CC Filed on 19.02.2010<br /> Disposed on 31.08.10<br /> <br /> BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, KOLAR.<br /> <br /> Dated: 31st day of August 2010<br /> <br /> PRESENT:<br /> Sri. G.V.HEGDE, President.<br /> <br /> Sri. T.NAGARAJA, Member.<br /> Smt. K.G.SHANTALA, Member.<br /> ---<br /> <br /> Consumer Complaint No. 23/2010<br /> <br /> Between:<br /> <br /> <br /> Smt. S. Kayal Vizhi,<br /> Aged about 34 years,<br /> Wife of late Sri. T.J. Saravanan,<br /> r/at: Quarters No.13,<br /> Type III, BEML Nagar & Post,<br /> Kolar Gold Fields – 563 115.<br /> <br /> <br /> (By Advocate Sri. P. Raghavan & others) <br /> <br /> <br /> <br /> ….Complainant<br /> <br /> V/S<br /> <br /> <br /> Birla Sun Life Insurance Co. Ltd.,<br /> No. 1/18, 3rd Floor,<br /> Shree Lakshmi Complex,<br /> 11th Main, 4th Block, <br /> Jayanagar,<br /> Bangalore.<br /> <br /> Represented by its:<br /> The Branch Manager. <br /> <br /> <br /> (By Advocate Sri. N.S. Satish Chandra & others)<br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> ….Opposite Party<br /> <br /> <br /> <br /> <br /> ORDERS<br /> <br /> This is a complaint filed under section 12 of the Consumer Protection Act, 1986 praying for a direction against the opposite party to pay the amount of Rs.13,00,000/- (rupees thirteen lakh only) with usual benefits payable under the Insurance Policy No. 000530588 ‘Premium Back Term Plan 100% Plan’ obtained by late T.J. Sharavanan issued by opposite party with interest and compensation for wrongful repudiation and costs, etc., <br /> <br /> 2. The material facts of complainant’s case may be stated as follows:<br /> That the complainant is the widow of late T.J. Sharavanan and she is the nominee for receiving the benefits under life insurance policy bearing No. 000530588 obtained by her husband from OP. The said policy was issued on 28.12.2005 for Rs.13,00,000/-. The premium of Rs.3,934.50 was payable quarterly with effect from 28.12.2005 for 20 years and the last premium was payable on 28.09.2025. The policy holder has paid the first six quarterly premiums and he had not paid the seventh installment within the time allowed, thereby the policy stood lapsed. The policy was obtained through an Insurance Advisor of the OP by name Sri. Yogesh. N. Shanbag of Jayanagar, Bangalore. <br /> <br /> On 09.10.2007 T.J. Sharavanan met the Insurance Advisor Sri. Yogesh. N. Shanbag personally at Bangalore and enquired regarding the procedure for reinstatement of the policy and as advised he issued cheque dated 10.10.2007 for Rs.8,158/- for enabling the reinstatement of the policy. Sri. T.J. Sharavanan also handed over application form containing health declaration duly filled and signed by him for reinstatement of the policy to that Insurance Advisor and the said Advisor accepted the cheque and the form duly filled. The cheque was encashed by the opposite party. <br /> <br /> On 11.10.2007 T.J. Sharavanan met with motor accident and succumbed to injuries sustained in the said accident on the same day. The complainant being the nominee of the policy holder preferred claim before the officials of OP. <br /> <br /> The OP repudiated the claim vide its letter dated 31.12.2007 on the ground that the policy has lapsed on account of non-payment of premium due on 26th June 2007 and the policy was not reinstated and thereby returned the amount received under cheque dated 10.10.2007. <br /> <br /> The complainant alleged the following grounds in para.6 to 10 of her complaint to contend that the repudiation of claim is not valid <br /> <br /> “6. The complainant submits that arrears of premium has been paid on 09.10.2007 under cheque dated 10.10.2007 duly accepted on behalf of the Opposite Party-Company and further encashed. This manifestly shows that ‘insurance interest’ has been created in favour of the deceased Sri. T.J. Saravanan and the policy is deemed to have been reinstated.<br /> <br /> 7. The fact that the Insurance Advisor accepted the cheque and in turn the company presented the same for encashment speaks volumes about the reinstatement of the policy and any other formalities in this regard are not mandatory.<br /> <br /> 8. The complainant submits that the unfortunate subsequent event of road accident in which Sri. T.J. Saravanan lost his life is beyond anyone’s control and the family of the policy holder who have lost the lone bread winner cannot be penalized for the same.<br /> <br /> 9. This Honourable Forum would appreciate the basic purpose of insuring with the Insurance Company is to safeguard and cushion the family in the event of death of the policy holder and if the kind of repudiation on hyper technical ground is adopted by the Company, the very purpose and intention of insuring would be defeated.<br /> <br /> 10. The Opposite Party-Company which ought to be supportive for the bereaved family has turned out to be an opportunist in wriggling out of the legal and moral obligation inventing reasons for the same.” <br /> <br /> The complainant got issued legal notice dated 05.09.2009 alleging the same grounds now stated in the complaint and claimed that the repudiation was improper. The OP got issued reply dated 23.09.2009 to this legal notice that they would consider the request after collecting the required particulars and stating that this reply was without prejudice to their rights and contentions as available. It appears no further reply was given. Thereafter the complainant filed the present complaint on 19.02.2010. <br /> <br /> 3. The OP appeared and filed its version. The issue of policy in question is not disputed. A copy of the said insurance policy is produced by OP. It contended that the said policy was earlier lapsed and it was reinstated in December 2006 and again the said policy stood lapsed with effect from 26.06.2007 for non-payment of the renewal premium due on 26.06.2007. Further it stated that the Life Assured requested the OP for reinstating the said policy and the Branch Office of the OP received a cheque towards the reinstatement of the policy on 10.10.2007 and the said cheque was receipted by the OP on 12.10.2007 and it was realized on 30.10.2007. Further the OP contended that the status of the Policy in question on the date of death of the Life Assured was ‘lapsed’. Further the OP stated that the death of the Life Assured was intimated to it on 11.10.2007 due to an accident and that the complainant submitted the claim statement on 19.11.2007. It contended that the claim of complainant could not be honoured as the Policy was in a lapsed status at the time of death of the Life Assured and therefore it does not have any contractual obligation to pay the claim. It is admitted that the repudiation letter dated 31.12.2007 was sent to complainant intimating the grounds of repudiation. OP also contended that the present complaint is barred by time as repudiation was communicated under letter dated 31.12.2007 and the present complaint does not accompany any application for condoning the delay and it was filed beyond two years from 31.12.2007. Therefore it prayed for dismissal of the complaint. <br /> <br /> 4. The complainant and one witness on her behalf filed affidavits by way of evidence and she produced certain documents. One Puneet Bansal an Authorized Officer of OP filed the affidavit on behalf of OP by way of evidence. We heard the Learned Counsel for the parties. <br /> <br /> In view of the letter dated 23.09.2009 in reply to the legal notice dated 05.09.2009 referred to above we think the complaint is in time. In the said reply letter OP had assured to look into the matter again after collecting the required particulars, but no further reply was given. In the legal notice certain grounds were stated why the repudiation dated 31.12.2007 was not proper. Therefore we think the party can wait for further reply from OP after receipt of reply to the legal notice. The legal notice was issued well within 2 years from the date of repudiation letter. Therefore we hold that the contention of OP that the complaint is barred by time is not well founded. <br /> <br /> 5. The other point that arises for our consideration is whether the OP is justified in repudiating the claim for the reasons stated by it. <br /> The repudiation letter dated 31.12.2007 states the following reasons for repudiating the claim.<br /> <br /> “The above policy stood lapsed on account of Non payment of premium due on 26th June 07. Our Branch Office received a cheque dated 10th October 07 drawn on the joint account of the Life Assured for Re instatement of the said policy. However, as the said cheque was realized after the death of the Life Assured, the policy stood lapsed as on the date of death of the Life Assured.” The repudiation letter also reproduces the relevant provisions of the policy regarding ‘Policy Lapse’ and ‘Reinstatement’. <br /> <br /> A copy of the policy is filed by OP. The terms agreed regarding ‘Policy Lapse’ and ‘Reinstatement’ are as follows:<br /> ‘Policy Lapse’ “Policy instalment premiums have to be paid on or before the premium due dates. You will be given a grace period of thirty days from the premium due date for payment of premium.<br /> If by the end of the grace period, we do not receive the full payment of the premium due, your policy together with all coverages then in effect will be terminated. The date on which the policy and coverages terminate is the Lapse Date, except that mentioned for paid up value.” <br /> <br /> ‘Reinstatement’ “Should your policy lapse, you can request that it be reinstated within two years from the Lapse Date. Reinstatement is subject to the following:<br /> • Evidence of insurability satisfactory to us with respect to the Life Insured; and <br /> • Payment in full of an amount equivalent to all Coverage Instalment Premiums due but unpaid from the first unpaid premium onwards with interest at such rate as we may charge for late payment of premiums as prevailing at the time of payment.<br /> <br /> The reinstatement of your policy will take effect only on it being specifically communicated to you by us in writing.<br /> <br /> 6. The Learned Counsel for OP relied upon the following decisions in support of his contention. <br /> 1. 2004 (2) ALT 19 (NC) (CPA) between M. Kanagavalli & others V/s. Divisional Manager, LIC of India and another.<br /> 2. II (1997) CPJ 129 (NC) between Life Insurance Corporation of India & Ors. V/s. Miss Anu Mohanot & Ors.<br /> 3. 4 (2008) CPJ 156 (NC) between Life Insurance Corporation of India & Ors. V/s. Siba Prasad Dash (Dr.) & Ors.<br /> <br /> Out of the above decisions the first decision is directly on the point involved in this case. The head note of the decision reads as follows:<br /> <br /> “Head Note: Consumer Protection Act 1986 – Sections 21 and 17 – Life Insurance Policy – Revival of insurance policy – Policy lapsed for non payment of premium on expiry of grace period – Revival of policy not automatic on payment of premium subsequently unless insurer indicates its willingness to revive the policy – No such decision yet taken – Insured died one day after sending pay order by post – Issue of notice to insured to make payment for the next quarter without knowing the death of insured does not amount to revival of the policy – Order of State Commission dismissing the claim by legal heirs of insured – Upheld.”<br /> <br /> <br /> The second and third decisions are not so relevant as they cover different points for determination. <br /> <br /> 7. The Learned Counsel for complainant relied upon decision AIR 1959 Andhra Pradesh 562 (V 46 C 161) between Hindusthan Ideal Insurance Co. Ltd., V/s. B. Jayalakshmamma and he also referred AIR 1981 Andhra Pradesh 50 Ahmedunnisa Begum V/s. Life Insurance Corporation of India, Hyderabad. <br /> <br /> 8. For the sake of clarity we may here again narrate the relevant facts relating to the present case. The policy was issued on 28.12.2005 and the first premium was adjusted on 31.12.2005, therefore the risk coverage was from 31.12.2005. The subsequent quarterly premiums would be becoming due on the 28th of each succeeding quarters i.e. 28th March, 28th June, 28th September and 28th December of each year and the last quarterly premium was payable on or before 28th September 2025 (However in the version it is mentioned that 26th of each quarter was the due date for payment of the premium. The policy does not contain the date from which the subsequent installment shall become due except stating that the premium was payable quarterly). The Life Assured paid the first six installments up to March 2007. He did not pay the 07th quarterly installment falling due in June 2007 within grace period. It is alleged in the complaint that the Life Assured met the Insurance Advisor Yogesh N. Shanbag at Bangalore on 09.11.2007 and handed over the cheque dated 10.10.2007 for Rs.8,158/- being the amount intimated to him as due by the Insurance Advisor for enabling the reinstatement of the policy. By that time the 8th installment becoming due in September 2007 was also in arrears. This cheque amount represents the premiums payable towards seventh and eight installments with interest. Unfortunately the Life Assured met with road accident on 11.10.2007 and succumbed to the injuries sustained the said accident. The OP stated that the cheque was realized on 30.10.2007. In the affidavit of the witness Venugopal for complainant it is stated that he accompanied the Life Assured on 09.10.2007 while meeting Insurance Advisor Sri. Yogesh N. Shanbag at Jayanagar, Bangalore and the Life Assured was advised to pay the arrears of premium and interest and fill a form declaring his health condition and earning details and thereafter for the amount intimated, the cheque dated 10.10.2007 for Rs.8,158/- was handed over along with the Form duly filled for reinstatement of the policy to the Advisor. The OP does not dispute the receipt of cheque dated 10.10.2007 in the Branch Office on 10.10.2007 itself. After filing the affidavit of S. Venugopal disclosing the fact for having furnished the declaration form regarding health of Life Assured as instructed by Insurance Advisor, the Learned Counsel for OP was asked whether he wanted time to verify the filing of health declaration form as stated in the affidavit. The Learned Counsel for OP submitted he has no further counter evidence on the relevant facts mentioned in the affidavit of witness Venugopal. Therefore it amounts to an admission that duly filled up health declaration form supplied by the Insurance Advisor was handed over along with cheque and in turn it can be presumed that the Insurance Advisor handed over the said declaration to Branch Office while delivering the cheque. It is told that the cheque for arrears of premiums is not received unless the health declaration form is accompanying the cheque. The OP intimated the rejection of claim under letter dated 31.12.2007 in response to the claim made by complainant on 13.11.2007. The claim was rejected stating that the policy stood lapsed on account of non-payment of premium due on 26th June 2007 and the Branch Office received the cheque dated 10th October 2007 for reinstatement of the said policy, however as the said cheque was realized after the death of the Life Assured the policy stood lapsed as on the date of death of the Life Assured. <br /> <br /> The reinstatement was applied on 10.10.2007, within a period of 2 ½ months from the date of lapse of policy. Usually if a policy holder wants to revive or reinstate the lapsed policy within a period of 6 months from the date of lapse, the insurance company takes a health declaration and as a matter of course reinstates the policy unless the said declaration is incomplete on material particulars or it contains false facts. The OP has not produced guidelines prescribed to collect which kind of evidence is to be insisted to ascertain the insurability of Life Assured in different nature of cases. Anyhow in the present case the acceptance of health declaration application with arrears of installment with interest establishes that this was the requirement to be fulfilled for reinstatement of the policy in question. <br /> <br /> The complainant had not specifically alleged in the complaint that the Life Assured had furnished the health declaration while tendering the cheque dated 10.10.2007. During the arguments when that fact was noticed the Learned Counsel for complainant prayed time and on the next date he produced the evidence of Venugopal. As already noted the Counsel for the OP did not dispute the furnishing of health declaration as claimed by complainant. It is told that the said declaration contains a specific column in the beginning itself that the cheque towards arrears of premiums and interest should be accompanied with the declaration. This fact also suggests that the health declaration must have been given. The cheque is encashed by OP. If declaration was not given there was no question encashing the cheque. The receipt issued by OP for having received cheque dated 10.10.2007 for Rs.8,158.88 shows a reference of application No. A3599868. Therefore this fact also suggests that the application containing the health declaration must have been filed. Therefore we have to say that the Life Assured had tendered the health declaration application as well as the cheque on 09.10.2007 to Insurance Advisor and in turn he placed it before Branch Office on 10.10.2007. <br /> <br /> 9. The Learned Counsel for the OP contended that there can be no question of revival or reinstatement of the policy subsequent to the death of the Life Assured and admittedly in this case the Life Assured had died before taking a decision on reinstatement of the policy. He also pointed out that the cheque had been realized only after the death of the Life Assured and that communication in writing of the reinstatement of the policy was the stage to complete the reinstatement and unless such communication was issued in writing the reinstatement of policy does not take place. He also pointed out that evidence of insurability satisfaction to OP with respect to the Life Assured is essential and it takes certain time to consider the aspect of insurability satisfaction. He further pointed out that the Branch Office had received the cheque and the health declaration form on 10.10.2007 and the OP had not applied its mind to consider the insurability satisfaction with respect to the Life Assured. Therefore he submitted that there is no question of reinstatement of the policy by merely receiving the cheque and the health declaration form. He submitted that there can be no revival after the death of Life Assured. <br /> <br /> The Learned Counsel for the complainant controverted all these contentions and submitted that in the facts and circumstances of the present case, the revival is automatic the moment the cheque and the health declaration form are admittedly received a day before the death of Life Assured. The Learned Counsel submitted that as per the health declaration furnished by the Life Assured he was keeping a good health and he was aged about 39 years and he also pointed out that on the basis of information furnished by the Life Assured in the health declaration form, the claim for reinstatement was not rejected and it could not have been rejected because of the good health of the Life Assured. Therefore he submitted there is no question of taking a meticulous decision regarding the health condition of Life Assured in the present case. He also pointed out that in that event the communication of reinstatement becomes superfluous. Therefore he submitted that in the present case the OP cannot insist that the communication of reinstatement was necessary to complete the reinstatement. He pointed out that there is no term in the policy that reinstatement could be considered only during the life time of Life Assured. Therefore according to him the OP is bound to consider the material on record for reinstatement and has to reinstate the policy if it satisfies regarding insurability of Life Assured irrespective of fact whether the Life Assured is alive or dead on the date of taking such decision. He relied upon AIR 1959 Andhra Pradesh 562 in support of his contention. <br /> <br /> 10. We bestowed our attention to the rival contentions of the parties regarding reinstatement of the policy and we perused the decisions citied by both parties. For considering the rival contentions the conditions and privileges contained in the policy are very material, as stated in AIR 1981 Andhra Pradesh 50. In para.4 of the said judgment it is stated as follows:<br /> “The wide question and a question of general public importance that arises in this appeal is; what are the precise limits and conditions for the revival of a lapsed insurance policy? The answer must be found from the conditions and privileges printed on the back of the policy itself.”<br /> <br /> In this decision the Hon’ble High Court found that the policy for consideration in that case contained a term that the revival could be considered only during lifetime of the Life Assured. Therefore it is held in that case that there could not be revival of policy as Life Assured had died before communicating the revival of policy. In the same decision a reference is made to Divisional Bench decision AIR 1959 Andhra Pradesh 562 and held that this Divisional Bench decision is distinguishable on facts. The head note (c) of the Division Bench decision AIR 1959 Andhra Pradesh 562 is as follows:<br /> “The renewal of lapsed policies follows as a matter of course on the fulfillment of the conditions mentioned in the policy. The insurer cannot add further terms and conditions if and when the revival is desired so as to affect the terms of the original agreement. Therefore, the contention that until the acceptance of the revival application and the issue of memorandum stating that the policy has been revived, the policy remains lapsed is not acceptable. <br /> Where the original agreement did not require that the assured should continue to be alive at the time when the company takes up the application for the renewal for consideration the contention that the death of the assured so operated as to render the revival of the lapsed policy ineffective is not tenable.” <br /> <br /> 11. In the present case we have already extracted above the terms and conditions regarding lapse of policy and its reinstatement. We found that there is no express or imply stipulation in the policy that revival could be considered only during the life time of the Life Assured. Therefore we think the Division Bench decision of Andhra Pradesh High Court squarely applies to the present case, as the material facts in this case and the facts involved in that Division Bench case are almost similar. In the present case, there is an express term that the reinstatement of policy will take effect only on its being specifically communicated in writing. However in the Division Bench decision such a condition was not contained in the original policy but in a subsequent document communicated to Life Assured. The said Division Bench decision also makes it clear that the ‘satisfactory insurability’ or ‘continued good health’ could only refer to good health from that date from which the risk under the original policy started to the date of the declaration and not till the consideration by the insurance company. Further it is made clear that by the time of death of Life Assured the amount paid under cheque was not realized could not affect the accruing of the liability of Insurance Company. The said decision further lays down that the renewal of lapsed policy follows as a matter of course on the fulfillment of the conditions mentioned in the policy, where there is nothing for consideration depending on the facts of a case. As already noted it is not the case of OP that the health declaration contained any incomplete particulars on a material fact or the said declaration was untrue. Therefore we think the reinstatement in the present case, should automatically follow on presentation of health declaration and the cheque for arrears. In that event the communication of reinstatement to the party becomes superfluous or redundant as observed in the said decision. Therefore in the present case the express stipulation of condition for communication for reinstatement does not take away the right of Life Assured or his nominee in case he dies before such communication. <br /> <br /> Therefore we are of the opinion that in a given case reinstatement of lapsed policy is to be considered irrespective of the death of Life Assured subsequent to the fulfilling of the conditions for revival and such consideration may depend on the continued good health or satisfactory insurability of the Life Assured from the date of lapse of the policy till the date of the fulfillment of the conditions for revival of policy. <br /> <br /> 12. The Hon’ble National Commission in II (1997) CPJ 129 held that revival of policy is not automatic on payment of premium subsequently unless the insurer indicates its willingness to revive the policy and that the revival could only be during the lifetime of the insured but not after his death. From the report of this decision we cannot make out whether there was an express stipulation in the policy under consideration, the revival could be only during the life time of the Life Assured. If there was such a condition in the policy in question in that case, we have to hold that the said decision is distinguishable from the facts of the present case, as, in the present case there is no such express condition. Even otherwise we think the Division Bench decision of the Hon’ble Andhra Pradesh High Court is well reasoned and favourable to the Life Assured or his Nominee, therefore we incline to adopt the said decision. In the facts of the present case, we hold that the policy in question is reinstated with effect from the date of lapse irrespective of the death of Life Assured and irrespective of the date on which the cheque was realized.<br /> <br /> For the above reasons we hold that the repudiation of the claim of complainant by OP is not justified and valid in law. The OP has stated in its version that the claim amount of the present policy in question would have been Rs.13,23,768.5 if the policy had not been lapsed. Hence we pass the following:<br /> <br /> O R D E R<br /> <br /> The complaint is allowed with costs of Rs.1,000/-. The OP is directed to pay Rs.13,23,768.50 (Rupees thirteen lakh twenty three thousand and seven hundred sixty eight and fifty paisa) with interest at the rate of 6% p.a. from 01.01.2008 till the date of payment within six weeks from the date of this order. <br /> <br /> Dictated to the Stenographer, corrected and pronounced in open Forum this the 31st day of August 2010.<br /> <br /> <br /> MEMBER MEMBER PRESIDENT<br /> <br /> <br /> <br />