Nalgonda District Commission Holds LIC Liable For Repudiation Of Genuine Claim Due To Inaccurate Verification Of Insured's Eligibility Age

Brief Facts:

The Government of Telangana had provided the Rythu Bhima Scheme for all farmers with agricultural land in the state's revenue villages. This scheme, under a Master Policy issued by Life Insurance Corporation of India (“LIC”) in the name of the Telangana Government, assured a sum of Rs. 5,00,000/- to each farmer in Telangana. Mr Hussein (Deceased) was a farmer and a member of the scheme. He died on August 15, 2020. Following his death, his wife (“Complainant”) approached the District Agriculture Office in Nalgonda. She submitted a claim intimation along with the necessary documents to claim the life insurance amount. The District Agricultural Officer forwarded these claim papers to LIC via email on the same day for settlement.

However, LIC returned the claim to the District Agricultural Officer, stating that the age of the deceased was more than 70 years according to Aadhar verification, rendering him ineligible for the claim. The Complainant contended that the deceased's Aadhar Card showed his date of birth as July 1, 1963, making him 57 years old at the time of his death. Therefore, she argued that LIC was liable to pay the policy amount as per the terms and conditions. Feeling aggrieved, she filed a consumer complaint in the District Consumer Disputes Redressal Commission, Nalgonda, Telangana (“District Commission”) against LIC and the Director of Agriculture, Govt. of Telangana.

LIC contended that the complaint filed against it was not maintainable due to the absence of a direct contractual relationship between LIC and the deceased. Further, the Director of Agriculture was designated as the representative of the Government of Telangana and was responsible for acting on behalf of both the government and the insured members participating in the scheme. The Director of Agriculture contended that the master policy was issued to the Government of Telangana, covering all eligible and enrolled members under the scheme, as per the terms agreed upon with the Government.

Observations by the Commission:

The District Commission noted that as per the claim settlement guidelines of the scheme, LIC reserved the right to investigate the authenticity of the age of the deceased farmer based on Aadhar verification. LIC's investigation, based on documents downloaded from the UIDAI website, indicated that the age band of the deceased was between 70 to 80 years, rendering him ineligible for coverage under the scheme. LIC also highlighted its correspondence with UIDAI seeking clarification on the age discrepancy, but UIDAI declined to provide specific information regarding the Aadhar verification process. On the other hand, the Director of Agriculture contended that the failure of LIC to verify the age properly at enrollment and subsequent years contributed to the denial of the claim.

The District Commission analyzed the evidence presented by both parties, including documents such as the Insurance Certificate, Aadhar cards, and correspondence between LIC, UIDAI, and the Nodal Agency. It observed that the deceased's age, as recorded in the Insurance Certificate, indicated that he was within the eligible age criteria at the time of his death. It also noted discrepancies in the verification process and the duty of both LIC and the Director of Agriculture to ensure accurate enrollment and age verification under the scheme.

Based on these observations and considering the terms of the Rythu Bhima Scheme, the District Commission partially allowed the complaint. It directed LIC to pay the sum assured of Rs. 5,00,000/- to the Complainant, along with Rs. 30,000/- as compensation and Rs. 10,000/- as litigation costs. The complaint against the Director of Agriculture was dismissed, owing to a lack of direct liability.

Case Title: Badavath Chandi vs The Branch Manager, Life Insurance Corporation of India and Anr.

Case No.: C.C. No. 14 of 2022

Date of Pronouncement: June 14th, 2024