JAGRAJ @ JAGRAM RATHI vs LIC of India

THIS appeal is directed against the order of the learned District Forum, Sirohi dated 24.4.1995 whereby the complaint filed by the appellant has been dismissed.

FACTS relevant for disposal of this appeal in brief are that a proposal to obtain a policy for life under the endowment plan upto the age of 75 years was submitted by Smt. Saraswati Rathi, wife of the complainant-appellant on 28.3.1994 for an amount of Rs. 1.00 lakh when she was of the age of 64 years. Along with the proposal, the appellant paid an amount of Rs. 12,365/- through cheque as the annual premium for the policy; in respect of which the respondent issued a receipt dated 31.3.1994. Although the respondent received the amount of the premium on account of proposed policy but the policy was not issued. It so happened that the proposer Smt. Rathi died on 28.4.1994 and an intimation about it was furnished to the respondent on 29.4.1994. When the appellant claimed the amount under the proposed policy, the respondent repudiated the claim vide its communication dated 26.5.1994 observing that the proposal has not been accepted by the respondent. Aggrieved the appellant filed the complaint before the District Forum which was dismissed on the ground that there has been no acceptance of the proposal to obtain policy on the life of Smt. Rathi and that there has been no deficiency in service on the part of the respondent. The appellant has now challenged the impugned order mainly on the ground that when the premium was accepted and a receipt thereof was issued by the respondent, a contract of insurance has come into existence and hence the repudiation made by the respondent Corporation is not tenable in the eye of law and that the appeal be accepted and the relief claimed in the complaint be granted.

We heard the learned Counsel for the parties at great length and have perused the material available on the record carefully. The facts are not largely in dispute. The contention of the learned Counsel for the appellant is that when once a receipt about accepting the premium has been issued by the respondent Corporation, it cannot escape from the consequences of the contract which has flowed from it. In other words, the argument is that issuance of receipt and acceptance of first premium constituted a valid acceptance of the proposed policy and that the claim advanced by the appellant be decreed.

ON the contrary, it has been vehemently argued by the learned Counsel for the respondent that the mere issuance of receipt and acceptance of premium would not constitute a completed contract. That since the proposal submitted by the proposer on 28.3.1994 has not been accepted by the respondent Corporation and no policy has been issued; in fact no concluded contract has come into existence. In a support of this argument, the learned Counsel for the respondent has relied upon a decision of Hon''ble the supreme Court in the case of LIC of India v. Raja Vasireddy Komalavalli Kamba, AIR 1984 SC 1014, and another decision of Hon''ble the National Commission in the case of LIC of India v. Smt. K. Aruna Kumari, III (1995) CPJ 80 (NC)=Jan. - April 1999 Legal Digest 167. It may be stated that at the time of submission of proposal, medical checkup of Smt. Rathi was also got done by the respondent, and a receipt dated 31.3.1994 was also issued by the respondent Corporation of having received the aforesaid amount of Rs. 12,365/- from Smt. Rathi subject to the condition that after the payment is found to be in order; this amount would be duly adjusted and thereafter a final receipt would be issued. It is not in dispute that the aforesaid amount of Rs. 12,365/- was received by the respondent Corporation as per certificate of payment of cheque issued by the SBI, Abu Road on 8.9.1994.

IN an issue of similar matter, the Hon''ble Supreme Court while dealing with the implications of having issued a receipt and also accepting the premium of the policy sought for by the proposer; Hon''ble Supreme Court held that ".........The mere receipt and retention of premium until and after the death of the applicant or the mere preparation of the policy document is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance........"

(p. 1018) Hon''ble the Supreme Court in this regard has reproduced the statement of law as stated at page 986 of Corpus Juris Secundum, Vol. XLIV wherein it has been stated as: "The mere receipt and retention of premiums until and after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offerer, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the company''s executive officers."

(p. 1018) The law so propounded by Hon''ble the Supreme Court has also been followed by Hon''ble the National Commission in the case of Smt. K. Aruna Kumari (supra). It is thus abundantly clear that where a proposer dies before the acceptance of the proposal by the LIC, there is no concluded contract between the parties as has been in the present case where also before the acceptance of the proposal by the respondent Corporation; the proposer Smt. Rathi died on 28.4.1994. Further the respondent Corporation in this case has neither issued a final receipt about the acceptance of the alleged premium amount by it nor it has issued any communication about the acceptance of the proposal by issuing the policy desired to be obtained by the deceased Smt. Rathi. Accordingly, we are of the firm view that the repudiation by the respondent Corporation of the claim advanced by the appellant and non-payment of the amount thereunder would not amount to any deficiency in service on its part. Consequently, we find no error whatsoever in the impugned order of the learned District Forum while dismissing the complaint of the appellant. The appeal, thus, has no merit and is dismissed with cost on parties. Appeal dismissed.