Life Insurance Corporation of India vs K.SAVITHRAMMA

HEARD the learned Counsel for the Life Insurance Corporation of India (''LIC'' for short). We do not find any merit in this appeal.

THE insured, Mr. P. Bhaskaran, had taken a Jeevan Mitra policy and the premia amounts were being deducted from his salary towards that policy by his employer i.e. the Andhra Pradesh State Road Transport Corporation (''APSRTC'' for short), and were being remitted to the LIC. When his nominee i.e., the complainant Mrs. K. Savithramma, lodged claim on that policy after the demise of her husband, the LIC offered only the paidup value on the policy contending that the policy was in a lapsed condition because premia for the months of February, 1991 to June, 1991, December, 1992 and May, 1994 to July, 1994 i.e., for nine months, were not received by the LIC after the respective due dates or within the grace periods and that, therefore, the policy was in a lapsed condition. But it was not disputed by the LIC that except premia for the nine months the other monthly premia were received till the insured died on 9.9.1995. The policy itself was taken by the insured on 20.12.1990. When the LIC offered to pay the paidup value that could be only on the basis that the LIC accepted that the policy was surviving for a minimum period of three years. We have to conclude from this that the LIC treated the policy as surviving even though the premia for February, 1991 to June, 1991 and premia for December, 1992 were not received by the LIC by the due dates or even within the grace periods. The policy was treated as in force for three years. Thus the LIC must be deemed to have revived the policy even assuming that it lapsed because of non-payment of the premia for those six months. The LIC did not state that it did not receive the premia for those six months subsequently after the grace period. It is the admitted case of the LIC that it continued to receive the premia after December, 1992. Even after the non-payment of the premia from May, 1994 to July, 1994, the LIC continued to receive the premia till August, 1995. The LIC did not state that it did not receive the premia for those three months even subsequently after the grace period. It would have to follow, therefore, that the LIC treated the policy as revived even after it lapsed for the non-payment of premia for those three months within the grace periods. A lapsed policy can be revived. It is not the case of the LIC that at any time during May, 1994 to July, 1994 or thereafter it gave any notice to the insured that his policy lapsed. It is also not the case of the LIC that it offered to return the premium amounts received after the policy lapsed.

The National Commission held in Rajani Patwari v. LIC of India & Anr., III (1997) CPJ 48 (NC), as follows : "We also feel that the LIC cannot be absolved of its responsibility in this case only on the technical ground that the policy had lapsed for want of payment of premiums from November, 1987 to May, 1988. If that was so why did the LIC of India Ltd. accept the premiums from June, 1988 to December, 1988, for a period of six months, and why did they not inform either the insured or his employer that the policy had lapsed and without its revival these premiums are not of any use and, therefore, are returned. We agree with the view taken by the District Forum that ''had the LIC informed the deceased Niranjan Patwari any time between June, 1988 and December, 1988 about the status of policy as lapsed, he might have taken steps to revive it''."

In view of this decision we find that the District Forum was perfectly right in holding that the complainant was entitled to the benefits under the policy treating it as subsisting as on the date of demise of the insured i.e., 9.9.1995. We, therefore, do not find any merit in this appeal preferred by the LIC.

IN the result, F.A. No. 674/1998 is dismissed. Earlier, when the appeal came up on 23.10.1998 before us, Mr. M.V.S. Suresh Kumar, the learned Counsel for the 1st opposite party (i.e. LIC), did not dispute that in the case of Jeevan Mitra policy when the insured meets death naturally double the policy amount has to be paid, and when the insured dies in an accident three times policy amount will be paid. In the present case the insured Mr. Bhaskaran died on 9.9.1995 not in an accident. But unfortunately the District Forum failed to notice that under the Jeevan Mitra policy the complainant would be entitled to twice the insured amount i.e. Rs. 1,00,000/- and not merely Rs. 50,000/-. This prima facie is a clear error and illegality and material irregularity in the order of the District Forum. In that view of the matter we directed notice to the LIC through its Counsel Mr. M.V.S. Suresh Kumar, invoking our suo motu revisional powers under Section 17(1)(b) of the Consumer Protection Act, 1986 (''the Act'' for short) to show cause as to why the LIC, which was the 1st opposite party in O.P. No. 236/1996 before the Nellore District Forum, should not be required to pay double the policy amount as the policy in question is ''Jeevan Mitra'' policy and the District Forum erred in directing only Rs. 50,000/- instead of Rs. 1,00,000/- under ''Jeevan Mitra'' policy. We also gave notice to the complainant Smt. K. Savithramma and to the 2nd opposite party i.e., Depot Manager, A.P.S.R.T.C. Atmakur, and directed the office to number the suo motu taken up revision. Accordingly notices were served and we heard the learned Counsel for the LIC.

IN view of incontrovertible position that in the case of Jeevan Mitra policy double the policy amount will have to be paid when the insured dies a natural death, the LIC shall have to pay further sum of Rs. 50,000/- to the complainant. IN CIII (1994) CPJ 65 (NC), the national Commission has observed that "the LIC being an instrument of the State is expected to conduct its business of insurance fairly, justly and reasonably and its policy should be guided by considerations of service to the people of this land as distinct from an unprincipled, commercial, profit oriented approach". Under the circumstances, when it is held that the policy in the present case was not in a lapsed condition when P. Bhaskaran died, it must follow that the LIC should have no objection to pay the amounts indisputably due under the policy. We, therefore, rectify the order of the District Forum and direct the 1st opposite party i.e. the Life Insurance Corporation of India, to pay a further sum of Rs. 50,000/- together with interest thereon @ 12% per annum from 1.3.1996 allowing about six months for finalisation of the claim after 9.9.1995 the date of the death of the insured upto the date of payment. The amount of Rs. 50,000/- and the interest thereon as directed shall be paid within two months from today, i.e. by 17.11.1999. The R.P. is accordingly allowed. F.A. dismissed and R.P. allowed.