STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

Gursatpal Kaur wife of Late Shri Nardev Singh r/o H.No.612, Main Road, Kalka, District Panchkula.

……Appellant

V E R S U S

Max New York Life  Insurance Co. Ltd., SCO No.36-38, 2nd Floor, Sector 8-C, Manimajra, Chandigarh through its Manager.

....Respondent

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:    JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

                   SH.JAGROOP SINGH MAHAL, MEMBER.

Argued by:  Sh.R.P.Singh, Advocate for the appellant.

              Sh.Rajneesh Malhotra, Advocate for the respondent.

PER  JUSTICE SHAM SUNDER, PRESIDENT

1.             This appeal is directed against the order dated 06.09.2011, rendered by the District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter to be called as the District Forum only) vide which it partly accepted the complaint, and directed the Opposite Party, as under:-

“From the above detailed analysis of the entire case, we partly accept the complaint and decide the same in favour of the Complainant and against the OP. The OP is directed to issue the cheque of Rs.44,460.98P after its revalidation to the Complainant, within a period of thirty days from the date of receipt of the certified copy of the order. However, in the facts and circumstances of the case, there shall be no order as to costs”.

2.             The facts, in brief, are that the husband of the complainant, got himself insured, with the Opposite Party, in the sum of Rs.2.50 lacs, vide insurance policy No.446722993, commencing from 03.11.2007. The said policy was to mature on 03.01.2017. The annual premium was Rs.25000/-. The life insured, deposited two annual premiums, but the third annual premium, could not be deposited by him, on account of illness, and, as such, the policy lapsed. It was stated that the life insured died, due to  illness on 07.02.2010. The Opposite Party, (now respondent), sent a letter alongwith cheque dated 21.06.2010, to the complainant, for an amount of Rs.44460.98P (Annexure C-2), on account of surrender charges. It was further stated that the Opposite Party, never sent notice, regarding the lapse of the insurance policy, on account of non-payment of the third premium. It was further stated that, under these circumstances, the complainant was entitled to the sum assured, to the tune of Rs.2.50 lacs. When the Opposite Party, was approached for the same, it   failed   to   pay  the     amount,    in     question. It was further stated that the aforesaid act of the Opposite Party, amounted to deficiency, in rendering service, and indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), with a prayer for direction to the Opposite Party to pay Rs.2.50 lacs, to the complainant,  alongwith interest and compensation in the sum of Rs.50,000/, was filed.

3.             The Opposite Party, put in appearance, and filed the written reply, wherein, it was admitted that the husband of the complainant, got himself insured, in the sum of Rs.2.50 lacs vide insurance policy No.446722993 and the risk was to commence from 03.11.2007. It was also admitted that the annual premium was Rs.25,000/-. The policy was to mature on 03.01.2017. It was stated that only two premiums, were deposited by the life insured,  but he  did not deposit the third premium, when it became due. It was further stated that, the life insured, did not even deposit the third premium, within the grace period of 30 days. It was further stated that, accordingly, the policy lapsed, as per the terms and conditions, mentioned therein. It was further stated that, since the life insured, had taken the unit linked policy, and, as such, the surrender charges, for the amount  invested in growth fund, were payable to the insured. It was further stated that intimation, with regard to the lapse of policy, was sent by the Opposite Party, vide letters dated 13.12.2009 and 11.02.2010 (Annexure R-4 and R-5), but no reply was received from the life insured or the complainant. It was further stated that the amount of Rs.44460.98, vide cheque No.855836 dated 21.06.2010 (Annexure R-7), was sent to the complainant,  as per clause Nos.16 and 17, of the terms and conditions of the insurance policy.      It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Party, nor it indulged into unfair trade practice. The remaining averments, were denied, being wrong.

4.             The Parties led evidence, in support of their case.

5.             After hearing the Counsel for the parties, and, on going through the evidence, and record of the case, the District Forum, partly accepted the complaint, in the manner, referred to, in the opening para of the instant order. 

6.             Feeling aggrieved, the instant appeal, has been filed by the appellant/complainant.

7.             We have heard the Counsel for the parties, and, have gone through the evidence and record of the case, carefully. 

8.             The Counsel for the appellant, submitted, that no doubt, the life insured, took the policy, referred to above, in the sum of Rs.2.50 lacs, under which the risk covered, was to commence on 03.11.2007. He further submitted, that the annual premium was Rs.25,000/-. He also submitted, that two annual premiums were deposited, but the third annual premium, could not be deposited, by the life insured, on account of his illness, who ultimately, died on 07.02.2010. He further submitted that the said policy could be revived,  within 36 months, from the date of its lapse, as per clause 17(i) of the policy Annexure R-2/C-1, but the Company did not revive the same. He further submitted that the District Forum, thus, fell into a grave error, in holding that the complainant was not entitled,  to a sum of Rs.2.50 lacs, for which the policy was taken. He further submitted that the order of the District Forum, deserves to be modified.

9.             On the other hand, the Counsel for the respondent/Opposite Party, submitted that, only two annual premiums, were deposited and the third premium due, was not deposited, in time. He further submitted that even the same was not deposited, during the grace period of 30 days. He further submitted that even, no request was received, from the life insured or the complainant, for the revival of policy. He further submitted that, under these circumstances, the District Forum, was right, in holding that once the policy lapsed, the complainant was entitled, to the surrender charges, for the amount invested in growth funds. He further submitted that that  the order of the District Forum, being legal and valid, is liable to be upheld.

10.           After giving our thoughtful consideration, to the rival contentions, advanced by the Counsel for the parties, and the evidence, on record, we are of the considered opinion, that the appeal is liable to be dismissed, for the reasons to be recorded hereinafter. Undisputedly, the husband of the complainant, obtained insurance policy No.446722993, the risk under which commenced on 03.11.2007. It  was to mature on 03.01.2017. There is, no dispute, about the factum, that the annual premium, was Rs.25,000/-.  It is, not  disputed that two annual premiums, were deposited by the life insured, and, thereafter, according to the Counsel for the complainant, he fell ill, and ultimately died. It is a settled principle of law, that the parties are bound by the terms and conditions of the policy. The terms and conditions of the policy, according to the Opposite Party, were duly explained, to the husband of the complainant i.e. the life insured. According to  column no. 9 of the proposal form, the life insured opted for unit linked plan. When only two premiums were paid and the third one was not deposited, when it fell due, the Opposite Party, sent reminder on 09.10.2009 Annexure R-3, reminding the life insured to pay the third due premium. However, the same was not paid. Clause 16 of the policy Annexure R-2/C-1, reads as under:-

“16. Lapse

16.1  Discontinuation of premiums after paying at least three consecutive years premium:

a)  If all the due  Annual Target Premiums have been paid for at least three consecutive years and subsequent Annual Target Premiums are unpaid, an opportunity will be given to you to revive the policy within the revival period as mentioned in clause 17 below.

b) During the revival period,  the insurance cover under the policy will continue and all unrecovered charges would be levied.

c)  At the end of the revival period, if the policy is not revived, the policy including riders will terminate and the guaranteed surrender value, if any, will be paid. However, we may instead of terminating the policy, offer to continue the policy including rides with the insurance cover, if so opted by you, levying appropriate charges until the fund value does not fall below an amount equal to one Annual Target Premium.

       16.2 Discontinuation of premiums within three years of    inception of the policy:

a)  If all the Annual Target Premiums have not been paid for at least 3 consecutive years from the effective date of coverage, the insurance cover[sum assured] under the Policy and applicable Riders, if any shall cease immediately on expiry of the grace period and the Unit Account will be closed.

b) We will give you an opportunity to revive the policy within the revival period as mentioned in clause 17 below.

c)  In case the policy is not revived during the revival period, the policy including riders will terminate and the guaranteed surrender value as at the date of lapse, if any, shall be paid at the end of third policy anniversary or at the end of the revival period, whichever is later.

       16.3 During the grace period we will accept the lapsed                   notice amount without interest. The insurance                 cover [sum assured] continues during this grace                 period but in case of death of Life  Insured      during           the grace period, We will pay       the Death Benefit as           applicable”.

11.           Since, the  policy had lapsed, due to non-deposit of the third annual premium, in time, or within the grace period of 30 days, as per clause 17 of the said policy, the contract of insurance,  between the parties, came to an end. Lapse notices Annexure R-4 and R-5, respectively, were also sent to the life insured/complainant, but to no avail.  Under these circumstances, the District Forum, in our considered opinion, was right,  in coming to the conclusion, that the complainant was only entitled to the surrender charges, in respect whereof, cheque was sent. In Life Insurance Corporation of India Vs. Mani Ram III (2005) CPJ 31 (SC),a case decided by a three Judge Bench of the Apex Court, the premium due had not been paid by the life insured, as a result whereof, the policy lapsed. Even, during the grace period of one month, the premium had not been paid. Under these circumstances, it was held by the Hon`ble Supreme Court of India, that the Insurance Company, was wholly justified in rejecting the claim of the complainant and no exception could be taken against such decision. The principle of law, laid down, in this case, is fully applicable to the facts and circumstances of the instant case. The District Forum, was also right, in holding, that the Opposite Party, was neither deficient in rendering service, nor indulged into unfair trade practice.  The findings of the District Forum, in this regard, being correct, are affirmed.

12.           The Counsel for the appellant, however, placed reliance on second part of Clause 17, according to which, the policy could be revived within 36 months, of its date of lapse, if the life insured, gave a written request, to the Company, to revive the same, and he had produced evidence of insurability, acceptable to the Company, as per their underwriting practices and paid all overdue annual target premiums and unpaid charges. In case, the life insured had died, the complainant, who is the beneficiary,  could very well make a written request to the Company, within 36 months, from the date of lapse, to revive the same, after fulfillment of the conditions indicated above. No such request was made, either by the life insured, or the complainant, who is the beneficiary, for revival of the policy, according to Clause 17 of the terms and conditions thereof. Under these circumstances, no help can be drawn, by the Counsel for the appellant, from this Clause. In this view of the matter, the submission of the Counsel for the appellant, being devoid of merit, must fail, and the same stands rejected.

13.           The Counsel for the appellant, however, placed reliance on L.I.C. of India Vs. Ram Narayan Yadav 2009(3)CLT 146, in support of his contention,  that the amount for which the policy was taken, was required to be paid to the complainant, who is the widow of the deceased, life insured and, as such, the beneficiary. In L.I.C. of India`s case (supra), premium for two years was paid. Before the payment of premium  for the third year, the insured died. Accordingly, the policy lapsed,  as per the terms and conditions of the same. The claim of 50% was allowed in terms of clause 4.2(b) of the Policy Servicing Manual No.11. Under these circumstances, it was held, that payment of 50% of the assured amount,  was an ex-gratia payment, although, under the policy, the petitioner was not obliged to make any payment, as the policy had lapsed. No help, therefore, can be drawn, by the Counsel for the appellant, from this case. On the other hand, this authority goes against the appellant.

14.           No other point, was urged, by the Counsel for the parties.

15.    The order, passed by the District Forum, being based on correct appreciation of evidence and law on the point, does not suffer from any illegality or perversity, warranting the interference of this Commission.

16.    For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed with no order as to costs. The impugned order of the District Forum, is upheld.

17.           Certified Copies of this order be sent to the parties, free of charge.

18.           The file be consigned to Record Room, after completion

Pronounced.

January 18, 2012

Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

SD/-

[NEENA SANDHU]

MEMBER

Sd/-

[JAGROOP SINGH MAHAL]

MEMBER

Rg