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MADHYA PRADESH STATE CONSUMER
DISPUTES REDRESSAL COMMISSION, BHOPAL
Hon’ble Mr. Justice S.K. Dubey, President &
Mr. B.L. Khare, Member
GANESH DUTTA TIWARI—Appellant
versus
DIVISIONAL MANAGER, LIFE INSURANCE
CORPORATION OF INDIA & ANR.—Respondents
Appeal No. 1063 of 2002—Decided on 25.3.2003
Counsels for the Parties :
For the Appellant :Mr. R.C. Saxena, Advocate.
For the Respondent:Mr. N.C. Byohar Parsad, Advocate.
The main legal point established in the judgment is that the insurer's obligation in the case of a lapsed policy due to non-payment of premiums should be interpreted in light of the provisions of the Insurance Act and the conditions of the policy, and the insurer may exercise discretion in making ex-gratia payments after adjusting the premium due.
Headnote:
Insurance Act - Life Insurance Policy - Section 50 of the Insurance Act - Summary of Acts and Sections: Section 50 of the Insurance Act - The court discussed the provisions of Section 50 of the Insurance Act, which requires an insurer to give notice to the policyholder of the options available to him in case of non-payment of premiums. The court also referred to various conditions of the policy dealing with payment of premiums, revival of discontinued policies, non-forfeiture regulations, and forfeiture in certain events. The court highlighted the relevance of notice of options available to the assured on lapsing of the policy and the discretion exercised by the insurer in making ex-gratia payment after adjusting the premium due.
Fact of the Case:
The deceased life assured had a lapsed life insurance policy due to non-payment of premiums. The appellant filed a complaint for deficiency in service against the Life Insurance Corporation of India (LIC) for not making the payment of the double accident benefit. The District Forum dismissed the complaint, citing it as barred by time and holding that notice under Section 50 of the Insurance Act was not necessary.
Finding of the Court:
The court held that the complaint could not have been dismissed as barred by time and emphasized that a plea of limitation should not be used to defeat the just claim of citizens. The court also discussed the relevance of Section 50 of the Insurance Act and the conditions of the policy in determining the insurer's liability.
Issues: The issues involved the dismissal of the complaint, compliance with Section 50 of the Insurance Act, and the insurer's obligation in the case of a lapsed policy due to non-payment of premiums.
Ratio Decidendi: The court's decision was based on the interpretation of Section 50 of the Insurance Act, the conditions of the policy dealing with premium payment and forfeiture, and the insurer's discretion in making ex-gratia payment after adjusting the premium due for the lapsed policy.
Final Decision: The appeal was dismissed, and the court held that the Life Insurance Corporation of India (LIC) cannot be held deficient in service. No order as to costs was made.
Mr. Justice S.K. Dubey, President—This appeal is directed against the order dated 17.6.2002 passed in Case No. 15/1999 by the District Consumer Disputes Redressal Forum, Jabalpur (for short the “District Forum”) whereby the complaint for deficiency in service in not making the payment of the double accident benefit of Rs. 50,000/- was dismissed.
2. Admittedly, the deceased life assured A.K. Tiwari was employed as Assistant Engineer, Rani Awanti Bai Sagar Pariyojna, Jabalpur, who obtained a Jeevan Mitra Double Cover Endowment Plan With Profits (With Accident Benefit) Policy No. 370527136 of the table and term 68-20 of the sum assured of Rs. 50,000/-, mode of payment of premium quarterly of Rs. 937/- issued on 28.2.1994 with the date of commencement of the policy was 28.1.1994. The life assured did not make the payment of premium due on 28.10.1995. However, the life assured paid the premium of Rs. 937/- on 28.1.1995, which was adjusted towards quarterly premium due on 28.10.1995 towards the lapsed policy. The life assured died on 25.3.1996 due to cardiac failure due to coronary heart disease as per post mortem report. On submission of the claim, the Life Insurance Corporation of India (for short “LIC”) made the payment on 10.12.1996 as ex-gratia payment of Rs. 56,467/- after deducting the due premium of December, 1995 and 1996. The appellant filed the complaint, which was resisted. The District Forum dismissed the complaint holding it as barred by time and on merits held that notice under Section 50 of the Insurance Act, 1938 (for short “Insurance Act”) was not necessary as it was the duty of the life assured to pay the premiums due even in the absence of premium notice. Therefore, the LIC for the policy which had lapsed in February, 1996 prior to the death of the life assured on 25.3.1996 rightly made the ex-gratia payment after adjustment of the premium due treating the payment of the premiums of the whole two years.
3. After hearing learned Counsels for the parties, in our opinion, the complaint could not have been dismissed as barred by time as it is well settled that Public Authority should not resort to plea of limitation to defeat the just claim of citizens though such plea is permissible under law, which can only be taken when the claim is not well founded. See, the decisions of the Supreme Court in Madras Port Trust v. Hymanshu International, (1979) 4 SCC 176, and Mahavir Kishore & Ors. v. State of Madhya Pradesh, AIR 1990 SC 313, and a Division Bench decision of the High Court of Madhya Pradesh in State of M.P. v. Ramrao Krishnarao Palsikar, 1990 JLJ 315, followed by this Commission in Appeal No. 547/1999 decided on 21.5.2001, Dilip Kumar Jain v. New India Insurance Company Ltd. & Anr.
4. It is not in dispute that the policy had lapsed for non-payment of the premium. In such circumstances, learned Counsel for the appellant submitted that Section 50 of the Insurance Act, 1938 (for short the “Insurance Act”) was not complied with nor Rule 39 of the Insurance Rules, 1939. Rule 39 speaks of minimum information to be maintained and the checks and other verification to be adopted which is not of such relevance for consideration of the submission as the main planks of the contention is on Section 50 of the Insurance Act, which we quote :
“Section 50. Notice of options available to the assured on the lapsing of a policy —An insurer shall, before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable but not paid, give notice to the policy holder informing him of the options available to him unless these are set forth in the policy.”
5. From a bare reading of Section 50 of the Insurance Act, it is evident that an insurer shall before the expiry of three months from the date on which the premiums in respect of a policy of lire insurance were payable but not paid given notice to the policy holder informing him of the options available to him unless these are set forth
