Kerala High Court
Life Insurance Corporation Of India vs Smt.Surumi on 2 August, 2024
2024:KER:61155
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.M.MANOJ
FRIDAY, THE 2ND DAY OF AUGUST 2024 / 11TH SRAVANA, 1946
WP(C) NO. 16294 OF 2015
PETITIONER:
LIFE INSURANCE CORPORATION OF INDIA
DIVISIONAL OFFICE, JEEVAN PRAKASH,PATTOM POST,
TRIVANDRUM-695 004, REPRESENTED BY THE
MANAGER(LEGAL & HPF),LIC OF INDIA,DIVISIONAL
OFFICE,ERNAKULAM-682 011.
BY ADVS.
SRI.R.S.KALKURA
SMT.R.BINDU
SRI.HARISH GOPINATH
SRI.M.S.KALESH
RESPONDENTS:
1 SMT.SURUMI, THEGAS NAGAR 69, PAZHAYATTINKUZHI
THOTTAMALA P.O.,KOLLAM DISTRICT-691020.
2 THE INSURANCE OMBUDSMAN, KOCHI
REPRESENTED BY ITS SECRETARY,2ND FLOOR,PULINAT
BUILDING, OPP.COCHIN SHIPYARD, M.G.ROAD,
ERNAKULAM, KOCHI-682 015.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON ON 02.08.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
2
W.P.(C) No.16294 of 2015
2024:KER:61155
JUDGMENT
Dated this the 2nd day of August, 2024
This writ petition is preferred by the Life Insurance
Corporation of India assailing Ext.P5 order passed by the 2 nd
respondent - Insurance Ombudsman under Rule 12(1) (b) r/w
Rule 13 of the Redressal of Public Grievances Rules, 1998 (for
short 'the Rules, 1998').
2. The short facts of the case are as follows:
The 1st respondent preferred a complaint before the 2 nd
respondent Ombudsman under Rule 12 (1)(b) r/w Rule 13 of the
Rules, 1998. Such a complaint was preferred on the premise that
claim raised by her was repudiated by the 2 nd respondent on the
ground that the policy was not in existence due to default on the
date of the death of her husband.
3. It is stated in the complaint that her husband Mr. B.Noufal
had taken a policy from the petitioner company bearing
No.785098280 with risk commencing from 04.06.2011. Her
husband passed away on 29.01.2013 on account of heart attack
and at that point of time, the 1 st respondent is surviving with her
three minor children and the mother of the deceased. The policy
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holder had regularly remitting the instalments of premium from
04.06.2011 onwards. On account of some financial difficulty in
connection with the last delivery of the petitioner, he could not
make the payment, which was due on 04.12.2012. After the
death of her husband, when a query was made by the petitioner,
it was told that due to failure to remit the instlament of premium
due 12/2012, the claim could not be allowed. This is the
circumstance in which she approached the 2 nd respondent as per
Ext.P1 complaint.
4. In Ext.P1 complaint, the 1st respondent specifically
explained the state of affairs, which appealing the consciousness
of any person because she was only 24 years age at that point of
time, studied upto 10th standard and having three minor kids
aged only 4 years, 3 years and 4 months along with the aged
mother of the deceased, who is suffering from various ailments.
In fact, the policy was taken for the future of their daughter and
the deceased was prompt in payment with effect from
04.06.2011.
5. Conversely, the petitioner preferred a detailed reply to
Ext.P1 complaint vide communication dated 21.12.2013 wherein
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it was made clear that the policy on the life of Mr.Noufal B, with
risk commencing from 04.06.2011 had been taken for a sum of
Rs.2 lakhs with payment of premium on quarterly basis payable
on 4th July, September, December and March of every year at the
rate of Rs.1912/-. In fact, tenure of the insurance was 20 years
which is upto 03/2031 and as per the terms of the policy, the life
assured is given one month's grace period for remitting the
premium. But due to the delay in remitting the same, the policy
lapsed and the death benefit under the policy could not be
granted. This factum was submitted before the 2 nd respondent.
The sole reason behind the repudiation of claim was, the
deceased B.Noufal failed to remit the premium which was due for
the month of 12/2012 within the grace period ending on
04.01.2013. The assured died on 29.01.2013, and the grace
period has expired by that time.
6. On considering the contentions raised by both sides, the
Ombudsman - the 2nd respondent, in compliance with Rule 14,
passed an award dated 03.12.2014, whereby directed the
petitioner to pay the insured sum as ex-gratia under Rule 18 of
the Rules, 1998.
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7. The writ petition is filed being aggrieved by such direction
stating that the exercise of discretion under Rule 18 is not proper.
It is further stated that the 2 nd respondent failed to take note the
circumstances that the policy got lapsed due to failure of
remitting the premium due on 04.12.2012 and even during the
grace period. It is also stated that the 2 nd respondent has not
considered the terms and conditions in the policy document which
forms a binding contract with regard to the privileges under the
policy in the event of death when the policy is in a lapsed
condition. It is further states that such condition is available only
if the death occurs after at least two full years premium has been
paid as is evident in Condition No.4 of the policy, which governs
the field. This was simply ignored by the 2 nd respondent while
passing the award.
8. It is further contended that the 2 nd respondent failed to
appreciate the fact that the condition precedent required for
considering the claim under ex-gratia payment did not exist in the
particular case as the life insured had passed away even before
the payment of at least two full years of premium under the
policy. In Rule 14 of the Rules 1998, the Ombudsman is bound to
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act fairly and equitably. The power of Rule 18 would be subject to
the rules, guidelines and circulars of the petitioner. Ex-gratia
payment does not mean that the entire policy amount can be
awarded on the basis of sympathy.
9. I have heard sri. R.S.Kalkura, the learned counsel for the
petitioner. No appearance for the 1st respondent.
10. On a perusal of Ext.P5, especially in paragraph 5, it is
specifically contended by the Ombudsman that "the policy has
run only for one year and six months. The premium due 12/2012
was not paid within the days of grace and technically policy is in a
lapsed status at the time of death. However, the respondent
insurer can condone the delay in remitting the premium and pay
the claim. This becomes necessary in view of the pathetic
condition of the widow and her three children. She is only 24
years and children are aged 6, 4 and 2 with no one to take care
of. Insurance companies have a social obligation as well and in
deserving cases, they have to compassionate."
11. It is the circumstances in which the 2 nd respondent
directed the company by stating that in case "the company is
having any legal hurdle in reviving the lapsed policy, the sum
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assured may be paid as ex-gratia under Rule 18 of the Rules
1998" whereby award is passed directing the respondent insured
to pay the claim within the period mentioned thereunder, without
awarding any costs.
12. At this point, it is pertinent to note the Rule 18 of the
Rules 1998, which says power to make ex-gratia payment..
"18. Power to make Ex-gratia payment : If the Ombudsman
deems fit, he may award an Ex-gratia payment."
13. Going by the said provision, it is the discretionary power
to be exercised by the Ombudsman. He may award an ex-gratia
payment in fit cases according to his judgment. Specific powers
have been vested with the Ombudsman as per Rule 18.
14. The learned counsel for the petitioner vehemently
argued the matter and has produced a reported judgment in Star
Health and Allied Insurance Company Ltd. v. Baiju S. and
another reported in [2019 (4) KHC 113], wherein it is stated:
"If only reasons are assigned by the authority, an
appellate or judicial forum will be in a position to
evaluate the manner in which the power was exercised
in order to arrive at a just conclusion. However, in the
case on hand, Ombudsman basically found that, the
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contract of policy issued is ab inito void, consequent to
the illegal conduct on the part of the 1 st respondent
not disclosing the true and material facts, which forms
the foundation of issuance of a policy. Above all on a
reading of Rule 18, it is explicit that only if it deems fit,
the ex-gratia may be awarded, which thus means, the
authority was duty bound to explain the circumstances
leading to the fitness of things enabling him to do so.
Having not done so, the substratum with respect to
the exercise of the discretionary power
vanishes. ...........".
15. On perusing the above judgment, it appears that in fact
this ratio is decided in favour of the 2nd respondent. Since in the
case on hand, while exercising jurisdiction under Rule 18, specific
reason is assigned by the Ombudsman while exercising discretion
provided under Rule 18. He has considered the pathetic situation,
in which the 1st respondent is in. It is also considered that the
circumstances in which she approached the Ombudsman for
awarding the assured sum.
16. The factual situation discernible from the records is that
at the time of the death of her husband, admittedly the premium
was in default. In fact, there was a grace period from 4.12.2012
to 04.01.2013. Due to the financial paucity in connection with the
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3rd delivery of the 1st respondent, the insured could not remit the
amount, which comes to Rs.1912/-. That itself shows the financial
situation of the 1st respondent. While this being the situation, her
husband expired on 29.01.2013 due to heart attack. She was not
in a position to continue any further payment towards the policy
as she is jobless, studied only upto 10th standard and aged only
24 years. At that point of time, she was surviving with the aged
mother of the deceased along with three minor children aged 6, 4
and 2. This situation is specifically explained by the Ombudsman
while exercising his discretionary jurisdiction under Rule 18. I am
satisfied that the ombudsman is justified in granting the ex-gratia
by exercising his discretion under Rule 18 of the Rules 1998.
13. I do not find any reason to interfere with Ext.P5.
Accordingly, the writ petition fails and dismissed.
Registry is directed to communicate this judgment to the 1 st
respondent.
Sd/-
P.M.MANOJ
JUDGE
das
2024:KER:61155
APPENDIX OF WP(C) 16294/2015
PETITIONER EXHIBITS
EXHIBIT P1- TRUE COPY OF THE COMPLAINT DATED 03-05-2013
SUBMITTED BY THE FIRST RESPONDENT BEFORE THE SECOND
RESPONDENT.
EXHIBIT P3- TRUE COPY OF THE COMMUNICATION DATED 21-12-
2013 ISSUED BY THE PETITIONER TO THE SECOND RESPONDENT.
EXHIBIT P3- TRUE OFFICE COPY OF POLICY DOCUMENT BEARING
NO. 785098280 ISSUED BY THE PETITIONER.
EXHIBIT P4- TRUE COPY OF PROPOSAL FORM DATED 04-06-11
SUBMITTED BY THE DECEASED LIFE ASSURED.
EXHIBIT P5- TRUE COPY OF THE AWARD DATED 03-12-2014
BEARING NO. IO/KOC/A/LI/0256/2014-15 ISSUED BY THE
SECOND RESPONDENT.
EXHIBIT P6- TRUE COPY OF THE COVERING LETTER DATED 16-
12-2014 FROM THE OFFICE OF THE SECOND RESPONDENT.
EXHIBIT P7- TRUE COPY OF THE RELEVANT PORTIONS OF THE
MANUAL PERTAINING TO PAYMENT OF EX GRATIA ISSUED BY THE
PETITIONER CORPORATION.
