M Kanagavalli vs Divisional Manager L I C Of India

THIS is a complaint under Section 17 read with Section 12 of the Consumer Protection Act.

THE Complainants are heirs and legal representatives of Late Murugesan, who died on 28.4.91. The said Murugesan had taken a Policy of Life Insurance with the 2nd Opposite Party fora sum of Rs. 1,00,000/ -. The 1st Complainant, who is his wife is the Nominee under the Policy. The premium was Rs. 1,247.50 payable quarterly. The 3rd premium due on 23.2.91 was not paid within the period or even during the grace period of one month. On 27.4.91, the deceased Murugesan took a Pay Order for the policy amount of Rs. 1,247.50 and interest of Rs. 12.50, totalling Rs. 1,260/ - from the UCO Bank and sent it to the 2nd Opposite Party by post under ''Certificate of Posting.'' The Pay order has been encashed by the 2nd Opposite Party on 3.5.91. The 2nd Opposite Party sent the demand notice for the 4th quarterly premium due on 22.6.91. But, in the meanwhile, the said Murugesan died in an accident on 28.4.91. The Complainants claim the policy amount and the 2nd Opposite Party repudiated the claim on the ground that the assured died before revival of the policy. Hence this claim. The claim is resisted by the Opposite Party. The Complainant took the Policy of Insurance commencing from 22.9.90 and the premium was payable quarterly on the 22nd of March, June, September, December every year. The first two premiums due on 22.9.90 and 22.12.90 were duly paid. The 3rd quarterly premium fell due on 22.3.91 and was not remitted either on the due date or even before the expiry of the grace period of one month. The policy, therefore, lapsed on 22.4.91. The Pay Order for Rs. 1,260/ - was received by the 2nd Opposite Party on 30.4.91. The 2nd Opposite Party was informed of the death of the assured only on 26.6.91, that is, after 2 months. The notice for premium due on 26.6.91 was sent in the routine manner as the 2nd Opposite Party was not aware of the death of the assured. The Complainant cannot take advantage of this premium notice. It is pointed out that revival of lapsed policy is not automatic. The Corporation has legal and contractual right to take a decision regarding revival after the receipt of the revival requirements. In the instant case, even before the Banker''s Pay Order was received by the Opposite Party, the assured had died and there was, therefore, an impossibility of revival in the instant case. The claim was, therefore, rightly rejected. There was no deficiency in service.

EXHIBITS A -1 to A -17 are marked by consent. Proof Affidavits are filed. No oral evidence had been let in.

THE point which arises for consideration is whether there has been any deficiency of service on the part of the Opposite Party -Insurer. Point: The 1st Complainant''s Husband and Father of 2nd Complainant and Son of 3rd Complainant had taken a Policy of Life Insurance for a sum of Rs. 1,00,000/ - on 22.9.90. Ex. Al is the Policy of Insurance. The 1st Complain - ant is the Nominee under the policy. The premium is payable quarterly on or before 22nd of March, June, September, December of every year. The assured has paid the first two quarterly premiums in time, due on 22.9.90 and 22.12.90 in time. The 3rd premium was due on 22.3.91. He did not pay on the due date or even before expiry of the grace period of one month. According to the Opposite Parties, therefore, the policy automatically lapsed on 22.4.91. The case of the Complainant is that on 27.4.91, the assured sent the policy amount with interest, totalling Rs. 1,260/ - by Pay Order drawn from the UCO Bank by post under Certificate of Posting under Ex. A10, dated 27.4.91, which was a Saturday. The 2nd Opposite Party claimed to have received the Pay order on 30.4.91 and it has been encashed on 3.5.91 as is seen from Ex. A17 communication from the UCO Bank. The question which arises for consideration is whether the policy has been revived and the Complainants are entitled to claim the amounts.

CONDITION Nos. 2 and 3 of Ex. Al Policy are as follows: Condition No. 2: Payment of Premium: "A grace period of one month but not less than 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 and the sum assured paid after deduction of the said premium as also unpaid premium/s falling due before the next anniversary of the Policy. If the premium is not paid before expiry of the days of grace the policy lapses. If the policy has not lapsed and the claim is admitted in case of death under a policy where the mode of payment of premiums is other than yearly, unpaid premiums if any falling due before the next policy anniversary shall be deducted from the claim amount.

Condition No. 3: Revival of Discontinued Policies: "If the Policy has 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 proof 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 a 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."

AS the Deceased Assured has failed to pay the 3rd quarterly premium due on 22.3.91, within the grace period of one month, i.e., on or before 22.4.91, the Policy automatically lapsed on 22.4.91. The question is whether this Policy has been revived. This matter has come up directly before the Andhra Pradesh High Court in "Ahmedunnisa Begum v. Life Insurance Corporation of India, Hyderabad" (AIR 1981 Andhra Pradesh 50). After reviewing the conditions of the Policy on the decisions on this point, the High Court formulated the following principles: "The revival of an insurance policy is not a matter of right and it would not automatically follow even after the fulfilment of the conditions laid down in the policy. The revival operates as a new contract and the rights and liabilities do not begin to run until the new terms and conditions are accepted and complied with."

In "Chairman, Life Insurance Corporation of India v. Narasama" I (1992) CPJ 128 (NC), the National Commission followed the aforesaid decision of the Andhra Pradesh High Court and held that policy could have been revived only after the L.I.C. had accepted the delayed premium with interest and as the Policy was not revived during the life time of Tr. A. Langaiya, it could not be revived after his death. The following principles are well settled with regard to lapse and revival of a policy. (1) The policy lapses for non -payment premium on the expiry of the grace period. (2) The revival is not automatic. (3) The revival takes place only on the acceptance by the Insurer of all arrears of premium with interest or the delayed payment with interest as stipulated in the rules. (4) The revival could only be during the life time of the Assured and not after his death. In the instant case, the premium amount with interest has been sent by the Assured by Pay Order on 27.4.91, which was a Saturday. It could not have been received by the 2nd Opposite Party on or before 29.4.91, which is a Monday. According to the 2nd Opposite Party, it was received on 30.4.91 and was encased on 3.5.91. The policy gets revival only on the acceptance of the payment by the insured and in this case, the acceptance cannot be before 30.4.91, when the Pay Order has been received by the Insurer. The Assured has, however, died on 28.4.91 itself prior to the acceptance of delayed payment and revival of the policy. There could, therefore, be no revival of Policy of Insurance. The fact that the 2nd Opposite Party Insurer has given notice claiming the 4th quarterly premium is of no significance as the notice has been issued before the Insurer was informed of the death of the deceased. This notice has not the effect of revival of the policy prior to the death of the deceased. We hold, therefore, that the policy in the instant case has not been revived during the life time of the deceased and there was, therefore, no revival in the eye of law. The claim is not, therefore, maintainable and has been rightly repudiated by the Opposite Party.

In the result, the complaint fails and is dismissed. No costs. Complaint dismissed.