BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM

VAZHUTHACAUD, THIRUVANANTHAPURAM.

PRESENT

SRI. G. SIVAPRASAD : PRESIDENT

SMT. BEENAKUMARI. A : MEMBER

SMT. S.K.SREELA : MEMBER

C.C. No. 157/2006 Filed on 31.05.2006

Dated : 15.03.2011

Complainant:

K.P. Soman, Pokkalathuvila Veedu, Thekkemuri, East Kallada P.O, Kollam.

(By adv. P. Raveendran)

Opposite parties :

1. Zonal Manager, LIC of India, LIC Building-102, Anna Salai, PB No. 2450, Chennai.

    

2. Divisional Manager, LIC Divisional Office, Thiruvananthapuram.

    

3. Branch Manager, LIC of India, Branch Office, LIC Building, MSM College Junction, Kayamkulam.

(By adv. G.S. Kalkura)

This O.P having been heard on 31.01.2011, the Forum on 15.03.2011 delivered the following:

ORDER

SMT. BEENAKUMARI.A: MEMBER

Complainant is the father of late Lijeesh, who expired on 3^rd August 2004. Lijeesh was a life insurance policy holder under the LIC of India. The complainant preferred this petition against the despotic denial by LIC against granting Ex-gratia payment to the nominee of the deceased. The complainant's son availed a life insurance policy under the money back scheme for sum assured Rs. 50,000/- commenced on 14 August 2002 with quarterly premium of Rs. 802/-. He had paid all the installment correctly except the last installment which has become due since May 2004. Complainant's son expired on 3^rd August 2004 while he was serving in the Indian Army as a combatant soldier posted to the military hospital Devlali. The death occurred at MH Devlali. A detailed court of enquiry on the circumstances which lead to the death by a team of experts recommended the death as “Attributable” to service duties. Immediately after the death of the son the complainant appealed to the Branch Manager, Kayamkulam for the sum assured, and other benefits due to him. Whereas the Branch Manager intimated him that there is nothing payable under the policy. Subsequent to the denial by the Branch Manager LIC Kayamkulam, the complainant had approached the Chairman, LIC Mumbai and the Zonal Manager, LIC Chennai for considering payment of ex-gratia to the nominee of the deceased. However, Branch Manager, Kayamkulam through his letter dated 02.02.2006 intimated him that his appeal has been rejected by the Claim Review Committee at Zonal Office, Chennai stating that the policy was on lapsed condition as on the date of death of the life assured. Complainant submits that the act of the opposite party is arbitrary, deliberate, despotic and devoid of any humanitarian consideration. Hence this complaint.

In the version the opposite party submits that in the preamble of the policy itself it is stated that the Corporation do by the policy agree in consideration of and subject to the due receipt of subsequent premium as set out in the schedule, to pay the sum assured, but without interest to the person or persons to whom the sum is payable. In the schedule of the policy it was set out that the premium of Rs. 802/- was payable once in every quarter till 14.05.2022 or till the date of death of the life assured Lijeesh. S. From the above it can be seen that the LIC of India had agreed on the policy 392562524 to pay the sum assured on the policy to the life assured on the date of maturity of the policy or to his nominee on his earlier death provided due payment of the premium of Rs. 802/- once in every quarter till the date of maturity or till earlier death of the life assured. As per condition No. 2 of the said policy if the premium as set out is not paid at least within the grace period of 30 days allowed, the policy lapses. Here in the instant case the policy commenced on 14.08.2002. The life assured Lijeesh had paid the premium till that due 14.02.2004. He had not cared to pay any further premium on the policy. Hence he had caused the policy to lapse from 14.05.2004 due to non-payment of premium from that date. Thus there was breach of contract of insurance under the said policy by the life assured Lijeesh himself and hence the contract of insurance under the policy came to a close from 14.05.2004. The life assured Lijeesh died on 03.08.2004. On that day there was no insurance cover on the policy and the policy had become lapsed due to breach of the condition of continued payment of premium. As per the privileges under the policy the life assured Lijeesh was eligible to be allowed a grace period of 30 days to remit the defaulted premium which too expired on 13.06.2004. He had not cared to arrange for the payment of premium on the policy even before the expiry of the said grace period. Hence the policy was in a lapsed condition without any contract of insurance on the date of death of the life assured. Further as per Sec. 113 of the Insurance Act 1938 and as per conditions of the policy, the policy will acquire any value only if premium thereunder had been paid for the minimum period of three years. In the instant case the life assured Lijeesh had paid only 7 quarterly premium, that is to say he had paid premium only for 1¾ ^th years. Hence the policy had lapsed without acquiring any value. In this connection the opposite parties beg to submit that the LIC of India was bearing the risk on the life of Lijeesh for the full sum assured of Rs. 50,000/- till 14.02.2004. Therefore no amount was payable on the policy on the date of death of the life assured. It was the duty of the life assured to remit or to arrange to remit the premium on the policy to avoid lapsation. He had failed to arrange for the continued remittance of premium till his death, as per the contract of insurance under the policy as submitted supra. The contract of insurance under the policy had broken and the policy had been made to lapse by the conduct of the life assured Lijeesh himself and due to that reason only, the LIC of India was not able to pay the claim of the complainant. The opposite parties had considered the matter of the claim of the complainant in all its aspects and in good faith with due application of mind. The complainant was informed of the position by letter dated 21.08.2004. In such circumstances there was no deficiency of service of any kind on the part of the opposite parties and hence the complaint is without any merit and liable to be dismissed.

In this case, complainant and opposite party filed proof affidavits and both parties produced documents.

Points to be ascertained:

1. Whether there has been deficiency in service from the side of opposite parties?

2. Whether the complainant is entitled to get the reliefs and costs?

Points (i) & (ii):- The son of the complainant was a LIC Policy holder who died on 03.08.2004. The claim of the complainant for the policy benefit of his son was rejected by the opposite party on the ground that the policy had lapsed without acquiring any value. In this case complainant has produced 5 documents which were marked as Exts. P1 to P5. Ext. P1 is the policy certificate. There is no dispute regarding this matter. Ext. P2 series are the 7 receipts of the payment of premium. Ext. P3 is the letter issued by the opposite party to the complainant on 21.08.2004 intimating him that there is nothing payable under the policy. Ext. P5 series are the copy of petition dated 10.11.2005, letter dated 09.12.2005, 26.11.2005 and 02.02.2006. The opposite party very strongly contested the case of the complainant. Opposite party has filed proof affidavit and has been examined as DW1. From the opposite party's side 11 documents were marked as Exts. D1 to D11. Ext. D1 is the proposal form. Ext. D2 is the policy. Ext. D3 is the request sent by the complainant to opposite parties. Ext. D4 is the copy of death certificate. Ext. D5 is the claim repudiation letter. Ext. D6 is the letter sent by the complainant to the opposite parties. Ext. D7 is the request letter issued by the Lt. Col., Sainik Aspathal, Devlali to the opposite parties to pay the Ex-gratia payments to the complainant. Ext. D8 is the letter issued by the opposite party to the complainant intimating that his claim was rejected by the Claim Review Committee. Ext. D9 is the details of payment of premiums. Ext. D10 is the manual for policy servicing department. Ext. D11 is the status report of policy. As per this document the status of the policy is in force. Date of this document is 23.08.2004. As per this document policy No. 392562524 was in force. Hence the policy holder is eligible to get its benefit. From this document we find that the contention raised by the opposite party that there is no contract in force at the time of death of the policy holder is false. Hence the complainant is entitled to get the benefits as the nominee. In this case complainant has produced the decision of the Supreme Court in Shashi Gupta Vs. LIC & others (AIR 1995 SC 1367). In that case the Division Bench of the Hon'ble Supreme Court observed as follows: “Under normal circumstances a policy lapses unless three installments are paid. Corporation however relaxed this condition vide its circular dated 16.10.1987, according to which if the death of the assured were to occur after two premiums have been paid within three months of the due date of the next unpaid premium “ the full sum assured together with the declared bonuses” would be paid”. This decision of the Supreme Court is applicable with respect to the circumstances in this case. In this case the policy holder had paid 7 premium before his death and within three months of due date of his next unpaid premium i.e; on 14.02.2004. The due date of unpaid premium was on 14.05.2004. In these circumstances we find that the complainant is entitled to get the benefits under policy No. 392562524. Hence the complaint is allowed.

In the result, the opposite parties are directed to pay the sum assured after deducting the unpaid premium amount with fine to the complainant. Time for compliance one month from the date of receipt of the order. Otherwise 9% annual interest shall be paid to the above said amount from the date of order.

A copy of this order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to the record room.

Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the Open Forum, this the 15^th day of March 2011.

Sd/- BEENAKUMARI. A : MEMBER

Sd/-

G. SIVAPRASAD : PRESIDENT

Sd/-

S.K. SREELA : MEMBER

jb

C.C. No. 157/2006

APPENDIX

I COMPLAINANT'S WITNESS :

PW1 - K.P. Soman

II COMPLAINANT'S DOCUMENTS :

P1 - Policy Certificate

P2 - Receipts for the payment of premium (7 Nos.)

P3 - Letter issued by the opposite party to the complainant

dated 21.08.2004

P4 - Letter issued by the opposite party.

P5 - Copy of the petition dated 10.11.2005, letter dated

09.12.2005, 26.11.2005 and 02.02.2006

III OPPOSITE PARTY'S WITNESS :

DW1 - N. Chandrasekharan

IV OPPOSITE PARTY'S DOCUMENTS :

D1 - Proposal Form

D2 - Policy.

D3 - Request sent by the complainant to opposite parties.

D4 - Copy of death certificate

D5 - Claim repudiation letter

D6 - Letter sent by the complainant to the opposite parties.

D7 - Request letter issued by the Lt. Col. Sainik Aspathal, Devlali to the opposite parties.

D8 - Letter issued by the opposite party to the complainant dated 02.02.2006

D9 - Details of payment of premiums.

D10 - Manual for policy servicing department.

D11 - Status report of policy.

Sd/-

PRESIDENT