Life Insurance Corporation of India vs KASHI RAM SAHU

THE Life Insurance Corporation of India (for short the ''LIC'') aggrieved of the order dated 30.6.2001 passed in Case No. 96/2000 by the District Consumer Disputes Redressal Forum, Datia (for short the ''District Forum'') has filed this appeal.

FACTS giving rise to this appeal are thus: the respondent''s wife late Smt. Mamta Devi Sahu aged about 26 years for assuring her life submitted a proposal on 5.2.1998 through agent Maniram Kushwaha. Admittedly, she was a non-earning woman. The proposal was accepted and a 20 years Money-back policy with profits and accident benefit No. 200523221 of Table and Term 75-20 of yearly premium of Rs. 3,185/- for the sum assured of Rs. 50,000/- for a woman falling under Category three with an endorsement of Clause 4-b was issued. The life assured committed suicide on 23.6.2000 i.e., after two years of commencement of policy. The respondent claim submitted was repudiated by the LIC on the ground that the policy was issued with the endorsement of Clause 4-b i.e., Special Female Clause, according to which sum assured was not payable, as life assured died within a period of 3 years from the date of the policy, hence, returned the premium deposited of Rs. 9,330/- by draft which was refused. The respondent filed the complaint which was resisted. The District Forum after appreciation of evidence and in particular the statement of the agent who submitted proposal held that the Clause 4-b was not the part of the policy, therefore, the LIC was deficient in service, hence, ordered to pay the sum assured with interest thereon at the rate of 18 per cent p.a. from the date of its payability and compensation of Rs. 2,000/- for mental pain along with Rs. 500/- as costs of the proceedings.

True, endorsement of Clause 4-b is not part of the policy. However, with the proposal Clause 4-b was sent. In any case, even if Clause 4-b was not sent with the proposal, the proposal fell in Category III of the underwriting manual of the LIC wherein it lays down that the Clause 4-b should be imposed on lives aged 35 years and below nearer birthday on the date of proposal for cases of the women falling in Clauses (a), (b) and (c) of the Category III. Proposal Clause No. 4(b) reads thus : Category III "Women not covered by I and II (a) Single Women : On consideration of Insurance needs subject to a maximum of Rs. 2 lakhs. The actual amount would depend on the financial status etc., of the family and the father and other insurable members of the family being sufficiently insured. In all cases a M.H.R. by the Branch Manager giving full details of the life assured, her own income, other sources of income including parents'' income, need for insurance and insurance on the lives of other members of the family, etc., is essential. (b) Married Women : Maximum limit of Rs. 5 lakhs not exceeding husband''s insurance in force for full sum assured (on risk covered plans). The underwriter should, however, examine whether the income of the husband can support the total insurance on his own life as well as on wife''s life and on the lives of his dependent children and also have regard to other aspects such as social status of the family, moral hazard etc., before deciding the amount of insurance that can be granted on each such proposal. (c) Widows : On consideration of insurance needs MHR by BM is necessary giving full details of her income, source and need for insurance."

ADMITTEDLY, at the time of submitting the proposal and at the time of death the life assured was below 35 years of age who committed suicide after commencement of the policy but before expiry of period of three years from the date of policy, therefore, the liability of the LIC was only to return the premiums deposited and not the amount assured merely because inadvertenly, endorsement of Clause 4-b was not made in the policy. As the life assured was below 35 years of age and non-earning woman, the proposal could not have been accepted without endorsement of Clause 4-b, therefore, for the mistake of the agent or a clerical error in not making an endorsement of Clause 4-b in the policy, the respondent cannot take advantage of such a mistake. The question of applicability of Clause 4-b was considered by this Commission in Life Insurance Corpn. v. Avadh Bihari Kaushik, II (2000) CPJ 553, wherein this Commission after following the decision of National Commission and after referring to Clause 4-b observed in paras 4, 5 and 6 thus : "4. From a bare reading of Clause 4-b it is clear that in case of intentional self-injury suicide or attempted suicide, insanity, accident other than an accident in a public place or murder if the death occurs before the expiry of three years from the date of the policy, in such a case the liability of the LIC would be limited to the sum equal to the total amount of premiums (exclusive of extra premiums, if any) paid under the policy without interest. 5. Special Female Clause 4-b was considered by the National Commission in case of Branch Manager, LIC & Anr. v. Ramchander Singh, National Commission and Supreme Court on Consumer Cases 1986-1995 page 1326, wherein the accident occurred at the residence, it was held that special female clause does exclude the cases as enumerated in the clause. 6. In the case in hand as the accident of the life assured occurred at her residence and not at a public place, therefore, the LIC was right in offering the payment of the amount of two premiums only."

IN the circumstances, in our opinion, the LIC was justified in repudiating the claim and in returning the premiums deposited which was not accepted by the respondent. IN view of this we direct, the LIC to return the amount of Rs. 9,330/- with interest thereon at the rate of 12% per annum from the date of repudiation of the claim, of course after adjustment of the amount if already paid along with Rs. 500/- as costs of the proceedings throughout within a period of two months from the date of receipt of the certified copy of this order. In the result, the appeal is allowed. The order of the District Forum is set aside and the complaint is dismissed with the observation made above. 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 allowed.