Oriental Insurance Co. Ltd.Vs Kalawati & 2 Ors

Subhash Chandra, Presiding Member

This revision petition under section 21(b) of the Consumer Protection Act, 1986 (in short, the ‘Act’) assails the order dated 28.03.2017 in First Appeal No. 102 of 2016 of the State Consumer Disputes Redressal Commission, Uttar Pradesh, Lucknow (in short, the ‘State Commission’) dismissing the appeal of the petitioner against order dated 14.12.2015 of the District Consumer Disputes Redressal Forum, Jhansi (in short, the ‘District Forum’) in Consumer Complaint no. 139 of 2011.

The brief facts of the case, according to the petitioner, are that as per an Agreement dated 19.11.2009 between the petitioner insurance company and the Government of Uttar Pradesh, a Janta Personal Insurance Accident Policy was to be issued by the petitioner for registered farmers in the age group 12 to 70 years to provide insurance cover of Rs.1,00,000/- against payment of premium on behalf of the insured by the State Government. Farmers were required to be land owners with their name in the khatauni and the premium amount was fixed at Rs 21.84 p per farmer per year. The policy was initially issued for 1 year with effect from 19.11.2009 and covered 12.50 crore farmers. Premium of Rs.54.60 crores was required to be paid by the State Government for the period 19.11.2009 to 18.07.2010; however, only Rs 36,20,05,480/- was paid and accordingly the policy was issued on pro rata basis. Despite several reminders, copies of which are brought on record, the full premium was not paid by the State Government. Subsequently, the policy was renewed for the next year from 19.07.2010 to 12.10.2010 for which a premium of Rs.12,86,46,575/- was paid and the policy was extended pro rata. On 19.11.2010 and 11.01.2011 the petitioner informed the State Government that in view of non-payment of insurance premium of Rs 5.47 crores, the policy had expired on the midnight of 12.10.2010.

Asha Ram, the husband of respondent no. 1 who was a farmer expired on 09.11.2010 during treatment of injuries in a road accident and an insurance claim was lodged with the petitioner. The claim was repudiated on the ground that the policy for 19.11.2009 to 12.10.2010 did not cover the death of her husband who expired after the policy cover had ended due to the lapsing of the policy. Respondent 1 approached the District Forum where the petitioner insurance company could not contest the case and the matter came to be decided ex parte. The District Forum upheld the claim and directed payment of Rs 1,00,000/- with interest @ 12% p.a. within 2 months along with Rs 5,000/- as compensation and Rs 5,000/- as litigation cost. The petitioner insurance company approached the State Commission in appeal which was dismissed. This revision petition impugns the order of the State Commission dated 28.03.2017.

The District Forum had, on contest, arrived at the finding below:

“The Ld. Counsel for the Opposite Party has argued that the death of Asha Ram took place after the insurance period therefore she was not entitled to get the claim. Therefore, her claim was rejected. This argument of the Ld. Counsel of the Opposite Party is true that document no. 17/1 which is related with the agriculture accident insurance of Asha Ram husband of the complainant, in this the insurance is from 19.07.2010 to 12.10.2010 but the document no. 24/1 has been filed on record by Opposite Party no. 1. The same is an agreement and this agreement has been executed between the Government of UP and Opposite Party no.2, the Oriental Insurance Company. In this regard, it has been mentioned at serial no. 2 that the insurance period will be in force for a period of one year from 19 Nov 2009. Thus, the period of one year is up to 18 Nov 2010 from 19 Nov 2009 and death of Asha Ram took place on 9 Nov 2010. He has died only after 10 days of the date given on the Agreement. Therefore, the argument of the Ld. Counsel for the Opposite Party the signature of the representatives of both the parties are on this Agreement and the terms of this Agreement will be applicable on both the parties This argument has also been advanced by the Ld. Counsel for the Opposite Party that Opposite Party has sent document number 26/1 to 26/10 to the UP Government to this effect that premium of insurance has not been submitted and be filed but in Para no. 25 of the agreement document it has been mentioned that agreement of Rs 5,46,000/- has been executed between UP Government and Insurance Company and the amount of premium of the insured farmers is also included in the agreement and at page 4 in para 4 of this, insured amount of Rs One lac has been shown Thus, the above argument of the Ld. Counsel for the complainant has no force. Therefore, in the opinion of the forum the opposite party has committed deficiency in service by not making the payment of insured amount to the complainant. Therefore, the complainant is liable to be allowed.”

The State Commission considered the submission of the petitioner/insurance company in appeal and while dismissing the appeal concluded that:

“ In view of provision of Section 53 of Indian Contract Act it is obvious that in case of any default in payment of premium by Government of U.P., the contract of insurance entered into between the Government and the appellant Insurance Company was voidable at the option of the appellant Insurance Company and the appellant Insurance Company might have voided it in case of short payment of premium amount but appellant insurance company has not exercised its option to void contract and has opted to perform the contract. As such appellant insurance company is bound by the terms and conditions of Agreement deed. Appellant Insurance Company cannot change or modify terms and conditions of contract unilaterally as such appellant Insurance Company is bound to discharge its liabilities in terms of Agreement deed and may claim payment of remaining amount of agreed premium by adopting legal process against the Government.

In view of discussion made above, we are of the view that once the appellant Insurance Company has decided to adhere with the Agreement and to perform its obligation in terms of Agreement it cannot reduce the period of JPA policy in violation of Agreement deed. In case of any deficiency in premium paid by State Government, appellant Insurance Company is at liberty to take legal recourse against State Government but it cannot refuse the risk entrusted to it vide agreement deed dated 19.11.2009 as it has exercised option to perform contract even after short payment of premium.”

None appeared on behalf of respondent no. 1 to argue the matter when the matter came up for final arguments.  I have heard the learned counsel for the petitioner and the authorized representative on behalf of respondent 2 and carefully considered the material on record.

Learned counsel for the petitioner argued that a scheme of insurance cover viz., Janta Personal Insurance Accident Policy was based upon an Agreement between the petitioner Insurance Company and the Government of U.P. represented by its Commissioner and Secretary, Board of Revenue pursuant to a Government Order no. 3695/1-9-2009-962 LC/09 TC-1 dated 14.10.2009 and was valid for a period on one year from 19.11.2009. While the policy was in favour of un-named persons, the premium for the policy of individual farmers was to be paid by the Government to cover 2.50 lakh persons in the age group of 12 to 70 years subject to them being registered owners of lands and subject also to claims being permissible only for one claim per person irrespective of number of holdings. A Bank Guarantee was provided by the petitioner Insurance Company as performance guarantee to the State Government. This policy was renewed from 13.10.2010 to 18.11.2011. The deceased insured expired on 09.11.2010. The cause of death is not in dispute. The case of the petitioner is that the claim of respondent 1 was repudiated since the policy had lapsed on 12.10.2010 despite several reminders to the State Government to pay the premium in order to renew the scheme. It is the petitioner’s case that the order of the fora below is flawed in that it is based upon a material irregularity and an erroneous interpretation of the Agreement between the petitioner and the State Government, an erroneous interpretation of the law as well as being contrary to the terms of the contract of insurance in the policy.

It is argued that the Agreement provided for insurance cover for which premium was required to be paid by the State. Despite several notices and follow up, the State failed to deposit the premium amount and renew the policy. The petitioner then informed the State Government that the policy stood lapsed for default. On the date of the claim, there was no insurable interest to even qualify as a ‘consumer’ under section 2(1)(d) of the Act. Therefore, there was no deficiency in service. Hence, it is contended that the repudiation of the policy is correct and valid.

The conclusion of the State Commission that in view of the Agreement, the policy could not have been voided by the petitioner and that it had, in fact, not voided the policy and being a special policy, the claim could not have been repudiated by it for these reasons. According to the petitioner, this argument is be based on an incorrect interpretation of the Agreement and the Policy. It was contended, based on the record of correspondence with the State Government, that the issue of payment of premium had been brought up on numerous occasions between 08.06.2010 and 11.01.2011, including informing the State that the District Magistrates be advised not to forward claims to the petitioner in view of the policy not having been renewed. It was also contended that finally, on 11.01.2011, the State Government had been informed that the policy stood terminated/lapsed and it was advised not to forward claims under the Janta Personal Accident Insurance Policy. However, the impugned order of the State Commission had not considered these submissions and evidence and had relied, instead, on the interpretation of subsistence of the Agreement dated 19.11.2009 between the petitioner and the State Government to conclude that, in view of the Agreement being in place, since this was not voided by the petitioner, the policy cannot be said to have lapsed and therefore the repudiation of the claim on this basis by the petitioner was incorrect. It is averred by the petitioner that the order of the District Forum and the State Commission was based on a material irregularity warranting interference of this Commission.  Reliance is placed on the judgment of the Hon’ble Supreme Court in Life Insurance Corporation of India Vs. Mani Ram, III (2005) CPJ 31 (SC) which laid down that non-payment of premium of a life insurance policy, including the grace period of one month, would entail lapse of policy and the insurance company would be wholly justified in rejecting the claim of the complainant for which no exception can be taken.

Respondent no. 1 did not appear or file any submissions or written arguments. The authorized representative for respondent no. 3 contended that the scheme of insurance for farmers was based on an Agreement between the petitioner and the State Government under which it was clearly stated that in cases of disputes, the decision of the District Magistrate would be final and binding upon the insurance company. It was stated that the death of the husband of respondent no. 1 occurred within the period of the policy, i.e. on 09.11.2010 and therefore the petitioner was liable to settle the claim as per the policy. The order of the State Commission was therefore in order and may be upheld.

From the foregoing, it is apparent that the death of the insured occurred during the validity of the Janta Accident Insurance Policy. The issue of the Agreement having precedence over the Policy is therefore not in issue notwithstanding the order of the State Commission relying on the primacy of the Agreement even if premium was not paid by the State Government. While this argument cannot be sustained in light of the judgment of the Hon’ble Supreme Court in Mani Ram (supra), in the facts and circumstances of the present case the order of the State Commission upholding the order of the District Forum partially cannot be faulted since it is manifest that the policy under which the claim was preferred as alive and valid. There is merit in the argument of the respondent no 3 that the claim was valid since it was within the validity period of the policy and also within the policy framework as determined by the District Magistrate, Jhansi.

This Commission, in exercise of its revisional jurisdiction, is not required to re-assess and re-appreciate the evidence on record when the findings of the lower fora are concurrent on facts. It can interfere with the concurrent findings of the fora below only on the grounds that the findings are either perverse or that the fora below have acted without jurisdiction. Findings can be concluded to be perverse only when they are based on either evidence that have not been produced or based on conjecture or surmises i.e. evidence which are either not part of the record or when material evidence on record is not considered. The power of this Commission to review under section 21 of the Act is, therefore, limited to cases where some prima facie error appears in the impugned order. As laid down by the Hon’ble Supreme Court in Rubi (Chandra) Dutta (2011) 11 SCC 269 decided on 18.03.2011, Lourdes Society Snehanjali Girls Hostel and Ors vs H & R Johnson (India) Ltd., and Ors (2016) 8 SCC 286 decided on 02.08.2016 and T Ramalingeswara Rao (Dead) Through LRs & Ors Vs. N Madhava Rao and Ors, Civil Appeal No. 3408 of 2019 decided on 05.04.2019, revisional jurisdiction is warranted to be exercised in cases of concurrent findings on facts by the lower fora only in cases where there is either a jurisdictional error or a material irregularity resulting in miscarriage of justice.

In the instant case, it is evident that the impugned order upholds the order of the District Forum to pay insurance cover with a reduced rate of interest and compensation under a scheme of insurance that was valid on the date of the demise of the deceased insured. There is, therefore, no ground made out by the petitioner warranting interference of this Commission on the ground of either jurisdiction or material irregularity. Hence, the petition is liable to be dismissed.

In view of the foregoing discussion, the revision petition is found to be without merits and is accordingly dismissed. Order of the State Commission is upheld. There shall be no order as to costs. All pending IAs, if any, stand disposed of with this order.