ANUPAM DASGUPTA
This revision petition is against the order dated 27.12.2005 of the Gujarat State Consumer Disputes Redressal Commission, Ahmedabad (in short, the State Commission) in First Appeal no. 113 of 2000. By this order, the State Commission dismissed the appeal of the Life Insurance Corporation of India (hereafter, the LIC) against the order dated 29.09.1999 of the District Consumer Disputes Redressal Forum, Ahmedabad City, Ahmedabad (in short, the District Forum) in complaint case no. 1797 of 1993.
2(i)Complainant no. 2 before the District Forum was the nominee in the life insurance policy for Rs.50,000/- (with accident benefit) taken by her husband (Rasiklal Maganlal Panchal) with effect from 07.10.1989. The premium for the policy was to be paid half yearly. The premium due on 15.05.1991 was not paid even within the grace period of one month, which expired on 04.06.1991. The life assured died on 25.07.1991. The overdue premium was, however, paid with interest on 11.10.1991 and also accepted by the LIC.
(ii) It was the case of the complainants that complainant 2 (widow/nominee of the deceased life assured) had informed the LIC of the death of her husband through its agent on 05.08.1991. Thereafter, by its letter dated 09.08.1991, the LIC had informed complainant 2 that premium due on 15.05.1991 had not been paid and hence, the policy had been lapsed before the death of the life assured. In reply, the complainant 2 wrote back on 14.10.1991 to the LIC that the premium due on 15.05.1991 had been paid, with interest, on 11.10.1991 after notice to pay the said overdue premium had been issued by the LIC. However, by its letter dated 30.10.1991, LIC again informed complainant 2 that since the premium due on 15.05.1991 had not been paid even during the grace period, the policy had lapsed and, therefore, no claim in respect of the policy was admissible because a policy could not be renewed after the death of the life assured.
(iii) Despite further correspondence with the assistance of complainant 1, LIC continued to reiterate the position stated in its letter dated 30.10.1991. This led the complainants to approach the District Forum with the consumer complaint.
3. On consideration of the pleadings and evidence, the District Forum allowed the complaint mainly on the ground that though the LIC was aware of the death of the life assured (as per its letter dated 09.08.1991) it accepted the premium due on 15.05.1991 with interest on 11.10.1991 and, therefore, was estopped from raising the plea of lapsed policy and repudiating the claim of the nominee on that ground. On this basis, it directed the LIC to pay Rs. 1 lakh plus bonus, if any, to the complainant with interest @ 16% per annum from 09.08.1991 (the date of repudiation of the claim) till the date of payment, Rs.5,000/- as compensation for hardship, mental agony, etc., suffered by complainant 2 and Rs.1,000/- towards cost, all to be paid within 30 days from the date of the order.
4. By its impugned order, the State Commission partly allowed the appeal of the LIC by reducing the rate of interest from 16% to 6% per annum and, setting aside the award of Rs.5,000/- towards compensation, directed payment of the cost of Rs.1,000/- to both the complainants.
5. We have heard Mr. Ashok Kashyap, learned counsel for the petitioner. However, no one was present on behalf of the respondents though respondent/complainant 1 had duly received notice for the hearing whereas notices issued to respondent/complainant 2 had been repeatedly received back with postal remarks Left.
6. While admitting the revision petition on 19.06.12006, this Commission had directed as under:
œAdmit. Notice to the respondents returnable on 12.12.2006.
The operation of the impugned order shall remain stayed subject to payment of Rs.25,000/- by way of bank draft to the complainant. In addition to the above amount, the amount of Rs.25,000/- deposited by the petitioner with the State Commission may also be withdrawn by the complainant in view of peculiar facts and circumstances of the matter. In case the petitioner succeeds this amount may be treated as ex gratia payment for the point in issue pertains to technical interpretation of a policy clause. Dasti?.
7. Mr. Kashyap has submitted that the view taken by both the District Forum and the State Commission is erroneous because it is not only against the terms and conditions of the insurance policy but also specific rulings of the Apex Court in a similar case involving the same issue.
8. The judgment of the Apex Court relied on by Mr. Kashyap is that in the case of Life Insurance Corporation of India v Jaya Chandel [(2008) 3 SCC 382]. It will be useful to reproduce the aforesaid order in extenso:
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Background facts in a nutshell are as follows:
One Karan Singh Chandel (hereinafter referred to as the deceased) had taken a life Insurance Policy and was insured for a sum of Rs.1,50,000/-. The annual premium payable was Rs.12,821/-. The policy was taken on 28.03.1994. The annual premium which was to be paid on or before 28.03.1995 was not paid. In terms of the policy, the same became inoperative after one month. The insured died on 01.07.1995. A cheque drawn on Jogindra Cooperative Bank Ltd., for an amount of Rs.12,821/- purportedly on account of premium along with late fee of Rs.189/- was issued by one Prakash Chand Thakur on 27.06.1995. The same was received on 12.07.1995. According to the claimant i.e., widow of the deceased, the cheque was issued before the death of the insured and therefore, the appellant could not have repudiated the claim.
3. The stand of the present appellant was that the policy had lapsed due to non-payment of premium in time. This plea was not accepted by the District Forum on the ground that the cheque was claimed to have been issued on 12.07.1995, but is presumed to have been received earlier than that date. The State Commission held that in any event the amount was received within the grace period and therefore, the claim could not have been repudiated. Accordingly, the appeal filed by the appellant was dismissed. The National Forum dismissed the Revision holding that Section 64-VB of the Insurance Act, 1938 (in short the Insurance Act) was applicable where the premium is tendered by postal money order or cheque sent by post and the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be. Therefore, it was held that there was revival. It did not accept the stand of the appellant that the revival was not a matter of right.
4. In support of the appeal, learned counsel for the appellant submitted that the District Forum, the State Commission and the National Commission failed to notice certain relevant factors. It was not explained as to why the cheque was issued by Prakash Chand Thakur and not by the insured. This is sufficient to show that subsequently a cheque was issued to regularise the policy. Further the cheque was received on 12.07.1995 much after the death and this itself is sufficient to show that the cheque was not issued prior to the death of the insured. The extract of the receipt register has been filed which shows that the cheque was received on 18.07.1995. The State Commission came to the conclusion that the cheque was issued during the grace period. This is also factually incorrect because the grace period is 30 days, the premium was due on 28.03.1995 and the cheque was issued much beyond the grace period. Additionally, Section 64-VB does not apply to the appellant. In this context Section 43 of the Life Insurance Corporation Act, 1956 (in short the Act) has relevance. Reference is also made to condition 2 of the policy.
5. In reply learned counsel for the claimant submitted that it is not condition 2 of the policy which is applicable, but condition no. 3 which is applicable. It is stated that no adverse inference can be drawn because the insured had not signed the cheque and merely because the cheque was received after the death of the deceased that does not entitle the appellant to refuse a genuine claim.
Conditions no. 2 and 3 of the policy read as follows:
œ2. Payment of premium: A grace period of one month but not less than 30 days will be allowed for payment of yearly, half-yearly or quarterly premiums and 15 days for monthly premiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid and the sum assured paid after deduction of the said premium as also the unpaid premiums failing due before the next anniversary of the policy. If premium is not paid before the expiry of the days of grace the policy lapses. If the policy has not lapsed and the claim is admitted in case of death under a policy where the mode of payment of premium is other, than yearly, unpaid premiums if any falling due before the next policy anniversary shall be deducted from the claim amount.?
3. Revival of discontinued policies: If the policy has lapsed it may be revived during the life time of the life assured, but within a period of five years from the date of the first unpaid premium and before the date of maturity, on submissions of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest of such rate as may be fixed by the Corporation from time to time compounding half yearly. The corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the life assured.?
6. The grace period is one month and therefore the State Commission was not justified in holding that the payment was made within the grace period. Condition 3 relates to revival of discontinued policy. A bare reading of the condition shows that it can be revived during the life time of the assured. In the instant case, the cheque was admittedly received after the death of the assured. Further the revival takes effect only after the same is approved by the Corporation and is specifically communicated to the life insured. In the present case this is not the situation?.
9. The aforesaid judgment leaves no doubt that in this case too acceptance of the half yearly premium (due on 15.05.1991) by the LIC on 11.10.1991, i.e., after the death of the life assured could not constitute an estoppel against the LIC in claiming that the policy had lapsed before the death of the life assured and that the said lapsed policy could not be renewed after the death of the life assured, either in terms of condition no. 2 or in terms of condition no. 3 of the policy in question.
10. In view of the foregoing discussion, the revision petition is allowed and the impugned order of the State Commission is set aside. However, keeping in view the spirit of the directions dated 19.06.2006 of this Commission in the backdrop of the rather unusual facts of the case as well as that the ruling of the Apex Court relied upon by the LIC is of 2008, we hope the LIC would not insist on recovering any amount from respondent/complainant 2 that may have been paid to her. This will, of course, not prejudice the LICs legal position in this case, which we have upheld as above.