22/7/2011        The brief facts of the instant case are that the on 17/10/2000 the complaint deposited a proposal form duly filled up along with the due insurance premium of Rs. 6,137/- (Rupees six thousand one hundred and thirty seven)for the purchase of a “children money bag policy” for the sum assured of Rs. 1,00,000/- (Rupees One lakh) only for his minor daughter against which the O.P issued a proposal deposit receipt vide receipt no. 396505. The complainant was later informed to deposit an additional amount of Rs. 82/- (Rupees Eighty two) as full and final payment of the premium which was accordingly paid by the complainant on 16/11/2000. After this even after the lapse of several months the complainant did not receive any copy of the policy nor the O.P. has intimated to the complainant about the fate of the policy purchased by him and hence this case. The O.P. insurance company filed the written statement and based on the pleadings of both the parties the following issues were framed in this case:

I.        Whether there is any cause of action for the complainant?

II.     Whether the O.P received the premium and the additional premium from the complainant to issue the policy?

III.   Whether the O.P. issued any policy in token of the premium paid by the complainant? If not, whether non issuance of such policy for a period of more than eleven months constitutes inaction and deficiency in service on the part of O.P.?

IV. Whether there is any valid contract between the complainant and the O.P.?

V.     To what reliefs are the parties entitle to?

Now on the basis of all materials available with this forum, the issues are decided as follows:

Issue I,II & III :          These three issues are inter-related and thus the forum would like to take them together. Sec 2(i) (g) of the Consumer Protection Act, 1986 speaks about “deficiency of service” – meaning by any fault, imperfection, shortcoming or inadequacy or performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service”.

As per para 3 and 6 of the w/s of the O.P, it is clear that the complainant indeed deposited the premium amount with the O.P. towards the issuance of the policy purchased by the complainant. The copy of the proposal deposit receipt annexed to this complaint also proves the same which is not denied by the O.P. at any stage of this case. As per the opinion of this forum there is a cause of action for the complainant and the action of the OP in not issuing the policy even after a lapse of more than eleven months after deposit of the premium amount definitely falls into the ambit of “deficiency in service” and therefore the complainant definitely has a cause of action as per the Consumer Protection Act and accordingly.

This forum would also like to dwell upon the contentions of the O.P. made by him in his written statement w.r.t. the different plan was actually offered to the complainant as well as deficit in the premium amount deposited by the complainant. However, in absence of any specific evidence adduced by the O.P. in this regard the Forum would like to emphasize that the burden of proof lies on the O.P. that due information was given to the complainant in this regard. But on the other hand, acceptance of the premium amount as well as additional premium amount would tantamount to acceptance of the proposal to the effect that the complainant has nothing more to do. The O.P. has also mentioned in para 6 of its w/s that the premium money was refunded back to the complainant which the complainant refused to accept. The forum is of the opinion that the O.P. needs to substantiate this with adequate evidence which it has miserably failed to do so. Issues 1, II & III thus are decided affirmatively in favour of the claimant-complainant.

 

Issue IV:         This issue is guide by the specific Law of Contracts as applicable in India. As per ‘The Indian Contract Act 1872’, insurance is a specialized type of contract where apart from the essentials of a valid contract insurance contracts are subject to additional principles. These additional principles are principles of utmost good faith, insurable interest, indemnity, subrogation, contribution and proximate cause. These distinctive features are based upon the basic principles of law and are applicable to all types of insurance contracts. These principles provide guidelines based upon which insurance contracts are being undertaken. In case of insurance, the product sold are intangible the facts relates to the proposer are very personal & known to him only. The law therefore, imposes a greater duty, to the parties of the insurance contract i.e. they need to have utmost good faith in each other, which implies full & correct disclosure of material facts by both the parties to the contract, not only the facts ‘they know’, but they ‘ought to know’ must be disclosed. The term ‘material fact’ under insurance refers to every fact or information which has a bearing on the decisions with respect to: the severity of the risk involved and the amount of premium. The disclosure of material fact, determines the terms of coverage of the insurance contract.

            This Forum would like to dwell upon the clauses of the Indian Contract Act as to find out whether there was a valid contract between both the parties. As per the Indian Contract Act when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promise to do or to  abstain from doing something such act or abstinence or promise is called a consideration for the promise and every promise and every set of promises, forming the consideration for each other, is an agreement. As per the contention of the O.P that the acceptance of the offer made by the complainant in this case was never made to the complainant, the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete-as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. By issuing the proposal deposit receipt to the complainant it is very clear that the O.P. accepted the proposal. The fact that the O.P. did not communicate anything to the complainant for almost eleven months also indicate that the O.P. had nothing more to do in this contract of insurance except to mere do the formality of issuing the papers related to the policy to the complainant. The law also mentions that the communication of a revocation is complete-as against the person who makes it, when it is out into a course of transmission to the person to whom it is made, when it comes to his knowledge. However, in this case no such explicit action was taken by the O.P. to indicate that he had any intention to revoke his acceptance at any point of time.

            Thus in this case the deposit of the premium amount by the complainant made a good consideration and its acceptance by the O.P. turned this consideration into a promise thus an agreement enforceable by the law for the time being in force and agreement enforceable by law is a contract. This issue thus is decided in favour of the complainant.

Issue V:           This forum has gone through various judgements & order of the other forums & high courts. Some of the factors, which this forum opines, are important to decide the relief are: the loss of income to the complainant due to deficiency in service, the inconvenience caused to him, the mental agony and pain suffered by him etc. After considering all the material facts, the forum is of the opinion that:

(1)   The complainant is entitled to valid policy for which he applied for. The O.P. is thus directed to issue a valid policy from the date of the first premium amount paid by the complainant on the conditions that the complainant would deposit all the subsequent premiums which would otherwise would have fallen due had a valid policy been issued in the first instance. However, in the event of the O.P. not being able to issue a valid policy retrospectively, the Forum takes it as a unlawful loss to the complainant who would otherwise have been benefitted from the said policy and directs the O.P. to return the entire amount of the premium deposited by the complainant with a penal interest of 24% per annum from the date of the deposit till the date of actual refund.

(2)   Also this forum decides that the opposite party should pay an amount of Rupees Twenty Five thousand as a compensation for mental pain and agony which the complainant experienced for the deficiency in service provided by the O.P and Rupees Five Thousand as cost of the legal proceedings.

The forum directs the O.P. to pay the entire amount of relief awarded to the complainant within a period of thirty days from the date of this order.

The case stands disposed off.