Life Insurance Corporation of India vs NANDUBEN

THIS appeal by Life Insurance Corporation of India (Corporation for short) is directed against the judgment and order dated November 11, 1994 passed by the District Consumer Disputes Redressal Forum, Panchmahals (District Forum for short) allowing the respondent''s complaint being Complaint No. 12 of 1994 and directing the Corporation to pay to the respondent an amount of Rs. 50,000/- together with bonus immediately.

THE respondent''s husband Ratansing Chaturbhai Cohil (deceased for short) was insured for a sum of Rs. 50,000/- with the Corporation on October 28, 1991. According to the Corporation, the deceased was insured under Plan No. 90-25 and the date of muturity of the insurance was October 28,2016 as the insurance period was of 25 years. THE deceased died on October 20,1992. THE respondent therefore approached the Corporation and requested to pay to her the insurance amount of Rs. 50,000/- together with bonus and interest as she was named as nominee by the deceased. THE Corporation, after many requests informed the respondent that the amount of insurance would become payable on maturity i.e., on October 28,2016. THE respondent alleging that there was deficiency of service on the part of the Corporation by refusing to pay the amount of insurance approached the District Forum by way of aforesaid complaint claiming insurance amount of Rs. 50,000/- together with interest of Rs. 24,000/- and compensation of Rs. 10,000/- for mental shock and suffering. THE Corporation filed written statement opposing the complaint and contended that there was mistake in the insurance policy in stating to the effect that the amount of insurance was payable on death or maturity, whichever event occurred first. It was contended that the above mistake was rectified by the circular issued by the Corporation and, therefore, the respondent was not entitled to claim insurance money before the period of maturity i.e., before October 28, 2016. THEre was, therefore, no deficiency of service on the part of the Corporation. It was submitted that since there was question of interpretation of contract and dispute was of civil nature, the District Forum had no jurisdiction to entertain the respondent''s complaint. On the above grounds the Corporation prayed for dismissal of the respondent''s complaint. The District Forum, by its impugned judgment and order held that under the insurance policy the respondent was named as nominee and, therefore, she was entitled to approach the District Forum under the Consumer Protection Act, 1986 (Act for short). It was further held that the policy clearly stated that the amount of insurance was payable "on the stipulated date of maturity if the life assured is then alive or at his death if earlier". The Corporation was, therefore, bound to pay to the respondent who was the nominee the amount of insurance on the death of the insured i.e., the deceased. The circular issued by the Corporation on which reliance was placed was issued subsequent to the death of the deceased and, therefore it had no application to the instant case. The District Forum was, therefore, of the view that the respondent was entitled to his relief as prayed for. The respondent''s complaint was, therefore, allowed and the Corporation was directed to pay the insurance amount together with bonus to her immediately.

It is not disputed that in the insurance policy which was issued in favour of the deceased, there was no term to the effect that the sum assured together with vested bonuses shall be payable at the end of selected term either in lumpsum or in 10 half yearly instalments at the option of the life assured/nominee/beneficiary and that the first instalment would become payable from the date of maturity. It was submitted that this term was always incorporated in policy under Plan 90-25 (Marriage Endowment/Educational Annuity Plan with Profits). However, through mistake the said term was not incorporated in the policy issued in favour of the deceased and instead it contained term which stated to the effect that the sum assured was payable on the stipulated date of maturity if the life assured is then alive or at his death, if earlier, it is this term on which reliance is placed by the District Forum. It is submitted that when it came to light that in some of the policies issued under the aforesaid plan 90-25 through oversight or mistake the term referred to above was not incorporated, the Corporation issued circular correcting the mistake. This circular admittedly was issued subsequent to the death of the deceased. But apart from that, we fail to see how a term in the insurance policy which is an insurance contract could be altered or changed without the consent of the insured subsequently by issuing a circular. So far as the insured is concerned, his/her contract with the Corporation would be governed by the terms and conditions of the insurance policy issued in his/her favour. The Corporation cannot unilaterally change any of the terms or conditions of the insurance policy. Therefore, in our opinion, the Corporation could not have changed/altered the term regarding payment of insurance amount contained in the insurance policy issued in favour of the deceased subsequently without approval or consent of the deceased. Admittedly, no term or condition has been altered/changed with the consent of the deceased. Therefore, the Corporation is bound to make payment of the sum assured as per the terms and conditions of the insurance policy.

AS pointed out above, the term in the insurance policy issued in favour of the deceased is very clear and it states that the sum assured will become payable on the stipulated date of maturity if the life of assured is then alive or at his death, if earlier. The death of the deceased had taken place earlier than the date of maturity which according to the Corporation was October 20, 2016. The deceased died on March 20,1992. Therefore, under the aforesaid term of the insurance policy, the sum assured had become payable on March 20, 1992 and the Corporation could not have refused to make payment thereof to the respondent who admittedly was the nominee. Therefore, the view taken by the District Forum is correct. However, while agreeing with the view taken by the District Forum we cannot overlook the fact that the deceased had taken the insurance "policy of Marriage Endowment/Educational Annuity with Profit for the protection of the interest of his minor children." The learned Advocate appearing for the respondent admitted that the deceased had left behind him, besides his widow, two children both of whom are at present minors. It is the duty of the Court/- Commission/Authority established under the law to protect, the interest of the minors. The District Forum has while passing the final order as stated above completely ignored or overlooked the purpose and object with which the deceased had taken the insurance policy. The amount if paid to the respondent is likely to be squandered away and it will not achieve the object for which the deceased had taken the insurance. We are, therefore, inclined to give direction for investment of the amount as stated in the final order. We may mention here that the learned Advocate for the respondent was fair enough to agree that appropriate order for the investment of the amount be passed as deemed fit by the Commission.

IN the result, we confirm the judgment of the District Forum subject to the following directions. The Corporation is directed to deposit in the District Forum the assured sum of Rs. 50,000/- together with bonus within two weeks from the date of this order. The District Forum shall take necessary steps to invest the amount deposited in the joint names of the respondent and the children of the deceased in "Kisan Vikas Patras" which are for a period of about 5 years. The persons in whose name the "Kisan Vikas Patras" are purchased shall not be entitled to raise any loan or create any charge on the "Kisan Vikas Patras". The respondent would also give an undertaking in writing that on the "Kisan Vikas Patras" becoming mature the amount which may become payable on maturity shall be re-invested in the "Kisan Vikas Patras" or other similar investment with the permission of the District Forum for a further period of about 5 years. In other words, no amount shall become receivable or payable to the respondent or minor children of the deceased till the expiry of the period of 11 years. After renewal also, the respondent and persons in whose names the "Kisan Vikas Patras" or other investment stand shall not be entitled to raise loan or create any charge on "Kisan Vikas Patras" or the investment. The respondent is merely a nominee named in the insurance policy and she and the minor children in whose names the "Kisan Vikas Patras" are to be purchased as aforesaid shall hold them for the benefit of the legal heirs and representatives of the deceased for whose benefit the insurance policy was taken and who would become entitled to the sum assured. The Corporation shall pay to the respondent Rs. 500/- by way of cost of this appeal within one month from the date of this order. Ordered accordingly.