CONSUMER EDUCATION AND RESEARCH SOCIETY vs LIFE INSURANCE CORPORATION OF INDIA

THIS is an appeal against the order dated 16th March, 1992 passed by State Consumer Disputes Redressal Commission, Gujarat at Ahmedabad. By the impugned order the State Commission allowed the complaint filed by the Appellant No. 1 Consumer Education & Research Society (for short CERS) and Appellant No. 2, Sanjay K. Kothari (who were arrayed as Complainants No. 1 and 2 respectively in the complaint) and directed the Respondent-Life Raj Kamal & Co. v. United India Insurance Co. Ltd. and Ors. 1 (1992) CPJ 121 (NC) Insurance Corporation of India (for short the Corporation) to pay Rs. 10,000/-, being the amount due under the policy, to Sanjay K. Kothari with future interest at the rate of 18% for three years preceding the date of the order and at the same rate from the date of the order till payment. The Corporation was also directed to pay him Rs. 3,000/- for pain and suffering. The Corporation was further directed to pay Rs. 5,00/- as costs of the proceedings. The Complainant-Appellants are not satisfied with the amount of award and therefore, have filed this appeal. They have prayed in this appeal that the Complainant No. 2 be allowed interest on the amount payable under the policy at the rate of 18% from the date the amount was payable. Enhancement of the principal amount of compensation by Rs. 10,000/- is also prayed for.

THE facts as they appear from the record are that Complainant No. 1 is a registered voluntary organistaion while Complainant No. 2 Sanjay K. Kothari is the son of the assured, Kumari; Virbala P. Shah. One Kumari Virbala took a Life Insurance Policy from the Corporation for Rs. t 10,000/- in the year 1965 when she was unmarried. The policy issued by the Corporation was subjected to first pregnancy clause which reads as follows: "Notwithstanding anything within mentioned to the contrary, it is hereby declared and agreed that should the death of the life assured occur as a result of pregnancy or from any other cause directly or indirectly attributable to pregnancy, Corporation''s liability shall, in case such pregnancy has occurred before she has had a normal full time confinement, be limited to either:"

(a) a sum equal to the total amount of premiums (exclusive of extra premium) paid under this policy, without interest less any sum paid by the Corporation, in respect of business in cash, pertions of sum assured or of surrenderd value or otherwise. (b) the surrender value of the Policy, whichever shall be greater but shall not exceed in any case the amount which would otherwise have been paid at death." It may be mentioned here that the said clause could have been removed from the policy if Kumari Virbala had paid extra premium at the rate of Rs. 5/- per thousand of the assured amount. This clause can also be waived by the Corporation at its discretion considering the circumstances of the case. Kumari Virbala got married in May, 1966 and left India for United Kingdom with her husband in October, 1966. On July 20,1968 she delivered a male child, after full period of confinement. The Delivery took place in Good-Hope Hospital at Sutton Coalfield, U.K. through caesarean operation. The said male child is Complainant No. 2-Sanjay K. Kothari. Unfortunately, Kumari Virbala died on 22nd July, 1968 on account of cardiac arrest. An inquest was held and her death by cardiac arrest was confirmed.

ACCORDING to the Complainants, Kumari Virbala was under the constant care of a qualified Doctor right from the time of conception to the time of delivery. Kumari Virbala had made no nominaion in the policy. After her death her father lodged a claim with the Corporation for the assured amount of Rs. 10,000/-but the claim was repudiated on 28th April, 1972 on the ground that her death was directly connected with her first pregnancy and therefore, the first pregnancy clause, reproduced above, applied and the claimant was entitled only to the amount of Rs. 1421.70 towards the refund of premiums under the said policy. In the meantime the father of Kumari Virbala also died. On 13th May, 1977, father-in-law of Km. Virbala i.e. grand father of Sanjay K. Kothari sent a notice through an Advocate to which the Corporation replied vide letter dated 21st May, 1977 explaining the position and pointed out that nothing more was payable under the said policy except the amount conveyed to the father of the deceased. The grand father of Sanjay K. Kothari did not prefer any further action. On 27th February, 1989 Complainant No. 2 Sanjay K. Kothari, after attaining age of majority, sent a letter along with Form No. 3806 duly filled in claiming the as sured amount. When no action was taken on that letter by the Corporation, Sanjay K. Kothari sent a reminder and in reply there to the Corporation sent a discharge voucher for Rs. 14521.70 which was the aggregate amount of premium paid and pointed out that the decision already conveyed was final and no further claim could Be entertained. This amount was not acceptable to Sanjay K. Kothari and hence he approached Complainant No. 1-CERS who took up the matter with the Corporation. However, the claim was not entertained by the Corporation. Hence the complaint petition jointly filed by the two Complainants against the Corporation. The main contentions of the Complainants were: (i) The so-called first Pregnancy clause was not applicable in respect of a female who had undergone full time confinement and who was expected to go to qualified doctors in the event of delivery. And in this case this endorsement has been added mistaken/ clandestinely to avoid the claim of the beneficiary, inconsistent with and contrary to their own policy declaration. (ii) The first pregnancy clause is not applicable to the cases of this type. The case of Virbala has not been dealt with in good faith and there was absence of fair dealing as is evident from the fact that Kumari Virbala was not informed of her rights under law. She would certainly have paid extra premium, if she was informed of the pregnancy clause, to dispense with that clause. (iii) Even within the terms of endorsement on this policy Kumari Virbala had a normal full time confinement at the end of which the child was born alive and in good health. The death occurred two days later due to cardiac arrest and not due to pregnancy. Repudiation of the claim under these circumstances is a deficiency of service and gross negligence on the part of the Opposite Party.

IN the counter the Corporation took several preliminary objections but only four were pressed which are narrated in para No. 10 of the State Commission''s order. It is not necessary to reproduce them because before us only two grounds were pressed. Firstly that the first pregnancy clause was applicable in the present case and therefore, the beneficiary under the policy is not entitled to anything more under the policy than the amount offered. It was also pleaded that there was no deficiency in service inasmuch as it has rendered all possible service to the representatives of the deceased. The State Commission held that nonpayment of insurance amount without sufficient grounds is a deficiency in service. The State Commission further held that the assured was a graduate who was employed as a teacher at the time she took the policy and there is nothing on the file to show that she had been told that if she had paid extra premium at the rate of Rs. 5/- per thousand the said pregnancy clause could have been waived. Further the Corporation has the power to waive this first pregnancy clause and this was a fit case in which the Corporation could have waived this clause as the assured had her confinement in a U.K. hospital having qualified doctor and in fact nothing happened during the confinement and she delivered a healthy child and died after two days. It was also observed that the purpose of introducing first pregnancy clause is to differentiate between policy holders who are likely to go to unqualified rersons for delivery and women who are likely to go qualified doctors and the risk factor is, therefore dependent upon the above probability. The State Commission also posed a question as to whether application of pregnancy clause by the Corporation was justified and legal. Placing reliance upon an order of this Commission in Raj Kamal and Co. v. United India Insurance Co. Ltd. and Ors. 1 (1992) CPJ 121 (NC) it was held that denial of a legitimate claim by relying on a clause which was not applicable or if applicable could have been waived is a clear deficiency in service. In view of the above findings the State Commission allowed the complaint and awarded the reliefs already noticed above.

WE have heard the learned Counsel appearing on both sides and have gone through the record carefully. First we may consider whether the State Commission was right in taking help of the order made by this Commission in Rajkamal''s case (supra) for deciding the question posed by it and referred to above. In that case this Commission had remarked. "The Redressal Forums, therefore, are bound to see whether or not the repudiation was made in good faith on valid and justifiable grounds. If the Surveyor or Surveyors choose to submit wrong report and the Insurance Company repudiates the claims without applying their minds then the repudiation cannot be said to be justified."

That observation was made after consideration of some orders passed by this Commission in other cases. The consistent view of this Commission is that in case it is found that the Insurance Company was justified in repudiating the contract of insurance after due applications of mind, the complaint petition before the Forum will have to fail because in that case it cannot be said that Insurance Company is guilty of any deficiency or negligence in the rendering of service. In Rajkamal''s case (supra) it was found by this Commission that the insured''s claim was rejected by the Insurance Company without due application of mind.

THE State Commission has also held that if the accused i.e. Kumari Virbala had been told about the elimination of the pregnancy clause on a demand of Rs. 50/- more for Rs. 10,000/-she might have opted to pay that amount and that in any case the Corporation should have waived the pregnancy clause in the circumstances of the case. We are of the opinion that the said observation made by the Slate Commission is not correct. As noticed above Kumari Virbala was an educated lady. There is nothing on the record to show that she was not told about the pregnancy clause or she had not read it. Moreover, it was for her to acquaint herself about the terms of the policy which she was going to take from the Corporation. She was a graduate and a teacher. In fact these facts go against the assured and not against the Corporation. We are of the opinion that the State Commission was not justified in assuming that the assured might have opted for paying Rs. 50/- more as premium for the policy had she been told about the said clause of the policy. As far as the question of discretion of the Corporation to waive the pregnancy clause in the present case is concerned, nobody can force the Corporation to exercise its discretion in a particular manner. Merely because the Corporation did not consider it necessary to waive the pregnancy clause on the ground that the assured was admitted in a hospital in U.K. having facility of qualified doctors, it cannot be said that the Corporation is guilty of deficiency in the rendering of service.

FROM the record before us we find that Smt. Virbala died on 22nd July, 1968. The cause of death was "cardiac arrest". There is no indication that cardiac arrest was a consequence of the caesarean operation she had undergone immediately before her death. It has only been stated in the Corporation''s counter that because of the intense nervous conditions during the caesarean operation, there was cardiac arrest which the doctors could not prevent. Cardiac arrest can be from many causes and at times from an unknown cause. In the absence of any definite medical finding that the cardiac arrest in this case was a consequence of the caesarean operation, we cannot accept the contention of the Respondent-Corporation that the death of the deceased was the result of pregnancy and caesarean operation and that the pregnancy clause was attracted in this case. We cannot also overlook the fact that in the practice of modern medicine caesarean operation has become almost a routine procedure. We are, therefore, of the view that the repudiation of the claim under the policy was not justified. However, it cannot I be said that such a repudiation was malafide or I without application of mind.

THE Respondent Corporation has already paid the amount awarded by the State Commission to the Appellant-Complainant and the Corporation has not come before us in appeal against the order of the State Commission. In the light of the above discussion we do not find it necessary to interfere with the order of the State Commission. The appeal is, therefore, dismissed. There is no order as to costs.