LIC OF INDIA VS. ABHISHEK GHOSH DASTIDAR

Wrong account no mentioned on premium cheque-dishonoured paid up value paid-insurer kept mum for 1 year-held insurer liable for deficiency in service as no notice of dishonour served on insured:

The brief facts giving rise to the case are that the insured was covered under a short term policy of 5 years with the above insurer. The four yearly premiums were duly paid by the insured but the last one was paid by the mother of the insured as his guardian. In this last cheque the account number was by mistake wrongly mentioned and it was returned unpaid. The insurer paid the paid up value to the insured. The insured was at the time of maturity informed of this fact of dishonour of the cheque but he claimed the sum assured along with the interest be paid to him which was declined.
The insured filed a complaint with the district forum which held the insurer liable for deficiency in service as the fact of dishonour of the cheque was not intimated to the insured and awarded interest on the amount of premium paid along with the interest.
In appeal by the insurer the appellate court observed that it was clear that the insured had tried to pay the premium by cheque. However unfortunately the cheque was dishonoured due to the reason mentioned above and premium remained uncollected. But the fact to be noted was that the cheque was dishonoured before the date of payment of last premium i.e. 15-11-99 yet the insurer did not care to inform/intimate the insured about this fact and kept silent for a period of one year till maturity of policy and till the insured laid claims for the maturity amount with the insurer.
Had the insurer intimated the fact of dishonour of cheque to the insured there was all the possibility that the insured would have issued a fresh cheque or taken efforts to correct the account number of the cheque in question already issued. Thus though the insured inadvertently committed a mistake in issuing the cheque bearing wrong account number, yet the fault
on the part of the insurer was much graver and it has to bear the blame of its omission of not intimating the insured about the same.

As regards the amount of compensation it was clear that the insured would get nothing more than what he would have got had the last premium amount was collected. The court allowed compensation of Rs.11000/- and cost Rs.1000/- to the insured besides the paid up value of Rs.40000/- already received.

Held: The insurer liable for deficiency of service and to pay paid up value along with compensation and costs and interest @12% p.a. in case of default in paying the same.

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