Manjulaben Parmar Vs LIC
- Posted by CERC India
- Posted in Some Cases
Mr. Vithaldas Parmar of Gujarat died of a heart attack ten months and nineteen days after taking a ‘Jeevan Mitra’ insurance policy. LIC repudiated the legitimate claim of his widow, Mrs. Manjulaben Parmar, for Rs.40,000/- on grounds that Vithaldas was a man of intemperate habits and that he had hidden material facts.
Mr. Vithaldas Parmar of Gujarat died of a heart attack ten months and nineteen days after taking a ‘Jeevan Mitra’ insurance policy. LIC repudiated the legitimate claim of his widow, Mrs. Manjulaben Parmar, for Rs.40,000/- on grounds that Vithaldas was a man of intemperate habits and that he had hidden material facts. LIC claimed that it had indisputable proof that for about two years before the insurance proposal, the assured had suffered from chest pain and cough and that he used to take bananas and pears despite medical advice. LIC relied on the assertions of a vaid who claimed to have examined the deceased a few months prior to his death. The case became well known as the ‘bananas and pears’ case in court circles. The Gujarat State Commission allowed the complaint and orderd payment of the claim amount of Rs.40,000/- with 18% interest and Rs.1,000/- as cost to Manjulaben. CERS appealed before the National Commission for award of exemplary damages to the widow. The National Commission ordered payment of the sum assured with interest and Rs. 20,000/- as damages to Manjulaben for the suffering and Rs.2000/- as cost.
CERS has preferred an appeal before the Supreme Court for awarding Rs.2,00,000/- as exemplary damages for the suffering of the widow owing to the arbitrary and negligent attitude of LIC.
The question that has arisen is whether the authorities under the Act are empowered to give punitive damages by way of interest or exemplary damages. The Act empowers the authorities to award compensation. This term means a monetary sum sufficient to make good the loss suffered by the assured due to the negligence of the insurer. In view of this interpretation, it may be said that the Act gives no powers to award punitive damages.
However, in practice the National Commission did allow interest and damages in the case. It fixed the damages of Rs. 20,000/- considering the hard times undergone by the widow and her children for many years as a result of not receiving the payment from LIC.
The Gujarat State Commission accepted in principle that in a situation of unequal bargaining capacity, if LIC is guilty of lack of good faith and fair dealing, it shall be liable for punitive damages which the Commission termed as exemplary damages. However, the Commission felt that the decision of LIC on facts of this case was only erroneous but not arbitrary, oppressive or malicious. It, therefore, declined to award punitive damages.
The State Commission further concluded that repudiation of claim by LIC on the plea of non-disclosure of material fact passed on the statement of a vaid was illegal.
