BEFORE THE DISTRICT CONSUMER REDRESSAL FORUM AT TURA.

Smti. Sandhya Newar

W/O. Shri Gopal Newar.

Resident of Fancy Valley, Tura

PO & PS Tura, Dist. West Garo Hills,

Meghalaya.

Complainant.

-Vs-

1. Life Insurance Corporation Of India Yogakshema, Zeevan Bima Marg, Mumbai.
2. The Branch Manager.

Life Insurance Corporation of India, Tura Branch, Tura, PO & PS Tura, Dist West Garo Hills, Meghalaya.

...Opposite Parties.

1. The Complainant has filed a complaint under section 17 of the Consumer
   Protection Act, 1986 before the State Commission Meghalaya, Shillong against the deficiency in the services and negligence of the opposite parties in discharging their duties as regards the settlement of the insurance claim of Late Priyanka Newar who is the only daughter of the Complainant. Complaint received on 20.12.2001 which was however, returned back to this Forum as the State Commission Meghalaya lacks jurisdiction.

Complainant's Case

2. Brief facts of the case of the complainant is that the complainant's only
   daughter Late (Miss) Priyanka Newar during her lifetime was working as an Air Hostess in the Alliance Air which is a wholly owned subsidiary of the Indian Airlines Limited and during her lifetime she on le July 2000 purchase a `Zeevan Sree Policy' for the sum insured of Rs.5,00,000/- (Rupees Five Lacs) only from the Life Insurance Corporation of India through its Tura branch. That Late Priyanka Newar during her lifetime submitted her proposal form giving all ,the particulars and information required by the Opposite Party No.2 and further along with the proposal she also deposited the first yearly premium of Rs. 24,593/- (Rupees Twenty five thousand five hundred and ninety three) only in cash and the

_c'x _\ premium was calculated by the Opposite Party and received by the Opposite Party

\          No. 2 in the following manner:-

Table No.                      Period                    Name of the Policy

112                                25 years            Zeevan Sree Policy

Sum Insured.              Premium Paying term                        Yearly Premium

Rs. 5,00,000/-                        16 years                                              Rs.24.593/-

3. That after receipt of the Proposal Form duly filled along with the first
   yearly Premium of Rs. 24,5931- only in cash. The Opposite Party No.2 accepted the proposal and First yearly premium and issued Proposal Deposit Receipt No. 0062652 Dt. 10/07/2000 in favor of the deceased daughter of the complainant. That the Agent. Smti. Chanda Das @Chanda Modak informed the deceased daughter of the Complainant that the Policy Copy in original will be sent to the address of the deceased Insured at her Fancy Valley, Tura address within a few days and has enclosed the Proposal Deposit receipt No.0062652 Dt.10/7/2000 issued by the Opposite Party No. 2 as Annexure-A.
4. That the Complainant was informed by her daughter that she has been
   nominated as the nominee of the aforesaid insured policy. Thereafter the deceased Insured left Tura for her place of posting of Calcutta along with original copy of the 'Proposal Deposit Receipt No.0062652 Dt 10/7/2000' and she deposited a copy of the same in the Office of her employer at Calcutta for her Income Tax benefits and so far the information received the original copy was carried by the deceased Insured, Late Priyanka Newar, to deposit the same in Delhi Office of her employer and in the air crash the original 'Proposal Deposit Receipt' was damaged and destroyed.
5. That on 17/07/2000 when the deceased Insured, Late (Miss) Priyanka
   Newar in connection with her Official duty was on board, in Flight No.CD-7412 for Calcutta — Patna — Delhi route, the said Flight crashed near Gardani Bag Chitotay Bridge, Patna (near Patna airport) and as a result almost all the passengers along with the crew members including the Insured daughter of the Complainant succumbed to her injuries on the spot. The dead certificate dated 17/7/2000, certificate of handing over the dead body of the Insured and a copy of Certificate of death issued by the Registrar, Birth and Death of C.M.C.Health Department Calcutta dated 01/08/2000 have been enclosed as Annexure B, C and D respectively.
6. The Complainant submits that on 16/10/2000 the complainant made a
   prayer before the Opposite Party No.2 for the issue of claim form to claim the sum insured of her deceased daughter but most surprisingly the opposite Party No.2 vide its Letter Dated 16/10/2000 informed the complainant that the claim money is not payable since no proposal alongwith with cash was received by them in one hand and on the other hand the Opposite Party No.2 has informed that the amount deposited Rs.24,593/- will be refunded after proof of death and Succession Certificate. The Letter dated 16/10/2000 has been annexed as Annexure-E.
7. The complainant argued that it was the Opposite Party No.2 who has on
   behalf of the Life Insurance Corporation of India accepted the Proposal and the First Yearly Premium of Rs. 24,593/- only in cash and issued the Proposal Deposit Receipt No.0062652 dated 10/07/2000 but it is the same Officer after the claim is made who flatly refused vide his Letter dated 16/10/2000 that no-proposal fdrm alongwith cash was deposited by the deceased insured which clearly shows that the Opposite Party No.2 has intentionally suppressed the facts of the submission of the proposal form of the deceased insured just to avoid the legitimate claim under Jeevan Sree Policy and it clearly shows serious deficiency in the services of the Opposite Party.

_A„d8.                           The complainant submits that after receipt of the Demand Notice dated

AN^. 0 /06/2000 the Opposite Party vide its Zonal Manager Eastern Zonal Office

Calcutta vide its Letter CS/Grivance cell/Misc. 2001/BM dated 12/13-07-2001 informed the Lawyer of the Complainant that the Bongaigaon Divisional Office has taken up the matter and same will be settled but no settlement is made. The Letter No.CS/Grivance Cell/Misc.2001/BM. Dated 12/13-7/2001 has been annexed as Annexure-G.

9. Complainant contended that in total contradiction to the letter of the Zonal Manager in response to the Demand Notice sent by the Lawyer of the complainant the Opposite Party No.2 vide his letter No. TBO/PS/DCL/BM dated 18/7/2001 informed the counsel for the complainant totally suppressing the facts of issue of Proposal Deposit Receipt that the deceased insured did not submit her proposal papers to their end and further alleged as such no binding contract has arisen thereof and as such the death claim of the life of the deceased Insured Miss Priyanka Newar was not considered. The Letter No. TBO/PS/DCL/BM dated 18/7/2001 has been annexed as Annexure-H. That it was only after the due submission of the proposal along with the first yearly premium of Rs.24,593/- for the Jeevan Sree Policy of Rs.500000/- it was the Opposite Party No.2 for and on the behalf of the Opposite Party No.1 who issued the 'Proposal Deposit Receipt No.0062653 dated 10/7/2000' and in fact no BOC No.994 dated 10/7/2000 was issued in favor of the deceased insured and it is crystal clear that without receiving the proposal papers the Opposite Party No.2 cannot issued the 'Proposal Deposit Receipt' and the very issue of the afore mentioned Proposal Deposit Receipt itself is an evident to show that the Opposite Party No.2 duly received and accepted the proposal papers and first yearly premium amount in cash and accordingly a binding contract has arisen thereon and the Opposite Party is bound to make the payment of the sum insurance of Rs.5,00,000/- (Rupees five lac) only to the complainant.
10. The Complainant argued that the Opposite Party is bound to make the payment of the sum assured of Rs. 5,00,000/- (Rupees five lac) only to Complainant as all the acts of obtaining the policy was duly performed and completed by the deceased Insured and the Opposite Party No.2 for an on behalf of the Opposite Party No.1 assured that the Original Policy copy will be sent within a short time in the address of the deceased by registered post and thus the rest of the acts was the sole duty of the present Opposite Party for any lapses and or inactions of the Opposite Party the beneficiary of the insurance cannot be denied from its benefit or claim.
11. That the cause of action of this Complaint arose on 17/7/2000 when the insured daughter of the Complainant succumbed to her injuries due to air crash near Patna Airport. That the cause of action again arose on 16/10/2000 when the Opposite Party No.2 denied the claim on the sole ground that no proposal was received by them alongwith the cash. Further the cause of action arose on 18/7/2001 when the Opposite Party No.2 again denied the claim on the sole ground that no proposal papers were submitted to their end and thereafter on every moment. The Complainant prays for:-

An award to be passed directing the Opposite Party, Life Insurance Corporation of India, to make the payment of the death claim of the insured sum of Rs.5,00,000/- (Rupees five lacs) only on the life of Late (Miss) Priyanka Newar to the Complainant.

An award to be passed granting interest at the rate of 18% (eighteen) percent Per annum on the insured sum of Rs. 5,00,000/- (Rupees five lacs) only with effect from 16/10/2000 till the date payment of the entire claim to the Complainant due to the illegally blocking of the sum assured.

3. An award to be passed directing and granting a sum of Rs. 1.00,000/-
   (Rupees one lac) only for undue harassment, mental pain, agony and undue sufferings of the innocent Complainant due to nonpayment of the sum assured.
4. An award to be passed granting a sum of Rs.50,000/- (Rupees fifty
   thousand) only being the cost of this litigation as the Complainant has to prosecute this complain from Tura considering the heavy cost of bus fare and journey expenses, stays at Shillong.

Opposite Parties contention

12. The Opposite Party in counter argued that the relationship between the
    complainant and the deceased Priyanka Newar could not be ascertained from their records since the proposal had not been received by the Tura Branch Office. That the deceased only made an initial deposit at their Tura Branch Office without submission of proposal form and other allied papers and as such it could not be said to have purchased the policy. That the deceased only caused an initial deposit of Rs.24,593/- but did not submit the proposal form for insurance at their Tura Branch Office. That the Proposal Deposit Receipt No.0062652 Dt 10/7/2000 for an amount of Rs.24,593/- is merely a Proposal Deposit Receipt and not the premium receipt.
13. That in the event of submission of proposal, proposal acknowledgement is
    issued to the proposer which forms the part of the proposal itself and is issued by detaching the same from the proposal form to the proposer on the receipt of the proposal. That in this case, since the proposal had not been submitted, no proposal acknowledgement has been issued to the deceased. That no proposal form was received by the opposite party and no First Premium and the amount received was only an initial deposit and does not and shall not create any contractual obligation between the deceased and the corporation. That the claim for Income Tax benefit can be availed on the Premium receipt and not on the Proposal deposit receipts. That the First Premium receipt is issued only on acceptance of the proposal and not otherwise and in this case since proposal itself was not received, the issue of First Premium cum acceptance does not arise.
14. That for settlement of the matter the Tura Branch office had written vide
    Letter Ref BO/DCL/RB dated 16.10.2001 addressed to the complainant had stated that as per rule since no proposal along with cash was received, the claim money is not payable. That the amount deposited will be refunded after proof of death and production of succession certificate and has annexed the said letter as Annexure-I. That Insurance contract and Insurance claim cannot and shall not arise merely on the basis of a proposal deposit receipt without proposal complying with all other and required formalities and their acceptance. That the policy could

,<X7),.  not be issued without compliance of all the formalities and in compliance and in the absence of the contract of insurance being completed in the manner required for the purpose no claim can arise and the question of avoiding the payment cannot and does not arise. That the Insurance Policy is issued only on acceptance of the proposal and on conclusion of the contract. That in this case, no proposal was received from the deceased and the matter of issuing policy is irrelevant. Opposite party pray for dismissal of the complaint. The Ops has relied on the and of 1. Life Insurance Corpn. Of India & Others V/S Smt. Saraswati Devi

 2. Indian Institute of Technology V/S Life Insurance Corporation of India.

^15(nAm               )

2. Cover note or temporary policy it is the evidence that the insurer has accepted the policy and the insured has remitted the premium.
3. Referred to the Head office for further approval it may in the case of heavy amount, which is beyond the power of the authority of the company. to which the applicant had given the proposal along with cheque.
4. Money is in Suspense Amount Simply information that the applicant's money has been deposited in an account in which in future it may be refunded if the same is not appropriated or utilized for the purpose for which it was remitted.

  17. As whole we see that generally the acceptance is to be made by the

insurer. Sec 2(b) of the Contract Act defines acceptance as When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. The insurer on receiving the papers containing the proposal scrutinizes them and when they are found in order he signifies his assent thereto by a letter and the letter is called the letter of acceptance until this is sent there is no acceptance. though a cheque for the premium is sent and the money is received and retained after the death of the insured. In certain human relationship silence to a proposal might convey acceptance but in the case of insurance proposal silence does not denote consent and no binding contract arises until the person to whom an offer is made signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance as prima facie acceptance must be communicated to the offerer.

       .18.  In this case it is seen that the proposal deposit of Rs 24,593/- has been

made by the deceased which has not been denied by the OPs, however, there is nothing to show that the OPs have received the proposal form as contended by the complainant. Maybe some light could have been shed on this issue if the agent had been impleaded and made a party or made as a witness which however could not be done as the complainant has stated that she never met the said agent anymore, which is very unfortunate. As no proposal form has been received, as contended by the Ops, it can be concluded that only an initial deposit of Rs.24,593/- has been made and no proposal form for insurance has been received by Tura Branch Office. As such, the Proposal Deposit Receipt No.0062652 Dt 10/7/2000 for an amount of Rs.24,593/- is merely a Proposal Deposit Receipt and not the premium receipt as the said amount will get converted into LIC policy after acceptance of documents by the LIC. This answers issue No. 2. With regard to issue No. 3 it is crystal clear that there was no concluded contract between the proposer on the one hand and the Insurance on the other hand, since no proposal form was received by the opposite parties and the amount received was only an initial deposit and does not create any contractual obligation between the deceased and the corporation. The First Premium receipt is issued only on acceptance of the

K^o proposal and not otherwise and in this case since proposal itself was not received, the issue of First Premium cum acceptance does not arise. As such there cannot be

`V  a liability of the Insurance Company. Be that as it may, the mere payment of proposal deposit for purchase of policy along with proposal form, if any, would not tantamount to a concluded contract between proposer and the insurer. The following Judgments also goes to show that the proposal has to be accepted by the insurance company which thereafter issues an insurance policy setting out the terms and conditions and thereby create a binding contract between the insurer

f9VI iPb and the insured.

   49.  The Hon'ble Gauhati High Court in Thounaojam Nomeeta Alias Ranjeeta

M  Devi Vs. Life Insurance Corporation of India reported in 2003(2)GLT 243 has held that "The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances maybe such that approval could be inferred from retention of the premium. The mere

FINDINGS, REASONS AND DECISIONS

15. Heard the submissions of the Ld. Counsel for the Complainant Shri.

B.Jogi and the Ld. Counsel for the Opposite Parties Shri. D. Baruah and perused the records. This Forum has framed the following issues for enabling this Forum to decide the case.

1. Whether the complaint is maintainable in its present form?
2. Whether the payment of Rs. 24,593 was the first premium or proposal deposit?
3. Whether there was any concluded contract between the Parties?
4. Whether there was any deficiency in service by the OP while repudiating the claim of the complainant?
5. Whether complainant is entitled to the relief prayed for?

16.    Issue No.1 can be clubbed together with issue No. 4, and issue No. 2 can

be clubbed together with issue No. 3 as they are interrelated.

This Forum shall first take up issue No. 2 and 3, i.e. No. 2 Whether the payment of Rs. 24,593/- was the first premium or proposal deposit? And No. 3 Whether there was any concluded contract between the Parties?

What is a proposal deposit? A proposal deposit is the preliminary stage of buying LIC policy by other than green channel. Proposal deposit will get converted in LIC policy after submission of medical records and acceptance of documents by the LIC.

In insurance, the insurance policy is a contract (generally a standard form of contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for the loss caused by perils covered under the policy language. The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium.

An insurance contract is an arrangement in which one party, the insurer, accepts significant insurance risks from another party, the policyholder, to compensate the policy holder if a specific uncertain future event impacts the policy holder.

To take an effecting Life Insurance policy one follows a procedure prescribed by life insurance:

1. Filling up the proposal form.
2. Declaration by the proponent.
3. Attachment of proof of age.
4. Presentation of proposals to the agent.
5. Medical examination
6. Report by the agent.
7. Scrutiny of proposal by the branch office.
8. Depositing of Premium.
9. Registration of proposal.                                                                                       •
10. Sending the proposal to appropriate department.
11. Taking final decision to the proposal.
12. Issue of Acceptance or request letter.
13. Issue of insurance policy. Etc.

)   After depositing the premium amount through cheque and after encashing

the cheque company may issue or send:

1. Receipt Simple acknowledgment of money deposited by the applicant.

execution of the policy is not an acceptance, an acceptance, to be complete, must be communicated to the offeree, 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 signature of one of the company's executive officer's.

In the case at hand, the proposal was made on 30.7.90, the memorandum of the receipt of the amount (exhibit-A/1) was issued, as per evidence the proposer borrowed Rs. 500/- from one of the witnesses for payment of the amount towards first premium. The proposer died on 29.8.90. Suit filed on 18.9.91. As per evidence produced before the Court, there is no material to infer that the proposal made by Maipakpi Devi was accepted by the Corporation/Defendant. The money receipt (Exhibit-A/1) is properly explained by the witness of the Defendant that the same may be treated as a first premium in case the proposal came to be accepted. Again, the policy number cited by the Plaintiffs also explained to be one provisionally reserved to be allotted to the proposer in case the proposal came to be accepted. Thus, in the present case Plaintiff failed to prove that the proposal was accepted by the Defendant/Corporation and as such it cannot be held that there was a contract of insurance. In the absence of existence of the many contract of insurance it cannot be held that Maipakpi Devi had an insurance policy.

20. The Hon'ble National Consumer Disputes Redressal Commission in

REVISION PETITION NO. 2140 OF 2013 between Life Insurance Corpn. Of India & Others V/S Smt. Saraswati Devi, has observed "Learned Counsel for the petitioner submitted that neither proposal form was accepted, nor policy was issued to the deceased and in such circumstances, as there was no concluded contract between the parties, no amount was payable under the policy. In support of his contention, he has placed reliance on judgment of apex court in (1984)2 SCC 719- LIC Of India Vs. Raja Vasireddy Komalavalli Kamba & Ors. in which it was held as under:

"Mere receipt and retention of premium until after the death of the appellant or mere preparation of the policy document is not acceptance and therefore, do not give rise to a contract. The general rule is that the contract of the 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 Whether the final acceptance is that of the assured or insurers, however, depends on the way in which negotiations for an insurance have progressed. Mere delay in giving an answer cannot be construed as an acceptance. Though in certain human relationship silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance".

Admittedly, OP has not accepted proposal and has not issued policy and in such circumstances, merely on the basis of retention of premium, complainant does not get right to claim amount under the policy in the absence of the concluded contract. Mere delay in not accepting proposal cannot construe as an acceptance in the light of aforesaid judgment. Learned counsel for the petitioner has also drawn my attention towards proposal review slip pertaining to the assured in which reports for medical tests have been called. It appears that medical reports were not submitted by the assured and in such circumstances, proposal was not accepted and policy was not issued in favor of the assured. As there was no acceptance of the proposal, OP rightly repudiated claim and learned

₁,611 b District Forum has not committed any error in dismissing complaint with direction to return premium retained by OP with interest.

"444:

The Hon'ble National Consumer Disputes Redressal Commission in irst Appeal No. 843 of 2013 between Indian Institute of Technology V/S Life Insurance Corporation of India has held: "Contract of insurance stands  concluded only when party to whom offer has been made, accepts it unconditionally and communicates his acceptance to person making offer.  Inspire of directions by OP to submit medical tests for renewal of policy for covering superannuation age of 65 years, no medical test report of complainant No.2 Is husband was submitted by complainant No. 1 to OP and ultimately, policy was renewed by OP on the original terms and conditions meaning thereby, no insurance coverage was given to Prof. V. Damodar Das and in such circumstances, complainant no. 2 was not entitled to any claim from the OP on account of her husband's death".

22. Now coming to issues No. 1 and 4, Whether the complaint is maintainable in its present form? And Whether there was any deficiency in service by the OP while repudiating the claim of the complainant? In view of the discussions and decisions above in issue No 2 and 3 wherein it has been held that the amount deposited is only a proposal deposit without any proposal having been submitted and there has been no binding contract between the insurer and the insured, the complaint is not maintainable in its present form and there is no deficiency in service by the OP while repudiating the claim of the complainant.
23. Coming to issue No 5, Whether complainant is entitled to the relief prayed for? In view of the discussions and decisions above in issue No 1, 2, 3 and 4 the complainant is not entitled to the relief prayed for.

73.                                  However before parting with the case record, this Forum cannot help but

notice that if the amount of Rs.24,593/- which has to be returned back to the legal heirs of the deceased is deposited in the bank, it could have generated a huge amount of interest considering the long passage of time that this case has been pending. As such, while disposing of this Complaint, we hereby direct that the amount of Rs.24,593/- be refunded with interest at a rate of 9% per annum to be calculated from the date of filing of the complaint till the date of repayment thereof We cannot help but also note, that to insist on the complainant to submit a succession certificate for refunding of the deposited amount would be like adding salt to an injury, as such, we hope that the opposite parties would have a more humane approach by not insisting too much on the production of Succession Certificate, as even the relationship of the complainant and the deceased can be verified from various documents e.g Birth Certificate, etc. and the No objection from other immediate family members can also be obtained by their declaration of No Objection on Affidavit duly sworn in before Magistrate and for this we leave it to the wisdom of the Opposite Parties.

With the above, the instant case is hereby disposed off