National Consumer Disputes Redressal
Life Insurance Corporation Of India vs Shri Gurnam Singh on 20 August, 2007
NCDRC NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO.306 OF 2004 (From the order dated 17.10.2001 in Appeal No.585/2003 of the State Commission, Uttranchal) 1. Life Insurance Corporation of India Northern Zone Office, New Delhi Through its Zonal Manager, Life Insurance Corporation of India, Jeevan Bharti, Connaught Circus, New Delhi 110 001. 2. The Legal Manager, Life Corporation of India, Divisional Office, Haridwar Road, Dehradun (Uttranchal) Petitioners Versus Shri Gurnam Singh Son of Shri Pyara Singh, R/o Kankata, Tehsil Rudrapur, District Udham Singh Nagar, Uttranchal Respondent BEFORE : HONBLE MR.JUSTICE M.B. SHAH, PRESIDENT MRS. RAJYALAKSHMI RAO, MEMBER For the Petitioner : Mr. S.P. Mittal, Advocate For the Respondent : Mr. Anuvrat Sharma, Advocate with Mr. Sanjay Kumar Singh, Advocate Dated : 20th August, 2007 ORDER
PER MRS. RAJYALAKHSMI RAO, MEMBER The present petition is filed by the Life Insurance Corporation of India (herein after called the Insurance Company) against the order dated 17.10.2001 passed by the State Commission, Uttranchal, in Appeal No.585 of 2003 whereby the Appeal filed by the Petitioner was dismissed.
The issue involved is : whether the rejection of the claim of the Respondent in respect of the life insurance policy, allegedly taken in favour of his wife, Smt. Harvans Kaur, amounts to deficiency in service.
In our view, on the basis of the fact, which would be discussed hereinafter, the LIC has rightly repudiated the case as the contract of insurance was not finalized and the policy was not issued before the death of the insured.
The brief facts of the case are :-
Shri Gurnam Singh, the Complainant/Respondent deposited a premium amount of Rs.6,074/- on 12.10.2001 with the Rudrapur Branch of the LIC for obtaining a life insurance policy for a sum of Rs.2 lakhs under table at term 14-25. The proposal for the insurance itself was made on 15.10.2001. The payment of Rs.6,074/- was found to be deficient by an amount of Rs.96/- which was paid only on 15.11.2001. A policy No.240940442 dated 28.11.2001 was issued in his favour.
Simultaneously, on 12.10.2001 Smt. Harvans Kaur, wife of the Complainant/Respondent also deposited an amount of Rs.3,543/- for obtaining a life insurance policy for a sum of Rs.one lakh.
It seems that the proposal form for insurance under table at term 14-16 was, in fact, filled in and submitted to the local LIC branch on 31.10.2001. Unfortunately, Smt. Harvans Kaur died on 13.11.2001. The Complainant/Respondent intimated the insurance company through a letter dated 10.12.2001 about the death and requested for payment of insurance claim. He followed this up with another letter dated 26.12.2001 after completing all formalities for the claim.
The Insurance Company, however, repudiated the claim on the same day, i.e. on 26.12.2001 on the ground that no valid insurance policy has been issued in favour of Smt. Harvans Kaur. The argument of the Insurance Company is that the proposal of Smt. Harvans Kaur fell in category 3 of schedule 9 and issuance of policy to her was dependent on the issuance of policy in favour of her husband, in the first instance. Since the policy in favour of Shri Gurnam Singh was issued on 28.11.2001 and since his wife died earlier than that on 13.11.2001, there is no question of any valid policy in her favour nor does a question of claiming any amount in such a non-existent policy. Both the lower Fora, however, proceeded on the assumption that the Complainant/Respondents wife is entitled to a life insurance policy on her own and since she paid the premium amount on 12.10.2001 (before her death), the claim ought to be paid by the insurance company. Hence, the present Revision Petition.
Learned Counsel for the Petitioner submits that proposal of Complainants wife had not been accepted till the date of her death.
On 15.10.2001, the Respondent, Shri Gurnam Singh, husband of Smt. Harvans Kaur submitted his proposal, which was a pre-condition for consideration of proposal of Smt. Harvans, she being a lady falling in category 3 of Schedule 9. Proposal of Smt. Harvans Kaur was not accompanied with appropriate declaration regarding proof of her age in Form No.5220 and accordingly letter dated 31.10.2001 was sent to her to file a declaration about her age duly attested by Notary Public. The proposal submitted was thus pending for completion of formalities and consideration and no policy of Insurance was either made out or issued as she died on 13.11.2001, before the formalities were completed.
The premium deposited by Shri Gurnam Singh, the Respondent against his own proposal for insurance was found to be deficient by Rs.96/- which he was requested to deposit to enable the Petitioner to consider and accept his proposal. He deposited the balance amount only on 15.11.2001. While doing so he did not disclose the fact of the demise of his wife, Smt. Harvans Kaur.
The proposal of Shri Gurnam Singh was independently processed and on acceptance thereof an insurance policy No.240940442 dated 28.11.2001 was issued in his favour. The proposal of Smt. Harvans Kaur remained pending for completion of formalities. Due to death of Smt. Harvans Kaur on 13.11.2001 the proposal itself becomes void and invalid as the policy was not issued and there was no contract made before her demise, as the risk of her life was not covered on that date.
The Respondent did not intimate the Petitioner regarding death of Smt. Harvans Kaur on 13.11.2001 and further he deposited the deficient amount of premium relating to his own proposal of insurance on 15.11.2001 and in the same letter he sought to settle the death claim of his wife at the earliest. The Petitioner submitted that the Respondent was explained that his proposal was itself got issued to him on 28.11.2001 after deposit of deficient amount of premium on 15.11.2001. The proposal in respect of Smt. Harvans Kaur which was incomplete owing to absence of valid age declaration and deficient payment of connected a proposal for insurance of her husband, got extinguished with her death on 13.11.2001 and even a proposal of Shri Gurnam Singh was still pending for acceptance.
The repudiation letter by the Petitioner is self explanatory and is reproduced as under :
(1) The age proof enclosed with the proposal of your wife was invalid.
(2) Before the proposal in respect of your wife could be considered, completion of your proposal was
necessary, which was deficient in the sum of Rs.96/-
which you deposited in BOC No.2902 on 15.11.2001.
Your proposal therefore was completed on 15.11.2001.
Your wife having expired on 13.11.2001 has been intimated. Because the proposal in respect of your wife would have been considered only after
completion of your proposal, we are sorry that in your wifes proposal No.2281-24A there is no risk of insurance covered. Therefore, premium amount of Rs.3,534/- only deposited by you in BCO No.2287 on 12.10.2001 can be returned.
You are therefore requested to send as the attested copy of death certificate in respect of Smt. Harvans Kaur so that payment of Rs.3,534/- in your favour could be made.
Learned Counsel for the Petitioner submitted that the law laid down by the Supreme Court in the case of Life Insurance Corporation of India Vs. Raja Vasireddy Komalvali Kamba & Ors. reported AIR 1984 SC 1014 holding that a contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Mere receipt and retention of premium until after the death of the applicant or even the mere preparation of the policy is not accepted. The contract of insurance is concluded on issue of policy. In the present case, it is submitted that the proposal got extinguished on the demise of Smt. Harvans Kaur on 13.11.2001and no concluded contract came into being.
As against this, Learned Counsel for the Respondent contended that Smt. Harvans Kaur falls under first category according to manual form 11/4 submitted by Life Insurance Corporation of India alongwith its affidavit whereby husbands life insurance is not required as she had a land in her own name and she had clearly written in her affidavit that her annual income is Rs.50,000/- and source of income is agriculture. She had also disclosed the income of her husband from agriculture and her husbands income is Rs.one lakh.
Learned Counsel for the Respondent contended that Shri Harvans Kaur falls under Category-I and her insurance is no way related to her husbands insurance. It is contended that Petitioners have wrongly placed her in category-III where insurance of the husband is necessary for the insurance on the life of wife. She paid premium amount from her own earned income and not from her husbands income. She also submitted affidavit and Jothbahi form 16/5 in support to prove the above submission.
It is also argued that she had completed all the formalities and paid the premium and the receipt was also issued by the Petitioners but did not issue the policy on the ground that there was a shortfall of Rs.96/-. Smt. Harvans Kaur had also provided proof of date of birth alongwith photocopy of their Jothbahi and the agent had not informed the Petitioner that she would not get her insurance policy on her own. It is contended that although all the formalities were done but the Petitioners rejected the claim which is arbitrary, illegal and unsustainable.
As per the record, it is seen that proof of Smt. Harvans Kaurs age was not made available despite letter dated 31.10.2001 from Petitioners till date of her death on 13.11.2001, itself shows that the Life Insurance proposal of Smt. Harvans Kaur was incomplete.
Secondly, Petitioners have not put her on the first category and placed in category-III based on the evidence available to them, which concluded that she was not eligible for policy on the basis of category-I. On the basis of instructions of Head Office, particulars of age, occupation, etc. they have placed Smt. Harvans Kaur under category-III. If this is to be accepted, then Smt. Harvans Kaur was dependent of her husband/Respondent policy. Unfortunately, Smt. Harvans Kaur died before these formalities were completed including payment of Rs.96/- which was a shortfall.
Lastly, Respondent paid this amount after his wifes death fully knowing a policy cannot be issued at this stage after her death. Hence, Insurance Company has rightly repudiated the claim because the policy was not issued prior to her death. Respondent being fully aware of his wifes death did not intimate the same to the Petitioner. This clearly shows that the Respondent intentionally concealed the fact regarding death of his wife which itself goes against him under the principle of Uberrima Fides.
The Fora below did not consider the decision taken by the Petitioner that Smt. Kaurs case would be category-III after evaluating all the details produced before them. The case has been decided on the assumption that she ought to have been considered for category-I because she is an earning member. It is for the insurance company to decide and place the category based on their assessment of the facts and offer the terms of the policy accordingly. They cannot be forced to issue a policy as per expectation of the person who is seeking a policy from them. Admittedly, Smt. Kaurs policy was not issued before her death and therefore the contract is not complete. Further, the Respondent has received the amount deposited.
In any set of circumstances, in the present case, there is no unusual delay on the part of the LIC in processing the proposal form submitted by the deceased. Proposal form was submitted on 15.10.2001 and she died on 13.11.2001. In between, LIC sought relevant information and the contract of insurance was not finalized. Therefore, the Insurance Company rightly repudiated the claim.
In view of the above discussion, we set aside the orders of the State Commission and District Forum and dismiss the complaint. There shall be no order as to costs.
J. (M.B. SHAH) PRESIDENT (RAJYALAKSHMI RAO) MEMBER P