FA 562/2008  against C.C. 299/2006,  Dist. Forum-I, Hyderabad   

Between:

The Branch Manager

L. I. C. of India

City Branch-VII

22-8-290, Chirag Ali Lane

Hyderabad-500 002.                                   ***                           Appellant/

            Opposite Party     

                                                                   And

N. R. Sinivasan, S/o. N. Raja Gopalan

Age: 68 years, Retd. Employee,

H.No. 304, Gayathri Apartments

Banjara Hills, Road No. 1

Hyderabad-500 034.                                   ***                         Respondent/

                                                                                                Complainant.  

Counsel for the  Appellant:                         M/s. Hari Rao Lakkaraju

Counsel for the  Respondent:                     M/s. K. Visweshwara Rao

CORAM:

HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.

                                             SMT. M. SHREESHA, MEMBER

                                                                   &

                                            SRI  R. L. NARASIMHA RAO, MEMBER
                                                         

TUESDAY, THIS THE NINETEENTH DAY OF JULY TWO THOUSAND ELEVEN

ORAL ORDER:  (Per Hon’ble Sri Justice D.Appa Rao, President)

***

1)                This is an appeal preferred by  LIC of India,  opposite party  against the order of the Dist. Forum directing it to pay   Rs. 10,000/-  together with bonus and interest @ 12% p.a., besides Rs. 5,000/- towards compensation and Rs. 1,000/- towards costs.

2)                The case of the complainant in brief is that  he subscribed to insurance scheme  under  ‘New Jeevan Suraksha Plan-I (with profits)’  on payment of Rs. 10,000/- towards single premium on  28.11.2002.   As per the terms LIC  has to refund  Rs. 10,000/-  on receipt of vesting of annuity as on 28.11.2005 i.e., three years after date of proposal.    It has to refund before due date.    Accordingly, he sent  the original bond, however,  as there was no reply he addressed a letter on  3.1.2006 requesting to pay the amount.  The LIC instead of  paying  the amount informed that  he had  not exercised  full payment option  by executing a separate format  to that effect.    In fact it is the duty of the LIC to intimate  date of maturity  and the format for executing full payment option before due date.   Non-sending of format amounts to deficiency in service.    In fact  he has also addressed a letter requesting the insurance company to return the original policy  for seeking redressal.   Though it  was returned,   since the amount was not refunded  he claimed  Rs. 10,000/- with interest @ 18% p.a., from 28.11.2005 together with compensation  of Rs. 30,000/-towards mental agony and Rs. 10,000/- towards costs.

3)                 LIC of India  resisted the case.   While admitting that the complainant subscribed to the policy it alleged that as per the terms of the policy the annuity vest on  28.11.2005 and the annuity would commence from the date of vesting but in no case  amount would be refunded as per condition No. 7.    In fact the complainant  issued notice on  3.1.2006  for which it has given reply  on  16.1.2006 informing that  he had applied for surrender value after the vesting date and as per rules  the policyholder is not entitled for surrender value.    He was requested to obtain the option form.  However, he did not exercise his option in time.    It admits that he could convert the said amount to other options.    When the policy was issued to the complainant  he was informed about the above option.   Without following the stipulations he cannot seek refund of the amount.   There is no maturity value under the policy, and  only annuity payment vest on the day of vesting.   The policy conditions stipulate surrender of policy with regard to  time stipulation and the quantum payable.  Since the complainant did not adhere to the terms and conditions  he cannot turn round and complain that there was deficiency in service on its part.    It cannot be presumed as deficiency in service.  There was no mandatory provision to issue notice to the policyholder  directing him to exercise option.    As per the terms and conditions he  ought to have exercised the  option  after completion of two years  by 28.11.2005.   When he did not exercise his option  the  policy  can never be surrendered.    He would be entitled to 25% of the cash option and balance would be paid as annuity  on exercising his option  as per the terms of the policy.    If the complainant desires  he could take  25% of cash option,  and balance to be paid as annuity.   Therefore it 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 A4 marked while the LIC filed the affidavit evidence of its  Administrative officer (legal) and got Exs. B1 to B8 marked. 

5)                 The Dist. Forum after considering the evidence placed on record opined that LIC was required to send the format within time prescribed  in order to help the policyholder to withdraw the maturity amount.    Therefore it  directed to pay  Rs. 10,000/-  together with bonus and interest @ 12% p.a., besides Rs. 5,000/- towards compensation and Rs. 1,000/- towards costs.

6)                 Aggrieved by the said decision, the LIC of India opposite party preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective.     It ought to have seen that policy bond was issued in favour of the complainant  with a specific stipulation that he could exercise his option  of surrendering  the policy after completion of two years before the date of vesting  28.11.2005.  When  he did not choose to exercise the said option what all he could be entitled to is 25% of the amount + annuity  in subsequent years.   When the terms stipulate specifically directing him to exercise  the option before 28.11.2005 which he did not do so, therefore he was not entitled to claim the amounts  which are against rules prescribed under the policy, 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 the complainant subscribed to a policy entitled  New Jeevan  Suraksha Plan-1 (with profits)  vide Ex. B1 wherein  he paid Rs. 10,000/-  as single  premium on 28.11.2002.    As per the terms of the policy which are noted on the reverse of  Ex. B1 clause 7(ii)  relating to the policy in question  reads as follows :

          7(ii)    For single premium  policy :   This policy can be surrendered  for cash at any time, after the completion  of 2 years from the date of issue but before the date on which the annuity  vests, for an amount equal to 90% of the within mentioned single premium. 

9)                Evidently the policy was matured on 28.11.2005.  Admittedly the complainant did not exercise his option  before the date of vesting  28.11.2005.   He exercised the option  on 3.1.2006 under Ex. A2.  Though he stated that he submitted the policy before the date of maturity but there is no evidence to substantiate the said fact.   The fact remains that  the complainant did not seek refund of the amount  either on the date of vesting of annuity  or before the date fixed i.e., on 28.11.2005.    The contention that the insurance company has to issue a form or  intimate to him before the due date cannot be up-held  in the light of  terms of the policy.   By virtue of term which  we have already mentioned  vesting of annuity  in no way  could be termed as maturity since there is no maturity value under the policy. 

10)              It is settled law the courts or tribunals cannot alter the terms of contract vide  Vikram Greentech (I) Ltd., Vs. New India Assurance Company Ltd., reported in  II (2009) CPJ 34 (SC).   

11)               At the cost of repetition, we may state that  there could not be any payment of maturity value.   What all he would be entitled to is in case where he could not  exercise his option for surrender before 28.11.2005 he would be entitled to receive  after  he intends to exercise option as per special provisions  No. 3 of the policy and he could take 25% of the cash option and balance  will be paid as annuity.   This fact was intimated to him by issuing letters under

Ex. B4 to B7.    The contention that it ought to have condoned the delay whatever that was occurred and ought to have paid the amount has no place.   When dates were stipulated  the parties are bound by it.   The LIC cannot change  the dates  mentioned in the schedule  as agreed upon.    Therefore, we are  unable to appreciate the contention of the complainant that  he was entitled to maturity value  contrary to the terms of the policy.    It is not too late a day  for him to exercise the option seeking  25% of the amount  and balance as per the stipulation.   However, we may state  in the interests of justice,  and fair play the complainant could as well  exercise  his option  and on receipt of it, the insurance company is directed to pay 25% of the amount and balance as per rules. 

12)               In the result  the appeal is allowed setting aside the order of the Dist. Forum including awarding of compensation and costs.    The complainant is directed to exercise his option  to pay 25% of the amount, and balance  as per rules within 30 days from the date of receipt of this order, and on such option being received the insurance company is directed to release the amount within 15 days on receipt of option.   However, in the circumstances of the case, there shall be no order as to costs.  Time for compliance as indicated above.  

1)       _______________________________

PRESIDENT                 

2)      ________________________________

 MEMBER          

3)      ________________________________

 MEMBER          

                                                                                      19/07/2011

*pnr

“UP LOAD – O.K.”