Life Insurance Corporation of India vs Amar Preet Kaur and Others

K.C. Gupta, J.—This is a Regular Second Appeal filed by the defendant-Life Insurance Corporation of India against the judgment dated 13.6.2000, whereby the appeal was dismissed and the judgment and decree dated 29.4.1994 passed by the Additional Senior Sub Judge, Kapurthala, vide which the suit of the respondent-plaintiffs was decreed, was up-held.

Briefly stated, the facts are that Smt. Nachhatar Kaur wife of Mohinder Singh, respondent No.3, and mother of respondent Nos. 1 and 2 was employed as teacher at a monthly salary of Rs.2,300/-. She applied for getting Life Insurance policy from the petitioner and for that purpose filed proposal form No.S-3073152 in the sum of Rs. one lac on 25.09.1989. She also paid the requisite premium of Rs.1,068/- vide receipt, which was accepted by the petitioner on 29.5.1989 vide BOC No.386 issued by Kapurthala office. Smt. Nachhatar Kaur was to pay a premium of Rs.535/- per month by instalments till the date of maturity or death whichever is earlier. Unfortunately Smt. Nachhatar Kaur expired on 5.6.1939 due to heart attack and intimation of the said death was given to the Branch Manager at Kapurthala. At the time of handing over the proposal all the formalities were got completed by the Corporation.

On receipt of intimation about the death of the insured, the officials of Life Insurance Corporation sent advance discharge form for execution of the same vide letter dated 11.10.1989. However later on, they did not send the amount and ultimately refused to pay the same.

The Life Insurance Corporation and the other defendant filed written statement, wherein they state that there was no concluded and completed contract between Smt. Nachhatar Kaur, proposer and the Life Insurance Corporation and in the absence of concluded contract, they were not liable to pay an amount as the proposal was never accepted by the Corporation. They also stated that the amount of first instalment of initial deposit had already been refunded to Mohinder Singh, respondent No.3, after deducting the medical fee vide cheque dated 13.10.1989 and as such the claim was not maintainable. Accordingly, the following issues were framed:-

Whether the plaintiff has got no cause of action to file the present suit? OPD

Whether the suit is not maintainable in the present form? OPD

Whether the plaintiff are entitled to recover Rs.1,00,000/-? OPP

Relief."

The parties adduced their evidence.

The additional Senior Sub Judge, Kapurthala, vide his judgment dated 23.4.1994 decreed suit of the respondent-plaintiffs by holding under Issues No. 1 to 3 that a concluded contract of insurance had taken place between Smt. Nachhatar Kaur, deceased and the Life Insurance Corporation and as such, the beneficiaries under the contract of insurance were entitled to recover the amount of Rs. one lac.

Aggrieved by the said judgment and decree, the Life Insurance Corporation filed an appeal, which was dismissed vide judgment dated 13.6.2000 by the Additional District Judge, Kapurthala.

Still dis-satisfied, the defendant-Life Insurance Corporation has filed the present appeal.

I have heard Shri B.R. Mahajan, counsel for the appellant Shri J.M. Sethi, counsel for the respondents and carefully gone through the file.

It is an admitted fact that Smt. Nachhatar Kaur was the wife of Mohinder Singh, PW1 and mother of respondent Nos. 1 and 3 (plaintiff Nos.l and 2). She was J.B.T. Teacher at the time of her death and she was getting Rs.2200-2300/- per month as salary. There is no dispute about it that she filled proposal form No.S-3973151 on 29.5.1989 to get herself insured for Rs. one lac. It is further an admitted fact that she paid the requisite premium amount of Rs.1068/- vide receipt which was received by the Corporation on 29.5.1989, vide BOC No.3S6. Now the only question to be determined is whether the acceptance of premium of Rs. 1,068/-, a concluded contract has come into existence or there should be intimation regarding acceptance of the proposal on behalf of the Life Insurance Corporation. The case of the appellant is that on scrutiny of the proposal, it was found that it was not complete since age proof, operating surgeon report and date of operation were not submitted with the proposal form, which were called from Smt. Nachhatar Kaur vide letter dated 3.6.1989 and since this information was not submitted to the Corporation, so the proposal remained incomplete and initial amount deposited was refunded to respondent No.3 and in these circumstances, it cannot be said that the contract of insurance was complete or a concluded contract had taken place between the Insurance Corporation and Smt. Nachhatar Kaur. For this contention, the counsel for the appellant has placed reliance on the authority of the Hon''ble Apex Court i.e. LIC of India v. Raja Vasireddy Komalavalli Kamba AIR 1984 S.C. 1014, in which it was held that mere receipt and retention of premium until after the death of the applicant or life mere preparation of the policy document is no acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises presumption of acceptance. Similarly, it has been held by the Hon''ble Apex Court in The Life Insurance Corporation of India, Trivandrum Vs. Mrs. Prasanna Devaraj, that in a case where the proposal form when duly filled in and signed by the proposed assured and forwarded to the insurer alongwith a cheque after getting himself medically examined and the LIC had issued a receipt, encashed the cheque and credited the amount in suspense account and where the death had occurred within 10 days on account of sudden rennal failure, then from the mere acceptance of cheque accompanied the proposal form would not amount to acceptance of the proposal and a. concluded contract of insurance had not taken place. To the same effect is the authority of The Life Insurance Corporation of India and another Vs. Smt. Brazinha D''Souza, Therefore, in view of the dictum laid in the above mentioned authorities, a concluded contract had not taken place because the Life Insurance Corporation had not accepted the offer. Mere delay in giving answer cannot be construed as an acceptance as prima facie acceptance must be communicated to the offer. The general rule is that the contract of insurance is concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Consequently, the finding of the trial Court on Issues Nos. 1 to 3 are set aside and it is held that respondents had no cause of action to file the suit and suit is not maintainable in the present form and further they are not entitled to recover Rs. one lac under the so called insurance policy as concluded contract had not taken place.

In view of the above discussion, the appeal is accepted and the judgment and de crees of the courts below are set aside being illegal and the suit of the respondent-plain tiffs for recovery of Rs. one lac on account of life insurance of Smt. Nachhatar Kaur is dismissed. However, in the peculiar facts and circumstances of the case, the parties are left to bear their own costs.