DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

============

Sitto Devi wife of Late Shri Sharif, r/o #2891, Dadu Majra Colony, Sector 38 (West), Chandigarh – 160014.

              ---Complainant

Vs

[1]  M/s Bajaj Allianz Life Insurance Co. Limited, Regd.& Head Office: GE Plaza, Airport Road, Yerwada, Pune – 411006, through its Managing Director.

[2]  M/s Bajaj Allianz Life Insurance Co. Limited, Branch Office-2, SCO No. 215-217, 4^th Floor, Sector 34-A, Chandigarh, through its Manager.

[3]  Mr. Anjay Jain, ICC Code No. 1000026535 C/o M/s Bajaj Allianz Life Insurance Co. Limited, SCO No. 139-140, 2^nd Floor, Sector 8-C, Chandigarh. {Deleted vide order dated 30.05.2012}

---- Opposite Parties

BEFORE:    MRS.MADHU MUTNEJA               PRESIDING MEMBER

           SH.JASWINDER SINGH SIDHU        MEMBER

Argued By:    Sh. Rishi Karan Kakkar, Counsel for Complainant.

Sh. Varun Chawla, Counsel for Opposite Parties No.1 and 2.

Opposite Party No.3 Deleted.

PER MADHU MUTNEJA, PRESIDING MEMBER

1.        The husband of the Complainant had purchased a life insurance policy from the Opposite Parties No.1 and 2 bearing No. 0001046392 on 28.11.2002 and had been paying regular annual premiums on quarterly basis for the same (details of Policy are at Annexure C-1). Payment of the premium was being paid timely and sometimes along with delayed payment also. The payment of the premium was being made through Opposite Party No.3. The Insurance Company had been accepting the amounts regularly. 

          The Complainant has stated that on many occasions, her husband had noticed that though premium for the policy was collected by the Opposite Party No.3 on time, but it was deposited at a later date, due to which extra charges had to be paid. It has also been stated in the complaint that premium falling due in the month of November – December 2010 was collected by the Opposite Party No.3 from her husband on an earlier date, but was deposited with the Insurance Company only on 20.12.2010. Unfortunately, the husband of the Complainant died a natural death on 19.12.2010. When the Complainant lodged a claim with the Opposite Parties with all documentation, she was informed that there was a lapse in the deposit of premium; therefore, the claim under the policy was inadmissible. A total amount of Rs.52,633/- was credited into the account of the Complainant as surrender value of policy on 21.2.2011 (Annexure C-3). No money for the life insurance cover was paid (copy of repudiation letter Annexure C-4).

          The Complainant has stated that she was entitled to the claim under the life insurance policy also and hence, served a legal notice dated 7.6.2010 upon the Opposite Parties for release of amount. As the amount has not been paid, the Complainant has filed the instant complaint, with a prayer that the Opposite Parties be directed to release amount of Rs.1.00 lac, along with interest and compensation.

2.        Notice of the complaint was sent to Opposite Party seeking their version of the case.

3.        Opposite Parties No.1 and 2 in reply have given the factual position of the case. They have stated that the Deceased Life Assured (DLA) Sh. Sharif had taken the Bajaj Allianz Save Care Protect Plan himself and had opted to pay regular quarterly premiums @ Rs.1301/- (excluding service tax) for premium paying term of 17 years. The original policy bond containing terms and conditions was delivered to the DLA. The DLA was required to pay the regular premiums under the policy as stipulated in the Schedule. Unfortunately, he failed to pay quarterly regular premiums of the policy, due to which the policy lapsed on non-payment of regular premium due on 28.8.2010 and onwards. The DLA expired on 19.12.2010 and his wife lodged the death claim under the Policy. The answering Opposite Parties have stated that the policy had already lapsed due to non-payment of premium due on 28.8.2010 as the DLA had even failed to pay the premium during the grace period of 30 days as provided under the policy terms and conditions which expired on 27.09.2010. Hence, on the date of death the policy was already in a lapsed condition. In fact, the premium due on 28.8.2010 was deposited by the Complainant/LRs on 20.12.2010 i.e. after the death of the DLA as an afterthought. Accordingly, in terms of the policy conditions, the permissible paid up value amounting to Rs.52,633/- was credited into the account of the Complainant as full and final settlement of the claim and the rest of the alleged claim was rejected being inadmissible as per terms and conditions of the contract of insurance.  

          In the preliminary objections, Opposite Parties No.1 and 2 have stated that due to non-payment of due premiums and without informing them regarding the prior death of the DLA, two quarterly premiums due on 28.8.2010 and 28.11.2010 have been deposited on 20.12.2010 i.e. after the death of the DLA on 19.12.2010 just to derive illegal financial gains under the policy and play fraud upon the answering Opposite Parties. Hence, there is no deficiency in service on the part of the answering Opposite Parties and the claim need not be paid. Also, Agents do not have any express or implied authority to receive or collect the premiums on behalf of the answering Opposite Parties. The alleged payment made by the DLA to the Agent can not be treated as payment to the Insurer. IRDA Guidelines are clear that agents are the independent contractors and there is no principal-agency relationship between the insurance consultant and the answering Opposite Parties.  According to the Opposite Parties, no amount is payable to the Complainant as the DLA failed to discharge his contractual obligation under the Policy. Moreover, permissible fund value has already been paid as per policy terms and conditions to the heirs. 

          On merits, Opposite Parties have reiterated the stand taken in the preliminary objections. It has further been stated that the required premiums were to be paid by the DLA without any obligation on the company to notify about the same and this was expressly mentioned in the terms and conditions of the policy issued to the DLA. Also, the Opposite Parties have no role to play in arranging to pick up the premium amount. Opposite Parties have placed on record copy of Proposal Form at Annexure R-1 and Policy at Annexure R-2. After the death of the DLA on 19.12.2010, intimation of death was received by the Opposite Parties on 21.01.2011 (Annexure R-3) from the Complainant (wife of the DLA). Opposite Parties have also stated that the Policy had already lapsed due to non-payment of premium due on 28.8.2010. Hence, on the date of death the policy was lying in the lapsed condition and thus, only surrender value was payable which amounted to Rs.52,633/-. The same was credited to the account of the DLA by the answering Opposite Parties. Denying all other allegations of the Complainant, Opposite Parties have prayed for dismissal of the complaint.  

4.        On a separate statement given by the learned counsel for the Complainant to the effect that he do not press the complaint against Opposite Party No.3, the name of Opposite Party No.3 was ordered to be deleted from the array of Opposite Parties vide order dated 30.05.2012.

5.        Parties led evidence in support of their contentions.

6.        We have heard the learned counsel for the Parties and have perused the record.  

7.        The case of the Complainant relates to non-payment of death claim by the Opposite Parties due to late receipt of premiums by the Opposite Parties. The Complainant has stated that the amount was paid to the Agent well in time, but was deposited by him with the Opposite Parties on 20.12.2010 when the husband of the Complainant (Life Assured) had died on 19.12.2010. Opposite Parties in reply have taken the stand that the policy was already in a lapsed condition as two premiums due 28.8.2010 and 28.11.2010 had not been paid. Opposite Parties have relied on Condition No.3 of the policy terms & conditions (Annexure R-4), which reads as under:-

“In the event of non payment of regular premiums due under this Policy within the grace period the policy will continue in paid up form provided that at least 3 full years premiums have been paid and the policy shall also acquire surrender value.”

          In accordance with the aforesaid terms and conditions, an amount of Rs.52,633/- was credited into the account of the Complainant by the Opposite Parties and the rest of the claim was rejected.

8.        A look at the terms and conditions of the policy with regard to premiums brings out the following:-

           2.   Payment of Premiums:

i)   Premiums are payable on the due dates. However, a grace period of one month not less than 30 (thirty) days shall be allowed under any circumstances whatsoever. If the death of the Life Assured occurs during the grace period the benefits payable on death under this Policy shall be paid after deduction of the premium then due.

ii)  Premiums shall be payable on the due dates within the grace period allowed without there being any obligation on the company to notify the Life Assured/ Policy Holder of the due dates. Where the premiums have not been paid on the due dates or even during the grace period, the Policy shall lapse, except those as given in paid up value.”

          From Condition No.2, reproduced above, it is evident that the premium was to be paid on time or within the grace period and in case, of death of the Life Assured, benefit would be payable only if the delayed premium was paid during the grace period. The Complainant has made the payment of premium to the Opposite Parties, beyond the grace period which expired on 27.9.2010.

9.        The Complainant has stated that payment was made to the agent of the Opposite Parties No.1 & 2 by her deceased husband on time, but the Agent failed to deposit the same with the Opposite Parties on time. The payment was in fact, deposited only after the death of the Life Assured, due to which the claim has been denied. To support the denial of claim on the ground of late deposit by the agent, the Opposite Parties  No.1 & 2 have placed reliance on the ruling of the Hon’ble National Consumer Disputes Redressal Commission in case Life Insurance Corp. of India Versus Girdhari Lal P. Kesarwani & Another, I (2009) CPJ 228 (NC), wherein it has been as under: -

“Consumer Protection Act, 1986 – Section 21(b) – Life Insurance – Policy lapsed – Premium paid to agent, not given to insurer – Insured expired – Liability denied by insurer – complaint allowed by Forum – Order upheld in appeal – Hence revision – As per Apex Court’s ruling, agent has no authority to accept premium on behalf of LIC, deposit made by agent after death of deceased would not entitle claimants to get amount insured under Policy – Orders of lower Fora set aside – No relief entitled. [Paras 6, 7, 8 and 11].”

          The Opposite Parties No.1 and 2 have also placed reliance on the ruling of the Hon’ble Apex Court in case Harshad J. Shah and Another Versus LIC of India and Others, III (1997) CPJ 9 (SC), wherein it has been as under: -

“Life Insurance Corporation Act, 1956 – Section 49, Clauses (3), (4) – Insurance – Functions of agents – Agent have no express/ implied authority to receive the premium on behalf of the LIC – Payment of premium in respect of Life Insurance Policy by insured to general agent of LIC – Cannot be regarded as payment to insurer – So as to constitute discharge of liability of insured.”

          Also, Opposite Parties No.1 & 2 have stated that as per the IRDA Guidelines, the Agent is an independent person and not an authorized representative of the Opposite Party to collect premiums. Hence, there was no principal -agency relationship between the insurance consultant and the Opposite Parties, thus, payment of premium to the Agent could not be treated as payment of premium to the Opposite Parties.

10.       The Hon’ble Apex Court in case Life Insurance Corporation of India Vs. Jaya Chandel, (2008) 3 Supreme Court Cases 382, has observed that the insurance corporation is not bound to revive a policy in case the money is received after the death of the insured and can return the money received as premium for the same. The amount given in cash by the DLA in the present case is to the Agent who has deposited the amount with the Opposite Parties after the death of the DLA. As alleged by the Complainant payment was made to the Agent prior to the death. Opposite Parties have categorically stated that the Complainant is not entitled to get the insured amount under the Policy. It is correct that the policy in question was already lying in a lapsed state, as even the grace period has lapsed. We fully agree with the stand taken by the Opposite Parties for denial; but there is a small fact which they seem to have overlooked which changes the situation completely and turns the tables on them. This minor fact is that they have not stated/ proved that they have returned the premium deposited by the Agent in cash in their office to the Complainant/heirs/agent. If they have accepted/ kept the premium then all wrongs by the DLA or the Agent have been condoned by the insurance company by keeping the money deposited. In such a situation, the policy would be deemed to have revived and insured amount would then be payable to the heirs. It needs to be added here that the DLA had been paying regular premiums to the insurance company since 2002.

11.       The Opposite Parties have already paid the permissible surrender value under the policy as per the terms and conditions, and entitlement of the life insurance cover amount to the heirs of the deceased though deniable due to payment after death, has been condoned by the simple fact that the money has not been refunded/returned. So taking a lenient view and in the interest of justice & the fact that the OPs have kept the amount of premium paid, we allow this complaint        in favour of the Complainants and direct the Opposite Parties to pay the amount due for the life insurance cover in terms of the policy issued. This amount be paid by the Opposite Parties within 45 days of receipt of this order, failing which Opposite Parties shall be liable to pay the amount of Rs.1.00 lac claimed by the Complainant in terms of the cover note issued. No cost.     

12.       Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

22^nd November, 2012.                                            

(MADHU MUTNEJA)

PRESIDING MEMBER

(JASWINDER SINGH SIDHU)

MEMBER