OF 2009 AGAINST C.C.NO.482 OF 2008 DISTRICT CONSUMER FORUM-III HYDERABAD

Between

Smt Madhu Updhyay
W/o late Rajesh Upadhyay
Aged about 28 yrs, Occ: Household
R/o 3-1-161, Old Moti Market
Esamiya Bazar, Hyderabad

                                                                Appellant/complainant

        A N D

1.     ING Vysya Life Insurance Company (P) Ltd.,
        rep. by its Branch Manager Claims
        Regd.Off: 5^th Floor, R.No.22, M.G.Road
        Bangalore (Formal Party)

2.     ING Vysya Life Insurance Company (P) Ltd.,
        Rep. by its Manager, Flat No.301 to 303
        Venkat Plaza, G-3-88/3, Panjagutta
        Hyderabad

                                                                Respondent/opposite parties

Counsel for the Appellant             Sri Madan Kshirsagar

Counsel for the Respondent          Sri C.V.Narasimham

 QUORUM:           

 SRI SYED ABDULLAH, HON’BLE MEMBER

      &

                            SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER

                        WEDNESDAY THE TWENTY SEVENTH DAY OF OCTOBER

                                            TWO THOUSAND TEN

Oral Order ( As per R.Lakshminarsimha Rao, Member)
           ***

        The complainant has filed the appeal challenging the order of the District forum whereby her complaint was dismissed on the ground that the insurance policy issued in favour of her husband was in lapsed condition and her husband failed to pay the fourth instalment and fifth instalment which were due on 3.5.2006 and 3.11.2006 respectively.

        The facts leading to filing of the appeal are that the appellant’s husband during his life time obtained insurance policy bearing No.001901095 for a sum assured of `1,00,000/- lakh from the respondents.  The premium was payable twice in a year on the third day of May as also on third day of November.  The policy was commenced on 3.11.2004.  The appellant’s husband paid premium till 3.5.2005.  The third half yearly payment was due on 3.11.2005.  A grace period of 30 days from the date of due date would end on 3^rd of June and 3^rd of December.  The third half yearly premium was not paid by the appellant’s husband till the expiry of the grace period.  The policy stood lapsed w.e.f., 3.11.2005. 

        The appellant’s husband applied for revival of the lapsed policy by submitting application dated 22.6.2006 and had paid a sum of `5,353/- through a cheque and the respondents issued acknowledgement of the cheque.  The respondents by their letter dated 28.6.2006 requested the appellant’s husband to undergo medical examination and submit medical examiner’s report.  He had undergone medical examination on 23.10.2006 and the report indicated blood pressure of the appellant’s husband on the higher side which was mentioned as undiagnosed hypertension.  The respondents requested the appellant’s husband on 30.10.2006 to undergo further medical tests.  The appellant’s husband met with road accident on 25.12.2006 in Maharastra and succumbed to the injuries sustained in the accident.  The appellant lodged claim and her claim was repudiated on the ground that the policy was in a lapsed condition. 

        The appellant filed the appeal contending that there was no communication of any repudiation of her claim by the respondents nor the respondents could take the plea of lapsed condition of the policy despite encashment of the cheque issued towards payment of the third half yearly premium.

        The points for consideration are:

1)                Whether encashment of the cheque issued by the appellant’s husband render the respondents liable to pay the sum assured?

2)                Whether the appellant is entitled to the benefit conferred by the insurance policy?

3)                To what relief?

POINTS NO.1 AND 2  The dispute in a narrow compass is the revival application submitted by the appellant’s husband vis-à-vis encashment of cheque issued by him towards third half yearly premium of the insurance policy.  The insurance policy was issued on 3.11.2004 giving choice to the appellant’s husband to cancel it for any reason that he disagreed with the terms and conditions of the policy and in such eventuality the respondent company would refund the premium after deducting the proportionate risk premium for the period of risk covered and expenses incurred by it on account of medical examination and stamp duty charges.  The appellant’s husband proceed to accept the insurance policy in accordance with the terms and conditions laid therein. 

The billing frequency of the premium is semi annual @ `2546/-.  The appellant’s husband paid first instalment premium of `2,546/- on 3.11.2004 for the period  from 3.11.2004 till 3.5.2005.  Therefore, the next premium due is on 3.5.2005 as also an extended period of 30 days as grace period from thereto.  The second half yearly premium was paid on 3.5.2005.  Therefore, the third half yearly premium under the policy was due on 3.11.2005.  By that date or with a 30 days period of grace period from thereto would be the period for the policy to lapse in case no premium amount is paid.  The appellant’s husband did not pay the third half yearly premium by the expiry of grace period and as such the insurance policy issued in his favour was in lapsed condition.

The appellant’s husband filed application for revival of the insurance policy on 22.6.2006 and he had paid a sum of `5,353/- through cheque bearing No.20623384 dated 22.6.2006.  The respondents acknowledged receipt of the amount.  The appellant’s husband was asked to undergo medical examination which he had undergone on 23.10.2006.  The respondents contended that they were not satisfied with the medical examination report which divulged enhanced blood pressure and styled it as undiagnosed hypertension.  In this regard the parties are at dispute as the respondents submitted that they had issued letter dated 30.10.2006 requesting the appellant’s husband to undergo further medical tests for the purpose of renewal of insurance policy, the appellant has contended that there was no any such communication from the respondents either to her or to her husband.  A perusal of letter dated 30.10.2006 shows that the respondents made a request whereby the appellant’s husband was required to submit hypertension questionnaire and medical tests report on or before 14.11.2006. 

The relevant terms and conditions for reinstatement of lapsed insurance policy have been embodied in the endorsement annexed to the insurance policy.  Clause VI of the conditions applicable to basic policy and riders provides for reinstatement of the insurance policy within five years from the due date of the first unpaid premium subject to three conditions that the policy has not been surrendered for cash, a written application for reinstatement together with evidence of insurability and health of the insured is submitted and that the amount necessary to reinstate the policy is paid by the insured.  Provisio to the clause VI  has couched the right of the respondents as to the acceptance of reinstatement of the policy.  It reads as under:

The company reserves the right to accept the reinstatement of a lapsed policy on its original terms or on modified terms or to reject the reinstatement.  The reinstatement shall come into effect on the date when it is specifically communicated to the policy holder by the company.  Since the company shall be totally relying on the statement made by the policy holder/life assured to the company and to its medical examiner in deciding on reinstatement of a lapsed policy, if any incorrect or untrue statement has been made or any material fact has been suppressed, the company shall be entitled to cancel the reinstatement of the policy or repudiate the claim if any arising out of such reinstatement and the entire amount paid towards such reinstatement shall be forfeited.

The respondent company had come forward to refund the amount of `5353/- received towards third annual instalment premium but claims to be received towards deposit till the revival application is approved.  Clause V of the conditions deals with the date of lapse of the insurance policy to be the date of the earliest unpaid premium.  Clause V of the conditions has to be read in consonance with the condition laid down in proposal deposit acknowledgement dated 27.10.2004 that the payment towards proposal deposit would be held in deposit without interest until the application is accepted or cancelled and the amount could not be considered the payment of premium for any purpose.  The amount of `5353/- paid by the appellant’s husband has to be considered as payment towards third annual instalment premium only subject to the acceptance of application for revival of the insurance policy, which in fact was not accepted nor rejected by the time of date of death of the appellant’s husband.  We would come to the effect of in action on the part of the respondent insurance company in regard to the application for revival of insurance policy of the husband of the appellant a little later and insofar as the question of entitlement of the appellant to the benefits under the insurance policy, in view of the position that the respondent insurance corporation had not approved the revival application submitted by the appellant’s husband, the status of the policy has to be considered as lapsed condition.  A lapsed insurance policy does not confer any right on the person claiming benefits thereunder. 

The respondent insurance company had received the revival application together with cheque for `5353/- on 22.6.2006.  The respondent insurance company subjected the appellant’s husband to undergo medical tests in accordance with which requirement, the appellant’s husband underwent medical examination on 23.10.2006.  At this juncture, clause VI of the conditions applicable to the basic policy springs into action as it is made mandatory for the insured to satisfy the three conditions laid down therein.  The three conditions are 1) non-surrender of the insurance policy for cash, 2) submission of application for reinstatement together with the medical reports and 3) the amount required for reinstatement of the insurance policy.  Admittedly, the respondent insurance company had no dispute in regard to the status of the insurance policy in terms of the first condition in regard to the fact that the insurance policy was not surrendered for cash and so is the position with the condition no.2 that the appellant’s husband had submitted written application on 28.6.2006.  The medical examination report issued by the doctor of the respondent insurance company to the insured on 23.10.2006 and thereafter till the death of the insured on 25.12.2006, the respondent insurance company failed to take any action in regard to the application for revival of the insurance policy. 
        The appellant has got issued notice dated 28.8.2007 through her advocate stating that on receipt of notice dated 30.10.2006 requiring the appellant’s husband to submit hypertension questionnaire and further medical test reports, he made representation to the respondent insurance company.  Further, it is stated that on  being satisfied with itself with the explanation tendered for, he was informed that the policy would be revived and fresh notice intimating the renewal of the policy would be issued.  However, without issuing the notice, the respondent insurance corporation had not kept its promise and meanwhile on 25.12.2006 the appellant’s husband died in a road traffic accident. 

In reply to the notice of the appellant, the respondents had issued letter dated 12.9.2007 clarifying that as per the terms and conditions of the insurance policy, the respondent insurance company is not liable to pay any benefit under the policy and the amount of Rs.5353/- was refunded thereby, with a request for furnishing of discharge voucher along with copy of bank passbook/statement. 

The appellant admitted the plea of the respondent insurance company that hypertension questionnaire and medical reports were sought for through their letter 30.10.2006.  The appellant had come up with the plea of her husband clarifying the matter  what was sought for where after the respondent company assured him of revival of the insurance policy and dispatch of notice of revival of the insurance policy.  The appellant’s husband was required to submit medical reports and hypertension questionnaire in order to comply with the requirement of clause VI of the condition applicable to Basic Policy and riders.  The respondent company had stated that the amount of `5,353/- which was kept in deposit was ready to be refunded to the appellant.  In the circumstances, there cannot be any deficiency in service found on the part of the respondent insurance company in the matter of revival of the insurance policy issued in favour of the husband of the appellant.  To the extent of refund of the premium amount, the appellant is found entitled to the refund of the amount of `5353/-.

In the result the appeal is allowed by setting aside the order dated 4.12.2008 of the District Forum.  The complaint is allowed directing the oppostie parties no.1 and 2 to refund the amount of `5353/- together with costs of `2,000/-.  Time for compliance four weeks.

                                                                        MEMBER

                                                                        MEMBER

                                                                     Dt.27.10.2010

KMK*