| SETTLEMENT RECORDS
Policy for Rs. 2,50,000/- ‘
Sum assured mentioned in policy bond Rs. 25,00,000/-
Claim made for amount in policy bond premium paid for Former:
Claim rejected
SATYA DEO MALVIYA Vs. LIC OF INDIA
The facts giving rise to the present case are that the insured
was a lady aged 77 years who bought an endowment policy from
the insurer under Table 21 for a period of thirteen years in
1989 by paying a single premium of Rs. 1,04,975/-. The said
insured expired in 1994 and the nominee of the insured (her
son) to whom the policy was duly assigned filed a claim with
the insurer for sum assured of Rs. 25,00,000/- (Rupees twenty
five lacs only) which was rejected by the insurer. The nominee
sent a legal notice to the insurer which was duly replied but
claim not settled.
A complaint was filed by the nominee of deceased before the
National Commission seeking issuance of appropriate directions
to the insurer to pay to the sum assured of Rs. 25 lacs. In
reply to the claim of the complainant the insurer submitted
before the Hon’ble Court that the above said policy was issued
under Table 21 for a sum of Rs. 2,50,000/- i.e. Two Lac Fifty
Thousand only for which a tabular single premium was paid amounting
to Rs. I ,04,975/-. The said amount assured Rs. 25,00,000/-
was mentioned incorrectly in the Policy document. The relevant
premium rates in force at the time the policy was issued to
the deceased were also brought on record which clearly said
the premium under the said policy was in fact Rs. I ,04,975/-
for a term of I 3 years. The insurer also produced the policy
scheme of Table 21 which said
i. The sum assured shall be payable on the life assured surviving
the term of the policy.
ii. If the said life assured died before the date of maturity,
policy being in force, then in case of death during first 3
yrs. of policy, total amount of premiums paid shall be refunded.
In case of death after 3rd Policy year then total amount of
premium paid along with interest thereon@2.5%p.a. compounding
yearly, calculated from due date of premium upto date of death
will be paid.
The complainant also contended that the said amount of Rs.
25 lacs was mentioned in the policy bond itself and there could
not be any mistake in the issuance of the same. Secondly, he
also pointed out that the reply received from the insurer earlier
nowhere stated this mistake as a typographical error. The Hon’ble
Court observed that the stand taken by the insurer was correct
and the sum assured of Rs. 25,00,000/- contained in the policy
bond was only a typographical mistake, this was clear from the
affidavit of the insurer and the details of premiums in force
at the time of issuance of the said policy which were brought
on record by the insurer. It was evident that by mistake Rs.
25,00,000/- was mentioned. One time premium for a sum assured
of Rs. 25 lacs would amount to Rs. 16,51,000/- which was admittedly
not paid by the deceased. The question therefore arose whether
mentioning of incorrect figure would be sufficient for grant
of the amount as claimed by the complainant. According to the
Court the typographical error of adding one more Zero after
Rs. 2,50,000 would not entail the complainant to receive the
said amount. The court also ruled: “Parties to the agreement
are not entitled to get benefits of apparent mistakes. In a
contract of insurance there is a requirement of ‘uberrima fides’
i.e. good faith on the part of the assured. It is the fundamental
principle of insurance law that utmost good faith must be observed
by the contracting parties and good faith forbids either party
from non-disclosure of the facts which the parties know.
Moreover in the policy itself, in bold letters it is mentioned
that, “YOU ARE REQUESTED TO EXAMINE THIS POLICY AND IF ANY MISTAKE
BE FOUND THEREIN, RETURN IT IMMEDIATELY FOR CORRECTION”.
Hence the complainant is entitled to a refund of the premium
paid along with interest@2.5% p.a compounding yearly from due
date of premium upto date of death.
Held :
Insurer to pay the refund of premium along with interest as
aforesaid upto date of complaint and thereafter@9%p.a simple
interest as the insurer ought to have paid or offered to pay
the said amount prior to the complaint.
Compiled by Anurag BonsaI, Advocate, Delhi High
Court Insurance Watch january 2005
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