BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION

AT  HYDERABAD.

F.A. 555/2008  against C.C. 139/2005,  Dist. Forum, Rajahmundry

Between:

1)  Singamsetti Krishnaveni

W/o. Srinivasa Rao

Age: 32 years

2)  Singamsetti Goutami Harika

D/o  Srinivasa Rao

Minor, Rep. by her mother

Singamsetti Krishnaveni

3)  S.S.R. Bala Deep

D/o  Srinivasa Rao

Minor, Rep. by her mother

Singamsetti Krishnaveni

C/o. Arigala Balarama Murthy

All are R/o. 6-100, Ambajipeta

East Godavari Dist.                                     ***                           Appellants/

            Complainants.       

                                                                   And

L.I.C. of India

Danavaipeta, Rajahmundry

East Godavari Dist.

Rep. by its Senior  Divisional Manager       ***                         Respondent/

                                                                                                O.P.

Counsel for the Appellant                                     M/s. V.G.S. Rao.

Counsel for the Respondent:                                 M/s. B. Rajendra.

CORAM:

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

    &

                                 SMT. M.SHREESHA, MEMBER.
                                                         

MONDAY, THIS THE FIFTEENTH DAY OF NOVEMBER TWO THOUSAND TEN

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

***

1)                Appellants are  unsuccessful complainants.

2)                The case of the complainants   in brief is that  complainant No. 1  is  the  wife,  complainant No. 2 & 3  are children of  late S. Srinivas  Rao  who had taken   Bhima Kiran  accident policy for Rs. 3 lakhs.  While so he died on 12.5.2002 at Swatantra Hospital, Rajahmundry, when he was admitted, having sustained injuries in a motor vehicle accident on 24.4.2002.    When she lodged the claim along with relevant documents like FIR etc.,  though the officers of the insurance company assured to give benefits by letter dt.  28.10.2002 it had paid only death benefit,  without considering accident benefit.    When they have issued a notice on   4.2.2003 the insurance company repudiated.  Assailing the repudiation the complainant filed the complaint claiming an amount of Rs. 3 lakhs together with interest @ 18% p.a., besides compensation and costs.

3)                The insurance company   resisted the case.  However it admitted issuance of policy in favour of S. Srinivasa Rao wherein he was entitled to death benefit of Rs. 3 lakhs and accident benefit.      It had paid Rs. 2, 97,369/- to the first complainant wife after recovering premium of Rs. 2,631/-.    The premium has to be paid by the assured once in every three months.   The premium was due on 28.2.2002.  His death was on 12.5.2002.  By the date of accident the policy was in a lapsed condition.    If premium was not paid within the grace period of 30 days it would be in a lapsed condition.   At the time of payment of quarterly premium the occurrence of accident was not disclosed.    For claiming accident benefit the policy should be in force not only on the date of accident but also on the date of death.    Since the policy was brought into existence   only  after the accident  it referred the matter to the Zonal Office to decide  whether accidental benefit could be given to them or not.    In fact the complainant was not satisfied with settlement made by them.  It has advised to approach the Ombudsman.  They had hastily approached the Dist. Forum by filing a complaint.    Therefore it prayed for dismissal of the complaint with costs.  

4)                The complainants in proof of their case filed the affidavit evidence of first complainant and got Exs. A1 to A10 marked, while the insurance company filed the affidavit evidence of its Manager and got Ex. B1 marked. 

5)                The Dist. Forum after considering the evidence placed on record opined that quarterly premium was due on   28.2.2002 and was paid on 26.4.2002 after the expiry of the grace period,  and that too after the accident by suppressing the fact and therefore they are not entitled to accident benefit, and consequently dismissed the complaint.

6)                Aggrieved by the said decision, the complainants preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective.    It ought to have seen that the grace period of 30 days was allowed for payment of quarterly premium due on 28.2.2002.  The premium was paid on 26.4.2002 and the assured had expired on 12.5.2002.    Having paid the sum assured they ought to have paid the accident benefit also.    At the most it could have collected interest on premium for the delay, and therefore they prayed that the complaint be allowed. 

7)                The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?

8)                     It is an undisputed fact that late   S. Srinivasa Rao husband of complainant No. 1 and father of complainants 2 to 4 had taken Ex. B1 Bima Kiran Policy for Rs. 3 lakhs with accident benefit commencing from 28.2.1997 for a period of 30 years.    The stipulated period of premium payable was   February, May, August and November every year.   Conditions 2 of the policy stipulates:

“2. Payment of premium—A grace period of one month but not less than 30 days will be allowed for payment of yearly, half-yearly or quarterly premiums and 15 days for monthly premiums. If death occurs within this period and before the payment of the premium then due, the Policy will still be valid and the sum assured paid after deduction of the said premium as also the unpaid premiums falling due before the next anniversary of the Policy. If premium is not paid before the expiry of the days of grace the Policy lapses. If the Policy has not lapsed and the claim is admitted in case of death under a Policy where the mode of payment of premium is other than yearly, unpaid premiums if any falling due before the next Policy anniversary shall be deducted from the claim amount.”

Admittedly the assured had sustained injuries in an accident on 24.4.2002 and he died on 12.5.2002 while undergoing treatment vide Exs. A2 & A5.   The premium was paid on 26.4.2002 two days after the accident,  no doubt,  without informing   about the accident. 

9)                 Learned counsel for the appellants/complainants relying a decision in L.I.C. of India Vs.  Luxmi Gulari reported in I (2006) CPJ 131   contended that if after collecting the premium of last and current quarter the policy was revived for one purpose and denied for other purpose,  it would be contradiction in terms.    In the circumstances if the policy revived for normal health, it also stood revived if death had occurred due to accident.    Admittedly the insurance company having  accepted the premium  of Rs. 2,631/-  paid on 26.4.2002  settled the death benefit  by paying an amount of  Rs. 2,97,369/- however refused to  pay accident benefit of Rs. 3 lakhs on the ground that  policy was expired.  Condition No. 3 of the policy reads as follows:

“3. Revival of Discontinued Policies: If the policy has lapsed, it may be revived during the lifetime of the Life Assured, but within a period of 5 years from the date of the first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest at such rate as may be fixed by the Corporation from time-to-time compounding half yearly. The Corporation reserves the right to accept or decline the revival of discontinued policy. The revival of discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the Proposer/Life Assured.”

In the above said decision, in an identical set of facts the Punjab State Commission observed that:

“Apart from this fact, there is another very important fact which may be noticed. The Insurance Company had given single benefit as if the death had not occurred due to accident and paid Rs. 1,01,260 on account of the death of Rakesh Kumar Gulati. If the policy did not stand revived, we fail to understand how under the same policy the claim on account of death of Rakesh Kumar Gulati had been given to the complainant to the tune of Rs. 1,01,260. If the policy has lapsed, surely, the claimant was not entitled even to Rs. 1,01,260 as the policy stood lapsed. We cannot countenance a situation that for one purpose the policy stood revived and for the other purpose it did not. It will be a contradiction in terms. If the policy stood revived for the purpose of normal death it also stood revived if the death had occurred due to accident.”

10)               Coming to the facts  though the policy was  in a lapsed condition it had accepted the premium on 26.4.2002 but it is after the accident.  Though the assured  died on   12.5.2002 long subsequent to payment,  the insurance company   settled  the claim  at Rs. Rs. 2,97,369/- after deducting premium of  Rs/ 2,631/-.  There is no reason why the very same yardstick  was not extended  for settling the  accident benefit.    By relying the above decision, we  are  of the

opinion that  the insurance company having accepted the  premium and  revived the policy and paid the amount for one purpose  could not have denied for the other  purpose.    They are no doubt contradiction in terms.    The Dist. Forum did not consider all these aspects  and  therefore we are of the opinion that the complainant  was entitled to accident benefit.

11)               In the result the appeal is allowed setting aside the order of the Dist. Forum.  Consequently the complaint is allowed  in part directing the insurance company to pay  Rs. 3 lakhs towards accident benefit  with interest @ 9% p.a.,  from the date of complaint till the date of realization together with costs of Rs. 2,000/-.  Time for compliance four weeks.

1)      _______________________________

PRESIDENT                 

2)      ________________________________

 MEMBER           

   Dt.  15.  11.   2010.

*pnr

“UP LOAD – O.K.”