SHAKUNTALA DEVI vs LIFE INSURANCE CORPORATION OF INDIA

THIS order will govern the disposal of R.P. Nos. 1132 of 2001 and 1133 of 2001 which arise out of a common order dated 2.5.2001 of Consumer Disputes Redressal Commission, U.T. Chandigarh dismissing Appeal No. 64 of 2001 filed by petitioner/complainant and allowing Appeal No. 98 of 2001 referred by respondents/opposite parties against the order dated 15.12.2000 of a District Forum. The District Forum on ground of deficiency in service in not issuing policy for about 5 months had directed the respondents to pay amount of Rs. 20,000/ - by way of compensation. In Appeal No. 98 of 2001, this order was substituted by issuing direction to the respondents to pay a sum of Rs. 2,272/ -, being the amount of first premium with interest at the rate of 9% per annum to the petitioner.

FACTS giving rise to these revisions lie in a narrow compass. Satyendra Garg, husband of petitioner submitted a proposal on 30.3.1994 for purchase of policy of Rs. 50,000/ - with date of risk to commence from 28.12.1993. Towards amount of Rs. 2,272/ - paid as half yearly premium, a receipt was issued by respondent No. 1 -Insurance Company on 31.3.1994. styendra Garg died on 30.8.1994. Claim made by the petitioner, nominee was repudiated by the Insurance Company by the letter dated 16.11.1994. Complaint filed by petitioner alleging deficiency in service was contested by the respondents. In written version, it was alleged that Satyendra Garg submitted a proposal dated 30.3.1994 wherein he desired the date of start of risk to be 28.12.1993. Amount of Rs. 2,272/ - was adjusted towards half yearly premium due on 28.12.1993. Second half yearly premium was payable on 28.6.1994. Policy was issued on 16.8.1994. Since policy lapsed due to non -payment of premium due on 28.6.1994, the claim made by the petitioner was repudiated vide letter dated 16.11.1994. It was further alleged that contract of insurance was concluded after the receipt dated 31.3.1994 was issued by Insurance Company. Having heard Shri V.B. Aggarwal for petitioner and Shri Vinod Kumar for respondents, the points which arise for consideration are -(i) when was the contract of insurance concluded and (ii) if the policy lapsed as a result of non -payment of half yearly premium due on 28.6.1994. Satyendra Garg, assured, is alleged to have made proposal on 30.3.1994 wherein he desired the date of start of risk to be 28.12.1993. It is not in dispute that premium amount of Rs. 2,272/ - was received against a receipt on 31.3.1994, the policy was issued on 16.8.1994 and the assured expired on 30.8.1994. When a contract of insurance is concluded, was directly in issue in the decision in Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba and Others, (1984) 2 SCC 719. It was held by the Supreme Court that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making of offer. Date of issue of policy i.e., 16.8.1994 will, thus, be the date on which contract of insurance came into existence. Contention advanced by Mr. Kumar, Advocate that contract of insurance was concluded on 31.3.1994 when a receipt for Rs. 2,272/ - paid towards half yearly premium was issued, is repelled being contrary to the ratio of the said decision.

COMING to second point referred to above, a policy can lapse only after it is issued. Since policy was issued on 16.8.1994, it could not have lapsed earlier on 28.6.1994 for non -payment of second half yearly premium. In fact no premium was payable on 28.6.1994. Therefore, repudiation of claim conveyed through the letter dated 16.11.1994 by the Insurance Company was bad in law. Above conclusion reached by us is supported by the decision in Miss Anu Mohanot and Others v. Branch Manager, L.I.C. and Others, I (1994) CPJ 496=1994 (2) Consumer Law Today 59, rendered by Rajasthan State Commission.

FROM aforesaid discussion, it must follow that the impugned order deserves to be set aside being legally erroneous and petitioner is entitled to the amount of policy in question. She is further entitled for delayed payment, interest which we quantify @ 12% per annum payable after one month of the lodging of claim with the Insurance Company by her. Consequently, while allowing revisions, aforesaid order dated 2.5.2001 is set aside and complaint allowed with direction to the respondents to pay amount of Rs. 50,000/ - with interest @ 12% per annum payable after one month of the making of claim by the petitioner till realization and cost of Rs. 10,000/ -. Revision Petitions allowed. -