ORDER
1. This revision has been filed under Section 21(b) of the Act 1986 in challenge to the Order dated 23.05.2014 of the State Commission in appeal no. 370 of 2011 arising out of the Order dated 29.01.2011 of the District Commission in complaint no. 232 of 2008.
2. We have heard the learned counsel for the two sides and have perused the record including inter alia the Order dated 29.01.2011 of the District Commission, the Order dated 23.05.2014 of the State Commission and the petition.
3. The dispute relates to repudiation of the insurance claim by the insurance co. on the death of the insured (the husband of the complainant nominee).
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4. Brief facts, relevant for the disposal of the revision, are that the husband of the complainant nominee had taken an insurance policy 'Bima Kiran Policy (Without Profits)' on 08.07.2000 for a period of 26 years. Its date of commencement was 28.12.1999. The policy inter alia covered 'Accident Benefit' as well as 'Death of the Life Assured'. The complainant i.e. the wife of the insured was the nominee. The premiums were regularly paid. The last premium of Rs. 4263/- was paid on 15.03.2003. The next premium was due on 28.12.2003 with grace period of 'one month' as provided for in the policy conditions. The said premium was to be paid on or before 28.01.2004. As such the policy was valid upto 28.01.2004. On 26.01.2004 the insured was trapped by a gang of criminals by mixing poison in his food. He was admitted to a hospital at about 10.00 p.m. on 26.01.2004 itself. He was in unconscious / incapacitated condition during treatment and expired in the hospital on 30.01.2004 at about
12.25 a.m. He left behind his wife, the complainant nominee, and one daughter aged about 08 years. The insurance co. repudiated the claim vide its letter dated 10.12.2004 and then vide its letter dated 25.08.2006 on the (sole) ground that at the time of death of the insured the policy had lapsed as the premium had not been paid till the expiry of the grace period and as such there was no liability to pay anything towards the death claim.
5. The complainant approached the District Commission on 07.11.2008. In its written version filed before the District Commission the solitary point put forth in its defence by the insurance co. was that the grace period to deposit the premium was upto 28.01.2004 but it was not deposited by the said date, the insured died on 30.01.2004 and therefore on the date of his death the policy had lapsed and was not in existence.
The District Commission critiqued the policy condition and for its reasons given allowed the complaint and ordered the insurance co. to pay the "double accidental benefits of Rs. 3,00,000/- and amount of Insurance of Rs. 3,00,000/- with bonus to the complainant under the policy" with simple interest at the rate of 18% per annum from 25.08.2006 i.e. the date of final repudiation of the insurance claim as well as Rs. 50,000/- as lumpsum compensation with interest at the rate of 18% per annum from 07.11.2008 i.e. the date of institution of the complaint along with Rs. 8,000/- as legal expenses.
6. The insurance company appealed before the State Commission. The State Commission for its reasons given allowed the appeal and dismissed the complaint.
7. Certain relevant terms and conditions contained in the subject policy are first being reproduced for reference:
2. Payment of Premium: A grace period of one month but not less than 30 days will be allowed for payment of yearly, half-yearly or quarterly premiums and 15 days, for monthly premiums. If death occurs within this period and before the payment of the premium then due, the Policy will still be valid and the Death Benefit paid after deduction of the said premium as also unpaid premium/s falling due before the next anniversary of the Policy. If the premium is not paid before the expiry of the days of grace, the Policy lapses.
If the Policy has not lapsed and the claim is admitted under a policy where the mode of payment of premium is other than yearly, unpaid premiums, if any, falling due before the next policy anniversary shall be deducted from the claim
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amount.
8. Accident Benefit : If at any time when this Policy is in full force, the Life Assured, before the expiry of the period for which the premium is payable is involved in an accident resulting in either permanent disability as hereinafter defined or death and the same is proved to the satisfaction of the Corporation, the Corporation agrees in the case of;
(a) Disability to the Life Assured : (i) to pay in monthly instalments spread over 10 years an additional sum equal to the death benefit under this Policy. If the policy becomes a claim before the expiry of the said period of 10 years, the disability benefit instalments which have not fallen due will be paid along with the claim; (ii) to waive the payment of future premiums.
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8(b) Death of the Life Assured: to pay an additional sum equal to the death benefit under this policy, if the life assured shall sustain any bodily injury resulting solely and directly from the accident caused by outward, violent and visible means and such injury shall within 120 days of its occurrence solely, directly and independently of all other causes result in the death of the life assured.
The corporation shall not be liable to pay the additional sum referred to in
(a) or (b) above, if the disability or the death of the life assured shall:
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8. Learned counsel for the complainant submits that in so far as the incident of the accident is concerned the same took place on 26.01.2004 admittedly when the policy was valid because the grace period for payment of the next premium was upto 28.01.2004. The very purpose of providing a grace period is that the concerned policy will be treated to be valid and genuine claim(s) made thereunder will be settled if the event takes place during the grace period. The 'benefit of accident' as the insured may have been entitled to under 'Accident Benefit' would necessarily have had to be paid to him had such contingency arisen since there was no question of the policy having lapsed on the date of the accident. The 'benefit of death' would necessarily have had to be paid if the death occurred within 120 days of the accident and its occurrence was solely and directly due to the accident independent of all other causes. In the instant case the death occurred within 04 days of the accident well within the period of 120 days provided for in the policy. There is no question mark on the fact that the death occurred solely and directly due to the accident and was independent of any other cause. Learned counsel argues that it can be inferred from the policy conditions contained in clause 2, clause 8 and clause 8(b) of the policy document that, one, the policy was valid on 26.01.2004 when the accident took place, two, the insured got the right to the 'benefit of accident' as he may have been entitled to under 'Accident Benefit' on 26.01.2004 and the same would necessarily have had to be paid by the insurance co. had the contingency so occasioned since there was no question of the policy having lapsed on the date of the accident, and, three, the accident occurred on 26.01.2004 and the death occurred on 30.01.2004 well within the 120 day period
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provided for in the policy conditions and the death was solely and directly due to the accident and independent of any other cause, accordingly the right to be provided the 'benefit of death' also accrued to the insured / his nominee on 26.01.2004 itself when the policy was valid. The submission is that as the insured was unconscious / incapacitated and ultimately expired in the hospital and he was not in a position to pay his premium between the period from 26.01.2004 to 28.01.2004 and also immediately thereafter between 29.01.2004 to 30.01.2004, the insurance co. should have appreciated that the insured met with the accident when the policy was still valid and was continuously unconscious / incapacitated and therefore not in a position to pay the premium, and it should have rationally considered the facts and circumstances of the matter with empathy and paid the 'benefit of death' in the routine; at worst it could have, if it so wanted, deducted the premium amount from the benefit payable as per the condition no. 2. However in the instant case even though such rational and empathetic decision-making ought to have been adopted, but even if the insurance co. adopted the strictest application of its own condition it still could not absolve itself of its liability since the right to 'benefit of death' accrued on 26.01.2004 itself when the incident of the accident took place and the subsequent death 04 days thence was a sole and direct consequence of the accident. Learned counsel submits that accordingly there is no way for the insurance co. to escape its liability.
9. On the other hand learned counsel for the insurance co. argues that the death occurred 02 days subsequent to the expiry of the grace period and because the premium had not been paid within the grace period the policy had lapsed and therefore there was no question of any liability on the insurance co. He also makes a feeble attempt to argue that the incident of poisoning by a gang of criminals should not be treated as an accident but then fairly admits that the term 'accident' is not exhaustively or comprehensively explained in the policy document and also that the only reason given in the repudiation letters (02 nos.) was that the policy had lapsed and as such there was no liability to pay anything towards the death claim, besides that the sole defence taken in the written version before the District Commission was also that the grace period to deposit the premium was upto 28.01.2004 but it was not deposited by the said date and the insured died on 30.01.2004 and therefore on the date of his death the policy had lapsed and was not in existence, as such learned counsel does not press this point at this stage in revisional proceedings before this Commission.
10. We find merit in the arguments made by the learned counsel for the complainant and also appreciate the fair submissions made by the learned counsel for the insurance co.
11. The insured had been dutifully paying his premiums for about four years from the commencement of the policy i.e. from 1999 to 2003. When the incident of accident took place the grace period had not expired and therefore the policy was valid on 26.01.2004 (and upto 28.01.2004). The very purpose of building a grace period in a policy is to assure the policy- taker that in the eventuality of a claim arising in the grace period the policy will be treated to be valid and the claim will be honoured if admissible. This also benefits the insurance co. since its business is not adversely affected by mechanical lapsing of policies on the very dates the premiums were due but not paid and enables it to continue with the policies if the premiums are paid within the reasonable period provided for as grace.
12. In so far as whether or not the incident of poisoning by a gang of criminals was within the meaning of the term 'accident' used in the insurance policy is concerned, we note that this ground was not mentioned in the repudiation letters (02 nos.), this defence was not raised in the
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written version filed before the District Commission, and there is nothing in the State Commission's Order to show that this point was agitated in the appeal preferred before the State Commission. We also note that the term 'accident' is not comprehensively and exhaustively explained in the policy document, nor poisoning by a gang of criminals etc. and the like been specifically excluded under any exclusion clause. We may observe that the terms used in an insurance policy should be ab initio properly explained in the policy document itself and should ordinarily not be the subject matter of subjective and conflicting interpretations after a claim is made and / or after a claim goes into litigation. We are not delving further into this area since this ground / defence was neither taken at the time of repudiation nor at the time of filing of the written version or while arguing the appeal before the State Commission and also since the learned counsel for the insurance co. does not press this point at the stage of revision now.
13. In the contingency that the insured had not expired and in the stead had been rendered with permanent disability there could have been no questions on the 'benefit of accident' being provided in terms of condition no. 8 of the policy document i.e. 'Accident Benefit'. The insured was in continuous unconscious / incapacitated condition during treatment and died in the hospital as a sole and direct result of the accident and independent of any other cause within 04 days which was well within the period of 120 days provided for in the condition no. 8(b) which deals with 'Death of the Life Assured'. As such the right to the 'benefit of death' accrued to the insured / his nominee on 26.01.2004 itself, when the accident directly and solely causing the death took place and on which date the policy was very much valid (being within the grace period).
What is crucially important is the directness of the nexus between the accident and its consequence, the death. What is also materially significant is whether the policy was valid when the accident took place. The only other thing germane is as to when the right accrued. After accrual of the right how was it material or relevant, and it was certainly not, that the insured made his mortal exit from this world within or a little after the grace period was over.
14. The District Commission has given a reasoning wherein it has inter alia stated that in the facts of the present case for all practical purposes the date of the accident i.e. 26.01.2004 should also be taken as the date of the death since after that the insured was unconscious and not capable to do any kind of work and was not able to deposit the premium instalment and it has also referred to certain provisions of The Indian Contract Act, 1872. We do not agree with the line of reasoning adopted by the District Commission. In our opinion the rational and correct way of interpreting the policy conditions in the context of the facts and circumstances and the evidence has been aptly argued by the learned counsel for the complainant and has been summarised by us hereinbefore. However, though its reasoning was not apt, the conclusion of the District Commission that the insurance co. was liable to pay the 'benefit of death' to the deceased insured's wife nominee was correct.
15. The State Commission has undertaken a superficial and mechanical examination of the matter and dismissed the complaint perfunctorily holding that on the date of the death i.e. 30.01.2004 the grace period had expired and since the premium had not been paid the policy had lapsed. It did not assiduously endeavour into examining and appreciating the facts and circumstances and evidence comprehensively and holistically with judicious application of mind.
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16. Learned counsel for the insurance co. submits that the rate of interest of 18% per annum on the 'benefit of death' and 'lumpsum compensation' contained in the District Commission's award is arbitrarily high and unreasonable and that a rate of interest of 8-10% per annum at the most would be fair and reasonable.
17. Learned counsel for the complainant makes a faint vain attempt to justify the rate of interest of 18% per annum.
18. In our considered opinion the insurance co. had wrongly repudiated the claim. The District Commission's conclusion to affix liability on the insurance co. to honour the claim was correct even though its line of reasoning was somewhat inapt and may not sustain. The State Commission has made a superficial and mechanical examination of the matter and therefore its perfunctory reasoning too cannot sustain. Both the fora below have failed to appreciate the facts and circumstances and evidence in the correct perspective and have failed to pass orders as may contain reasons that are logical and coherent and which could reflect the correct appreciation and interpretation of the relevant policy conditions.
19. There can be no two opinions that the 'benefit of death', which is the right of the complainant and is the liability of the insurance co., as well as 'lumpsum compensation' and 'cost of litigation', which are fair and reasonable in the facts of the case, as contained in the District Commission's award, have necessarily to be paid by the insurance co. to the complainant i.e. the widow nominee of the deceased insured. We also agree with the District Commission's view that interest on the 'benefit of death' should be awarded from 25.08.2006 i.e. the date of final repudiation of the claim by the insurance co. and interest on 'lumpsum compensation' should be awarded from 07.11.2008 i.e. the date of institution of the complaint. However we find that on the face of it itself the rate of interest of 18% per annum awarded by the District Commission is disproportionate and arbitrarily high. We feel that a rate of interest of 9% per annum shall be just and reasonable in the facts and circumstances of the case, and shall meet the scale of equity.
20. Sequel to the above discussion, the revision petition is disposed of with the direction that the award made by the District Commission vide its Order dated 29.01.2011 is modified to the extent that the rate of interest contained therein apropos 'benefit of death' and 'lumpsum compensation' shall be 9% per annum instead of 18%. The rest of the award remains undisturbed. The award as modified herein shall be made good by the insurance co. within a period of six weeks from today, failing which the District Commission shall undertake execution, for 'enforcement' and for 'penalty', as per the law.
21. The Registry is requested to send a copy each of this Order to the parties in the revision petition and to their learned counsel as well as to the District Commission immediately. The stenographer is also requested to upload this Order on the website of this Commission immediately.
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DINESH SINGH
PRESIDING MEMBER
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KARUNA NAND BAJPAYEE
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