Life Insurance Corporation of India vs K.V.NATARAJAN

FACTS as culled out from the materials placed on record may in brevity be related in order to understand the crux of the issue arising for consideration in this action.

ONE K.V. Natarajan (complainant) is residing at Door No. 7/112, Kambalapatty P.O., Pollachi Taluk. He had one daughter by name Indirani (since deceased). She was born on 9.5.1969. When she attained the age of 24, she took a policy of insurance from the Life Insurance Corporation of India, Coimbatore - 641 018 (opposite party). The policy of insurance so taken was an "Endowment Assurance Policy (with profits) (with accident benefit)". The sum assured under the policy was to the tune of Rs. 50,000/-. In case of accident and death ensues thereon, the insured is entitled to an equal sum of the life assured namely, Rs. 50,000/-. The policy commenced on 28.3.1993. The policy was for a period of 25 years. It was to mature on 28.3.2018. The premium payable under the policy is quarterly and the quarterly premium is to the tune of Rs. 487/-. The quarterly premium of Rs. 487/- is inclusive of the premium for accident benefit. The premium is required to be paid on 28th every quarterly. There is a grace time of 30 days for the payment of the quarterly premium. The quarterly premium had been duly paid ever since the commencement of the policy which event happened on 28.3.1993 till upto 28.6.1995. The quarterly premium payable on 28.6.1995 was not paid on or before 28.6.1995. Even the said premium was not paid before the expiry of the grace period, that is to say, on or before 27.7.1995. The premium was actually paid with penalty on 9.9.1995 and the opposite party Insurance Company also accepted such payment and revived the policy and consequently the policy was kept in force.

The assured met with an accident of a snake bite on 8.9.1995 and was admitted at Sri Ramakrishna Hospital, Coimbatore where she was dead at about 4 p.m. on 9.9.1995.

THE complainant made a claim to the opposite party Insurance Company on 22.9.1995. THE opposite party Insurance Company honoured its commitment with regard to the payment of Endowment Insurance with Profits in the sense of making a payment of Rs. 59,076/-. It however refused to honour the claim relatable to accident benefit. THE claim relatable to accident benefit had been repudiated by a communication dated 9.2.1996 addressed to one S.K. Husein, M.A.B.L., Advocate, of the complainant. THE reasons for the repudiation of the claim relatable to accident benefit are couched in that letter as below : "In this connection, we wish to inform you that on the date of the snake bite accident on 8.9.1995, the Quarterly Premium due 28.6.1995 had not been paid and the policy was totally lapsed without any value and was not in force for the full Sum Assured. As per the policy condition - 10.2 - Accident Benefit, the policy has to be in force for the full Sum Assured at the time of Accident to consider the accident benefit. In view of the above, we deeply regret our inability to consider the claim for Accident Benefits. THE Quarterly Premium due 28.6.1995 was however paid on 9.9.1995 and the policy was in force at the time of death on 9.9.1995. We have accordingly, admitted the death claim for the basic sum assured and bonus and the necessary discharge voucher has been sent to your client on 15.12.1995. You may advise your client to return the same duly executed to our Pollachi Branch when they shall settle the death claim for the net of Rs. 59,076/-."

In such a backdrop and setting, the complainant knocked at the doors of the Forum below stating that the act of the opposite party Insurance Company in repudiating the claim relatable to accident benefit on the facts and in the circumstances of the case would tantamount to deficiency in service on their part and consequently claiming certain reliefs as prayed for in the complaint.

THE opposite party Insurance Company in pith and substance would contend that there was no deficiency in service on their part in repudiating the claim relatable to accident benefit by reiterating the reasons as stated by them in their repudiation letter dated 9.2.1996. The Forum below after taking into consideration the materials placed on record, recorded a finding that the act of the opposite party Insurance Company in repudiating the claim as made by the complainant relatable to accident benefits would tantamount to deficiency in service on their part and, therefore, directed the opposite party Insurance Company to pay to the complainant a sum of Rs. 50,000/- as Accident Benefit under the insurance policy with interest thereon @ 12% p.a. from 22.9.1995, the date on which the claim petition had been filed till the date of payment and a sum of Rs. 1,000/- as compensation for mental agony caused to the complainant and a sum of Rs. 500/- as costs. The Forum below further issued a direction that the amount of the award should have to be paid to the complainant by the opposite party Insurance Company within a period of two months from the date of receipt of the copy of its order or otherwise the complainant will be at liberty to take suitable penal action as per the due provisions of law. The order of the Forum below is dated 4.9.1998. Aggrieved by the order as above, the opposite party Insurance Company resorted to the present action by engaging a Counsel of their choice namely, learned Counsel Mr. V. Jambunathan. On service of process the respondent/complainant entered appearance through a Counsel of his choice namely, learned Counsel M/s. M. Sathyanarayanan and K.K. Ananthapadmanabhan. We heard the argu-ments of learned Counsel appearing for the respective parties.

LEARNED Counsel Mr. V. Jambunathan, appearing for the appellant/opposite party would reiterate the reasons as given in the repudiation letter marked as Ex. A5 for the repudiation of the claim of the complainant relatable to accident benefits payable under the policy and the rationale or reasons found stated therein had not been properly appreciated by the Forum below and that perhaps was the reason for the culmination of the order now impugned in this action.

LEARNED Counsel Mr. K.K. Ananthapadmanabhan, appearing for the complainant would however strike a discordant note and was rest content in stating that the approach of the Forum below negativing the reasons for the repudiation of the claim cannot at all be stated to be not well-founded. From the pith and submission of learned Counsel appearing for the respective parties, the one and only question that crops up for consideration is as to whether the order of the Forum below on the facts and in the circumstances of the case is sustainable in law.

The sustainability or otherwise of the order of the Forum below will solely depend upon the interpretations to be given as respects Clause 10.2 of the Insurance Policy marked as Ex. B2. The portion of the said clause which is relevant for the present purpose reads as under : "10.2 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 the Life Assured is 70, 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...."

FROM what has been extracted above, for the sustainability of the accident claim under the policy, the parameters as below had been prescribed. (1) The policy must be in force for the full sum assured. (2) The life assured must involve in an accident. (3) The accident involved must result in either permanent disability as defined in the policy or death. (4) The accident must have to happen within the two periods whichever is earlier. The two periods prescribed are : (a) before the expiry of the period for which the premium is payable; or (b) before the policy anniversary on which the age nearer birthday of the life assured is 70. (5) All the parameters as above must have to be proved to the satisfaction of the Corporation.

If we advert to the repudiation letter given by the opposite party Insurance Company marked as Ex. A5, the reasons given thereon for repudiation of the claim cannot at all be stated to be in tune with the provisions as adumbrated under Clause 10-2 of the policy. One of the reasons given is the quarterly premium due on 28.6.1995 had not been paid and consequently the policy got totally lapsed on 8.9.1995 the date on which the accident of snake bite occurred. The repudiation letter would also refer to in another portion that the quarterly premium due on 28.6.1995 was however paid on 9.9.1995 and the policy was in force at the time of death on 9.9.1995. On such a rationale, the opposite party Insurance Company admitted the death claim for the basic sum assured and attendant benefits while rejecting the claim as relatable to accident benefit.

THE policy taken under Ex. B2 is one integrated whole covering both the risks, endowment claims as well as the accident benefit. For both the claims, what is required is the policy should never got lapsed before ever the claim arises. On reading Clause 10(2) of the policy under Ex. B2, the opposite party Insurance Company would, we rather feel, unwittingly state that the policy was in force for the death claim but not in force for the accident benefits. This sort of an individuas distinction they had made in their repudiation letter cannot at all be sustained on the face of the parameters laid down by Clause 10.2 for the claim of the accident benefit. We have already referred to the parameters prescribed for the successful claim of the accident benefits. One of the parameters is that the policy must be in force for the full sum assured. In the case on hand, the policy taken which would have otherwise got elapsed by the non-payment of the quarterly premium due on 28.6.1995 did not lapse as a consequence of the payment of the premium due with all penalty by the complainant and accepted by the opposite party, Insurance Company. THE life assured namely, Indirani admittedly got involved in the accident of a snake bite on 8.9.1995. She however died at 4 p.m. on 9.9.1995. THE next premium to be due and payable after the revival of the policy on 9.9.1995 is on or before 28.9.1995. Such being the case, the accident of snake bite to the victim/deceased/life assured Indirani on 8.9.1995 had happened before the expiry of the period for which the premium is payable under the policy of insurance namely, 28.9.1995 and this is the first period as had been referred to in Clause 10.2. THE other period referred to is relatable to the period before the policy anniversary on which the age nearer the birthday of the life assured is 70. In the case on had, the life assured Indirani died prematurely on 9.9.1995 at the age of 26. THE event of the anniversary of the policy was to happen in the year 1996, on 28.3.1996. Such being the case, the second period prescribed cannot at all be stated to be earlier than the first period prescribed. THE first period prescribed being 28.9.1995 and the death of the assured having happened as a consequence of the accident of snake bite on 9.9.1995, the life assured is entitled to have the claim of the accident benefit when especially there was no dispute at all as respects the death of the life assured as a consequence of snake bite as evidenced by the Certificate dated 23.12.1995 issued by Sri Ramakrishna Hospital, Coimbatore - 641 044 marked as Ex. A1. The rationale or reasons we have given are altogether different and distinct from the rationale or reasons given by the Forum below for arriving at the conclusion that there was deficiency in service on the part of the opposite party Insurance Company in repudiating the claim of the complainant. That is of no consequence on the facts and in the circumstances of the case. The proceedings before this Commission is a continuation of the proceedings of the Forum below. Such being the case, this Commission is entitled to sift and scan the materials placed on record as the Forum of first instance had come to a conclusion as the one recorded by the Forum below for altogether different reasons. The Forum below apart from granting the relief of accident benefit, also granted the relief of compensation for mental agony and anguish quantified in a sum of Rs. 1,000/- besides the grant of interest @ 12% p.a. It is not legally permissible to grant interest as well as payment of compensation for mental agony and anguish suffered. This is the dictum of the superior Courts of Jurisdiction. Such being the case, we prefer to delete the award relatable to the payment of compensation for mental agony and anguish quantified in a sum of Rs. 1,000/-. We accordingly do so. Even as respects the question of payment of interest, the Supreme Court on more than one occasion said that payment of interest by Insurance Companies beyond 9% is not permissible. We, therefore, set aside the order of the Forum below as relatable to the payment of interest @ 12% p.a. on Rs. 50,000/-, the accident benefit under the policy and instead we direct the opposite party Insurance Company to pay interest on the said sum @ 9% p.a.

THE Forum below also awarded payment of interest on and from 22.9.1995 the date of the claim petition. That also does not appear to be proper. THE Supreme Court on occasions more than one said that the Insurance Company must be given sufficient time for consideration of the claim made by the claimants. We rather feel that the grant of three months from the date of the claim petition for consideration of the claim by the opposite party Insurance Company won''t be besides justice. Giving due allowance to the period of three months, the interest has to commence on the said sum of Rs. 50,000/- on and from 22.12.1995. We accordingly do so.

THE Forum below after all awarded costs quantified in a sum of Rs. 500/- which we feel is reasonable on the facts and in the circumstances of the case. We, therefore, confirm such part of the award. In fine, except to the extent of the modification of the order of the Forum below as we have made above, the appeal shall stand dismissed in other respects. We make no order as to costs on the facts and in the circumstances of the case. The order as above made by us is required to be complied with by the opposite party Insurance Company within a month from the date of receipt of our order or otherwise the complainant will be perfectly at liberty to invoke the provisions under Section 27 of the Consumer Protection Act, 1986. Appeal dismissed.