DR. SADHNA SHANKER, MEMBER

1.       This appeal has been filed under section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as the ‘Act’) in challenge to the Order dated 04.09.2015 of the State Commission in complaint no. 482 of 2001 whereby the complaint was allowed.

2.       We have heard the learned counsel for the appellant (hereinafter referred to as the ‘insurance company’) and the learned counsel for the respondents (hereinafter referred to as the ‘complainants’) and perused the memorandum of appeal.

3.       There is a delay of 28 days in filing the present appeal.  

In the interest of justice and considering the reasons mentioned in the application for condonation of delay, the delay in filing the appeal is condoned.

4.       The facts in brief are that on 06.03.1998, the son of complainants, Mr. Jhankar Sachindra Shah (hereinafter referred to as the ‘insured’), submitted proposal forms for purchase of policies worth Rs. 11 lakh and completed all the formalities including submission of medical reports on 10.03.1998. The premium of Rs. 21,938/- was paid. The insured had died on 28.03.1998. The complainants informed about his death to the insurance company to claim assured sum on 03.04.1998. It is alleged that on 06.04.1998, the complainants were asked to submit PGBS report and income tax returns. On 23.06.1998, the complainants had reminded the insurance company about the claim and the insurance company vide letter dated 27.06.1998 informed the complainants that his proposal had been forwarded. Further, vide letter dated 20.12.1999, the insurance company informed the complainant that the claim could not be settled as the same was found to be an unconcluded contract.

5.       Being aggrieved, the complainants filed a consumer complaint before the State Commission with the prayer to direct the insurance company to pay the compensation and abide by the terms of the contract to pay the sum insured to them.

6.       The insurance company contested the complaint by filling written statement stating therein that the complaint is barred by limitation as the cause of action arose on 04.07.1998 when the claim was rejected and the complaint had been filed on 28.12.2001 i.e. after expiry of three years. It is further stated that the medical requirements (P.G.B.S. Report) called by medical referees are not filed, hence, the proposal had not resulted into policies and the complainants are entitled for refund of Rs. 21,938/-. It is further stated that there was no delay in processing of proposal at any stage and giving information of requirement.

7.       The State Commission, vide its order dated 04.09.2015, allowed the complaint and directed the insurance company to pay a sum of Rs. 11 lakh along with interest at the rate of 9% per annum from the date of filing of complaint i.e. 28.1.2001 till the amount is realized with cost of Rs. 25,000/-.          

8.       Being aggrieved by the order dated 04.09.2015, the insurance company has filed the instant appeal seeking setting aside of the impugned order.

9.       Before us, the main argument was raised only on the point of limitation. On this point, learned counsel for the insurance company has argued that the complaint filed before the State Commission is barred by limitation as the complaint was filed after the expiry of three years from the date of repudiation i.e. 04.07.1998. He pointed out that the State Commission has incorrectly observed the letter dated 30.12.1999 as the repudiation letter and allowed the complaint. He further argued that vide decision of Central Underwriting Section dated 31.03.1998, the insured was called for Post Glucose Blood Sugal (PGBSB) on 03.04.1998 but unfortunately, the insured expired on 28.03.1998, and hence, the contract remained unconcluded under the law, therefore, the insurance company is not liable to pay any claim to the complainants.

10.     Learned counsel for the complainants has argued that the insurance company has repudiated the claim on 20.12.1999 and the complainant has received the same on 08.01.2000 and the complaint had been filed on 28.12.2001, therefore, the complaint is within limitation period. He further argued that the delay in accepting the proposal after completing all the formalities by the proposer and after completion of statutory period of 15 days should not lead to non-conclusion of contract unless there is sufficient cause to keep the proposal on hold. He further argued that the cheques issued against premium were honoured and encashed and the insured also attended medical test on the date time place fixed by the insurance company and after receipts of medical report, the insured was not informed any abnormality in ECG, therefore, it cannot be said that the contract was unconcluded and the insurance company has wrongly repudiated the claim.  

11.     The question before us is as to whether the complaint filed before the State Commission, is within limitation period.

12.     In so far as limitation point is concerned, it is apposite to quote the letters dated 04.07.1998 and dated 30.12.1999.

      Letter dated 04.07.1998     

      “Dear Sir,

Re.: Proposal Nos. 6809, 6810, 6811, 6812, 6814, 6816, 6817, 6818, 6819, 6820, 6822, 6823, 6824, 6825, 6826, 6828, 6829, 6830, 6831, 6832, 6833, 6834 on the life of Shri J. S. Shah (Decd.)

This is further to our letter dated 27.6.98, we regret to inform you that the competent authority has not admitted any claim liability under the above proposals, as the contract was not concluded for want of further requirements. Therefore, only proposal deposit amount of Rs. 21900/- is refundable.

The amount is payable to the person/persons obtaining an (sick) of legal title to the estate of the deceased such as letter of Administrator Succession Certificate, Administrator General Certificate.

If you are not able to produce the above, we may consider the payment on the strength of Indemnity Bond waiving evidence of legal title, enable us to consider waiver of title please return enclosed Form No. 3807 duly com.(sick) by a person of sound financial status, who will join you in indemnifying (sick) surety. The proposed surety should not be related to you. On receipt of this requirement & finding them in order, we shall advise you further in the (sick).”

          Letter dated 20.12.1999

          “Dear Sir,

Re.: Proposals nos. 6804 to 6834, Branch 915, (22 proposals) on the life of Shri J. S. Shah.

Please refer to your letter dated 26.10.1999, addressed to our Chairman, regarding the death claim settlement under the above proposals.

The above proposals were referred to Central Writing Section of the LIC on 21/3/98 due to high sum assured involved. The Medical Officer of the CUS observed adverse finding in the ECG and hence it was decided to call for PGBS. The decision was taken on 31/3/98 and the same was communicated on 1/4/98 alongwith copy of the evidence of income. Unfortunately the Life Proposed had died on 28/3/98. Due to this, the above proposals remained incomplete. As per our rules and prevailing practices in this regard, a medical requirement called by our Medical (sick) cannot be waived and a proposal cannot be completed without them. Because of said demise of your son Jhankar before submission of PGBS, these proposals remained unconcluded and hence only, the proposal deposit paid at the time of submission of the proposals is refundable. The same has already been offered to you. We are afraid that the case cannot be considered further.”

13.     From a perusal of the letters dated 04.07.1998 and dated 30.12.1999, it is manifest that the insurance company has repudiated the claim on 04.07.1998 and not on 20.12.1999 . The letter dated 20.12.1999, which is being relied upon by the complainant is a clarification and reply to their letter dated 26.10.1999. It is not the repudiation letter as claimed and relied on by the State Commission. The repudiation was made vide letter dated 04.07.1998. The complaint was filed on 28.12.2001, and was therefore, clearly barred by limitation. At no stage, has the complainant denied receiving the letter dated 04.07.1998. Therefore, we are of the view that order dated 04.09.2015 of the State Commission is liable to be set aside.

14.     In view of the above discussion, the appeal is allowed and the order dated 04.09.2015 is set aside. The complaint is dismissed as barred by limitation.