Life Insurance Corporation of India vs Manna Devi

THIS revision petition challenges the order dated 15.12.2009 of the Rajasthan State Consumer Disputes Redressal Commission, (in short, the State Commission), in appeal no. 1506 of 2008, by which the State Commission directed the petitioner (Life Insurance Corporation LIC) to pay Rs.10,000/- as ex-gratia to the respondent / complainant who is the widow of the deceased life assured.

THE brief facts are the husband of the respondent / complainant obtained a life insurance policy from the LIC for a sum of Rs.1 lakh on 29.03.2006. Life assured expired on 27.04.2007, whereupon a claim for the amount assured was filed by the complainant with the LIC. By its letter dated 28.02.2008, the LIC repudiated the claim on the ground that the life assured had suppressed material facts regarding the status of his health in the proposal dated 29.03.2006 by stating that he was not suffering from any kind of disease. Though, in fact, he had been under treatment during February 2006 and May 2006 for hypertension and chronic renal failure. In fact, he had been admitted to the SMS Hospital, Jaipur on 23.05.2006 and was diagnosed with said disease and also treated therefore. The respondent / complainant filed a consumer complaint against the LIC before the District Consumer Disputes Redressal Forum, Tonk (in short the District Forum) alleging deficiency in service on the part of the LIC in repudiating the aforesaid claim. The District Forum dismissed the complaint on the ground of suppression of material facts relating to status of health of the life assured at the time of obtaining of life insurance policy in question. In appeal filed by the complainant, the State Commission discussed at length on the inadmissibility of a claim of life insurance in the case of material facts relating to status of health of the life assured. However, the State Commission, ended up passing the impugned order with the aforesaid direction regarding ex-gratia payment by the LIC to the respondent.

The question of ex-gratia payment by the same insurer came-up for consideration of this Commission in a batch of revision petitions. By its order dated 17.12.2009, the Commission held, interalia, as under:- While going through the Aims & Objectives of the Consumer Protection Bill 1986, as highlighted by the learned Counsel for the respondent, we are of the view that a distinction needs to be made between justice natural or otherwise-and, favour. There is no room for favouritism while dispensing justice. The word ex-gratia has been interpreted / understood to mean favour, rendered voluntarily and on moral grounds, thus, clearly ousting the jurisdiction of quasi judicial bodies like ours to direct a party to show favour. If we do this, this will not only run counter to the letter and spirit of Consumer Protection Act but also assume / confer powers which are not conferred upon us by Law / mandate. Any direction by Consumer Fora to the party concerned to grant ex-gratia payment will defeat the very purpose and meaning of ex-gratia, i.e., favour, grace shown voluntarily on moral grounds. However, this order would not deter directing payment on ex-gratia basis by the Consumer Forums, provided, the concurrence of the sanctioning authority of Insurance company, is obtained through their counsel (counsel for the Insurance Company) for making the payment on ex-gratia basis. In the aforementioned circumstances, we are of the view that Consumer Fora, by the very construction of the Act, are not empowered to direct any party for grant of ex-gratia payment, in view of which we are unable to sustain the orders passed by the State Commission, directing the Life Insurance Corporation to pay ex-gratia amount(s) in view of which the order(s) passed by the State Commission are set aside. All the Revision Petitions are allowed and complaints are dismissed. However, keeping in view the facts and circumstances in each case, we request, the Life Insurance Corporation to consider the case sympathetically for grant of ex-gratia payment to the complainant(s) in each case.

IN view of the legal interpretation of the term ex-gratia, it is clear that the order of the State Commission, particularly paragraph 19, cannot be sustained. However, in keeping with the spirit of the observations in paragraph 20 of the impugned order, we too would request the LIC to consider if as small as a sum of Rs.10,000/- could need be paid to the respondent/ complainant as a benevolent gesture.