Life Insurance Corporation of India vs Meena Kumari

THIS appeal under Section 15 of the Consumer Protection Act, 1986 (the Act) is directed against the majority order dated 3.1.1996 made by the two Members of the District Consumer Disputes Redressal Forum, Hanumangarh (the Forum) in Complaint Case No. 38 of 1995 awarding a decree for Rs. 4,10,000/- in favour of the respondent complaining against the appellant Company. The President of the Forum, however, took a contrary view of the matter and held that the insurance policy, covering the risk on the life of the deceased insured person, had already lapsed prior to his death and, therefore, the complainant who was the nominee of the deceased in the policy, was not entitled to any amount under the lapsed policy.

FACTS relevant to and sufficient for the disposal of the appeal are these : Late Mr. Vinay Kumar Sharma, Advocte, the late husband of Smt. Meena Kumari Sharma complainant-respondent, had purchased a Life Insurance Policy being No. 50071156 for Rs. 2,00,000/- on 28.7.1993 from the Branch Office of the Life Insurance Corporation of India (the appellant Company) at Hanumangarh. The respondent was the nominee of the insured in the policy. The instalments of premium of Rs. 7,455/- each was payable on 28th January and 28th July each year. The date of maturity of the policy was 28.7.2013 and the last instalment was payable on 28.1.2013.

Unfortunately, the insured met with an accident on 10.4.1995 and died. Before his death the insured had paid half-yearly instalments on 31.8.1993, 18.2.1994 and 1.8.1994. The fourth instalment having fallen due on 28.1.1995, during the life-time of the deceased insurer, had not been paid even within the grace period of next thirty days.

ON 17.4.1995 a Banker''s cheque No. BC/D-877122 dated 10.4.1995 for Rs. 7,622.70 drawn on SBBJ Branch Office at Hanumangarh in favour of the appellant and sent by the respondent by post alongwith premium notice for January, 1995, was received in the Branch Office of the appellant at Hanumangarh. The said cheque was, however, returned on 18.4.1995 by the Branch Office of the appellant to the respondent with the remarks that since the insurer had already expired on 10.4.1995 the premium after his death was not acceptable. ON 6.6.1995 the respondent, as nominee of the deceased, filed her claim with appellant''s branch office for release of the assured amount in her favour. By its letter dated 8.6.1995 the appellant repudiated her claim on the ground that the policy in question had already lapsed and, therefore, the claim was not admissible. The respondent, therefore, filed her complaint under Section 12 of the Act before the Forum on 9.11.1995. The complaint has been disposed of by the President and the two Members of the Forum in the manner as stated above. The main contention of the learned Counsel for the appellant Company is that on insurer''s failing to pay the instalment amount by the due date i.e. 28.1.1995 and with interest even within the grace period of thirty days thereafter, as specifically stipulated by and under condition No. 2 of the policy issued, the policy had lapsed and the repudiation thereof by the appellant Company was fully justified in law and on facts.

ON the other hand it was urged on behalf of the respondent that since a banker''s cheque for the amount of premium falling due on 28.1.1995 with interest thereupon had been issued on 10.4.1995 before the death of the insured at 9.30 p.m. on that day the said instalment would be considered to have been duly paid by the insured during his life-time. In any case, urged the learned Counsel, the payment of Rs. 7,622.70 would revive a lapsed policy if the same is considered to have lapsed. In reply the learned Counsel for the appellant submitted that not only the circumstances attending on the preparation of the bankers cheque on 10.4.1995, before the death of the insurer, were highly suspicious inspiring no confidence in its genuineness, it could not go to revive a lapsed policy as per condition No. 3 of the policy. In this behalf it was pointed out by the learned Counsel that all along during his life-time the insurer had made payments of earlier instalments in cash at the cash counter of the branch office of the appellant at Hanumangarh but in so far as the disputed payment was concerned it was really surprising that on 10.4.1995 an amount of Rs. 7,642.70 was withdrawn from the Bank A/c of M/s. Shiv Shakti Emporium and then the disputed bankers cheque was got prepared with the connivance of Bank officials. It was submitted that the conduct and behaviour of the respondent in so getting a cheque prepared in back date in collusion with Bank officials, instead of paying the instalments amount at the easily available cash counter in the office of the branch office of the appellant at the same place, speak of lack of good faith and bona fides on the part of the respondent. We have thoughtfully considered the rival submissions and carefully gone through the material on the record of the Forum.

THE broad facts of the case as stated above, are well established on record. It is, therefore, beyond any dispute that the fourth instalment of the premium had fallen due on 28.1.1995 but it was not paid by the insurer by that time. THE instalment was not paid even within the grace period of thirty days. Obviously the policy in question had lapsed as per condition No. 2 of the policy which reads as under : "2. Payment of Premium-A grace period of 30 days will be allowed for payment of yearly, half-yearly or quarterly premiums and 15 days for monthly premiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid on the sum assured paid after deduction of the said premium as also the unpaid premiums falling due before the next anniversary of the policy. In case of death, unpaid premium, if any, falling due before the next policy anniversary shall be deducted from the claim amount."

NOW the question is, if the lapsed policy was still open for revival and did revive on respondents sending the bankers cheque dated 10.4.1995 to the appellants branch office at Hanumangarh. In this behalf it would be worthwhile to reproduce the relevant condition No. 3 of the policy which directly governs the issue presently before us. It reads as under : "3. Revival of Discontinued Policies-If the policy had lapsed, it may be revived during the life-time of the life assured, but within a period of 5 years from the date of the first unpaid premium and before the date of maturity, on submission of period of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest at such rate as may be fixed by the Corporation from time to time compounding half-yearly. The Corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the life assured."

It may be noted that as per condition No. 3 a lapsed policy may be revived during the life-time of the assured, but within a period of five years from the date of the first unpaid premium and before the date of maturity, on submission of period of continued insurability to the satisfaction of the LIC and the payment of all the arrears of premium together with interest at such rate as may be fixed by the Corporation from time to time, compounding half-yearly. Even if that has been done the LIC has a right to accept or decline to accept the revival of the discontinued policy. If the LIC opts to revive the policy, the revival thereof shall be effective after the same has been approved by the LIC. Since this condition gives a clear right to the LIC either to accept or not to accept the revival of a discontinued policy, the exercise of such a right by it against revival cannot be lightly questioned without there being good reasons for doing so. The condition speaks of the satisfaction of the LIC over the necessity of revival of the policy and to achieve its satisfaction it may require the insurer to fulfil certain conditions like medical examination before actually reviving the policy.

In the instant case the deceased had admittedly died on 10.4.1995. The appellant was admittedly having its branch office at Hanumangarh and during his life-time the insurer had paid the earlier three instalments of the premium at the cash counter of the said branch. But the fourth instalment was sought to be paid through a bankers cheque purportedly prepared on 10.4.1995. The amount had been withdrawn from the bank account of other person, as is established from the record of the Bank requisitioned by the Forum before it and the extract whereof are available on its record. The bankers cheque was sent on 15.4.1995 by registered post to the Branch Office where it was received on 17.4.1995, seven days after the death of the insurer on 10.4.1995. The cheque was returned on the very next day. There is no material on the record of the Forum to show that the respondent or the insurer had ever applied to the appellant for revival of the discontinued or lapsed policy. The letter issued by the Branch Office of the appellant informing the respondent of the final lapse of the policy on account of not paying the instalments due within six months of the unpaid instalments makes no difference as a policy cannot be revived after the death of the insured. In our opinion, these facts clearly speak that there was no deficiency in service on the part of the appellant and that it was fully justified in law and on facts in repudiating the claim preferred by the respondent. We thus agree with the learned President of the Forum over the decision of respondent''s complaint.

SINCE we have arrived at the above conclusion notwithstanding the conduct of the respondent and Bank officials in getting the bankers cheque (purported to have been) prepared on 10.4.1995, we avoid our comments on their conduct, which was certainly curious if not highly suspicious and condemnable. In the result, we set aside the majority order and agreeing with the minority order of the President of the Forum allow this appeal and dismiss the complaint of the respondent with no order as to costs throughout. Appeal allowed.