Life Insurance Corporation Of India vs Sunita

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

1 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

2 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

3 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

4 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

6 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-

7 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

8 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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