Shakuntala Devi vs LIC of India

THIS is a case where the proposal form was submitted on 30.3.1994 with request that the policy should relate back to 28th December, 1993. Half yearly premium was remitted along with proposal form and a receipt of that was also issued on 31.3.1994. But the policy was issued only on 16.8.1994. The policy was for a sum of Rs. 50,000/-. The contract of insurance in this case would have come into existence and concluded, even through it related back to 28.12.1993, only on 16.8.1994 as per the judgment in the case of LIC v. Raja Vasireddy Komalavalli Kamba & Ors., AIR 1984 SC 1014, wherein it was held that "the risk under the contract of insurance commences and concludes when the policy is issued". Unfortunately, the insured died on 31.8.1994. The contention raised by the respondent Insurance Company is that the next half yearly premium had fallen due for payment on 28.6.1994 because the policy related back to 28.12.1993. Counsel for the Insurance Company has not been able to cite any authority in support of this connection that even though the insurance policy is not issued and half yearly premium had fallen due before its issue the insured would be under an obligation to pay the half yearly premium and that the risk gets covered irrespective of the issue of the policy of insurance. Infact the insured could not have paid any premium prior to the issue of policy as he did not receive any particulars of policy number etc. which could enable him to pay against that policy. Respondent''s Counsel wanted to argue further but we find that the insurer has not challenged the impugned order. As such no relief can become available to the insurer even if some argument could be raised against the above view.

IN the present case the INsurance Company has taken a long time on account of its own delay in issuing the policy beyond the period when half yearly premium had fallen due prior to the issue of the policy. There are situations where INsurance Company may take the plea that until insurance policy is issued the risk is not assumed by the insured. This would give rise to very peculiar situation that by mere delay in issuance of the policy, the INsurance Company could defeat the rightful claim of the insured. Even though Counsel for INsurance Company argues that the tenor of the receipt shows that the proposal had been accepted, we are of the opinion that 30 days grace period which is available in terms of Clause 2 of the contract of insurance, should commence from the date the insurance policy is issued and not related back to any time when insurance policy was still to be issued. Although the policy, according to the proposal form, was to relate back to 28th December, 1993 as no policy had yet been issued till 28th June, the party did not know against which policy the amount of premium was, if at all, to be deposited. The receipt could only indicate the type of policy and the period of policy and there is no indication of the proposal having been accepted. IN that view of the matter, the LIC cannot take advantage of its own delay and the grace period would be available to the insured after the receipt of the policy. IN the light of this, we feel that the benefit of Clause 2 of the insurance policy relating to payment of premium should be available to the insured and he would be entitled to receive the amount as per the contract of insurance. The Clause 2 is as follows : 2. Payment of Premium-A grace period of one month but not less than 30 days will be allowed for payment of yearly, half-yearly or quarterly premiums and 15 days for monthly premiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid and the sum assured paid after deduction of the said premium as also the unpaid premium falling due before the next anniversary of the policy."

Moreover, the insurer cannot be heard at this score as it has not challenged the impugned order.

Coming to the plea of the complainant/petitioner, we find that Clause 4B of the policy provides as under : "Notwithstanding anything mentioned to the contrary, it is hereby declared and agreed that in the event of death of life assured occurring as a result of intentional self-injury, suicide or attempted suicide, insanity, accident other than an accident in a public place or murder at any time on or after the death on which the risk under the policy has commenced but before the expiry of three years from the date of this policy, the Corporation''s liability shall be limited to the sum equal to the total amount of premiums (exclusive extra of premiums, if any), paid under the policy without interest. Provided that in case the life assured shall commit suicide before the expiry of one year reckoned from the date of this policy, the provisions of the clause under the heading "Suicide" printed on the back of the policy."

UNDER the above clause of the contract and in view of the fact that the death occurred within one month of the policy all that can be paid to the petitioner is only the amount of the premium paid which the State Commission has rightly awarded with interest. We are in agreement with the State Commission on this point. Therefore, we see no merit in these petitions which are dismissed with no orders as to costs. Petitions dismissed.