State Consumer Disputes Redressal Commission
1. Life Insurance Corpn. Of India vs 1. Smt.Seema Wd/O Narendra Kharbade on 22 April, 2014
Daily Order
STATE CONSUMER
DISPUTES REDRESSAL COMMISSION, MAHARASHTRA
CIRCUIT BENCH
AT NAGPUR
5 TH FLOOR,
ADMINISTRATIVE BUILDING NO. 1
CIVIL LINES,
NAGPUR-440 001
First Appeal
No. A/1045/07
(Arisen out of
Order Dated 5/11/2007 in C.C. No. 78/2007 of Addl. District Forum,Nagpur)
1. Life Insurance Corpn. OF INDIA
Through
its Divisional Manager,
Dvnl.Office, S.V.Patel Marg, Sadar
NAGPUR
2. Life Insurance Corpn. OF INDIA
Through its Branch Manager, Saoner
Branch
Dr.Bhagat Buldg. Civil Lines
Saoner.
Vs.
1. Smt.Seema Wd/o Narendra Kharbade
2. Ku.Nishigandha Narendra Kharbade
3. Ku.Nidhi Narendra Kharbade
All R/o c/o
M.B.Anjankar, Rajgopala-
Charya
ward, Behind Social Welfare
Office,Bhandara.
BEFORE:
HON'ABLE MR. B.A.Shaikh PRESIDING MEMBER
HON'ABLE MR. S.B.SAWARKAR MEMBER
PRESENT:
ADV. QUAZI, Advocate for the Appellant 1
ADV. GAWANDE, Advocate for the Respondent 1
ORDER
(Passed on 22/04/2014) PER SHRI.S.B.SAWARKAR, HON'BLE MEMBER
1.This appeal is preferred against the order dated 5/11/2007 passed in CC No. 78/2007 by the Additional District Forum, Nagpur by which the complaint has been allowed fastening the deficiency in service. The impugned order further directed the Opposite Parties to pay the policy value of Rs.2 lac + free policy benefit security sum of Rs.80000/- with all the accrued benefits and interest. It further directed to provide Rs.1000/- as cost of complaint to be paid in a span of 30 days otherwise, to pay interest @ 9% till the date of actual payment.
2.The brief facts of the complaint are that the complainant Sima Narendra Kharbade with her two minor daughters Nishigandha and Nidhi filed a complaint before the Forum on 13/1/2007. Complaint stated that the husband of the complainant, one Narendra Pandurang Kharbade serving in B&C department had taken a Bimakiran policy on 18/12/1994 of Rs.2 lacs for 24 years. The premium was Rs.216/- which was regularly paid up to December,2005. However, on 26/4/2006, he suddenly died at his village.
3.The complainant then filed a claim before the opposite parties 1 & 2 to receive the death claim arising out of the policy. However, the opposite parties refuted the claim and only paid her Rs.29393/-. As the opposite parties did not give her the death benefit, she filed a complaint before the Forum making a request to direct the Ops to i.
Pay Rs.2 lac, the value of the policy along with interest thereupon @Rs.24% p.a. ii. Award cost of Rs.5000/- of the proceedings and any other relief.
4.The Opposite parties appeared before the Forum and through their written versions, submitted that the diseased husband of the complainant had taken the Bima Kiran Policy. However, he had paid the premium installments up to 11/11/2005 and had not paid thereafter. As the premiums were not paid, even after the grace period as per clause 2 of the policy, the policy got lapsed and was in the lapsed condition at the time of his death. However, as per the conditions of the policy the complainant was eligible to receive the paid up value of the paid premium. Hence, she was paid Rs.29393/- appropriately. The Opposite parties denied any deficiency or lacunae in the service and justified their action.
5.The Forum heard both the parties. Forum held that as per the insurance Act,1938, Section 113, if the insured pays the premiums for a period of 3 years, and therefter, if he dies within a period of six months, his nominee is eligible to receive the bonus of the premiums paid. In the present case, the diseased had taken the policy for the last 11 years. Therefore, the opposite parties could have deducted the amount of premium which was falling short from the last payment of premium till the time of death from the payment which was made to the complainant. At the same time, the Opposite Parties, have deducted the amount equivalent to the premiums from April, 2006 to November, 2006 which have no reason. Thus, the Forum fastened deficiency of service to the Ops and directed as above.
6.Aggrieved by the impugned order the OPs have preferred this appeal before us, hence are hereafter, called as appellants. The original complainants are called as respondents for brevity.
7.Heard both the parties together, perused the documents filed before us with conditions of the policy.
8.The appellants have no dispute regarding the policy taken by the husband of the respondent and its continuation till December, 2005. But submitted that as no further premiums were paid by the insured, the policy was lapsed. Hence only the paid up value was paid to the respondent. The appellant submitted that i.
The Forum wrongly appreciated section 113 of the Indian Insurance Act and decided that after payment of 3 years of premium, if the person dies within 6 months, he would be eligible still for all the benefits and, therefore, wrongly provided all benefits to the respondent.
ii. The Forum wrongly appreciated clause 2 of the policy about the paid up value and the deduction of Rs.2,431/- as premium for the remaining months,which was unjustifiable.
iii. The Forum granted Rs.80000/- when no such request was made in the complaint.
iv. Forum wrongly appreciated terms of the policy which is a contract between two persons and gave directions to make such payments which have never been agreed between the parties.
v. Thus, the learned Forum below exceeded its jurisdiction which is not vested under law and also against the factual and contractual position of the policy. Therefore, the order is unsustainable and against the provisions of the law.
9.The respondents submitted the similar grounds as were put before the Forum and reiterated that the decision held by the Forum correct and hence requested to confirm the impugned order.
10. We heard both the parties and perused the papers submitted before us by both the parties.
11.The undisputed facts are that the premiums were not paid after December,2005 and hence after the grace period, the policy was lapsed. Section 2 of the policy stipulates that if the payment of premium is not paid in the grace period, the policy is lapsed. When the policy is lapsed, the insurance company is not liable for payment of death claim. As per the circular issued by the company dated 18/7/1998, if the duration of premium payment is more than 5 years, the policy is given special surrender value based on the calculations of the paid up premiums.
12.The Insurance Act 1938, Section 113 is regarding the eligibility of the surrender value of the policy when the premiums are paid for continuous 3 years. Section 113 does not have any application to the present circumstances wherein policy got lapsed for non-payment of premium.
13.It clearly appears that the policy was lapsed in the month of January, 2006. The husband of the respondent died after 3 months, He died when the policy was lapsed. Therefore, it cannot be held that he was eligible for getting full benefits of the policy. The appellant as per Section 113 of the Insurance Act have rightfully calculated the paid up value of the policy which was paid for 11 years and paid the amount which accrued after the provided calculations and paid it to the respondents.
14.The Forum below appears to have not properly interpreted Section 113 (2) of the Insurance Act, which reads as below.
"Notwithstanding any contract to the contrary, a policy which has acquired a surrender value shall not lapse by reason of the non-payment of further premiums but shall be kept alive to the extent of paid up sum insured, and the paid-up sum insured shall for the purposes of this sub section include in full all subsisting reversionary bonuses that have already attached to the policy, and shall, where the policy is one on which the maximum number of annual premiums payable is fixed and the premiums are of uniform amount, be before the inclusion of such bonuses not less than the amount bearing to the total sum insured by the policy exclusive of bonuses the same proportion as the total period for which premiums have already been paid bears to the maximum period for which premiums were originally payable".
15. This clearly indicates that the above section does not provide any eligibility to the respondent to claim the benefits from lapsed policy. It is also apparent that the Forum below has provided the benefit of free secured insurance of Rs.80000/- which is nowhere concerned in the present circumstances. This facility is provided in case the insurer remains alive at the time of the maturity of the policy. He receives the maturity value of Rs.62208/- and thereafter he gets the cover under free insurance for 10 years meaning thereby that if he dies he would be paid a compensation of Rs.80000/- without paying any premium. The Forum has improperly appreciated the above provision laid in conditions of the policy vide clause B (2) and without the prayer of the respondent, provided her.
16.Thus, in the consideration of the papers and the contract of policy before us, we find that the action of the appellant is according to the conditions of the policy. Directing the appellant to provide the benefit which is nowhere available to the respondent would not sustain in the law and would also be beyond the scope of C.P.Act. With this consideration, we find that the Forum below has travelled beyond the arch of authority vested in it under C.P.Act by improper appreciation of the rules and providing the benefits which the respondent did not deserve. Thus, with full compassion for the respondents in the circumstances of the case, we have to hold the principals of fair play and justice. We thus hold the order of the Forum to be beyond the scope of authority and unsustainable in the law, which deserves to be set aside.
17. In the circumstances of the case, no cost need to be paid to the parties. Hence we pass the order as below..
ORDER i.
The appeal is allowed ii.
The impugned order of the Forum dated 05/11/2007 is set aside. The complaint stands dismissed.
iii.
Parties to bear their own cost.
iv.
Copies of the order be provided to both the parties free of cost.
v.
The member copies be returned to the appellant.
[HON'ABLE MR.
B.A.Shaikh] PRESIDING MEMBER [HON'ABLE MR. S.B.SAWARKAR] MEMBER