Before the District Forum: Kurnool
Present: Sri K.V.H. Prasad, B.A., LL.B., President
And
Smt C.Preethi, M.A., LL.B., Member
Sri R.Ramachandra reddy, B.Com., LL.B., Member
Wednesday the 13th day of October, 2004
C.D.No.162/2003
Smt. Muntaz Begum ,
W/o. Late A.M.Shariff,
R/o. Door No.51/964-A2,
Seetharama Nagar,
Kurnool . . . Complainant represented by his
counsel Sri K.Yerukala Reddy.
-Vs-
1. L.I.C of India,
Rep by its Branch Manager,
Kurnool.
2. L.I.C of India,
Rep by its Divisional Manager,
Divisional Office,
College Road,
Cuddapah. . . .Opposite party No.1&2 represented
by his counsel Sri S.Viswanatha Reddy.
O RDER
(As per Smt C.Preethi, Hon’ble Lady Member)
1. This C.D complaint of the complainant is filed under section 12 of C.P. Act, 1986, seeking a direction on the opposite parties to pay interest @ 18% per annum on Rs.1,60,636/- from 2.6.1996 to June 2002, Rs.10,000/- towards costs for mental agony, Rs.5,000/- as costs of this complaint and any other relief of reliefs which the complainant is remaining entitled of the circumstance of the case.
2. The brief facts of the complaint are that A.M.Shariff husband of the complainant has taken an LIC policy called as “JEEVAN MITRA” (Double Cover Plan) with accident benefits and profits bearing Policy No. 651418243 from the opposite parties and insuring his life, paying installments under Salary Saving Scheme and the sum insured was Rs.50, 000/-, as per the terms of the policy in case of accident of the insured, the opposite parties will pay triple sum assured with boons and the complainant is the nominee of the said policy holder and the policy was in force from 28.3.1993 to 38.2.2015. The said policy holder A.M.Shariff died in a bus accident on 2.6.1996. Immediately after the accident the complainant submitted necessary relevant documents to the opposite parties with a request to settle her claim. In spite of several demands and approaches, the opposite parties did not settle the claim. Thereafter, in the month June 2002, the opposite party No.1 paid the insured amount of Rs.1,60,636/-. As the payment was made after a gap of six years, the complainant accepted the same as she was badly in need of money under oral protest. Hence the opposite parties are liable to pay interest on the said amount for the delayed period from the date of the death of the deceased till June 2002, for non settling the claim of the complainant with in a reasonable time and also compensation for mental agony towards inconvenience suffered by the complainant, at the lapsive conduct of the opposite parties, the complainant was constrained to seeks redressal in this Forum for the relief sought in the complaint.
3. In substation of her case the complainant filed the following two documents viz (1) legal notice dt 11.3.2003 issued by complainants counsel to opposite party No.1 and (2) postal acknowledgement of opposite party No.1 for receipt of Ex A.1, beside to her sworn affidavit in reiteration of her complaint avernments and in support of the above documents, the above documents are marked as Ex A.1 and A.2 for its appreciation in this case and suitably replied to the interrogatories given by the opposite parties.
4. In pursuance to the notice of this Forum as to this case of the complainant, the opposite parties made their appearance through their standing counsel and contested the case. The opposite party No.1 filed its written version and opposite party No.2 adopted the written version of opposite party No.1 and denied the complaint avernments as not maintainable either in Law or on facts.
5. The written version of opposite parties admits that the complainants deceased husband has taken a Jeevan Mitra Double cover plan policy bearing No.651418243 for assured sum of Rs.50,000/- and the policy commenced from 28.3.1993 and opted to pay monthly premium of Rs.228/- through Salary Savings Scheme through his employer A.P.S.R.T.C. It further submits that the complainant after the death of her husband A.M.Shariff did not submit statutory requirements and did not furnish reasons for non recovery of premia of Rs.228/- from May, 1993 to August, 1993. As there are no particulars furnished for non-remittance of premium, the policy could not be treated as in force for consideration of claim for all the benefits. The complainant made a representation dated Nil, received by opposite parties on 13.9.2001 and opposite parties thereafter settled the claim on ex-gratia basis for Basic Sum Assured of Rs. 50,000/-, additional sum assured of Rs.50,000/- and accident benefit of Rs.50,000/- along with all benefits and obtained discharge voucher dt 12.6.2002 from the complainant in full and final settlement of claim amount to Rs.1,63,000/-. Therefore, when once the complainants claim was settled in her favour, in spite of non-compliance of all requirement and the complainant accepted the total sum in respect of her husband’s policy, there arises no deficiency of service on part of opposite parties and seeks for the dismissal of complaint with costs.
6. In substantiation of its case the opposite parties relied on the following documents Viz (1) office copy of letter dt 6.8.1997 of Depot Manager, APSRTC. Kurnool to opposite party No.1 (2) office copy of letter dt 12.7.2001 of Depot Manager, APSRTC, Kurnool to opposite party No.1 (3) Discharge receipt dt 12.6.2002 duly signed by the complainant (4) Ex-gratia discharge receipt executed by the complainant dt 12.6.2002 and (5) letter dt 2.1.2002 of complainant to opposite party No.1, besides to sworn-affidavit of opposite party No.1 in support of the above documents and the above documents are marked as Ex B.1 to B.5 for its appreciation in this case and suitably replied to the interrogatories filed by the complainant.
7. Hence the point for consideration is to what relief the complainant is remaining entitled alleging deficiency of service on part of the opposite parties :-
8. It is the case of the complainant that she is entitled to the assured sum of her deceased husband, who nominated her as his nominee. The opposite parties settled her claim after a lapse of six years for the assured sum of Rs.1,63,636/-. The complainant alleges that for the delayed period of six years, she is entitled to interest of 18% per annum on the said amount and compensation also. The opposite parties pleaded that the complainant has received Ex-gratia amount of Rs.1,63,636/- of her deceased husband in full and final settlement and as such the complainant is not entitled to get any more amount.
9. The only point involved in this case is whether after receiving delayed Ex-gratia sum of Rs.1,63,636/-, the complainant is remaining entitled to interest on the said amount or not. According to the learned counsel for opposite parties the complainant received the said sum in full and final settlement of the claim and as such she is not remaining entitled to any interest. On the other hand the learned counsel for complainant argued that the complainant was a poor illiterate lady and was badly in need of amount, due to her financial problems she accepted the delayed amount under oral protest, as there is no other go except to accept it. Thereafter, the complainant issued legal notice dt 11.3.2003 demanding interest on the said amount for the delayed period, when there was no response from the opposite parties the complainant filed the present complaint seeking redressal in this Forum.
10. The Ex B.4 is the receipt obtained from the complainant before making an Ex-gratia payment, which goes to show that the amount has been received from the LIC, the afore said sum of Rs.1,63,636/- in full and final settlement of all claims in respect of complainant deceased husband’s policy and the signature of the complainant appears on this form. As per the Apex Court decision in United India Insurance Vs Ajmer Singh Cotton and General Mills and others reported in 1999 (7) Supreme page 171, where in, it was held that mere execution of discharge voucher would not always deprive the Consumer from preferring claim with respect to the deficiency in service, if in a given case the consumer satisfies the authority under the Act that the discharge voucher was obtained by fraud, misrepresentation, under influence or the like, coersive bargaining compelled by circumstances. In the present case has already been seen in the earlier part of the order, the complainant was a poor illiterate lady and was badly in need of amount due to her financial problems. For that purpose she required the amount immediately, so that she could solve her financial difficulties. Therefore, under these compelling circumstances, the complainant agreed to take the amount from the opposite parties, thereafter she issued a legal notice for payment of interest on the said amount. Thus satisfies the conditions laid down in the supra mentioned case. Thus the receipt which is in full and final settlement of the claim does not indicate that the complainant has accepted the amount in full and final settlement of the claim. This plea of the opposite parties is rejected.
11. Now the point for consideration is delay in settling the claim of the complainant, whether the delay in such a context would defeat the very purpose of the insurance?. It appears that the explicit condition of the Insurance is that the insurer’s claim must be settled with the utmost expedition, either by way of acceptance or repudiating of the same, what ever be the merit of the insurance claim, it is certainly not open to the insurer’s to sit smugly over the same and hang to sword of Damoclies inordinately for years. What ever may have been the situation earlier, it appears that with the present technological advances, which are now freely available to the large insurance corporations, it would not be difficult for them to either settle or repudiate an insurance claim within a reasonable period of 3 months. But, unless, it is established other wise for cogent reasons, a delay beyond three months to either settle or repudiate would in essence be a deficiency of service undertaken to be rendered by the Insurance Corporations at least within the Consumer jurisdiction as per the decision SCDRC, Haryana at Chandigarh between Smt. Surrinder Kaur Vs The Oriental Insurance Co. Ltd reported in C.P.R.1993 (III) Page 438.
The complainant also relies on the following decisions.
- Santosh Kumar Gupta and another Vs LIC of India of High Court of Rajasthan, reported in 2001 ACJ Page 1834, where in, it was held that the sum assured became at once payable on the death of the assured, it was debt till payment, interest at the rate of 15% P.A was allowed from the date of death till realization.
- Mau Aima Sahkari Katai Mills Ltd Vs United India Insurance Co. Ltd and Anr reported in 1993 (III) CPR Page 197 (National Commission), where in, it was held that inordinate delay in payment of insurance amount under a policy amounts to deficiency in service and insurance company is liable to pay interest for the delayed period.
- United India Insurance Co Ltd, & ors Vs M/s Jindal policy Industries of SCDRC of Uttar Pradesh, reported in, 2002 (2) CPR Page 291, where in, it was held that mere execution of discharge voucher would not always deprive the consumer from preferring the claim with respect to deficiency of service in a claim under Insurance Policy.
- Branch Manager, LIC of India Vs Smt Suchita Das SCDRC of Jharkhand, reported in 2003 (1) CPR Page 507, where in, it was held that employer under the Salary Saving Scheme acts as an agent of LIC while deducting premium amount from the salary of employee and failure on part of employer binds LIC of its liability to pay policy amount.
- LIC of India Vs K.Rama Iyer of High Court of Karnataka, reported in, 2004 ACJ Page 591, where in, it was held that LIC had not taken recourse to discontinue the scheme on account of default in payment of premium.
12. To conclude, from the above discussions and following the aforementioned decisions, the reasonable time frame within which the nationalized Insurance Companies must settle or repudiate the insured claims would normally be a period of three months. Any delay beyond that would per se attract odium of deficiency of service, unless the same is cogently explained by the Insurance Companies and the burden must necessarily rest on them. There is no doubt that this delay of six years for payment of assured amount by the opposite parties to the complainant must have caused serious financial difficulties to the complainant and there is no merit in the contention of the opposite parties that there is no provision for payment of interest on Ex-gratia amount paid to the complainant when it is paid in full & final settlement. The liability of the opposite parties to pay interest on the delayed payment under the insurance policy arises because of deficiency in service due to its negligence for taking six long years for settling the claim of the complainant. Hence in the circumstances discussed above as there is clear deficiency of service on the part of opposite parties. The complainant is certainly remaining entitled to the relief sought in the complaint.
13. In the result, the complaint is allowed directing the opposite parties to pay interest of 12% per annum on the assured amount of Rs.1,63,636/- from the date of demise of deceased till 12.6.2002, Rs.5,000/- as compensation for mental agony suffered by the complaint at the deficiency in service of the opposite parties and Rs.2,000/- as costs of the complaint, within a month of the receipt of this Order.
Dictated to the Stenographer Typed to the Dictation corrected by us pronounced in the Open Court this the 13th day of October, 2004.
Sd/-
PRESIDENT
Sd/- Sd/-
MEMBER MEMBER
