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Report No. 112

Chapter 5

Comments Received on the working Paper

5.1. Comments on the Working Paper.-

The Working Paper prepared on the subject under consideration was circulated by the Commission in March, 1985 to interested persons and bodies including the Life Insurance Corporation of India, State Governments, High Courts and Bar Associations. A request was made to forward comments by the 15th April, 1985. All the comments received upto the 1st June, 1985 have been taken into consideration before finalising the Commission's views.

It may also be mentioned that very informative views have been expressed by one Association. The Commission would like to express its appreciation of the interest shown by the said Association in the matter1 and also its gratitude to those who have sent comments on the Working Paper. As regards the receipt of comments, the following persons/bodies have forwarded us their comments on the Working Paper:

(a) Two High Courts.2

(b) State Governments.3

(c) One research institution.4

(d) Two persons.5

(e) Life Insurance Corporation of India.6

One High Court7 concurs with the suggestions of the Law Commission to recast section 45 on the ground that the section as proposed to be revised would reduce the scope of avoiding the lawful claim of an insured by the insurer. However, in the reply received from the other High Court, it has been mentioned that the Judges have no comments to offer.8

Four State Governments9 have concurred with the suggestion of the Commission. One State Government10 fully endorses the background given by the Commission for the examination of the working of section 45 of the Insurance Act, 1938, and states that if the law is to be retained as it stands, cases of hardships and injustice might arise within the two-year period and the courts would be helpless to remedy. Another State Government11 does not agree with the suggestion of the Law Commission because, according to it, the proposed amendment, would make the provision a rigid one resulting in injustice to the insurer in a genuine case of fraud. One persbn suggests12 that a period of 2 years instead of 3 years is more than sufficient after which LIC cannot repudiate claims under any circumstances, whatsoever.

Another person13 does not make any specific comment on the Working Paper. The Life Insurance Corporation of India14 has in its comments suggested that if death occurs within three years from the date of the policy or its revival, the right to repudiate for mis-statements should be available for a period of one year from the date of intimation of death. In cases of fraud, it has suggested that it should have a right to call the policy in question for a period upto 5 years and that where a policy is continuously in force for a period of 6 to 8 years without its being called in question, the LIC shall be deemed to have waived its right to repudiate the policy on any ground.

The Commission has carefully considered the suggestion of the LIC in the light of the decided cases mentioned earlier in this Report. In view of the observations of many of the Courts that the LIC should not be like an ordinary litigant and put forth frivolous defences to repudiate claims and in the interests of the insured and claimants, the Commission feels that such a long period should not be given to the LIC to repudiate claims and the period of 3 years recommended is a sufficiently long period for the LIC to make independent investigations rather than leave the insured in a state of uncertainty for a period of 8 years. The Commission therefore feels that no change need be made in its recommendations.

1. Law Commission File No. 2(2)/85-L.C., Sl. Nos. 13(R) and 22(R).

2. Law Commission File No. F.2(2)/85-L.C., SI. Nos. 16(R) and 24(R).

3. Law Commission File No. F.2(2)/85-L.C., Sl. Nos. 12(R), 15(R), 18(R), 19(R), 23(R) and 27(R).

4. Law Commission File No. F.2(2)/85-L.C., Sl. Nos. 13(R) and 22(R).

5. Law Commission File No. F.2(2)/85-L.C., Si. Nos. 17(R) and 21(R).

6. Law Commission File No. F.2(2)/85-L.C., Sl. No. 28(R).

7. Law Commission File No. F.2(2)/85-L.C., SI. No. 24(R).

8. Law Commission File No. F.2(2)/85-L.C., Sl. No. 16(R).

9. Law Commission File No. F.2(2)/85-L.C., Sl. Nos. 12(R), 15(R), 23(R) and 27(R).

10. Law Commission File No. F.2(2)/85-L.C., Sl. No. 19(R).

11. Law Commission File No. F.2(2)/85-L.C., Sl. No. 18(R).

12. Law Commission File No. F.2(2)/85-L.C., Sl. No. 21(R).

13. Law Commission File No. F.2(2)/85-L.C., Sl. No. 17(R).

14. Law Commission File No. F.2(2)/85-L.C., Sl. No. 28(R).



Section 45 of the Insurance Act, 1938 Back




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