Case Note & Summary
The case arises from a dispute under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), a government-sponsored life insurance scheme. The complainant, Hariben Kandas Sadhu, was the nominee of the deceased insured, who had a savings account with Bank of Baroda. The insurance was facilitated by the bank under PMJJBY. Upon the death of the insured, the claim was repudiated by Life Insurance Corporation of India (LIC) on the ground that the deceased was over 50 years of age at the time of insurance, making him ineligible under the scheme, which requires the insured to be between 18 and 50 years. The District Consumer Commission allowed the complaint, directing LIC and the bank to jointly and severally pay Rs.2,00,000 with 9% interest from the date of filing, plus Rs.5,000 costs and Rs.3,000 for mental harassment. The State Commission dismissed LIC's appeal. LIC then filed a second appeal before the National Commission, raising substantial questions of law regarding which document should be considered for age determination (Aadhaar card vs. proposal form), whether the insurer can reject a claim after accepting premium, and whether eligibility criteria can be relaxed. The National Commission noted that LIC failed to produce the proposal form, insurance certificate, and repudiation letter despite being directed. The Commission held that it is the insurer's duty to verify eligibility before issuing the policy; having issued the certificate based on bank details, LIC cannot later repudiate the claim on age grounds. The appeal was dismissed, and the orders of the lower fora were upheld.
Headnote
A) Insurance Law - Pradhan Mantri Jeevan Jyoti Bima Yojana - Eligibility Verification - Duty of Insurance Company - The insurance company issued a policy under PMJJBY based on details provided by the bank without verifying the insured's age. Later, it repudiated the claim on ground that the insured was over 50 years. The Commission held that if the scheme mandates eligibility conditions, it is the insurer's duty to verify documents before issuing the certificate; having failed to do so, it cannot repudiate the claim at the stage of settlement. (Paras 7-9) B) Consumer Law - Repudiation of Insurance Claim - Deficiency in Service - The District Commission allowed the complaint and directed joint and several payment of Rs.2,00,000 with 9% interest, Rs.5,000 costs, and Rs.3,000 for mental harassment. The State Commission dismissed the appeal. The National Commission upheld the concurrent findings, dismissing the second appeal. (Paras 3, 9)
Issue of Consideration
Whether the Insurance Company after receiving requisite details and issuing insurance certificate can later repudiate the claim on ground of insured not fulfilling mandatory eligibility conditions, specifically age.
Final Decision
The second appeal is dismissed. The orders of the District Commission and State Commission are upheld. The appellant is directed to comply with the order within four weeks.
Law Points
- Insurance company cannot repudiate claim after issuing policy without verifying eligibility
- Duty of insurance company to verify eligibility before issuing certificate
- Pradhan Mantri Jeevan Jyoti Bima Yojana eligibility conditions
