L.I.C.OF INDIA vs BIMALA ROUTRAY

THIS is an appeal against the order passed by the State Commission, Orissa in complaint No.117190 before them.

THIS facts of the case as found by the State Commission are: Shri Jayanta Kumar Routray, husband of Complainant/Respondent gave a proposal to the Corporation for insuring his life under double benefit scheme on 22.2.1987. First premium was paid on 11.3.1987. Proposal papers were submitted to the branch office of appellant on 14.3.87. Next day on 15.3.1987, Jayanta while driving a motorcycle met with anaccident and was declared dead at the S.C.B. Medical College Hospital, Cuttack where he was taken. On 19.3.1987 the proposal was accepted (more rightly "found in order") resulting in the issuance of a policy with date of commencement of risk on 27.3.1987. The policy was for Rs. 20,000/- and "a double accident benefit" of another Rs. 20,000/- was available under the policy. On 30.11.1987, Respondent submitted the claim form. On 19.5.1988, Opposite Party found that the Respondent is not entitled to the amount covered under the risk but decided to make ex-gratia payment of Rs. 20,472/-. On 30.4.1988 ex-gratia payment was made to the complainant in full and final settlement of the claim. These sums included the basic sum assured, the bonus and less the unpaid premium. After the full and final payment voucher was signed by the respondent, on 29.9.1988 Respondent made a claim for further sum of Rs. 20,000/- towards double accidental benefit. The claim not having been accepted, a complaint was filed for compensation for Rs. 1,20,000/-with interest at 18% with effect from l4.3.1987 when the proposal was submitted. The appellant herein, in the Life Insurance Corporation in its Statement filed before the State Commission submitted that in case death of the proposed on 153.1987 would have been known, it would not have accepted the risk on 19.3.87 w.e.f. 27.3.1987. Since the acceptance was at a time when the proposer wasalready dead, the policy in not enforceable. From the police report, it is seen that husband of complainant committed an offence punishable under Section 304-A and 337 I.P.C. which resulted in an accident and accordingly, even if the policy is held to be valid, complainant is not entitled to the double accidental benefit. It relied upon Clause 10 of policy where it is provided that the Corporation shall not be liable to pay the additional sum if the death of the life assured shall result from the life assured committing any breach of law.

THE State Commission gave their consideration to various points viz. (1) Whether there was a valid policy ? (2) Whether the death was on account of any breach of law ? (3) Whether receipt of full and final payment by issue of voucher disentitles complainant to receive the amount ? and (4) To what relief complainant is entitled to ? and come to the conclusion that the appellants were liable to pay the destitute widow of 25 years, the full benefit due under the policy and proceeded to award another sum of Rs. 20,000/- with interest at 18% annually from 20.9.1988 till the date of payment together with Rs. 5,000/- as compensation and Rs. 1,000/- towards costs. This payment was to be made within two months of the date of the receipt of the order.

WE are unable to agree with the State Commission for reasons Stated in the appeal by the appellants, in which they have quoted a Supreme Court judgment. The Hon''ble Supreme Court in its decision reported as ''Life Insurance Corporation of India v. Raja Vasi Reddy Komalavalli Kamba and Others'' (1984) 3 SCR 350 have laid down while deciding the question as to when an Insurance Policy becomes effective that " "........A mere receipt and retention of permium until after the death of the applicant or the mere preparation of the policy documents is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties after which the law raises a presumption of acceptance."

IN fact this case is also covered by our order passed in FA No. 343 of 1992 titled Consumer Education and Research Society and Anr. v. L.I.C. of India, decided on 15th March, 1993 I (1993) CPJ 128 (NC) wherein we have held, after consideration of various decided cases. That where a proposer dies before the acceptance of the proposal, there is no concluded contract of insurance.

WE are thus of the view that the complainant respondent was unfortunately not entitled to payment under the said Insurance Policy, but the appellant had taken a humane view and made ex gratia payment of Rs. 20,472/- as reported earlier. We cannot direct them to make any further ex gratia payment and so we allow the appeal and set aside the order of the State Commission. There will be no order as to costs.