Asha Garg And Ors. vs LIFE INSURANCE CORPORATION OF INDIA

SALIENT features of the case are that deceased Yogendra Garg, husband of petitioner No. 1 and father of petitioner Nos. 2 and 3 obtained an insurance policy payable with double benefit, in case of accident, from respondent/Insurance Company. The policy commenced from 28.8.1989. Undisputedly half yearly premium which was due on 28.8.1992, could not be paid even within 30 days of the grace period in terms of the policy. In the event of failure of the insured to pay due premium within the grace period the policy was to lapse. However, liberty is to the assured that lapsed policy can be renewed within five years with the consent of Insurance Company but during life -time of the assured, after premium notice of schedule of late fee is given. However, while half yearly premium was due on 28.8.1990 assured having met with an accident died in night of 7.1.1991. The assured preceding his death on 7.1.1991, sent Rs. 1,285.70 inclusive of late fee charges through UPC. When legal representatives of the deceased lodged claim with Insurance Company, it was repudiated on premises that premium for cheque was tendered on counter, on 10.1.1991, after death of the assured. The Insurance Company held that since preceding receipt of cheque, the assured has died and policy had not been renewed, liability of the Insurance Company to pay insurance value had ceased.

AGGRIEVED with repudiation of claim, the petitioners approached District Forum seeking direction to the Insurance Company to pay insurance value along with interest of 18% p.a. from the date of death of deceased. The claim of petitioners was resisted by Insurance Company holding that policy of the deceased stood lapsed on the date of his death and premium due on 28.8.1990 was received at their cash counter only on 10.1.1991. The Insurance Company negated assertion made by petitioners about deceased remitting cheque in question to the Insurance Company on 7.1.1991 by post. The District Forum considering pleadings of the parties and also affidavit evidence that were led in course of proceedings, negating pleadings of the Insurance Company held that there was no clinching evidence about someone tendering cheque at their cash counter on 10.1.1991. Conversely the District Forum endorsed contentions raised on behalf of petitioners about remittance of cheque on 7.1.1991 towards premium due on 28.8.1990. The District Forum based on these findings, accepted complaint and directed Insurance Company to pay assured value of Rs. 1,00,000 along with 12% interest p.a. from the date of repudiation of claim till payment. The costs of litigation too was awarded by District Forum.

THE respondent/Insurance Company impeached finding of the District Forum in appeal and State Commission too having concurred with finding of District Forum about there being evidence for remittance of cheque for premium on 2.1.1991 through UPC, dismissed the appeal. It is against these findings of the State Commission that both Smt. Asha Garg and also Insurance Company preferred their revision petitions which is under consideration before us. Admittedly the premium was due on 28.8.1990 which was payable during life -time of assured along with late fee. The assured, as has been case of the petitioners, preceding his death on the night of 7.1.1991 remitted due premium along with late fee through cheque under UPC. This became debatable issue, as conversely respondent/LIC pleaded that premium was tendered in cash on counter on 10.1.1991 and since payment was not made during life -time of assured, simply acceptance of premium even if there be, would not revive lapsed policy. Both Fora below have recorded concurrent finding on fact about remittance of premium by deceased himself before his death, and hence even if this be accepted on its face value, that ensurability was not lost, yet there is other aspect of the issue which cannot be lost sight of. There has been no evidence suggesting acceptance of premium and communicating to the assured revival of policy by respondent Insurance Company. It is now well acknowledged crystallized by catena of decisions that revival of lapsed insurance policy was not a matter of right and it would not automatically follow even after fulfilment of conditions laid down in the policy. The revival operates as a new contract and the rights and liabilities begin to run until new terms and conditions are accepted and complied with. Since assured died, even holding that, there was remittance of premium during life -time of the assured, since assured died before actual revival of the policy, there was in fact no revival of the policy. Simply acceptance of premium and its retention by respondent/Insurance Company did not ipso facto render the policy revived in absence of acceptance of revival to insured by respondent/ Insurance Company.

DRAWING inspiration from ratio of decision rendered by Hon''ble Apex Court in case of LIC of India v. Raja Vasireddy Kamalavally Kamba and Ors., reported in AIR 1984 SC 1014, we are inclined to hold that there could have been revival of policy only after acceptance of premium of lapsed policy and communication of revival to the assured Even if there be silence on part of Insurance Company that too would not be construed to be acceptance. We are not oblivious that though Smt. Asha Garg did not have a good cause for receipt of assured value, since more than 18 years have lapsed since death of assured, we direct Insurance Corporation that half of the assured value be paid to Smt. Asha Garg if not paid earlier during the pendency of proceedings and both the revision petitions filed by Smt. Asha Garg and others and also the Insurance Company are disposed of in above terms.