Life Insurance Corporation of India vs MADHU BALA GUPTA

PRESIDENT-We have heard Mr. B.J. Singh, Advocate appearing for the appellant-Life Insurance Corporation of India and have perused the order dated 17.9.2003 under appeal passed in Complaint Case No. 126 of 2001, Smt. Madhu Bala Gupta v. Life Insurance Corporation of India & 2 Ors., by District Consumer Disputes Redressal Forum-II (for short hereinafter referred to as the District Forum).

THE District Forum allowed the complaint to the extent that the appellants have been directed to pay the paid up value of the policy to the complainant and dismissed the complaint regarding the claim of the complainant under the concerned policy taken on the life of the deceased husband Late Shri Mohan Lal Gupta on the ground that there was no deficiency in service on the part of O.Ps. as the complainant had given wrong answers to the questions recited in the proposal form and there was concealment of information about the heart ailment while filling in the form dated 20.3.1989. The deceased Shri Mohan Lal Gupta, husband of the complainant Smt. Madhu Bala Gupta had obtained a LIC Policy bearing No. 170182532 dated 28.3.1989 for the assured sum of Rs. 25,000/-. Shri Mohan Lal Gupta died on 12.11.1990 and the complainant filed claim to the sum assured under the aforesaid policy. During the course of enquiry, it was found that the deceased husband was suffering from various ailments including heart disease and he filled the form while taking the policy regarding his state of health wherein he concealed the relevant information and gave allegedly wrong answers relating to his true state of health. The claim was dismissed by the appellant and the prayer for the payment of the paid up value was also resisted during the trial on the ground that under Clause 4, since the policy had not continued for a period of 3 years and more, the complainant was not entitled for the paid up amount under the policy aforesaid.

Clause 4 of the policy deals with "Non-forfeiture Regulation" and reads, inter alia as under : "4. Non-forfeiture Regulations : If after, at least three full years'' premium have been paid in respect of this policy any subsequent premium be not duly paid, this policy shall not be wholly void, but the sum assured by it shall be reduced to such a sum as shall bear the same ratio to the full sum assured as the number of premiums actually paid shall bear to the total number originally stipulated for in the policy, provided such reduced sum in the case of a policy for sum assured of Rs. 1,000/- or over not be less than Rs. 250/- and in the case of a policy for sum assured of less than Rs. 1,000/- be not less than Rs. 100/-. The policy so reduced shall thereafter be free from all liability for payment of within mentioned premiums but shall not be entitled to participate in future profits. The existing vested bonus additions, if any, will remain attached to the reduced paid-up policy. Notwithstanding what is above stated, if after at least three full years'' premium have been paid in respect of this policy, any subsequent premium, be not duly paid, in the event of the death of the Life Assured within six months from the due date of the first unpaid premium, the policy moneys will be paid as if the premium or premiums unpaid with interest thereon to the date of death on the same terms as for revival of the policy during such period, and (b) the unpaid premiums falling due before the next anniversary of the policy. Notwithstanding what is above stated , if, after at least five full years'' premium have been paid, in respect of this policy any subsequent premium be not duly paid, in the event of the death of the Life Assured within 12 months from the due date of the first unpaid premium, the policy moneys will be paid as if the policy had remained in full force after deduction of, (a) the premium or premiums unpaid with interest thereon to the date of death on the same terms as for revival of the policy during such period; and (b) the unpaid premiums falling due before the next anniversary of the policy."

CLAUSE 7 of the policy deals with "Guaranteed Surrender Value" and it provides as under : "7. Guaranteed Surrender Value : This policy can be surrendered for cash after the premiums have been paid for at least three years. The minimum surrender value allowable under this policy is equal to 30% of the total amount of the policy within mentioned premium paid excluding the premiums for the first year and all extra premiums and/or additional premiums for Accident Benefit that may have been paid. The cash value of any existing vested bonus additions will also be allowed."

The District Forum has directed the appellant to pay the paid up value of the policy to the complainant. The main contention of the learned Counsel for the appellant is that such a blanket direction could not be issued as the appellants have to determine the amount which is payable under the terms and conditions of the policy and as referred to above, the amount which can be refunded as the surrender value of the policy which remained in force during the life time of the insured. The learned Counsel for the appellant was, however, unable to show any clause under which there is a complete ban for the refund of the premiums paid by the insured under the policy insuring his own life. If, it may be mentioned that if the appellant is allowed to forfeit the amount of premiums deposited under the policy, it will be a case of double jeopardy inasmuch as the relief under the policy was not given to the complainant on the finding that there had been a violation on the part of the deceased while filling up the proposal form for obtaining the policy and at the same time even the amount which had been deposited under the policy is also not refunded.

WE, therefore, find that the District Forum has rightly issued direction for the refund of the amount deposited under the policy aforesaid. However, the same is to be worked out according to the terms and conditions and any other relevant rules regarding deduction of a valid amount of servicing the policy. Subject to these observations, the appeal is dismissed summarily. Copies of this order be sent to the parties free of charge. Appeal dismissed.