Satya Deo Malviya                               -- Complainant
                              Vs.
Life Insurance Corporation of India Ltd.   -- Opposite Party

Before: Hon'ble Mr. Justice M.B.Shah, President, Mrs. Rajyalakshmi Rao, Member.

M.B.Shah, J. President

       It is the say of the Complainant that his mother, Smt. Minta Devi, had taken a life policy from the LIC of India for a sum of Rs.25,00,000/- and a sum of Rs.1,04,975/- was paid as single premium. The endowment policy was for a period between 28th September, 1989 and 28th September 2002, i.e. to say maturity date was after 13 years from the date of the policy. It is also averred that Complainant, Satya Deo Malviya was made nominee under the said policy and the policy was duly assigned to him by his mother. That assignment was registered by the LIC on 25/9/1992 by the endorsement on the policy bond issued by the Corporation.

      It is further stated that mother of the Complainant died on 10-5-1994. Hence, Complainant preferred the claim. To this, Complainant was asked to produce succession certificate. Complainant wrote back that as the policy was assigned there was no question of producing succession certificate. As the amount was not paid, notice dated 1-9-1994 was served on the opposite party. That notice was replied by an Advocate, Mr. Jaiswal by letter dated 7-10-1994. It is submitted that there was no justifiable reason for the Opposite Party not to pay the amount insured as per the policy. Hence, LIC be directed to pay the said amount with interest and costs.

      In response to the notice issued by the Commission, it is contended by the LIC that endowment policy issued in favour of Mrs. Minta Devi was for a sum of Rs.2,50,000/- (Rupees two lakhs fifty thousand only) and not Rs.25,00,000/- as incorrectly mentioned in the policy bond. It is submitted that single premium of Rs.1,04,975/- as per Table-21 which was in force at the relevant time for the endowment policy was paid by the deceased. The age of the deceased at the time of taking the policy was 77 years and the policy was for a term of 13 years. On payment of single premium for this purpose reliance is placed upon Table-21 which provides that endowment term premium rates for the sum assured. As per the said table, if the policy is for 13 years, then single premium for the policy for Rs.1,000/- was Rs.419.90. It is pointed out that such policies of insurance are issued by the Corporation to persons of all age groups without medical check up and such pure endowment policy entails the payment of the sum assured only if the life insured survives the term of the plan. In case of death prior to the stipulated period, the assignee is entitled to refund of the premium paid with interest thereon @ 2-1/2% p.a. compounding yearly, calculated from the date of the premium paid. Relevant part of teh Table-21 relating to pure endowment policy for adults or children is as under:

          "Under the policy, the sum assured is payable on the life assured's surviving the endowment term. If the said life assured shall die before the date of maturity the policy is in force, the following amounts shall be payable to the person or persons entitled to them under an annual premium policy.

     (1) If death shall occur during the first three policy years, the total amount of all premiums paid, and (ii) if death shall occur after the third policy year, the total amount of all premiums paid with interest thereon at the rate of 2-1/2% per annum compounding yearly calculated from the due dates of premiums paid upto the date of death.

     PROVIDED, howeverr, that in no case shall the amount payable exceed the sum assured payable under the policy".

     It is therefore, submitted that Complainant is not entitled to get Rs.25,00,000/- against the payment of a single premium of Rs. 1,04,975/-. For taking the endowment policy for a sum of Rs.25,00,000/-, Rs. 16,51,100/- was required to be paid as premium.

     Learned Counsel for the Complainant submitted that insurance policy specifically mentions that it was for a sum of Rs.25,00,000/-. He, therefore, submitted that Complainant is entitled to receive the said sum with interest and, therefore, there is no question of any mistake in inssuance of the policy. He also refers to the reply dated 7-10-1994 given on behalf of the Insurance Company to the notice issued on behalf of the Complainant and submitted that in the said reply also it is nowhere mentioned that endowment policy was only for a sum of Rs.2,50,000/- and not for Rs. 25,00,000/-.

     It is true that in the original insurance policy which which was produced before us for our perusal the amount which is mentioned is Rs.25,00,000/-. However, considering the facts stated in the affidavit by the Insurance Company it is apparent that instead of Rs.2,50,000/- it is evident that by apparent mistake Rs.25,00,000/- is mentioned. One time premium for the endowment policy for the period of 13 years would be Rs.16,51,100/- which is admittedly not paid. Therefore, the question is whether mentioning of incorrect figure would be sufficient for grant of the amount as claimed by the Complainant. In our view, typographical error of adding one zero after Rs, 2,50,000/- would not entail the Complainant to receive the said amount. 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. [Re. Life Insurance Corporation of India vs. Smt.G.M. Channabasamma, (1991)1 SCC 357]. 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".

     In any case, as per the term quoted above, the Complainant is entitled to have only refund of the premium with interest @ 2.5% p.a. as the death of the insured has occurred before the date of maturity. As stated above, the policy was taken on 28-9-1989 and the insured expired on 10-5-1994. Admittedly, it was an endowment policy for a period of 13 years. Therefore, the Complainant is not entitled to receive the amount of Rs.25,00,000/- as claimed by him. He is entitled to receive the premium paid with interest @ 2.5% p.a. compounding yearly calculated from the due dates of premium paid upto the date of death. Admittedly, the premium paid by the deceased was Rs. 1,04,975/-.

     In the result, complaint is partly allowed. LIC is directed to refund the premium of Rs.1,04,975/- with 2.5% interest thereon till the date of the complaint, i.e. upto 30th September, 1995, and, thereafter, with 9% simple interest till its payment, as the LIC ought to have paid or offered to pay the said amount prior to the date of complaint.

     The complaint is disposed accordingly considering the exaggerated claim. There shall be no order as to costs.