STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

The SBI Life Insurance Company Limited, SCO NO.127-128, 1^st Floor, Sector 17-C, Chandigarh, through its Branch Manager or Competent authority (through Sh. V. Srinivas, Head-Legal, SBI Life Insurance Co. Ltd., Central Processing Centre, Kapas Bhavan, Sector-10, CBD-BELAPUR, Navi Mumbai)

……Appellant/Opposite Party

V e r s u s

1.  Sh.Avtar Singh, resident of No.80, Village Makhewala, Tehsil Sardulgarh, District Mansa, Punjab.

2.  Sh.Gurlal Singh, son of Sh.Dharam Singh, son of Labh Singh, resident of No.80, Village Makhewala, Tehsil Sardulgarh, District Mansa, Punjab.

3.  Sh. Malkit Kaur widow of Sh.Dharam Singh, son of Labh Singh, resident of No.80, Village Makhewala, Tehsil Sardulgarh, District Mansa, Punjab.                                                                ....Respondents/complainants

4.  SBI, Madhya Marg, Sector 7, Chandigarh through its Branch Manager.

                               ….Respondent/Opposite Party No.2

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:    MR. JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

Argued by:  Sh.Varun Chawla, Advocate alongwith Sh. Rajneesh   Malhotra, Advocate for the appellant.

Sh.Jatinder Pal Singh Sidhu, Advocate for respondents no.1 to 3.

              Respondent No.4 already exparte.

PER  JUSTICE SHAM SUNDER, PRESIDENT

1.               This appeal is directed against the order dated 23.11.2011, rendered by the District Consumer Disputes Redressal Forum-II, U.T., Chandigarh (hereinafter to be called as the District Forum only), vide which, it accepted the complaint of the complainants (now respondents no.1 to 3), and directed Opposite Party No.1 (now appellant), as under:-

“In view of the above discussion, we allow the present complaint in favour of the complainants and direct the OP No.1 to honor their commitment even though the policy had not been made and to pay to the complainants the policy amount i.e. Rs.2,02,500/-.

The above order be complied with by OP No.1 within a period of 30 days failing which it shall be liable to pay the aforesaid amount of Rs.2,02,500/- alongwith interest 9% per annum from the date of order till actual payment”

2.               The complaint against Opposite Party No.2 (now respondent no.4), was dismissed, as no specific allegation had been made against it.

3.               The facts, in brief, are that Dharam Singh (now deceased), purchased a Life Insurance Policy,  from the Opposite Parties,  and paid the first premium of Rs.15,000/-,  on 09.09.2008. While subscribing to the aforesaid policy, the deceased filled up the proposal form, and signed the same. Dharam Singh, died on 09.10.2008. The legal heirs of Dharam Singh (now respondents no.1 to 3), came to know, about the purchase of the policy, from the passbook/account of the deceased (Dharam Singh). When the legal heirs approached the Opposite Parties, for the payment  of amount, under the policy, after the death of the insured, they did not honour their commitment. They also did not give any specific reason, for denial of the claim. It was stated that  the aforesaid acts of the Opposite Parties, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainants, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), for directing the Opposite Parties for payment of the insured claim; Rs.90,000/- for mental agony and physical harassment; and Rs.16,500/-, as costs of the proceedings, was filed.

4.               Opposite Party No.1, in its written version, pleaded that no concluded contract, came into being, between Dharam Singh, and it (SBI Life Insurance Company limited, Chandigarh). It was stated that, under these circumstances, the complainants, who are the legal heirs of Dharam Singh, did not fall within the definition of consumers, under the Act. It was further stated that mere deposit of premium amount, alongwith proposal form, did not automatically result into the issuance of an insurance policy. It was further stated that Opposite Party No.1, had to satisfy itself, about the proposal of the insured, before issuing the risk cover. It was further stated that, until or unless, the proposal form was accepted, by it, and such acceptance went out of its hands, by putting the same in mail, no concluded contract came into existence. It was further stated that, on receipt of the proposal form, it was found that the signatures of the beneficiary, on the benefit illustration, did not match, with the same (proposal form). It was further stated that, on 15.09.2008, the insured was asked, to comply with the requirements, but he failed to fulfill the same. It was further stated that, after a long wait, the proposal was cancelled and the premium amount was refunded. It was further stated that even, no intimation was given to the Opposite Parties, by the legal heirs, of the deceased, regarding his death on 09.10.2008. It was further stated, that neither there was any deficiency, in rendering service, on the part of Opposite Party No.1, nor it indulged into unfair trade practice.  The remaining averments, were denied being wrong.

5.               Opposite Party No.2, in its written version, pleaded that the complaint was bad for misjoinder of parties. It was stated that there was no deficiency, in service, on the part of Opposite Party No.2. It was further stated that the only connection between Opposite Party No.2, and the deceased,  was that, he was operating the saving bank salary account, with it. The remaining averments, were denied being wrong.

6.               The Parties led evidence, in support of their case.

7.               After hearing the Counsel for the parties, and, on going through the evidence, and record of the case, the District Forum, accepted the complaint, against Opposite Party No.1, in the manner, referred to, in the opening para of the instant order. 

8.               Feeling aggrieved, the instant appeal, has been filed by the appellant/Opposite Party No.1.

9.               Despite service, no legally authorized representative on behalf of respondent no.4, came present. Accordingly, it was proceeded against exparte, vide order dated 15.02.2012.

10.            We have heard the Counsel for the appellant, and respondents no.1 to 3, and, have gone through the evidence and record of the case, carefully.

11.            The Counsel for the appellant, submitted that, no doubt, Dharam Singh (now deceased), filled up the proposal form and paid the first premium of Rs.15,000/-. He further submitted that the proposal form was only an offer, and until or unless, the same had been accepted, by Opposite Party No.1, and the policy had been issued, to Dharam Singh, aforesaid, no concluded contract, could come into being. He further submitted that since the signatures of the beneficiary, on the benefit illustration, did not match, with signatures on the proposal form, he was asked to explain the same, but no reply was ever received. He further submitted that no Insurance policy was ever issued, in favor of Dharam Singh, and, on the other hand, the same stood cancelled and premium amount was refunded to the complainants/respondents no.1 to 3. It is settled principle of law, that proposal form, is just an offer, made by the person, who is filling up the same. It is only after the acceptance of this offer, and intimation of such acceptance, in writing, by the party to which such offer is made, that a concluded contract, comes into being. Until or unless, the concluded contract, came into being, by issuance of an insurance policy, in favour of the insured, no benefit under the same, could be claimed, either by the insured, or his legal heirs. In Life Insurance Corporation of India Vs. Raja Vasireddy  Komalavalli Kamba & Others  1984 AIR (SC) 1014, the principle of law, laid down, was to the effect, that the question of coming into existence the binding contract of insurance, does not  at all arise, until the person, whom the offer (by way of proposal form), is made, signifies acceptance. It was also held that the acceptance is complete, only when communicated to the offeror. The mere receipt and retention of premium, could not be termed, as an acceptance of the offer. Mere silence also did not amount to consent, on the part of the offeree. The mere receipt and retention of premiums, until after the death of the applicant, does not give rise to a contract, although the circumstances, may be such that approval could be inferred from retention of the premium. Mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offerer, either directly, or by some definite act, such as placing the contract in the mail.  The test is not intention alone. When the application, so requires, the acceptance must be evidenced, by the signatures of one of the Company`s Executive Officers.

12.            Though, in certain human relationships, silence to a proposal, might convey acceptance, but, in the case of insurance proposal, silence does not denote consent, and no binding contract arises, until the person, to whom, an offer is made, says or does something to signify his acceptance. Mere delay in giving an answer, cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offeror. The general rule is that the contract of insurance would  be concluded only, when the party, to whom, an offer has been made, accepts it, unconditionally, and communicates his acceptance to the person, making the offer. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way, in which negotiations for an insurance have progressed. In Life Insurance Corporation of India & Anr. Vs. Gurnam Singh, IV (2007) CPJ 53 (NC), death of the deceased took place, before the issuance of policy. The same was intentionally concealed. It was held that, no concluded contract, came into being, between the parties, and, as such, the repudiation of claim was legal and valid.  In the instant case, as stated above, no doubt, the proposal form was signed by Dharam Singh (deceased), and sent to Opposite Party No.1. It was received in its Head Office, on 15.09.2008, but since, there was some mismatch in the signatures of the beneficiary, on the benefit illustration and the proposal form, a letter was written to Dharam Singh, when he was alive, but no answer was received to the same, and, in the meanwhile, he (Dharam Singh) died on 09.10.2008, but no intimation with regard to the same, was sent by his legal heirs, to Opposite Party No.1. The fact remains that no insurance policy was issued, in favor of Dharam Singh. Mere retention of premium by Opposite Party No.1, did not amount to the issuance of insurance policy. Under these circumstances, Opposite Party No.1, was right in repudiating the claim of the legal heirs of the deceased, on the ground, that no concluded contract came into existence. It is very unfortunate that the District Forum, in paragraph 5 of  its order, though cited the case LIC of India V. Rajavasireddy & others (AIR 1984 SC 1014), yet did not appear to have gone through the same, as to find out the principle of law, laid down, therein.  Had it gone through the facts of the aforesaid case, it would have certainly come to know that the principle of law, laid down, therein, is fully applicable to the instant case. By ignoring the ratio of law, which was aptly applicable to the facts of the case, the District Forum, fell into a grave error, in holding, that Opposite Party No.1 was liable to pay the insured amount, without any concluded contact, having come into being, between the parties. The findings of the District Forum, in this regard, being wholly and completely illegal, are liable to be set aside.

13.            The District Forum, no doubt, relied upon Section 4(6) of the Insurance Regulatory and Development Authority (Protection of Policyholders` Interest) Regulations, 2002, which says that 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 proposal by the insurer. There is, no dispute, with the aforesaid provision. However, this does not mean that, if after receipt of premium, the insurance policy is not issued, within the time frame, it would automatically amount to coming into force, the concluded contract of insurance, between the parties. Section 4(6), referred to above, does not, in any way say that, in case within 15 days of the receipt of proposal form, the same is not accepted, then it would automatically amount to acceptance of the offer, leading to the coming into force of the concluded contract. The District Forum was wholly wrong, in coming to the contrary conclusion. The findings of the District Forum, in this regard, being incorrect, are liable to be set aside.

14.            No doubt, according to the Counsel for the appellant, vide letter dated 10.11.2008, Annexure D, on cancellation of the proposal form, draft/cheque no.42951 dated 05.11.2008, in the sum of Rs.15,000/-, was sent, in favour of Malkit Kaur. However, Avtar Singh, one of the complainants, in his affidavit, has denied the factum of receipt of any such cheque/draft at their address. The Counsel for the appellant, was pointedly asked to produce some cogent proof, regarding the receipt of the aforesaid cheque/draft sent to Malkit Kaur, but he failed to produce the same.  Thus, Opposite Party No.1, illegally and improperly withheld the amount of Rs.15,000/-, paid by Dharam Singh, deceased, for a sufficiently longer period, and, thus, deprived him and after his death his legal heirs of utilizing this amount. Thus, the complainants/respondents no.1 to 3 are entitled to the refund of the amount of premium of Rs.15,000/-, with interest @10% P.A. from the date of deposit.

15.            No other point, was urged, by the Counsel for the appellant, and respondents no.1 to 3.

16.            The order passed by the District Forum, being not wholly  based, on the correct appreciation of evidence, and law, on the point, suffers from illegality and perversity, warranting the interference of this Commission.

17.            For the reasons recorded above, the appeal, is partly accepted, with no order as to costs. The impugned order is modified, in the following manner:-

                            i).   The order of the District Forum, directing Opposite Party No.1/appellant, to pay a sum of Rs,2,02,500/- alongwith penal interest @9% P.A., under the Policy, is set aside.

                          ii).   The appellant/Opposite Party No.1, is, however, directed to refund the amount of Rs.15,000/-, paid as premium, by Dharam Singh (deceased) and received by the former on 15.09.2008, with interest @10% P.A., from that date (15.09.2008) to the complainants within 30 days, from the date of receipt of a certified copy of the order, failing which it shall pay the same, with penal interest @12% P.A., till realization.

18.            Certified Copies of this order be sent to the parties, free of charge.

19.            The file be consigned to Record Room, after completion.

Pronounced.

May 01, 2012

Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Rg