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B.S. Sundaravadivel Mudaliar & Sons - Appellant
Versus
Life Insurance Corporation of India - Respondent
Decided On : 02/05/1996
G.P. No. 89/95
Advocates Appeared :
Ms. Aruna Ganesh,V. Ramasubramanian
Headnote:(i) Consumer Protection Act, 1986 Sections 2 & 14 - Insurance - Unfair trade practice - Variance of terms of policy Enhancement of premium - Clause of policy show that Life Insurance Corporation had discretion to change terms of policy at the time of renewal subject to 3 months notice no notice given - Whether Life Insurance Corporation can be held guilty of deficiency-in-service? - (No, complainant employer completely acquiesced in the scheme at every renewal year after year).
Held: That there is justification in the LIC in not giving notice to the employer as stated in Clause 4. A close reading of Clause 4 would clearly show that the Life Insurance Corporation had the discretion to change the terms of the policy at the time of renewal subject to only thing that3 months notice shall be given to the employer. May be such notice has been required to enable the employer to opt out of the GIS of LIC if the terms were not agreeable to him. Therefore only because no notice under Clause 4 has not been given, it cannot be said that the Life Insurance Corporation is guilty of deficiency in service. The conduct of the complainant employer throughout only shows that he has completely acquiesced in the scheme at every renewal year after year. As a foreseen the GIS of LIC was started from 1.6.1989. The contract under the policy will be for one year and the annual renewable date was 1st June of every subsequent year. It was being renewed every year from 1990 up to 1993. If really there was unfair trade practice indulged by the Life Insurance Corporation and on account of that the complainant was affected adversely and the scheme had been disadvantageous to the complainant firm, they could have at the completion of the first year itself refused for renewal of the policy. But the complainant would not do so. Demand by the complainant every year after renewal of the policy to send computed statement, has been complied with by the opposite parties. Even during the first year it self after renewal such a statement has been admittedly sent to the complainant, and the complainant had not raised any objections thereto. The same position continued up to 1993-94. It was at the instance of the Life Insurance Corporation the policy was not renewed thereafter and not at the option of the employer. These facts would only strongly suggest that the scheme was never to be disadvantageous of the complainant and there was no indulgence of unfair trade practice or any deficiency in service on the part of the Opposite Parties. In the first table given in the complaint it is shown that the LIC had received about Rs. 6,00,000/- as interest. But this is denied and there is absolutely nothing to show that it so happened. No evidence has been let in to show that the complainant was liable to pay lesser amount than the amount charged by UC on the basis of the sums assured and the table applicable, as shown in table 2 in the complaint. On the other hand it is not in dispute that from the inception of this scheme during 1989-90 up to 1993-94 the total premium paid by the employer was only Rs. 4,38,783/-but the claim amount paid by LIC was as much as Rs. 11,33,000/-. It is manifest from this that the scheme had been to a great disadvantage of LIFE INSURANCE CORPORATION. (Para 5)
(ii) LIMITATION - Consumer Protection Act, 1986 - Section 24A - Before the amendment was brought in regarding limitation, 3 years must be taken as limitation as provided u/s 113 of the limitation Act. (para 7)
Result: Complaint dismissed.
E.J. Bellie, President - The complainant M/s. B.S. Sundaravadivel Mudaliar and Sons are engaged in manufacture of beedi and 679 workers were in their unit at Palakkarai, Trichy. The workers were covered under the Employees' Provident Fund scheme and they had the facility of Employee Deposit Link Insurance Scheme(EDLIS). This was from 11.1.1986. Similar scheme was introduced by the Opposite Parties Life Insurance Corporation of India(for short, LIC) as Group Insurance Scheme(GIS of LIC). The case of the complainant is that they were made to believe by the LIC that by changing over to GIS of LIC from EDLIS, there would be many advantages for the employer and the employees at no increased cost. Such a propaganda was made by the LIC through advertisements and brochures. The main attraction that was spelt out was that, while under the EDLIS the cost of an employer is 0.50% of the wages of the employees, under the GIS of LIC, the cost of the employee to cover will work out to less than 0.50% of the wages. Such a propaganda has been made by the L.I.C. with a view to make the employer to cover their Units under the GIS of LIC. Believing the Propaganda as true, the complainant employer terminated the cover of EDLIS under the Employees' Provident Fund from 1.6.1989 and switched over to the cover under the GIS of Lie. The policy under the GIS of LIC which took effect from 26.6.1989 was for 679 workers. The annual renewal date was the 1st June of every subsequent year. Under the al conditions in the policy, the LIC shall give three months' notice to the employer for effecting any variations. But without any such notice the LIC has unilaterally changed the category of the workers form Table G3 to Table G4 and then to F Table G6 and also changed the risk sum assured a from Rs. 10,500/- to Rs. 25,500/- from C 1.3.1990 and to Rs. 35,500/- from 1.2.1993 d and similarly the LIC had demanded and collected more premia at every renewal of the Policy and collected the same on the threat of expiry of the cover. When the UC was asked for an explanation c as to why the rates of premium has been varied, it successfully evaded and the complainant was at a loss to understand the reasons for such enhancement of premium. Such change of category of Tables in regard to the employees and enhancement of premium without notice to the complainant was in breach of the conditions of the policy. The said unilateral variance of the terms of the policy was brought to the knowledge of the complainant during its conference with the Divisional Manager on 13.1.1995. In sharp contrast to the representations made by the Opposite Party LIC that the cover under GIS would be more beneficial, the liability of the complainant under the GIS has become more that 300% while the liability under the EDLIS never extended beyond 0.50% of the wages paid to the workers. Therefore the Opposite Party LIC is guilty of unfair trade practice. The LIC is also guilty of deficiency in service because of its unilateral variance of the terms and conditions of the policy and collection of extra premium of Rs. 5,04,500/-. On these ground the complainant has prayed for an award of a sum of Rs. 8,47,940.29 as loss sustained by the complainant by reason of misrepresentation in the pamphlets and other advertisement materials of the Opposite Party and a sum of Rs. 5,12,516/- as extra premium wrongfully collected and a sum of Rs. 50,000/- as compensation for mental agony suffered by the complainant and a sum of Rs. 5,000/- towards costs of the complaint.
2. The Opposite Party resists the complaint contending as follows:- The dispute raised in the complaint involves complicated question of law and facts in respect of actuarial calculations and the premium tables for payment of premium payable on Life Insurance Policy and this Commission cannot undertake such an exercise and the remedy, if any, for the complainant is not this Forum and hence the complaint is not maintainable. In an earlier O.P. No. 180
