F.A.No.180 OF 2012 AGAINST C.C.NO.23 OF 2011 DISTRICT FORUM-II TIRUPATHI

Between:

1.     The Manager

        Reliance General Insurance Co.Ltd.,

        Rectified House, Naigaum Cross Road

        Wadala (W) Mumbai.

2.     Reliance General Insurance Co.Ltd.,

        Rep. by its Branch Manager,

        Vijaya Bharathi Commercial Complex

        D.No.19-6-27, D.R.Mahal Road

        Tirupathi

                                                                                                                Appellants/Opposite parties

        A N D

      1.     Shaik Ameena W/o Shaik Gafoor

              Aged about 49 years, Housewife

      2.     Shaik Gafoor S/o Shaik Basha

              Aged about 55 years, Coolie

              Both are R/o K.Yerragudi Village and Post

              Chakrayapet Mandal, Kadapa District

                                                                                                                      Respondents/complainants

Counsel for the Appellants                     M/s A.Ramakrishna Reddy

Counsel for the Respondents                 M/s O.Udaya Kumar

QUORUM:   SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER

                                                AND

SRI THOTA ASHOK KUMAR, HON’BLE MEMBER

MONDAY  THE FIRST DAY OF APRIL

                                TWO THOUSAND TWELVE

Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)

***

1.             The opposite party-insurance company is the appellant. The respondents filed complaint claiming the assured sum of `10,00,000/- and compensation of `1,00,000/-. The District Forum allowed the complaint awarding `10,00,000/- with interest@9% p.a. thereon and an amount of `2500/- towards costs.

2.             The respondents’ son during his lifetime obtained “Reliance Pravasi Bharathiya Yojana 2006” for the period from 17.12.2008 till 16.12.2010 and he had been to Saudi Arabia and died there on 14.06.2010 while unloading sand from a Truck. The deceased appointed the respondents as his nominees for the policy proceeds. The respondents submitted claim and as it was not issued, they got issued notice on 12.08.2010 and on 3.09.2010 enclosing thereto the required documents for settlement of the claim. As the notice did not evoke any response from the appellant-insurance company, the respondents filed complaint before the District Forum.

3.             The appellant resisted the claim on the premise of non-compliance of the terms of the insurance policy by the  deceased Hussain Basha Shaik which amounts to violation of the terms   of the insurance policy.

4.             The first respondent  filed his  affidavit and the documnts,ExA1 to A10. On behalf of the appellant-insurance company, its Claims Manager filed his affidavit and it has not chosen to file any documents.

5.             The District Forum allowed the complaint on the premise that non-submission of claim within 30 days cannot be ground for repudiation of contract and the appellant can claim benefit of the clause if it proved that delayed claim led to its failure to verify the correctness of the facts which gave rise  the claim. The District Forum observed that the appellant has not communicated its opinion to the respondents and the delayed in filing the claim or claim intimation cannot be made ground to repudiate the claim.

6.             The opposite party–insurance company has filed appeal contending that the District Forum failed to appreciate that the respondents did not submit claim intimation and documents such as attested copy of death certificate of the insured which is the reason for non-settlement of the claim. It is contended that fault cannot be found with the appellant in the absence of proof of submission of documents and the appellant came to know about the death of the insured on receiving the notice dated 3.09.2010 which was got issued by the respondents through their advocate. It is contended that in view of decisions of the supreme court in “United India Insurance Company Ltd vs Davnder Singh”2008 (1) ALD 42 and “Vikram Greentech India Ltd and another vs New India Assurance Company Ltd “ 2009(5) SCC 599 wherein it was held that Consumer Forum is concerned with a question  as to whether there is deficiency in service on the Insurance Company and extent of liability of insurance company can be determined on strict construing of terms of the insurance policy without there being any attempt to rewrite the contract or substituting the terms of the contract which were not intended by the parties.

7.             The point for consideration is whether the respondents are entitled to the sum assured under the insurance policy?

8.             The appellant projected two dimensional objections as regards to compliance of the terms of the insurance policy and violation of the conditions of the policy. Non-submission of claim intimation and attested copy of death certificate of the insured is stated as non-compliance of the terms of the insurance policy whereas non-submission of the claim within 30 days of the death of the insured is termed as violation of the terms of the policy on the part of the insured.

9.             The two objections raised by the appellant for non-settlement of the claim cannot be considered independent of each other and therefore, this Commission held it a two dimensional objection. In the ground no.2 of the Grounds of Appeal , the objection in regard to non-submission of the claim intimation and the relevant document is stated as :

“The District Forum failed to appreciate the fact that this appellant Insurance Company has not received any claim intimation or documents  such as Death Certificate and other certificates duly attested by Saudi Arabian Government and that being the reason, it has not settle the claim of the respondent/complainants”.

10.                  In contradistinction to the objection as to the non-submission of the  claim intimation, the other objection is with regard to submission of the claim beyond stipulated period of 30 days from the date of death of the insured. Ground No. 6 of the Appeal Grounds read as under:

”The District Forum failed to appreciate the fact that as per the terms and conditions of the policy, the death intimation shall be given to the Appellant Insurance Company within 30 days of the happening of the event, but the finding of the Forum is that the respondent/complainant are not the parties and they cannot be blamed fi the claim is not made within time and failed to appreciate that the time of essence of the contract and the insurance is the subject matter of solicitation”.

11.            In order to focus on  second limb of objection that the claim should be filed within 30 days of death of the insured, reliance is placed on the ratio laid in “Vikram Greentech India Ltd and another vs New India Assurance Company Ltd “. The objection as to entertainment of delayed claim automatically nullifies the effect of other objection that no claim intimation or attested copy of death certificate was received by the appellant-insurance company. In the written version there is no any averment to the effect the claim along with documents was not submitted by the respondents. Thus, the objection that the cause for non-settlement of claim is non-submission of documents such as death certificate attested by the official of Saudi Arabian Government is not sustainable.

12.            In regard to the objection as to submission of delayed claim by the respondents, it is contended on behalf of the appellant that the violation of the insurance contract by the parties to the contract of insurance, the contract becomes void and the terms of the agreement have to be strictly construed to determine the extent of liability of the insurance company. The District Forum has observed the objection of the appellant of delayed claim in the circumstances whether it would have any impact on settlement or repudiation of the claim as under:

However, the counsel for opposite parties repeatedly pointed out that the claim should be made within 30 days. It must be stated that it is for the convenience of the early settlement and for scrutiny of the claim such stipulation would be made, but that itself may not be a ground to hold that the opposite party could repudiate the contract. In the event of opposite party able to establish that on account of the delayed claim, they could not effectively verify and confirm the correctness of the claim, then only the opposite parties could claim benefit under the said clause. Now the indisputed fact is that the deceased has taken a policy and policy was in force when the deceased died in an accident in Saudi Arabia. Now admittedly the claim was made in September 2010 and at any rate till today the opposite parties have not communicated their stand with regard to the claim. However, the counsel for opposite parties made repeated endeavour to contend that there is no deficiency of service.

7.  Infact so far, that is even after the present complaint being filed, the claim is not settled or the opposite party came with specific stand. It must be held that there is some unexplained delay in not trying to settle the claim in time.

8.  Now coming to the notice within 30 days, it must be stated that it is a contract between the deceased and the opposite party and the complainants were not party to the contract but beneficiary. They cannot be blamed if the claim is not made in time. Hence, this Forum is convinced that there is unexplained delay in not settling the claim, which results in deficiency of service.

13.            The learned counsel for the appellant has relied upon the aforementioned decisions In  “S. Ram Reddy vs M/s. Bajaj Allianz General Insurance Company Ltd”.,  in FA  699 of 2009 ,  in support of the same contention that delayed claim intimation disentitle the nominee of the insured to claim the sum assured by the insurance policy. In the case this Commission dealt with the law laid in the two decisions as under:   

“12)                 The learned counsel for the respondent  relied a decision   United India Insurance Company Ltd.  Vs. Davinder Singh reported in 2008 (1)  ALD 42 (SC) wherein  the Hon’ble Supreme Court held that  “right of insurance company  not to pay amount of insurance  would depend  upon facts and circumstances of each case.   In certain situation insurer may be bound to pay claim made by third party, if same filed before  a forum created  under  the M.V. Act.    But deficiency  may be held to be justified  before a different  forum like  Consumer Forum where question raised is required to be considered in a different manner.   We do not see any  relationship  when their Lordships’  were referring to the cases pertaining to third party.   No doubt their Lordships’ also  made a mention  about the liability of the insurer vis-à-vis  cases arising before the Consumer Fora.    The other decision  that was relied  Vikram Greentech India Ltd., Vs. New India Assurance Company Ltd.  reported in (2009) 5 SCC 599  equally has no bearing.   Their Lordships’  opined that  in a contract of insurance four essentials  have to be considered viz.,  (i) definition of risk (ii)  duration of risk (iii) premium and (iv)  amount of insurance.   There is  no quarrel as to the  proposition laid down  therein”. 

14.            Further, in the aforementioned appeal, this Commission referring to plea of non-submission of the relevant documents and claim form, held that  plea of delayed submission or non-submission of claim form and the documents  is a routine plea not supported by any evidence taken by the insurance company for the first time before the District Forum . It was held :

“13)                 ………   These pleas are taken routinely  without recoursing to the facts   in order to deny the just claim.   The complainant could prove by filing irrefutable documents evidencing that they are the parents of the deceased, and that he died in an accident,  and the policy covers the period on which date the accident took place.    Therefore they are bound to pay the amount.  Non-settling the amount unjustly amounts to deficiency in service.   In view of non-settling the claim by taking irrelevant pleas the complainants are entitled to a compensation of Rs. 10,000/- towards mental agony”.  

15.            The Insurance Regulatory and Development Authority issued  Circular dated 20.09.2011 regarding delay in intimation of claim  to the insurer within prescribed period issued guidelines as follows:

The current contractual obligation imposing the c onditoin that the claims shall be intimated to the insurer with prescribed couments within a specified number of days is necessary for insurers for effecting various post claim activities like investigation, loss assessment, provisioning, claim settlement etc.  However, this condition should not prevent settlement of genuine claims, particularly when there is delay in intimation or in submission of documents due to unavoidable circumstances.

The insurer’s decision to reject a claim shall be based on sound logic and valid grounds.  It may be noted that such limitation clause does not work in isolation and is not absolute.  One needs to see the merits and good spirit of the clause, without compromising on bad claims.  Rejection of claims on purely technical grounds I a mechanical fashion will result in policyholders losing confidence in the insurance industry, giving rise to excessive litigation.

Therefore, it is advised that all insurers need to develop a sound mechanism of their own to handle such claims with utmost care and caution.  It is also advised that the insurers must not repudiate such claims unless and until the reasons of delay are specifically ascertained, recorded and the insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time. 

16.            In the case on hand, the appellant had not raised objection as to non-submission or  delayed submission of claim.  The ratio laid in the aforementioned decisions was held not applicable to the facts of the case such as the present case. We do not find any irregularity or infirmity in the order of the District Forum.  In the circumstances where the issuance of the insurance policy and death of the insured in accident were not questioned by the appellant and the claim is kept pending without assigning any reason, the obligation to honour the claim rest on the appellant-insurance company which the appellant failed to discharge and  by its inaction the appellant invited the  imposition of costs and interest on the sum assured under the insurance policy. The appeal has no substance and is liable to be dismissed.

17.            In the result the appeal is dismissed confirming the order of the District Forum with costs of Rs.3,000/-. Time for compliance four weeks.

                                                                                   Sd/-

                                                                                MEMBER

                                                                                   Sd/-

                                                                                MEMBER

                                                                            Dt.01.04.2013

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