Karnataka

Bidar

CC/18/2016

Smt. Padmavati W/o Late Karbasappa Chetty - Complainant(s)

Versus

The Senior Divisional Manager Raichur - Opp.Party(s)

VIJAY KUMAR K J

05 Dec 2016

ORDER

::BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM,

AT BIDAR::

 

 

                                                                                                                 C.C.No. 18/2016

 

                                                                                                  Date of filing : 09/03/2016

 

                                                                                             Date of disposal : 05/12/2016

 

 

P R E S E N T:-                    (1) Shri. Jagannath Prasad Udgata,

                                                                                         B.A., LL.B.,

                                                                                                       President.

    

                                              (2) Shri. Shankrappa (Halipurgi),

                                                                                 B.A.LL.B.,

                                                                                           Member.

 

                                   

 

                                               

COMPLAINANT/S:              Smt. Padmavathi, w/o Late Karbasappa Chetty,

                                           Age about 45 years: Occ: Household,

                                            R/o Chetty Galli, Town Humnabad,

                                         Tq.Humnabad.

 

              

 

 

                                         (By Shri. Vijaykumr K.J., Advocate )

 

 

                                                      VERSUS

 

OPPONENT/S   :-            1.  The Senior Divisional Manager,

                                           L & H.P.F Department, Divisional Office,

                                           Raichur.

                                       

                                         

                                   2. The Chief Manager,

                                        LIC of India, Br. Basavakalyan,

                                           Dist.Bidar.

                                     

 

 

 

                                      (O.Ps By Shri.Sanjay Kumar S.Patil, Advocate)   

 

 

                                                

::   J UD G M E N T  : :

 

 

 

By Shri. Jagannath Prasad Udgata, President.

 

              The complainant is before this Forum alleging deficiency of service in the part of the O.Ps, all officials of the LIC of India, by filing a complaint U/s. 12 of the C.P. Act., 1986, and the sum total of her complaint is as here under.

 

2.             The complainant’s husband by name late Karbasappa Chetty was an employee in Ram and Raj P.U College. Bidar. During his life time he had purchased two New Endowment Policies bearing .nos. 661752138 and another policy no. 661775764 interalia under the Salary Saving Scheme from the O.P.No.2 for a sum assured Rs. 2,35,000/- and Rs. 1,25,000/- respectively.  The  commencement of risk of the policy dt. 12-02-2014 (Policy no. 661752138) and another  policy   dt.28-01-2015(Policy no. 661775764 ).  Thereafter,   husband of the complainant died due to heart attack on 22-04-2015.  The complainant, as the nominee in two policies,  approached the O.Ps for claims of the above said policies.  In spite of several requests and also legal notice the O.Ps. have repudiated  claims of the policies.  Hence, the complainant is before this Forum for claiming   policy amount and other benefits as well as compensation against the O.Ps.     

 

 3.           Entering into defence the O.Ps have filed detailed written versions and therein have stated that, the husband of the complainant had obtained five   policies under the salary saving scheme.  Out of five policies, two policies have been repudiated due to non disclosure/suppression of existence of previous policies.  Further O.Ps aver that, Policy (no.661752138) was in lapsed condition due to non payment of premium.  Hence, the O.Ps have repudiated the claim of the complainant.  Therefore, this act of the O.Ps Corporation cannot be stated to be deficiency of service and the complaint be dismissed. 

 

4.          Both sides have filed documents, detailed at the end of this order, so also evidence affidavits and written arguments justifying their respective stands. 

 

5.                     In the written arguments, the opponents have relied upon the ratios laid down by higher courts as here under, without providing the copies of such rulings.  Only the copy of last one provided.

            1.         2008 (1) S.C.C. Page-321

                        P.C. Chock and Another V/S Chairman L.I.C. of India.

            2.         2009 (8) S.C.C. page.316

                        Satwant Kaur Sandhu V/s New India Asst.Co.Ltd.

            3.         F.A. No.26/2005 (N.C) D.D. 27.01.2010

                        L.I.C. V/S V. Radhamma.

 

6.         In the last ruling “quoted above, the Hon’ble National Commission has been pleased to hold as below:-

 

7.         The term “material fact” is not defined in the Insurance Act 1938 and therefore it has been understood and explained by the Courts in general terms of mean as any fact which would influence the judgment of prudent insurer in fixing the premium or determining whether he would like to accept the risk.  Any fact which goes to the root of the contract of insurance and has bearing on the risk involved would be “material”.  The Insurance Regulatory and Development Authority (Protection of Policy Holders Interest) Regulation- 2002 defines the word  “Material” To mean and include all “Important” “essential” and “relevant” Information in the context of guiding the insurer to decide whether to undertake the risk or not.

8.         Thus, in a contract of insurance, any fact which would influence the mind of prudent insurer in deciding whether to accept or not the risk is a “material fact”.  If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form, Any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into contract of Insurance”

 

9.         The opponents have also quoted the ratio of another judgment of the Hon’ble National Commission purported to have held as below in 2015 consumer Judgments Page-478- ICICI PRUDENTIAL LIFE INSURANCE CO V/S LALITHA JAIN.

 

            “Consumer Protection Act-1986, Sections 17, 19 & 21- Insurance-life  insurance-repudiation of death claim on ground that while submitting proposal form, insured had concealed fact that, he had taken/applied for several other life insurance policies- information with respect to other life insurance policies and/or applied by proposer cannot be said to be inconsequential or trivial information since said information had material bearing on underwriting decision of petitioner company- Deceased insured had withheld material information from petitioner company and had misrepresented- complaint Dismissed”.

 

10.       Both parties were heard in length. While the complainants counsel submitted that, what so ever lapses might have occurred was done by the agent concerned, the opponents’ counsel vehemently argued that, the late Insured was an educated person, serving in a college as office assistant and without accepting the blame on the part of the agents, put forward that, there has been deliberate concealment by the proposer about his previous policies and hence they were justified in repudiating claim in Policy No.661752138.  As regards policy No.661775764, it is asserted that, the same stood lapsed as on the date of death of the policy holder and hence it was repudiated justifiably.  Inspite of several insistences the terms and conditions of the policies concerned were not produced in the court by the opponent.  At last on 26.10.2016, the Ld. Counsel of the complainant submitted a photo copy of the partial conditions of Table 814. (with profits), now marked as Ex.P.26.

 

11.       Considering the rival contention of the feuding parties, the following points arise for our consideration.

1. Does the complainant prove that, there has been deficiency of service in the part of the opponents?
2. Does O.P.s prove that, they were justified in refuting the claims of the complainant?
3. What orders?

            Our answers to the points stated above are as follows:-

               1. In the affirmative.

               2. In the negative.

               3. As per the final order, for the following:

 

 

                                                                                                       :: REASONS ::

 

12.       The answers to point No.1 and 2 shall go together.  While the complainant is claiming non payment of Insured amount on two polices of the deceased insured i.e., Policy No.661775764 and Policy No.661752138, the opponent corporation claims that, the Policy No. 661775764 stood lapsed as on the date of death of the insured i.e., 22.04.2015.  In the status reports of both polices Ex. P2.and P3 claims it is recorded. “NO PAYMENT HISTORY OF THEPOLICY”.  We have before us two documents produced as Ex.P.9 and10 from the complainants’ side.  In Ex.P.9 (No date mentioned) a receipt in which the L.I.C. acknowledges receipt of a sum of Rs.21,208/-.  This receipt corresponds to Ex.P.10, a letter transmitted to L.I.C.  Bangalore (Govt. Salary [Br]) for the month of April 2015. In this document we see, in respect of deceased policy holder Karbasappa, the following remittances were made.

 

                        Policy No. 661747945 - Rs. 1539-00.

                        Policy No. 661747949 - Rs. 663-00.

                        Policy No. 661747954 - Rs. 1226-00.

                        Policy No. 661752138 - Rs. 1503-00.

 

13.       This document (Ex.P10) reveals that, indeed premium for Policy No.661775764 was not made during the month of April 2015, and the policy being under salary saving scheme stood lapsed on the date of death on 22.04.2015.  In this connection, two far fetching rulings of the Hon’ble National Commission and Punjab State Commission to our notice as stated below with the ratio

            1.         2015 NCJ 466(NC)

                        L.I.C. of India V/S Smt. Ramsakhi.

            Lapsed policy-Scope-Held-Question of lapse of a policy under “salary saving scheme” arises only when premiums remain unpaid for 6 months and intimation in that behalf was required to be sent in prescribed form by insurance company to the employee as well as insured.

                                                            *****

            13. Answer to the second question also need not detain me for long.  Here again only paragraphs 13.4 ad 16 of the Manual for Policy Servicing Department (No.14) issued by the Insurance Company itself, for administering the Salary Saving Scheme need to be interpreted.  The said paragraphs read as follows:

                                                            *****

            “13.4. LOSS OF PAY: Default in payment of premia should be intimated to the party and arrears of premia should be called for.  If the number of premiums unpaid are 6, lapse action should be taken.

                                                            *****

            14............

            15............

            16.  DEFAULT AND FINAL LAPSE NOTICE:

                   While posting the Group Ledger any default in payment of premia should be communicated to the employer in a special form No.5227.  If the premiums remain unpaid for 6 months, a lapse intimation on the prescribed form No.5228 should be sent to the employee.  A lapse Register is also to be maintained for preparing statistics in respect of lapses.

                                                            *****

            2.         III (2009) CPJ 140

                        L.I.C. of India V/S Mamchand and Another.

            Consumer Protection Act 1986- Section 2(1)(g)- Life Insurance Policy lapsed Premium not paid Policy obtained through agent No. Contract exists between employer and insurer since insurer assumed liability of writing to employer of assured to deduct premium amount from assured’s salary, remit it to them Insurer liable to pursue matter with employer.

            Employer, insurer liable to inform assured about non-receipt of premium from employer- Deficiency in service on part of insurer proved, which led to lapsing of policy complaint allowed by Forum Order upheld in appeal.

14.       The sum total of the judgments are that, while admitting a policy proposal under salary saving scheme, the Insurer assumed certain responsibilities for effecting the collection of the due premium as laid down by the Hon’ble National Commission drawing a reference to paragraphs 13.4 and 16 of the Manual for Policy servicing Department (14) issued by the Insurance Company itself.  Both the case laws are equivocal that, the Insurance Company is bound to issue notice (s) in case of default of premium payment to the employer and the employee and in the instant case the L.I.C. has not discharged that part of its’ obligation.  Nor it is any where evident in their pleadings.  There by the lapsation due to default cannot be given any credit owing to the misfeasance of the L.I.C. itself and they would be bound to satisfy the claim raised.

 

15.       Coming to consider the issues pertaining to Policy No.661752138, it is evident from Ex.P.10 that, the premium was paid for this policy by the employer of the deceased.  The opponents claim that, full disclosure of previous policies was not made in the proposal form and hence repudiation by them was proper.  To drive in their points, the L.I.C. has filed the attested copies of the purported proposal forms of the policies interalia as Ex.R.1 and Ex.R.3.  Glancing through the contents of the proposal form, we see, in Ex.R.1 only one policy No. of the proposal form, only one policy No. is written in answer to querries at clause 10 A. In Ex.R.3 again one policy No.661752138 is mentioned.  These two documents being of vital importance, invited our closure scrutiny.  We found no where any policy number mentioned on the purported forms to link them both to the policy (s) under consideration.  Hence for all practical purposes both the documents are to be considered irrelevant to the facts in issue.  Contrary to the vociferous canvassment of the O.P.s counsel, the law does not permit us to hazard a guess about the relevancy of the documents therefore, we conclude that, the opponents have failed to prove that, the deceased proposer has concealed material facts while obtaining policy No. 661752138 and reject their repudiation as improper, incompetent, imperfect and irrelevant.  It was also stated at the bar that from the year 2011 onwards the system of L.I.C. fully stands computerised.  If that is so, how could the L.I.C. accept this proposal without checking?  Every information could have been obtained by a click of the mouse.

 

16.       Basing on the analysis (s) supra, not  with standing the opponents taking shelter in the case laws quoted above, the laid down quoted by the O.P.s ratios are not applicable to the case in hand and proceed to pass the following:-

 

:: ORDER ::

 

   

1.  The complaint is allowed in part.
2. The opponents are jointly and severally liable to reimburse the Insured amount of Rs.2,35,000/-  in policy No. 661752138 and Insured amount of Rs.1,25,000 in policy No.661775764 together with vested simple Reversionary Bonus+ FAB if any together with12% interest on the total sum calculated from the date of death of the policy holder till the date of realisation.
3. The opponents would be further liable to pay a compensation of Rs.10,000/- and litigation expenses of Rs.5000/-.

 

 

           d)  Four weeks time granted to comply this order.

 

 

(Typed to our dictation then corrected, signed by us and then pronounced in the open Forum on this 5^th day of December-2016)

 

 

                  Sd/-                                                                                  Sd/-                                                                                                            

   Sri. Shankrappa H.                                             Sri. Jagannath Prasad                                  

Member.                                                                President.                                                                                            

Documents produced by the complainant

1. Ex.P.1-Legal notice dated 21.01.2016.
2. Ex.P.2- Status report of Policy No.661775764.
3. Ex.P.3- Status report of Policy NO.66175238 (Irrelevant to this case).
4. Ex.P.4 to P.7- Postal receipts (Qua-Ex.P.1).
5. Ex.P.8- Death Certificate of Karasappa.
6. Ex.P.9- Receipt of L.I.C. for Rs.21208.00 date: Nil.
7. Ex.P.10- Payment statement issued to L.I.C. by Principal Ram and Raj school for the month of April. 2015.
8. Ex.P.11- Another receipt of L.I.C. ( Replica of Ex.P.9)
9. Ex.P.12 & 13- Postal acknowledgement forms (Qua-Ex.P1).
10. Ex.P.14- Office copy of legal notice date: 04.02.2016 with postal receipt

                affixed.

11. Ex.P.15- Reply of L.I.C. to counsel for the complainant date: 27.01.2016.
12. Ex.P.16- Letter of L.I.C. to counsel for the complainant date: 27.01.2016.
13. Ex.P.17- Receipt of Policy No.661775764.
14. Ex.P.18- Receipt of Policy No.661752138.
15. Ex.P.19- certificate of the Principal Ram and Raj College.
16. Ex.P.20- Copy of Adhar Card of Karbasappa.
17. Ex.P.21- Copy of Voter I.D. card of Karabasappa.
18. Ex.P.22- Copy of Adhar Card of complainant.
19. Ex.P.23- Copy of Voter I.D. Card of Complainant.
20. Ex.P.24- Medical records of Sachin Nursing home  pertaining to
                     Karbasappa (late).
21. Ex.P.25- Extract of terms and condition of L.I.C. Policy Table 814.

 

 Document produced by the Opponent/s

 

1. Ex.R.1- Attested photo copy of proposal form (No policy mentioned).
2. Ex.R.2- Status report of Policy No. 661752138.
3. Ex.R.3- Attested photo copy of proposal form ( No policy mentioned).
4. Ex.R.4- Status report of policy No.661775764.

 

 

                  Sd/-                                                                            Sd/-                                                                                                            

   Sri. Shankrappa H.                                             Sri. Jagannath Prasad                                  

          Member.                                                                President.        

 

 

 

 

 

 

Sb.