Oral Order: (Per Hon?ble Justice D. Appa Rao, President)
1) This is a complaint filed against the insurance company for payment of Rs. 25 lakhs covered under the policy together with compensation and costs.
2) The case of the complainant in brief is that she is the wife of insured late Uppalapati Venkateswara Rao who had taken insurance policy for Rs. 25 lakhs commencing from 28.5.2004 wherein she was the nominee. The maturity of the policy is either on the date of maturity or on the date of death of the insured whichever is earlier. While so, her husband paid premium due on 28.5.2006 for an amount of Rs. 26,0000/- by way of demand draft (DD) Dt. 7.7.2006 submitted in the office of opposite party No. 2 on 11.7.2006 and the same was acknowledged by the officer. The said amount was also encashed. While so, the insured died on 12.7.2006. When the claim was made it was repudiated on the ground that the policy was reinstated on 14.7.2006 viz., after the death of the insured by enclosing a cheque for Rs. 26,077.22. Again she addressed a letter stating that the premium was received on 11.7.2006 amounting to renewal of the policy. In fact she has received the notice of lapse of policy on 10.10.2006 much later to the payment of the premium and requested to reconsider. Though it had reviewed as a special case, however, repudiated the claim. Alleging that the repudiation was unjust the complainant claimed Rs. 25 lakhs together with interest @ 25% p.a., from the date of date of claim till the date of realization together with compensation of Rs. 5 lakhs towards mental agony and costs.
3) The insurance company resisted the claim. It denied each and every averment made in the complaint. It alleged that at the time of death of deceased life assured the policy was in lapsed mode on account of non-payment of renewal premium. It was received 15 days after the expiry of grace period thus the policy was lapsed. The policy was reinstated without the knowledge of his death. She intimated the death only after reinstatement of the policy. The insured was never regular in paying the renewal premium in time. It was lapsed many times. She was trying to get the benefit under the lapsed policy due to non-payment of premium on due dates. On every occasion the insurance company has been reinstating the policy on receipt of renewal premium from the life assured. The premium is to be paid quarterly. The premium due on 28.2.2005, 28.5.2005, 28.2.2006 were reinstated after receiving the amount after the expiry of the grace period. In regard to the claim made in the complaint, it was due on 28.5.2006. A premium notice was dispatched on 2.6.2006. It was expired on 27.6.2006 after expiry of grace period of 30 days. The renewal premium was paid by way of demand draft after the expiry of the grace period and lapse of the policy. The payment was acknowledged on 12.7.2006 by issuing a receipt. The policy was reinstated on 14.7.2006 without the knowledge of the death of the assured on 12.7.2006. The death intimation was received on 15.7.2006 and by then the policy was in the lapse mode. Therefore reinstatement without knowledge of the death of the assured would not accrue any benefit to the complainant. There was no negligence or deficiency in service on its part, and therefore it prayed that the complaint be dismissed.
4) The complainant in proof of her case filed her affidavit evidence and got Exs. A1 to A11 marked while the opposite parties filed the affidavit evidence of its Deputy Manager (Claims) and got Exs. B1 to B16 marked.
5) The points that arise for consideration are :
i) Whether the policy was lapsed by the date of payment of amount for the premium due on 28.5.2006?
ii) Whether the complainant is entitled to the amount covered under the policy? If so, to what amount?
6) It is an undisputed fact that the complainant is the nominee under life insurance policy of her husband late Uppalapati Venkateswara Rao for an amount of Rs. 25 lakhs commencing from 28.5.2004 evidenced under Ex. A10. The premium had to be paid in quarterly mode. It is also not in dispute that the assured died on 12.7.2006 evidenced under Ex. A11 death certificate issued by Apollo Hospitals, Vijayawada. The assured, during his life time, for the premium due on 28.5.2006 paid the renewal premium of Rs. 26,000/- by way of DD Dt. 7.7.2006 issued by ING Vysya Bank evidenced under Ex. A4. It was acknowledged by authorized signatory by issuing a letter on 12.7.2006 vide Ex. B6. After receipt of death claim from the complainant under Ex. B10 on 15.7.2006 the insurance company under Ex. B11 Dt. 17.7.2006 while acknowledging the receipt of premium informed that ?the policy was made inactive due to non-payment of premium in the stipulated time. It requested to kindly disregard the earlier letter regarding lapse in coverage.?
7) Later by letter Ex. B12 Dt. 13.10.2006 it informed that ?After the policy had lapsed, we had received a demand draft for Rs. 26,000/- at our branch office on July 11, 2006 towards renewal premium that was due on May 28, 2006 for reinstatement of the policy. Post clearance of the demand draft into our bank account on 14.7.2006, we had reinstated the policy on 14.7.2006 ignorant of the fact that late Mr. Uppalapati Rao had already expired on 12.7.2006. As you are aware, no reinstatement could be effected after the death of the life assured. Since the policy was in lapse mode on the date of death of late Mr. Uppalapati Rao i.e., on 12.7.2006, no claim is admissible. Therefore, much that we would like to help you, we regret our inability to admit the death claim against the captioned policy.? Therefore they returned the payment of Rs. 26,000/- by way of cheque Dt. 12.10.2006 drawn on HSBC Ltd., towards refund of the premium after the death of the assured. Evidently payment acknowledgement was made under Ex. B6 Dt. 12.7.2006 they actually received the premium amount by 11.7.2006 itself vide Ex. B12 notice. Though the insurance company alleged that it was kept in ?lapse mode? Ex. B11 contrarily speaks that ? This to acknowledge receipt of your premium as per details below. Terms and conditions of your policy remain the same as before the policy was made inactive due to non-receipt of premium in the stipulated time. We request you to kindly disregard the earlier letter regarding lapse in coverage.? No doubt the letter was Dt. 17.7.2006 unaware of the death of the assured. The fact remains that the very conduct of the insurance company all through was consistent in renewing the lapse policy despite payment of premium even after expiry of grace period. Their own letters Exs. B1 to B8 show that the life assured was constantly paying the premia after the grace period, however the insurance company was receiving the premia and keeping the policy alive and active. For the disputed period also the assured had paid the amount by way of DD Dt. 7.7.2006 received by the insurance company on 11.7.2006. The deceased died on 12.7.2006. At no stretch of imagination, it could be said that the policy was kept in lapsed mode. They did not say in any of their letters, on the other hand they stated that the policy was kept under inactive mode. They did not keep the policy in lapsed mode as contended by the insurance company in their counter. Later in view of death of the assured on 12.7.2006 it harped on the fact that the clearance of DD was made on 14.7.2006 and therefore it must be deemed that the premium was paid after the death of the assured and therefore the complainant was not entitled to the amount. Unlike a cheque, delivery of demand draft can be taken as date of payment of the premium. The DD will be purchased on payment of money. The insurance company itself accepted that the demand draft for Rs. 26,000/.. It was received at their branch office on 11.7.2006 towards renewal of premium even before the death of the assured. Rest of the proceedings viz., reinstatement of policy etc. are routine, and they are departmental problems. The complainant cannot be denied the amount simply because the proceedings were informed at a later point of time. It all depends on the exigencies of situation and their office work which had nothing to do with the claim of the complainant.
8) Then the only question that centers around would be the payment was made before the death of the assured could not be accepted as valid payment. Having received it as a valid payment, they cannot turn round and contend that the policy was in ?lapse mode? and it was reinstated bonafidely not knowing the death of the deceased. The very insurance company admitted that the DD was received in their branch office on 11.7.2006 itself. It has acknowledged on the next day and subsequently regularized the payment consistently for renewal of the policy. Therefore, we do not subscribe to the contention that reinstatement was made under bonafide mistake not knowing the death of the assured. In fact, the payment having been received before the death of the assured and by no stretch of imagination it can be said that the amount was paid after lapse of the policy. It was never kept in ?lapsed mode? evident from letter Ex. B11.
9) It may be stated herein that it is a base policy for whole life evidenced from Ex. A9 wherein due dates for premiums payable are mentioned as 28th May, August, November and February of every year.
10) To sum up, the insurance company during the life time of the deceased itself received the premium, and confirmed in Ex. B11 that they had kept the policy active. It was not kept in the ?lasped mode?. It makes all the difference. It is unfortunate that the insurance company intends to get over its own admiss
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ions though in fact that the policy was not lapsed. Since the assured had paid the amount on 7.7. 2006 by way of D.D. and the same was received by the insurance company on 11.7.2006 itself during the life time of the deceased, who died on 12.7.2006, the insurance company is liable to pay the amount as promised under the policy. 11) Though the complainant had sought Rs. 5 lakhs towards compensation we do not see how she would be entitled to compensation. The question of mental agony does not arise when the assured paid the policy amount just before the expiry of the policy and in the light of payment at the last hour allowing the insurance company to raise all these pleas, may be warranted or unwarranted, she is not entitled to any compensation towards mental agony. 12) In the result the complaint is allowed in part directing the opposite party insurance company to pay Rs. 25 lakhs together with interest @ 9% p.a., from the date of complaint viz., from 25.6.2007 till the date of realization with costs computed at Rs. 5,000/-. Time for compliance four weeks.