F.A. No. 909/2008 against C.C. No. 80/2005,  Dist. Forum, Warangal.

Between:

1. The Divisional Manager

The New India Assurance Company Ltd.,

Rep. by its Divisional Manager

Divisional Office at

Punnam Chander Complex

Chowastha, Hanamkonda

Warangal Dist.

2. The Divisional Manager

The New India Assurance Company Ltd.,

Rep. by its Divisional Manager

Divisional Office at

5-2-174/2, R.P. Road

Secunderabad.                                           ***                           Appellants/

            O.Ps.         

                                                                    And

Thangallapallikunta Swaroopa Rani

W/o. Late Raju, Age: 30 years

R/o. NGO’s Colony,

Mahabubabad  (V&M)

Warangal Dist.                                            ***                         Respondent/

Complainant

Counsel for the Petitioner:                         M/s. Kota Subba Rao

Counsel for the Respondent:                       Admission Stage

QUORUM:

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

                                 SMT.M.SHREESHA, LADY MEMBER.
                                                          &

                                 SRI G.BHOOPATHI REDDY, MEMBER

MONDAY, THE  EIGTH  DAY OF SEPTEMBER  TWO THOUSAND EIGHT.

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

***

The insurance company preferred this appeal when it was directed to pay the amounts covered under the policies.

The case of the complainant in brief is that the appellant issued two  Long Term Group Janata Personal Accident Policies for Rs. 50,000/- each covering the risk of  Thangallapallikunta Raju working as attender in the Sub-Court, Mahabubabad vide Exs. A1 & A2 covering the period from 12.2.1999 to 11.2.2014,  and  from 30.4.1999 to 15.04.2014  respectively.  Under the policy

on his death his wife was entitled to twice the amount viz., Rs. 1,00,000/- each.  During the existence of policy on 13.7.2003, T. Raju suddenly fell down  and sustained injuries on the abdomen and neck and died.  In the first week of April, 2005  she could know that two policies were taken by her husband.  When she submitted the claim the appellant did not settle the claim.  On that she issued legal notice on 4.7.2005 for which no reply was given.  Therefore, she prayed that the amount  covered under the policies be paid together with damages of Rs. 10,000/- and Rs. 5,000/- towards transportation charges etc.    

The respondent resisted the complaint admitting that the policies were issued to the employees working in A.P. Judiciary.  Much prior to the death of the deceased, the Registrar, High Court of A.P. was informed about cancellation of said policies.  The policies were not in force.  The said fact was informed to the complainant.  Clause 5 of the policy stipulates that

“ The company may at any time by notice in writing terminate this policy provided that the company shall in that case return to the insured then last paid premium in respect of such persons in respect of whom no claim has arisen, less pro-rate par thereof for the portion of the current insurance period which shall have expired.   Such notice shall be deemed sufficiently given if posted addressed to the insured at the address last registered in the company’s books and shall be deemed to have been received by the insured at the time when the same would be delivered in the ordinary course of post.”

Therefore, she was not entitled to any amount.  There was no deficiency in service on its part.  Therefore, it prayed that the complaint be dismissed.

The complainant in proof of her case filed her affidavit evidence and Exs. A1 to A8, while the appellant filed the affidavit of its officer and Exs. B1 to B9.  The Dist. Forum after considering the facts that the policies were issued in the year 1999 and the husband of the complainant having died on 13.7.2003 by which time the policies were in force, directed it  to pay the same.

Aggrieved by the said decision, the insurance company preferred this appeal contending that  the policies were not in force at the time when the claim was made.  Therefore, it prayed that the appeal be allowed.

It is an undisputed fact that two  Long Term Group Janata Personal Accident Policies  were taken for Rs. 50,000/- each  by late Sri T.K. Raju, an  attender working in  the Sub-Court, Mahabubabad for the period from 12.2.1999 to 11.2.2004 and from 30.4.1999 to 15.4.2014 evidenced under Exs. A1 & A2.  The premium was collected from out of salary.   On 13.7.2003 Sri T.K. Raju died in an accident.  On that a legal notice was issued on 4.7.2005 under Ex. A3.  It was received by the appellant evidenced under Exs. A4 & A5 postal acknowledgements, however, no  reply was given.   The fact that he died in an accident is evidenced under Ex. A6 FIR, Ex. A7 Post-mortem examination and Ex. A8 death certificate.  The contention of the appellant is that the policies were cancelled in the year 2002.  On 6.11.2002 the said fact was informed to the  Registrar, High Court  of A.P.  It was much prior to the death of the deceased. Therefore they were not liable.

  Evidently, the policies were in force from 12.2.1999 to 11.2.2004 and from 30.4.1999 to 15.4.2014.  No doubt  clause 5 of the policy  stipulates that   the company may at any time by notice in writing terminate the policy provided that the company shall in that case return to the insured then last paid premium in respect of such persons in respect of whom no claim has arisen, less pro-rate par thereof for the portion of the current insurance period which shall have expired.  

The appellant filed a letter Dt. 28.4.2008 addressed to the Registrar, High Court of A.P., Hyderabad,  the letter  reads as follows :

  “Please refer our letter Dt. 3.4.2008 wherein, we have sent cheque bearing No. 621569 Dt. 30.3.2008 for Rs. 22,55,107 towards  refund of premium in connection with  cancellation of Long Term Janata Personal Accident  Insurance Policies issued to the employees of A.P. Judiciary.

We have received  a letter from you Dt. 22.4.2008 informing us that the letter has been received  but cheque has not been received.  We regret for  the  inconvenience caused and we are enclosing another cheque bearing No. 621697 Dt. 28.4.2004 for Rs. 22,55,107/-.”

  Therefore, the contention that it was intimated to the employer on  6.11.2002  is obviously false.   Even otherwise it did not pay the amount as stipulated under clause ‘5’ of the policy.  It could not have been said that the policy was lapsed, when the  premium  was  refunded for the first time on 28.4.2008.   Therefore, it cannot be said that the policy was  discontinued from 6.11.2002.  The appellant in order to get over the  payment  of the amount covered under the policies took,  such a   false plea.

Learned counsel for the insurance company contended that  the policy could be cancelled at any time invoking  clause No. 5 of the policy.   The right of insurance company to cancel the policy was up held by the Supreme Court  in the following decisions:

1)  The Central Bank of  India Vs. The Hartford  Fire Insurance  Ltd., reported in AIR 1965  Supreme Court  1288.

2)  The General Assurance Society Ltd. Vs. Chandmull  Jain and another reported in  1966 ACJ 267.

3) The State of Orissa Vs. United India Insurance Company  Ltd., reported in AIR 1997 Supreme Court 2671.

There is no quarrel as to the proposition that the insurance company is entitled to terminate the policy at any time.   The Supreme Court has consistantly opined that  unless the risk had already commenced  or had become so imminent, that it must inevitably take place such a clause could be invoked.   It is  a question of fact  in each case, whether the cancellation was legitimate or illegitimate. 

It is settled law that where two interpretations are reasonably possible, one which  favours a policy holder is to be accepted, as the same advances the purpose for which a policy is taken.  In case of ambiguity or doubt in any term of the policy, it should be interpreted  in favour of the insured and against the insurer.

Coming to the facts of the case, when the insurance company intends to invoke  Clause 5  of the policy, it was only on 28.4.2008 the notice was given and the last premia was refunded.  The contention that it was cancelled in the year 2002 itself, was patently incorrect.   Conditions of  Clause 5  were not fulfilled.  The question of termination of policy will  not arise from the date till payment of prorate premia amount.  We  reiterate under Clause 5,  for the first time the insurance company paid  an amount  of Rs. 22,55,107/- on 30.3.2008.   The death of the deceased being on 13.7.2003,  long prior to cancellation, it  will not  absolve the liability of the insurance company from payment of the amount.  These contentions were taken without recourse to the facts.

We may state that contract of insurance  in between the insurance company and the High Court of A.P. has not been filed.  It is not known whether the scheme has been introduced by the insurance company purely on business consideration and not for any particular  benefit  of insurance conferred on the employees of the said organization.    It is not known the understanding between the insurance company and the employer.    As far as employee is concerned premium was deducted from his salary every month and remitted to the insurance company.   Since the stipulation as laid down under Clause 5 for the first time was complied on 28.4.2008,  by  refunding the amount, it cannot be said that  on the date of death, the policies were not in force.   We do not see any merits in the appeal.  The appeal is liable to be rejected  at the stage of admission.  

In the result the appeal is dismissed.  However, no costs.  Time for compliance four weeks.

PRESIDENT                  LADY MEMBER            MALE MEMBER

                                                 Dt. 08.09.2008.

*pnr.

                                                CORRECTED – O.K.