Life Insurance Corporation of India vs REKHA DIXIT

THIS is an appeal by the Insurance Company directing it to pay a sum of Rs. 1,50,000/- by way of ex-gratia payment to the petitioner.

THE complainant is the wife of one Virendra Kr. Dixit. He submitted a proposal with the L.I.C.I. on 31.3.1999 for insurance in respect of his own life and paid a sum of Rs. 26,170/- against a receipt towards first premium. Before the proposal could be accepted by the Insurance Company, the said Virendra Kr. died on 9.6.1999. THE proposal for insurance was for Rs. 2,50,000/-. THE allegation of the complainant is that because of negligence and deficiency in service on the part of the L.I.C.I., there was abnormal delay in the matter of acceptance of the policy. Resultantly, the proposer was without any life cover. Accordingly, the complainant being his wife has brought this action. The case of the Insurance Company is that in the medical report the Serum Cholesterol Level was high and as such they called for report on Lipid profile. The further case of the Insurance Company was that they asked the proposer to fulfill some requirements which the proposer having not complied with the proposal was not accepted. It denies that there was any negligence and deficiency in service on their part.

Upon consideration of the materials before it, the Forum noticed that there was not a concluded contract under the proposal. The proposal for life insurance cover remained a proposal only and the Insurance Company did not accept the proposal because of failure on the part of the proposer to fulfill some of the requirements. The Forum noticed that it was not a concluded contract but expressed surprise in not dealing with the proposal of the proposer quickly. According to the Forum this amounted to negligence and deficiency in service. The Forum, however, had taken resort to some provisions of the policy manual to award ex-gratia payment to the present complainant to mitigate the hardship. This is, however, challenged by the Insurance Company in appeal. The learned Counsel appearing for the appellant submits that before a complainant can succeed under the Consumer Protection Act he must show that he comes within the definition of the word "Consumer" as defined in the said Act. Besides, he is required to prove that there was deficiency in service on the part of the O.P. He submits that the complainant has failed to establish that the proposal of the policy or the beneficiary thereof comes within the definition of the word "Consumer". It appears that the Forum had noticed that there was no concluded contract between the parties so as to bind the Insurance Company to make payment of the sum assured. As noticed earlier, the proposal remained a proposal only. The Insurance Company having not accepted the proposal it has no binding force. It appears that the Forum ordered payment of the amount for Rs. 1,50,000/- by way of equitable relief. The learned Counsel for the appellant submits that the Forum was not justified in granting the amount of compensation by way of equitable relief. He submits that only the Hon''ble Court in the exercise of its writ jurisdiction can grant relief by way of ex-gratia payment. He submits that the Forum lacks jurisdiction to grant ex-gratia payment. We have considered the submission of the parties and think that the contention raised by the learned Counsel for the appellant is of much substance. The complainant has failed to establish that he is a consumer or a beneficiary of the consumer. The proposal was get to be accepted by the Insurance Company when the proposer died. So, there had been no concluded contract by the Insurance Company. We think that the Forum was not justified in making ex-gratia payment. The jurisdiction, authority and power to grant ex-gratia payment lie within the exclusive power of the Hon''ble Court in writ jurisdiction. So, we think that the Forum was wholly wrong in directing ex-gratia payment of Rs. 1,50,000/-. Accordingly, we cannot upheld the order which is liable to be set aside. In the result, the appeal be allowed and judgment of the Forum be set aside and the complaint petition be dismissed. Appeal allowed.