LIC OF INDIA vs VAJAVADDEN HYDERALI MULLA

Petitioner, Life Insurance Corporation of India, has filed this revision petition against the order dated 22.09.2006 of the Karnataka, State Consumer Disputes Redressal Commission, Bangalore, (in short ''the State Commission'').

In brief, the case of the complainant is that he took three life insurance policies in the name of his minor daughter Reshma with common date of commencement i.e. 28.10.2002 from the petitioner. Two policies were for Rs.1 lac each and third policy was for Rs.50,000/- only. The minor daughter Reshma slipped into the well and died on 22.11.2002. The Respondent requested the petitioner for payment of these three policies. However, petitioner made full payment of the policy no.632962147 for Rs.50,000/-, but refused the payment of other two policies of Rs.1 lac each. The respondent filed a complaint before the District Consumer Disputes Redressal Forum, Bijapur, (in short ''the District Forum'') alleging deficiency of service and District Forum vide its order dated 28.3.2005 allowed the claim. The petitioner preferred an appeal before the State Commission against the order dated 28.3.2005 of the District Forum. The State Commission vide its order dated 22.09.2006 dismissed the appeal. Against this dismissal order the present revision petition has been filed.

We heard the arguments from both the sides and carefully perused the records. Learned counsel for the petitioner argued that it is mandatory to give full information about the previous policies while filling the proposal form of any policy. In the present case, the first policy was for Rs.50,000/- and, therefore, it has been fully paid. However, there was no information regarding the policy of Rs.50,000/- given in the proposal forms relating to other two polices of Rs.1 lac each. This was a clear case of suppression of information in the proposal forms and hence claims have been denied. The intention of the respondent was quite malafide right from the very beginning because of four facts. First, the respondent was the earning member, but he did not take any policy for himself. Secondly, the respondent had three daughters, but no insurance was taken for other two daughters. Third, all the three policies were taken from different agents so as to circumvent various provisions and rules. According to the rules of LIC, if the guardian is not insured, the policy of the minor cannot be beyond Rs.1 lac. Fourth, the daughter Reshma died in suspicious circumstances by slipping into the well within just one month of the policy being taken. Though, the police had filed a final report, but the internal inquiry of the LIC has revealed that the girl died in mysterious circumstances.

Learned counsel for the respondent stated that all the three policies were taken according to rules and from the regular agents of LIC. All the proposal forms were duly filled in and were accepted by the petitioner and policies issued against them. Whatever lacunae of rules are being stated by the learned counsel for the petitioner, they were there before the issue of these policies and were in full knowledge of the petitioner company. Once the proposal forms have been accepted and policies issued, these preliminary objections cannot be raised when matter of payment comes. When all the three policies commenced from the same date i.e. 28.10.2002, where is the possibility of giving information about one policy in the proposal form of the other. When the insured fell into the well, police inquiry was conducted and police had filed a final report. No wrong motive can be presumed. So far as the rule regarding maximum policy of Rs.1 lac for the minor whose guardian is not insured, is concerned, The officers of the LIC must be knowing this rules and they should not have allowed these policies for issue. This rule was not, in any case, in the knowledge of the respondent. As the policies were issued, shelter cannot be taken under this rule now for repudiation of the policy.

After hearing the arguments from both the sides and perusing the records, we find that according to the petitioner''s written statement before the District Forum, the details of the three policies have been given as under:-

Policy Nos. 632962147 632961735 632961996

2 Sum assured Rs.50,000/- Rs.100000/- Rs.100000/-

3 Date of claim 28-10-2002 28-10-2002 28-10-2002

Proposal number 6957 7305 7609

Medical examination date 9-10-2002 22-10-2002 2-11-2002

The respondent in his complaint before the District Forum, has informed that the premium of Rs.754/- was paid on 7.10.2002 for policy no.632961735 and premium for Rs.936/- was paid on 30.10.2002 for policy no.632961996. Both these policies were for Rs.1 lac each. For the third policy no.632962147 for Rs. 50,000/-, premium of Rs.921/- was paid on 9.10.2002.

State Commission has taken a view that it is difficult to say, which is the first policy and which is last policy because the commencement date of all the three policies happened to be 28.10.2002. As per the complainant, the first premium was deposited on 07.10.2002 for policy no.632961735 and the sum assured was Rs.1 lac. The LIC in its written statement has narrated that the date of deposit of first premium has no relevance because until the proposal is accepted, it has no meaning because it is only in the form of advance payment. If we look from the point of view of serial nos. of the three policies, it seems natural that policy no.632961735 should be treated as first, policy no.632961996 should be treated as second and policy no.632962147 should be treated as third policy. The policy no.632962147 for Rs.50,000/- is not available on the file. However, policy no.632961735 and policy no.632961996 are available on the file. For the policy no.632961996 the date of proposal has been given as 30.10.2002 and this policy also commences with effect from 28.10.2002. It is also pertinent to note that the medical examination for this policy was done on 2 November, 2002 as is clear from the information provided by the LIC nd and presented in the table given in para 5. It is not clear how this policy can be issued prior to the date of proposal and medical examination. Clearly this should be treated as the third policy where information about the other two policies should have been provided. Even if we go by the date of deposit of first premium or by the serial number of the policy, clearly policy no.632961735 with sum assured of Rs.1 lac seems to be the first policy and there was no question of giving information about the previous policies so far as its proposal form was concerned. As the policy no.632962147 for Rs.50,000/-is concerned, its first premium has been paid on 9.10.2002 and it also commences from 28.10.2002. Therefore, it was not possible to give information of any other policy in its proposal form. Otherwise also, this policy is not under dispute as this has already been paid to the respondent. Accordingly, we are of the opinion that the repudiation in respect of policy no.632961735 for Rs.1 lac is not justified.

In the light of the above discussions, the revision petition is partly allowed. The order dated 22.09.2006 of the State Commission is set aside and order dated 28.3.2005 of District Forum is modified to the extent that petitioner-LIC of India would be required to make payment of Rs.1 lac (Rupees One Lac only) for policy no.632961735 to the respondent along with interest of 9% p.a. from the date of filing of the complaint i.e.25.6.2003 till the date of actual payment. Petitioner is also liable to pay Rs.10,000/- (Rupees Ten Thousand) only as cost to the respondent. Total amount should be paid within a period of two months, failing which @12% p.a. interest will be payable for the period beyond two months.