IN THE DISTRICT CONSUMERS’ DISPUTES REDRESSAL FORUM AT MYSORE<br /> <br /> PRESENT: 1. Shri.D.Krishnappa<br /> B.A., L.L.B - <br /> 2. Smt.Y.V.Uma Shenoi<br /> M.Sc., B.Ed., - Member<br /> 3. Shri. Shivakumar.J.<br /> B.A., L.L.B., - Member<br /> <br /> CC 81/08 DATED 16-06-2008<br /> <br /> ORDER<br /> <br /> Complainants 1. Smt.H>V.Bharathi, W/o K.Vittala Murthy,<br /> 2. Kum.Vibha <br /> 3. Kum.Vidya, All are R/at NO.966/F 7, II Main, II Cross, Vidyaranyapuram, Mysore.<br /> (By Sri.P.G.Ravindra., Advocate)<br /> Vs. <br /> Opposite Parties 1. Manager, M/s Birla Sun Life Insurance Co.Ltd., Sixth Floor, Vaman Centre, Makhwana Road, Off. Andheri-Kurla Road, Near Marol Naka, Andheri E, <br /> Mumbai-400059.<br /> 2. M/s Birla Sun Life Insurance Co.Ltd., 101, Daraja Opus, First Floor, D.Devaraja Urs Road, Mysore-1.<br /> (By Sri.K.R.Shivashankar., Advocate)<br /> <br /> Nature of complaint : Deficiency in service<br /> Date of filing of complaint : 27.03.2008<br /> Date of appearance of O.P. : 22.04.2008<br /> Date of order : 16.06.2008<br /> Duration of Proceeding : 1 ¾ MONTHS<br /> <br /> <br /> PRESIDENT <br /> <br /> <br /> <br /> MEMBER<br /> <br /> <br /> MEMBER<br /> <br /> Sri.D.Krishnappa,<br /> President<br /> <br /> 1. This is a complaint filed by the complainants against the Opposite parties under section 12 of the Consumer Protection Act, 1986 with their grievance that the husband of the first complainant namely K.Vittalamurthy had taken 2 insurance policies from the first Opposite party and the second Opposite party is a branch of first Opposite party. That the insured died on 07.06.2004 by committing suicide, when they made a claim to the Opposite parties for payment of the insured amount, the Opposite parties have paid the amount due under the policy No.000003971, but refused to pay the insurance amount in respect of policy No.000012002. That the premium was payable monthly at Rs.542 and the insured was paying premium regularly and last premium was paid by him on 08.04.2004. The premium due for the month of May 2004 ought to have been paid in the same month for which there is grace period of one month. Since the insured died on 07.06.2004, therefore the Opposite parties are liable to pay the insured amount. But, the Opposite parties have informed them stating that the policy is lapsed that the receipt issued by the Opposite parties on 08.04.2004, in which they have not mentioned that the payment was accepted towards month of March 2004. Further, the Opposite parties letter dated 01.06.2004 shows that policy had not lapsed, therefore the Opposite parties are liable to pay the insured amount and thus the complainants have prayed for a direction to the Opposite parties to pay the amount due under the policy and compensation of Rs.10,000/- for the mental agony.<br /> 2. First Opposite party has appeared through his advocate and filed version. Second Opposite party was duly served remained absent is placed exparte. But the counsel for the first Opposite party shown to have filed version on behalf of both the Opposite parties admitting to had issued insurance policy in the name of K.Vittalamurthy as referred in the complaint with the premium payable under electronic clearing service. It is further contended that the premium was payable on 27th of every month with monthly premium through electronic clearing service mode. That the policy was valid up to 27th March 2004 and that the policy automatically got lapsed from 28th March 2004. That the electronic clearing service extraction of the life assured were dishonoured on 27th March 2004, 27th April 2004 and again on May 27th 2004. However, the insured made a cash payment of Rs.542.01 towards the monthly premium on 08.04.2004, which was inadvertently considered to be the premium due on 27th April 2004. Though the installment of 27th March 2004 was also unpaid as under section 64 V(B) of the Insurance Act, the insurer is not permitted to assume risk under the policy unless the premium is paid in advance and as such said policy remained in force upto 27th May 2004. That on 29.04.2004 intimated the dishonour of the installment due on 27.04.2004 and hence on 03.05.2004m the cash payment made on 08.04.2004 was adjusted towards the unpaid premium on 27th March 2004 which meant that the said policy has lapsed w.e.f. 28.04.2004. Therefore, the policy lapsed due to failure of payment of premium on the part of the life assured after April 2004. That the complainants had given a complaint and had approached insurance Ombudsmen Hyderabad who after enquiry, dismissed the complaint, therefore the Opposite parties denying all other allegations have contended that the policy has lapsed that they have not committed any deficiency, therefore have prayed for dismissal of the complaint.<br /> 3. In the course of enquiry into the complaint, the first complainant and one Puneet Bansal an authorised officer of first and second Opposite parties have filed their affidavit evidence reproducing what they have stated in their respective complaint and version. The complainant has produced a copy of the letter addressed by the Opposite parties on 01.06.2004, copy of the legal notice they got issued to the Opposite parties. The Opposite parties have produced copy of the policy, copy of the order of the Ombudsmen and copy of 2 letters they addressed to first complainant on 01.09.2004 and 21.10.2004. Heard the counsel for both the parties and perused the records.<br /> 4. On the above contentions, following points for determination arise.<br /> 1. Whether the Opposite parties prove that the policy No.000012002 issued on the life of K.Vittalamurthy lapsed due to non-payment of premium prior to the death of the insured and therefore they are not liable to pay insurance amount?<br /> 2. Whether the complainants prove that the Opposite parties by not paying insured amount have caused deficiency in their service? <br /> 3. To what relief the complainants are entitled to?<br /> 4. What order?<br /> 5. Our findings are as under:-<br /> Point no.1 : In the Negative<br /> Point no.2 : In the affirmative.<br /> Point no.3 & 4: See the final order.<br /> <br /> REASONS<br /> <br /> 6. Points no. 1 and 2:- The fact that the Opposite parties have issued an insurance policy bearing No.000012002 on the life of Late K.Vittalamurthy and that the insured K.Vittalamurthy died on 07.06.2004 are not in dispute. But, it is the contention of the Opposite parties that the policy had lapsed long back prior to the death of the insured, therefore as it was not valid as on his death, they are not liable to pay insured amount has been seriously disputed by the complainants.<br /> 7. The witness for the Opposite parties in the affidavit evidence filed by him reiterated the contents of the version filed by them. In view of these rival contentions, the burden is on the Opposite parties to prove that the policy had lapsed prior to the death of the insured. But, the Opposite parties are not consistent on this fact, but are weavering and adopted misinterpreting tactics to deprive the complainants of their entitlement. The fact that the insured was paying the monthly premium through electronic clearing service is undisputed. The Opposite parties with regard to their contention that policy had lapsed long back prior to the death of the insured in [para 5 of their version have stated that the electronic clearing service extraction of the life assured was dishonoured on 27th March 2004, 27th April 2004 and again on 27th May 2004 and thereafter the insured paid Rs.542/- towards the monthly premium of April on 8th 2004, which was inadvertently considered to be the premium due on April 27th 2004. The witness for the Opposite parties in the affidavit evidence in para 8 of his affidavit has similarly stated, therefore it emerges as if the electronic clearing services transfer of amount given by the assured were dishonoured for the month of March, April and May 2004. Further, they have stated as if the premium paid by the insured towards the month of April 2004 was in advertently considered to be the premium due on 27th April 2004. This admission goes to prove that the insured had paid the premium of April on 08.04.2004 and the same was appropriated towards premium of April 2004 and they have further stated in the same para of the version and affidavit that the policy remained in force up to 27.05.2004. It is further stated by them that on 03.05.2004, the premium paid by the insured on 08.04.2004 was readjusted towards unpaid premium of 27.03.2004. Here we emphasize the word readjusted and they say that the policy stood lapsed from 28th April 2004 onwards. This submission and evidence of the second Opposite party is contrary to their own version, in which they have stated in their earlier para that the policy remained in force upto 27.05.2004. Whereas the first complainant in her affidavit evidence has categorically stated that the insured had paid premium as on 08.04.2004 and was due to pay the premium of May 2004 and if it was not paid within due date, the deceased had grace period of one month, but insured died on 07.06.2004, thus the policy cannot be taken to had lapsed. In this context, it is relevant to refer to a letter addressed by the Opposite parties dated 01.06.2004 wherein they have stated as under:-<br /> “We refer to the ECS arrangement that you have signed up for and inform you that the ECS payment of Rs.542.01 for the month of May has been dishonoured for the reason closed account. Please arrange to make payment by way of a cheque at any of our branches or mail it to us at the below mentioned address. If the amount due has been paid, please accept our thanks and disregard this notice.”<br /> The remaining contents of this letter since is not relevant for this case is vomited. This is the earliest letter of the Opposite parties addressed to the insured K.Vittalamurthy. In this letter, the Opposite parties never whispered regarding non-payment of premiums for the months of February, March and April, but they have only referred to the premium of May and requested the insured to pay that premium of May 2004 and that ended there. The Opposite parties have not disputed in having addressed this letter to the insured, therefore it is clear that as on 01.06.2004 the insured had paid all the premiums due up to the month of April 2004 and was due towards month of May 2004. <br /> 8. The Opposite parties as we have pointed out above in the version and also in the affidavit evidence admitted to had received the premium amount of Rs.542.01 paid by the insured on 08.04.2004 and further admitted to have appropriated that premium towards the premium of April 2004, but contended as if inadvertently considered that premium to be the premium of April, but later on contended as if they re-adjusted that premium towards the premium of March 2004. It could be seen that the Opposite parties have alleged, as if the electronic clearing services issued by the insured was dishonoured for the month of March 2004. But, the Opposite parties have not produced any documents or extract of the dishonouring of electronic clearing services of the insured for the month of March 2004. If really that the premium payable for the month of March 2004 had dishonoured nothing prevented, the Opposite parties to produce the materials or documents before this Forum to show the dishonouring. Even when they received the premium amount of Rs.542.01 on 08.04.2004 and appropriated that payment towards the premium of April 2004, they must have verified the premium payment position and if the premium of March was not paid, they could have at that stage itself appropriated towards the premium of March 2004, but they did not do so, on the contrary accepted that amount as the premium of April 2004. But, thereafter on their own some where in the month of May, they say that they have readjusted that amount towards the unpaid premium of March 2004, but surprisingly did not inform the insured of the dishonouring of the March premium, non-payment of premium and readjustment of premium paid, for the month of April 2004 towards the premium of March 2004. The insured when he paid the premium of April 2004 and obtained the receipt he was just assured that he had paid premium for April 2004 and was made known that he is liable to pay premium of May 2004. If the Opposite parties had found premium of March 2004 was not paid and if they had readjusted the premium of April 2004 to the premium of March 2004 they ought o have informed the insured for the payment of April premium and thereby the insurance could have been kept alive. Even otherwise, by the conduct of these Opposite parties after adjustment of payment made on 08.04.2004 towards the premium of April 2004 they sent a letter dated 01.06.2004 to the insured to pay the premium of May 2004. Even at that stage they did notice the non-payment of the premiums of March 2004, but remanded the insured to pay the premium of May 2004 with this letter of Opposite parties the insured further believed that he had paid all the premiums regularly except the premium of May 2004. Therefore, the inaction or omission of these Opposite parties cannot be taken to the advantage for themselves to repudiate the claim of the complainants. Further, it could be seen that the Opposite parties have contended as if the insured had not paid premiums and the premium extraction were dishonoured on 07.03.2004, 27.04.25004 and 27.05.2004, which is contrary to their own case. If the premium of February and March were not paid has contended by them the policy would have lapsed long back prior to May 2004. But, contended as if the policy remained in force up to 27.05.2004, but at another stretch they have stated as if the policy stood lapsed w.e.f. 28.04.2004, which are contrary to each other. It is therefore clear that when the Opposite parties sent letter to the insured on 01.06.2004, they never had any basis to say that the insured had not paid premiums upto April 2004, therefore they did not say so. But, surprisingly after lapse of several months through their letter dated 01.08.2004 and 01.10.2004 they have stated as if the policy had lapsed. In the letter of 01.09.2004, the Opposite parties as stated as under:-<br /> “We wish to inform you that the above policy is in a lapsed condition due to non-payment of premium due on 27th February 2004 onwards and hence note that no benefits are payable under the policy.”<br /> In the letter dated 21.10.2004, the Opposite parties have stated as under:- <br /> The receipt which you have produced is admittedly dated 08.04.2004. But the payment for the month of 28th March was dishonoured. Therefore, the payment made in cash of Rs.542 on 08.04.2004 was adjusted against the dishonoured ECS payment. The policy lapsed on 27.05.2004 after a grace period of 30 days as the payment for the due date 28th April 2004 was not made”.<br /> 9. The contents of these two letters run contrary to their own letter dated 01.06.2004 and even contrary to the contents of the version and also affidavit with regard to the month from which the policy stood lapsed. Even otherwise, the Opposite parties as observed by us above assumed themselves everything without informing the insured about dishonour of the premium payable for the month of March 2004, readjustment of the premium paid for April month at their wins and fancies by keeping the insured in darkness. Even otherwise Opposite parties have not placed any materials to prove that payment made towards the premium of March 2004 is dishonoured. They did not informed the insured regarding readjustment of March premium to the premium of April. Therefore, we on perusal of all these materials have no hesitation to hold that the Opposite parties are very callous in handlings policy of this insured and have acted to their convenience keeping the insured in darkness about their readustment or vision of non-payment and they have acted against their own communication made to the insured on 01.06.2004. Thus in the absence of any proof to show that the premium towards the March 2004 was dishonoured. Thus when the Opposite parties accepted the premium Rs.542.01 paid on 08.04.2004 was rightly appropriated by them towards the premium of April 2004 and if they had inadvertently appropriated towards the premium of April 2004, but later on readjusted towards the month of March 2004 they ought to move informed the insured. Therefore, accepting that the insured had paid premium of April 2004 on 08.04.2004 and accordingly the Opposite parties had appropriated it for that month and a communication was made by the Opposite parties to insured on 01.06.2004 reminding to pay the May premium. Therefore, if the premium of April 2004 was taken as paid, the deceased was liable to pay the premium of May 2004. As admitted by the Opposite parties premium was payable on 27th of every month, therefore the deceased was liable to pay the premium of May 2004, on 27.05.2004 that was the due date for payment of that premium. But, the insured had grace period of 30 days from that due date to pay the premium if the premium was not paid within the due date. As admitted by the Opposite party themselves there are 30 grace period, therefore deceased could have paid the premium of May 2004 within 30 days grace period i.e. on or before 27.06.2004. Therefore, as evidenced the deceased had time to pay the premium of May 2004 on or before 27.06.2004, but unfortunately he died on 07.06.2004, as such, the policy in our view had not lapsed by the time, the insured died and therefore the contention of the Opposite parties that the policy had lapsed by the time insured died cannot be accepted and it has no substance. Hence, we hold that the Opposite parties have failed to prove the lapsing of the policy prior to the death of the insured and the complainants have proved that the Opposite parties have caused deficiency in their service in not paying the insurance amount. With the result, the complaint deserves to be allowed and pass the following order:- <br /> ORDER<br /> <br /> 1. The Complaint is allowed.<br /> 2. The Opposite parties are held jointly and severally liable to pay the insurance amount due under policy NO.000012002 with all other accrued benefits to the complainants and they shall pay jointly and severally that amount with interest at 5% p.a. from the date of their claim i.e. from 26.08.2004 till the date of payment. <br /> 3. The Opposite parties shall also pay damages of Rs.2,000/- to the complainants towards mental agony with cost of Rs.1,000/-.<br /> 4. Give a copy of this order to each party according to Rules.<br /> (Dictated to the Stenographer, transcribed by her, transcript revised by us and then pronounced in the open Forum on this the day 16th June 2008)<br /> <br /> <br /> <br /> (D.Krishnappa) <br /> President <br /> <br /> <br /> (Y.V.Uma Shenoi)<br /> Member<br /> <br /> <br /> (Shivakumar.J.)<br /> Member<br /> <br />