Pradhan Mantri Jeevan Jyoti Bima Yojana | Provisions Of Policy Must Be Interpreted To Benefit Policy Holder: Madras High Court

Justice GR Swaminathan of the Madurai bench was dealing with a plea challenging the order passed by the Office of the Insurance Ombudsman rejecting a complaint against the Life Insurance Corporation of India for rejecting a death claim.

The petitioner informed the court that her husband was a member of the Pradhan Mantri Jeevan Jyoti Bima Yojana and had a savings bank account with the City Union Bank. The petitioner's husband died on June 1^st, 2018. She submitted that the policy began on June 1^st,2015 and the annual renewal date was on May 31^st,2018 but on that day no deduction happened from the savings account towards payment of the premium amount. Later, when the petitioner approached the insurance company for payment under the death benefit clause, she was informed that the claim could not be admitted or honored due to non-payment of premium.

The insurance company informed the court that due to insufficiency of funds, the premium amount had not been debited from the savings account. It was further argued that the benefit of the grace period could not be invoked in the present case and was available only to the designated branch office of the master policyholder for payment of the premium.

The court noted that as per the policy, the renewal premium must be paid on or before the 31^st of May every year and if such payment could not be made, a grace period of 30 days is given. The court noted that till the expiry of the grace period, the policy must be considered to be in force with the risk cover.

The court disagreed with the insurance company's stand that every year a fresh policy is being issued. The court added that in matters like this, the provisions should be interpreted to the benefit of the policyholder.

In the present case, the court noted that the petitioner's husband had passed away during the grace period when the policy was in force. The court added that the insurance form and the ombudsman had erroneously presumed that the benefit of the grace period was only for the designated branch of the master policyholder.

The court thus set aside the award and directed the insurance company to pay the policy amount within eight weeks.

Counsel for the Petitioner: Mr.K.Lenin

Counsel for the Respondents: Mr.B.Prasanna Vinoth Standing Counsel

Citation: 2024 LiveLaw (Mad) 157

Case Title: M Chellammal v Office of the Insurance Ombudsman

Case No: W.P(MD)No.1259 of 2024