SR. DIVISIONAL MANAGER, L.I.C. OF INDIA vs UMABA VIJAYSINGH JADEJA

THIS appeal arises from order dated 21.8.1999 rendered by the learned Consumer Disputes Redressal Forum, Rajkot in Complaint No. 291 of 1996 directing the opponent Life Insurance Corporation of India (LIC for short) to pay to the complainant Rs. 50,000/- with double benefit i.e. Rs. 1,00,000/- with interest @ 12% p.a. from 10.10.1996 till payment and cost quantified at Rs. 3,000/-.

FACTS of the case before the learned Forum may briefly be stated : Vijaysingh Govindji Jadeja, now deceased, proposed for double benefit insurance to the opponent LIC and made payment of Rs. 740/- by way of premium to the agent on 27.2.1995. Receipt with regard to such payment was issued from the LIC. Unfortunately, said Vijaysingh Govindji Jadeja died of accident during early hours of 4.3.1995. The complainant being the widow presented claim of insurance on 21.6.1995. The opponent LIC did not pay the amount in spite of passage of 11 months. On 15.4.1996 opponent LIC informed the complainant that the proposal form for the insurance in question was received after 11 O''clock in the morning of 4.3.1995 and the proposer died prior to that day and, therefore, no benefit under the proposed insurance could be conferred upon the complainant. The complainant was, therefore, before the learned Forum by way of aforesaid complaint claiming insurance amount with double benefit with interest @ 18% and compensation in the sum of Rs. 10,000/-. The opponent resisted the complaint inter alia on the ground that the proposal for insurance was never accepted and before that could be done the proposer died. Hence, complainant would at best be entitled to refund of Rs. 740/- paid by the proposer. The learned Forum, therefore, considered the affidavits filed on behalf of the parties and material placed on record as also the decisions cited before it and came to the conclusion that on acceptance of the amount of premium, the contract became concluded and, therefore, the opponent LIC was liable to pay the amount of insurance. The learned Forum came to the conclusion that the decisions cited on behalf of the opponent LIC including the decision of the Apex Court in the case of LIC of India v. R. Vasireddy, reported in AIR 1984 SC 1014, were distinguishable on facts. The learned Forum, however, has not indicated how the decision of the Apex Court could be distinguished on facts of the case before the learned Forum. We have heard the learned Advocate appearing for the opponent LIC, appellant herein. No one has remained present for the respondent-original complainant. We have gone through the decision of the Apex Court in the case of LIC of India v. Vasireddy, (supra). In that case one Raja Vasireddy Chandra Dhara Prasad who died intestate on 12.1.1961 filed in a proposal for insurance for Rs. 50,000/- on 27.12.1960. He was medically examined by doctor of the life of the deceased on 27.12.1960. He issued two cheques of Rs. 300/- and Rs. 220/- respectively in favour of the LIC as first premium. Cheque for Rs. 300/- was encashed on 29.12.1960. Cheque for Rs. 220/- was dishonoured three times and finally encashed on 11.1.1961. The said proposer died on 12.1.1961. That is how the claim for the proposed insurance arose. In that case the honourable Supreme Court has ruled that the contract of insurance was not complete as there was no acceptance of the proposal of insurance. This is what the Apex Court has observed : "A 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 the offer. Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offeror. Similarly, the mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not acceptance."

In our considered opinion the decision of the Apex Court squarely applies to the facts of the present case. As a matter of fact, the facts of the present case go to indicate that the premium was in fact not paid in full. The premium amount which was stated in the receipt is Rs. 1,237/-. That again was quarterly premium. What was paid was the amount of Rs. 740/- in cash. That amount was kept in suspense account. These facts are not in dispute. Even the processing of the proposal form also did not commence when the proposer died. If that is so, by no stretch of imagination, it can be presumed that there was acceptance of the proposal for insurance. In that view of the matter, it would not be necessary to go to other decisions which have been referred to on behalf of the opponent LIC before the learned Forum. Other decisions also include decisions rendered by the honourable National Commission. It is not understandable how the learned Forum has proceeded to bypass the settled law.

IN above view of the matter, this appeal is required to be allowed. Following order is, therefore, passed. ORDER Impugned order dated 21.8.1999 rendered by the learned Consumer Disputes Redressal Forum, Rajkot in Complaint No. 291 of 1996 is hereby set aside. The complaint filed by the complainant will stand dismissed. Opponent LIC shall, however, refund the amount of Rs. 740/- with interest @ 10% from 27.2.1995 till payment. This appeal is accordingly allowed, with no order as to costs throughout. It is made clear that this order will not come in the way of concerned authority of the opponent LIC in considering some ex-gratia payment to the complainant. A copy of this order be sent to Consumer Disputes Redressal Forum, Rajkot. Appeal allowed.