NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 1268 OF 1998 (From the order dated 6.5.1998 in Appeal No.1346 of 1997 of the State Commission, Maharashtra) Smt. Pramila Vikram Khillare Petitioner Versus The Branch Manager, Life Insurance Corporation of India Respondent
BEFORE :
HONBLE
MR. JUSTICE M.B.SHAH, PRESIDENT.
DR.
P.D.SHENOY, MEMBER.
For the Petitioners : Ms. Anjani Ayagari &
Ms. K. Radha Rao, Advocates.
For the Respondents : Mr. Mahinder
Singh, Advocate.
25th
July, 2005
O
R D E R
M.B.SHAH, J. PRESIDENT.
Petitioner, Smt.
Pramila Vikaram Khilare, filed complaint No. 67 of 1995 before the Consumer
Disputes Redressal Forum, Aurangabad,
against the L.I.C. (Life Insurance Corporation of India), contending that the
husband of the Complainant had taken an insurance policy for a sum of Rs.25,000/- on 30th March, 1993
by depositing the first premium amount. At that time the age of the deceased
was 43 years. Initial premium was paid on 30th March, 1993; and, thereafter, the subsequent
quarterly premiums were also payable on 30th September, 30th December and so
on. The husband of the Complainant died on 30th July, 1994 leaving behind the applicant
(Complainant), five daughters and one son. The LIC repudiated the claim on the
ground that the deceased had failed to pay the premium for the last quarter
which was payable on 12th June, 1994, adding the grace period of 30 days, the
deceased was required to pay the premium before 12th July, 1994. As he had
expired on 13th July, 1994, the heirs were not entitled to the
benefit of the insurance.
It
is admitted that the deceased paid the first premium on 30th
June, 1993.
However, it is contended by the LIC that the policy was issued with back date
commencing from 12th March, 1993; and, therefore, the premium was
payable on 12th June, 1994. The deceased expired after the
expiry of the grace period of one month and, therefore, the policy had lapsed,
and, hence, the Complainant was not entitled for the policy amount in view of
the rules 4 and 5 printed on the overleaf of the policy. The claim for
compensation of Rs.10,000/- was also denied.
The
District Forum by its judgment and order dated 5.9.1997 allowed the complaint
by holding that the first premium was paid on 30th March, 1993 in a routine
manner; counting the 30 days grace period for paying the premium of 30th June,
the deceased was required to pay the premium before 30th July and the person had
expired before 30th July; and, therefore, the heirs were entitled to the
benefit of the insurance. The District Forum observed that there is nothing on
record to show that the deceased had given any option for issuing back-dated
policy. No consent letter of the deceased to that effect was produced by the
LIC. The District Forum also observed that the life insurance policies are
obtained by persons for benefit of their family members and if the claims are
going to be refused on such technical ground, public at large would suffer;
and, there was no reason for not taking a sympathetic view. The District Forum,
therefore, directed the LIC to pay the amount with interest at the rate of 18%
p.a. from the date of the death of the deceased.
Against
that order the Insurance Company preferred Appeal No.1346 of 1997 before the
State Commission, Maharashtra at Mumbai. That appeal was allowed
by observing that even though the first premium receipt is dated 31.3.1993, the
date of the commencement of the risk in respect of the life of the deceased was
shown as 12th March, 1993. The policy was issued on 8.6.1993
and in the said policy the same date is mentioned. If there was any mistake,
the deceased ought to have drawn the attention of the LIC. The State Commission also observed that the
premium due on 12th June, 1993 was paid 12th
September, 1993 with a late fee of Rs.3/-; and that the subsequent premium was paid on
7.1.1994, within the grace period. And, that the premium of March, 1994 was
paid even before the due date. Therefore, it was established that the insured
was fully aware of the date of the commencement of the risk as 12th
March, 1993.
Hence, as the premium was not paid during the grace period, the finding
recorded by the District Forum cannot be sustained. The appeal was, therefore,
allowed.
Against
that judgment and order, the Complainant has preferred this Revision Petition.
Learned Counsel for the Petitioner submitted that there was no justifiable
ground for back-dating the insurance policy; and for doing so no consent was
given by the deceased. In such circumstances, for illiterate persons, no such
adverse inference could be drawn that the deceased was
knowing about the back-dating.
As
against this, learned Counsel for the LIC submitted that as the amount was not
paid before 12th July, 1993, and the person had expired on 13th
July, 1993,
the heirs are not entitled to any benefit.
He submitted that there is no justifiable ground for interfering with
the order passed by the State Commission.
As
stated above, undisputedly, the husband of the Complainant obtained the LIC
policy for a sum of Rs.25,000/- by submitting the
proposal form dated 29.3.1993. It is also mentioned in the reply filed by the
LIC to the Revision Petition
that the date of birth of the proposer was given as 12th
March, 1950
and has given his age as 43 years the policy was issued covering the risk from 12th
March, 1993.
This was mentioned in the policy as well as in the acceptance letter. The husband of the deceased had not raised
any objection against the commencement of the risk w.e.f.
12th March, 1993. It is also pointed out that in the policy it has been stated
that the policy holder should examine the policy and if any mistake was
found return it immediately for
correction.
In our view, the submissions made by the learned Counsel for the
Petitioner requires to be accepted. There is nothing on record to
indicate that the deceased has given any consent or has applied for back-dating
the policy. In such circumstances there was no justifiable reason for the
Insurance Company to back date the policy. In a similar matter this Commission, in the case of Life
Insurance Corporation of India & Ors. Vs. Miss Anu Mohanot & Ors.
First Appeal No. 620 of 1993 decided on 29th May, 1997 reported as 1986-99 NC
& SC on Consumer Cases (Part III) 4272 (NS), has observed that back-dating is not permissible without the
consent of the parties. For this purpose, reliance was placed on the guidelines
issued by the LIC which are mentioned in para 8, as
under:
I. Commencement of Risk and Dating Back of
Policies. The risk under the Corporations Policies commences on
the date of receipt of the first premium in full or the date of Acceptance whichever
is the later, but if the acceptance of a Proposal is conditional upon the
proposers compliance with any requirements, then the risk under the Policy
will commence on the date on which all the requirements are satisfactorily
complied with or on the date of receipt of the first Premium in full, whichever
is the later.
There are certain other conditions
which are referred to in the said judgment. The Commission has observed that
back-dating of the insurance policy could be done at the request of insured, in
accordance with the principles and terms of the back dating a policy
irrespective of the commencement of a scheme of insurance. As stated above, there is nothing on record
to establish that the Complainant, an illiterate person, at any point of time
requested for back-dating the policy. Suo
motu the LIC back-dated the same as the date
of birth of the deceased was 12th March, 1950.
Further,
in the present case, it is a hard case. The deceased was regularly depositing
the quarterly premium. On occasion, he paid it beyond the grace period by
paying interest on the amount on the premium payable. But for his death, it is
apparent that he would have paid the premium.
Secondly, it is not that the grace period cannot be extended by one or
two days. If the LIC had taken humanitarian view, it would not have repudiated
the claim.
In
the present case, Clause (2) of the Policy reads thus:
2. Payment of premiums: A grace period of one month but not less than
30 days will be allowed for payment of yearly, half-yearly or quarterly
premiums and 15 days, for monthly premiums. If death occurs within this period
and before the payment of the premium then due, the policy will still be valid and the Sum Assured paid after deduction
of the said premium as also unpaid premium/s falling due before the next
anniversary of the Policy. If the premium is not paid before
the expiry of the days of grace, the policy lapses.
The
aforesaid clause specifically provides that grace period of one month shall not
be less than 30 days. One month can extend upto 31
days. And, therefore, in the present case, during the grace period the deceased
expired. Hence, as per the aforesaid clause the policy would be valid and the
heirs are entitled to the sum assured after deduction of the premium payable.
Further,
in the present case, the receipts issued to the deceased for payment of premium
nowhere say that it shall be paid on or before a particular date. It only
mentions that premium would become due in JUN 1994 without any specific date.
Same is the position with regard to the previous receipts. Therefore, it will
be difficult to hold that insurance premium was to be paid before 12th
July, 1994.
In
the result, the Revision Petition is allowed. The impugned order of the State
Commission is set aside. The order passed by the District Forum is confirmed.
It would be open to the Insurance Company to deduct the premium which was
payable by the deceased as per Clause (2) quoted above. However,
with the modification that the LIC shall pay interest at 9% p.a. instead of 18%
p.a. as directed by the District Forum. There shall be no order as to
costs.
….J.
(M.B.SHAH)
PRESIDENT
….
(P.D.SHENOY)
MEMBER
