BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
F.A. 833/2008 against C.C. 223/2007, Dist. Forum, Vijayawada
Between:
The New India Assurance Company
Rep. by Divisional Manager
Chanumolu Complex
Rajagopalachari Street
Governorpet, Vijayawada. *** Appellant/
O.P. No. 1
And
1. K. Sudhkar Gandhiji
S/o. Late Ramam,
R/o. 101, Chandana Towers
Mogalrajpuram
Vijayawada-10. *** Respondent/
Complainant
2. Insurance Regulatory Development
Authority, Rep. by its Officer-On-
Special Duty, 3rd Floor
Parishram Bhavan,
Basheerbagh, Hyderabad. *** Respondent/
O.P. No. 2.
Counsel for the Appellants: M/s. Naresh Byrapaneni
Counsel for the Resps: Mr. G. Rama Sharma
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
SMT. M. SHREESHA, MEMBER
&
SRI SYED ABDULLAH, MEMBER
WEDNESDAY, THE TWENTY SEVENTH DAY OF OCTOBER TWO THOUSAND TEN
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
*****
1) This is an appeal preferred by the opposite party insurance company against the order of the Dist. Forum directing it to renew the policy for 2007-2008 and refund Rs. 78,500/- with interest @ 7.5% p.a., from 19.2.2007 till the date of payment together with costs.
2) The case of the complainant in brief is that he was a medi-claim policy holder for more than a decade and the lapsed policy for the year 2007-2008 was in force up to 15.2.2007. While so, earlier his Manager though tried to pay premium in cash, officers of the appellant insurance company did not receive and therefore he was compelled to send a demand draft for Rs. 8,512/- on 15.2.2007 to renew it for 2007-2008. It has been repudiated on the premise that adverse claims were received. While so in the month of November, 2006 he returned from USA and underwent angioplasty at Care Banjara Hospital, Hyderabad and the same was informed and claim for an amount of Rs. 1,94,443/- was submitted on 27.11.2006 and the insurance company kept the matter in pending till June, 2007 and unjustifiably sent a cheque dt. 19.6.2007 for Rs. 1, 13,943/- informing that an amount of Rs. 78,500/- was deducted as wrong payment was made on the claim dt. 4.6.1997 basing on an audit query. Assailing the deduction of Rs. 78,500/- as illegal besides non-renewal of policy for 2007-2008, equally an amount of Rs. 9,500/- earlier paid to the hospital has not been included, he filed the complaint for refund of Rs. 78,500/- + Rs. 9,500/- totalling Rs. 88,000/- with interest together with compensation of Rs. 25,000/- and costs besides renewal of policy for 2007-2008.
3) The insurance company resisted the claim. While denying each and every allegation made in the complaint it alleged that the complainant did not follow the due procedure for renewal of policy wherein he had to pay premium 10 days prior to expiry of the policy. Since he did not pay the premium in time the policy was not renewed. At any rate as per the policy terms it had a right to accept or reject for coverage of any person proposed for medi-claim insurance whether fresh or renewal rests with the company. Since he had retained the amount which was paid in excess it had lost confidence and therefore not agreed to renew the policy. While settling the claim they found that they paid an excess amount of Rs. 78,500/- which was disclosed in an audit and when requested for refund of the amount through various letters the complainant did not refund the amount. Therefore while settling the claim they had deducted Rs. 78,500/-. It was mistakenly paid. There was no negligence on its part and therefore prayed for dismissal of the complaint with costs.
4) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A5 marked while the appellant insurance company filed the affidavit evidence of its Divisional Manager and did not file any documents.
5) The Dist. Forum after considering the evidence placed on record opined that there was no proof that an amount of Rs. 78,500/- in excess was made. Equally the complainant having paid Rs. 8,512/- by way of demand draft on 15.2.2007 the insurance company was liable to renew the policy and therefore directed its renewal besides refund Rs. 78,500/- together with interest and costs.
6) Aggrieved by the said decision, the insurance company preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It contended that renewal of policy could not be directed in a contract of insurance, equally ordering refund of Rs. 78,500/- which was paid in excess by mistake. Therefore it prayed that the appeal be allowed.
7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
8) It is an undisputed fact that the complainant who was having medi-claim policy for 2006-2007 was expired by 15.2.2007. It is also not in dispute that he underwent angioplasty at Care Banjara Hospital, Hyderabad and presented a bill for Rs. 1,94,443/-. The insurance company allowed the claim however sent a cheque for Rs. 1, 13,943/- by observing that earlier an amount of Rs. 78,500/- was wrongly paid for the claim in 2004.
9) The insurance company did not file any document in order to prove that an amount of Rs. 78,500/- was paid wrongly and the same was surfaced in the audit. The amount that said to have been paid was in January, 2004. At the cost of repetition, we may state that no document whatsoever was filed in order to prove that the insurance company had paid Rs. 78,500/- in excess while settling the claim made in 2004. There is no reason why the said amount was not recovered for a period of three years. Had the insurance company filed the audit query it could have been known as to the exact mistake that was committed by the insurance company in order to justify the deduction of Rs. 78,500/- while settling the claim for the operation underwent by the complainant in November, 2006. Even by then there is a dispute between the parties in regard to renewal of policy for the year 2007-2008.
10) While the complainant alleges that though his Manager went to the office of the insurance company to pay premium in cash they did not receive as such he was forced to send by taking a demand draft on 15.2.2007. The insurance company alleges that for renewal of policy the premium has to be paid 10 days prior to expiry of the policy. It is unfortunate that neither the complainant nor the insurance company filed the policy in order to find out the terms.
11) The Supreme Court in Biman Kishore Bose Vs. United India Insurance Company Ltd. reported in 2001 (3) CPJ 10 SC held:
“A renewal of an insurance policy means repetition of the original policy. When renewed, the policy is extended and the renewed policy in the identical terms from a different date of its expiration comes into force. In common parlance, by renewal, the old policy is revived and it is sort of a substitution of obligations under the old policy unless such policy provides otherwise. It may be that on renewal, a new contract comes into being, but the said contract is on the same terms and conditions as that of the original policy. Where an Insurance Company which has exclusive privilege to carry on insurance business has refused to renew the medi-claim policy of an insured on extraneous and irrelevant consideration, any disease which an insured had contacted during the period when the policy was not renewed, such disease cannot be covered under a fresh insurance policy in view of the exclusion clause. The exclusion clause provides that the pre-existing diseases would not be covered under the fresh insurance policy. If we take the view that the medi-claim policy cannot be renewed with retrospective effect, it would give handle to the Insurance Company to refuse the renewal of the policy on extraneous consideration thereby deprive the claim of insured for treatment of diseases which have appeared during the relevant time and further deprive the insured for all time to come to cover those diseases under an insurance policy by virtue of the exclusion clause. This being the disastrous effect of wrongful refusal of renewal of the insurance policy, the mischief and harm done to the insured must be remedied. We are, therefore, of the view that once it is found that the act of an Insurance Company was arbitrary in refusing to renew the policy, the policy is required to be renewed with effect from the date when it fell due for its renewal.”
12) Coming to the case on hand the complainant had paid the premium before the expiry of the policy by way of demand draft which fact is not in dispute. Evidently by then the claim was pending. Refusal to renew the policy is undoubtedly malafide on the ground that the complainant was making unjust claims. The malafides are evident from deduction of amount from the claim which he was admittedly entitled to recoursing to an audit report. It is not filed in order to find out whether the deduction is just or otherwise. Already the period of renewal has expired by now. It makes no difference if renewal is made or not but technically the insurance company is not justified in refusing to renew the policy. Therefore we do not see any mis-appreciation of fact or law by the Dist. Forum in this regard. We do not see any merits in the appeal.
13) In the result the appeal is dismissed with costs computed at Rs. 2,000/-. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
3) ________________________________
MEMBER
Dt. 27. 10. 2010.
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“UP LOAD – O.K.”
was submitted on 27.11.2006 and the insurance company kept the matter in pending till June, 2007 and unjustifiably sent a cheque dt. 19.6.2007 for Rs. 1,13,943/- informing that an amount of Rs. 78,500/- was deducted as wrong payment was made on the claim dt. 4.6.1997 basing on an audit query. Assailing the deduction of Rs. 78,500/- as illegal besides non-renewal of policy for 2007-2008.
she is the wife of late V. Sekhar who had taken Post Life Insurance Policy (PLI) on 25.3.2004 for a sum of Rs. 1 lakh keeping her as his nominee. A premium of Rs. 315/- was to be paid per month, and the date of commencement of risk was from 25.3.2004. While so, he died on 20.7.2005. The postal authorities had extended the facility to pay premium at any post office in India. Even if there is any delay he could pay with interest after expiry time and the policy comes into force. The deceased paid premium amount of Rs. 3,150/- on 18.4.2005 for the period from 4.4.2004 to 1.5.2005 at RTC Complex post office, Adoni. When she made the claim the same was repudiated. Assailing the said repudiation she filed the complaint claiming Rs. 1 lakh covered under the policy together with interest besides compensation and costs.
3) The appellants’ postal authorities resisted the case, however, it admitted issuance of PLI policy Dt. 25.3.2004 for Rs. 1 lakh. He paid advance premium of Rs. 315/- on 20.3.2004 at Madhavaram post office. The proposal was accepted on 31.3.2004 and the assured was supplied with premium receipt pass book, acceptance memo and policy bond etc. In the very pass book conditions were made a mention. As per rules the policyholder has to pay his premium amounts only at the specified post offices where he had taken the policy. The insured had opted to pay the premium every month. There is also a provision for payment of the premium amount within the grace period fixed in the policy, and non-payment would entail lapsing of the policy. The insured had paid an amount of Rs. 3,150/- for the months of 4/2004 to 1/2005 on 18.4.2005 at RTC Complex SPO, Adoni. Since he did not pay premium every month within grace period of one calendar month at a specified post office the policy of the insured was lapsed. If he intends to revive the policy he had to pay the entire outstanding premia within a period of not later than 6 to 12 months from the date of first unpaid premium together with interest thereon at the rates prescribed in the specified post office only and inform the same to the Post Master General through the specified post office along with certificate of continued good health in the prescribed proforma signed by the Civil Surgeon or Assistant Civil Surgeon as the case may be and also declaration of good health by the insured himself along with the certificate from the employer of the insured to the effect that the insured had availed leave on medical grounds during the period of the lapse of the policy. He also credited further a sum of Rs. 1,908/- on 13.7.2005 towards premium for the months of 2/2005 to 7/2005 at RTC Complex Sub Post Office. Subsequent premium for the month of August, 2005 was credited by his wife on 20.8.2005 after the demise of her husband. This unilateral payment would not revive the already lapsed policy being in violation of policy conditions. When the claim was made by memo Dt. 12.12.2006 after consideration of facts premium amount of Rs. 5,373/- was refunded and the said fact was communicated. If there is any such clause mentioning that he could pay at any post office it should be read with conditions printed in the pass book and the policy document. Therefore it prayed for dismissal of the complaint with costs.
4) The complainant in proof of her case filed her affidavit evidence and got Exs. A1 to A4 marked while the postal authorities filed the affidavit evidence of its Senior Superintendent of Post Offices, Kurnool and got Exs. B1 to B3 marked.
5) The Dist. Forum after considering the evidence placed on record opined that when the postal authorities had accepted the premium paid by him the policy was automatically revived and therefore directed it to pay the amount covered under the policy with interest @ 9% p.a., from the date of death of policy holder and costs.
6) Aggrieved by the said decision, the postal authorities preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that the assured had never paid the premium at the specified post office in time and those premiums that were paid by the complainant were after the death of the assured and that too at RTC Complex Sub-Post Office, Adoni without conforming to the conditions in the pass book and without reviving the policy. Admittedly the premium amounts were paid beyond time. The repudiation was not unjust and therefore prayed that the complaint be dismissed.
7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
8) It is an undisputed fact that PLI policy was issued in the name of V. Sekhar for Rs. 1 lakh commencing from 25.3.2004. A premium of Rs. 315/- was paid at Madavaram post office where he was residing. The premium was accepted and policy was issued. It is also not in dispute that he paid Rs. 3,150/- on 18.4.2005 for the period from 4/2004 to 1/2005, Rs. 1,908/- on 13.7.2005 for the period from 2/2005 to 7/2005 at RTC Complex Sub Post Office, Adoni. He died on 20.7.2005. There after his wife the complainant herein paid premium amount of Rs. 315/- on 20.8.2005 for the month of August, 2005 at RTC
Complex Sub Post Office, Adoni. While the complainant claims that the premium could be paid at any post office and the payment made by the assured would endure to her benefit. In the brochure Ex. A1 a stipulation was noted that the assured could pay the premium in the nearest post office or where he finds it convenient. In clause-7 there was a mention that if payment of premium is defaulted he could pay with interest and get it revived. The fact that the assured had paid Rs. 3,150/- on 18.4.2004 towards premium from 4/2004 to 1/2005 for a period of ten months by then the policy was admittedly lapsed such payment is supposed to be made every month. Equally so an amount of Rs. 1,908/- was paid from 2/2005 to 7/2005 on 13.7.2005. Later after the death of the assured on 20.7.2005 the complainant his wife deposited Rs. 315/- for the month of August, 2005 on 20.8.2005.
The postal authorities filed notification dt. 15.3.1995 to show that caluse-15 stipulates ‘Payment of Premia’:
“ A proposer or an insurant shall deposit his/her premia only at specified head post office, sub post office or branch post office selected for the purpose and duly approved by the department. Any subsequent change in the selected post office shall have to be got approved by the concerned CPMG.
15.1. The proposer may select the periodicity (viz., monthly, quarterly, half yearly, or yearly) for payment of premia as per his/her convenience, at the time of submission of his/her proposal and he/she shall not be normally allowed to such periodicity. In case the insurant subsequently wants any change in the periodicity of payment of premia he/she shall obtain approval of CPMG concerned, or officers authorized on his behalf.
15.2. Notwithstanding what is stated above an insurant may advance premium at any time as prescribed under POIF Rules and avail of the rebates permitted. “
Clause 23 stipulates ‘Lapsing of policies, revival and settlement of claims’:
“Any policy which is not in force due to non-payment of any premium within the period of grace shall be treated as lapsed and void and shall be governed by the relevant POIF rules for their settlement or revival. No claims whatsoever shall be entertained by the department in respect of void policies or any other policies where the rules under this scheme of POIF rules have been violated.”
Lapsing of policies is also mentioned at Clause-39 which we do not intend to reproduce.
“Clause 39(2) stipulates that “When a policy becomes void for default in payment of premiums in terms of sub-rule (1), any payments purporting to be premium payments subsequently made but before the policy is formally revised under the provisions of sub-rule (1) or of rule 41 will be held in suspense and will not be considered as payment by way of premiums.”
Note: 1. Should the insured person die after the expiration of the days of grace allowed for the payment in each month of the premium due for that month but before the date of the revival of the policy in accordance with the rules, no claim for the payment of the policy will be entertained.”
When the assured had committed default in payment of premia nor sought for its revival and unilaterally deposited the premia in some other post office and that too without taking permission would not endure to his benefit. The very payment of one of the premiums after the death of the assured would itself indicate that the complainant intends to get the benefit. From the payments made by the assured it is beyond doubt that the policy has been lapsed. There is no revival of the policy. Therefore the amount that was settled by the postal authorities at Rs. 5,373/- would suffice in the circumstances. The complainant is not entitled to any amount under the policy. The Dist. Forum did not appreciate the facts or law in correct perspective.
9) In the result the appeal is allowed setting aside the order of the Dist. Forum. Consequently the complaint is dismissed. However, no costs.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 27. 10. 2010.
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