S. JEYANTHI vs Life Insurance Corporation of India

THE complainants'' case is that the 2nd complainant''s husband was a policy holder for a sum of Rs. 3,00,000/-. THE premium is payable every February and August. THE policy was taken on 10.1.1993 and the next payment had to be made in August, 1993. A grace period of 30 days is available for payment of premium. THE 2nd complainant''s husband died on 12.8.1993. As the nominee, the 2nd complainant is entitled to get the policy amount. When she made a claim, it was repudiated by the opposite parties. In spite of repeated requests, they have not chosen to accept the claim. THEre is thus deficiency. Hence the complaint.

THE opposite parties contended as follows: THE assured had taken a policy for Rs. 3,00,000/- in Policy No. 741227886. THE half-yearly premium due was in a sum of Rs. 6,388/-. It is not true to say that the premium was payable every February and August. THE policy had commenced on 10.1.1993 and the premium was payable in January and July every year. But, in the policy schedule, the period during which the premium noted wrongly as payable in February and August. THE said period is wrongly mentioned by rubber stamp which had been inadvertently affixed by the employee of the Corporation. When the schedule of policy contained the date of commencement of the policy as 10.1.1993 and when it is admitted that the mode of payment is half-yearly, there is no room for ambiguity about the period for which premium is to be paid. It is not true to say that the premium is payable till September, 1994. Since the premium was not remitted in due time, the policy got lapsed automatically. THEy sent a premium notice for 10th July, 1993. Taking advantage of the mistake committed by the employee, the complainant has chosen to prefer this complaint. Hence the opposite party prays that the complaint be dismissed with cost. The District Forum dismissed the complaint and aggrieved by the same, the 2nd complainant have now preferred this appeal.

The 2nd complainant''s husband had insured himself for a sum of Rs. 3,00,000/- on 10.1.1993. The premium payable is Rs. 6,388/-. The date of maturity of the policy is 10.1.2018. We find from the policy that the wife has been nominated as the nominee. It is further admitted that it is a non-medical policy issued and the premium is payable half-yearly. In the policy, under the column dates when premium payable, it is stated ''February and August'' every year. Basing their claim on this rubber stamp endorsement made under the column, the complainant would say that the premium due and payable only in the months of February and August, namely on 10th February, and 10th August, of every year. Since it is half-yearly premium, they will have 30 days grace and hence the premium due for February, can be paid before 10th of March, and the premium due for August, can be paid before 10th September, and, therefore, there was no lapse or failure to remit and hence the order of the District Forum is not tenable in law.

THE date of commencement of the policy is 10.1.1993. THE insured died on 12.8.1993. In the letter by the complainants, is stated that because it is mentioned that the premium is payable every February and August, the insured could have been under the impression that he had time till 9th September, to pay the premium and perhaps on that impression he could not and did not make payment. THE opposite parties admit that it is no doubt stated in the policy under the relevant column that the premium is payable in the months of February and August, but it has been done mistakenly by affixing the rubber stamp wrongly but the policy actually commenced on 10.1.1993 and, therefore, the premiums have to be paid only in the months of January and July of every month. Though the opposite parties have not produced all the records connected with the policy for its part, they have produced certain documents before this Commission at the time of appeal and they have been ordered to be received. THEy are xerox copies of the documents in the possession of the opposite parties and are marked by consent as Exs. C1 to C9. Ex. C1 is the proposal form dated 13.1.1993. Thus, we find that the proposal form has been dated only 13.1.1993. When it is so, it is not known how the date of commencement of the policy is given as 10.1.1993. Of course, in the declaration, the proposer has signed it as Ist January, 1993. C2 is the Agent''s Confidential-cum-Moral Hazard Report. It is also dated 1st January, 1993. In the Medical Examiner''s Confidential Report, Ex. C3, it is stated 1st January, 1993. It is also signed by the Doctor on the 1st of January. The premium has been accepted and paid on 30.12.1992. The Proposal Review Slip marked as Ex. C5 shows the date of proposal as 13.1.1993. In the policy, we find that it has been examined and signed on behalf of the Insurance Company on 11.3.1993. Thus, from the above records, we find that though the premium was paid on 30.12.1992 and the proposal was signed by the party on 1.1.1993, it was received by the Insurance Company only on 13.1.1993 and the policy has been accepted and signed only on 11.3.1993 and mentioning that the premium is payable in February and August, every year.

THE National Commission has held in I (1993) CPJ 9, that a concluded contract of insurance will arise only on the date the proposal is accepted. In other words, it was a case where the person who desired to take a policy passed away and the National Commission held that since the policy had not been accepted, there is no concluded contract and, therefore, the Insurance Company is not liable. THE Supreme Court also held in 1984 ACJ 345, that the general rule is that the contract of insurance will be concluded only when the party to whom offer has been made accept it. In yet another case, where the proposal of the assured reached the branch concerned only after the death of the proposer and the amount paid was kept in suspense account, the National Commission held that there was no binding contract of insurance between the assured and the insurer. The decision is reported in 1993 (2) CPR 129. Similarly in the decision reported in 1996 (1) CPR 598, it is held that if an insurer died before expiry of grace period of payment of premium for the insurance, then the concerned authority is bound to pay insurance amount after deducting the premium amount.

IN the decision reported in III (1998) CPJ 3 (SC), that the date on which risk in the policy commenced is different from the date of policy. They have further held that "we are of the considered opinion that under Clause 4-B of the policy the date of the policy is the date on which the policy had been issued and not the date on which the risk under the policy had commenced."

IN the decision reported in II (1999) CPJ 7, it has been held that the insured cannot claim policy merely because he has passed cheques and that mere payment of premium could not result in automatic renewal of policy. This State Commission has also taken the view that when a deceased committed suicide within 1 year from the date of policy, the one year time will commence from the date of policy and not from the date of risk. When a proposer died prior to the Insurance Company received proposal form and the amount was kept in suspense, it was held that no benefit can be conferred upon the complainant. To the above effect, we find the decision of Gujarat State Consumer Disputes Redressal Commission reported in II (1993) CPJ 440. Uttranchal State Consumer Disputes Redressal Commission has also taken the view that unless there is acceptance, the insured cannot claim any benefit.

Therefore, the effect of the above decisions is only to show that a policy will become enforceable only after its acceptance and merely the date of commencement of the policy which is shown in the document is not the governing date but it is only the date when the contract of insurance is concluded, that is, the crucial date for the purpose of accepting or repudiating the claim.

THE policy condition under condition No. 2 is that there will be a grace period of 30 days for payment of yearly, half-yearly or quarterly premiums and 15 days for monthly premiums. It further says that if death occurs within this period and before the payment of premium then due, the policy will still be valid and the sum assured paid after deduction of the said premium as also the unpaid premium falling due before the next anniversary of the policy and in case of death, unpaid premium, if any, falling due before the next policy anniversary shall be deducted from the claim amount. In this case, as already pointed out, though the premium was paid on 30.12.1992 and the proposal form was signed by the insured on 1.1.1993, it was received at the office of the opposite parties only on 13.1.1993 and was accepted and signed on behalf of the Insurance Company on 11.3.193. Therefore, it would come into effect only from the date of acceptance which is from 11.3.1993. If it is taken as the date then the premium will be payable every September and March, every year, but the policy specifically mentions February and August, of every year as the dates when the premium becomes payable. As regards the premium due for February, it has been already received, therefore, we have to take it that the 1st premium due has been accepted and received eve before the proposal was received and before the policy was accepted and signed on behalf of the opposite parties. The next premium due was only in the month of August. Therefore, it is payable by or before 10th of August, or 9th of August, as the case may be. There was a grace period of 30 days which means that the premium could be paid till 9th or 10th of September. The death had taken place on 12.8.1993. Therefore, it follows that the insured died before the premium became payable. Acceptance of the policy has been only in the month of March. The proposal form has been signed on 13th of January. Even taking the date of receipt of the proposal as well as the date for considering, it will be payable in July and January, every year. In that case, as the insured died on 12th August namely within the grace period of 30 days if it is taken that the premium is payable by or before 13th of July, still it is within time. Therefore, considering the above facts and circumstances, it is clear that there has been acceptance of the policy before the next premium could become payable or before the expiry of the period provided for the payment of next premium the insured died and the claim has been preferred. Therefore, in such circumstances, we are unable to accept the contention of the opposite parties that the date of commencement of the policy is 10.1.1993 since the date of commencement and date of risk are not the same as held by the decisions reported above. The date of acceptance of risk is only from 11.3.193 when it has been signed by the opposite parties. The insured was only required to pay the premiums every February and August, as per the conditions stamped in the policy. The opposite parties cannot be absolved of their liability merely on their statement that it has been by mistake stamped so. They had all the necessary papers before they accepted the policy. Therefore, to say that it was mistakenly affixed cannot be accepted at all. They were conscious of the fact that when such a stamping was made they are bound by what they have stated in the policy and it is not, therefore, open to them now to turn round and say that the premiums were payable only in January and July, and what has been stated by them is by mistake. What is stated in the premium receipt regarding the date of payment of premium is not the contract. Therefore, in such circumstances, the repudiation of the claim is not proper. Hence, we do not accept the verdict of the lower Forum. Consequently, we have to set aside the order passed by the lower Forum.

IN the result, this appeal is allowed with cost of Rs. 500/-. The opposite parties are directed to make payment of the moneys due under the policy after deducting the unpaid premium, with such benefits to which the assured was entitled to as on the date of death of the assured. Time for payment: Two months. Appeal allowed.