Bajaj Allianz General Insurance Company Ltd. And Ors. vs KRISHNA DEVI

THE Insurance Regulatory and Development Authority known as IRDA, has framed Insurance Regulatory & Development Authority (Protection of Policy holders'' interest) Regulations, 2002 by virtue of powers confirmed by Clause (zc) of sub Section 2 of Section 114A of the Insurance Act 1938 read with Section 126 of Insurance Regulatory and Development Authority Act, 1999. Regulation No. 4 is reproduced here as under: - - "(4) Whereas proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with proposal and incorporate the information in its cover note or policy. The onus of proof shall rest with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover."

TO our mind it is mandatory upon the Insurance Company to accept the proposal and communicate it to the proposer within a period of 15 days of the receipt of proposal. The facts of this case are these. Sh. Amar Nath (since deceased), the insured, husband of Smt. Krishna Devi, the complainant, obtained Insurance policy from OP - M/s. Bajaj Allianz Life Insurance Company Limited, in the sum of Rs. 3,00,000/ -. The proposal form was given on 24.08.2007. The cheque was encashed on 09.09.2007. Unfortunately, Sh. Amar Nath passed away on 13.09.2007. The complainant is her nominee. The letter was communicated to the complainant one day after the death of her husband on 14.09.2007. The complainant filed a claim and sent a legal notice, but her claim could not be settled.

THE District Forum and State Commission have decided the case in favour of the complainant.

WE have heard the counsel for the parties. Learned counsel for the Insurance Company/petitioner vehemently argued that the Insurance Company was not intimated about the death of the insured. He explained that as per the policy, the complainant is required to intimate the Insurance Company in writing within a period of 180 days from the date of the death of the insured. However, the record shows that the intimation was given on 14.07.2008 i.e. after about 10 months. Again, the deceased died on 13.09.2007 but the complaint was filed after the expiry of more than two years on 23.04.2010. The principal argument urged by the counsel for the petitioner was that the contract was not yet concluded. The insured died before the Insurance Policy was communicated to him. The learned Counsel has invited our attention towards the policy dated 14.09.2007 itself which mentions: - - "Date of Commencement: 14.09.2007

Date of Risk : 14.09.2007"

and towards proposal deposit, where there is following endorsement at the foot of document: - -

"Insurance cover shall convene only from the date of acceptance of risk, eased on Proposal papers submitted and other requirements called for."

He has cited celebrated authority reported in LIC of India v. Raja Vasireddy Komalavalli Kamba & Ors. : AIR 1984 SC 1014, wherein it was held that a contract concludes only when offer has been made to him, he accepts it unconditionally and communicates his acceptance to the person making offer. It was further held that similarly the mere receipts and retention of premium until after the death of the applicant or mere preparation of the policy document is not acceptance and does not give rise to contract. Again, the acceptance must be signified by some Act or Acts agreed on by the parties or from which the Law raises a presumption of acceptance.

THIS authority was followed in other cases of this Commission reported in LIC of India and Another v. Smt. K. Aruna Kumari,, 1995 (3) CPR 62 and Consumer Protection Association v. Chairman, LIC of India and Ors., First Appeal No. 68 of 1994 decided on 08.11.1996 and Vijay Laxmi Dhir & Ors. v. Life Insurance Corporation of India, Original Petition No. 318 of 2001, decided on 27.02.2004, wherein the cause of action had arisen in the year 2000.

ALL these authorities pertain prior to the year 2002. The tremendous change was brought about in this regard by the above Rule No. 4, which was introduced in the year 2002. The Insurance Company used to procrastinate over such like matters. The delay used to exasperate the people, no end. That was unusual harassment to the consumers. Keeping that fact in view, the above said Rule 4 was brought about. The Rules and Regulations issued by the IRDA must be followed strictly. Consequently, the orders passed by the Fora below cannot be faulted.

THE OP took unnecessary delay of about 22 days in accepting the proposal. Counsel for the petitioner tried to explain that some documents were to be filed by the insured, but no such evidence saw the light of the day. The Insurance Company should not receive the proposal form unless or until all the documents are filed before it. It is difficult to fathom why the cheque was not encashed immediately. There was unnecessary delay in accepting the proposal. This also smacks of malafide intention on the part of the petitioner.

ON the other hand, respondent has cited authorities reported in Gita Devi Agarwala Versus Chairman, LIC & Ors., II (2008) CPJ 375 (NC), wherein the Supreme Court''s authority reported in Life Insurance Corporation of India & Ors. v. Smt. Asha Goel & Anr., : AIR 2001 SC 549, it was observed: - - "In course of time the Corporation has grown in size and at present it is one of the largest public sector financial undertakings. The public in general and crores of policy -holders in particular, look forward to prompt and efficient service from the Corporation. Therefore, the authorities in charge of management of the affairs of the Corporation should bear in mind that its credibility and repudiation depend on its prompt and efficient service. Therefore, the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it, should be one of extreme care and caution. It should not be dealt with in a mechanical and routine manner."

The State Commission has placed reliance on the case reported in "ICICI Prudential Life Insurance Company Limited v. Bimal Kanta Kharab" : 1 (2013) CPJ 155 (NC), wherein it was held that the life cover commences from the date of deposit. The instant case stands on a higher pedestal. In this case the amount stood encashed by the OP prior to the death of the deceased insured. The amount in question already went into the accounts of OP. As such we will presume that the acceptance stood signified with the encashment of cheque in terms of the above mentioned celebrated authority of Apex Court in LIC of India v. Raja Vasireddy Komalavalli Kamba & Ors. (Supra). We do not expect that officials/clerks of OP should twiddle their thumbs but should act promptly and immediately on the same day after the encashment of cheque. Consequently, the arguments urged by the counsel for the petitioner deserve no consideration.

IT must be borne in mind that the claim of the complainant was neither rejected nor accepted nor acknowledged. The documents filed by the complainant clearly go to show that the claim was made, legal notice was sent, which are corroborated by postal A.D. acknowledgments. Thus, it is clear that the case of the complainant has continuous cause of action. Counsel for the complainant has cited an authority reported in United India Insurance Company Ltd. & Anr. v. R. Piyarelall Import & Export Ltd.",, I (2010) CPJ -22 (NC). The complainant is an illiterate lady. She could not file the claim within 180 days. Her claim cannot be rejected on this ground. The petitioner had sufficient time to find out whether the claim made by her is true or false. The Revision Petition is sans merits and therefore, dismissed.