New India Assurance Company Ltd vs Anusuyamma

MR. S.K. Naik, Member-The New India Assurance Co. Ltd., the petitioner herein, offered insurance cover for a period of ten years on payment of one-time-premium under the Janatha Personal Accident Insurance Policy scheme. Deceased Guru Shanthappa M., husband of respondent/complainant No. l availed the policy covering the period from 13th of March, 1998 to 12th of March, 2008 for a sum of Rs. 5.00 lakh and paid the relevant one time-premium of Rs. 1,375. Guru Shanthappa M., however, died on 19th of September, 2002 on account of a snake bite. Respondent/complainant No. 1, being the nominee of the Life Assured, approached the petitioner/Insurance Company for the settlement of the claim arising out of the said policy on 11th of January, 2003. On a reply received thereto stating that her claim is not maintainable as the policy stood cancelled w.e.f. 1st of July, 2002; the widow of the Life Assured, along with her daughter, filed a complaint before the District Consumer Disputes Redressal Forum, Chitradurga (''District Forum'' for short), seeking a direction to the petitioner/Insurance Company to honour their claim. The complaint was contested by the petitioner/Insurance Company. Parties thereafter led their respective evidence, after a consideration of which the District Forum allowed the complaint and directed the petitioner/Insurance Company to pay the policy amount with benefits to the complainants within two months, failure of which was to attract interest @ 12% per annum till its payment and in addition it ordered payment of Rs. 1,500 towards the cost of litigation.

AGGRIEVED thereupon, the petitioner/Insurance Company filed an appeal before the Karnataka State Consumer Disputes Redressal Commission (''State Commission'' for short), who vide the order impugned held that the stand of the petitioner/Insurance Company, that in terms of Condition No. 5 of the Policy they had duly served the notice for cancellation of the policy, was not sustainable and in any case since the insured has not played any fraud in obtaining the policy and further that the Insurance Company does not disclose the reasons for cancellation of the policy, it dismissed the appeal.

YET dissatisfied with the concurrent findings of the two Fora below that the opposite party/Insurance Company is in revision before us.

WE have heard the learned Counsel for the petitioner/Insurance Company and the learned Counsel for the respondents/complainants.

SINCE the main contention of the petitioner/Insurance Company is that in terms of the policy and, in particular, in terms of Condition No. 5 they were fully authorized to cancel the policy after following the procedure so prescribed therein and further that in terms of Condition No. l the nominee/claimant/complainant having failed to approach them within the prescribed period, their action of not entertaining the claim cannot be faulted; it would be useful first to examine the said conditions, which read as under: "CONDITIONS 1. Upon the happening of any event which may give rise to a claim under this policy the Insured shall forthwith give notice thereof to the Company. Unless reasonable cause is shown, the Insured/Nominee should within one calendar month after the event which may give rise to a claim under the policy, give written notice to the Company with full particulars of the claim. 2. ............................... 3. ............................... 4. ............................... 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 part thereof for the portion of the 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. 6. ..............................."

A bare reading of Condition No. 5 above leaves no manner of doubt that the Insurance Company had the authority to cancel the policy but in order to take such cancellation to its logical end, it was necessary for the Insurance Company to issue a notice in writing indicating its intention to do so and further return to the Insured the last paid premium less pro-rata thereof for the portion of the current insurance period which shall have expired.

THE petitioner/Insurance Company in this regard had taken the plea that a notice through registered cover was sent to the Life Assured on the 21st of June, 2002 informing him that in terms of Condition No. 5 of the policy, by giving a week''s notice they will not be on risk w.e.f. 30th of June, 2002. The said communication, however, was returned with the endorsement of the postal authorities as "not claimed", which amounted to deemed service. The District Forum, however, held that the notice had not been served on the husband of the first complainant, as there is no signature for the said ''shara''. Further, we have perused page 28 of the paper-book, which is a photocopy of the envelope returned by the postal authorities, which clearly states "Not claimed, Rtd. to sender, dated 29.6.2002". No doubt, there is no signature of the postman of the postal authority thereon but this cannot be made a ground to hold that the said letter was pot served on the Life Assured as the endorsement has been made by an official of the Government postal authority during the course of the normal discharge of his duty. In any case, once a letter has been dispatched it cannot come back except through the postal channel. The District Forum, therefore, was clearly in the wrong to harbour any doubt with regard to the dispatch and service of the said registered letter. On this point, the State Commission has erroneously held that in order to prove the contents of the said acknowledgment, the Insurance Company ought to have filed the affidavit of the postal authorities, which, in our view, was not necessary when the same is corroborated from the entries in the ''dispatch register'' maintained by the petitioner/Insurance Company in which against the date of 21st June, 2002, the name of the Life Assured appears amongst a number of other persons to whom such notices were issued. Thus, the requirement of notice to the Life Assured was duly complied with.

INSOFAR as the other requirement of refund of the last paid premium is concerned, it is the say of the petitioner/Insurance Company that they sent a refund voucher for Rs. 784 through courier on the 6th of August, 2002, which was duly acknowledged by the respondent/complainant No. 1 herein. A photocopy of the acknowledgment obtained from the courier company has been referred to in this regard. The District Forum on this point has held as under: "After cancellation of the policy it is mandatory that the last premium shall be sent back to the policy holder. It is not the contention of the opponent that after the cancellation of the policy the last premium was sent to the policy holder. After cancellation of the policy, the opponent has not sent back the last premium. The opponent has not followed the condition No. 5 of the policy."

THE District Forum clearly has committed an error on facts as the petitioner/Insurance Company in their written statement before the District Forum in para 12(g) has clearly stated as under: "For the Letter of Anasuya, the O.P. by its Letter dated 27.1.2003 has made clear cancellation of policy of Gurushanthappa with effect from 1.7.2002 and sending the Registered Letter to Guru Shanthappa on 21.6.2002 and also sending, refund voucher to Guru Shanthappa through courier dated 6.8.2002. The contents of the said letter binds Guru shanthappa prior to his death and the complainants after his death. The letter is enclosed as document No. 9. Sending the said letter through courier dated 6.8.2002 to show the same copy of the courier notice is enclosed as document No. 10."

(Emphasis supplied)

IN view of this clear averment of petitioner/Insurance Company in their written statement that refund voucher had been duly sent to the Life Assured and in the absence of any rebuttal thereto, the District Forum was clearly in the wrong to hold that the petitioner/Insurance Company had advanced no such contention with regard to payment of the last premium. The State Commission has not considered this aspect.

AT the time of arguments before us, learned Counsel for respondents/complainants has drawn our attention to the refund voucher at page-27 of the paper-book which is dated 21st of July, 2002 and referring to the endorsement of the postal authorities which is dated 29th of June, 2002 has contended that the refund voucher is a fabricated document as this refund voucher is dated 21.7.2002 and could not have been dispatched prior to its origination on the 29th of June, 2002. This contention of the learned Counsel has to be repelled as the case of the petitioner/Insurance Company is that the refund voucher was dispatched on 6th of August, 2002 through a courier agency which has been acknowledged by the claimant, widow of the Life Assured. Endorsement dated 29.6.2002 pertains to the notice for cancellation of policy dated. 21.6.2002 while the refund voucher was sent through a courier company on 6.8.2002. Thus, there being no anomaly it cannot be held that the petitioner/Insurance Company had not taken any action to refund the last premium. It may be that, even after receipt of the refund voucher the complainant deliberately kept quiet in order to make out a case for consumer complaint.

THIS leaves us with regard to the compliance of Condition No. l, which casts an obligation on the complainant to have filed the complaint immediately after the death of the Life Assured but in any case within a period of one month from the date of death. The Life Assured having died on 19th of September, 2002 the claim was filed after a period of four months on 11th of January, 2003. No explanation has been offered as to why there was such a long delay when the condition specifically prescribed that Insurance Company be approached immediately alter the death or in any case within a period of one month. On this count also the petitioner/Insurance Company has proved the point.

IN view of the above discussion, we are of the view that both the District Forum as well as the State Commission have misdirected themselves in holding that the petitioner/Insurance Company has not complied with the conditions with regard to their right to cancel the policy. The impugned orders are, therefore, set aside. The revision petition is accordingly allowed, however, with no order as to cost. R.P. allowed.