LIFE INSURANCE CORPORATION OF INDIA, JAIPUR vs KRISHNA DADHICH

THIS appeal has been filed by the Life Insurance Corporation of India against the order of District Forum, Ganganagar dated 10.4.1995 whereby the District Forum directed the opposite party-appellant to pay to the complainant the entire amount of the Life Insurance Policy which had been obtained by late Sh. Nagarmal Dadhich husband of the complainant, alongwith interest @ 12% p.a. and Rs. 500/- as costs.

FACTS leading to the filing of this appeal are that Smt. Krishna Dadhich, wife of late Sh. Nagarmal Dadhich, filed a complaint in District Forum, Ganganagar on 13.12.1994 with the averments that her late husband Nagarmal Dadhich was employed in Khetri Copper Complex, which was a Government of India Public Enterprise. While so employed Nagarmal Dadhich had taken a life insurance policy No. 50717442 from the opposite party and the Insurance Policy commenced from 9.10.1991. It was stated that the said insurance policy was taken under salary saving scheme of the Life Insurance Corporation of India. The premium was to be deducted from the monthly salary of Nagarmal Dadhich and the amount of the monthly premium was Rs. 107.50. It was alleged in the complaint that upto the month of November, 1982, the monthly premiums were regularly deducted from the salary of Nagarmal Dadhich. Thereafter, it was alleged that Nagarmal Dadhich got himself transferred from Khetri Copper Complex Khetri to Cement Corporation of India, New Delhi and after his life insurance policy record was transferred from Jhunjhunu to New Delhi, the Cement Corporation of India paid to the opposite party a total amount of Rs. 2600/- with respect to arrears of premium from November, 1982 to March, 1984. Thereafter the premium amount was regularly deducted from the salary of Nagarmal Dadhich which was paid to him by the Cement Corporation of India, New Delhi and his code number was 3870. On 18.8.1985 Nagarmal Dadhich expired and information about his death was given to the Life Insurance Corporation. Whatever information was required by the Corporation was furnished but the assured amount has not been paid to the complainant. It was also stated that on 19.11.1988 the complainant made an application to the opposite party to pay to her the paid up value of the insurance policy and several reminders were given but with no avail. The complainant/ therefore, filed a complaint on 12.12.1994 claiming the insured amount of Rs. 20,000/- from the opposite party alongwith interest @ 24% p.a. w.e.f. 18.8.1985 and Rs. 3,000/- as costs. The opposite party filed a version before the District Forum in which it was admitted that Nagarmal Dadhich had obtained a life insurance policy under salary saving scheme and that the policy commenced from 9.10.1979 and the monthly premium payable was Rs. 107.50 and the sum assured was Rs. 20,000/-. The opposite party stated that Nagarmal Dadhich had deposited the premium only upto October, 1982 and thereafter since the monthly premium was not deposited insurance policy lapsed. It was stated that on 31.3.1984 Nagarmal Dadhich had made an application for revival of the insurance policy and also deposited an amount of Rs. 2600/-. Nagarmal Dadhich was required to complete the necessary formalities for revival of the insurance policy and to submit declaration regarding his health. It is pleaded by the Corporation that since the deceased had continued to remain ill, he could not submit the declaration of his good health and during his life-time he made an application on 25.7.1985 for payment of the surrender value of the policy. Nagarmal Dadhich expired on 18.8.1985. It was also stated that it was offered to the complainant that paid-up value according to rules may be taken, but the complainant deliberately did not accept the paid-up value. The Life Insurance Corporation stated in the version that paid-up value can be given to the complainant and it is ready to give her the paid-up value. The opposite party also stated that the complaint was not filed within limitation. The claim of the complainant was denied by the opposite party.

The District Forum, Ganganagar in its order referred to the lengthy arguments which were advanced before the District Forum on behalf of the complainant and probably accepting those arguments allowed the complaint. It appears from going through the order of the District Forum that me Counsel for the complainant submitted before the District Forum that the life insurance policy had been taken from Jhunjhunu branch of the Corporation, Later on the deceased insured had made application for transfer of the policy to Delhi, but no intimation of me transfer of the policy was given to the insured in time. There was delay in transfer of the policy. The matter regarding dispensing with the requirement of form No. 680 was under consideration of the Corporation. However, no intimation of the decision was given to the insured. After the transfer of the policy the Corporation continued to accept the monthly deduction of premiums. Nagarmal Dadhich had applied for payment of paid up value but his offer was not accepted during his life-time and, therefore, the proposal made by Nagarmal Dadhich for payment of paid up value lapsed when he died. In such circumstances, it was urged on behalf of the complainant before the Forum that the insurance policy did not lapse. It was also contended that the opposite party could not raise the objection that the complaint was barred by limitation because the Corporation was ready to pay part of the amount. The District Forum, Ganganagar without expressing its own opinion on me arguments advanced on behalf of the complainant came to the conclusion that the complaint deserved to be accepted holding that there was deficiency in service because payment of the sum assured was not made despite repeated letters and demands of the complainant. Aggrieved by this order, the Life Insurance Corporation has filed this appeal.

IT was urged before us by the learned Counsel for the appellant that Nagarmal Dadhich had paid premium only upto October, 1982 and the insurance policy lapsed after the expiry of the grace period. On 14.3.1984 Nagarmal Dadhich deposited an amount of Rs. 2600/- as branch office collection for revival of the policy. Nagarmal Dadhich was asked to submit declaration about his good health and for getting DGH conducted but this requirement was not complied with and the policy did not revive. On 25.7.1985 Nagarmal Dadhich had himself made an application for closing the policy by paying to him the paid-up value. IT was urged that the lapsed policy did not revive till the death of Nagarmal Dadhich. IT was also contended mat the Life Insurance Corporation had repudiated the claim on 19.11.1988 when it wrote to the complainant regarding its offer for paid up value. Cause of action, therefore, accrued to the complainant on 19.11.1988. She filed complaint before the District Forum, Ganganagar on 13.12.1994. The complaint was thus barred by limitation. We have given our due consideration to the submissions made by the Counsel for the appellant. It is clear that Nagarmal Dadhich was an employee in Khetri Copper Complex at Khetri which was a Government of India Public enterprise. He had taken the life insurance policy under salary saving scheme. Till October, 1982 monthly premium was deducted from his salary upto the time he was employed in Khetri Copper Complex. It is wrong on the part of the complainant to say that Nagarmal Dadhich was transferred from Khetri Copper Complex to Cement Corporation of India, New Delhi. It was not a case of transfer because Cement Corporation of India was not a branch or part and parcel of Khetri Copper Complex. In any event, the insured had shifted to New Delhi under a new employer i.e. Cement Corporation of India. The complainant had produced certain copies of the applications alleged to have been sent by Nagarmal Dadhich on 16.1.1983, 22.8.1983 and 2.3.1984 to the Br. Manager/Life Insurance Corporation of India, Jhunjhunu for transfer of his policy from Jhunjhunu to New Delhi. It appears from a letter of the Life Insurance Corporation of India dated 30.4.1985 sent to Nagarmal Dadhich that the Corporation felt sorry for the delay in transfer of policy records from Jhunjhunu branch of the Corporation to Delhi. It appears that when the record of the complainant''s policy had been transferred from Jhunjhunu branch of the Corporation to Delhi that Nagarmal Dadhich deposited the arrears of the monthly premiums amounting to Rs. 2600/- on 31.3.1984. As the insurance premium was payable monthly, the policy was treated to have lapsed. Nagarmal Dadhich had sent a letter dated 19.4.1985 to the Life Insurance Corporation of India, New Delhi wherein he mentioned that the policy was transferred from Jhunjhunu branch to New Delhi after 1 years and he was asked to fill up form No. 680 to keep his policy in force. Nagarmal Dadhich stated in his application that he had made representation to the Sr. Branch Manager and had pleaded that since there was no fault on his part in transferring the policy/the requirement of filling up form No. 680 should be waived and his policy should be kept in force. It was also mentioned that when he came to know of the transfer of the policy from Jhunjhunu branch, he paid the premium and was since then regularly paying the premium through salary saving scheme from his present employer i.e. Cement Corporation of India. Nagarmal Dadhich requested the Divisional Manager of LIC, New Delhi to help in keeping his policy in force. In case it was not possible to keep the policy in force/ he mentioned that he hereby surrenders his policy and the Divisional Manager may help in expediting payment of surrender value and the amount lying in suspense account. This representation of Nagarmal Dadhich was replied by the Manager (SSS) LIC, New Delhi wherein it was stated that the matter regarding waiver of personal statement form No. 680 was being looked into and that he would be writing to the insured on the subject shortly. In this letter the Manager (SSS) also stated that "we are indeed sorry for the delay in transfer of policy records from Jhunjhunu branch of LIC to Delhi". It seems that since no reply was received Nagarmal Dadhich made an application on 25.9.1985 to the Sr. Branch Manager, LIC, New Delhi stating that he was surrendering his life insurance policy and was enclosing the original policy. He had filed in a prescribed proforma. He requested that surrender value may be paid to him.

THE complainant has also produced a copy of the letter which had been sent by the Accounts Officer of Cement Corporation addressed to the Br. Manager, LIC, New Delhi wherein the Accounts Officer had confirmed that the premium was being deducted from the salary of Sh. Nagarmal Dadhich every month since April, 1984 onwards and the amount was remitted to LIC against PA Code No. 3870 and intimation is sent every month to branch unit312. This letter of the Accounts Officer is dated 29.10.1984. A copy of this letter had been sent to Nagarmal Dadhich also by the Accounts Officer. It seems that nothing happened on the matter of revival of policy and waiver of personal statement form No. 680 and Nagarmal Dadhich died on 18.8.1985. After his death the complainant made claim. By a letter dated 22.1.1987 the Sr. Branch Manager, LIC, New Delhi stated that they had already explained to her in their letter dated 20.12.1986 the position with regard to the payment of premium under the policy. It was stated that since the premium under the policy had been paid up to October, 1982, the claim under the policy is to be settled on the basis of the paid-up value of the policy for which the Corporation had already sent to her discharge form for Rs. 3084/-. THE complainant was requested to return the discharge form so that the payment could be made to her. THEre is also another letter sent by Sr. Branch Manager, LIC, Delhi on 1/19.11.88 to the complainant wherein it was written that they are enclosing a form No. 3801 for Rs. 4317/- which may be returned duly completed, stamped and signed by her in all respect. It would thus appear that after the death of Nagarmal Dadhich the Life Insurance Corporation was only ready to pay to the complainant an amount of Rs. 4317/- as paid up value of the policy and not the sum assured of Rs. 20,000/-. THE complainant filed the complaint before the District Forum on 13.12.1994. It was, therefore, a stale complaint. THE complaint was filed after the expiry of the period of limitation. THE District Forum, Ganganagar very cursorily and in arbitrary manner ignored the question of limitation. THE District Forum stated that there was correspondence regarding payment of part amount and, therefore, question of limitation cannot be raised. THE District Forum also said that the opposite party had not raised the question of limitation in the version and had showed readiness to pay the paid up value of the policy. It is true that the opposite party had stated in the version that they are ready to pay the paid up value of the policy to the complainant in accordance with rules. THEy had expressly raised objection regarding limitation in para 6 of their version wherein it was stated that the complaint has not been filed within limitation and deserves to be dismissed on that ground. THE District Forum, Ganganagar was, therefore, wrong in stating that the question of limitation was not raised. It was an insurance policy under monthly salary scheme and premium had to be paid monthly through deduction from salary. The premium was deducted monthly till the insured was employee of Khetri Copper Complex. Later, on the insured joined another concern i.e. Cement Corporation of India at New Delhi. On account of this change monthly premium could not be deducted after October, 1982 and an amount of Rs. 2600/- was paid only in March, 1984 when the insurance policy record was transferred from Jhunjhunu to Delhi. The Insurance Corporation considered that the policy had lapsed. For revival, the Life Insurance Corporation required formalities of personal statement regarding health in form No. 680. The matter regarding waiving this requirement was under consideration. However, the insured died. There was nothing to prevent the complainant from filing the complaint within limitation when she had been informed by the LIC that it was ready to pay her Rs. 4317/- only as paid up value. However, she waited for six years before filing the complaint. Since the Life Insurance Corporation has in their version shown readiness to pay the paid-up value which was mentioned as Rs. 4317/- we can direct the Corporation to pay this paid up value of Rs. 4317/- to the complainant. We may here mention that when this appeal was listed on the stay application filed by the appellant, the State Commission ordered on 29.6.1995 that subject to the condition that the LIC deposits in the (sic.) District Forum, Ganganagar, the surrender value of the insurance policy standing in the name of Nagarmal Dadhich, the enforcement of the order of the District Forum, Ganganagar shall remain stayed. It might be that the Corporation would have deposited the surrender value of the policy.

WE, therefore, partly allow this appeal and modify the order of the District Forum, Ganganagar in this manner that the opposite party will pay to the complainant the paid up value of the policy i.e. Rs. 4317/-. If in pursuance of the interim order of this State Commission dated 29.6.1995 the LIC has made the deposit, the complainant will receive the said amount of Rs. 4317/- from the amount deposited by the LIC in pursuance of the interim order of this State Commission dated 29.6.1995. As for the remaining amount, the complaint filed by the complainant was barred by limitation.

BEFORE parting with this order, we may state that we are not expressing on the question of about lapsing of the policy. We will like to comment that the Life Insurance Corporation of India covers the risk of the life of the insured. It had in the interest of the insured floated salary saving scheme so that monthly premium may be deducted regularly from the salary of the insured. As soon as Nagarmal Dadhich shifted from Khetri to Delhi and joined new establishment i.e. Cement Corporation of India, he applied repeatedly for transfer of his policy record from Jhunjhunu to Delhi. But here was such a gross negligent and care-free Life Insurance Corporation of India that for 1 years it did not transfer the policy record of the insured from Jhunjhunu to Delhi. The Manager (SSS) in his letter dated 30.4.1985 specifically stated that the Corporation was indeed sorry for the delay in transfer of policy records from Jhunjhunu branch of LIC to Delhi. Mere expressing of regret is no solace to a widow whose husband died and for whose benefit the life insurance policy was taken. It appears from the recital of the above facts that insured Nagarmal Dadhich was a person of clean conduct in the matter of payment of premium. Immediately after his joining new establishment at Delhi he repeatedly wrote letters for transfer of his policy records to New Delhi so that his new employer may send the monthly premium. No sooner the policy record was transferred to New Delhi lumpsum deposit of Rs. 2600/- was made in March, 1984 and thereafter monthly premiums were deducted by the new employer. We condemn the Life Insurance Corporation in very strongest terms that although it had been throughout negligent in its conduct and had unnecessarily delayed the transfer of the policy record for 1 years and then it has the audacity to say that the policy had lapsed and not revived during the life-time of the deceased. We have been compelled to disallow the claim of the complainant because it was barred by limitation and not on the ground that the policy had lapsed in the above circumstances. We, therefore, strongly recommend that the Life Insurance Corporation should make, in the above circumstances of the case, ex gratia payment of Rs. 20,000/- to the complainant Smt. Krishna Dadhich. This is the least which they should pay for their act of glaring negligence and arbitrari ness. We also condemn the Life Insurance Corporation that it raises the question of limitation even in cases where its own conduct was highly negligent. We, therefore, also direct that a copy of this order will be sent to the Divisional Manager of the Life Insurance Corporation of India, New Delhi by the Registrar of this State Commission for his information and necessary action. Appeal partly allowed.