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Judgment
This first appeal has been filed against the order dated 12.1.2017 passed by the State Consumer Disputes Redressal Commission, Rajasthan, Jaipur Bench No.1 ( for short, 'State Commission ') in C.C. No.125/2015.
Brief facts mentioned in the complaint are that the proposal form was filled by the deceased life assured (DLA) on 8.8.2014 and was received by the OP insurance company on 12.8.2014. The premium of Rs.10,169/- was also paid on the same date and the cheque was encashed on 14.8.2014. The husband of the complainant who was insured died on 19.9.2014. The claim was filed and the insurance claim was repudiated on 2.9.2015. Hence, the complaint was filed before the State Commission. The State Commission has dismissed the complaint as the offer was never accepted by the OP insurance company and counter offer was communicated before the husband of the complainant died.
Hence, the present appeal.
Heard the learned counsel for both the parties and perused the record.
Learned counsel for the petitioner/complainant stated that the insurance cover would be deemed to have started from the date of encashment of the cheque of premium i.e. from 14.8.2014 because the contract was completed and the OP had no objection in accepting the premium. Even otherwise the regulations issued by the IRDA clearly states that the decision should be taken by the insurance company within a period of 15 days from the date of receipt of proposal form. The learned counsel referred to the Regulation 4 ( 6) of the Insurance Regulatory and Development Authority (Protection of Policy Holders' interest ) Regulations, 2002. In this regard, Learned counsel referred to the judgment of this Commission in Asha Lata Parida Vs. S.B.I. Life Insurance Company Ltd., III (2010) CPJ 228 (NC), wherein it has been mentioned:
"Said Regulation 4(6 ) provides that the proposal shall be processed by the insurer with speed and efficiency and all decisions thereon shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposal by the insurer."
Learned counsel mentioned that the State Commission has wrongly reached to the conclusion that there was no concluded contract. The insurance company retained the premium amount for a long time and it was only paid back to the complainant when the claim was dismissed. If the contract was not concluded, then the insurance company should have returned the premium immediately and there was no question of retention of premium by the insurance company for about a year. To support his arguments, learned counsel referred to the following judgments:
1) In Life Insurance Corporation of India Vs. C.P. Sinha, I (2013) CPJ 109, this Commission has held as under:
"6. In this case, it is clear that a cheque of Rs.3385/- for first premium was received by the agent of LIC and it was deposited in the office of the LIC. The said amount was returned after about 2 years and 9 months. The LIC has failed to give any lucid explanation as to why the cheque was withheld for a period of 2 years and 9 months. The LIC did not take action. The moment LIC had accepted the cheque, it should have returned the cheque to the deceased or written that is cheque stood accepted and fill up the proposal form. It is well known that the LIC grants insurance cover after acceptance of money. The insurance starts the moment the cheque is accepted. If there is no irregularity or the facts are admitted by the LIC, it cannot be turned around and discard the proposal after a lapse of more than two years. All these facts go to show the mala fides on the part of the LIC. It cannot cheat the gullible persons with the help of few authorities, which are not applicable in this case. The return of the cheque after about 2 years and 9 months, smacks of malafides on the part of the LIC. Decision in such like cases must be taken immediately. The delay in such matters rather casts a film of doubt over the integrity of the officers involved in this case. It is also surprising to note that no action was taken against the agent. It was the duty of the agent to give LIC cover immediately after acceptance of the amount. It is also surprising to note that the agent did not inform the LIC about the death of the proposer. Learned counsel for the petitioner has stated that they could not send back the cheque to the petitioner because the LIC did not know his address. This argument leaves no impression upon us and it should have called the agent and enquired the address from him. The purpose of law is to prevent the strong already having their way."
2.) Hon'ble Supreme Court in D. Srinivas Vs. SBI Life Insurance Company Ltd. and others, Civil Appeal No. 2216 of 2018 decided on 16.2.2018 has observed as under:
"15. xxxxxxxxxxIn this case, we cannot hold that such enormous delay was reasonable. Moreover, it is borne from the records that the premium was only re-paid on 24.02.2011, after a delay of more than one year five months. If we consider above aspects, it can be reasonably concluded that the insurer is only trying to get out of the bargain, which they had willfully accepted. From the aforesaid circumstances we can easily conclude that the policy was accepted by the insurer.
In the circumstances, there is no reason to believe that there was no complete contract. There is clear presumption of the acceptance of the proposal in favour of the proposer. Therefore, the majority view of the Commission would not sustain xxxxxxxx."
On the other hand, learned counsel for the insurance company stated that after receiving the proposal form, the same was examined and on 18.9.2014 it was decided to ask for certain more documents. In response to this letter the insured Mr. Arun Saini replied on 29.9.2014 that he was agreeable to make his wife his nominee in place of his brother. The learned counsel contended that when the insured died on 19.9.2014 how has he signed the letter dated 29.9.2014. It clearly means that somebody on his behalf has tried to misrepresent him so that the policy is issued and later on they may claim the insurance amount. The information about the death was actually sent on 30.9.2014 by the complainant to the insurance company. Later on, the insurance company agreed for providing insurance cover of Rs.18 lakhs but by that time the insurance company was unaware that the proposer had died. Obviously, this counter offer was not received by the proposer as he had died by that time. Thus, insurance contract remained inconclusive and therefore, no claim can be considered under the insurance policy which was never issued. All the cases referred to by the learned counsel for the complainant do not cover the present case as the facts of each case are different. It was contended by the learned counsel for the insurance company that receipt of the amount of Rs.10,169/- does not constitute the conclusion of the contract. In support of his arguments, the learned counsel relied upon the judgment of Hon'ble Supreme Court in Life Insurance Corporation of India Vs. Raja Vasireddy Komallavalli Kamba and others, 1984 AIR 1014. Learned counsel stated that this Commission in the case of Life Insurance Corporation of India Vs. Shri Deepak Chhabra and another, R.P. No.61 of 2012 decided on 22.4 .2015 has again relied upon the judgment of Hon'ble Supreme Court in Life Insurance Corporation of India Vs. Raja Vasireddy Komallavalli Kamba (supra) by observing the following:
"In fact, the issue involved in this case is no more res-integra in view of the binding decision of the Hon'ble Supreme Court in LIC of India vs. Raja Vasireddy Komalaralli Kamle & Ors., AIR 1984 SC 1014. In the aforesaid case, the deceased filled a proposal for insurance on 27.12.1960. This was followed by a medical examination on the same day. He issued two cheques in favour of the Corporation. The first cheque towards premium of Rs. 300/- was encashed by the Corporation. The second cheque was initially dishonoured, but later encashed on 11.01.1961. The deceased died on 12.01.1961. The widow of the deceased thereupon demanded the payment of Rs.15,000/- from the Corporation. The claim having been denied a Civil Suit was filed by her, against the Corporation. The Trial Court held that there was no concluded contract between the parties. Being aggrieved, the plaintiff approached the High Court, which ruled in her favour. The Corporation thereupon took the matter to the Hon'ble Supreme Court. Allowing the appeal filed by the Corporation, the Hon'ble Apex Court, inter-alia, held as under:-
The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy documents is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. See in this connection the statement of law in Corpus Juris Secundum, Vol. XLIV page 986 wherein it has been stated as:-
"The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offerer, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the company's executive officers."
Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance.
The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer."
Learned counsel argued that the Regulations of IRDA are not mandatory and are only suggestive in nature as held by this Commission in Life Insurance Corporation of India and another Vs. Shubhra Bhambri and others, First Appeal No647 of 2015 decided on 20.3.2017, wherein it is held as under:
"12. As far Regulations made by IRDA, directing Insurance Co. to process proposal and communicate its decision in a period of not exceeding 15 days. This Commission in F.A. No. 560 of 2012 - SBI Life Insurance Co. Ltd. Vs. D. Srinivas & Ors. observed that these Regulations had no significance as they were not approved by both the Houses of Parliament and non-compliance of 15 days period for processing of proposal by Insurance Co. will not come in the way of Insurance Co. to repudiate insurance claim and in the light of judgment of 3rd Member, repudiation of claim of complainant by insurer was upheld."
Further, learned counsel for the respondent relied upon the judgment in SBI Life Insurance Company Ltd. vs. D. Srinivas and others, First Appeal No.5 60 of 2012 decided on 3.2.2017 by this Commission, wherein the following has been held:
"11. It is admitted position that no insurance policy was issued by the appellant in favour of deceased. In the absence of insurance policy, no concluded contract comes into force between the deceased and appellant.
I differ from the view taken by this Commission in Asha Lata case (supra) in the light of aforesaid judgements of this Commission and judgment of Hon'ble Apex Court in Raja Vasi Reddy Komalavalli Kamba & Ors. (supra) and am of the view that in the absence of concluded contact, learned State Commission committed error in allowing complaint and directing appellant to pay entire amount under loan account and appeal is to be allowed."
I have given a thoughtful consideration to the arguments advanced by both the parties and have examined the record.
The admitted facts are that the proposal form was filed on 8.8.2014. However, the same was received by the insurance company on 12.8.2014 and the cheque of premium was encashed on 12.8.2014. It is also admitted that the DLA died on 19.9.2014. It is the case of the insurance company that they demanded certain documents and certain queries were made from the proposer vide their letter dated 18.9.2014 . This letter was replied on 29.9.2014 which allegedly bears the signature of the DLA. There is no date mentioned in the letter however, 29.9.2014 is only the date when this letter has been received by the insurance company. Therefore, it can be disputed that this letter was necessarily sent after the death of the DLA. It may be that the DLA sent this letter before his death which was received by the insurance company on 29.9.2014. Therefore, the insurance company cannot derive any benefit from this letter.
The main question to be considered in the present first appeal is whether the contract of insurance was completed or not. The Hon'ble Supreme Court in Insurance Corporation of India Vs. Raja Vasireddy Komallavalli Kamba and others (supra) has clearly laid down the law that if the policy document is not received by the insured, the contract of insurance is not complete. This judgment is fully applicable in the present case. It is not denied by the complainant that the DLA received some queries from the insurance company to which the DLA replied and that letter was received by the insurance company on 29.9.2014. Thus, the contract of insurance was not concluded and it was under the stage of negotiations. Accordingly, the insurance claim does not become due as there was no concluded contract of insurance.
Coming to the assertion of the complainant in respect of the IRDA Circular and Guidelines that the insurance company should decide the proposal within a period of 15 days, it is to be examined as to what will be the repercussions if these guidelines are not followed by the insurance company. Though the insurance company has relied upon the judgment of this Commission in Life Insurance Corporation of India and another Vs. Shubhra Bhambri and others (supra), wherein this Commission has held that these guidelines are not approved by both the Houses of Parliament and therefore, they do not have any force of law. So far as Regulation 11 (4) of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interest ) Regulations, 2002 is concerned, the following is the repercussions if these regulations are breached:
"Any breaches of the obligations cast on an insurer or insurance agent or insurance intermediary in terms of these regulations may enable the authority to initiate action against each or all of them, jointly or severally, under the Act and/or the Insurance Regulatory and Development Authority Act, 1999."
From the above, it is clear that if the guidelines/provisions of this Circular are not followed by the insurance company, it is the IRDA which is empowered to take action against the insurance company and the complaint may be filed with IRDA. Moreover, even in these guidelines, there is no deeming provision that if Insurance Company does not take a decision within 15 days of receiving the proposal, the approval of Insurance Company on the proposal would be assumed. With respect to deficiency of the insurance company for violating the provisions of the Circular of the IRDA, this Commission has to consider the legal position with respect to conclusion of the insurance contract as well. As explained above, the insurance contract was not concluded in the present case and therefore, the insurance claim is not payable.
Based on the above discussion, I do not find any merit in the present appeal filed by the appellant and accordingly, the First Appeal No. 303 of 2017 stands dismissed with no order as to cost.