K. NETAJI PATNAIK vs SHYAMLAL DEY

-HEARD learned Counsel for the appellant and the Counsel appearing for the respondents.

THE appellant and the proforma respondents 4 to 11 have filed an application before the District Forum claiming a sum of Rs. 99,900/- against the Life Insurance Corporation, represented through its Divisional Manager and the Branch Manager on the allegation that one Mr. K.G. Swamy, the predecessor-in-interest of the claimants had paid a premium of Rs. 1,086/- on 31.3.1989 to the Insurance Agent (Respondent No. 1 in this appeal) for covering the risk of his life. THE agent after receipt of the premium duly deposited the same in the office of the L.I.C., but no policy was issued thereafter. On 22.6.1989 the said K.G. Swamy died whereafter his legal representatives filed he aforesaid application claiming the amount for which the life of K.G. Swamy was sought to be insured. The stand of the L.I.C. is that the proposal for covering the risk of life of K.G. Swamy reached the Corporation after the date of death of K.G. Swamy and, therefore, the question of covering the risk of his life did not arise prior to his death. In other words, their case is that the Insurance Corporation had never undertaken to cover the risk of the life of K.G. Swamy either by issurance of policy or otherwise, and therefore, they have no liability whatsoever.

The District Forum, where the case was filed, after considering the facts and circumstances of the case held that the risk of life of K.G. Swamy was not covered by any policy of insurance, therefore, the L.I.C. of India has no liability to pay compensation. However, the. District Forum directed refund of Rs. 1,086/- which K.G. Swamy had paid to the Insurance Agent. The appellant in this appeal has assailed the aforesaid order of the District Forum.

MR. Rao, learned Counsel appearing for the appellant strenuously urged that the premium of Rs. 1,086/- having been paid by K.G. Swamy to the Insurance Agent, it must be taken to have been paid to the Insurance Corporation itself as the former was its agent who transacted business with K.G. Swamy on behalf of the Corporation. His further argument is that the Insurance Agent had deposited the money in the office of the Corporation, and the Corporation thereby accepted the liability of the risk of life of K.G. Swamy, the proposer. His next argument has been that the money having been accepted on 31.3.1989 by the Insurance Agent and nothing having been intimated to the proposer as to the acceptance or otherwise it must be deemed to have been acccepted on the basis of the theory of "implied acceptance". MR. Rao, learned Counsel appearing for the appellant submits that the Insurance Company becomes liable for payment of the amount for which the life of K.G. Swamy was insured. Mr. Mohanty, learned Counsel appearing for the Insurance Company has submitted that the proposal submitted by the Agent to cover the risk of life of K.G. Swamy had never been accepted by he Corporation and, therefore, the liability of the Corporation does not arise at all. His further argument is that mere deposit of the amount of Rs. 1,086/- the risk is not covered and the said amount can hardly be called "premium" in the strict sense of the term.

MR. Rao, during the course of his argument has taken us to the different provisions of the Insurance Act for the purpose of saying that Respondent No. 1 was a duly authorised agent and the payment of the amount of Rs. 1,086/- must be taken to be a payment made to the Corporation as he has transacted business on behalf of the Insurance Corporation. Relying on the provision of Sect. 64(v)(b) of the Act he contends that the risk is covered by the Insurance Company from the moment the premium is accepted. The question that arises for consideration is as to whether the Life Insurance Corporation has undertaken the liability to pay for the life of the insurer, if at all MR. Swamy is called so. It is elementary to note that policy of an insurance is a contract by which the Life Insurance Corporation covers the risk of life of the insurer under certain terms and conditions. Like any other contract it arises from a proposal and becomes an agreement after its acceptance. Admittedly the proposal was laid before the Insurance Corporation through the Insurance agent along with the deposit of a sum of Rs. 1086/- which represents the first premium of the policy of insurance if and when granted. It is the argument of MR. Rao that in the written statement filed by the Insurance Agent before the District Forum he has admitted to have deposited the amount in the office of the Insurance Corporation soon after the same was received by him. There is no dispute on behalf of the Insurance Company that the amount of Rs. 1086/- has been deposited in the office. The question which remains for consideration is as to whether there was any completed contract, and if so, the date of commencement thereof. As already stated, it may be said that there was some delay in considering the proposal laid on behalf of the insurer. But the unnecessary delay does not amount to acceptance without anything further added to it. In the present case as argued by MR. Mohanty deposit of an amount representing the first instalment of the premium makes the proposal eligible for consideration. But after death of the proposer, the proposal did not survive for consideration as the subject-matter of contract was to cover the risk of life of the proposer. In the circumstances, we do not find any justification for coming to a conclusion that there was ''implied acceptance'' of contract or that any risk was undertaken by the Insurance Company for the life of the proposer. Mr. Rao has relied upon a decision reported in A.I.R. 1983 Patna 142 (Smt. Kiran Sinha v. Life Insurance Corporation of India and Others), which, in our opinion, has little relevance so far as the facts of this case are concerned. In the aforesaid case the deceased assured had purchased three insurance policies. The wife of the deceased who was the nominee under policies made an application for payment under the policies. The fact of the death of the assured was informed by his wife to the Agent and also to be Development Officer. The Corporation refused to pay the sums assured under the policies on the ground that the Corporation had no knowledge about the death of the deceased and that since the premiums were recovered after the death of the deceased the policies stood lapsed. Their Lordships in the facts of that case came to a conclusion that the information of the death of the assured was given to the agent which amounts to the knowledge of the Insurance Corporation. The acceptance of payment of premium thereafter would preclude the Insurance Corporation from raising the plea that on the death of the deceased policy stood lapsed. The question of continuance of a policy for non-payment of the premium or acceptance of premium after the death of the insured does not arise for consideration in this case. We, therefore, find no justification to support the claim of the appellant. It is, however, apparent from the facts stated above that there has been some delay on the part of the Life Insurance Corporation of India, in considering the proposal sent to it by the agent. As argued by the learned Counsel for the appellant and not disputed by the learned Counsel appearing for the respondents that there is no provision fixing any time limit for consideration of the proposal for its acceptance or nonacceptance.

MR. Rao, learned Counsel appearing for the appellant has argued that for the delay in considering the proposal of the appellant, the appellant becomes entitled to the compensation which must be equal to the sum assured in the proposal. We agree that the appellant may be entiled to compensation, if he has suffered for the delay in considering the proposal, but the compensation by any stretch of imagination, can not be said to be equal to the sum for which the life of Sri Swamy was proposed to be assured. Admittedly the sum of Rs. 1,086/- was deposited by MR. Swamy along with the proposal. The District Forum has ordered for refund of the said amount.

WE modify the aforesaid order by requiring the Life Insurance Corporation to refund he said amount together with interest @ 12% per annum from the date of deposit till the date of payment. WE further order that the said amount shall be returned to the appellant, who shall receive it on behalf of himself and on behalf of respondents 4 to 11 within 3 months from today. The appeal is disposed of with the aforesaid directions. Appeal disposed of.