Hdfc Standard Life Insurance Vs. Sujatha and Others - Court Judgment

The Respondents as complainants filed a complaint before the District Forum, Coimbatore alleging deficiency against the opposite party and praying to pay a sum of Rs.3,00,000/- towards the matured policy amount with interest at 18% p.a. till realization, to pay the future premium and other benefits, to pay compensation of Rs.1,00,000/- towards mental agony and cost of the complaint. The District Forum allowed the complaint. Against the said order, this appeal is preferred praying to set aside the order of the District Forum, Coimbatore dt.13.05.2008 in C.C.No.275/2007.

After hearing the arguments of appellant side, finally on 21.1.2011, this Commission made the following order :

A.K.ANNAMALAI, PRESIDING MEMBER JUDICIAL

1. Opposite party is the appellant.

2. The respondents/complainants filed a complaint before the District Forum praying for payment of claim amount of Rs.3,00,000/- towards the insurance policy amount for the death of 1st complainants husband Sadhasivam and Rs.10,000/- towards compensation.

3. The opposite party opposed the complaint on the ground that there was no policy in existence at the time of death of the first complainants husband and only a proposal was pending finalization and in those circumstances the claim was repudiated.

4. After enquiry, since the District Forum allowed the complaint, aggrieved by the same the appellants have come forward with this appeal and in the grounds of appeal stating that there was no acceptance of the proposal made by the deceased Sadasivam and as per the settled law without acceptance of the proposals in insurance contracts there will not be a binding contract between the parties and in the circumstances, the District Forum erroneously passed orders in favour of the complainant and prayed for allowing of appeal.

5. The respondents counsel contended since there was an acceptance of the proposal by way of issuing receipt Exhibit B4 and the alleged Exhibit B3 letter was not received by the deceased and thereby there was an acceptance by the appellant/opposite party and the deceaseds legal heirs, the complainants are entitled for the claim made.

6. While considering bothsides arguments and averments it is not in dispute that there was a proposal made by the deceased Sadhasivam on 27.1.2001 as per Exhibit B2 and also a receipt was issued of Rs.5,000/- as premium as per Exhibit B3 and this receipt Exhibit A6. This receipt is said to be the acceptance as per the contention of the complainant. On perusal of Exhibit A6, in which it is stated as follows :- “Please note that the policy will be issued subject to the conditions mentioned in the proposal form submitted by you and the initial deposit will be accounted as premium towards the policy when issued. From this it is clear that the amount was received only towards the deposit for the issuance of policy and the policy will be issued subject to the conditions mentioned in the Proposal Form. According to the proposal form Exhibit B2 a letter dated 31.1.07 was sent to the insured for attending medical examination by giving the medical officers address and in the letter also it is mentioned unless the report received from the medical officer the proposal will not be able to be processed. It is not in dispute that the proposar Sadhasivam died on 10.2.2007. The learned counsel for the appellant also relied upon the following rules (1) 1984 ACJ 345 (2) National Consumer Disputes Redressal Commission, Revision Petition No.1040/2004,

1. Life Insurance Corpn.of India

THRU.MR.SP.TANWAR, A.S.

Shillong Branch Office,

Rev.J.J.M.Nichols Roy Road,

Dhankheti,

Shillong 793 002.

2. Life Insurance Corpn. of India,

Thru.MR.S.P.Tanwar, A.S.

Northern Zonal Office,

Jeevan Bharti,

Connaught Circus, …………. Petitioners

New Delhi 110 001,

Vs

Shri Radhey Shyam Bajoria,

Kamakhya Bhavan,

Police Bazaar,

Shillong 793 001. ………… Respondent”

And in that case based on the Supreme Court ruling in LIC of India Vs. Raja Vasireddy Komalavalli Kamba and Ors. AIR 1984 SC 1014 it is held :

“ The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer.”

(3) I (2010) CPJ page 137 National Consumer Disputes Redressal Commission, New Delhi, in which it was held as follows :-

“Consumer Protection Act, 1986 – Section 21 – Life Insurance – Concluded Contract – Policy underwritten and dispatched after death of proposer, without knowledge of death – Acceptance of proposal never communicated during lifetime of proposer – Could not be communicated to (deceased) proposer – No concluded contract of Insurance exists between parties – No relief entitled.”

7. In all those rulings it is pointed out mere filling in proposal for insurance and depositing the first premium with Insurance company does not create a binding contract unless it had accepted the proposal. As far as our case is concerned the proposal made by the deceased Sadhasivam on 27.1.07 as per Exhibit B2 and Exhibit A6 receipt for payment of Rs.5,000/- as initial deposit and Exhibit B3 letter alleged to have been said to the proposal for medical examination would all go to show that for issuing insurance policy was under processing stage and before reaching the finality of issuance of policy the proposer died on 10.2.07 before acceptance and thereby there was no acceptance of proposal by the appellant/insurance company and in the circumstances it is obvious that there is no contract of insurance between the parties fulfilled and thereby there cannot be any claim on behalf of the proposer or alleged insured.

8. Hence in the circumstances, the contention of the respondents/complainants that issuance of receipt by accepting initial payment would amount to commencement of policy is not acceptable. Hence in those circumstances, this Commission feels that this appeal deserves to be allowed by setting aside the orders passed by the District Forum erroneously.

9. In the result, the appeal is allowed, by setting aside the order of the District Forum, Coimbatore in CC.275/2007 dated 13.05.2008 and the complaint is dismissed. Under the facts and circumstances of the case, there will be no order as to cost through out.

10. The Registry is directed to hand over the Fixed Deposit Receipt, made by way of mandatory deposit, to the appellant, duly discharged.