Life Insurance Corporation of India vs KEWALANAND

LIFE Insurance Corporation of India has preferred this appeal against the order dated 17.9.1992 passed by District Forum (1), Lucknow in Complaint Case No. 535/90 in Kewalanand v. LIFE Insurance Corporation of India.

THIS appeal was heard finally on 6.3.1998 and the orders were reserved. Learned Counsel Mr. Arjun Bhargava for the appellant and Sri Rajesh Chadha, learned Counsel for the respondent were present and their arguments were heard on that day. The case in brief is that the respondent Mr. Kewalanand took a policy of Life Insurance bearing No. 46218361 on his own life for a sum of Rs. 25,000/- under Table and term life 24-15 with the date of commencement of 17.1.1980 on an annual premium payable Rs. 1,931.30. This premium also includes Rs. 25/- only towards coverage of risk for accident benefit and permanent disability benefit subject to the condition of the insurance policy. While he applied for a loan through his letter dated 14.3.1987, received in the office of the Life Insurance Corporation of India on 21.3.1987, the respondent-complainant informed the appellant''s office that he had met with an accident on 1.3.1997 at Firozabad and was lying in Mool Chand Hospital at New Delhi and again vide his letter dated 22.6.1987, received by the appellants on 1.7.1987 from the respondent-complainant, informing that his right leg was amputated at Agra on 5.8.1987 and claimed the accident and disability benefit. Though according to the terms of the policy the Insurance Company has paid the amount on due dates alongwith dividend but repudiated the claim of the benefit of accident policy and disability benefit vide letter dated 15th April, 1988 on the ground that since his right leg had been amputated above the knee and the left leg had not suffered any disability it would not be possible by the Life Insurance Corporation to consider grant of disability benefit under his policy.

After hearing both the parties, the District Forum allowed the complaint and directed the appellants to pay additional sum equal to assured sum of Rs. 25,000/- by yearly instalment of 10 years and if the policy matures earlier the balance of payment be made in one lump sum and also awarded Rs. 1,000/- as compensation.

FEELING aggrieved by this order the appellants (Life Insurance Corporation) has filed this present appeal. Though there is no dispute regarding the facts of the case of accident and the policy having the benefit of accident and permanent disability benefit. The question to the dispute is whether the respondent-complainant is entitled to receive the accident benefit and permanent disability benefit in accordance with the terms and conditions of the policy in question. Under law the policy''s benefit will be accrued in accordance with the terms of the contract as mentioned in the aforesaid Policy No. 46218361. The learned Counsel for the respondent has asserted before us that the policy in question was received later but those conditions were not known to the respondent complainant at the time of the proposal of the policy. Therefore, the Life Insurance Corporation cannot do away with the liability to make payment of the accident benefit and permanent disability benefit. Contrary to these arguments the learned Counsel, Mr. Arjun Bhargava for the appellant had drawn our attention to the Condition 10 which is meant for accident benefits which is reproduced as below: "10. Accident Benefit-If at any time when the 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 birth day of the 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 over 10 years an additional sum equal to the sum assured under the 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 alongwith the Claim (ii) to waive the payment of future premiums. The maximum aggregate limit of assurances 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. l/OO.OOO/- the benefits shall apply to the first Rs. 1,00,000/- assured in order of date of the policies issued. The waiver of premium shall extinguish all options under the 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 benefit covered by (b) of this clause. The disability clause referred to must be disability which is the result of an accident and must be fatal and permanent and such that there is neither then nor at any time thereafter any work, occupation or profession that the Life Assured can never 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 of 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 the writs if the amputation of both feet at or above ankles, or in the amputation of one hand at or above the wrist and one feet at or above the ankle shall also be deemed to constitute such disability".

ACCORDING to this condition the disability benefit can be given to the insured only in case both the legs above the ankles or both the hands above the wrists have been amputated or one leg and one hand have been amputated or both the eyes have lost sight within 90 days time of the prescribed therein and the insured has become incapable to earn his livelihood in any way then in that case the disability benefit on account of the accident can be awarded by the Life Insurance Corporation. In support of this argument the learned Counsel for the appellant had relied upon a case L.I.C. v. Ramesh Chandra, decided by the National Commission, (1997) (2) CPR (NC). The facts of this case are also identical to the present case of this appeal before us. ACCORDING to this the National Commission has laid down principle that the provisions in the contract of insurance is the determining factor of contract of the indemnity and the incidence of payment dependent on the terms under the policy bond. In that case the respondent- complainant has got amputated only one hand above the wrist and according to terms and conditions of the policy he did not fall within the definition constituting the disability. Thus according to this decision the present appeal of the Life Insurance Corporation of India is not liable to pay any accident disability benefit to the complainant in the present case before us. Because an essential element of the contract of the insurance policy is that the agreement provides that the insurer undertakes to indemnify the insured on the happening of a specified event of or of death or causing permanent disability. Life insurance business now includes miscellaneous insurance. A claim will arise in life insurance only in the event of the death or attaining a specified age but if the policy is coupled with miscellaneous insurance the life assured will be entitled to accidental benefit/disability benefit as in this case. Since the respondent- complainant''s right leg has been amputated above the ankle and not both the legs and, therefore, he is not entitled to claim the permanent disability benefit from the Insurance Company. There is no case of the complainant-respondent that due to the accident and amputation of his one leg he was not able to earn his livelihood on his own and, therefore, his claims also failed on this condition too. ACCORDING to the condition the disability benefit can be only given in case both the legs above the ankle or both the hands above the wrists or one hand and one leg is amputated in accident and made him unable to earn his livelihood than the accident benefit could be given to him. But in this case it is not such a case as admitted before us. The learned Counsel of the respondent have urged before us that if that was the case then why the Life Insurance Corporation had taken more than 10 months in repudiating the claim and harassing the respondent asking for a number of the documents and papers. It should have out rightly rejected the claim when it received the intimation on 1.7.1987 about the amputation of the right leg. Thus the Life Insurance Corporation has committed deficiency in service by delaying in settlement of his claim. This plea has force and we agree with it. Delay in settlement of this claim is also a deficiency under Section 2(1)(g) of the Consumer Protection Act, 1986. The respondent is, therefore, entitled to compensation of the delay for the mental agony and harassment suffered on account of deficiency. The Life Insurance Corporation can decide a claim within two or three months in such cases to settle or repudiate the claim of this nature. The respondent is, therefore, entitled to a sum of Rs. 5,000/- as compensation on account of delay in settlement of the claim.

IN view of the aforesaid, the appeal is partly allowed. The order dated 17.8.1992 passed by the District Forum in Case No. 535/90 is modified as observed above and the appellant is not to indemnify the accident disability but to pay Rs. 5.000/- as compensation for delay in settlement of the claim.

WE leave the parties to bear their own costs. Let a copy of this order be made available to both the parties within 10 days and its copy be transmitted to the District Forum for necessary action. Appeal partly allowed. _______________