Case Study - 2

[Expert]

Complainant was employed as a driver and when he was driving a truck from Pali to Jaipur, he met with an accident and sustained injury on his right leg. Thereafter, his right leg was required to be amputated so that he may survive. The LIC repudiated the claim on 12.3.2001 by contending that amputation of one leg was not sufficient for paying the sum assured.

[Expert]

Life Insurance Corporation of India Vs. Anuradha (2004) is litigating for a sum of Rs.25,000/- which is directed to be paid by the District Forum and the State Commission, on the basis of an endowment insurance policy with profit taken by the complainant on 28.3.1994. Complainant paid the premium regularly. He was employed as a driver and when he was driving a truck from Pali to Jaipur, he met with an accident and sustained injury on his right leg. Thereafter, his right leg was required to be amputated so that he may survive. The LIC repudiated the claim on 12.3.2001 by contending that amputation of one leg was not sufficient for paying the sum assured.

The State Commission referred to the decision of the Apex Court in United India Assurance Company Ltd. V/s. Puspalaya Printers 2004 (3) SCC 649 and observed that if there is any ambiguity, or a term is capable of two possible interpretations, the one beneficial to the insured should be accepted consistent with the purpose for which the policy is taken, namely, to cover the risk on the happening of certain event. The State Commission thereafter referred to the fact that a Medical Board was set up by the Government of Rajasthan at SMS Hospital, Jaipur and that Board has certified that the right leg of the complainant below knee was amputated on 25.12.2000. The State Commission also noted that complainant was not educated and cannot be gainfully employed because he is not a normal person. On the said basis, the State Commission confirmed the order passed by the District Forum directing the LIC to pay the sum assured.

Against that order, this revision petition is filed.

Now, we would refer to the condition upon which reliance is placed by the learned counsel for the petitioner. The relevant part of the Condition No.10 (which we divided into two parts) is as under:-

“10. Accident Benefit:- If at any time when this Policy is in force for full sum assured, the Life Assured, before the expiry of the period for which the premium is payable or before the policy anniversary on which the age nearer

birthday of the Life Assured is 70, whichever is earlier, is involved in an accident resulting in either permanent disability as hereinafter defined or death and the same is proved to the satisfaction of the Corporation, the Corporation agrees in the case of :-

“The disability above referred to must be disability which is the result of an accident and must be total and permanent and such that there is neither then nor at any time thereafter any work, occupation or profession that the Life Assured can ever sufficiently do or follow to earn or obtain any wages, compensation or profit.”

“Accidental injuries which independently of all other causes and within 120 days from the happening of such accident, result in the irrecoverable loss of the entire sight of both eyes or in the amputation of the both hands at or above the wrists, or in the amputation of both feet at or above ankles, or in the amputation of one hand at or above the wrist and one foot at or above the ankle, shall be deemed to constitute such disability.”

No doubt the aforesaid condition as per the policy term, is not in divided form as stated above. But, for the purpose of understanding and interpretation the condition is divided into two parts without any addition. First part of the condition, inter alia, provides that in the accident there must be total and permanent disability so that assured can never sufficiently do or follow to earn or obtain any wages, compensation or profit. This part is different from the second part narrated above.

Second part deals with accidental injuries which independent of all other causes, result in loss of limbs as mentioned therein. Such loss of limb is also deemed to constitute permanent disability. It is a deeming provision where capacity to earn is not required to be considered. It makes it clear that independent of the injuries which may be total and permanent for any other cause, the loss of limbs, as stated therein, would by itself be deemed to be permanent disability. To illustrate, a businessman can do his work even if there is amputation of one hand and/or above the wrist and one foot and/or above the ankle.

In our view, this would be the reasonable interpretation and in conformity with the principle that if the terms of the policy are vague it should be interpreted for the benefit of the assured as it would serve the purpose and object of getting insurance coverage Re: Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan & Ors. (1987) 2 SCC 654; Shashi Gupta Vs. LIC of India (1995) Suppl 1 SCC 754; B.V. Nagaraju Vs. M/s. Oriental Insurance Co. Ltd. (1996) 4 SCC 648; and LIC Vs. Raj Kumar Rajgarhia & Anr. (1999) 3 SCC 465.

In any case where there is any ambiguity or term is capable of two interpretations, interest of justice would be served if interpretation one beneficial to the policy holder is accepted: Re: United India Insurance Co. Ltd. Vs. Pushpalaya Printers - (2004)3 SCC 694.

In the present case, the Complainant is an illiterate person whose only job was driving a vehicle and he lost his one leg and become unfit for driving the vehicle then it cannot be said that he can sufficiently do the said work for getting his livelihood or to obtain any wages, compensation or profit by doing the said job. May be that by begging he may get some amount but that cannot be said to be a business or occupation and that such an interpretation is to be avoided.

Learned counsel for the petitioner, however, submitted that the terms of the insurance policy are to be strictly interpreted as held by the Apex Court. For this proposition, we have no doubt. But, at the same time when the condition is ambiguous the interpretation which serves the purpose of insurance is to be accepted.

He further referred to the decision rendered by this Commission wherein this Commission observed that loss of one eye was not a permanent disability and, therefore, the LIC rightly repudiated the claim. In or view, the said judgement would have no bearing on the facts of the present case, as the person is a driver and his livelihood was depending upon driving a vehicle, and that he cannot do so in future for all the time to come.

Finally, we observe that it is necessary for the officers of the LIC to change their negative approach in dealing with such claim and the insurance coverage should not be nullified by backward looking interpretation of the Act and in some cases litigation could be avoided. The Apex Court, in this context, held in Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan, (1987) 2 SCC 654 at 665, that : “It is the statutory provision defining the conditions of exemption which is being interpreted. These must, therefore, be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfill its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not turned to the purpose and philosophy of the legislation without being informed of the true goals sought to be achieved. What the Legislature has given, the Court cannot deprive of by way of an exercise in interpretation when the view which renders the provision potent is equally plausible as the one which renders the provision impotent”.


Hence, in our view, the impugned order passed by the State Commission does not call for any interference. Hence, the revision petition is dismissed.