By Dr.K.Radhakrishnan Nair, Member :
Complainant is a policy holder of the LIC (Life Insurance Corporation of India) with the policy No.775157400. As stated by him the sum insured of the policy is Rs.2,50,000/- and date of maturity was on 12/12/2015 as he was made to belief by the LIC. According to the LIC the sum assured of the policy is Rs.1,10,910/- only. It is true that there is no such entry against the sum assured column of the policy. Complainant submits that he was under the knowledge and belief that the sum assured of the policy was Rs.2,50,000/- only. He has never been informed or given any chance to get a first-hand knowledge about such a sum insured as Rs.1,10,910/-. The policy was taken on 12/12/2015 and a premium of Rs.1,22,480/- was remitted so far. Complainant’s case is that even after remittance of Rs.1,22,480/- and accounting the same, the sum assured will be a reduced amount of Rs.1,10,910/- is without any rhyme or reason and cannot be accepted. Complainant reiterates that the amount he has to get on maturity of the policy is Rs.2,50,000/- and he is legally entitled as per the terms and conditions of the policy. The opposite party – LIC has no right to deny the same without any valid reason. As denied, the act of the opposite party amounts to unfair trade practice by virtue of serious deficiency in service and also allege that he has suffered irreparable damage and mental agony. On 10/10/2015 an advocate’s notice was sent to return the proceeds with consequential relief. Deficiency to the core, opposite party was not even bothered to refund the amount due to him. Hence this case for getting a direction to the opposite party to pay Rs.2,50,000/- maturity amount with 12% interest and cost. In addition, a compensation of Rs.50,000/- also be granted allowing his complaint.
2. The case was filed on 31/12/2015. As admitted notice was issued. Opposite party entered appearance through counsel. In the objection filed, opposite party took a main contention that sum insured shown is nothing but Death sum Assured i.e. 2,50,000/- Maturity sum Assured is not shown in the policy. The maturity sum of assured payable under the policy is assessed on the basis of term of the policy and the age of the life assured which as about Rs.1,10.910/-. As stated by the opposite party LIC Jeevan Saral policy has a unique feature having different sum assured i.e., Death Sum Assured and Maturity Sum Assured as stated earlier. The Death Sum Assured is 250 times of the monthly premium chosen by the complainant and the Monthly Sum Assured is calculated based on two factors such as age and terms of the policy. Accordingly the proposer has to first decide the amount of premium he wants to pay per year. Once the premium is chosen, the sum assured payable on death get automatically determined, which is 250 times of the monthly premium whatever be the age of the policy holder and term of the policy. This is called Death Sum Assured under the policy. As explained further, in short, death cover will be same irrespective of age at entry and term of the policy, but the sum payable at maturity will be different for different age at entry level and term of the policy. Opposite party has elucidated the bifurcation of the assessment of the maturity sum assured of the proposed policy of the complainant. It was under the Table 165 (Jeevan Saral). The complainant was at the age of 28 and the premium paying term was for 10 years. The complainant opted for a quarterly mode of payment at the rate of Rs.3,062/- including the Accidental Benefit Premium of Rs.62. The Death Sum Assured under the policy was fixed at Rs.2,50,000/- being 250 times of the chosen monthly premium. As per the policy conditions the maturity sum assured payable in is only Rs.11,091/- per every Rs.100/- monthly premium for a person aged 28 years or a term of 10 years. Hence the basic monthly premium comes to Rs.1000/- and the maturity sum assured for the term comes to Rs.1,10,910/-. On surviving the policy term, the policy holder is eligible to receive only the maturity sum assured and not the death sum assured. On 15/9/2015 a letter was sent to the complainant pointing out the mistake in the policy crept into while typing the sum assured as Rs.2,50,000/- in both the cases as against the correct maturity sum assured of Rs.1,10,910/-. This was done well before the date of maturity with a request to produce the original policy document for making the necessary correction and inclusion on the policy bond. Even after the receipt of the said letter it is alleged that the complainant made no arrangements to comply with the request. It is also submitted that the policy was issued on 22/12/2005. As per the document, the policy holder was bound to examine the policy and if any mistake be found there in, return it immediately for correction. But he had not reported to us the fact that the maturity sum assured is not printed in the bond. The opposite party also state that the complainant is eligible for a sum of Rs.1,44,183/- as maturity value adding the loyalty additions of Rs.33,273/-. The opposite party is ready to disburse the amount to the complainant on receipt of the original policy bond and discharge form. Complainant is not entitled to get any amount other than as admitted above. As there is no deficiency in service the complaint may be dismissed with compensatory costs to the opposite parties.
3. The case was then posted for evidence. The points for consideration are that :
1) Whether there was any deficiency in service amounting to unfair trade practice on the part of opposite parties?
2) If yes, what are costs and reliefs?
4. Complainant has appeared before the Forum and submitted proof affidavit explaining and confirming the averments in the complaint. He has produced three Exhibits P1 to P3. Ext.P1 is the notice sent to the opposite party on 10/10/15, Ext.P2 is the letter dtd. 3/10/15 sent to the complainant by the opposite party and Ext.P3 is the original policy bearing the No.775151400.
5. Opposite party represented by its Manager (legal) appeared before the Forum and submitted proof affidavit and produced 5 documents and marked as Exts.R1 to R5. Ext.R1 is certified copy of the proposal form, Ext.R2 is certified copy of the policy, Ext.R3 is letter dated 15/9/15 sent to the complainant informing the mistake, Ext.R4 is brochure of Jeevan Saral Policy and Ext.R5 is chart showing maturity sum. Additional documents produced and marked as Exts.R6 to R10. Ext.R6 is letter dated 15/9/15 to the complainant about the mistake, Ext.R7 is letter to the opposite party by the complainant, Ext.R8 is letter dated 3/10/15 by the opposite party, Ext.R9 is reply notice by the opposite party and Ext.R10 is brochure of Jeevan Saral Policy.
Appreciation of Evidence
6. Exts.P3 and R2 – The original policy was produced by the complainant as Ext.P3 and Ext.R2 is the certified copy of the policy. The most important document of the case is the policy bond. Terms and conditions printed in the policy are applicable to the complainant. In the policy schedule, maturity sum insured and the death benefit sum insured are clearly printed as Rs.2,50,000/- each. That being the fact, the opposite party has informed the complainant through Ext.R8 dtd. 3/10/15 letter that while printing the policy documents, inadvertently an error had crept in “where in the maturity sum insured was either not printed or the value was wrongly printed. This has came to our notice only now and we deeply regret the error caused”. Even now the opposite party is not prepared to admit that there is an entry of Rs.2,50,000/- as maturity sum insured in the policy schedule. Under conditions and privileges within, as provided under Section Proof of Age – the maturity sum insured having been calculated on the age of the life assured as declared in the proposal, in case the age is found different from such age without prejudice to the corporation other rights and remedies including those under the Insurance Act, 1938, the sum insured payable on maturity as shown in the schedule will be correspondingly altered. As such, the sum insured provided in the schedule will be the amount to be given on maturity if there is no any age difference.
7. Exts.P2 and R8 letters are one and the same admitting the mistake and arriving at a sum assured of Rs.1,10, 910/- as the maturity sum assured coupled with loyalty additions Rs.33,273/- and thereby a total of Rs.1,44,183/- will be payable on submitting original policy bond. The liability of the corporation will be the above amount and not the amount of Rs.2,50,000/- which is either wrongly printed or not printed in the policy about which the opposite party is not sure (emphasis supplied)
As per IRDAI (Policy holders Interests) Regulation 2002 Section 6(1)(a) A life Insurance policy shall clearly state the name of the plan governing the policy, its terms and conditions (d) the benefits payable and the contingencies up on which those were payable and the other terms and conditions of the insurance contacts along with the other 12 items. Section 6(2) while acting under regulation 6(1) in forwarding the policy to the insured, the insurer shall inform by the letter forwarding the policy that he has a period of 15 days from the date of receipt of the policy document to review the terms and conditions of the policy and where the insured disagrees to any of their terms or conditions, he has the option to return the policy stating the reason for is objections. The averment of the opposite party that the policy holder/complainant had not objected or reviewed. It is observed that no such letters seems to have addressed to the complainant as per the requirements of Se.6(2) and complainant need not review since there is no disagreement with regard to the maturity sum assured of Rs.2,50,000/- as provided by the opposite party. It is a case where the opposite party took more than nine years (i.e. just before the maturity date only) to find out mistake or a typographical error in the policy document. Section 45(1) of the Insurance Act also prohibits and
to question the policy on any ground whatsoever after the expiry of two years from the date of the policy. (As per the Amended Act this period is three years from the date of the policy)
8. The main consideration before the Forum is whether the opposite party has to settle the claim as per the terms and conditions of the policy bond or take advantage of the mistake and settle the same for a reduced amount of Rs.1,44,183/- being the admitted liability. As rightly held in LIC of India Ramesh Chandn 1997(2) CPR 8 NC construction of the policy bond which is the basis of the contract of insurance is a question of Law and its true and correct interpretation would give jurisdiction to the Fora to pronounce up on the deficiency in service. The District Forum as well as the State Commission had no jurisdiction to go beyond the terms and conditions of the policy bond. In LIC of India Vs. Balaial Chodari 1(2004) CPJ 67(NC) direct question was canvassed whether liability can be fastened on the Corporation for clerical mistakes or typographical error, which resulted in non-mentioning of the material data in the policy due to inadvertence or oversight. The National Commission held that life insurance corporation is liable . Policy documents assumes ultimate finality. The brochure cannot overrides the terms and conditions of the policy as we are guided by the terms and conditions mentioned in the policy. When it is left blank or wrongly typed, whether it is typographical error or inadvertent mistake by the opposite party the advantage has to go to the complainant. As also held in LIC Vs. Consumer Education and Research Society. The broad principle underlying the doctrine of utmost good faith (uberrima fide) is that no one will be allowed to take advantage of his own wrong especially while entering into a contract.
9. Recognizing the claimants right for a fair and prompt consideration is an important aspect of the policy contract of utmost good faith. They should take full responsibility for explaining their decision to the claimant with full disclosures. There cannot be any missing gap between promises and performances Afortiori, the complainant is entitled to get in accordance with the schedule of the policy bond where it is provided Rs.2,50,000/-. Non- payment of the same is a deficiency in service amounting to unfair trade practice.
10. In the result, we are inclined to allow the complaint, directing the opposite party to pay Rs.2,50,000/- (Rupees Two lakh and fifty thousand only) with 12% interest and Rs.2,000/- (Rupees Two thousand only) towards cost and compensation within one month from the date of receiving copy of this order.
Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Forum this the 31st day of October 2019.
Sd/- Sd/-
Dr.K.Radhakrishnan Nair P.K.Sasi,
Member President.
Appendix
Complainant’s Exhibits
Ext.P1 Notice sent to the opposite party on 10/10/15,
Ext.P2 letter dtd. 3/10/15 sent to the complainant by the opposite party Ext.P3 original policy bearing the No.775151400
Opposite Party’s Exhibits
Ext.R1 certified copy of the proposal form,
Ext.R2 certified copy of the policy,
Ext.R3 letter dated 15/9/15
Ext.R4 brochure of Jeevan Saral Policy
Ext.R5 chart showing maturity sum
Ext.R6 letter dated 15/9/15 to the complainant about the mistake,
Ext.R7 letter to the opposite party by the complainant,
Ext.R8 letter dated 3/10/15 by the opposite party,
Ext.R9 Reply notice by the opposite party
Ext.R10 brochure of Jeevan Saral Policy Id/-
Member
