The present appeal has been filed by the appellant Life Insurance Corporation of India challenging the order dated 26.09.2016 passed by the State Consumer Disputes Redressal Commission, Maharashtra, (in short the State Commission) in Consumer Complaint No.CC/11/338. Brief facts of the case are that Mr. Sanjay Kumar Savleram Bare submitted a proposal on 2.

29.11.2004 for taking Life Insurance Policy

Jeevan Mitra double cover endowment plus profit plus accident benefit

and deposited Rs.1,68,609/- for sum assured of Rs.39,00,000/-. On 11.07.2005, the policy was issued, bearing no.960205662 under TT 88-24. On 25.11.2005, the policy lapsed for non-payment of premium. On 09.09.2009, the policy holder applied for revival of the policy and medical was done but no amount was paid. On 12.09.2009, medical report was received by the branch office Nasik of the opposite party. On 14.12.2009, the Divisional Office of the Insurance Company informed that the policy cannot be accepted for revival at this stage and may be kept in abeyance for six months. On 01.01.2010, a letter was sent to life assured which was duly received by him stating that the revival is postponed for six months. In the meanwhile, the life assured expired on 02.01.2010. On 27.12.2011, complaint was filed before the State Commission. The complaint was resisted by the opposite party by filing written version. On 26.09.2016, the State Commission passed the following order:- -1-

1. Consumer complaint is allowed with costs quantified at Rs.30,000/-.

2. Opponent/LIC of India is directed to pay an amount of Rs.78 lakhs (Rupees Seventy Eight lakhs only) (double the sum assured) along with Bonus accrued as per policy terms and conditions to the complainant within a period of 45 days from the date of this order. Non compliance of the order shall be liable for payment of interest @9% p.a. till realization on the amount ordered to be paid.

3. Opponent is also directed to pay an amount of Rs.1 lakhs (Rupees one lakh only) as compensation towards mental agony and suffering.

Hence the present appeal. 3. Heard the learned counsel for both the parties and perused the record. Learned counsel for 4. the appellant stated that the Deceased Life Assured (DLA) paid only one premium and did not bother to pay any further premium, accordingly the policy lapsed. The DLA applied for the renewal of the policy dated 11.07.2007, which was considered by the Insurance Company and the Insurance Company got the medical examination done of the life assured before taking any decision on the renewal of the said policy. After seeing the medical report, the decision was taken by the Insurance Company that the renewal should be kept pending for about six months and accordingly a letter dated .01.01.2010 was issued, which was received by the life assured on the same day. It was clearly mentioned in this letter that the renewal will be taken up after six months. The learned counsel stated that in postponing the decision on renewal for about six months, the idea was that in the meantime, the test report of the life assured might get better. Ultimately, the life assured died on 02.01.2010. The insurance claim was submitted by the complainant to the Insurance Company, however the Insurance Company repudiated the claim on the ground that there was no renewal of the policy and therefore, the policy was not valid on the date of death of the life assured. The State Commission has allowed the complaint of the respondent on the basis of the guidelines issued by IRDA vide their Circular No. 1385GI 2002 ENG dated 26.04.2002, which states that after receiving a proposal, Insurance Company should take the decision within 15 days. The State Commission has applied this guideline in the present case also, whereas the present case is not an initial proposal, rather it was an application for renewal of the lapsed policy. Clearly, no time limit is prescribed for renewal of the policy and it is the discretion of the Insurance Company to revive or not to revive the policy. Learned counsel referred to condition No.2 and 3 in this regard which reads as under:-

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 sum assured paid after deduction of the said premium as also the unpaid premiums falling due before the next anniversary of the Policy. If 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 in case of death 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 amount.

3. Revival of Discontinued policies: If the Policy has lapsed it may be reived during the life time of the Life Assured, but within a period of 5 years from the date of the first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest of such rate as may be fixed by the Corporation from time to time compounding half yearly. The Corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the life assured.

It was argued by the learned counsel for the appellant that insurability for lapsed period is to 5. be seen by the Insurance Company and that is why, the medical examination is done to know the health status of the life assured. In the interest of the life assured, a decision was taken by the Insurance Company that the renewal will be considered after six months expecting improvement in the test parameters of the life assured. It was stated that unless the Corporation approves the revival, the policy cannot be treated as valid and will have the status of a lapsed policy. The State Commission fell in error by treating the renewal application as an initial proposal for a policy in applying IRDA guidelines in the present case, whereas the present case is related to a proposal of revival of a lapsed policy. So, there is no occasion for the applicability of these guidelines of the IRDA. In support of his argument learned counsel referred to the judgment of the Honble Supreme Court in Life Insurance Corporation of India Vs. Jaya Chandel, JT 2008 (2) SC 250 [LQ/SC/2008/273] , wherein the following has been held:-

6. The grace period is one month and therefore the State Commission was not justified in holding that the payment was made within the grace period. Condition 3 relates to revival of discontinued policy. A bare reading of the condition shows that it can be revived during the life time of the assured. In the instant case the cheque was admittedly received after the death of the assured. Further the revival takes effect only after the same is approved by the Corporation and is specifically communicated to the life insured. In the present case this is not the situation.

Learned counsel further stated that the Honble Supreme Court in 6. L.I.C. of India & Ors. has taken a view Vs. Rakshna Devi, Civil Appeal No(s).808 of 2007, decided on 03.02.2011 that even if the policy was issued, but the life assured died before the issuance of the policy, the contract of insurance would not be treated as concluded. The Honble Supreme Court has held the following:-

The facts have been set out in the impugned judgment and hence we are not repeating the same here. It appears that on 30.01.1998 Ishwar Chand submitted a proposal for getting a LIC policy. He died on 01.03.1998. Unaware of the death of the assured on 01.03.1998, the proposal was accepted by the LIC on 02.03.1998 and an insurance policy was issued on 09.03.1998. The question is whether there is a concluded contract or not. A contract under the Contract Act implies offer, acceptance and consideration. Without acceptance there is no concluded contract. If before the acceptance the offerer dies, the offer immediately lapses and hence there cannot be any acceptance after his death. Hence, the impugned judgment of the National Commission is not correct and it is set aside. The Appeal is allowed accordingly. No costs.

From the above judgment, the argument of the learned counsel for the appellant is that in the 7. present case the contract of renewal was not completed as the renewal was not accepted by the Insurance Company and the offer of renewal lapsed on the death of the life assured, therefore, no relief can be granted to the complainant on the basis of treating renewal application as an initial policy proposal and then applying IRDA guidelines dated 26.04.2002. On the other hand, learned counsel for the respondent/complainant stated that the State 8. Commission has considered all the aspects and has allowed the complaint in favour of the complainant. The IRDA guidelines are very much applicable in the present case as the renewal application was also a proposal given by the life assured and it is not open to the Insurance Company to sit on the proposal for a long time. When the medical examination was already conducted by the authority for consideration of renewal of the policy, the Insurance Company should have taken the final decision. However, the Company issued a letter dated 1.1.2010 that the matter of renewal will be considered after six months. It clearly means that the proposal of renewal was not finally rejected by the Insurance Company, rather, it was kept pending against all rules. If the Insurance Company was not satisfied with the medical test results of the life assured, the renewal application should have been rejected. If the Insurance Company keeps the proposal pending and does not decide for a long time, the risk cannot be kept open for the proposer. The Insurance Company cannot be allowed to do so, and make the applicants suffer and therefore, IRDA guidelines are equally applicable for renewal of policies as well. I have carefully considered the arguments advanced by the learned counsel for the parties 9. and have examined the record. The State Commission has allowed the claim on the ground that the policy stood revived as the company was bound to take decision within a period of 15 days from the submission of the proposal of the renewal. The fact is that the policy was in a lapsed condition due to non-payment of premium and renewal was applied after four years. However, no final decision was taken by the Insurance Company on the renewal application of the complainant. Just because the Insurance Company got the medical examination of the complainant for which the complainant deposited certain amount and then vide letter dated

01.01.2010 the Insurance Company deferred the decision for six months would not mean that the renewal was allowed by the Insurance Company. Guidelines of IRDA are certainly the guidelines to be followed by the Insurance Company, however, there are two questions involved. The first question is whether the guidelines referred to by the learned State Commission are applicable for the renewal applications also and the second point is that if an Insurance Company has violated the particular guidelines, what would be the repercussion of the same. So far as the first point is concerned, the clause that has been relied upon by the State Commission is in respect of the new proposal. A policy lapses when the premium is not paid as per the policy condition. It is true that a policy can be renewed and there are different provisions for revival by different companies for different kinds of policies. In the present policy, renewal could have been made within five years. The complainant applied within this limit. It is expected from the Insurance Company that even if no period is prescribed for disposal of the application for renewal, it should be disposed of within a reasonable time whether there are guidelines of IRDA or not. The Insurance Company has not disposed of the application finally, rather, even after medical examination done, the decision has been deferred for six months. No reason has been given in the communication sent to the insured, however, the learned counsel for the Insurance Company has stated that this decision was taken so that parameters of blood tests may improve within six months and the renewal could have become possible. The complainant has contended this theory and has stated that when the medical examination was completed, the Insurance Company should have finally decided the issue of renewal of the policy, so that if the renewal was rejected, the complainant may have gone to some other insurance company for a fresh insurance. Be that as it may, the fact of the matter is that the revival was not allowed by the insurance company in the present case. Under conditionNo.3, the issue of revival of discontinued policy has been mentioned. It is clearly stated that continued insurability will be seen to the satisfaction of the Corporation. It is further mentioned that the Corporation reserved the right to accept or decline the revival of the discontinued policy. The Corporation has neither accepted nor declined the revival of the discontinued policy in the present case. Now the question for consideration is whether this will be treated as approval of revival by the Corporation. Clearly, the guidelines of IRDA for new proposal do not seem to be applicable for renewal cases. Clearly, the contract has not been concluded as the Corporation has not approved the revival of the policy. Honble Supreme Court in Life Insurance Corporation of India Vs. Raja Vasireddy Komalavalli Kamba, (1984) 2 has clearly observed that if there is no communication of approval of the proposal of SCC, 719, the proposer the contract is not concluded. In this case the observation of the Honble Supreme Court reads as under:-

13. The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy documents is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. See in this connection the statement of law in Corpus Juris Secundum, Vol. XLIV page 986 wherein it has been stated as:-

The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offerer, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the companys executive officers.

14. Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Similarly the judgement of the Honble Supreme Court in 10. Life Insurance Corporation of relied upon by the appellant clearly states that India Vs. Jaya Chandel, JT 2008 (2) SC 250 [LQ/SC/2008/273] revival takes effect only after the same is approved by the Corporation and is specifically communicated to the life assured. In view of the above judgements of the Honble Supreme Court, the renewal of lapsed 11. policy of the DLA cannot be taken to be revived and the status of the policy remain lapsed at the time of the death of the assured. Coming to the second question about the repercussion of the violation of the guidelines of 12. IRDA, it is seen that Regulation 11 (4) of the Insurance Regulatory and Development Authority (Protection of Policyholders Interest ) Regulations, 2002, the following reads as under:-

Any breaches of the obligations cast on an insurer or insurance agent or insurance intermediary in terms of these regulations may enable the authority to initiate action against each or all of them, jointly or severally, under the and/or the Insurance Regulatory and Development Authority Act, 1999.

From the above, it is clear that if the guidelines/provisions of this Circular are not followed 13. by the insurance company, it is the IRDA which is empowered to take action against the insurance company and the complaint may be filed with IRDA. Moreover, even in these guidelines, there is no deeming provision that if Insurance Company does not take a decision within 15 days of receiving the proposal, the approval of Insurance Company on the proposal would be assumed. In fact, the condition reads as under:-

4 (6) Proposals shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposals by the insurer.

With respect to deficiency of the insurance company for violating the provisions of the 14. Circular of the IRDA, this Commission has to consider the legal position with respect to conclusion of the insurance contract as well. As explained above, the insurance contract was not concluded in the present case and therefore, the insurance claim is not payable. Thus, from the above examination, it is clear that first of all the State Commission has 15. wrongly applied the guidelines of the IRDA in the present case. Secondly, the policy cannot be treated as revived as there was no approval from the Insurance Company for such revival and no such revival can be presumed or deemed to have been approved as there was no concluded contract on the proposal of revival. Thirdly for violation of any guidelines of the Insurance Company, the action can be taken by the IRDA Act 1999 and the Insurance Act 1938 on the application filed by the complainant. However, it has been seen that the Insurance Company should have taken a decision after getting the medical test reports of the Life Assured either this way or that way instead of postponing the decision for six months. It has been found that the guidelines of IRDA relied upon by the State Commission are not applicable to the case of revival of policy, however, as a service provider, the appellant should have taken a decision on the application for revival within a reasonable time which should not have been a period of six months definitely. This has deprived the Life Assured to explore other avenues for insuring himself. Therefore, in my view, there is some deficiency of service on the part of the Insurance Company as a service provider. As there was no concluded contract on the proposal of revival of the lapsed policy the policy amount is definitely not payable to the complainant, however, in the facts and circumstances of the cases, I deem it appropriate to award a compensation of Rs.2,00,000/- to the complainant to be paid by the appellant Insurance Company. The Insurance Company is also liable to refund the amount received from the DLA for renewal of the policy including the amount paid for medical examination. Based on the above discussion, the first appeal no.1429 of 2016 is allowed and the order of 16. the State Commission dated 26.09.2016 is modified to the extent that the appellant Insurance Company shall pay a compensation of Rs.2,00,000/- (rupees two lakhs only) instead of policy amount of Rs.78,00,000/- plus bonus as allowed by the State Commission. The compensation of Rs.1,00,000/- awarded by the State Commission for mental agony stands merged in the present order for award of Rs.2,00,000/- as compensation. This amount of Rs.2,00,000/- be paid to the complainant by the appellant Insurance Company within a period of 45 days from the date of receipt/service of this order along with 9% interest from the date of order of the State Commission i.e. from 26.09.2016 till actual payment. Along with this amount, the Insurance Company shall also refund the amount received from the DLA for renewal of the policy including the amount charged for medical examination. The appellant Insurance Company shall also pay to the complainant a sum of Rs.25,000/- (rupees twenty five thousand only) as cost of litigation. ...................... PREM NARAIN PRESIDING MEMBER