Life Insurance Corporation of India vs KALIKA PRASAD

Mr. Justice S.K. Dubey, President

THIS appeal is directed against the order dated 5.7.2000 passed in Case No. 32/1997 by the District Consumer Disputes Redressal Forum, Chhindwara (for short the "District Forum"). Life Insurance Corporation of India (for short "LIC") after acceptance of the proposal issued a policy No. S/67908908 for the sum assured of Rs. 50,000/- under the Salary Savings Scheme of the table and term 14-20 on 28.8.1985 of the maturity date of 28.8.2005 to the respondent, who was employed as Tub Loader in the Bhawani Incline, Ambara Colliery. He fell down from the roof at the time of loading the coal due to which he received severe injuries in the ribs and backbone. He remained under treatment for a period of 217 days. The Medical Board after examining assessed 100% disability of which certificate was issued. The appellant lodged the claim for payment of accident benefit. The LIC rejected the claim vide letter dated 21.7.1997 on two grounds that is the intimation of accident was not given to the LIC within a period of 120 days as per the policy condition and the nature of the injury sustained was not covered under condition No. 10(a) of the policy as there was no amputation of his lower limb or limbs. The respondent filed the complaint, which was resisted. The District Forum after appreciation of evidence held that because of fractures in backbone and ribs, the respondent became permanently disabled and is paraplegia since last 10 years. The delay in intimation of the accident beyond the period of 120 days in the circumstances is of no avail as the respondent remained in the Hospital for about 217 days who thereafter was examined by the Medical Board for assessment of the permanent disability, and thereafter gave intimation on 23.4.1988. Hence, the delay so caused is not fatal particularly when the respondent''s wife intimated the accident to the Branch of the LIC at Parasiya within a period of one month. In view of the permanent disablement, the respondent is entitled to accident benefits as both his legs right from the waste to ankle have become useless and non-functional resulting in permanent disability. In the circumstances, for the disability which is more worse than an amputation, ordered to pay Rs. 50,000/- with interest thereon at the rate of 12 per cent per annum from 18.4.1991. On the due instalments, the interest was also ordered to be paid at the rate of 12 per cent per annum along with Rs. 1,000/- as costs of the proceedings.

After hearing learned Counsels for the parties and on reappraisal of evidence on record the submission of learned Counsel for the LIC that the respondent was not entitled for accident benefits as per the terms and conditions of the policy for two reasons, firstly, the disability was intimated after 217 days after the date of accident which ought to have been communicated by the respondent within a period of 120 days and, secondly, the disability does not fall within the definition of "disability" as defined under the policy, hence, the repudiation of the claim was justified, cannot be accepted.

THE condition No. 10(a) of the policy deals with the "Accident Benefit" of which reads thus : "10. Accident benefit : If at any time when this policy is in force for the full sum assured, the Life Assured, before the expiry of the period for which the premium is payable or before the policy anniversary on which the age nearer birthday of Life Assured is 65, whichever is earlier, is involved in an accident resulting in either permanent disability as hereinafter defined or death and the same is proved to the satisfaction of the Corporation, the Corporation agrees in the case of- (a) Disability to the Life Assured : (i) to pay in monthly instalments spread on 10 years an additional sum equal to the Sum Assured under this policy. If the policy becomes a claim before the expiry of the said period of 10 years, the disability benefit instalments which have not fallen due will be paid along with the claim, (ii) to waive the payment of future premiums. THE maximum aggregate limit of assurance under all policies on the same life to which benefits (i) and (ii) above apply shall not in any event exceed Rs. 1,00,000/-. If there be more policies than one and if the total assurance exceeds Rs. 1,00,000/- the the benefits shall apply to the first Rs. 1,00,000/- assured in order of date of the policies issued. THE waiver of premiums shall extinguish all options under this policy except as to such assurance, if any, as exceeds the maximum aggregate limit of Rs. 1,00,000/- and which may have been kept in force by continued payment of premiums and the benefits covered by (b) of this clause. THE disability above referred to must be disability which is the result of an accident and must be total and permanent and such that there is neither then nor at any time thereafter any work, occupation or profession that the Life assured can ever sufficiently do or follow to earn or obtain any wages, compensation or profit. Accidental injuries which independently of all other causes and within ninety days from the happening of such accident, result in the irrecoverable loss of the entire sight of both eyes or in the amputation of both hands at or above the wrists, or in the amputation of both feet at or above ankles, or in the amputation of one hand at or above the wrist and one foot at or above ankle, shall also be deemed to constitute such disability. Immediately after the happening of the disability, full particulars thereof must be given in writing to the office of the Corporation where this policy is serviced together with the then address and whereabouts of the Life Assured and within ninety days after happening of the disability there must be given to the servicing Divisional Office of the Corporation in the manner required by it, proof of disability satisfactory to the Corporation and without any expense to the Corporation, and thereafter similar proof must be given, as and when required by the Corporation, of the continuance of such disability. Any Medical Examiner nominated by the Corporation shall be allowed to examine the person of the Life Assured in respect of any disability claimed. In such manner and at such times before and/or after the disability is accepted by the Corporation as the Corporation may require. In the event of its being discovered at any time that a claim under the clause has been wrongly admitted all premiums falling due after the date of the Corporation''s intimation to that effect shall be paid and no further instalments of the additional Sum Assured shall be paid as if no disability had occurred. 10(b) Death of the life assured...."

True condition No. 10(a) lays down that immediately after the happening of the disability full particulars must be given in writing to the office of Corporation and within ninety days after happening of the disability that must be given to the servicing to the Divisional Office of the Corporation in the manner required with proof of such disability. The period of ninety days is now 120 days. In this respect the District Forum has recorded a categorical finding that the accident was intimated by the wife of the respondent to the Branch Office of the LIC. The permanent disability certificate could only be produced after the discharge from hospital and then on examination of the life assured by the Medical Board which found paraplegia, kyphotic, deformity T.L. function # dislocation D1 and L1, therefore, it being a case of 100 per cent disability of both the lower limbs from waist to ankle, hence, in the circumstances, the delay in not giving the particulars in the manner prescribed cannot be fatal to disentitlement of the claim.

IT takes us to ground of amputation. True, there is no amputation but from a bare look of the condition, it is evident that the disability which is a result of accident must be total and permanent and such that there is neither then nor at any time thereafter any work, occupation or profession that the life assured can ever sufficiently do or follow to earn or obtain any wages, compensation or profit. Thereafter, the clause proceeds to specify accidental injuries which independently of all other causes and within ninety days from the happening of such accident, result in the irrecoverable loss of the entire sight of both eyes or in the amputation of both hands at or above the wrists, or in the amputation of both feet at or above ankles or in the amputation of one hand at or above the wrist and one foot at or above the ankle, shall be deemed to constitute such disability. Therefore, for the injuries arising out of an accident which results in permanent disablement whereby the life assured cannot do or follow to earn or obtain any wages, compensation or profits. The amputation of the nature in this clause by deeming provision has been included in disability i.e. the injuries arising out of the accident, that is sight of both eyes or in the amputation of both hands at or above the wrists, or in the amputation of both feet at or above ankles, or in the amputation of one hand at or above the wrist and one foot at or above the ankle, shall also constitute disability. In "Black''s Law Dictionary" Sixth Edition at page 1139, the word "Permanent disability" gives meaning thus : "Generally, permanent disability is one which will remain substantially the same during remainder of workers'' compensation claimant''s life. Subsequent Injuries Fund v. Industrial Acc. Commission, 226 Cal. App. 2d 136, 37 Cal. Rptr. 844, 849. A permanent disability is one which causes impairment of earning capacity, impairment of normal use of member, or competitive handicap in open labour market. State Compensation Insurance Company Fund v. Industrial Acc. Commission, 59 Cal. 2d 45, 27 Cal. Rptr. 702, 707, 377 P.2d 902. Within insurance policies does not mean that disability must continue throughout life of insured, but it connotes idea that disability must be something more than temporary, and at least presumably permanent."

In P. Ramanatha Aiyar "The Law Lexicon" 1997 Edition at page 1440 the word "Permanent disability" has been defined thus : "The ''Permanent disability'' for which recovery may be had in an action for personal injuries, is the permanent reduction of the injured person''s power to earn money, resulting from the injury, caused by the negligent act of the other party."

IN view of the above the expression permanent disability must be such that it causes impairment of earning capacity, impairment of normal use of member, or competitive handicap in open labour market. IN insurance policies, disability must continue throughout life of insured, which connotes idea that disability must be something more than temporary and at least presumably permanent. It is not in dispute that the life assured has been impaired permanently to earn his livelihood as he has become paraplegia as his both lower limbs have become permanently disabled in totality. IN such circumstances, in our opinion, irrespective of the fact that there was no amputation of the two legs at or above ankles, the LIC cannot escape its liability on the ground that though there is a permanent disability, but in the absence of amputation claim is not maintainable.

THE National Commission in case of Bhag Chand Jain v. LIC of India & Anr., II (1999) CPJ 20 (NC)=(1999) NCJ 305 (NC), a case where the life assured sustained multiple fracture of both lower extremities and had developed permanent disability in totality considered the question of permanent disability as defined in condition No. 10(a) of the Policy and observed in para 9 thus : "9. We have given our thoughtful consideration to the entire controversy. In our opinion, the contention raised on behalf of the petitioner has merit. THE District Forum had relied upon the certificates issued by Dr. Madhav Upadhayay and the opinion of the Medical Board of the S.M.S. Medical College Hospital, Jaipur. THE State Commission failed to consider the opinion of the Board wherein it was specifically mentioned that the petitioner sustained multiple fractures of both lower extremities and there was no possibility to improve and he had developed permanent disability in totality. THE petitioner had also filed an affidavit before the District Forum stating therein that he was permanently disabled to do any work after the accident. THE case of the petitioner stood fully established from the opinion of the Medical Board, Certificates of Dr. Madhav Upadhayay and his own affidavit. In our opinion, the State Commission committed a grave legal error by ignoring very material evidence placed on record i.e. opinion of the Medical Board. THE State Commission also committed a legal error by rejecting the two certificates issued by Dr. Madhav Upadhyay on insufficient and untenable grounds. THE order of the State Commission suffers from legal infirmity and is unsustainable in law. As a result thereof, we allow this revision petition and set aside the order passed by the State Commission and restore the order of the District Forum. However, we leave the parties to bear their own costs. THE revision petition stands disposed of as above."

The decision of the National Commission in case of L.I.C. of India v. Ramesh Chandra, II (1997) CPJ 45 (NC), relied by learned Counsel for LIC is distinguishable on facts as in the said case the amputation of one hand at or above the wrist and not of both hands at or above the wrist, therefore, it was held that it does not constitute disability within the meaning of Clause 10(a) of the policy.

In view of the above, in our opinion, the respondent was entitled to the accident benefit of Rs. 50,000/- to be spread over in 10 years in equal monthly instalments of which the first instalment was to begin from 18.4.1991.

IN view of the above as 10 years has lapsed, the respondent is entitled to total amount of Rs. 50,000/- with interest thereon at the rate of 9 per cent per annum from 18.4.1991 and not at the rate of 12 per annum in view of the economy change in the policy of the Reserve Bank of INdia where the Bank on the fixed deposit not granting interest more than 9 per cent per annum as held by the Supreme Court in case of S. Kaushunuma Begum & Ors. v. The New INdia Assurance Co. Ltd., I (2001) ACC 151 (SC)=I (2001) SLT 300=AIR 2001 SC 485. However, the respondent would not be entitled to the insured sum which is payable only in case of death or at the time of maturity of the policy which matures on 28.8.2005. However, the respondent would be entitled of waiver of unpaid premiums from the date of accident till the date of maturity of the policy.

CONSIDERING the circumstances, we expect from the LIC to see whether looking to the condition of the life assured who has been permanently disabled of payment of the sum assured of Rs. 50,000/- with benefits on the date of maturity or on the date of death, can be relaxed so as to pay him the amount of sum assured with benefits. In view of the above, we direct the LIC to pay the amount of Rs. 50,000/- along with interest at the rate of 9 per cent per annum from 18.4.1991 with costs of Rs. 1,000/- as awarded by the District Forum within a period of two months from the date of receipt of certified copy of this order, failing which the interest would be payable at the rate of 12 per cent per annum from the date of this order. In the result, the appeal is partly allowed. The order of the District Forum shall stand modified as indicated hereinabove. However, in the circumstances, we direct the LIC to bear the costs of this appeal also quantified at Rs. 2,000/-. A copy of this order be conveyed to the parties and a copy be sent to the District Forum along with record of the case. Appeal partly allowed.