LIFE INSURANCE CORP. OF INDIA vs ABHAY KUMAR SINGHAI

THIS is an appeal preferred by the Life Insurance Corporation of India (hereinafter referred to as "LIC") against the decision of District Forum, Narsinghpur partly allowing the complaint against the LIC and directing it to alter a policy taken by the Complainant of the value of Rs. 50,000/- for a period of 20 years to a policy of the value of Rs. 25,000/- for a period of 15 years. If the premium on the earlier policy upto 16-12-92 is. pa id with interest for the delay in payment and also payment of alteration fees within a month from the passing of the order.

THE Complainants'' case before the District Forum was that a policy for a period of 20 years was given to them under a misrepresentation that it was for a period of 12 years. THE Complainants therefore requested for an alteration of the policy to a shorter period. THE LIC proposed its own terms according to it''s own Rules for the alteration which was not acceptable to the Complainants. THE Complainants, therefore, approached the District Forum for compensation for the loss suffered by the Complainants on account of giving of wrong policy and not altering it to a policy for a lesser duration. The District Forum held that the allegations of misrepresentation were not proved and the LIC was not liable for the alleged loss suffered by the Complainants so far as issue of incorrect policy was concerned. However, the District Forum held that the Complainants were entitled to get the policy renewed without subjecting them to a fresh medical check up and issued a direction setting out conditions of alteration of the policy making the amount of the policy Rs. 25,000/- and the period 15 years. Against this direction the LIC has approached this Commission.

It is submitted by the appellant-LIC that the policy had lapsed on 16-9-1991 for nonpayment of premium and, therefore, there was no question of altering a lapsed policy into any other policy. It was also contended that refusing to alter a policy of insurance to some other value and period is governed by the policy of the LIC and if, that policy meant for uniform application is followed in the Complainants'' case, it cannot be said to be a deficiency in service. It was further contended that conditions of the policy did not provide for any alteration, in the policy and any such alteration would be a notation of the earlier contract of insurance evidenced by the earlier policy and, therefore, unless the LIC accepts the proposal for alteration, it could not become a completed contract and would confer no right on the Complainants. The findings of the District Forum were also challenged on behalf of the appellant as factually incorrect. On behalf of the Respondents the order of the District Forum was supported contending that it was a case of mere alteration and not of notation of contract.

HAVING heard both the parties and having perused the record, we are of the opinion that this appeal deserves to be allowed and the order of the District Forum deserves to be set-aside. For a complainant to succeed he must show a deficiency in service on the part of the LIC. In the present case, the LIC refused to alter a policy for a higher value and for longer period to that for a smaller sum and a shorter period. There is nothing on record to show that a policy holder could as of right effect alteration of the policy like this on his own terms. If, the LIC puts certain conditions for the alteration of the policy as requested by the policy holder, it cannot be said to be a deficiency in service as there was never a contract between the parties to alter the period and the value of the policy at the instance of the policy holder. Proposal for alteration of the policy shall be a fresh proposal and unless it is accepted by the LIC, it does not result into a contract of insurance. The LIC in this case, had at no point of time accepted the proposal for alteration as it was made by the policy holder. The correspondence shows that the policy holder was told about the terms and conditions which would be acceptable to the LIC for altering the policy to a smaller sum and a shorter period. There was not even an offer by the LIC to alter the period and the amount of the policy. There was, therefore, no question of any contract of hiring the services of the LIC for the purpose of getting an insurance cover for a smaller amount and a shorter period. It is clear from the record that the Complainants stopped paying premium on the earlier policy as a result of which it lapsed. There was no question of a lapsed policy being altered to any other policy. The Complainants have failed to prove any deficiency of service on the part of the LIC. The complaint therefore had no force and deserves to be dismissed. The order of the District Forum cannot be sustained. It deserves to be set-aside and is hereby set-aside. This appeal is allowed. Parties shall however bear their own costs. Appeal allowed.