Taken up through video conferencing.

1.       Heard learned counsel for the revisionist insurance co.

          Perused the material on record.

2.       The dispute relates to an insurance claim made by the respondent complainant on the death of her son.

3.       The District Forum vide its Order dated 30.01.2018 allowed the complaint. It directed the opposite party insurance co. (the revisionist herein) to pay the insured value of Rs. 4,00,000/- plus all bonuses, compensation of Rs.10,000/- and cost of litigation of Rs. 5,000/- to the complainant within one month from the date of its Order, failing which the total amount will carry interest @ 5% per annum from the date of filing of the complaint i.e. 12.09.2016 till its realisation.

4.       The State Commission vide its Order dated 17.12.2019 dismissed the appeal with cost of Rs. 25,000/-.

For ready appreciation, extracts of the appraisal made by the State Commission in its impugned Order of 17.12.2019 are reproduced below:

The dispute between the parties revolves around a death claim being made by the Respondent over the death of her son.

Both sides were heard through their respective Ld. Advocates.  Documents on record also gone through extensively in order to derive at a judicious decision in the matter.

Admittedly, the  Appellant  received  premium  amount  of  Rs.  26,441/- from the son of the Respondent, Litan Basak, on 30-04-2014.  Said Litan Basak died on 10-08-2014.

It is the case of the Appellant that the proposal form of Litan Basak was declined vide letter dated17-07-2014 over non-submission of certain documents.

It is indeed curious to note that the Appellant has not adduced any scrap of paper to show that such decision was duly communicated to Litan Basak prior to his death and the premium amount returned to him instantly. Thus, the probability of manufacturing documents in order to give it the colour of a ‘conscious decision’ cannot be ruled out.

We  are  of  view  that  eligibility  of  the  proposer  to  avail  a  policy  needs  to  be  examined  before acceptance  of  premium  from  him,  not  afterwards. Acceptance of  premium  pending  decision pertaining to eligibility of the proposer is akin to putting the cart before the horse which is not permissible.

It  is  though  claimed  by  the  Appellant  that  the  competent  Authority  decided  negatively  about issuance of policy on 17-07-2014 after Litan Basak, since deceased, failed to furnish requisite documents in terms of the letter dated 18-06-2014, it is quite baffling that none of the aforesaid two  letters  reached  the  end  of  the  Respondent  No.  1. In  fact, Appellant  has  not  adduced  any cogent documentary proof to establish that the aforementioned two letters were indeed issued and sent to the residence of Litan Basak, since deceased.

Another  intriguing  fact  is  that,  though  the  Appellant  allegedly  declined  to  accept  the  proposal form  of  Litan  Basak,  since  deceased,  on  17-07-2014,  no  endeavour  was  made  from  its  end  to refund the premium amount till 10-08-2014, i.e., the expiry date of said proposer.

Considering all these vital aspects, we refuse to accept the purported letters dated 18-06-2014 and17-07-2014 as genuine documents.

Admittedly, the proposal form was received by the Appellant on 30-04-2014.  In view of this, it was highly unusual for the Appellant to sit tight over the proposal form of Litan Basak for so long, who made no bones about his actual state of health in the proposal form.

In terms of Clause 4(6) of the Insurance Regulatory and Development Authority (Protection of Policyholders’  Interests)  Regulations,  2002,  Proposals  shall  be  processed  by  the  Insurer  with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposals by the Insurer.

It is though contended by the Appellant that the same is only directive and holds good in respect of  proposals  complete  in  all  respects,  no  such  specific  stipulation  is  mentioned  in  the aforementioned Regulation.  Further, even if it is assumed for the sake of argument that the same was applicable in respect of those proposal forms which were complete in all respects, it is not understood, why it did not seek requisite documents within a fortnight of receipt of the proposal form from the Respondent No. 1.

Coming to the contention of the Appellant that since the proposal form was not accepted, it did not give rise to any contract between the parties, it appears that the Hon’ble Supreme Court dealt with the issue elaborately in the matter of D. Srinivas Vs. SBI Life Insurance Company Ltd. and Ors. (Civil Appeal No.2216 of 2018) and in fact took into consideration the impact of its earlier decision in LIC v. Raja Vasireddy Komalavalli Kamba and Ors., (1984) 2 SCC 719.  Relevant portion of the said decision is appended below which is self explanatory.

“12. Our attention has been drawn to the case of LIC v. Raja Vasireddy Komalavalli Kamba and Ors., (1984) 2 SCC 719, wherein this Court has clearly stated that the acceptance of an insurance contract may not be completed by mere retention of the premium or preparation of the policy document rather the acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance.

13. Although we do not have any quarrel with the proposition laid therein, it should be noted that aforesaid judgments only laid down a flexible formula for the court to see as to whether there was clear indication of acceptance of the insurance. It is to be noted that the impugned majority order merely cites the aforesaid judgment, without appreciating the circumstances which give rise to a very  clear  presumption  of  acceptance  of  the  policy  by  the  insurer  in  this  case  at  hand.  The insurance contract being a contract of utmost good faith, is a two-way door. The standards of conduct as expected under the utmost good faith obligation should be met by either party to such contract.

14. From the aforesaid clause it may be seen that the condition precedent for acceptance of the premium was  the medical  examination.  It  would  be  logical  for  an  underwriter  to  accept  the premium based on the medical examination and not otherwise. Therefore, by the very fact that they accepted the premium waived the condition precedent of medical examination”.

Clearly, the above illustration makes a complete hollow of the contention of the Appellant that mere acceptance of premium does not give rise to any contract.

It is indeed a sorrow sight that the most vocal advocate of the principle of ‘uberrima fides’ (utmost good  faith)  acted  in  contravention  of  the  same  simply  to  deny  a  bona  fide  claimant  of  her legitimate due. Such opportunistic attitude on the part of the Appellant is highly condemnable.

We do not find any merit in this Appeal and as such, dismiss the same with a cost of Rs. 25,000/- being payable by the Appellant to the Respondent No. 1. The impugned order is perfectly in order and hence requires no sort of intervention from this end.

5.       The State Commission has passed a well-appraised reasoned Order. It has concurred with the findings of the District Forum. No palpable crucial error in appreciating the evidence by the two fora below, as may cause to require de novo re-appreciation in revision, is visible. No jurisdictional error, or legal principle ignored, or miscarriage of justice, is visible. Nothing warrants interference with the impugned Order of the State Commission in the exercise of the revisional jurisdiction of this Commission.

6.       The revision petition, being ill-conceived and bereft of merit, is dismissed.

7.       The son of the complainant expired in 2014, the District Forum passed its Order in 2016, the State Commission passed its Order in 2019, we are now in 2021.

8.       To achieve the ends of justice, the revisionist insurance co. is directed through its chief executive to make good the award within one month from today and to file a report-in-compliance with the District Commission within the same period of one month from today, failing which the District Commission shall undertake execution against the revisionist insurance co. through its chief executive, both for ‘Enforcement’ and for ‘Penalty’, as per the law.

9.       The Registry is requested to send a copy each of this Order to the chief executive of the revisionist insurance company, to the complainant and to the District Commission, within three days. The stenographer is requested to upload this Order on the website of this Commission immediately.