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Supreme Court of India
Life Insurance Corporation Of … vs Sunita on 29 October, 2021Author: Sanjiv Khanna
Bench: Sanjiv Khanna, Hon’Ble Ms. Trivedi
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO…………….OF 2021
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 13868 OF 2019)
LIFE INSURANCE CORPORATION OF
INDIA AND ANOTHER …. APPELLANT(S)
VERSUS
SUNITA …. RESPONDENT(S)
JUDGMENT
BELA M. TRIVEDI, J.
1. Leave is granted.
2. The present appeal is directed against the judgment and order
dated 24th April, 2019 passed by the National Consumer Disputes
Redressal Commission, New Delhi (hereinafter referred to as the
NCDRC) in Revision Petition No. 897 of 2018, whereby the NCDRC
while allowing the said Revision Petition, has set aside the order
passed by the State Commission and has confirmed the order
passed by the District Forum.
Signature Not Verified
Digitally signed by Dr.
Mukesh Nasa
3. The short facts giving rise to the present appeal are that Mr.
Date: 2021.10.29
17:56:30 IST
Reason:
Pradeep Kumar, the husband of the respondent herein (original
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complainant) had taken/purchased a life insurance policy under the
Jeevan Suraksha Yojana on 14.04.2021 from the appellant-Life
Insurance Corporation, under which a sum of Rs. 3,75,000/- was
assured by the corporation, and in case of death by accident an
additional sum of Rs. 3,75,000/- was also assured. The insurance
premium of the said policy was to be paid six monthly. The next
premium was due to be paid by the said insured Pradeep Kumar on
14th October, 2011. However, he committed a default. On
06.03.2012, the said Pradeep Kumar i.e. the husband of the
complainant met with an accident and succumbed to the injuries on
21.03.2012. In the meantime, he deposited the due premium of
October, 2011 on, 09.03.2012 for reviving the policy. The
complainant after the death of her husband filed a claim before the
appellant-Corporation. The appellant paid a sum of Rs. 3,75,000/- to
the complainant, however, did not pay the additional amount of Rs.
3,75,000/- towards the Accident claim benefit. The complainant,
therefore, approached the District Forum by filing a complaint
seeking the said amount towards the Accident claim benefit. The
said complaint was resisted by the Life Insurance Corporation
contending, inter alia, that the day when the husband of the
complainant met with an accident, the said policy had already
lapsed on account of non-payment of the due premium.
4. The District Forum placing reliance upon the Ready reckoner
issued by the appellant-Corporation, allowed the said claim of the
respondent vide its judgment and order dated 14.10.2013. The
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appellant-Corporation being aggrieved by the same preferred an
appeal before the State Consumer Disputes Redressal Commission.
The State Commission allowed the said appeal and set aside the
said order passed by the District Forum. The aggrieved complainant
preferred a Revision Petition being no. 897 of 2008 under Section
21(B) of the Consumer Protection Act (hereinafter referred to as the
said Act), before the NCDRC challenging the order passed by the
State Commission. The NCDRC vide the impugned judgment dated
24.04.2019 allowed the said Revision Petition of the respondent and
set aside the order passed by the State Commission. Hence, the
present Appeal has been filed by the appellant-Corporation.
5. The learned counsel appearing for the appellant-Corporation
placing heavy reliance on the condition no. 11 of the policy
submitted that the Accident claim benefit was payable only if the
policy was in force on the date of accident, however, in the instant
case, the policy had already lapsed in October, 2011 and the
husband of the respondent-complainant had sought to pay the
premium on 09.03.2012, i.e. three days after the occurrence of
accident on 06.03.2012. According to him, even the appellant-
Corporation was not informed about the said accident when the
policy was sought to be revived on 09.03.2012. He has placed
reliance on the judgments of this court in case of Vikram
Greentech (I) Ltd. & Anr vs New India Assurance Co. Ltd
(2009) 5 SCC 599 and in case of Life Insurance Corporation of
India Vs. Jaya Chandel (2008) 3 SCC 382 to submit that there
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is a requirement of good faith on the part of the insured in the
contract of insurance.
6. However, the learned counsel appearing for the respondent-
complainant submitted that the said terms and conditions of the
policy were not brought to the notice of the insured i.e. the
husband of the complainant, and that the complainant was entitled
to the Accident claim benefit as per the Ready reckoner. He further
submitted that the husband of the complainant had made payment
of premium on 09.03.2012 along with the late fee charges and,
therefore, the policy had stood revived before the death of the
complainant’s husband. He also placed reliance on LIC vs. Jaya
Chandel (supra) to submit that since the insurance company had
issued the renewal premium receipt on 09.03.2012, it was required
to be construed that the policy which had already lapsed due to
non-payment of premium on time, had stood revived.
7. In order to appreciate the rival contentions raised by the
learned counsels for the parties, apt would be to reproduce the
relevant conditions of the policy in question. Relevant condition
nos. 3, 4, and 11 read as under:
“3. 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 five years, from
the due date of the first unpaid premium and before
the date of Maturity, on submission of proof of
continued incurability to the satisfaction of the
corporation and the payment of all the arrears of
premium together with interest compounding half
yearly at such rates as may be fixed by the
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Corporation from time to time. The Corporation,
reserves the rights to accept or accept with modified
terms or decline the revival of Discontinued Policy.
The revival of a Discontinued Policy shall take effect
only after the same is a approved by the Corporation
and is specifically communicated to the proposer/Life
Assured.
4 Non-forfeiture Regulations:
(a) If, after at least 3 full years premiums have been
paid in respect of this Policy, any subsequent
premiums be not duly paid, this Policy shall not be
wholly void, but shall subsist as a Paid-up Value
which shall be payable in case of death/Matyrly and
shall depend on the number of years for which
premiums have been paid and shall be greater of a
sum that bears the same ratio to the Maturity Sum
Assured as the number of premiums actually paid
shall bear to the total number of premiums originally
stipulated in the Policy.
OR
The surrender value as per para 7 below assuming
that the policy has been surrendered on the date of
death/Matyruty, as the case may be.
11. Accident Benefit (If opted for): If at any time
when this policy is in force for the full sum assured or
reduced sum assured in case of partial surrender of
the policy, the life assured, before the expiry of the
policy term or the policy anniversary on which the
age nearer birthday of the Life Assured is 70 years,
whichever is earlier, is involved in an accident
resulting in either permanent disability as hereinafter
defined or death and the same is proved to the
satisfaction of the Corporation, the Corporation
agrees in the case of :-
(a)……………….
(b) Death of the Life Assured: to pay an additional
sum equal to the Accident Benefit Sum Assured
under this Policy, if the life assured shall sustain and
bodily injury resulting solely and directly from the
accident caused by outward, violent and visible
means and such injury shall within 180 days of its
occurrence solely, directly and independently of all
other causes result in the death of the life assured.”
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8. Now, so far as the facts of this case are concerned, it is not
disputed that the husband of the complainant had taken the life
insurance policy on 14.04.2011, that the next premium had fallen
due on 14.10.2011 but was not paid by him, that the husband of
the complainant met with an accident on 06.03.2012, that
thereafter the premium was paid on 09.03.2012 and that he
expired on 21.03.2012. It is also not disputed that at the time of
making payment of premium on 09.03.2012, it was not disclosed by
the complainant or her husband to the appellant-Corporation about
the accident which had taken placed on 06.03.2012. The said
conduct on the part of the complainant and her husband in not
disclosing about the accident to the corporation not only amounted
to suppression of material fact and lacked bona fides but smacked
of their mala fide intention, and therefore, the Accident benefit
claim of the complainant was liable to be rejected on the said
ground alone. It is well settled legal position that in a contract of
insurance there is a requirement of Uberrima fides i.e. good faith on
the part of the assured. The Supreme Court in case of Vikram
Greentech (I) Ltd. V/s New India Assurance Co. Ltd. (2009) 5
SCC 599, while dealing with the contract of insurance held as
under:-
“16. An insurance contract, is a species of
commercial transactions and must be construed like
any other contract to its own terms and by itself. In a
contract of insurance, there is requirement of
uberrima fides i.e. good faith on the part of the
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insured. Except that, in other respects, there is no
difference between a contract of insurance and any
other contract.
17. The four essentials of a contract of
insurance are: (I) the definition of the risk, (ii) the
duration of the risk, (iii) the premium, and (iv) the
amount of insurance. Since upon issuance of the
insurance policy, the insurer undertakes to indemnify
the loss suffered by the insured on account of the
risks covered by the insurance policy, its terms have
to be strictly construed to determine the extent of
liability of the insurer.
18. The endeavour of the court must always be
to interpret the words in which the contract is
expressed by the parties. The court while construing
the terms of policy is not expected to venture into
extra liberalism that may result in rewriting the
contract of substituting the terms which were not
intended by the parties. The insured cannot claim
anything more than what is covered by the insurance
policy. (General Assurance Society Ltd. v.
Chandmull Jain (1966) 3 SCR 500, Oriental
Insurance Co. Ltd. v. Sony Cheriyan AIR 1999
SC 3252 and United India Insurance Co. Ltd. v.
Harchand Rai Chandan Lal (2004) 8 SCC 644).”
9. From the afore-stated legal position, it is clear that the terms of
insurance policy have to be strictly construed, and it is not
permissible to rewrite the contract while interpreting the terms of
the Policy. In the instant case, condition no. 11 of the Policy clearly
stipulated that the policy has to be in force when the accident takes
place. In the instant case, the policy had lapsed on 14.10.2011 and
was not in force on the date of accident i.e. on 06.03.2012. It was
sought to be revived on 09.03.2012 after the accident in question,
and that too without disclosing the fact of accident which had taken
place on 06.03.2012. Thus, apart from the fact that the respondent-
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complainant had not come with clean hands to claim the add
on/extra Accident benefit of the policy, the policy in question being
not in force on the date of accident as per the condition no. 11 of
the policy, the claim for extra Accident benefit was rightly rejected
by the appellant-Corporation. Since, clause 3 of the said terms and
conditions of the policy permitted the renewal of discontinued
policy, the appellant-Corporation had revived the policy of the
respondent-complainant by accepting the payment of premium
after the due date and paid Rs. 3,75,000/- as assured under the
policy, nonetheless for the Accident benefit, the policy had to be in
force for the full sum assured on the date of accident as per the
said condition no. 11. The said Accident benefit could have been
claimed and availed of only if the accident had taken place
subsequent to the renewal of the policy. The policy in the instant
case was lying in a lapsed condition since 14 th October, 2011 and,
therefore, was not in force as on 06.03.2012, resultantly, the claim
over Accident benefit was not payable to the respondent as per the
conditions of the contract of insurance.
10. The Court, therefore, is of the opinion that the impugned order
passed by the NCDRC setting aside the order passed by the
Commission and reviving the order passed by the District Forum
was highly erroneous and liable to be set aside.
11. In the aforesaid premises, the present appeal is allowed and
the impugned order passed by the NCDRC is set aside. The claim of
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the respondent towards Accident benefit stands rejected
accordingly. Pending applications, if any, are disposed of.
…………………………..J.
[SANJIV KHANNA]
NEW DELHI …………………………J.
29.10.2021 [BELA M. TRIVEDI]
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