BRANCH OFFICER, LIC OF INDIA vs KANCHANBEN H.SHAH

BY the impugned order, the Consumer Disputes Redressal Commission, Gujarat State at Ahmedabad has directed the Life Insurance Corporation of India (for short ''LIC'') to pay Rs. 96,808/- to the complainant (now respondent No. 1) with running interest at the rate of 15% from the date of complaint till payment. Feeling aggrieved by that order, the present appellants, who were Opposite Parties Nos. 1 to 3 have come before this Commission by way of this t Revision Petition.

THE facts are that the present respondent No. 1, Smt. Kanchanben H. Shah had filed a complaint before the District Consumer Disputes Redressal Forum, Jamnagar. The Opposite Parties Nos. 1 to 5 arrayed were the Branch Officer, LIC, Jamnagar Branch, Divisional Manager, LIC, Rajkot, Chairman, LIC, Central Offices, Bombay, Smt. Shingala, Agent of LIC, Jamnagar and the Development Officer Mr. G.B. Chandarana, LIC Jamnagar respectively. She had alleged that her husband Harakhlal To-laram Shah (since deceased was having several insurance policies on his life from the LIC, Jamnagar Branch Office. The deceased intended to have one more policy to assure his life and therefore, he made a proposal for insurance on 28th March, 1989 through the local Agent-Smt. Shingala Opposite Party No. 4, for an amount of Rs. 1 lac under plan 14-18. He also attached a Cheque dated 31st March, 1989 for Rs. 6,885/- towards the first annual premium for the proposed policy. After making the aforesaid pro-posaland before the said proposal was accepted and policy to that effect was issued to the said poser, he died in a motor accident on 15th ; September, 1989. On receipt of the proposal, LIC vide letter dated 1st November, 1989 asked the proposer to pay Rs. 3,191.10 more towards the first annual premium in respect of the said proposal as the proposal could be accepted only under plan 14-12 and that he should also get himself medically checked up again and should submit the medical check up report and also should give an undertaking in writing that he was agreeable to plan 14-12. This additional requirement put forward by LIC had remained unfulfilled and in fact, it was not possible to fulfill it as by that time the proposer had died. The widow of the deceased, i.e. the complainant corresponded with the different officers of LIC for payment of the amount under the disputed policy, (it may be mentioned here that she has already been paid Rs. 1,50,000/- in respect of other policies taken by the deceased). The Jamnagar office vide letter dated 10/16th November, 1989 informed the complainant that they were ready to pay the amount which had been paid by the deceased by means of the cheque dated 31st March, 1989 after deducting the expenditure of the medical check up of the assured. The complainant did not agree to that suggestion and wrote a letter dated 9th January, 1990 to the Chairman of LIC requesting him to make payment of the amount of the policy taken by her deceased husband ex-gratia but the Chairman has not taken any decision on that letter so " far. The complainant, therefore filed a complaint before the District Forum claiming Rs. 96,808.50 as the amount of disputed insurance with interest. (A little less amount has been claimed than the amount allegedly due under the insurance so as to bring the complaint within the pecuniary jurisdiction of the District Forum). In the complaint she cited one instance where the LIC had made ex-gratia payment, being the amount in terms of the policy, to the heirs of the assured, who has died only a few days after the proposal had been made and before the policy could be issued. In the complaint she has claimed the above amount as ex-gratia payment.

OPPOSITE Parties Nos. 1,2, 3 and 5 filed a joint counter contesting the complaint. According to their contentions, the District Forum had no jurisdiction to entertain or hear the complaint as the provisions of Consumer Protection Act, 1986 were neither attracted nor applicable to the contentions raised by the complainant. The complainant has neither acquired the status of a ''consumer'' nor she has any right or cause of action to file the complaint. The proposal of the deceased dated 29th March, 1989 had remained as a proposal only and a sum of Rs. 6,885/- was deposited in suspense account and the suspense memorandum had been issued to the deceased. This shows that neither the proposal nor the premium was accepted. The Corporation, in fact, peruses each of the proposals and after careful scrutiny, if any additional condition or requirement is to be fulfilled by the proposer, the same is communicated to him and if the proposer accepts such additional requirements and fulfills the stipulations only then the proposal is accepted in the amended form. In the present case, the proposal of the deceased was studied and E.C.G. and blood test reports for Blood Sugar were called for. The deceased submitted the E.C.G. Report dated 13th April, 1989. However, he got the blood sugar test report from a pathological laboratory of Dr. L.K. Joshi on 18th July, 1989 and the report was submitted thereafter. (It may be mentioned here that the blood sugar test report was called for by the LIC vide letter dated 17th May, 1989). After scrutiny of the proposal form and the reports it was decided to accept the proposal under Schedule No. 14-12, in place of the original proposal. The proposer was also asked to pay an extra premium at Rs. 5.60 Ps. per Rs. 1000/-per annum and full medical report. (As noticed above this additional requirement was required to be fulfilled vide letter dated 1st November, 1989 issued by LIC, Jamnagar Office.) The Jamnagar Office had never been informed by the complainant or any other person before 1st November, 1989 about the death of the proposer. Thus the proposal submitted by the deceased never matured into a concluded contract and it lapsed upon his death. In fact, the complainant herself in one of her letters to the LIC had admitted that the proposal had remained unconcluded. Thus, according to the answering Opp. Parties the complaint was thoroughly misconceived and was made only to misuse the process of law as no Court fee is payable. The ex-gratia payment made to another party cannot be made the basis for the claim by the complainant. In that other case peculiar circumstances of that case were considered by the Corporation and had made ex-gratia payment. It is also a grievance of the answering opponents that the complainant has impleaded various individuals as respondents against whom no relief in fact or in law can be granted. The Corporation carries all its functions through its employees working under its directions.

OPPOSITE Party No. 4, i.e. the Agent, contending therein, that she was not a necessary party nor any relief can be sought against her by the complainant as she is merely an agent of the LIC having its local office at Jamnagar and she had merely taken the proposal form dated 28th March, 1989 from the proposer. It was for the LIC to accept the proposal or to reject it or to put new conditions before accepting it. The Agents of LIC cannot give any undertaking or promise under the provisions of the LIC Act, 1956 under which LIC was constituted or the rules applicable to the agents. The agents are not personally liable for making any payment of any dues etc. to the proposers or the policy holders. That the work of the agents of the LIC is simply to collect the proposals of the persons who want to get their lives insured and they have to submit those proposal forms to the office of the LIC and in the present case it was done by her. Hence, the complaint was liable to be dismissed so far as she was concerned. The District Forum held that the claim was not based only by way of grace, he. ex-gratia grant but the complainant has claimed the amount by way of right also and so it had jurisdiction to entertain the complaint. After thorough examination of the various documents it held that by the end of July, 1987 the deceased himself had not taken any steps for submitting the necessary documents required by the Corporation for finalising the proposal and hence there was no lapse on the part of the Corporation, as alleged by on behalf of the complainant. It was further held that the contract had remained unconcluded and therefore, in view of LIC of India v. Raja Vasi Reddy and Others, AIR 1984 SC 1014 the complainant was not entitld to any amount under the policy. About the prayer of the complainant for the payment as ex-gratia grant, it was held that it was not an appropriate Forum for adjudicating that question and if any discrimination had been mad qua the complainant by LIC, she has to approach the Supreme Court by way of a writ petition or if so advised file a regular suit. It was also held that the District Forum could not order the payment of ex-gratia grant under the policy. As such payment cannot be claimed as of antacid no direction can be given to the LIC for making any ex-gratia payment. Consequently, the complaint was dismissed. On behalf of LIC as well as by other Opp. Parties, a prayer was made for awarding heavy costs against the complainant but the District Forum thought it fit to direct the parties to bear their own costs.

FEELING aggrieved against the order of the District Forum, the complainant filed appeal before the aforesaid State Commission. The State Commission was of the opinion that LIC is a "State" within the meaning of Article 12 of the Constitution of India and has a monopoly through out the country to undertake the business of life insurance and at the same time, every citizen of this country has a right to be insured if he satisfies the necessary conditions of insurance and pays the premium. About the present disputed proposer it was remarked: The deceased had taken several insurance policies prior to this policy. It is not the case of anybody that he had made misstatement or suppressed any material facts. His age was known and confirmed by the LIC in previous policies." Before the State Commission also the complainant had cited an instance where ex-gratia payment was made by LIC when the proposal had remained unconcluded but the State Commission refused to grant any ex-gratia on that ground as it was of the opinion that it could not grant any ex-gratia payment. It was remarked that discriminatory policy was being followed by LIC while making ex-gratia payments. However, the State Commission was of the opinion that LIC was expected to take a decision within a reasonable time since every material was ready, i.e., age was proved, the premium had been paid, medical examination had been done, the proposer was found insurable and therefore, no further investigation was necessary. The State Commission held that LIC had taken a long time for deciding the case which amounts to deficiency in service. However, the State Commission relied upon its some earlier order wherein it was held: "the policy could not be issued on account of negligence and indifference which has resulted into deficiency in service, the complainant and his family members have suffered the damages as stated above. In that earlier case, the State Commission estimated damages at 80% of the insured amount. In that case also policy had not been issued. Relying upon that earlier order, the State Commission held that in the present case, the claimant was entitled to double the insured amount as the deceased had died in an accident and the claim at 80% comes to more than the amount claimed by the present claimant but as she has asked only for Rs. 96,808/- the said amount of damages was quite reasonable and proper. It may be mentioned here that the claimant had filed an application for amendment of the claim for raising it to Rs. 2 lacs but the Counsel for the claimant stated before the State Commission that if the original claim was awarded he did not want to press for the amendment and therefore, the State Commission did not pass any order on the amended application as the amount prayed for was being awarded. The State Commission accepted the appeal and issued a direction to LIC which had already been noticed above.

OPPOSITE Parties Nos. 1 to 3 have filed the present Revision Petition. Before we proceed further, we may mention here that a wrong practice has developed while filing complaints. We have noticed that when a case is filed against a Bank or Insurance Company, the different officers of those institutions, who had dealt with the case of the consumer, are arrayed as Opposite Parties. This practical had to be depreciated. The strict principles of Civil Procedure Code are not applicable to the complainants filed under the Consumer Protection Act. Therefore, it is unnecessary to find out if the Opposite Party is a legal entity and can sue or be sured in its name. If the complainant wants to make a complaint against the branch offices he can do so and not against the Branch Manager as the Branch Manager is not liable to satisfy the claim of the complainant. Moreover, the Branch Manager who had dealt with the case of the consumer might be transferred by the time the complaint is decided. In the present case, the different officers of the LIC and particularly the agent have been unnecessarily dragged into this controversy. The complainant could have easily arrayed the LIC through its Branch Offices or the Regional Office or the Zonal Office or the Central Office through their Principal Officers but not the Officers themselves. After hearing the parties, we are of the opinion that it is not necessary to dwell much upon the merits of this case as the complainant has no case. The case if fully covered by Raja Vasi Reddy''s case (supra). In paragraph 14 of the judgment it was remarked: "Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposer, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance; as prima facie, acceptance must be communicated to the officer. The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accept it unconditionally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurer however depends simply on the way in which negotiation for insurance have progressed. See in this complaint statement of law in Mac Gillivray and Park-ingston. On Insurance Law, Seventh Edition. Page 94 Paragraph 215" (Emphasis added.) Therefore, merely because there has been a delay in the acceptance of the proposal of the deceased in the present case; it cannot be held that there has been deficiency in the rendering of service by LIC. It may be mentioned here that the question of delay has been considered in detail by the District Forum and after consideration of all the relevant documents. It was held that the LIC cannot be said to be guilty of delay. Looking to the age of the proposer, LIC was within its rights to ask for ECG and blood sugar reports of the proposer. The deceased has submitted the ECG report dated 13th April, 1989 issued by Dr. Anjaria and blood sugar report dated 18th July, 1989 issued by Dr. Joshi. Thus, the deceased himself took for much time to send reports asked for by the LIC. In due course, those reports reached the Central Office at Bombay where those were examined. Vide letter dated 3rd September, 1989 the Bombay office wrote to Rajkot Branch Office intimating that the Central Office was not ready to accept the original proposal of the deceased and suggested an alternative proposal and directed the Rajkot office to intimate the deceased as to whether he was ready to accept the counter proposal or the amended proposal as suggested by the Bombay Office. The Rajkot office in turn must have written to the local Jamnagar office and the Jamnagar office vide letter dated 1st November, 1989 wrote to the proposer but by that time, the proposer had died and therefore, no concluded contract of insurance came into existence. In such cirumstances LIC cannot be held to be guilty of unnecessary delay. We are of the opinion that the State Commission went beyond its jurisdiction in holding that it could grant damages to the extent of 80% to the complainant.

AS noticed earlier, both the lower Forums have held that under the Consumer Protection Act, 1986, LIC cannot be ordered to make ex-gratia payment merely on the ground that in some other cases it has done so. We concur with that finding.

ACCORDINGLY , we accept the present Revision Petition, set aside the impugned order and dismiss the complaint. The parties will bear their respective costs. Mr. Y. Krishan, Member" I entirely agree. I am, however, constrained to observe that the order passed by the State Commission is erroneous both in law as well as on facts. 2. It has disregarded the decision of the Hon''ble Supreme Court in Life Insurance Corporation of India v. Raja Vasi Reddy and Ors. AIR 1984 S.C. 1914 which had been cited in the order of the District Forum. 3. The facts also clearly establish that there was no delay on the part of the LIC in processing the proposal for insurance. In fact, it was the deceased himself who took unduly long time in Submitting the E.C.G. and Blood Sugar reports he proposer. 4. The State Commission has also observed that the LIC was following a discriminatory policy in the matter of making ex-gratia payments and that LIC is a ''State'' within the meaning of Article 12 of the Constitution and has a monopoly of the business of life insurance in the country and that every citizen of this country has the right to be insured if he satisfies the necessary conditions of insurance and pays the premium. Any allegation of unfair discrimination because of payment ex-gratia in one case and not in another case cannot constitute deficiency in service under the Consumer Protection Act. In fact, non-payment or non-grant of a benefit ex-gratia cannot constitute deficiency in service which the parties are otherwise expected to render. 5. I am constrained to make these observations because it is noticeable that there is increasing in some of the Consumer Forums to travel beyond their jurisdiction. While the Consumer Forums are under obligation to protect the consumers against harassment if they buy any goods or hire any services, it is essential that only those suppliers of goods and services suffer penalties under the Consumer Protection Act who are found to have genuinely defaulted and been negligent towards the consumer. It is of paramount importance that while granting reliefs to the consumers those who provide goods or services are dealt with justly and fairly