Life Insurance Corporation of India vs Balwinder Kaur

MR. Justice R.S. Mongia, President-Brief facts giving rise to this appeal at the behest of the Life Insurance Corporation may be noticed. One Gurdial Singh wanted his life to be insured with Life Insurance Corporation and for that purpose he had filled in proposal form on 20.10.2002 and the premium that was payable was paid on 21.10.2002 and the proposal deposit which later on is convertible to premium was also deposited on 21.10.2002 by way of a cheque which stood duly encashed. On the purported medical examination of the proposer Gurdial Singh, the proposal was accepted on 31.10.2002 and policy was also issued on the same date i.e., 31.10.2002 commencing from 28.10.2002. It may be observed that there are rules and regulations as to how the date of commencement is to be mentioned in the life insurance policy. In fact, what had happened in this case was that the insured had already died on 30.10.2002, i.e., before the acceptance of the proposal for insurance and the issuance of insurance policy on 31.10.2002. Balwinder Kaur wife of Gurdial Singh on the basis of policy which was in the sum of Rs. 1,24,000 lodged a claim with the Insurance Company. However, the same was repudiated on the ground that there was no concluded contract between the Insurance Company and late Sh. Gurdial Singh. This led Balwinder Kaur to file a complaint before the District Forum which allowed the complaint.

LEARNED District Forum was of the view that the plea of the Insurance Company that there was no concluded contract was not well based inasmuch as the date of commencement of policy itself was mentioned as 28.10.2002 and, therefore, it is immaterial if the contract was accepted on 31.10.2002 or the policy was issued on that day. The District Forum allowed the complaint and directed the Insurance Company to pay the insured sum along with 9% interest and Rs. 500 as costs. Hence the present appeal. Learned Counsel for the appellant argued that there are instructions for completion of the proposal review slip issued by the Insurance Company in which it is also mentioned as to how the date of commencement of the policy is to be fixed. The argument proceeded that on the date when the proposal is accepted and intimation thereof is sent to the insured intimating him that the proposal has been accepted or the policy itself is sent, it will have to be seen whether on that date when the proposal is accepted, the person to be insured is alive or not. This argument is on the basis that there cannot be any valid contract with the dead man. According to the learned Counsel, the date relevant for the purpose of seeing a concluded valid contract is the date of the acceptance irrespective of the date of the commencement of the contract. If the contract, on the day it is made, is a valid contract under the Contract Act, the commencement date of the contract can be fixed by the terms and conditions of the policy or rules and regulations. However, if on the date the proposal is accepted, the proposer is dead, the question of any acceptance of the proposal would not arise and no legal contract would come into being w.e.f. that date much less w.e.f. prior date. Learned Counsel drew our attention to Annexure 4 containing instructions regarding date of commencement which is as follows: "(1) Date of commencement:

Normally, it would be the date on which the full premium has been received and accepted as such or the date of issuing the acceptance-cum-F.P.R. whichever is later as explained below- (a) Full deposit paid In this case the date of with proposal commencement would accepted at Ordinary Rates. be the date of issuing the acceptance-Cum-F.P.R. (b) Full deposit paid The date of commence- with proposal but ment would be the the proposal date of receiving accepted at other- balance of first instal- wise than ordinary ment premium, the rates or subject to letter of consent or some requirements. requirements or the date on which all for- malities are completed which is later. (c) When there is a The date of commence- specific request ment would be this from the party date provided it is for dating back allowed under the the policy. rules and interest due, if any, is paid. When the date of commencement as above works out to be after the 28th of any month, the 28th of that month will be taken as the date of commencement."

LEARNED Counsel cited the following authorities in support of his contention: (1) LIC of India v. R. Vasireddy, AIR 1984 SC 1014. (2) LIC of India v. Smt. Mumtaz Begum, I (1993) CPJ 10 (NC)=1992 (2) CPR 715 (NC). (3) LIC of India v. Mrs. Bimala Routray, II (1993) CPJ 146 (NC). (4) LIC of India v. Smt. K. Aruna Kumari, III (1995) CPJ 80 (NC)=1995 (3) CPR 62. (5) LIC of India v. Amar Preet Kaur, 2002 (2) R.C.R. (Civil) 56. (6) LIC of India v. Dharam Vir Anand, III (1998) CPJ 3 (SC)=1998 (2) CON.LT 493. Learned Counsel further submitted that even if it is assumed for the sake of argument that a valid contract had come into being on 31.10.2002 the same was on the basis of a fraud having been committed with Insurance Company. A medical test is stated to have been conducted on Sh. Gurdial Singh by a doctor on 31.10.2002 which was necessary pre-requisite for entering into contract of insurance. The doctor certificate is dated 31.10.2002. Admittedly on 31.10.2002, Gurdial Singh did not exist in this world as he had died on 30.10.2002. He submitted that whoever may be the parties to the fraud, may be the doctor, some officials or agent of the Insurance Company or the complainant herself can be held liable separately but the fact remains that the document regarding the medical test which is dated 31.10.2002 showing Gurdial Singh having been examined by the doctor on that date is undoubtedly a forged or fraudulent document as on that date Gurdial Singh was not alive. On that premises, learned Counsel argued that the contract being based on a fraud or a fraudulent document which was one of the essential documents for entering into a contract, the contract dated 31.10.2002 would become invalid.

ON the other hand, learned Counsel for the complainant-respondent urged the same point as were urged before the District Forum i.e., there was a completed contract which, as per the policy, had come into effect from 28.10.2002 and now it did not lie in the mouth of the LIC to say that on the date when the proposal was accepted and policy was issued i.e., 31.10.2002, Gurdial Singh was dead. According to the learned Counsel, the relevant date is the date of commencement of policy and not when the proposal is accepted. After hearing the learned Counsel for the parties, we are of the view that there is force in the argument of learned Counsel for the appellant. Supposing in this very case, Gurdial Singh was alive on 31.10.2002 and if any right to him or to any nominee had accrued on or after 28.10.2002 as in the case of endowment assurance policy with profits plus accident benefits, the Insurance Company could not have repudiated the contract on the ground that the contract had been entered into on 31.10.2002 and anything which might have happened after 28.10.2002 and prior to 31.10.2002 would not be covered. On the other hand, if on 31.10.2002 the insured is dead and the contract is entered into, though w.e.f. a previous date the contract itself will be void as no contract on 31.10.2002 could be entered into with a dead man. In these circumstances, if anything happened on or after 28.10.2002 the Insurance Company would not be liable as there is no legal and valid contract dated 31.10.2002. Though it is unfortunate for the complainant that in this case the contract had entered into on 31.10.2002 whereas the proposal was made on 28.10.2002 and her husband died on 30.10.2002. No valid contract came into being and she is being deprived of the benefits, which otherwise could be availed of by her in case the contract was valid.

IN view of the above, we are of the opinion that the approach of the District Forum was not correct. This appeal is allowed and the judgment and the order of the District Forum dated 4.2.2005 is set aside. There will be no order as to costs.

THE amount deposited by the appellant while filing the appeal be remitted back to the appellant by way of a Bank draft/crossed cheque after 45 days. Orders were reserved on 7.2.2006. Be communicated to the parties. Appeal allowed.