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Judgment
This appeal has been preferred by the Life Insurance Corporation of India for setting aside the judgment and order passed by the learned Single Judge in W.P.(C) No. 6905 of 2007 dated 3.7.2008 whereby the writ petition and the award dated 28.8.2007 passed by the Parmanent Lok Adalat, Hazaribag in PLA Case No. 1/2006 was upheld, and consequently, the award determining an amount of Rupees Five Lacs which was ordered to be paid by the appellant-Insurance company to the contesting respondent was upheld and thus affirmed.
Admittedly, the deceased had taken a policy of insurance for his life during his life time and had also paid the entire premium for this policy. The policy of insurance was issued for a sum of Rs. 5/- lakhs and hence after the death of the policy holder the widow of the deceased laid a claim for payment of the amount towards the policy of insurance which he had taken. After the death of the deceased, the widow of the deceased, Most. Mohini filed a claim for payment of the amount on account of the policy of insurance taken by her deceased-husband for which the entire premium for the policy had also been paid and duly accepted by the L.I.C. But, when the respondent-widow laid a claim for payment of the amount on account of the policy of insurance of her deceased-husband, the appellant-Corporation initiated an enquiry as in view of the appellant-L.I.C., the policy of insurance was obtained by the deceased, Rajesh Kumar by giving a false declaration in regard to his date of birth. According to the appellant-L.I.C., the date of birth given in the school register did not tally with the date of birth given out by the deceased policy holder. However, it has not been explained as to why the appellant-L.I.C. thought it appropriate to initiate an enquiry in regard to the date of birth of the deceased when the wife of the deceased raised a claim for payment of the amount of the policy.
It is no doubt true that the appellant-L.I.C. had raised objection before the permanent Lok Adalat: raising its objection against the claim of the respondent-wife on the ground of collusive policy of insurance. But the Members of the permanent Lok Adalat noted that in so far as the grant of policy of insurance is concerned that was not in doubt or disputed as the policy of insurance had duly been executed by the appellant-L.I.C. in favour of the deceased and after the deceased died, it was only at the stage of payment of the amount, that the L.I.C. raised an objection in regard to the validity of the policy of insurance. It is no body''s case that the policy of insurance was a forged and fabricated document. What has been contended by the counsel for the appellant-L.I.C. is only to the extent that the policy of insurance had been obtained by the deceased by furnishing an incorrect date of birth which did not tally with the date of birth given out in the policy of insurance.
Counsel for the appellant-L.I.C. has further made an over zealous effort contrary to the pleading that the policy of insurance was forged which is clearly without any substance as the policy of insurance was not a forged and fabricated document, what has been contested is that as per the case of LIC the date of birth in the policy of insurance was not correctly recorded which prompted the L.I.C. to initiate an enquiry regarding its issuance after the policy holder died.
The attention of this Court was invited to Section 45 of the Insurance Act, 1938 which envisages the stage when the policy of insurance can be questioned and it clearly lays down the condition under the head of ''policy that the policy shall not be called in question on account of mis-statement after expiry of two years of its issuance''. This provision, in our view, does not support the stand of the appellant-L.I.C. as this provision clearly indicates the circumstances under which the policy cannot be called into question after a period of two years. In facility of reference Section 45 of the Insurance Act, 1938 is quoted here as follows:
Policy not to be called in question on ground of mis-statement after two years - No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement [was on a material matter or suppressed fact which it was material to disclose and that it was fraudulently made] by the policy-holder and that the policy-holder knew at the time of making it that the statement was false [or that it suppressed facts which it was material to disclose]:
In the present case, the policy of insurance, no doubt, was questioned only after a period of five months of the issuance of the policy, but the vital fact remains that the policy was questioned after the death of the policy holder. In our considered opinion, Section 45 of the Insurance Act, 1.938 has to he clearly interpreted so as to infer that the question of the validity of the policy of insurance although may not be called into question before expiry of two years of its issue, the same can be questioned provided the policy holder is alive. In this case, the policy holder has already died after taking the policy and the Insurance; Company had duly accepted the premium for the policy. It is, therefore, not open for the Insurance Company to question the validity of such insurance policy by initiating an enquiry after the policy holder has died. What prompted the L.I.C. to hold an enquiry after the policy holder died, in the instant matter, is not at all clear. The bonafide of the appellant-L.I.C. obviously would have been above board if the validity of the policy had been questioned during the life time of the deceased in view of Section 45 of the Insurance Act, 1938. But the appellant-L.I.C. not only did not question the policy of insurance but it: also duly accepted the entire premium toward:; the policy. Thus, the contractual relationship between the L.I.C. and the policy holder came to a complete halt and only after the death of the policy holder when the wife of the deceased raised a claim, the L.I.C. started its enquiry and gave its report that the policy of insurance was not valid since the date of birth of the deceased was not given out correctly. In fact, if the L.I.C. had alleged suppression of health condition of the deceased when the policy was introduced, perhaps the matter would have been agreeable to some extent. The instant matter is not a case of the Insurance Company that the health of the deceased was in a bad condition and that there was suppression on his part in so far as the condition of health of the policy holder is concerned. In so far as the plea in regard to correctness of the date of birth is concerned it was open to the Insurance Company to enquire and check the date of birth before the policy of insurance was issued in his favour. That having not been done during the life time of the policy holder, the appellant-L.I.C. cannot be allowed to raise a plea that the policy of insurance could not be given effect to as the date of birth was not inserted correctly in the policy of insurance. In view of the Section 45 of the Act of 1938 such objection, no doubt, could have been raised before expiry of the period of the year of the issuance of the policy, if the policy holder had been alive. It hardly needs to be emphasized that the policy of insurance is issued or taken by the policy holder to ensure security after his death and all information and enquiries by the insurer is presumed to have been'' done by the insurer before the policy is issued not later than year of the issuance of the policy which ought to mean within the year while the policy holder is alive. If the L.I.C. is allowed to raise objection in regard to the correctness of the validity of the policy of insurance after the policy holder has died, the whole purpose of the issuance of the policy would render it futile and meaningless which hold it serve the purposed for which it is opted. That is certainly not the purpose of the entire exercise of taking the policy of insurance by the policy holder.
As the deceased-policy holder had taken the policy after it. was duly approved by the authority of the L.I.C. and thereafter the L.I.C. also accepted the amount towards the premium even though it was only one installment, it cannot be permitted to resile from the contractual obligation to make the payment to the wife of the deceased after the policy holder has died.
Thus, we are of the view that the authorities of the permanent Lok Adalat who allowed the legal representative of the deceased to avail the amount after the death of her husband on the basis of the policy which had been issued in favour of her husband and the premium was duly accepted by the L.I.C. were perfectly justified and it does not lie within the legal domain of the L.I.C. to question the correctness of the order passed by the permanent Lok Adalat.
Before we part: with this order, we deem it necessary to reiterate that although the appellant-L.I.C. might not have given its consent to pass an award in favour of the policy holder, the amount, which was ordered to be paid by the permanent Lok Adalat on the basis of the genuineness of the policy of insurance issued in favour of the deceased and that having not been questioned even by the L.I.C. during the life time of the policy holder, the same was rightly not allowed to be challenged.
We, therefore, see no reason to entertain this appeal and consequently it is dismissed at the admission stage itself.
The Respondent-L.I.C. is directed to make the payment, if not already paid, to the appellant expeditiously but not later than a period of four weeks from the date of receipt of this order.