RAMWATI @ URMILA vs Life Insurance Corporation of India

THE complainant has prayed for payment of Rs . 1,00,000/- as amount of premium for which the insurance was made, a sum of Rs. 27,000/- as bonus on the amount and a sum of Rs. 4,45,473/- as interest from 31.7.1988 till the date of complaint at the rate of 24% per annum and Rs. 50,000/- towards mental tension etc.

THE facts of the case stated in brief are that the complainant''s husband late Chhoteylal Yadav took a Money Back Policy for a sum of Rs. 1,00,000/- from Life Insurance Corporation of India on 28.4.1982. THE deceased mentioned the complainant as his nominee. Unfortunately the husband of the complainant died on 31.7.1988 and soon thereafter a claim was lodged with the Life Insurance Corporation of India by the complainant. THE complainant approached Life Insurance Corporation several times, the dates of which are mentioned in para 5 of the complaint, but the claim was not settled by the Life Insurance Corporation. Till the date of filing of the claim petition repudiation was also not done and the claim was not settled. The opposite party in its written version has admitted the policy but alleged that late Chhoteylal Yadav nominated his wife and mentioned her name as Smt. Ramwati but the claim has been filed by Smt. Urmila @ Ramwati. It is further alleged that the claim is barred by limitation as the same has been filed after seven years of the death of the complainant. The complaint is, therefore, barred under Section 27(A) of the Consumer Protection Act. The complainant is not entitled to claim any compensation. Moreover the interest at the rate of 24% per annum is very much on the higher side.

The parties lead evidence in support of their respective contentions. We have heard learned Counsel for the parties and perused evidence on record.

THE only question which arises for consideration in this case is whether the claimant is right and was nominee of the deceased Chhoteylal Yadav. According to the opposite party, the nomination was done in the name of Ramwati while the claim has been made under the name of Smt. Urmila @ Ramwati. It has also been argued by the learned Counsel that the enquiries are pending in order to determine whether the complainant is the wife and nominee of the deceased Chhoteylal Yadav or not. It is very strange that when the incident took place in the year 1988 and the written statement was filed in the year 1997 the enquiry was pending. Even after a lapse of 9 years the enquiry could not be completed in order to find out as to what was the name of the wife of the deceased and whether the complainant is the wife of the deceased or not. Even the claim has not been repudiated so far by the Life Insurance Corporation. It is very strange that the opposite party, after the death of the insured, did not hand over the money which is legally due to the complainant. Instead of it, they continued to enquire into the matter and could not come to any definite conclusion even after the lapse of 12 years. This enquiry could not have been taken more than six months or so. If the Life Insurance Corporation felt that the complainant is not the wife of the deceased, then it should have repudiated the claim but it has also not been done. It is next to impossible to believe that upto this time the Life Insurance Corporation would not have come to know the real name of the deceased''s wife. Even if the name of Urmila has been mentioned, it will not take away the right of the claimant to claim the amount of insurance. It has been definitely stated in affidavit by the complainant that her house-hold name is Urmila. It is common knowledge that in India generally people are known by two names. Thus we find that the defence put up by the opposite party is baseless and has no legs to stand on. The complainant is entitled to the amount for which the insurance was done and which she is entitled on the death of her husband. The complaint is, therefore, liable to be decreed for recovery of Rs. 1,00,000/- as insurance amount alongwith bonus and interest by the Life Insurance Corporation.

NOW the question of rate of interest arises. Learned Counsel for the Insurance Company has argued that the interest should be fixed at the rate of 12% per annum. In support of his argument he has placed reliance on the case of United (SC)=1996-1999 Consumer 4781 (NS), in which it was held that the rate of interest in the name of Insurance Company should be 12% per annum. However, the learned Counsel for the complainant has argued that the interest should be awarded at the rate of 18% per annum in view of the decision of the Hon''ble Supreme Court in the case of United India Insurance Company Limited v. Fancy Traders, VII (2000) SLT 365=JT 2000 (10) SC 337. The Hon''ble Supreme Court in this case has held that the interest at the rate of 18% per annum is justifiable. The order of the Hon''ble Supreme Court is very short and is being reproduced below : "Order 1. Leave is granted. 2. Heard learned Counsel for the parties. 3. The net loss caused to the respondent due to fire was assessed at Rs. 4,72,146/- but the applicant paid only a sum of Rs. 2,75,146/- to the Bank of the respondent. The balance amount together with interest at the rate of 18% was ordered to be paid to the respondent by the State Commission. 4. Having regard to the facts and circumstances of the case, the High Court also did not interfere with the rate of interest awarded by the State Commission. We find no justification for our interference in the matter under Article 136 of the Constitution. 5. The appeal is accordingly dismissed. There shall be no order as to costs."

In a more recent case, National Insurance Company v. Ram Sheo Kumar, Civil Appeal No. 3110/1993, alongwith Appeal No. 4430/1993 decided on 23rd September, 1999, the Hon''ble Apex Court had also considered the quantum of interest which should be awarded in the case of Insurance Company. In that case before the Apex Court, it was held that the repudiation of the claim by the Insurance Company was wholly mala fide. It was held that all the risks were covered by the insurance policy. The ship which was carrying the goods was lost on the high seas. Before the Hon''ble Supreme Court it was contended that the Commission was not justified in awarding interest at the rate of 18% per annum to the respondent. The Hon''ble Supreme Court repelled the contention of the Insurance Company about the rate of interest in the following words : "So far as the question of quantum of interest is concerned, we see no infirmity in the order passed by the Commission except that the order of the Commission requires a little alteration so that the date 6.12.1987 is altered to 12.8.1987 in consonance with the judgment of the Commission itself."

Thus in view of the latest decision of the Hon''ble Supreme Court, it is now clear that the interest at the rate of 18% per annum is to be paid by the Insurance Corporation when it is found that the deficiency is on behalf of the Insurance Corporation. Order The complaint is decreed for recovery of Rs. 1,00,000/- alongwith bonus and interest at the rate of 18% per annum on the above amount. The interest shall run from the expiry of three months from the date of submission of the claim and will be payable till the date of payment. The complainant shall also get a cost of Rs. 3,000/- from the opposite party.

LET compliance of the order be made within a period of two months from the date of this order. LET copy as per rules be made available to the parties. Complaint allowed.