BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
F.A. 399/2008 against C.C. 17/2007, Dist.. Forum, Rajahmundry
Between:
1. L.I.C. of India
Rep. by its Divisional Manager
Morampudi, Rajahmundry
East Godavari Dist. *** Appellant/
O.P.
. And
1. Smt. Yashoda Jain
W/o. Late Ramesh Kumar Jain
2. Rasmi Jain,
D/o. Late Ramesh Kumar Jain
3. Rusub Jain,
S/o. Late Ramesh Kumar Jain
4. Raj Jain,
S/o. Late Ramesh Kumar Jain
(R2 to R4 being minors rep.
By their mother R1)
All are R/o. D.No. 9-15-15,
Khazi Street, Rajahmundry *** Respondents/
Complainants.
Counsel for the Appellants: M/s. Srinivas Karra
Counsel for the Resps: M/s. V.G.S. Rao.
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
&
SMT. M. SHREESHA, MEMBER
TUESDAY, THIS THE SIXTEENTH DAY OF NOVEMBER TWO THOUSAND TEN
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
*****
1) This is an appeal preferred by the LIC opposite party against the order of the Dist. Forum directing it to pay assured sum of Rs. 2 lakhs along with accrued guaranteed addition of Rs. 75,000/- with interest @ 12% p.a. from 1.1.2006 till the date of payment together with compensation of Rs. 5,000/- and costs of Rs. 2,000/-
2) The case of the complainants in brief is that complainant No. 1 is the wife, and complainant Nos. 2 to 4 are children of late Ramesh Kumar Jain. He took Jeevan Suraksha Endowment Funding Policy with guaranteed additions for sum assured of Rs. 2 lakhs. While so on 8.8.2005 he died and when the claim form was given, the insurance company did not settle it. They being the LRs of the deceased entitled to an amount of Rs. 2 lakhs together with Rs. 75,000/- towards arrears of bonus and Rs. 15,000/- towards future bonus with interest @ 12% p.a., besides compensation of Rs. 10,000/- and costs.
3) The insurance company resisted the case. It admitted issuance of policy for the period from 23.8.2000 for a term of 19 years wherein he made his wife as nominee. On receipt of information about the death of the assured it was informed by letter dt. 30.1.2006 that the bonus would be payable to the first complainant and that there was option to receive 25% of the sum assured and guaranteed additions, if any in lump sum. On that she approached the Director of Public Grievances, New Delhi for settlement of claim for paying full sum assured in lump sum. As per the terms of the policy she was not entitled to lump sum amount. Since the assured died before annuity she would be entitled to basic sum assured and guaranteed additions viz., Rs. 2,00,000/- + Rs. 75,000/- = Rs. 2,75,000/- would be utilized to purchase annuity to the spouse. The wife is not entitled for lump sum amount. In fact the insurance company was entitled to exemplary costs of Rs. 10,000/- for un-necessarily filing of the complaint though they were ready to pay the annuity to the first complainant. There was no deficiency in service on its part and therefore 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 A6 marked, while the appellants filed the affidavit evidence of its Manager, and got Exs. B1 to B6 marked.
5) The Dist. Forum after considering the evidence placed on record opined that the conditions found on the policy were not decipherable and they were microscopic and they have not informed to commute 25% of the accrued amount and to receive the balance in the form of monthly pension till the year 2019 and therefore directed it to pay Rs. 2 lakhs together with Rs. 75,000/- with interest @ 12% p.a. besides compensation and costs.
6) Aggrieved by the said decision, the appellant insurance company 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 conditions of the policy must have been understood by the assured and cannot claim contrary to the terms of the policy. The policy was issued on 23.8.2000. The plea that the conditions were not legible was not raised till the date of death in August, 2005. The assured, husband of the complainant was a stock broker by profession. He took the policy for the purpose of investment. The insurance company introduces several policies intended for several persons suitable to their purpose and the premiums will be fixed separately basing on the risk involved and the amounts payable under the policies. The Dist. Forum could not have taken the sympathetic ground on the death of the assured. Therefore it prayed that the amount be awarded as per the terms of the policy.
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 deceased late Ramesh Kumar Jain had taken Jeevan Suraksha Endowment Funding Policy with guaranteed additions for sum assured of Rs. 2 lakhs vide Ex. A1 covering the period from 23.8.2000 to 23.09.2019. The assured died on 8.8.2005. No doubt the terms of the policy are in fine print. However, it cannot be said that it is un-decipherable. Clause-6(1) (a) of the terms reads as follows:
“If the proposer dies before the date on which annuity vests and while the policy is in force the following benefits shall become payable.
In case, the spouse named in the proposal is alive on the date of death of the proposer, then basic sum assured together with accrued guaranteed additions will be utilized to purchase annuity to the spouse and the spouse will have the option I, II & IV detailed in the special conditions. The annuity will be payable to the spouse from the first of the month following the month of the death of the proposer and every month thereafter as per selected option. This spouse will have an option to receive 25% of the sum assured (basic sum assured and accrued guaranteed additions, if any) in lump sum and the balance in annuity. In case the spouse is not named in the proposal, the basic sum assured with guaranteed additions, if any, will be payable in lump sum to the nominee or legal heirs”
9) From this it is beyond doubt that in the event of death of the proposer complainant No. 1 being the nominee was entitled to Rs. 2 lakhs + Rs. 75,000/- by 23.8.2019. Since the complainant has survived, the insurance company had to pay the annuity to the spouse from the first of the month following the month of the death of the proposer and every month thereafter as per the selected option. She had an option to receive 25% of the sum assured (basic sum assured and accrued guaranteed additions if any) in lump sum and the balance in annuity.
10) It is settled law that the policy is a contract between parties and both parties are bound by terms of contract vide United India Insurance Company Ltd. Vs. Harchand Rai Chandan Lal reported in IV (2004) CPJ 15 (SC).
11) In the light of terms of the policy, necessarily the complainant had to give option as stated above within one month from the date of receipt of this order and on failure to give option the insurance company is directed to pay treating it as a case where the nominee had not given any option.
12) In the result the appeal is allowed with the above said direction. However, in the circumstances of the case no costs. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 16. 11. 2010.
*pnr
“UP LOAD – O.K.”
