1. This Revision Petition has been filed under Section 21(b) of The Consumer Protection Act, 1986, hereinafter referred to as the ‘Act’, challenging the Order dated 16.04.2012 passed by The Madhya Pradesh State Consumer Disputes Redressal Commission, hereinafter referred to as the ‘State Commission’, in F.A. No. 1830 of 2010 arising out of the Order dated 25.06.2010 in C.C. No. 18 of 2010 passed by The District Consumer Disputes Redressal Forum, West Nimad, Mandaleshwar, hereinafter referred to as the ‘District Forum’.
The Petitioners herein, The Reliance Life Insurance Co. Ltd., were the Opposite Parties before the District Forum, and are hereinafter being referred to as the ‘Insurance Co.’
The Respondents herein, Girijabai, Ganesh Mourya, Santosh Mourya, Arjun Singh and Gangabai Mourya (through legal heirs), were the Complainants before the District Forum, and are hereinafter being referred to as the ‘Complainants’.
2. Heard learned Counsel for the Insurance Co. and the Complainants through video conferencing on 22.06.2020, and perused the material on record including inter alia the Order dated 25.06.2010 of the District Forum, the impugned Order dated 16.04.2012 of the State Commission and the Petition.
3. Brief facts, relevant for the disposal of this Petition, are that on 05.05.2009, one Radheyshyam Mourya s/o Arjunsingh Mourya applied for ‘Reliance Super Automatic Investment Plan Policy’. The sum insured was Rs. 4,80,000/-. He made the proposal and paid the annual premium of Rs.20,000/- on 05.05.2009.
The said Radheyshyam Mourya died in a road accident on 27.05.2009.
The Policy was issued on 29.05.2009.
The Insurance Co. denied the claim on ground that the insured Radheyshyam Mourya expired before the Policy was issued i.e. before the coverage of the risk commenced.
4. The District Forum vide its Order dated 25.06.2010 dismissed the Complaint.
5. The Complainants filed Appeal under Section 15 of the Act before the State Commission.
6. The State Commission vide its impugned Order dated 16.04.2012 allowed the Appeal.
For ready appreciation, extracts of the appraisal made by the State Commission are reproduced below:
FIRST PREMIUM RECEIPT (FPR)
12. The underwriter’s decision on the proposal may be to accept at OR or otherwise. If it is accepted at OR, the policy can be commenced immediately, provided the full premium had been paid along with the proposal. The FPR will be issued. If the acceptance is not at OR, the proposer has to agree to the modified terms and pay the balance premium if any, before the FPR can be issued. The IRDA regulations require that the decision on the proposal should be made by the insurer within 15 days.
Insurance Act, 1938 – See 64 VB – Insurance policy – Date of commence-ment-Determination-Liability of Insurance Company-The insurer received premium from the insured in cash on 22.03.2000 against receipt but issued policy on 28.03.2000-Accident took place on 25.03.2000 and Commissioner exonerated the Insurance Company on the ground that insurer is liable only from the date on which the policy was issued-Held, Liability has been accepted by the insurer on the date, on which premium was accepted and receipt issued and therefore, Insurance Company is liable to pay compensation but not for penalty.
(paras 4 to 8 of the State Commission’s Order)
7. It is noted that the State Commission has weighed the evidence, quoted relevant IRDAI guidelines, cited a relevant case-law, and passed a well reasoned Order.
8. It is seen that [a] the proposal form was submitted on 05.05.2009, [b] the requisite premium of Rs. 20,000/- was paid on 05.05.2009 and [c] the Policy was duly issued on 29.05.2009. It is implicit that no infirmity was noted in the proposal form and no shortfall was found in the premium amount (else the Insurance Co. would not have issued the Policy).
9. The State Commission has inter alia observed that IRDAI regulations require that the decision on the proposal should be made by the insurer within 15 days. It has given the benefit of the delay in issuing the Policy, beyond 15 days, to the insured. The State Commission has also cited an instance in which, in similar facts, the insurance company was held liable to pay compensation.
10. The State Commission’s appraisal cannot be faulted.
11. Also, the Award made by the State Commission, to pay the sum insured, Rs.4,80,000/-, with interest at the rate of 6% per annum from the date of filing of the Complaint before the District Forum, and cost of litigation of Rs.2,000/- (quoted in para 6 above), appears just and equitable.
12. It may be added that it is not disputed that [a] the proposal was made on 05.05.2009; [b] the premium was paid on 05.05.2009; [c] the insured Radheyshyam Mourya expired in a road accident on 27.05.2009; [d] no infirmity in the proposal form was noticed and no shortfall in the premium amount was found by the Insurance Co. (else it would not have issued the Policy); [e] the Insurance Co. accepted the premium on 05.05.2009; and [f] the time-frame prescribed in IRDAI guidelines for taking the decision and issuing the Policy was not adhered to by the Insurance Co.
The commencement of coverage of risk cannot be an arbitrary and irrational function of the level of efficiency or inefficiency of the functionaries of the Insurance Co.
In other words, it cannot be that had the functionaries of the Insurance Co. been efficient enough and issued the Policy on any day from 05.05.2009 to 27.05.2009, before the insured Radheyshyam Mourya expired, the risk would have been covered and the sum insured would have been paid, but, if the functionaries of the Insurance Co. were not efficient enough and issued the Policy subsequent to 27.05.2009, after the insured Radheyshyam Mourya expired, the risk would not be covered and the sum insured would not be paid.
Hypothetically, in the case of any other similarly situate person, who expires, say, about 20-25 days after furnishing the proposal form and after paying the premium, but in whose case the functionaries of the Insurance Co. issue the policy before his having expired, the claim would be honoured, but, in the present case, since the functionaries of the Insurance Co. did not issue the Policy before the insured expired, the claim would not be honoured.
The nominees / legal heirs of the insured, in present facts and specificities, that is, of an insured, who, after furnishing the proposal form (which passed scrutiny of the Insurance Co.), and after paying the premium (which was accepted by the Insurance Co.), expired unexpectedly in a road accident before the Policy was issued, cannot be made dependent on the level of efficiency or inefficiency of the functionaries of the Insurance Co.
The Insurance Co. has argued that coverage of risk commences when the Policy is issued. The case here, but, is that the coverage of risk cannot be an arbitrary and irrational function of the level of efficiency or inefficiency of the functionaries of the Insurance Co., it cannot be overlooked that there was no infirmity in the proposal form and there was no shortfall in the premium and the premium was accepted by the Insurance Co.
Rather than applying its mind to the facts and specificities of the case, the Insurance Co. mechanically furnished a defence that the Policy had not been issued till the date the insured expired in a road accident and as such the coverage of the risk had not commenced. Delay beyond the time-frame of 15 days prescribed in IRDAI guidelines has not been satisfactorily explained. There is nothing on record to show that any internal inquiry was conducted to fix / imbibe accountability and responsibility or any efforts made to inculcate systemic improvements for future. That there was no infirmity in the proposal form and there was no shortfall in the premium and the premium had been accepted by the Insurance Co. have been treated to be inconsequential. Arbitrary irrational non-application of mind is well evident on the part of the Insurance Co.
13. The Act is for “better protection of the interests of consumers”, in recognizedly a fight amongst unequals. Its Statement of Objects and Reasons says of “speedy and simple redressal to consumer disputes”.
In the instant case, the proposal was made and the premium paid in 2009. The insured expired in a road accident in 2009. Paying the sum insured to the nominees / legal heirs of the deceased insured is still pending, in 2020. One primary objective of taking insurance, that is, immediate (repeat immediate) pecuniary relief to the nominees / legal heirs of the insured, has already been defeated.
This is a plain and simple case of an insurance company, with wherewithal, on the one side, and an ordinary common consumer, without wherewithal, on the other side, with the insurance company first indulging in deficiency in service, causing loss and injury to the consumer, and then indulging in intransigent protracted litigation.
All this is not viewed favourably, it necessitates advice and cost.
14. The Petition, being patently ill-conceived and totally bereft of merit, is dismissed with stern advice of caution to the Insurance Co., through its Chief Executive, by imposition of cost of Rs. 50,000/-, to be deposited in the Consumer Legal Aid Account of the State Commission, within four weeks of the pronouncement of this Order.
The Chief Executive is advised to inculcate systemic improvements for future, that in cases where there is no infirmity
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in the proposal forms and there is no shortfall in the premia and the premia is accepted by the Insurance Co., the policies are issued efficiently and diligently within the time-frame stipulated in the applicable IRDAI guidelines. 15. The State Commission’s impugned Order dated 16.04.2012 is affirmed. The Award made by the State Commission is confirmed. In addition, an amount of Rs. 50,000/- is awarded to the Complainants as cost of litigation in the revisional proceedings before this Commission (which lasted for about 8 years, from 2012 to 2020). 16. The Insurance Co. through its Chief Executive shall ensure compliance within four weeks of the pronouncement of this Order (para 14 and 15 above). 17. The State Commission shall undertake execution as per the law for failure or omission in compliance within the stipulated period. 18. The Registry is directed to send a copy each of this Order to the State Commission, to the Chief Executive of the Insurance Co. and to the Complainants within three days of its pronouncement.