APPEAL NO: 504/2005


Rajulal Saini

r/o 367, Kamla Nehru Nagar,

Jaipur.

Complainant-appellant


Vs.


1. Life Insurance Corporation of India,

Jeevan Prakash, Bhagwan Das Road,

Jaipur through Divisional Manager


2. Life Insurance Corporation of India,

Kotawala bldg., Tripolia Bazar,

Jaipur through Br. Manager.


Opposite parties-respondents


Date of judgment 9.7.2009


Before:


Mr.Justice Sunil Kumar Garg-President

Mrs.Vimla Sethia-Member


Mr.D.M.Mathur counsel for the appellant

Mr.Ramkalyan Sharma counsel for the respondents


BY THE STATE COMMISSION


This appeal has been filed by the complainant appellant

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against order dated 25.2.05 passed by the District Forum, Jaipur IInd in complaint no. 266/04 by which the complaint of the complainant appellant was allowed only in the manner that the respondents LIC were directed to make payment of Rs. 5201/- and if the above amount was not paid within two months the respondents would pay interest @ 9% p.a. on the above amount from the date of passing of the order.


2. It arises in the following circumstances-


That the complainant appellant had filed a complaint before the District Forum, Jaipur IInd on 19.4.04 inter alia stating that his wife Kesari, now deceased had taken LIC policy from the respondents for a sum of Rs.25,000/- bearing policy no.193913108 on 4.4.02. It was further stated in the complaint that the deceased had died suddenly on 9.11.03 as her condition became deteriorated . It was further stated in the complaint that after the death of the deceased claim was preferred by the complainant respondent being the husband and nominee of the deceased before the office of the respondents but that claim was not settled by the respondents , therefore, the present complaint was filed.


A reply was filed by the respondents on 26.6.04 before the District Forum, Jaipur IInd and the case of the respondents was that as per clause 4 B of the policy, claim was not payable as the death of the deceased had taken place within three years of the issuance of the policy at home and the death of the deceased was not natural one as is evident from the mug FIR bearing no. 43/03 lodged with

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the Police Station Sadar city Jaipur where it was mentioned that the deceased had died because she had taken some poisonous tablets by mistake and since the death of the deceased was not natural one, therefore, clause 4 B of the policy was applicable and hence claim was not payable and the complainant is only entitled for a sum of Rs. 5,201/- , the amount of the premium received by the respondents and it was prayed that complaint of the complainant be dismissed .


After hearing the parties, the District Forum, Jaipur IInd through impugned order dated 25.2.05 had found that since in the present case clause 4 B of the terms and conditions of the policy was applicable and therefore, the amount of the policy in question i.e. Rs. 25,000/- was not ordered to be paid and only the amount of premium to the tune of Rs. 5,201/- was ordered to be paid to the complainant.


Aggrieved from the said order dated 25.2.05 passed by the District Forum, Jaipur IInd, this appeal has been filed by the complainant appellant.


3. In this appeal the main contention of the learned counsel for the appellant is that the terms of clause 4 B of the policy should have not been applied in the case of the complainant appellant as those terms were not made known to the deceased by the respondents at the time of issuance of the policy and further they were not part of the terms and conditions of the policy and therefore, the impugned order dated 25.2.05 by which it was held

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that clause 4 B would be applicable suffers from basic infirmity and illegality and the District Forum had committed serious error and illegality in allowing the claim only to the tune of Rs. 5,201/- and the impugned order could not be sustained and liable to be quashed and set aside and this appeal deserves to be allowed.


4. On the other hand the learned counsel appearing for the respondent has supported the impugned order passed by the District Forum.


5. We have heard the learned counsel appearing for the appellant as well as for the respondent and gone through the entire materials available on record.


6. There is no dispute on the point that the deceased had taken

LIC policy from the respondents for a sum of Rs.25,000/- bearing policy no.193913108 on 4.4.02.


7. There is also no dispute on the point that deceased had died on 9.11.03 for which a mug FIR bearing no. 43/03 lodged with the Police Station, Sadar city Jaipur and the police had submitted a report of the fact that some poisonous thing was taken by the deceased by mistake and not with any intention to commit suicide.


8. There is no dispute on the point that the said incident had taken place at home of the deceased and the death of the deceased could not be said to be natural one.


9. There is no dispute on the point that the death of the


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deceased had taken place within three years of the issuance of the policy.


10. There is also no dispute on the point that in the policy it was mentioned with hand that clause 4 B would be applicable.


11. The question for consideration is whether in the present case clause 4 B of the policy could be made applicable in the case of the complainant appellant or not. For convenience clause 4 B of the policy is reproduced here as under-


" Notwithstanding anything within mentioned to the contrary, it is hereby declared and agreed that in the event of death of the life assured occuring as a result of intentional self-injury, suicide or attempted suicide, insanity, accident other than an accident in a public place or murder at any time on or after the date on which the risk, under the policy has commenced but before the expiry of three years from the date of this policy, the Corporation's liability shall be limited to the sum equal to the total amount of premiums ( exclusive of extra premiums, if any ) paid under the policy without interest....

Provided that in case the Life Assured shall commit suicide before the expiry of one year reckoned from the date of this policy, the provisions of the clause under the heading. Suicide printed on the back of the policy shall apply."



12. It may be stated here that the terms and conditions which have been reproduced here and which are marked as 4 B, they are

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not printed alongwith the policy in question but they are written and printed on a separate paper.


13. The learned counsel for the respondents has argued that since the words " 4 B" are written in the policy, therefore, for all purposes it should be taken for granted that the deceased was aware of the terms and conditions of the policy including the clause 4 B.


14. On the other hand the learned counsel for the complainant appellant has stated that it was neither a part of the contract and if these words were written in the policy, for that it could not be said that the deceased was aware of the fact of clause 4 B and further these words were added later on and for that it could not be said that she was aware of the terms of clause 4 B of the policy.


15. In our considered opinion in terms of article 12 of the Constitution of India, LIC is the state and accordingly agents of LIC are bound to disclose full information relevant and advantageous to the insured. The purpose of creating a corporation is to serve the interest of consumers.


16. Apart from that disclosure of facts is obligation of both parties. The Hon'ble Supreme Court in the case of Mordern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. reported in AIR 2000 SC 1014 has observed that it is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the insurance

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company and its agents to disclose all material facts in their knowledge since obligation of good faith equally applies to both .


17. Apart from that duty of good faith is of continuing nature. Accordingly, after the contract is concluded, no material alteration can be made in terms of the contract of insurance without mutual consent. Materiality is to be judged by the circumstances as they exist at the time of concluding the contract.


18. It may further be stated here that repudiation of claim on the basis of exclusion clause in policy is not always justified and in some cases policy could not be repudiated on the grounds of exclusion clause.


19. Applying the above principles of law, if the facts of the present case are examined it can be said that clause 4 B on which reliance has been placed by the Insurance Company, is found on separate sheet or paper and thus it cannot be treated as part of the policy for the simple reason that the possibility tht it was inserted or placed later on could not be ruled out. Thus, in such circumstances it was the duty of the Insurance Company to prove the fact that this clause was made known to the deceased or appellant at the time of effecting the policy but this aspect is totally missing in this case and thus it is held that the sheet in which clause 4 B was mentioned was not a part of the contract of insurance and further no influence could be drawn on the ground that the same were explained to the insured and in absence of that the respondent LIC could not take the benefit of this exclusion clause.


20. Hence, this Commission is of the view that the deceased

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was not bound by those terms and conditions which were not made known to her at the time of issuance of the policy and thus it is held that the respondents have failed to prove the fact that clause 4 B was made known to the deceased at the time of issuance of the policy and since clause 4 B is printed on a separate sheet which does not bear the signatures of the deceased, therefore, it could not be said that it was a part of the contract between the parties.


21. So far as the argument that the words " 4 B" are written in the policy, is concerned, in our considered opinion this will not give any benefit to the respondents because of the simple reason that the possibility that these lines were added later on could not be ruled out specially when clause 4 B was not a part of the actual policy but that was written on a separate paper. Hence, no benefit could be given to the respondents of those lines found in the policy . For coming to the above conclusion reliance can be placed on the judgment of the Hon'ble National Commission in the case of Life Insurance Corporation of India Vs. Consumer Education and Research Society and anr. reported in III (1994) CPJ 65 (NC).


22. Thus, it is held that the respondents are not entitled to the benefit of clause 4 B and when clause 4 B would not be applicable, the respondents LIC were not justified in not settling the claim of the complainant appellant.


23. For the reasons stated above, the respondents were not justified in not settling the claim of the complainant appellant on the ground of clause 4 B and in view of this, the findings of the District Forum allowing the complaint of the complainant appellant only for a sum of Rs. 5,201/- could not be sustained as

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they suffer from basic infirmity, illegality and perversity. Hence, this appeal deserves to be allowed and the impugned order is liable to be quashed and set aside .


Accordingly, this appeal filed by the appellant complainant is allowed and the impugned order dated 25.2.05 passed by the District Forum,Jaipur IInd is quashed and set aside and the complaint of the complainant appellant stands allowed in the manner that the respondents are directed to pay to the complainant appellant a sum of Rs. 25,000/- as claim amount under the policy in question of deceased alongwith interest @ 9% p.a. from the date of filing of the complaintand further to pay a sum of Rs. 3000/- as costs of litigation. It is further made clear that the amount of Rs. 5201/- if paid by the respondents to the complainant would be adjusted towards the payment of principal amount.



Member President