Insurance Corporation of India Vs. Jaya Chandel  Insc 148 (7 February 2008)
Arijit Pasayat & P. Sathasivam
APPEAL NO. 1089 OF 2008 (Arising out of SLP (C) No.12792 of 2005) Dr. ARIJIT
Challenge in this appeal is to the order passed by the National Consumer
Disputes Redressal Commission (in short the "National Commission")
dismissing the Revision Petition filed by the appellant. Challenge before the
Commission was to the order passed in appeal by the Himachal Pradesh State
Consumer Disputes Redressal Commission, Shimla (in short the 'State
Commission') which in turn had upheld the order passed by the District Forum, Shimla
(in short the 'District Forum').
facts in a nutshell are as follows:
Singh Chandel (hereinafter referred to as the 'deceased') had taken a Life
Insurance Policy and was insured for a sum of Rs.1,50,000/-. The annual premium
payable was Rs.12,821/-. The policy was taken on 28.3.1994. The annual premium
which was to be paid on or before 28.3.1995 was not paid. In terms of the
policy, the same became inoperative after one month. The insured died on
1.7.1995. A cheque drawn on Jogindra Cooperative Bank Ltd. for an amount of
Rs.12,821/- purportedly on account of premium along with late fee of Rs.189/-
was issued by one Prakash Chand Thakur on 27.6.1995. The same was received on
12.7.1995. According to the claimant i.e. widow of the deceased, the cheque was
issued before the death of the insured and therefore, the appellant could not
have repudiated the claim.
stand of the present appellant was that the policy had lapsed due to
non-payment of premium in time. This plea was not accepted by the District
Forum on the ground that the cheque was claimed to have been issued on
12.7.1995, but is presumed to have been received earlier than that date. The
State Commission held that in any event the amount was received within the
grace period and therefore, the claim could not have been repudiated.
Accordingly the appeal filed by the appellant was dismissed. The National Forum
dismissed the Revision holding that Section 64-VB of the Insurance Act, 1938
(in short the 'Insurance Act') was applicable where the premium is tendered by
postal money order or cheque sent by post and the risk may be assumed on the
date on which the money order is booked or the cheque is posted, as the case
may be. Therefore, it was held that there was revival. It did not accept the
stand of the appellant that the revival was not a matter of right.
support of the appeal, learned counsel for the appellant submitted that the
District Forum, the State Commission and the National Commission failed to
notice certain relevant factors.
not explained as to why the cheque was issued by Prakash Chand Thakur and not
by the insured. This is sufficient to show that subsequently a cheque was
issued to regularize the policy.
the cheque was received on 12.7.1995 much after the death and this itself is
sufficient to show that the cheque was not issued prior to the death of the
insured. The extract of the receipt register has been filed which shows that
the cheque was received on 12.7.1995. The State Commission came to the
conclusion that the cheque was issued during the grace period.
is also factually incorrect because the grace period is 30 days, the premium
was due on 28.3.1995 and the cheque was issued much beyond the grace period.
Additionally, Section 64- VB does not apply to the appellant. In this context
Section 43 of the Life Insurance Corporation Act, 1956 (in short the 'Act') has
relevance. Reference is also made to Condition 2 of the policy.
reply learned counsel for the claimant submitted that it is not Condition 2 of
the policy which is applicable, but Condition no.3 which is applicable. It is
stated that no adverse inference can be drawn because the insured had not
signed the cheque and merely because the cheque was received after the death of
the deceased that does not entitle the appellant to refuse a genuine claim.
2 & 3 of the policy read as follows:
Payment of premium: A grace period of one month but not less than 30 days will
be allowed for payment of yearly, half - yearly or quarterly premiums and 15
days for monthly premiums. If death occurs within this period and before the
payment of the premium then due, the Policy will still be valid and the sum
assured paid after deduction of the said premium as also the unpaid premiums
falling due before the next anniversary of the Policy. If premium is not paid before
the expiry of the days of grace the Policy lapses. If the Policy has not lapsed
and the claim is admitted incase of death under a Policy where the mode of
payment of premium is other than yearly, unpaid premiums if any falling due
before the next Policy anniversary shall be deducted from the claim
Revival of discontinued Policies: If the Policy has lapsed it may be revived
during the life time of the Life Assured, but within a period of 5 years from
the date of the first unpaid premium and before the date of maturity, on
submission of proof of continued insurability to the satisfaction of the
Corporation and the payment of all the arrears of premium together with
interest at such rate as may be fixed by the Corporation from time to time compounding
half yearly. The Corporation reserves the right to accept or decline the
revival of discontinued policy. The revival of a discontinued policy shall take
effect only after the same is approved by the Corporation and is specifically
communicated to the life assured."
grace period is one month and therefore the State Commission was not justified
in holding that the payment was made within the grace period. Condition 3
relates to revival of discontinued policy. A bare reading of the condition
shows that it can be revived during the life time of the assured. In the
instant case the cheque was admittedly received after the death of the assured.
Further the revival takes effect only after the same is approved by the
Corporation and is specifically communicated to the life insured. In the
present case this is not the situation.
Section 43 of the Act reads as follows:
Application of the Insurance Act.
The following section of the Insurance Act shall, so far as may be, apply to the
Corporation as they apply to any other insurer, namely:-Sections 2, 2B, 3, 18,
26, 33, 38, 39, 31, 45, 46, 47A, 50, 51, 52, 110A, 110B, 110C, 119, 121, 122
The Central Government shall as soon as may be after the commencement of this
Act, by notification in the Official Gazette, direct that the following
sections of the Insurance Act shall apply to the Corporation subject to such
conditions and modifications as may be specified in the notification,
namely:-Sections 2D, 10, 11, 13, 14, 15, 20, 21, 22, 23, 25, 27A, 28A, 35, 36,
37, 40, 40A, 43, 44,102 to 106, 107 to 110, 111, 113, 114 and 116A.
42 of the Insurance Act shall have effect in relation to the issue to any
individual of a licence to act as an agent for the purpose of soliciting or
procuring life insurance business for the Corporation as if the reference to an
officer authorised by the Controller in this behalf in sub-section (1) thereof
included a reference to an officer of the Corporation authorised by the
Controller in this behalf.]
The Central Government may, be notification in the Official Gazette, direct
that all or any of the Insurance Act other than those specified in sub-section
(1) or sub- section (2) shall apply to the Corporation subject to such conditions
and modifications as may be specified in the notification.
Every notification issued under sub-section (2) or sub-section (3) shall be
laid for not less than thirty days before both Houses of Parliament as soon as
possible after it is issued, and shall be subject to such modifications as
Parliament may make during the session in which it is so laid or the session
Save as provided in this section, nothing contained in the Insurance Act shall
apply to the Corporation."
43 of the Act enumerates the various Sections of Insurance Act which have
application to the Act and Section 64- VB is not one of them. That being so
also the National Commission was not justified in its conclusion about the
applicability of that provision.
Looked at from any angle the orders passed by the District Forum, the State
Forum and National Commission cannot be maintained and are set aside.
Appeal is allowed. There shall be no order as to costs.