LIFE INSURANCE CORPORATION OF INDIA vs Debasis Mishra

BEING aggrieved against the orders dated 22.4.2004 in C.D. Case No. 148 of 2003 of the District Forum, Angul, the opposite parties have filed this appeal against the complainant.

THE facts of the case in brief are that the complainant, who is the sole respondent had a Money Back Life Insurance Policy in short L.I. policy, bearing No. 580602270 for an assured sum of Rs. 50,000 for a period of 15 years with opposite party No. 1, the Branch Manager, Life Insurance Corporation of India, Angul Branch, Distt. Angul, the appellant No. 1. This L.I. policy commenced on 14.2.1994, when the complainant was serving at TAMRIT, Angul where premium was to be paid by the respondent quarterly. The respondent paid quarterly premium in the months of May, August and November, 1994. As the respondent was retrenched from the service with effect from 1.1.1995, he failed to pay the subsequent quarterly premium due to financial problem. He waited for a long period and thereafter approached appellant No. 1 and the L.I.C. agent to get back the premium amount deposited by him with interest. But, his request was turned down by appellant No. 1. He again approached appellant No. 1 in writing on 6.12.2003. But, it was also turned down for which he filed the aforesaid C.D. case. Both the appellants, in their written version, had challenged the maintainability of the case on the ground as barred by limitation since the C.D. case has been filed almost nine years after the time of alleged cause of action. Their specific plea was that as the respondent has not deposited the quarterly premium from 14.2.1995, in absence of any exigencies like death, disability of the life assured etc., the policy was lapsed and the policy premium deposited earlier has been forfeited to the Life Insurance Corporation of India in short, Corporation, as per the terms and conditions of the said policy. Therefore, they have caused no deficiency in service to the respondent.

WHILE deciding the dispute between parties, the District Forum had relied upon the decision of this Commission reported in 1997 (I) C.P.R. 544, Niranjan Sahoo v. Branch Manager, L.I.C. of India. It has been decided in this case that the premium paid by the policy holder is not gratuitous. Therefore, in case the policy is lapsed due to non -deposit of policy premium, forfeiture of premium already deposited would contravene the provision under Section 65 read with Section 74 of the Indian Contract Act. The Corporation, therefore, is not entitled to appropriate the premium amount already deposited by the policy holder and rather, would refund him the same. In view of the finding, the District Forum has directed the opposite parties/appellants to refund to the complainant/respondent, the amount of premium deposited by him with interest @ 6% per annum from 1.1.2004 towards compensation within one month from the date of receipt of the copy of the order, failing which the aforesaid amount would carry penal interest @ 2% per annum from the date of deposit.

WE have heard the learned Counsel for the appellants as none appeared for the respondent and perused the materials available on record. The appellants have challenged the aforesaid orders of the District Forum as fallacious and against the principle of insurance contract which is distinctly different from the provision and principle of the Indian Contract Act. It was argued on behalf of the appellants that as the respondent has failed to deposit the amount of premium after the month of November, 1994, the premium amount shall stand forfeited by the Corporation in view of the terms and conditions of the L.I.C. policy, which is binding to both parties. In this end of the view the respondent would not be benefited out of the principle laid down in the said decision relied by the District Forum. In support of this argument, the learned Counsel for the appellants has relied on a decision reported in A.I.R. 1962 Supreme Court 814 (V 49 C 117), in a case in between Mithool Lal v. Life Insurance Corporation of India. Besides this, it was argued on behalf of the appellants that the District Forum should not have entertained the case at all as the complaint was filed long after the period of limitation.

NOW , therefore, the main point to be decided by us is as to whether the respondent is entitled to get refund of the amount of premium deposited by him till the month of November, 1994 and how far the order of the District Forum in this respect is justified.

UNDISPUTEDLY , the respondent has entered into the aforesaid money back L.I.C. policy with appellant No. 1 commencing from 14.2.1994 and has deposited quarterly premium with appellant No. 1 till November, 1994. Undisputedly, he has discontinued payment of quarterly premium thereafter and long after this he requested appellants to refund the premium amount already deposited by him. Nowhere the respondent has challenged the legality of the conditions and privileges of money back plan of the L.I.C. policy under which he has entered into the scheme. Therefore, it is binding on him. As per Clause 5 of the money back L.I.C. policy under heading ''forfeiture in certain events'', in case the premium is not duly paid by the insured or in case any conditions contained and endorsed therein, etc. are violated, subject to provision of Section 45 of the Insurance Act, all claims shall cease and determined and all money deposited in consequence of the policy shall belong to the Corporation excepting the privileges contained therein are lawfully granted by the Corporation. In the instant case, the aforesaid provision of Insurance Act is attracted and the respondent is not entitled to any privileges as no such occasion has arisen. The Honble Supreme Court has held in the aforesaid decision, that where one of the conditions in the Money Back policy is that the money that has been paid in view of the term of the policy would belong to the Corporation, if the policy is vitiated due to fraudulent suppression of material facts by the insured and where there is a stipulation in the policy that for the breach of warranty by one of the parties to the contract, the other party would be discharged from the performance of his part of contract, Sections 65 and 64 of the Indian Contract Act would cease to operate in that case. This decision of the Apex Court should be respected as against the aforesaid findings of this Commission reported in 1997 (1) C.P.R. 544. Thus as the respondent has violated the terms and conditions under aforesaid Clause 5 in defaulting to deposit subsequent quarterly premium from the month of November 1994, the Corporation is not guilty of deficiency in service in not refunding the amount of premium already deposited by the respondent. In this end of the view, the aforesaid orders of the District Forum should be set aside as the Corporation has rightly forfeited the premium amount deposited by the respondent.

FURTHER , the appellants have not established as to how the District Forum is wrong in holding that the C.D. case was filed in time. As the respondent is losing its claim in view of our above findings, the question of filing the C.D. case beyond period of limitation has become irrelevant.

IN the result, we allow the appeal without cost taking into consideration the circumstances of the case. The impugned orders dated 22.4.2004 passed by the District Forum in C.D. Case No. 148 of 2003 is hereby set aside. I agree. Appeal allowed. -