ICICI PRUDENTIAL LIFE INSURANCE CO LTD vs LATIKA SHIVsHANKAR SALUNKE

-THIS appeal filed by ICICI Prudential Life Insurance Company Ltd. is directed against the order dated 22. 10. 2007 passed by District Consumer Forum Solapur.

WE heard Mr. Sachin Chandarana, Advocate for the appellant/insurance Company and Ms. Bindu Jain, Advocate for the respondent/org. complainant. Factual background: Shivshankar Pandurang Salunke had taken lifetime insurance policy. Sum assured was Rs. 5,50,000. He submitted proposal on 26. 5. 2006. The proposal was accepted by the Insurance Company. The risk was covered with effect from 4. 8. 2006. The premium was to be made on 1st of every month. Grace period not more than 15 days was allowed. The insured paid two instalments after commencement of the policy. The insured paid premium due 1. 10. 2006 by cheque dated 19. 10. 2006. The insured paid premium due on 1. 11. 2006 also by cheque dated 1. 11. 2006. The insured died on 15. 12. 2006. The widow lodged the claim. The Insurance Company repudiated the claim on the ground that the policy was in lapsed condition. According to the Insurance Company both the cheques were dishonoured on account of mismatched signature. Therefore, the widow filed consumer complaint in the District Consumer Forum, Solapur. The said complaint was opposed by the Insurance Company. The Forum below rejected the defence raised by the Insurance Company and allowed the complaint. The Forum below directed the Insurance Company to pay Rs. 5,50,000 to the complainant together with interest @ 9% p. a. from 3. 5. 2007.

The learned Advocate Mr. Chandarana vehemently submitted that cheque dated 19. 10. 2006 was dishonoured on 20. 10. 2006 on account of mismatched signature. Similarly, cheque dated 1. 11. 2006 was dishonoured on 3. 11. 2006 on account of mismatched signature. The learned Advocate Mr. Chandarana argued further that due to failure to pay premium the policy was lapsed. He also argued that for want of consideration the contract of insurance is void. He pointed out that some of the observations made by the District Consumer Forum are contrary to the well settled legal position. He relied upon a decision of the National Commission in the case of United India Insurance Co. v. N. Mohan Reddy and Anr. , I (1996) CPJ 11 (NC) and a decision of the Supreme Court in the case of National Insurance Co. Ltd. v. Seema Malhotra and Ors. , I (2001) ACC 317 (SC)=ii (2001) SLT 229= (2001) 3 SCC 151. On the other hand, Learned Advocate Ms. Bindu jain argued that the cheque were dishonoured fraudulently. She pointed out that there was sufficient balance in the account of the insured. She strongly supported the impugned order under challenge.

WE gave anxious consideration to the rival submissions advanced at the Bar. Some of the observations made by the District Consumer Forum are certainly contrary to the well settled legal position. The Forum below has arrived at a conclusion that it was a moral duty of the Insurance Company to give intimation to the insured about non-encashment of cheque on account of mismatched signature. The National Commission has held in the case (mentioned supra) that there is no obligation on the Insurance Company to give intimation of dishonouring of the cheque. We therefore hold that the observations made by the Forum below in this behalf are not proper. There is no quarrel with regard to proposition of law laid down in the case of Seema Malhotra and Ors. Decided by the Supreme Court. Sections 25 and 65 of the Contract Act, 1872 are very much clear. Where the premium remains unpaid on account of non-encashment of cheque, contract of insurance becomes void.

AFTER having subjected the entire material to close scrutiny, we find considerable force in the argument of learned Advocate Ms. Bindu Jain. The complainant has specifically raised issue in the complaint itself that the Insurance Company being sister concern of ICICI Bank, practised fraud. It is admitted fact that the insured had account in the ICICI Bank Branch at Solapur. We carefully examined the two memos issued by the Bank. These two memos are issued by ICICI Bank Branch at Kolahpur. We fail to understand as to how two cheques, which were presented in the ICICI Bank, Solapur Branch travelled to Kolhapur. Specimen signature of the insured was with the ICICI Bank, Branch at Solapur. There was no specimen signature of the insured in the ICICI Bank, Branch at Kolahpur. It is beyond our comprehension as to how the Branch at Kolahpur dishonoured the cheques on account of mismatched signature. This is a fraud played by the ICICI Bank to avoid payment to a widow. A reference with profit can be made to the decision of the National Commission in the case of The Divisional Manager, Life Insurance Corporation of India v. Uma Devi, II (1991) CPJ 516 (NC)= (1986-94) Con. C 908 NC SC NS. It is held by the National Commission that the Consumer Disputes Redressal Forum has not only a jurisdiction but also a duty to investigate into the question whether the charge made by the Insurance Company on the basis of which the alleged repudiation was made is well founded in fact. It is further held by the National Commission that in case it is found as a result of such investigation that the Insurance Company was justified in repudiating the contract, the complaint petition before the Forum will have to fail. If, on the other hand, the Forum comes to the conclusion that the charge levelled by the Insurance Company is not substantiated and hence, there was no justification for its purported action repudiating the contract of insurance, the contract of insurance will be treated as subsisting and an inquiry will be conducted into the merits as to whether there was any deficiency in the service on the part of the Insurance Company so as to entitle the complainant to grant of relief under the Act. In the case in hand, we thoroughly investigated the matter and have come to the conclusion that the repudiation was not at all justified. The ICICI Prudential Life Insurance Co. Ltd. being sister concern of ICICI Bank, the fraud is perpetrated in order to avoid payment. An ingenious mode is adopted by the Insurance Company. Two cheques presented by the insured are shown to have been dishonoured on account of mismatched signatures. The learned Advocate Mr. Chandarana for the appellant did not touch this aspect when we specifically asked him to make comments. The ICICI Bank, Branch at Kolahpur had absolutely no reason to dishonour the cheques. It had no authority to do so.

THE Insurance Company played another mischief. It is a fact that the premium was not paid on 1. 10. 2006. The insured gave a cheque to the Insurance Company on 19. 10. 2006. After having received the premium against lapsed policy, the Insurance Company reinstated and revived the lapsed policy. The vital piece of document is suppressed. The learned Advocate Ms. Bindu Jain brought to our notice the letter dated 19. 10. 2006 sent by the Insurance Company to the insured. We are inclined to reproduce the text of the said letter: "dear Mr. Shivshankar Pandurang Salunke sub: Policy Re-instatement thank you for giving us an opportunity to serve you. We have received your payment towards your premium (s) against the policy number 20931939 which had lapsed as communicated to you earlier. We are pleased to inform you that your policy has been reinstated and your life cover revived. For your reference, your next premium due date is 1. 11. 2006. For any further clarifications, please feel free to contact us at any of the access points mentioned overleaf. We assure you of our best service at all times. "

THE lapsed policy was revived and accordingly intimation was given to the insured. The insured was asked to make next payment on 1. 11. 2006. However, this next payment was rejected on the ground of mismatched signature. Both the cheques issued by the insured were valid. However, both the cheques were rejected fraudulently. In the broadest sense, fraud is "deception made for personal gain". Fraud can be accomplished with the aid of forged objects. A tort is a civil wrong for which the law provides a remedy. A civil fraud involves the act of intentionally making a false representation of a material fact with an intention to deceive other party. This is nothing but theft by deception. December premium was due on 1. 12. 2006. No premium was paid on 1. 12. 2006. 15 days grace period was allowed by virtue of insurance contract. Therefore, the last date for payment of premium was 16. 12. 2006. The insured ought to have paid premium on or before 16. 12. 2006. He could have legitimately paid the premium on 16. 12. 2006. The insured died on 15. 12. 2006. After 15. 12. 2006 there is no question of payment of premium. The insurance policy therefore did not lapse. The claim lodged by the widow of the insured ought to have been allowed by the Insurance Company. The Insurance Company wrongly repudiated the claim without any valid reason. The Supreme Court in the case of Life Insurance Corporation of India and Ors. v. Asha Goel and Anr. , I (2001) SLT 89=2001 (2) SCC 160, has held that in the matter of repudiation of a policy, the Insurance Company should take extreme care and cautions and it should not be dealt with in a mechanical and routine manner.

After having scanned the evidence on record and after having considered the facts and circumstances of the case, we are of the clear opinion that the action of repudiation of the Insurance Company was bad in law. The final order passed by the District Consumer Forum is proper though some of the reasons are improper. The appeal filed by the Insurance Company is without any merits. We propose to impose heavy cost on account of fraud played by the Insurance Company. ORDER 1. Appeal stands dismissed with cost of Rs. 25,000 to be paid to the respondent/org. complainant. 2. Misc. Application No. 2070/2004, which is for stay stands disposed of. 3. Copies of the order be furnished to the parties.

Appeal dismissed.