State Consumer Disputes Redressal Commission
Smt Kolla Vijaya Lakshmi Maharastra vs The Life Insurance Corporation Of India ... on 8 May, 2009
BEFORE THE A BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD. C.C. NO. 50 OF 2007 Between: Smt Kolla Vijaya Lakshmi W/o late Kolla Gangadhara Rao Aged about 44 years, R/o H.No.1549, C/o Chokole, Dajipet, Near Balajai Mandir Sholapur, Maharastra State Complainant A N D 1. The Life Insurance Corporation of India Rep. by its Divisional Manager, Machilipatnam, Krishna District 2. The Branch manager Guntur II Branch (699) Life Insurance Corporation of India Kothpeta Guntur Opposite parties Counsel for the complainant: Sri P.Venkateswarlu Counsel for the opposite parties Sri A.V.S.Ramakrishna QUORUM: SRI SYED ABDULLAH, PRESIDING MEMBER
& SRI R.LAKSHMINARSIMHA RAO, MEMBER FRIDAY THE EIGTH DAY OF MAY TWO THOUSAND NINE Oral Order ( As per Sri R.Lakshminarsimha Rao, Member) *** The complaint is filed u/s 17(A)(1) of the Consumer protection Act against the Life Insurance Corporation of India seeking direction to pay a sum of Rs.20 lakhs towards insurance policy benefits with interest @ 24% per annum, Rs.2 lakhs towards compensation for mental agony pain and suffering and Rs.20,000/- towards costs.
The brief averments of the complaint are as follows:
The husband of the complainant namely, Kolla Gandadhara Rao during his life time obtained insurance policy New Jeevan Shree Policy No.672898162 introduced by the first opposite party and issued by the second opposite party. The complainant is the nominee.
The policy commenced from 24.3.2003 and its maturity date is 24.3.2023. The annual premium for main plan, accident benefit premium and term assurance premium Rs.91,016/- for a period of 10 years. In the event of death of the policy holder before the date of maturity a sum of Rs.10 lakhs and equivalent to sum assured of Rs.10 lakhs is payable to the nominee. The husband of the complainant died on the intervening night of 27/28.03.2003 due to heart attack at Sholapur. The police Murum found that the death was due to heart attack and according to the Postmortem report also the cause of death is cardiac arrest.
After the death of her husband the complainant lodged claim with the opposite party no.2 who through their letter dated 4.10.2003 requested the complainant to submit death certificate of her husband issued by Maharashtra Government and further through their letter dated 28.10.2003, the opposite party no.2 requested the complainant to furnish death certificate, details of treatment and final police report. Again the opposite party no.2 asked the complainant to submit form-A1 from the LIC agent concerned, certificate from health centre concerned and final police report which the complainant submitted to the opposite party no.2. As there was no response from the opposite party no.2, the complainant addressed a letter dated 23.8.2004 requesting to settle her claim to which the opposite party no.2 through their letter dated 2.9.2004 intimated the complainant that the claim was forwarded to their Divisional Office. Again the complainant addressed letter in the first week of August 2005, in the third week of March 2006. The inaction on the part of the opposite parties in settling the claim of the complainant amounts to deficiency in service. Hence, prayed to allow the complaint.
The opposite parties have filed counter affidavit denying the averments of the complaint and stating that as the death of the husband of the complainant occurred due to heart attack, the complainant cannot claim accident benefit and invoke jurisdiction of this Commission. Supply of claim forms and submission of the same does not confer any right on the complainant to claim the policy benefits.
The husband of the complainant submitted proposal on 22.3.2003 for a high sum assured of Rs.10 lakhs at the first instance on his life and deposited an amount of Rs.71,000/- on 22.3.2003 and Rs.21,025/- on 24.3.2003 towards the first premium deposit. On 22.3.2003 medical reports and special reports were also submitted by him. On 26.3.2003 his proposal was accepted and on 27.6.2003 policy number was allotted.
The policy document dated 1.4.2003 was sent on 16.4.2003 by speed post. On 28.3.2003 the proponent died before the policy document could be delivered to him. Without knowing the death of the proponent, the opposite parties had sent the policy and first premium receipt to him. The documents ought to have been returned to the opposite parties as the addressee was dead on the date of delivery of the document. There was no concluded contract as the acceptance was not communicated to the proponent during his life time. Hence there was no deficiency in service on the par of the opposite parties and as such prayed for dismissal of the complaint.
The complainant has filed her affidavit. The documents Exs.A1 to A8 are marked on behalf of the complainant. Ex.A1 is the copy of insurance policy. Ex.A2 is the Proposal Deposit Receipt dated 22.3.2003 issued by the opposite party no.2. Ex.A3 is the copy of death certificate of Kolla Gangadhar Rao Apparao. Ex.A4 is the copy of requisition submitted by police Murum before Executive Magistrate Usmanabad. Ex.A5 is the copy of letter dated 4.10.2003 issued by the opposite party no.2 to the complainant. Ex.A6 is the copy of letter dated 23.8.2004 addressed to the complainant. Ex.A7 is the copy of letter dated 1.8.2005 issued by the opposite party No. 2. Ex.A8 is the copies of postal acknowledgements of receipts.
The Secretary, Legal department of the opposite party no.1 filed his affidavit. Exs.B1 to B5 are marked on behalf of the opposite parties. Ex.B1 is the insurance policy bond.
Ex.B2 is the copy of extract of dispatch register. Ex.B3 is the copy of speed post receipt. Ex.B4 is the copy of proposal. Ex.B5 is the letter dated 1.4.2003 issued by opposite partyno.2 requesting the husband of the complainant to submit receipts for reimbursement of medical fee paid by him.
The points for consideration are :
1) Whether there was any concluded contract between the opposite parties and husband of the complainant?
2) Whether there was any deficiency in service on the part o the opposite parties.?
3) To what relief?
Point No.1: The admitted facts are that the husband of the complainant no.1 had obtained insurance policy bearing no.672898162 by paying premium a sum of Rs.
91,016/-. The policy was commenced from 24.3.2003 and its maturity date 24.3.2023. The husband of the complainant died on 27/28.3.2003. The proposal submitted by the husband of the complainant was accepted on 26.3.2003 and insurance police issued on 1.4.2003. The policy number was allotted on 27.3.2003. Absolutely there has been no dispute about the payment of premium and cause of death of the husband of the complainant.
Therefore, no consideration of documents is required in regard to the above said facts. The only dispute between the parties is whether there was concluded contract between the opposite parties and the husband of the complainant who paid the premium and on whose name the insurance policy Ex.A1 was issued wherein the complainant was appointed as his nominee.
Admittedly, the proposal was accepted on 26.3.2003 and policy Number was given on 27.3.2003.
However, the person who paid the premium died on 27/28.3.2003. The learned counsel for the complainant submits that since the premium was accepted and insurance policy was issued by the opposite parties the contract was concluded and the opposite parties are liable to pay the policy benefits to the complainant. The learned counsel for the opposite parties contends that there was no concluded contract as the person who paid the premium died even before the acceptance of proposal was communicated to him. Further he submits that when her husband died, the complainant ought to have returned the insurance policy bond to the opposite parties. As aforesaid, there has been no dispute even in regard to the dates on which various incidents such as submission of proposal by the husband of the complainant, acceptance of the proposal by the Divisional Office of the opposite parties, allotment of policy number, sending the insurance policy bond and the death of the husband of the complainant occurred. Since, the things stood as such it is now to be considered whether there was amount a concluded contract. 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. The husband of the complainant died by the time the insurance policy bond reached the address given by him. His offer in the shape of proposal was accepted by the opposite parties and by the time the acceptance was communicated to him he was no more in the world. Thus, there had been no concluded contract between the husband of the complainant and the opposite parties basing on which the claim submitted by the complainant rests upon.
The learned counsel for the complainant had relied upon the following decisions:
1) (2007) 5 SCC 717 in Sudha Jain Vs. Chief Manager and another
2) 1994-SCC-Supp2-531 in Fertilizer Corporation of India Limited Vs. Jagdish Prasad Kesharwani
3) 1962-AIR(SC)-0-378 in Jawahar Lal Barman Vs. Union of India
4) IV (2005) CPJ 214 (NC) in LIC and others Vs Rakshna Devi
5) F.A.No.28/2009 of A.P.State Commission in The New India Assurance Co., Ltd., Vs Jilakara Gangavva and another In Sudha Jain Vs. Chief Manager and another, the complaint was returned by the State Commission for being filed before the District Forum citing the reasons that the claim was exaggerated. The Supreme Court set aside the order of the State Commission and restored the complaint to its original file. This decision was cited on account of the objection to the jurisdiction of this commission, raised by the opposite parties.
In Fertilizer Corporation of India Limited Vs. Jagdish Prasad Kesharwani, the Supreme Court was dealing with the issue whether the acceptance of tender by the FCI amounts to concluded contract as was found by the High Court and alteration in the price without any notice to the respondent constitutes breach of contract. This decision is not applicable to the facts of the case on hand for the reason that facts of both cases are different and also that the contract of insurance stands on a different pedestal compared to the ordinary contract.
In Jawahar Lal Barman Vs. Union of India, the issue was in regard to the application of Arbitration Act and question of concluded contract. It was held that the contract was concluded by the acceptance of tender.
These two decisions are not applicable to the facts of the case on hand for the reason that facts of both cases are different and also that the contract of insurance stands on a different pedestal compared to the ordinary contract.
In LIC and others Vs Rakshna Devi, the proposal was submitted by the assured who was having subsisting insurance policy on 30.1.1998 and he died on 01.3.1998. Unaware of death of the assured the proposal was accepted on 2.3.1998 and on 9.3.1998 the insurance policy was issued with retrospective effect from 28.10.1997 as requested by the assured. The Honble National Commission held that the LIC accepted the proposal with retrospective date and as such the LIC cannot contend that the policy would come into existence on 2.3.1998. However, in the case on hand the policy was issued only on 1.4.2003 whereas the assured died on the intervening night of 27/28.3.2003. Therefore this decision has no application to the facts of the case on hand.
In New India Assurance Co., Ltd., Vs Jilakara Gangavva and another assured during his life time obtained a policy covering his death by accident and he died due to sun stroke. This decision does not help the complainant in any manner as the question of concluded contract was not an issue at all. For all practical purposes the contract was concluded and after issuance of the insurance policy only, the assured died. Therefore, this decision will not help the complainant.
The learned counsel for the opposite parties relied upon the following decisions:
1. AIR 1984 SC 1014 in LIC of India Vs Raja Vasi Reddy Komalavalli Kamba and others
2. 1995(3) CPR 62 in LIC of India and another Vs Smt K.Aruna Kumari
3. (11) 1993 CPJ 146 (NC) in LIC of India Vs Mrs. Bimala Routray In LIC of India Vs Raja Vasi Reddy Komalavalli Kamba and others, the Supreme Court has elaborately dealt with the concept of concluded contract.
The Apex Court approved statement of law in Corpus Juris Secundum, Vol. XLIV page 986 wherein it has been stated as:-
The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offerer, either directly, or by some definite act, such as placing the contract in the mail.
The test is not intention alone.
When the application so requires, the acceptance must be evidenced by the significance of one of the companys executive officers.
In LIC of India and another Vs Smt K.Aruna Kumari, the assured submitted proposal on 14.3.1987. First premium was paid on 11.3.1987. On 19.3.1987 proposal was accepted with the date of commencement of risk from 27.3.1987. On 15.3.1987 he died. The LIC offered ex gratia payment of Rs.20,472/- without the accident benefit.
The National Commission held as under:
We are thus of the view that the complainant respondent was unfortunately not entitled to payment under the said insurance policy, but the appellant had taken a humane view and made ex gratia payment of Rs.20,472/- as reported earlier. We cannot direct them to make any further ex gratia payment and so we allow the appeal and set aside the order of the State Commission.
In LIC of India Vs Mrs. Bimala Routray, the premium amount paid was kept in deposit in view of the failure of the assured in submitting of his age and before the insurance policy was issued, he died. The National Commission allowed the appeal preferred by the LIC holding that By merely submitting the proposal and payment of an amount which was kept in deposit without appropriation towards the premium it cannot e construed as a concluded contract of insurance.
There has to be an offer of LIC of accepting the proposal, issuing the premium receipt and subsequently issuing a policy of insurance. The mere receipt of the initial amount towards proposal and retention of it until after death of the deceased is not acceptance of the contract of insurance.
The acceptance must be signified by some act or acts agreed to by the parties after which the law arises a presumption of acceptance.
In the light of the above said decisions of the Honble Supreme Court and the National Commission, as aforesaid in the earlier part of this order there was no concluded contract enabling the complainant to proceed against the opposite parties.
Point No.2 : The learned counsel for the opposite parties had submitted that the complainant had inflated the claim in order to invoke the jurisdiction of this Commission. He indirectly was submitting that the husband of the complainant was not met with an accidental death. We do not agree with this contention as the hospital record unequivocally shows that the husband of the complainant had suddenly developed pain in the heart which resulted in his death. The opposite party had not disputed the treatment and cause of death of the husband of the complainant. It is settled law that if the patient does not know that he was suffering from heart problem and dies suddenly, his death for all practical purposes be treated as an accidental death.
In Sudha Jain Vs. Chief Manager and another reported in (2007) 5 SCC 717, the complaint was returned by the State Commission for being filed before the District Forum citing the reasons that the claim was exaggerated. The Supreme Court set aside the order of the State Commission and restored the complaint to its original file. This decision was cited on account of the objection to the jurisdiction of this commission, raised by the opposite parties.
The insurance policy Ex.B1 had conferred accident benefit on the nominee i.e., complainant herein. The complainant in addition to the sum assured had claimed the accident benefit also which amounts to Rs.20 lakhs and above. Therefore there is force in the contention of the opposite parties that the claim was inflated. However, the very insurance policy which was the basis for the claim is held not to be valid in view of the finding under point no.1 that there was no concluded contract, this point is answered accordingly.
In the cases referred above, the LIC had come forward with a proposal to pay for ex gratia. In this case there has been no such proposal on the part of the opposite parties. We hope the LIC would come forward with humane approach by offering ex gratia payment. Even otherwise, when the contract was not concluded, the LIC cannot keep with it the premium paid by the husband of the complainant. Therefore, we hold the complainant entitled to the amount of Rs.91,016/- along with interest @ 9% per annum 24.3.2003 till payment. The opposite parties are at liberty to offer any ex gratia payment in addition to the said amount.
In the result the complaint is partly allowed. The opposite parties no.1 and 2 jointly and severally liable to pay a sum of Rs.91,016/- along with interest @ 9% per annum 24.3.2003 till payment and Rs.2,000/- towards costs. Time for compliance four weeks.
PRESIDING MEMBER MEMBER Dt. 08.05.2009 APPENDIX OF EVIDENCE WITNESSES EXAMINED NIL EXHIBITS MARKED For Complainant Ex.A1 Copy of insurance policy.
Ex.A2 Proposal Deposit Receipt dated 22.3.2003 issued by the opposite party no.2.
Ex.A3 Copy of death certificate of Kolla Gangadhar Rao Apparao. Ex.A4 Copy of requisition submitted by police Murum before Executive Magistrate Usmanabad.
Ex.A5 Copy of letter dated 4.10.2003 issued by the opposite party no.2 t o the complainant.
Ex.A6 Copy of letter dated 23.8.2004 addressed to the complainant. Ex.A7 Copy of letter dated 1.8.2005 issued by the opposite party 2.
Ex.A8 Copies of postal acknowledgements For opposite parties Ex.B1 Insurance policy bond.
Ex.B2 Copy of extract of dispatch register.
Ex.B3 Copy of speed post receipt.
Ex.B4 Copy of proposal.
Ex.B5 Letter dated 1.4.2003 issued by opposite partyno.2 requesting the husband of the complainant to submit receipts for reimbursement of medical fee paid by him.
PRESIDING MEMBER MEMBER