NATIONAL INSURANCE CO LTD vs HARCHARAN SINGH & ORS

Rekha Gupta, J.

[1] Revision Petition No. 1960 of 2013 has been filed by the respondent/opposite party against the order dated 22.1.2013, passed by Punjab State Consumer Disputes Redressal Commission, Chandigarh (short, "State Commission") in First Appeal No.529 of 2012.

[2] The facts of the case as per the respondent/complainant are that Paramjit Singh son of Harcharan Singh got himself insured with the opposite parties no.1 & 2 vide policy no.401308/9600001/98 vide certificate no.0005937 for Rs.1,00,000/- through the opposite party no.3. The policy was for the period from 6.4.1999 to 5.4.1999. The said policy covered the insured from accidental death along with other disabilities mentioned on the overleaf of the policy.

[3] Paramjit Singh met with an accident on 5.4.2009 while returning to his village and died in the way while being taken to Civil Hospital, Samrala. The postmortem of Paramjit Singh was conducted on 6.4.2009 and matter was reported and a DDR No.4 dt. 6.4.2009 was also got recorded by Police of P.S. Macchiwara. Thereafter the complainant approached the opposite party No.2 and its Ludhiana office regarding the death claim of said Paramjit Singh and requested them to release the death claim amount of deceased Paramjit Singh. The complainants also submitted relevant documents to the opposite parties, but they refused to pay the said death claim amount. Thereafter the complainant no.1 received one letter dated 4.5.2009 from the opposite party no.2 alleging that the policy in question was cancelled by the opposite parties no.1 and 2 on 29.7.2005 and they had also sent a cheque bearing no.706402 dated 4.5.2009 for the amount of Rs.196/-.

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[6] Thereafter the complainant filed fresh complaint against the opposite parties no.1 and 2, which was partly allowed by the District Forum, Sangrur with direction to the opposite party no.2 to handover the claim form to the complainants within fortnight from the date of order and decide the matter vide its order dated 09.12.2010. Cheque no.706402 dated 4.5.2009 in original is placed in the consumer complaint file bearing no.375 dt. 09.06.2010 decided on 09.12.2010 titled Harcharan Singh and others Versus National Insurance Co. Ltd. and others.

[7] On 12.02.2011, the complainants received one claim form which was sent to the opposite party no.2 after completing all the formalities by the complainant no.1. In response to the said claim form, the opposite party no.2 served a letter dated 22.2.2011 to the complainant no.1 alleging the claim case of the complainants had been repudiated as the policy in question had been cancelled in the year of 2005 as mentioned above.

[8] In their reply before the State Commission, the petitioners/OP Nos.1 & 2 contended that the present complaint was not maintainable under law. The policy in question which was issued w.e.f. 06.04.1999 to 05.4.2009 stood cancelled w.e.f. 29.7.2005. A letter to that effect had been issued to the insured M/s Star Gold Mine Chits P. Ltd. but since the office insured was lying locked so a public notice was published in Punjab Kesri dated 15.11.2005 to that effect. No policy was subsisting on the date of death of Paramjit Singh, therefore, the complaint was liable to be dismissed.

[9] That the present complaint was not maintainable since the respondent had already sent the refund of premium amounting to Rs.196/-. The cheque no.706402 dated 4.5.2009 vide letter dated 4.5.2009 on the basis of pro-rata premium from the date of cancellation of policy i.e. 29.7.2005 to 05.04.2009. Therefore, on this ground the complaint is liable to be dismissed as Paramjit Singh beneficiary was not insured at the time of his death.

[10] The District Forum vide its order dated 6.3.2012 while allowing the complaint had observed as under:- "10. Adverting to the question of liability of opposite parties number 1 & 2, clause number of the conditions of the insurance policy Ex.R-2 reads as under:-

"The company may at any time by notice in writing cancel this policy provided that the company shall in that case return to the insured the than last paid premium less a pro-rata thereof for the portion of current insurance period which shall have expired. Such notice shall be deemed sufficiently given if posted, addressed to the insured at the address last registered in the company''s books and shall be deemed to have been received by the insured at the time when the same would be delivered in the ordinary course of post."

It is true that as per law laid down in Simran Farms Ltd. Vs. United India Insurance Co. Ltd. & Ors. the Consumer Forum cannot go into the question of harshness of agreement clause. However, in the instant case, we find that opposite parties number 1 & 2 violated the condition number 5 because there is no evidence that they while cancelling the policy they returned to the insured the then last paid premium less a pro-rata thereof for the portion of current insurance period which shall have expired. The copy of letter Ex. R-5 (the date is not mentioned but vide Ex.R-6 and Ex.R-7 it was sent on 1.8.2005 shows that the policy was cancelled with effect from 29.7.2005. However, the copy of letter Ex. R-5 nowhere shows that as per condition number 5 of the insurance policy, the payment as mentioned therein was returned to the insured. It appears that when one of the beneficiaries Paramjit Singh died on 5.4.2009 and complainants approached opposite parties number 1 & 2, thereafter opposite party number 2 sent a letter dated 4.5.2009 copy of which is Ex.C-7 intimating Harcharan Singh, complainant number 1 that the policy had been cancelled on 29.7.2005 and he was being sent a cheque of Rs.196/- which was principal amount of the Insurance. Significantly, though the policy was allegedly cancelled on 29.7.2005 yet the information was not sent to Paramjit Singh during his life time that the said Janta Personal Accident Policy stood cancelled on 29.7.2005. Furthermore, the payment as per condition number 5 of the policy was to be made to the insured and not to the nominee of the beneficiary, therefore, the action of opposite party number 2 in sending the cheque of only Rs.196/- to the complainant number 1 on 4.5.2009 is not the sufficient compliance of the terms and conditions of the policy. The learned counsel for the complainants has relied on Oriental Insurance Co. Ltd. Vs. Sheetla Devi & Anr.,2010 1 CPC 191 (MP State Commission) wherein insured deceased had obtained Group Janta Personal Accident Policy and died. The Insurance Co. pleaded that the policy was cancelled on 8.3.2002 whereas the insured had died on 30.4.2007 but cheque for refund of premium could not reach the insured. It was held by the Hon''ble State Commission that unilateral cancellation of policy was not legally permissible. Similarly, in Ashok Kumar Roy Vs. Oriental Insurance Co. Ltd. and Others, 2010 1 CPC 87 (NC) there was unilateral cancellation of the policy by insurer and it was held that cancellation of the policy was not justified without any notice to the complainant and policy shall be deemed to be in existence.

In the instant case also, we feel that since neither the beneficiary Paramjit Singh was intimated about the cancellation of the policy nor the insured opposite party number 3 was aid the premium as per condition number 5 of the policy, therefore, it cannot be accepted that the policy was legally cancelled. We are of the opinion that since condition number 5 of the policy was not duly complied with by opposite parties number 1 & 2 therefore, policy would be deemed to be in existence and heirs of Paramjit Singh would be entitled to get insurance amount of Rs.one lac. We find deficiency in service and negligence on the part of the opposite parties number 1 & 2.

For the reasons recorded above, the complaint filed by the father, widow and children of the deceased Paramjit Singh is allowed against opposite parties number 1 & 2. Opposite parties number 1 & 2 are directed to

Pay an amount of Rs.One Lac to the complainants along with interest @ 9% per annum from the date of death of Paramjit Singh deceased i.e. 5.4.2009 till realization.

Make payment of an amount of Rs.10000/- to the complainants towards litigation expenses."

[11] Aggrieved by the order of the District Forum, the petitioner filed an appeal before the State Commission. The State Commission while dismissing the appeal observed as under:- "8. Learned counsel for the OP appellant has argued that no doubt the group insurance policy was taken by OP No.3 yet the same could be cancelled by the Appellant. In this respect, learned counsel referred to clause No.5 of the Insurance Policy Ex.R-4 which reads as follows:-

"5. The Company may at any time by notice in writing cancel this Policy provided that the Company shall in that case return to the insured the then last paid premium less a pro-rata thereof for the portion of current insurance period which shall have expired. Such notice shall be deemed sufficiently given if posted, addressed to the insured at the address last registered in the Company''s books and shall be deemed to have been received by the insured at the time when the same would be delivered to the ordinary course of post."

This provision shows that the policy could be cancelled only by giving the notice in writing provided the Company returned to the insured the last paid premium less a pro-rata thereof for the period of current insurance period. Admittedly in the present case a notice was sent but the pro-rata premium was not refunded to the insured. The cancellation, therefore, could not take place in view of non-compliance of condition No.5 of the insurance policy and the learned District Forum rightly observed that the policy continued till the pro-rata amount was sent vide letter dated 4.5.2009. Needless to mention that the insured had died prior to that date and, therefore, cancellation could not be taken as a defence against the payment of the compensation.

There is another aspect of the case. The notice about cancellation was given only to OP No.3 and not to Paramjit Singh insured. In case "Life Insurance Corporation of India Vs. K. Venketashwar, 2011 1 CPJ 305", the group savings linked policy was purchased by the employer but thereafter the premium was not paid and the policy lapsed. When the insurance claim was filed by one of the employees it was not accepted on the ground that the policy had lapsed. A complaint was filed which was dismissed by the learned District Forum but the State Commission allowed the same. In the revision petition the Hon''ble National Commission held that the transaction was in nature of tripartite agreement under which employee is the beneficiary and the employer had acted as an agent of the petitioner and was liable to pay insured amount to the complainant as master policy was cancelled before the deceased expired. In that case no notice was given to the employee that the policy was in lapsed condition and the employees being beneficiaries required separate different notices because the decision was bound to affect their interest. In case "Ashok Kumar v. Oriental Insurance Co. Ltd., 2009 4 CPJ 101", the Hon''ble National Commission was again dealing with the case relating to cancellation of the policy by the insurer and it was held that where no notice of unilateral cancellation of the policy was served on the complainant there was no cancellation and the policy was deemed to have been in existence. In case "Oriental Insurance Co. Ltd. vs. Ramwati, 2010 2 CPJ 258", the policy was cancelled after giving intimation to the employer. The stand taken by the Insurance Co. was rejected on the ground that the policy could not be cancelled unless intimation was given directly to the insured which was not given and, therefore, the policy could not be treated to have been cancelled. In the present case also the inured was Paramjit Singh to whom no notice of cancellation was given by the OP-appellant. The policy, therefore, continued in operation and the rights of the complainants respondents cannot be jeopardized.

In the present case, admittedly no notice of the cancellation of the policy was given to the insured, i.e., Paramjit Singh nor the pro-rata premium was returned to him. Intimation given to the employer who was only an agent to procure the insurance policy was not enough. Learned District Forum, therefore, rightly allowed the complaint. There is no merit in this appeal and the same is accordingly dismissed. Parties are left to bear their own costs."

[12] Hence, the revision petition.

[13] We have heard the learned counsel for the petitioner and the respondents and carefully gone through the record. Learned counsel for the petitioner contended that the State Commission had failed to appreciate that once a policy has been cancelled and notice has been given the insured then the insurance company is not liable to pay any compensation and even the death of Shri Paramjit Singh occurred in the year 2009 whereas the policy had been cancelled in the year 2005.

[14] The State Commission had also failed to appreciate that the policy had been cancelled and notice in this regard had been sent through the registered post to the insured Star Gold Mine and as the company has shifted somewhere else and did not inform to the petitioner in regard to the shifting of the place of working. Still the petitioner had given the public notice in the widely circulated newspaper in this regard.

[15] Learned counsel for the respondents, however, argued that they were never informed about the alleged cancellation of the policy during the lifetime of deceased Paramjit Singh and he had not been refunded the pro rata premium during his life time and hence the orders of the lower fora allowing the complaint are absolutely just and right given the circumstances of the case.

[16] The petitioner has placed on file Certificate No.0005937 in favour of Paramjit Singh which gives the membership no.2741 and includes the important terms, conditions, definitons and exclusions of the policy. So it is an admitted fact that the petitioner had extended an insurance cover to Shri Paramjit Singh which covered the total disablement, death, etc. There is an undated letter on record from the Sr. Branch Manager, National Insurance Co. Ltd. to OP No.5/respondent No.5 regarding the cancellation of Group Janta Personal Accident Policy issued to them giving them 7 days'' notice. However there is nothing on the record to show that when the pro- rata premium for the cancelled policy was sent to respondent No.5. Placed on file also is a letter dated 30.6.1999 from the Branch manager to respondent No.5 which reads as under:- "Now, we have received advices from our higher offices that all the existing Group JPA Policies are to be cancelled with immediate effect and no fresh member is allowed to be entered in the existing policy.

Keeping in view the guidelines of our higher offices, we hereby inform you that no fresh proposal will be accepted from you and no further member will be enrolled in the above mentioned policy. Kindly note that no further declaration will be accepted by our office.

The group JPA policy No. mentioned above issued to your concern stands cancelled and ceased to be operated w.e.f. 7th July, 1999 i.e. after seven days from the date of this letter."

[17] Learned counsel for the petitioner could not also give any evidence to support that Shri Paramjit Singh had been given notice of the cancellation of the policy and refunded the pro rata premium during his life time. The petitioner is taking contrary stand, as stating on one hand that he had refunded pro-rata premium to respondent no.5 for distribution to the beneficiaries and on the other hand, directly refunding a premium of amount of Rs.196/- to Shri Paramjit Singh on 4.5.2009, a month after his death. It is quite possible that if Paramjit Singh had been made aware that the policy stood cancelled from 2005, he would have availed of a fresh insurance.

[18] The Hon''ble Supreme Court in Mrs.Rubi Chandra Dutta Vs. M/s United India Insurance Co. Ltd., 2011 3 Scale 654 has observed:- "Also, it is to be noted that the revisional powers of the National Commission are derived from Section 21 (b) of the Act, under which the said power can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order, and only then, may the same be set aside. In our considered opinion there was no jurisdictional error or miscarriage of justice, which could have warranted the National Commission to have taken a different view than what was taken by the two Forums. The decision of the National Commission rests not on the basis of some legal principle that was ignored by the Courts below, but on a different (and in our opinion, an erroneous) interpretation of the same set of facts. This is not the manner in which revisional powers should be invoked. In this view of the matter, we are of the considered opinion that the jurisdiction conferred on the National Commission under Section 21 (b) of the Act has been transgressed. It was not a case where such a view could have been taken by setting aside the concurrent findings of two fora."

[19] Thus, no jurisdictional or legal error has been shown to us to call for interference in the exercise of powers under Section 21 (b) of Act. Since, the State Commission has given detailed and reasoned order which does not call for any interference nor it suffer from any infirmity or erroneous exercise of jurisdiction or material irregularity. Thus, the present revision petition is hereby dismissed.

[20] No order as to cost.