Case Title: Life Insurance of India Ltd. vs Geeta Madhavrao Damahes & 2 Ors.
Summary
The National Consumer Disputes Redressal Commission (NCDRC) denied Life Insurance of India’s (LIC) Revision Petition and affirmed the State Commission’s ruling. The court ruled that LIC, as a public sector insurance company, is obligated to pay the entire policy amount, despite the complainant’s initial claim for a diminished sum. It ordered LIC to make an incentive payment of Rs. 6 lakhs.
The complaint was filed against the State Consumer Disputes Redressal Commission, Maharashtra, Circuit Bench’s order, which challenged the decision of the District Consumer Disputes Redressal Forum, Nagpur. The deceased spouse of the complainant acquired a Jeevan Mitra policy guaranteeing a sum of 2 lakh rupees. LIC denied the assertion, claiming the decedent had neglected to divulge critical health details during the policy’s acquisition. The District Commission determined that LIC’s denial of the claim was unwarranted and ordered LIC to remit the policy sum of Rs. 2 Lakhs plus 6% interest. The court awarded Rs. 10,000 as compensation for mental distress and incompetence in service, as well as Rs. 10,000 for litigation expenses.
About the case
The NCDRC, presided over by Dr. Inder Jit Singh, denied Life Insurance of India’s (LIC) Revision Petition and affirmed the State Commission’s ruling. The court ruled that LIC, in its capacity as a public sector insurance company, is obligated to pay the entire policy amount, notwithstanding the complainant’s initial claim for a diminished sum. It ordered LIC to make an incentive payment of Rs. 6 lakhs. LIC filed the Revision Petition in opposition to the State Consumer Disputes Redressal Commission, Maharashtra, Circuit Bench’s order, which challenged the decision of the District Consumer Disputes Redressal Forum, Nagpur. A Few Facts: The deceased spouse of the complainant acquired a Jeevan Mitra policy guaranteeing a sum of 2 lakh rupees. In her capacity as the designee, the Complainant submitted a claim to LIC for the amount at the time of the decedent’s passing.
On the contrary, LIC denied the assertion, contending that the decedent had neglected to divulge critical health details during the policy’s acquisition. Subsequently, she lodged a Consumer Complaint with the District Commission, which determined that LIC’s denial of the claim was unwarranted and ordered the company to remit the policy sum of Rs. 2 Lakhs plus 6% interest. LIC, dissatisfied with the ruling, lodged an appeal with the State Commission. Nevertheless, the State Commission affirmed the order of the District Commission and denied LIC’s appeal. The 2009 dismissal of LIC’s Revision Petition before the NCDRC was also a factor. Consequently, in accordance with the State Commission’s order, LIC paid the awarded amount plus costs.
Nevertheless, the complainant lodged an additional complaint with the District Commission, which was dismissed on the grounds that, pursuant to Order-2, Rule-2 of the Code of Civil Procedure, 1908, no balance could be claimed (since the complaint’s cause of action was identical to the previous one) and the complainant had unreasonably waived her claim for the remaining amount (in excess of Rs. 2 Lakhs) in the earlier complaint. The State Commission reversed the order of the District Commission and ordered LIC to satisfy the claim with the remaining balance (less Rs 2,38,800 that the complainant had accepted in protest) after receiving an appeal from the Complainant. The sum comprised the sum guaranteed under the policy scheme (Rs. 2 Lakhs) in addition to the incentive on the sum assured (Rs. 2 Lakhs), which accrued at a yearly interest rate of 9%.
Furthermore, the court awarded Rs. 10,000 as compensation for mental distress and incompetence in service, in addition to Rs. 10,000 for litigation expenses. LIC supported a Revision Petition opposition to the State Commission’s decision before the NCDRC. Aspects noted by NCDRC: In upholding the State Commission’s decision, the NCDRC denied the Revision Petition and ruled that LIC is obligated to reimburse the complainant for the full amount specified in the policy, notwithstanding the initial claim for a diminished sum. In Canara Bank v. United India Insurance Co. Ltd. & Ors., the NCDRC underscored the importance of construing insurance policies in a manner that satisfies the reasonable expectations of all parties concerned, with an ambiguity-resolving preference for the insured. It was noted that LIC, as an insurance company operating in the public sector, has an obligation to completely discharge its responsibilities in light of the State Commission’s decision that the claim repudiation was unwarranted and that the sum assured ought to be paid. The State Commission has reached the determination that the complainant is eligible to receive the sum assured policy’s triple benefit, amounting to Rs. 6 lakhs in addition to an incentive. In support of its position, the Commission emphasized in Rubi Chandra Dutta vs. United India Insurance Co. Ltd. and Sunil Kumar Maity vs. State Bank of India & Ors that its revisional jurisdiction is restricted and may only be invoked when the challenged order contains a prima facie jurisdictional error.
The official statement elaborated that the revisional power is exclusively applicable in particular circumstances delineated in the pertinent legislation. These circumstances include instances where the State Commission exceeded its legal authority or inadequately exercised its jurisdiction. In conclusion, the NCDRC ordered LIC to pay the full amount, Rs 6 Lakhs, plus a bonus amount in accordance with the policy, and denied LIC’s technical objections to the claim.
