KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACAUD, THIRUVANANTHAPURAM.
APPEAL NO.278/09
JUDGMENT DATED 26.7.2011
PRESENT:
SHRI. M.V. VISWANATHAN -- JUDICIAL MEMBER
SHRI.M.K.ABDULLA SONA -- MEMBER
1. Regional Manager
LIC of India Ltd,
Unit-II, Kollam. -- APPELLANT
2. The Branch Manager,
LIC of India, Punalur.
(By Adv.G.S.Kalkura)
Vs.
Uthaman,
Thoppil Veedu, Thazhamel, -- RESPONDENT
Anchal, Kollam.
JUDGMENT
SHRI.M.V.VISWANATHAN,JUDICIAL MEMBER
Appellants are the opposite parties and respondent is the complainant in OP.No.360/03 on the file of CDRF, Kollam. The complaint therein was filed alleging deficiency in service on the part of the opposite parties (LIC of India) in repudiating the insurance claim preferred by the complainant under Ashadeep policy bearing No.781547082 issued by the LIC of India and also due to the act of the LIC of India in changing the Ashadeep policy endowment type plan with effect from 28.7.03. It was also alleged that the complainant suffered mental agony and hardship due to the deficiency in service on the part of the opposite parties. Hence the complainant filed the complaint in OP.360/03 claiming the benefit under benefit (B) of the policy with compensation and costs.
2. The opposite parties entered appearance and on behalf of the opposite parties the version was filed by the Manager (legal and HPF) office of the General Manager of LIC of India, Divisional Office, Thiruvananthapuram denying the alleged deficiency in service. It was contended that the opposite parties have rightly repudiated the insurance claim preferred by the complainant under the life insurance policy No.781547082 (Ashadeep policy), that the said policy was issued subject to the condition and restriction incorporated under clause 11 (a) to the said policy; that the said policy was lapsed due to non payment of the half yearly premiums and the same was revived on 27.2.03, that the life assured underwent Kidni transplantation on 7.3.03, that the said Kidni transplantation was done within one year from the date of revival of the policy, that by virtue of clause 11 (a) of the Ashadeep policy the life assured is not eligible for the benefits (B) of the said policy because of the fact that contingency of kidni transplantation happened within one year from the date of revival of the policy. Thus, the opposite parties justified their action in repudiating the insurance claim preferred by the complainant. It was further contended that the Ashadeep policy was converted into an endowment policy with knowledge and consent of the complainant/policy holder and the said change of the policy was made by virtue of the provisions contained in the claims manual of LIC of India. Thus, the opposite parties prayed for dismissal of the complaint.
3. Before the Forum below the complainant was examined as PW1 and the Manager Legal and HPF office of the Senior Divisional Manager, LIC of India, Thiruvananthapuram was examined as DW1. Exts. P1 to P5 and D1 documents were produced and marked on the side of the parties to the said complaint.
4. On an appreciation of the facts, circumstances and evidence on record, the Forum below passed the impugned order dated 30th March 2009 allowing the complaint and directing the opposite parties to pay Rs.25,000/- (50% of the assured amount) with interest at the rate of 12% per annum from 12.9.03. till payment and also 10% of the assured amount of every succeeding year along with waiver of future premiums. The opposite parties are also directed to pay Rs.25,000/- by way of compensation for unfair trade practice. Hence the present appeal.
5. We heard both sides.
6. The learned counsel for the appellants/opposite parties submitted his arguments based on the grounds urged in the memorandum of the present appeal. He much relied on clause 11 (a) and 11 (b) of the P1 policy certificate and also on P2 and P3 revival quotation and revival premium receipt and argued for the position that the complainant was not eligible for the benefit (B) of P1 Ashadeep policy because of the fact that the contingency of Kidni transplantation occurred within one year from the date of revival of the policy. He further submitted that the Ashadeep policy was converted to an endowment policy by virtue of the provisions of the claims manual and that the said change of the policy from Ashadeep policy to endowment policy was made with the knowledge and consent of the complainant/life assured. Thus, the appellants prayed for setting aside the impugned order passed by the Forum below and for dismissal of the complaint in OP.360/03.
7. On the other hand, the learned counsel for the respondent/complainant supported the impugned order passed by the forum below. He relied on P2 revival quotation issued by LIC of India for getting the policy revived and submitted that the policy was revived with full benefits of the policy and so, LIC of India cannot be justified in repudiating the claim on the ground that the contingency occurred within one year from the date of revival. He further submitted that the complainant never requested for converting the Ashadeep policy into an endowment policy and the said change was made without the consent of the policy holder and that there is no provision in the policy to make such a change in Ashadeep policy. Thus, the respondent prayed for dismissal of the present appeal.
8. The points that arise for consideration are:-
1. Whether there was any deficiency in service or unfair trade practice on the part of the appellants/opposite parties in repudiating the insurance claim for benefit (B) of the Ashadeep policy which was issued in the name of the respondent/complainant?
2. Whether the appellants/opposite parties can be justified in converting the Ashadeep policy into an endowment policy by virtue of the provisions contained in the claims manuel of LIC of India?
3. Is there any legally sustainable ground to interfere with the impugned order passed 30th March 2009 passed by CDRF, Kollam in OP.360/03?
9. POINT NO.1:-
There is no dispute that the respondent/complainant had taken P1 Ashadeep policy with the commencement on 28.7.98. Ext.P1 is the aforesaid policy certificate issued by the appellant/LIC of India to the respondent/complainant. The sum assured is Rs.50,000/- with half yearly premium of Rs.2174/-. The maturity date of the said policy is 28.7.2013. The said Ashadeep policy is having benefit (A) and Benefit (B). Under benefit (A) the sum assured with vested bonus, if any, is payable in the event of the life assured surviving the stipulated date of maturity or at his death,. Benefit (B) will be available if any one of the contingencies given in Para 11 (b), subject however to the conditions mentioned in Para 11 (a) of the “conditions & Privileges” The following benefits will be available. (i) Immediate payment of 50% of the sum assured. (ii) Payment of balance 50% of the sum assured along with vested bonus, if any, in the event of the life assured surviving the stipulated date of maturity or at his death, if earlier. (iii) Payment of an amount equal to 10% of the sum assured, every year, commencing from the policy anniversary falling on or immediately after the date of eligibility for Benefit (B) and ending with the policy anniversary preceding the stipulated date of maturity or the date of death of the life assured, whichever is earlier. (iv) Waiver of premiums, if any, (including accident premium) due from the policy anniversary falling on or immediately after the date of eligibility for Benefit (B).
10. In the present case on hand, we are concerned with benefit (B) of P1 policy. Admittedly, the complainant/policy holder had undergone Kidni transplantation on 7.4.03. There can be no doubt that Kidni transplantation is a contingency enumerated under clause 11 (b) of the policy. Admittedly, on 7.4.03 the date of Kidni transplantation, the Ashadeep policy was alive and thereby it can be held that the contingency referred to under clause 11 (b) of the Ashadeep policy occurred. So, the complainant can very well put forward the claim under benefit (B) of Ashadeep policy.
11. Admittedly, P1 policy certificate (Ashadeep policy) was issued subject to the terms and conditions of the policy especially clause 11 (a) and 11 (b) of the policy. Clause 11 (b) prescribes the contingencies which are covered by the said policy. There is a condition or restriction imposed under clause 11 (a) of Ashadeep policy. Clause 11 (a) is as follows:-
“ Benefit (B) of the policy schedule is not applicable if any of the contingencies mentioned in Para 11 (b) occurs (i) at any time on or after the date on which the risk under this policy is commenced but before the expiry of one year reckoned from the date of this policy or (ii) one year from the date of revival”. No doubt that sub cause 1 of clause 11 (a) has no application in the present case as the P1 policy was issued with the commencement date as 28.7.98. The occurrence of Kidni transplantation occurred on 7.4.2003.
12. We are concerned with Sub clause (ii) of 11 (a) of P1 policy. Admittedly, the policy was lapsed for non payment of the half yearly premiums and the said policy was revived on 27.2.03. The occurrence of kidni transplantation was on 7.4.2003. The aforesaid date would show that the occurrence in the present case on hand occurred within one year from the date of revival of the policy. If that be so, sub clause (ii) of 11 (a) of P1 Ashadeep policy would come into play. In such a situation, the complainant/policy holder is not eligible to get the benefit (B) of the P1 policy schedule. The appellants/opposite parties can be justified in repudiating the claim preferred by the complainant under benefit (B) of P1 policy.
13. There can be no doubt about the fact that the life assured and the insurer (LIC of India) are bound by the terms and conditions of the P1 Ashadeep policy. The complainant/policy holder cannot ignore the restriction contained in clause 11 (a) of the policy. The aforesaid restriction in the form of a lien period of one year will bind the complainant/policy holder. There can be no doubt about the fact that the occurrence of Kidni transplantation occurred during the lien period of one year ie; before the expiry of one year from the date of revival. If that be so, the appellants/opposite parties can very well repudiate the insurance claim preferred by the respondent/complainant for benefit (B) of Ashadeep policy. The aforesaid repudiation of the claim would not amount to deficiency in service or unfair trade practice.
14. It is true that the lapsed policy was revived at the instance of the appellant/opposite party LIC of India. It is also true that Ext.P2 revival quotation was issued by the opposite party LIC of India inviting the attention of the complainant/policy holder to get his policy revived by making payment of the defaulted premiums with interest and late fee. It is true that as per P2 revival quotation, the LIC of India offered some interest discount and late fee discount. It was also offered that the policy holder will get full benefits of the policy and the valuable life insurance protection by getting the lapsed policy revived. But P2 revival quotation would not give an indication that the conditions stipulated under clause 11 (a) of the said policy will be cancelled or modified. The recitals in P2 revival quotation would only make it clear that on getting the lapsed policy revived, the policy holder will get the full benefits of the policy. It can only be interpreted that the policy will be revived with all the terms and conditions incorporated in the original policy. It is further to be noted that P1 policy certificate was issued subject to the terms and conditions of the said policy. There was a binding contract between the insured and the insurer. They were governed by the terms and conditions incorporated in the said insurance contract. A subsequent letter is not sufficient enough to waive the terms or conditions of the said contract. If there was any such intention to modify or alter or nullify the terms and conditions of the contract, it must be specifically mentioned in P2 revival quotation. But as far as P2 revival quotation is concerned, there is no recital regarding any such modification, alteration or cancellation of the terms and conditions of the said policy. The recital, that on getting the policy revived, “the policy holder will get full benefits of the policy and the valuable life insurance protection” cannot be treated as modification or cancellation of the terms and conditions of Ashadeep policy. The argument of the learned counsel for the respondent/complainant that by virtue of the revival of the policy on the strength of P2 revival quotation, the condition under clause 11 (a) (ii) of the Ashadeep policy was cancelled cannot be accepted for a moment. In all respects, it can be concluded that there was no deficiency in service or unfair trade practice on the part of the appellants/opposite parties in repudiating the insurance claim preferred by the respondent/complainant for the benefit (B) of Ext.P1 policy (Ashadeep policy). The forum below cannot be justified in finding deficiency in service on the part of the opposite parties in repudiating the aforesaid claim. The impugned order passed by the forum below awarding the benefit (B) of the Ashadeep policy is liable to be set aside. Hence we do so. This point is answered in favour of the appellants/opposite parties.
15. POINT NO.2:-
It is the definite case of the appellants/opposite parties that the Ashadeep policy bearing policy No.781547082 was changed to an endowment assurance policy with the knowledge and consent of the respondent/complainant. We have already considered the terms and conditions of P1 Ashadeep policy. The parties to the said insurance contract are bound by the terms and conditions of the policy. A perusal of P1 Ashadeep policy certificate and the terms and conditions incorporated in the said policy would not give any indication regarding the right or authority of the insurer (LIC of India) to change or convert the Ashadeep policy into an endowment policy. Unless and until there is no such stipulation or policy condition to get the Ashadeep policy changed to an endowment policy, the aforesaid action on the part of the opposite party/ insurance company can be considered as one amounting to deficiency in service and unfair trade practice.
16. It is to be noted that the appellants/opposite parties changed the Ashadeep policy into an endowment policy with effect from 28.7.03. Admittedly, the complainant never requested LIC of India to get his Ashadeep policy converted into an endowment assurance policy. The mere fact that LIC of India requested the complainant/ policy holder to forward the policy to change the same to an endowment policy and thereby the policy holder submitted the policy based on the said request cannot be taken as a ground to hold that the complainant/policy holder was a consenting party to the said modification. It was incumbent upon the opposite party LIC of India to get a proper request or endorsement from the complainant/ policy holder for changing or converting the Ashadeep policy into an endowment assurance policy. So, the materials on record would not show that the complainant was well informed about the conversion of Ashadeep policy to endowment assurance policy. There is also nothing on record to infer that the complainant was a consenting party for making such a conversion or change in the Ashadeep policy.
17. The appellants/opposite parties would contend that they changed the Ashadeep policy into an endowment assurance policy/plan as per the provisions contained in clause 1 (d) of Chapter 6 of the claims Manuel. But, the complainant/policy holder was not informed about the procedures incorporated in the claims Manuel maintained by LIC of India. There is nothing on record to show that the complainant policy holder was well informed about the provisions of the claims Manuel for getting the Ashadeep policy converted into an endowment policy. It is further to be noted that there is nothing on record to show that the said change of the policy was made to benefit the complainant/ policy holder. The materials on record would show that the complainant is not benefited by the unilateral action of the opposite party LIC of India in converting the Ashadeep policy to an endowment policy. So, the grievance of the complainant regarding conversion of the Ashadeep policy to an endowment policy can be considered as a genuine grievance and the action on the part of the opposite party LIC of India in changing the Ashadeep policy to an endowment policy would amount to deficiency in service and unfair trade practice. The complainant is entitled to get the aforesaid genuine grievance redressed at the hands of the agencies constituted under the Consumer Protection Act, 1986. So, this Commission is pleased to direct the appellants/opposite parties to keep the original Ashadeep II policies as alive and to render all services to the complainant by getting the said policy as alive till its maturity date of 28.7.2013. This point is answered accordingly.
18. POINT NO.3:-
The findings on the previous points 1 & 2 would make it clear that the appellants/opposite parties are justified in repudiating the insurance claim preferred by the respondent/complainant for the claim under benefit (B) of P1 Ashadeep policy. At the same time, the appellants/opposite parties cannot be justified in converting the Ashadeep policy into an endowment policy and the said action of the appellants/opposite parties would amount to deficiency in service and unfair trade practice. Thus, the said action of the appellants/opposite parties in converting the Ashadeep policy to an endowment policy is cancelled and the appellants/opposite parties (LIC of India) are directed to keep the original Ashadeep policy alive and to render all the necessary services to the complainant/policy holder as envisaged in P1 policy certificate.
19. The complainant has only claimed compensation of Rs.25,000/- from the opposite parties for the mental agony suffered by the complainant. The Forum below has also awarded compensation of Rs.25,000/- for unfair trade practice on the part of the opposite parties. It is to be noted that the respondent/complainant has not suffered any such mental agony or financial loss on account of the so called conversion of Ashadeep policy to an endowment policy. But the opposite parties have to be made liable for the deficiency in service and unfair trade practice in converting the Ashadeep policy to an endowment policy without any provision in the P1 policy and its terms and condition. This Commission is of the view that the compensation of Rs.25,000/- awarded by the forum below is on the higher side. A sum of Rs.10,000/- can be treated as just and reasonable compensation for the deficiency in service and unfair trade practice on the part of the appellants/opposite parties. So, the compensation of Rs.25,000/- awarded by the Forum below is modified/reduced to Rs.10,000/-. Thus, the impugned order passed by the forum below is set aside/modified accordingly.
In the result, the appeal is allowed partly. The impugned order dated 30th March 2009 passed by CDRF, Kollam in OP.360/03 is set aside/modified. Thereby, the order passed by the Forum below directing the opposite parties to pay the complainant Rs.25,000/- with interest at the rate of 12% per annum from 12.9.03 till payment and also to pay 10% of the assured amount on every succeeding year along with waiver of future premiums is set aside. The order passed by the Forum below awarding compensation of Rs.25,000/- is modified and thereby the compensation is reduced to Rs.10,000/-. The appellants/opposite parties are directed to keep the original Ashadeep II policy alive and to render all the services to the respondent/complainant as per the provisions of the said Ashadeep policy. The conversion of the Ashadeep policy into an endowment policy is hereby cancelled. The parties to this appeal are directed to suffer their respective costs through out.
M.V. VISWANATHAN -- JUDICIAL MEMBER
M.K.ABDULLA SONA -- MEMBER
