BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION

AT HYDERABAD.



F.A. 320/2006 against C.C. 1495/2004, Dist. Forum-I, Hyderabad.



Between:



The Branch Manager

LIC of India

City Branch-VII,

Nayapul, Hyderabad *** Appellant/

O.P. No. 1

And

1. Smt. A. Padmaja Rani

W/o. A. P. Kutumba Rao

Age: 46 years, House Wife

R/o. Plot No. 116

Sharada Nagar,

Vanasthalipuram.

Hyderabad. *** Respondent/

Complainant

2. M/s. Sinetron Electronics Systems Pvt. Ltd.

305/5, Ground Floor,

Jawahar Nagar, Moulali

Hyderabad-500 040. *** Respondent/

O.P. No. 2



Counsel for the Appellant: M/s. M. Venkata Ramana Reddy

Counsel for the Resps: M/s. M. K. Savithri. (R1)

CORAM:



HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT

SMT. M. SHREESHA, MEMBER

&

SRI K. SATYANAND, MEMBER





WEDNESDAY, THIS THE FIFTEENTH DAY OF APRIL TWO THOUSAND NINE



Oral Order: (Per Hon’ble Justice D. Appa Rao, President)



*****





1) This is an appeal preferred by opposite party insurance company against the order of the Dist. Forum in directing it to pay the amount covered under the policy together with costs of Rs. 2,000/-.

















2) A. Rajesh who took Jeevan Mitra Triple Coverage Endowment Plan with profits with accident benefits policy on 28.2.2001 for an amount of Rs. 50,000/- died in a motor vehicle accident on 5.4.2002. The premium is being paid by R2 from out of his salary. His mother the complainant submitted her claim and the same was repudiated on the ground that he died after expiry of the policy for non-payment of instalment. She filed the complaint claiming the amount covered under the policy together with interest and costs.



3) The insurance company resisted the case. While admitting that it had issued the police effective from 28.2.2001 on payment of quarterly premium, it alleged that it was not linked with salary saving scheme. The assured did not pay the quarterly premium due on 28.2.2002 nor within the grace period of 30 days, and therefore the policy was lapsed. The policy can be revived within 6 months in case the assured was alive, even after grace period on payment of all the premiums due with late fee. After his death, it cannot revive the lapsed policy. Therefore it prayed for dismissal of the complaint with costs.



4) R2 did not choose to contest the matter and was set-exparte.



5) The complainant in proof of her case filed her affidavit evidence and got Exs. A1 to A13 marked, while the insurance company got Exs. B1 to B15 marked.















6) The Dist. Forum after considering the evidence placed on record opined that the assured was entitled to pay the premiums within the grace period and even otherwise the very insurance company by its letter Dt. 29.5.2002 directed the assured to pay it and therefore the appellant was directed to pay at least the policy amount of Rs. 50,000/- ‘ on humanitarian grounds’ together with costs of Rs. 2,000/-.



7) Aggrieved by the said decision, the appellant preferred this appeal contending that the Dist. Forum did not appreciate the facts in correct perspective. It ought to have seen that the policy was lapsed by 28.2.2002. The death of the assured was on 5.4.2002. The quarterly premium was not paid before the said date. Automatically the insurance policy lapses. The question of considering it on humanitarian grounds in cases of insurance contracts will not arise, and therefore prayed that the appeal be allowed.



8) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of facts and law and liable to be set-aside?



9) It is an undisputed fact that assured late A. Rajesh son of the complainant had taken an insurance policy Ex. B2 for Rs. 50,000/- effective from 28.2.2001 and the premium was payable in quarterly instalments. It is also not in dispute that he died on 5.4.2002 in an accident evidenced under Ex. A10 copy of FIR, Ex. A12 post mortem certificate, Ex. A13 final report besides Ex. A11 death certificate. When the complainant claimed the amount, the appellant repudiated the same on the ground that the policy was lapsed as on the date of death of the deceased. The assured had to pay premium by 28.2.2002 which he did not pay. As per the terms and conditions of the policy the grace period of one month was even expired by 28.3.2002. Admittedly the premium amount was not paid even within the grace period. Unfortunately the assured died on 5.4.2002 in an accident.







The death of the deceased was not informed to the insurance company till 28th May, 2002 vide Ex. B5. On that the insurance company repudiated the claim on the ground that the premium due on 28.2.2002 was not paid, and as such it was lapsed as on the date of death of the assured. As we have earlier pointed out that premium was not admittedly paid. Even if the grace period of one month is allowed by 28.3.2002, the amount was not paid. We may emphasise that the deceased did not pay the amount during his life time towards said quarterly premium. The policy was lapsed.



10) Learned counsel for the complainant contends that the very insurance company under Ex. A3 Dt. 29.5.2002 directed the assured to pay the premium amount before 29.6.2002. As such the policy was not lapsed. This was undoubtedly issued subsequently, not knowing that assured had died in an accident. Assuming without admitting that the assured had time to pay the quarterly premium by 28.6.2002, it does not mean that the policy stands revoked.



11) Learned counsel by relying Ex. A2 premium intimation letter, contended that the appellant informed the assured, the days of grace in regard to quarterly premium, as one month but not less than 30 days. If the premium is not paid within the days of grace the policy does not lapse. Since the assured had time to pay within grace period up to 28.6.2002, it cannot be said that the policy was lapsed. All this applies provided if the assured had paid the amount within the grace period. The precondition is that he should be alive by the date when he paid the premium or within the grace period allowed to him. The assured having failed to pay the premium, the policy cannot be revived after the death. Undoubtedly the policy was lapsed. The question of allowing the claim on humanitarian grounds does not hold good. It is a matter of contract.





11) Rule 3 of the terms and conditions of the policy clearly stipulates as follows :



Revival of discontinued policies: If the policy has lapsed, it may be revived during the life time of the life assured, but within a period of five years from the date of first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the corporation and the payment of all the arrears of premium together with interest at such rate as may be prevailing at the time of the payment compounding half-yearly. The corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the life assured. (emphasis ours)



12) Since the policy has been lapsed and the assured died even before revival of policy at no stretch of imagination the complainant was entitled to the amount. The Dist. Forum did not consider this aspect at all. It went by sympathetic approach, which we may not be able to follow, more so, in the case of an insurance contract.



























13) In the result the appeal is allowed setting aside the order of the Dist. Forum. Consequently the complaint is dismissed. However, in the circumstances of the case, no costs.







1) ______________________________

PRESIDENT











2) _______________________________

LADY MEMBER











3) _______________________________

MALE MEMBER





Dt. 15. 04. 2009.