IN THE STATE COMMISSION: DELHI

(Constituted under section 9 of the Consumer Protection Act, 1986)

Date of Hearing:27.07.2021

Date of Decision:04.08.2021

First Appeal No. 720/2014

IN THE MATTER OF

MAX LIFE INSURANCE CO. LTD.

Through Manager

Registered Office at Max House

Okhla, New Delhi-110020

BRANCH OFFICE AT:

Jacaranda Marg, DLF Phase II

Gurgaon-122002 ….Appellant

VERSUS

MR. SATENDER SINGH

S/o Sh. Barumal

R/o B-7/72

Karawal Nagar Road

Shahdara

New Delhi-110094                                                                            ....Respondent

HON’BLE  SH. ANIL SRIVASTAVA, MEMBER 

1.   Whether reporters of local newspaper be allowed to see the judgment?                             Yes     

 2.   To be referred to the reporter or not?                                                                                        Yes

Present:          Ms. Renu Gupta, Counsel for the Appellant

                        None for the respondents

            ANIL SRIVASTAVA, MEMBER

JUDGEMENT

1.       The orders dated 07.05.2014 passed by the District Consumer Disputes Redressal Forum IV (District North East) in C-219/2012 in the matter of Sh. Satender Singh versus Max Life Insurance, allowing the complaint and directing the insurer to pay Rs. 4,00,000/- with interest @ 6% and compensation of Rs. 40,000/- and litigation charges of Rs. 10,000/-, has been assailed before this Commission under Section 15 of the Consumer Protection Act 1986, the Act, by the insurer, for short appellant against Sh. Satender Singh resident of Delhi hereinafter referred to as respondents alleging that the orders passed by the District Forum suffers from infirmity since the claim could not have been approved in the circumstances when the event takes place after the lapse of the policy and praying for setting aside the order and for dismissal of the complaint.
2.       Facts of the case necessary for the adjudication of the appeal are these.
3.       On 17^th December 2009, the DLA, submitted a duly signed Proposal Form No. 761679067, to the appellant, for “Smart Assure risk” for a period of twenty years. As a consequence thereof an insurance policy bearing no. 761679067 was issued on 22^nd December 2009.  The sum assured was Rs. Four Lacs under the base plan. Under the policy, the annual premium payable was Rs. Twenty Five Thousand, to be paid in quarterly instalments. Thus, four quarterly instalments were due on 22^nd December, 22^nd March, 22^nd June and 22^nd September of every year. The appellant received payment from the DLA on 18^th December 2009, for an amount of Rs. 6,250,00/-. This amount was towards payment for instalment for the first quarter of the first year, i.e. for the quarter of 22^nd December 2009 to 21^st March 2010. The DLA according to the appellant failed to make timely payment of premium due on the Life Insurance Policy. The DLA did not make the payment of the premium due for the quarter 22^nd June 2011 to 21^st September 2011. Consequently the appellant informed the DLA, that his insurance policy has lapsed due to non-receipt of premium due for the quarter 22^nd June 2011 to 21^st September 2011 and further that it could be reinstated by making payment of the due amount of Rs. 6,250,00/-. Resultantly the DLA paid an amount of Rs. 12,500/-towards the unpaid premium for two quarters of 22^nd June 2011 to 21^st September 2011 and 22^nd September 2011 to 21^st December 2011. Upon such payment, the insurance policy of the DLA, which had lapsed on account of non-payment of insurance premium, stood revived. Again the premium for next quarter, i.e. 22^nd December 2011 to 21^st March 2012, became due on 21^st December 2011 but the DLA even after expiry of the grace period of thirty days, available for payment of premium failed to make payment towards premium for the relevant quarter, leading to issuance of a letter on 22 January 2012, informing the DLA, that the insurance policy has lapsed due to non-receipt of premium and that it could be reinstated by making payment of the due amount of Rupees Six Thousand Two Hundred and Fifty Rupees, as premium due for the quarter from 22 December 2011 to 21^st March 2012.
4.       However the DLA had passed away on 27.01.2012 before paying the premium. The son of the DLA, the respondent herein had thus preferred the claim arising out of the policy, which claim having not been allowed, the complaint was filed before the District Forum. The said complaint having been allowed this appeal has been preferred on the grounds, namely, that the District Forum did not appreciate the facts, nor gave credence to the fact that the policy had already stood lapsed on the date of the death of the insured. The appellant have highlighted the payment made and payment due indicated as under:-

It is evident from the above table that the premium due for the quarter from 22 December 2011 to 21 March 2012 was not paid. Accordingly, the said insurance policy was lapsed and thus the said policy was not operative on the date of his death on 27 January 2012, having lapsed on 22 December 2011.

5.       Respondents were noticed but in response thereto they have neither appeared nor filed any reply.
6.       This appeal was listed before this Commission for final hearing on 27.07.2021 when the counsel for appellant appeared and advanced her arguments vehemently pressing for setting aside the order and for dismissal of the complaint. No appearance was made on behalf of the respondents despite adequate opportunities having been afforded. I have perused the records of the case and given consideration to the rival contentions involved in the case.
7.       Short question for adjudication in this appeal is whether the insurer rejecting claim on the ground of non receipt of the payment towards premium leading to lapse of the policy suffers from any infirmity and, if not, whether the orders passed by the District Forum allowing the complaint can sustain.
8.       The fact that the premium was not timely paid is not controverted. At this stage I may advert to clause 14 dealing with the clause relating to lapse of policy and discontinuance of the premiums. The said clause of the policy are as under:-

14.1 Discontinuation of premiums after paying at least three consecutive years premiums:

1. If all the due Annual Target Premiums/increased ATPs as applicable have been paid for at least three consecutive years and subsequent Annual Target Premiums/increased ATPs are unpaid, an opportunity will be given to you to revive the policy within the revival period as mentioned in Section 15.
2. During the revival period, the insurance cover under the policy will continue and all due charges would be levied and recovered. However, if the Fund Value reaches an amount equal to one Annual Target Premium, the contract shall be terminated and the fund value will be paid.

14.2 Discontinuance of premiums within three years of inception of the policy:

If all the Annual Target Premiums/increased ATPs have not been paid for at least three consecutive years from the effective date of coverage, the insurance cover under the policy shall cease immediately on expiry of the grace period and the Unit Account will be closed.

9.       Clause 14(1) and 14(2) are binding on both, insured and insurer. No deviation can be done. The Hon’ble Supreme Court of India is pleased to hold in the matter of Vikram Greentech India Ltd. and anr. versus New India Assurance Company Ltd. as reported in (2009) 5 SCC 599 as under:-

An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberrima fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract.

10.       In these circumstances the policy having lapsed the claim preferred is unpayable. I do not find any infirmity in the action of the insurer and accordingly the orders passed by the District Forum cannot sustain and it is accordingly set aside.
11.       Besides the respondents not contesting the matter despite adequate opportunities having been offered, the appeal has to be allowed. In this connection orders passed by this Commission on 04.02.2016 are relevant and are reproduced below:-

Present:- Ms. Renu Gupta, Counsel for the appellant

None for the respondent

Respondent has been served by dasti notice. An affidavit of service is filed along with proof of having served the respondent.

Despite service no one has appeared on behalf of the respondent. Is appears that the respondent is not interest in opposing this appeal.

List for This complaint was listed before this Commission for final hearing on 01.03.2021 when the counsel for both sides appeared and advanced their arguments on 04.08.2016.

Let the file of complaint case no. 219/12 from the District Forum, Nand Nagri, Delhi be requisitioned for the next date.

(Justice Veena Birbal)

12.       Ordered accordingly.
13.       A copy of this order be forwarded to the parties to the case free of cost as is statutorily required. A copy of this order be forwarded to the District Forum for information.
14.       File be consigned to records.

(ANIL SRIVASTAVA)

MEMBER

PRONOUNCED ON

04.08.2021

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