Orissa

Jajapur

CC/56/2015

Jitendra Barik - Complainant(s)

Versus

Branch Manager,TATA AIG Life Insurance Co.Ltd - Opp.Party(s)

P.K .Das Pattnaik

27 Jan 2016

ORDER

IN THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, JAJPUR.

                                                                      Present:  1.Shri Biraja Prasad Kar, President,

                                                                                      2.Sri Pitabas Mohanty, Member,

                                                                                      3.Miss Smita Ray, Lady Member.                        

        Dated the 27th day of January,2016.

                                        C.C.Case No.56 of 2015

Jitendra Barik,  S/O Iswar Barik

At . Rahemanpur,P.O. Tulati

P.S. Korei, Dist. Jajpur.                                                                                       …… ……....Complainant .                                                        .                                                  (Versus)

1. Branch Manager, TATA AIG Life Insurance Co.Ltd,At/P.O/P.S/Jajpur Road

    Dist.Jajpur.

2.  TATA AIG Life Insurance Co.Ltd, Regd.Corporate Office, Deiphai-B-wing

     2^nd floor,Orchard Avenue, Hirandari Business ,Powai Mumbai.                   ……………..Opp.Parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                

For the Complainant:        Sri P. K. Daspattnaik, Advocate.

For the Opp.Parties:        Sri S.K.Nanda,M.Panda,A.Mohapatra,R.Mallick,S.N.Rana Advocates.                                                                                          

SHRI  BIRAJA PRASAD KAR, PRESIDENT..                         Date of order:   27. 01. 2016.

                                                                                                                                         

                        Deficiency in Insurance service is the grievance of the complainant.

                        Brief facts of the complainant’s case are that the complainant’s deceased father Iswar Chandra Barik had done one policy bearing No.C-671632467 from the O.Ps. (Insurance Company) on 17.08.11 and the Insurance policy was issued on 19.08.2011. Also another policy bearing policy No.C-671627126 was also  done by the deceased father of the complainant on 22.08.2011 and on the same day the premium amount was deposited but the policy was issued on 25.08.2011 Suddenly Iswar Barik died on 24.08.11 . Being the nominee under both the policies the complainant lodged death claim under both the policies. The O.Ps. settled the death claim under one policy bearing No.C-671632467  but rejected the death claim bearing policy No.C-671627126 vide their letter dt.07.05.2012 and refunded only the premium amount of Rs.9659/- vide cheque No,683467 dt.31.03.12 . The complainant represented to the O.Ps. for payment of full claim under policy No.C-671627126 but no avail . Hence the complainant approached the Insurance Ombudsman for redressal , who in his turn rejected the claim of the complainant. Aggrieved by the rejected order of the O.Ps. and Ombudsman the complainant filed this C.C. Case alleging deficiency of service on the

part of the O.Ps. with the prayer to direct the O.Ps. to pay Rs.1,15,000/- towards deficiency of service, physical and mental agony and cost of litigation.

                        Being noticed the O.Ps. appeared through their advocates and filed their  written version  denying the allegations made in the complainant petition and inter alia pleaded that on 19.08.2011 Iswar Ch.Barik referred to as the “Deceased life Insured or DLI “ was issued with policy No.C-671632467 under the “Mahalife gold” policy and here-in-after referred to as the 1^st policy basing on his initial premium of Rs.9809 on 17.08.2011.

                        On 25.08.2011 he was also issued another policy as ‘ TATA AIG Subha Life” being policy No.C-671627126 herein after referred “2^nd policy” for a term of 15 years with a sum assured of Rs.2,50,000/- basing on the representations made by him vide his application and premium of Rs.9809 dt.22.08.2011 .

                        On 05.10.2011 the O.Ps. received death claim intimation-cum-claimant’s statement along with death certificate from the nominee, the present complainant intimating that the DLI expired 24.08.2011 . In the said statement the claimant has categorically mentioned that the commencement of the policy is 25.08.2011 .

                        Thereafter the death claim in respect of both claim policy were processed. As the first policy was issued on 19.08.2011 the death claim was paid in respect of first policy that is C-671632467 “Mahalife gold” was settled.

                        As the second policy that is C-671627126 “TATA AIG  Subha Life “ was only issued on 25.08.2011 that is after death of DLI the claim for the said policy was declined and the premium amount of Rs.9659 being the full and final settlement of the claim was refunded on the ground that there was no liability under the said unconcluded contract but limited to refund premium only . Vide letter dt.07.05.2012 the claimant was advised in case he was unsatisfied with such decision to write to the Customer care cell or to have recourse to Insurance Ombudsman. As the premium of second policy was only receipt by the O.Ps. 22.08.2011 and thereafter processed after granting receipt. The acceptance of deposit does not constitute risk commencement with only starts after acceptance of risk by the company. As the DLI died before issuance of policy i.e before acceptance of the risk by O.Ps, the O.Ps. are not liable to pay as there is no contract at all and only liable to return of the proposal amount of the unconcluded contract and  therefore the O.Ps. rejected the claim of the nominee / complainant in respect of the second policy with return of premium as per the law.

                        The contract of issuance is a contract by which one party in consideration of price paid by him to the company gets adequate risk and security to him from the company towards any loss ,damage etc. The person who undertakes the risk i.e the Insurance company is only liable on acceptance of such contract . Unless the proposal and acceptance are complete by inception of a valid and binding contract to discharge its liability the  payment  of premium  without  any acceptance and subsequent inception of the contract does not incure  any liability as in the instant case.The present claimant approached the insurance ombudsman on the same allegations and prayers as here in respect of second policy  and the Ombudsman the vide order dt.30March 2015 rejected the claim of the claimant.

                        The Insurance Company like to state that merely by encasing cheque of premium ,insurance contract does not come into force, as held by this Commission in (1(2011) CPJ-60(NC)-LIC of India Vs.Bhoommikaben M.Modi & Ors.(2009STPL (CL) 479(NC)-Elsa Tony Phillip Vs.Manager ,LIC of India and Ors. And (1(2010 CPJ 137(NC)-Kolla Vijaya Laxmi Vs.Life Insurance Corporation of India & Anr. That considering the above view Hon’ble National Commission in Revision petition No.3623 of 2009 ,Revision petition No.2680 of 2012 and First Appeal No.881 of 2013 upheld merely by encasing cheque of premium, insurance contract does not come into force. It is submitted before the Hon’ble Forum that the O.Ps. had rightly declined the claim of the complainant for the second policy save and except the refund of premium for the unconcluded contract. There has been no deficiency in service on the part of the O.P and the present case has no merit.

                        On the date of hearing we have heard the learned counsels appearing for both the sides. We have also perused the record in detail and gone through the documents available on record.

                        The advocate for the complainant argued that late Iswar Barik took two policies from O.Ps. bearing Nos.C-671632467 and C-671627176 . He paid Rs.9809/- towards initial deposit on 22.08.2011 for taking the policy No.C-671627126, Suddenly Iswar Barik died on 24.08.2011. Being the nominee under both the nominee under both the policies, the complainant lodged death claim. O.Ps. settled death claim under one policy but rejected the claim on other policy no.C-671627126 .  It refunded only the premium amount of Rs.9659/- on the ground that there was no liability under the said unconcluded contract but limited to refund of premium paid. The complainant represented to O.Ps. for payment of full claim, but of no avail. So he approached this Forum for Redressal.

                        The  advocate for the O.Ps argued that it received a proposal / application form from the life assured for a Shubh Life plan for a sum assured of Rs.2,50,000/- at a premium of Rs.9659/- for 15 years premium paying term. Basing on the proposal ,it issued the policy to the life assured. The complainant Jitendra Barik, being son of the life assured was the nominee under the policy .On 21.12.2011 O.Ps. received death claim intimation –cum-claimant’s statement along with death certificate from the nominee and it could know that the life assured died  on 24.08.2011. It paid death claim in one policy  bearing No.C-671632467 and declined the claim in other policy no.C-671627126 as LA expired before the issuance of the policy. The advocate for the O.Ps. reiterates that the DLA had signed the proposal / application from on 22.08.2011 for the said policy and the policy was issued on 25.08.2011 . The advocate for the O.Ps. further submits that it received the initial deposit of Rs.9809/- from the DLA and granted a receipt wherein it was clearly mentioned that “Acceptance of deposit does not constitute risk commencement. It starts after acceptance of risk by the company”. As the DLA died before issuance of the policy i.e before acceptance of risk by the O.Ps. it repudiate the claim and rightly refunded the premium amount of Rs.9,659.00/-.

                        The advocates on behalf of O.Ps. argued that  the DLA died on 24.8.2011 but policy was issued on 25.08.2011 since there was no concluded contract between the O.P and the DLA the former rightly rejected the claim. The representative of O.Ps. reiterates that acceptance of deposit given by the DLA does not amount to acceptance of risk and this fact has been bodily mentioned in the receipt granted.

                        The whole peculiarity of the case is that in the second policy  was tendered on 22.08.2011, the insured died on 24.08.2011 , but the policy was issued on 25.08.2011 . Now the chief question that arises  for consideration is whether there was any concluded contract between the parties so that the insurer would be liable under the same to pay death claim to the nominee. A fair determination of this sole question would stall the entire controversy.

                         Before going deep into the merits available materials let us discuss a bit about the established position of law in connection with a contract of insurance. Actually a contract of insurance is a contract by which one party in consideration of price paid to him adequate to the risk, becomes security to the other , that he shall not suffer loss ,damage or prejudice by the happening of perils specified to the certain things which may be exposed to them. The parties to a contract of insurance at the insured and the insurer. The person who undertakes the risk is called the insurer and the person whose interests are protected is called the assured. As in case of any other contract a contract of insurance is formed by a proposal followed by an acceptance . In a life insurance contract particularly the inception of a valid and a binding contract relates to payment of the 1^st premium and whatever took place prior to it must be regard as mere negotiations and adjustment of preliminaries , the presumption being that there shall be  no contract till the 1^st premium is paid and the policy is issued. In fact there is no contract binding the company unless the proposer assents to or complies with the terms of the company. The parties must agree upon every material term in order to have a binding contract of insurance. A contract of insurance is concluded only when the party to whom an offer is made accepts it unconditionally and that acceptance is communicated to the proposer. Keeping in view the established principles of law on insurance contract let us now switch over to the particular facts and circumstances of the present case.

                        Photo-copes of proposal form dt.22.08.2011 ,receipt of initial premium and policy documents are readily available in the file. After a careful scrutiny of the same it is seen that deceased Iswar barik deposited Rs.9809/- on 22.08.2011 with the O.Ps. which granted a receipt being subscribed with  a condition that acceptance of deposit does not constitute to risk commencement which starts after acceptance of risk by the company. Thus it is clear that O.Ps. accepts the offer (proposal and  premium) conditionally . The  policy containing the terms and conditions of the insurance contract was issued on 25.08.2011 when the risk commenced. But by the time of issuance of policy and commencement  of risk the insured was no more on this mundane earth. Thus it can be safely inferred that there was no concluded contract in between the insured and the insurer by the time when the insured died. In such circumstance the nominee –complainant is neither entitled to get the death claim nor O.P is liable the same .

                        The factual matrix of the case makes it very clear that although the proposal form was submitted and the premium was also paid to the Insurance company on 22.08.2011 , the policy in question had not been issued , when the death of the father of the complainant took place i.e 25.08.11. We have, therefore no reason to differ with stand taken by the O.Ps. that no concluded contract had come into existence between the parties. Our above view is supported by the order of the Hon’ble Supreme Court of India in “Life Insurance Corporation of India Vrs. Raja Vasireddy Komalavalli Kamba and Ors (1984(2) SCC-719 “That merely filing any proposal for insurance and depositing the first premium with LIC, do not create a binding contract between the parties. Similar view has been taken also in (1(2009)CPJ-18(NC).

                                                                        O R D E R

                        In view of the above discussion we hold that there was no liability on the part of the O.Ps. to pay the death benefit to the complainant and there is no deficiency in service on the part of the O.Ps. The C.C. Case is therefore ordered to be dismissed . There shall be no order as to the costs.          

             This  order is  pronounced in the open Forum on this the  27th  day of  January, 2016. under my hand and seal of the Forum.