Full Judgment Text
2024 INSC 395
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No.270 of 2012
Mrs. Bhumikaben N. Modi & Ors.
…Appellant(s)
Versus
Life Insurance Corporation of India
…Respondent(s)
J U D G M E N T
C.T. RAVIKUMAR, J.
1. The appellants herein were the respondents
before the National Consumer Disputes Redressal
Commission, New Delhi (for short ‘the NCDRC’). As per
the impugned order, the NCDRC allowed revision
petition No. 3384 of 2006 filed by the Life Insurance
Corporation of India, the respondent herein and
reversed the concurrent orders of the forums below
Signature Not Verified
Digitally signed by
VARSHA MENDIRATTA
Date: 2024.05.08
15:18:31 IST
Reason:
passed in favour of the appellants herein and dismissed
C.A. No.270 of 2012
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their complaint that culminated in a direction in their
favour for grant of compensation.
2. Succinctly stated, the facts that led to the captioned
appeal, are as follows: -
The appellants are the widow and the children of one
Shri Narender Kumar Kantilal Modi (hereafter referred to
as ‘the deceased’) who met with an accidental death due
to electric shock on 14.07.1996. Prior to his death, the
deceased submitted a proposal form for Life Insurance
Policy on 06.07.1996 and issued cheque of Rs. 3388/-
towards premium on 09.07.1996 through cheque No.
187009 dated 08.07.1996 of Dhokla Branch of State Bank
of Saurastra. At this juncture, it is to be noted that there
is no dispute regarding the permissibility of effecting
premium in the said mode. After the death of the
deceased the appellants herein claimed benefits based
on Insurance Policy Diary No. 832471906. Even after 14
months since the death of the policy holder, the
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respondent did not give any benefit and as such the
appellants were constrained to cause legal notice. The
stand of the respondent for repudiating the claim was
that the proposal submitted by the deceased was not
accepted and therefore there is no concluded contract
between the deceased and the respondent. In fact, the
respondent had blocked policy No.832471906 and
issued Acceptance-cum-First Premium Receipt showing
the policy No. 832471906.
3. In the aforementioned circumstances, aggrieved
by the repudiation, the appellants herein approached
the District Forum by filing complaint No. 1044 of 1997 in
terms of Section 11 of the Consumer Protection Act, 1986
(for short “the Act”). As per order dated 19.07.2001, the
District Forum allowed the complaint and directed the
respondent to pay total outstanding amount payable to
the appellants as per terms and conditions of Insurance
Policy No. 832471906 along with interest at the rate of
C.A. No.270 of 2012
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12% per annum till realization within 30 days from the
date of receipt of the copy of the order. Further, it was
directed to pay Rs. 5000/- to the appellants towards
compensation for mental agony and harassment as also
Rs. 2000/- towards costs. Aggrieved by the order of the
District Forum, the respondent herein/the opponent
therein filed an appeal viz. appeal No. 464 of 2002 before
the State Commission. The State Commission dismissed
the appeal as per order dated 25.07.2006 against which
the respondent herein filed a revision petition before the
National Commission in terms of the provisions of the
Section 21 (b) of the Act. The impugned order was
passed thereon and it resulted in reversal of the
concurrent orders of the forums below and dismissal of
the complaint.
4. Heard, learned counsel for the appellant and also
the learned Senior Counsel appearing for the
respondent. The factum of submission of proposal for
C.A. No.270 of 2012
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Life Insurance Policy on 06.07.1996 by the deceased and
also issuance of cheque bearing No. 1870092 therewithal
towards premium are not in dispute. The allotment of
policy No. 832471906, rather its blocking in the name of
the deceased is also not in dispute. The contention of the
appellants before the District Forum was that the
respondent had accepted the first premium amount and
issued Acceptance-cum-First Premium Receipt on
09.07.1996 and in view of the nature of the receipt issued
the respondent could not have repudiated the claim and
wriggled out of the liability to assume the risk.
5. Per contra, the respondent took the stand that the
policy prepared was not actually communicated to the
deceased and it was blocked on 15.07.1996 owing to the
demise of the proposer Shri Narender Kumar Kantilal
Modi. Further, it was contended that in the aforesaid
circumstances there was no concluded contract between
the deceased and the respondent. It is to be noted that
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even after taking such a stand the respondent offered Rs.
1 Lakh on ex gratia basis to the appellants. However, the
appellants refused to accept the same and claimed the
amount payable in terms of the terms and conditions in
Policy No. 832471906. Obviously, the District Forum
took note of the rival factual contentions and also the
further fact of payment of commission in respect of the
policy to the agent and consequently, the defence raised
on behalf of the respondent herein to justify that the
repudiation of the claim was rejected and the complaint
was allowed.
6. In the appeal before the State Commission, the
respondent reiterated the contentions unsuccessfully
taken before the District Forum. As noticed before, the
core contention was that on the date of death of “the
deceased” there was no concluded contract between the
insurer and the deceased. The contentions raised did
not find favour with the State Commission and the State
C.A. No.270 of 2012
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Commission found that the acceptance of the proposal
was unconditional and in favour of the deceased and
therefore the contract should relate back to the date from
which the insurance coverage was granted i.e., w.e.f.
28.06.1996. Assigning such a reason, the State
Commission dismissed the appeal. It is the order of the
appeal confirming the order of the District Forum that
was taken up in revision before the NCDRC by the
respondent herein, which culminated in the impugned
order.
7. A perusal of the impugned order would reveal that
for reversing the concurrent orders and dismissing the
complaint, the NCDRC assigned the reason that mere
receipt and retention of the premium until after the death
of the deceased-applicant or even the mere preparation
of the policy and its blocking would not amount to
acceptance of the proposal for insurance policy. To
arrive at such conclusions, it relied on the decision of this
C.A. No.270 of 2012
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Court in Life Insurance Corporation of India v. Raja
1
Vasireddy Komalavalli Kamba and Ors. . It was held
that the fora below had erred in directing for payment of
benefits in terms of the subject policy.
8. Various contentions were raised on behalf of the
parties before us to support their rival contentions. We
have already taken note of the factual contentions raised
on behalf of the parties. In the light of the contentions the
question to be considered is whether the NCDRC was
justified in reversing the concurrent orders of the forums
below and in dismissing the complaint. It is to be noted
that even after dismissing the complaint NCDRC took
note of the offer made by the respondent to the appellant
for payment of an amount of Rs. 1 Lakh ex-gratia vide
paragraph 4 (d) of the memo of the revision petition, and
issued a specific direction to the respondent to pay a sum
of Rs. 1 Lakh to the appellant by way of ex-gratia . Before
1
( 1984) 2 SCC 719
C.A. No.270 of 2012
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adverting to the rival contentions and looking into the
correctness or otherwise of the reversal of the
concurrent orders we find it appropriate to dilate this
aspect of the impugned order.
9. As noted hereinbefore, as per the impugned order
the NCDRC dismissed the complaint. Therefore, the
question is how can an order carrying a specific
direction for payment, even by way of ex-gratia, be
issued in a complaint after dismissing the same. It is to
be noted that such an order was passed in a revision
petition filed by the respondent herein. Jurisdiction of
the NCDRC under the Act is provided under Section 21
thereof. Section 21 (a) has two Sub-clauses and Sub-
clause (i) thereof deals with the original jurisdiction of
NCDRC to entertain complaints and Sub-clause (ii)
thereof deals with appeals against orders of the State
Commission. Section 21 (b) deals with its revisional
power. Section 21 of the Act reads thus: -
C.A. No.270 of 2012
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“21. Jurisdiction of the National Commission.—
Subject to the other provisions of this Act, the National
Commission shall have jurisdiction—
(a) to entertain—
(i) complaints where the value of the goods or
services and compensation, if any, claimed
exceeds [rupees one crore]; and
(ii) appeals against the orders of any State
Commission; and
(b) to call for the records and pass appropriate orders
in any consumer dispute which is pending before or
has been decided by any State Commission where it
appears to the National Commission that such State
Commission has exercised a jurisdiction not vested in
it by law, or has failed to exercise a jurisdiction so
vested, or has acted in the exercise of its jurisdiction
illegally or with material irregularity.”
10. A bare perusal of Sections 21 (a) and 21 (b) would
reveal that the powers thereunder are different and
distinct and the powers under Section 21 (b) is very
limited. The NCDRC itself, in the decision in
Kongaraananthram v. Telecom Distt. Engineer, Ma-
C.A. No.270 of 2012
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2
Habubnagar , held that its revisional powers under the
said Section are very limited. The said Section provides
power to call for the records from the State Commission
and to set aside its order issued sans jurisdiction vested
in it by law or if the State Commission failed to exercise
a jurisdiction so vested or if the State Commission has
acted in exercise of its jurisdiction illegally or with
material irregularity.
11. As noticed hereinbefore, a specific direction was
issued under the impugned order by NCDRC after
dismissing the complaint which was allowed by the
District Forum and got confirmance from the State
Commission. It is true that what was ordered by NCDRC
is not for payment of benefits based on the policy
bearing No.832471906 but only payment of Rs.1 lakh by
way of ex gratia, as offered in the memorandum of the
revision petition. Ex gratia is an act of gratis and has no
2
1990 SCC OnLine NCDRC 24
C.A. No.270 of 2012
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connection with the liability, payable as a legal duty.
th
Going by the Oxford Dictionary of Law, 5 Edition, the
term “ ex gratia ” is payment not required to be made by
a legal duty.
12. In the contextual situation, it is relevant to refer to
the decision of this Court in Sudesh Dogra v. Union of
3
India & Ors. . This Court held therein that ex gratia is an
act of gratis and it got no connection with the liability of
the State under law and the very nature of the relief and
its dispensation by the State could not be governed by
directions in the nature of mandamus unless, of course,
there is an apparent discrimination in the manner of
grant of such relief.
13. In the context of the directions, it is also to be noted
that such an offer was made by the Respondent much
earlier even before the matter reached the District
Forum, but the appellant had denied to accept such an
3
(2014) 6 SCC 486
C.A. No.270 of 2012
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offer. The specific direction, in such circumstances
issued in exercise of the revisional power dissuade us to
accept the impugned order as one dismissing the
complaint in toto and in the aforesaid circumstances, the
impugned order virtually partakes the character of an
order modifying the order of the District Forum which
was confirmed by the State Commission. Be that as it
may, we will further consider the question whether the
NCDRC is justified in reversing the concurrent order in
the complaint filed by the appellants in exercise of its
revisional jurisdiction.
14. A perusal of the impugned order would reveal, as
noted earlier, that the reversal of the concurrent order(s)
of the forums below and the consequential rejection of
the complaint made by the NCDRC after coming to a
conclusion of non-existence of a concluded contract was
by relying on a decision of this Court in Raja Vasireddy
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Komalavalli Kamba’s case (supra). It is true that in the
said decision this Court held thus:-
“15. Though in certain human relationships silence to
a proposal might convey acceptance but in the case of
insurance proposal, silence does not denote consent
and no binding contract arises until the person to
whom an offer is made says or does something to
signify his acceptance. Mere delay in giving an answer
cannot be construed as an acceptance, as, prima facie,
acceptance must be communicated to the offerer. The
general rule is that the contract of insurance will be
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. Whether the final acceptance is that of the
assured or insurers, however, depends simply on the
way in which negotiations for an insurance have
progressed. See in this connection statement of law
in MacGillivray & Parkington on Insurance
Law, Seventh Edn., p. 94, para 215.”
15. The factual position obtained in the case on hand
tend us to hold that the NCDRC had failed to bestow
proper consideration of the factual position which
C.A. No.270 of 2012
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consequently led to the mis-application of the decision
in Raja Vasireddy Komalavalli Kamba’s case (supra).
In view of the decision in D. Srinivas v. SBI Life
4
Insurance Co. Ltd. & Ors. , wherein this Court
distinguished the decision in Raja Vasireddy
Komalavalli Kamba’s case (supra), we are of the view
that NCDRC had misdirected itself in considering the
relevant question involved, which was rightly
considered by the District Forum. In the decision in D.
Srinivas case, this Court held thus:-
“12. Although we do not have any quarrel with the
proposition laid therein, it should be noted that
aforesaid judgments only laid down a flexible formula
for the Court to see as to whether there was clear
indication of acceptance of the insurance. It is to be
noted that the impugned majority order merely cites
the aforesaid judgment, without appreciating the
circumstances which give rise to a very clear
presumption of acceptance of the policy by the insurer
in this case at hand. The insurance contract being a
4
(2018) 3 SCC 653
C.A. No.270 of 2012
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contract of utmost good faith, is a two-way door. The
standards of conduct as expected under the utmost
good faith obligation should be met by either party to
such contract.”
16. Paragraph 11 of the decision in D. Srinivas case
(supra) would reveal that the afore-quoted recital was
made thereunder after considering the decision in Raja
Vasireddy Komalavalli Kamba case (supra). In short,
the decision in D. Srinivas case (supra) would obligate
us to consider whether the circumstances obtained in
this case give rise to a very clear presumption of
acceptance of the policy by the insurer instead of merely
giving imprimatur to the impugned order of NCDRC on
the ground that it was rendered relying on the decision
in Raja Vasireddy Komalavalli Kamba’s case. In this
context, it is only apposite to note that though the orders
were passed by the District Forum which was confirmed
by the State Commission would reveal that the analysis
and the consequential conclusion arrived at thereunder
C.A. No.270 of 2012
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lie in conformity with the exercise expected to be
undertaken based on the aforementioned exposition of
law in D. Srinivas’s case (supra). We are not oblivious
of the fact that the decision in D. Srinivas’s case (supra)
was rendered much later to the order impugned in this
appeal. But then, in view of the exposition of law in
5
Murthy v. State of Karnataka & Others as also in view
of D. Srinivas’s case (supra), if the analysis and the
ultimate conclusions of the District Forum is in tune with
the decision in D. Srinivas’s case, we are bound to
restore the same. In Murthy’s case (supra), this Court
held that normally the decision of the Supreme Court
enunciating a principle of law is applicable to all cases
irrespective of the stage of pendency thereof because it
is assumed that what is enunciated by the Supreme Court
is, in fact, the law from inception.
5
(2003) 7 SCC 517
C.A. No.270 of 2012
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17. The decision in D. Srinivas’s case was followed by
this Court again in the decision in Gokal Chand (D) Thr.
6
LRs v. Axis Bank Ltd. and Anr. , after rejecting a defence
relying on the decision in Raja Vasireddy Komalavalli
Kamba’s case.
18. Now, we will proceed to consider the question
whether circumstances obtained in this case carry clear
presumption of the acceptance of the policy by the
insurer, as has been obligated under the decision in D.
Srinivas’s case (supra).
19. Evidently, it is the case of the appellants that the
first premium was accepted and a duly signed receipt
therefor, noting policy No.832471906 was issued by the
respondent on 09.07.1996. The contents of the same has
been reproduced in the synopsis of this case at page ‘E’
as hereunder.
6
2022 SCC OnLine 1720
C.A. No.270 of 2012
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“Annexure B
Dear Sir/Madam
Your proposal for Assurance as per particulars
noted in the schedule has been accepted by the
corporation as proposed at ordinary rates/with
E.D.B……………………………………………………
……………………………………………………………
We have also received amount noted in the
schedule being the First Premium on the policy of
assurance for the plan and amount indicated therein.
The acceptance of this payment places the corporation
on risk with effect from the date of this Acceptance cum
First Premium Receipt or if the proposal is under the
Children/Deferred or Children Anticipated Assurance
Plan from the deferred date on terms & conditions of
the policy of assurance which will be sent shortly.
The issue of this receipt is also subject to this
realisation of the amount in cash and the terms and
conditions of acceptance printed over leaf.
Policy will be despatched shortly, if you do not
receive the same within next 90 days please write to
us.”
20. The photocopy of the Acceptance-cum-First
Premium Receipt is produced by the respondent along
C.A. No.270 of 2012
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with its written submission as Annexure B. In fact,
Annexure B would reveal the accuracy and correctness
of what is stated at page ‘E’ of the synopsis of the
captioned appeal. A perusal of the same would make it
clear that the acceptance of the payment would place the
Corporation to assume the risk with effect from the date
of the Acceptance-cum-First Premium Receipt. True that
in Annexure B, it is stated that it would be subject to the
realization of the amount in cash and the terms and
conditions of acceptance printed overleaf. Though this
Court called upon the respondent to produce the
original, the same was not produced and what was
produced was only a photo copy as Annexure B. In this
context, as also in view of the decision in D. Srinivas’s
case, it is only appropriate to refer to certain recitals
from the order of the District Forum. They, in so far as
relevant, read thus:-
C.A. No.270 of 2012
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“ 1 …………………………………..………………………
……………….
The deceased had filled up the proposal form of the
said disputed policy on 06.07.1996 and issued cheque
of Rs. 3388/- towards premium on 09.07.1996 through'
cheque of Rs. 187009/- of State Bank of Saurastra and
the opponent accepted the said premium and issued
said policy no. 832471906. The opponent also
prepared cover note with the details of said policy.
The opponent also issued receipt for the said
premium. The deceased has accordingly accident
benefit policy. The policy holder insured Narendra
Kumar K. Modi, the complainant husband died due to
electric shock and it is proved by death certificate
issued the Medical caused by electric shock passing
through the body. He died at young age. It was sudden
and accidental death……………………………………
……………..…This complaint was filed before this
forum on 19.07.1997. the complainant has engaged
learned advocate Shri A.V. Modi and D. V. Modi under
Vakalatnama and produced 22 documentary evidence
as stated in the list of documents including Suspense
Memorandum dated 09.07.1996 and copy of the police
i.e. disputed policy no. 832471906, copy of opponent's
notice to call for second installment premium, copy of
death certificate and policy papers and certificate
C.A. No.270 of 2012
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issued by Police Inspector, Dholka Police Station and
documents issued by the Medical Officer of Sheth G.K.
Municipal Hospital and all relevant documents issued
by the opponent and notice given by the complainant
to the opponent dated 10.09.1996 and opponent letter
dated 29.08.1996 and copy of other correspondence
including notice given by Shri T.S. Nanavati dated
25.03.1997 to the opponent and notice dated
21.04.1997 notice given through Shri A.V. Modi dated
14.08.1997 to the opponent.
4. The complainant's advocate notice to the opponent
on 03 .07.1998 and requested the opponent to produce
required original documents and requested the
opponent's authorized person Shri Mukund Krishnarao
Joshi (Shri. M. K Joshi) to remain present with the said
documents. In response to that Shri. M. K. Joshi,
Manager (Lega) of opponent LIC of India has filed
affidavit. He has explained about the documents
produced by the complainant along with complaint.
5 …………………………..…………………………….
………….The complainant have produced
documentary evidence with complaint from no.
6061830 and the opponent issued policy no.
832417906 and as per the suspense memorandum
C.A. No.270 of 2012
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BOC No. 600392 dated 09.07.1996 issued by the
opponent LIC of India, SM Market, Bavla, Dist.
Ahmadabad. It was issued against policy/proposal no.
F.P. of Rs. 3388/- and as per the case of the
complainant the opponent LIC accepted the proposal
form and accepted the premium thereof of Rs.3388/-
and issued receipt dated policy no.832471906 and in
the said receipt issued by the opponent, policy
number is written and date of commencement of
policy is written as 28.06.1996 and maturity is
27.06.2016 and all the details including sum insured
Rs. 1.00 lakh, instatement premium Rs. 3388/- table
and term no. 75/20, short name of insured N. K. Modi,
due date, mode of payment half yearly, date of birth,
age whether admitted: yes and all other details about
BR. DO. DO code, Agent code etc are written and full
address of policy holder Mr. Narendra Kumar Modi is
written and office of the LI C of India has issued the
legal receipt and the same original receipt is
produced by the complainant along with complaint.
The opponents have also produce copy of the
insurance policy issued by the opponent, the policy
no.832471906 all the details of commencement of
policy, mode of premium, date of proposal, name. and
address of proposer and life assured of Shri. Narendra
Kumar Kantila Modi and full address is written and it
C.A. No.270 of 2012
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was signed by the office of the LIC and the opponent
have of commencement of policy and policy no. is
written 832471906 and commencement of policy
28.06.1996 and all necessary details are stated. The
State Bank of Saurashtra, Dholka Branch has issued
certificate that the . cheque no. 187009 dated
8.07.1996 favoring LIC of India Rs. 3388/- drawn by
Narendra Kumar Modi paid by them as on 12.07.1996.
The opponent also issued first premium commission
bill in the favour of Shri. P.B. Shah, the agent of the
policy issued in the favour of complaint and in the said
bill policy no. - · 832471906, sum insured Rs. 1.00 lakh,
mode of payment, table and term, all details are
stated. The said first premium commission bill issued
by the opponent……………………………………..….
…………... We have to note that when policy number
itself is stated in the said letter dated 29.08.1996 of
disputed policy, means all procedure prior to issuance
of policy were completed and then only the policy
number can be allotted to the proposer and in this
case when policy number was already given to the
proposer, means the contract was started or
concluded so the opponent cannot go back with the
terms and conditions of the said contract i.e. policy
no.832471906…………………………………………
C.A. No.270 of 2012
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…………. The opponent wrote letter dated 17.06.1997
in connection of complaint's notice given through
advocate dated 25.03.1997 and 21.04.1997. We have
noted that the title of the letter is stated by the
opponent that the title of the letter is stated by the
opponent that "Re: Policy No. 832471906 addressed to
Shri T.S. Nanavati, who gave two legal notices on
behalf of the complainants, the opponent have shown
their failings to pay exgratia payment sum insured
only in full and final settlement of the dues under the
aforesaid policy. At this juncture, we have to interpret
the said all words used by the LIC i.e. Ex- gratia or
basic sum insured only in full and final settlement of
the dues under the · above policy all the said words
are proving that the opponent have issued the policy
and accepted the risk…………….........................
…………………………….….. We have also noted that
the opponent has deliberately not examined any
witness to prove that the decision to accept the
proposal was taken by the opponent on 15.07.1996
and the death of the proposer has taken place on
14.07.1996, the contract could not be said to have been
concluded and the contract was never in existence.
We have noted that the contract was already
concluded prior to the death of the policy holder Shri
Narendra Kumar Modi, if the opponent were and are
C.A. No.270 of 2012
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in possession of the documentary evidence to prove
that the decision to accept the proposal was taken by
the opponent on 15.07.1996, then definitely, the
opponent would have produced oral or documentary
evidence to prove the said facts as this is a crucial
point, but the opponent has not taken . any action to
produce oral or documentary evidence oat this point
i.e. only defense of the opponent in the written
statement which amounts to crush the object of LIC act
and other prevailing act to give protection and risk
coverage…………………………………………………
……...………………………The opponent have not
produced their own record to prove that after the
receipt of the proposal and cheque of premium of
Rs3388/- dated 09.07.1996, the decision to accept the
proposal was not taken on 09.07.1996 or immediately
within reasonable period 213 days and took only on
15.07.1996………….”
21. Obviously, the said First Premium Receipt
contains the number of the policy as 832471906 and the
next premium date was shown therein as 28.12.1996. In
addition to the aforesaid recitals from the order of the
C.A. No.270 of 2012
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District Forum, we are of the view that certain other
emerging aspects also assume relevance.
22. Though it is stated, as can be seen from the
extracted portion, that the issue of the receipt is subject
to the realization of the amount in cash and the terms and
condition of acceptance printed overleaf, the printing on
overleaf is conspicuously absent in Annexure B. So also,
there is no case for the respondent that the cheque
issued was dishonored.
23. The factum of receipt of cheque amount cannot be
disputed by the respondent. In fact, the statement in the
counter affidavit of the respondent in this appeal that the
appellant’s entitlement is only to get refund of the
amount tendered as initial deposit at the time of
submitting proposal would reveal the said position.
Another circumstance is also relevant in the context of
consideration based on the decision in D. Srinivas’s case
(supra) viz., the stand of the respondent that mere
C.A. No.270 of 2012
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preparation of the policy document is not acceptance so
as to create a concluded contract. The cheque amount
was received prior to the death of ‘the deceased’ is not
in dispute. Paragraph 5 of the order of the District Forum
would reveal that the Dhokla Branch of the State Bank of
Saurashtra issued certificate that Cheque No.187009
favouring the respondent herein for Rs.3388/- drawn by
‘the deceased’ was paid by him on 12.07.1996. The
order of the State Commission in paragraph 3 would
reveal the consistent stand of the respondent that the
proposal form was accepted only on 15.07.1996 whereas
the death of ‘the deceased’ was on the previous day viz.,
on 14.07.1996 and therefore, there was no concluded
contract. The documents pertaining to the proposal
were perused by both the District Forum and the State
Commission and the said fact is discernible from their
respective orders. The various documents were
referred to in the orders with reference to the page
C.A. No.270 of 2012
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numbers, in which they are available. In the said
context, paragraph 6 of the orders of the State
Commission assumes relevance and the same to the
extent it is relevant, read thus:-
“6. Page 125 is the proposal form. Perusal of the same
suggests that the amount of Rs. 3,388/- is shown as
deposit amount and the risk date is shown to be
28.06.1996. Thus, it will be seen that the policy was
desired to be effective and risk commenced
retrospectively with effect from 28.06.1996. It is also
suggested that the said proposal form was filled in on
09.07.1996. Page 126 reads the same to be suspense
memorandum with BOC No. 600392 dated 09 .07 .1996
and the policy of proposal number is shown as F.P.
Page 130 reads that next premium would become due
on 28.12.1996…….”
24. In the circumstances, referred to in the orders of
the District Forum and the State Commission as also
noted hereinbefore, the question is whether a clear
presumption as to the acceptance of the policy by the
insurer is available in the case on hand. In Annexure B
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receipt of the first premium, it is specifically stated that
the acceptance of payment would place the Corporation
on risk with effect from the date of the said Acceptance-
cum-First Premium Receipt, subject to the realization of
the amount in cash and the terms and conditions of
acceptance printed overleaf. What is printed overleaf is
not on record as the same was not produced, though it
should be a part of Annexure B. Thus, the entire
circumstances discussed based on the documents in the
orders of the District Forum and the State Commission
hereinbefore in this judgment, in the light of the decision
in D. Srinivas’s case (supra) constrain us to hold that the
proposal was accepted.
25. When the aforesaid being the circumstances
revealed from the conclusions and concurrent findings
by the District Forum and the State Commission entered
with reference to the documents perused by them, in
exercise of revisional power the NCDRC could not have
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arrived at a finding that the forums below acted in the
exercise of jurisdiction illegally or that there occurred a
material irregularity. In fact, all the circumstances
discussed above justify the conclusion of acceptance of
the proposal prior to the death of ‘the deceased’.
26. There is no case for the respondent that Annexure
B viz., the First Premium Receipt carrying the assurance,
as mentioned earlier, was not issued. Annexure B would
justify drawing of presumption of acceptance of the
policy and not otherwise. We have also found that no
material irregularity or illegality could be found in the
conclusions drawn with regard to the acceptance of
proposal by the District Forum which was confirmed by
the State Commission with reasons. We are fortified in
our view by the following further reasons/
circumstances.
The entry 15.07.1996 in Annexure B and the
contentions that the factum of death was made known on
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15.07.1996 and the acceptance of policy also on
15.07.1996 cannot co-exist. If the amount received on
account of encashment of cheque is kept as
deposit/suspense and was not accepted by way of
premium, as has been contended before the State
Commission and duly recorded in paragraph 3 of its
order what was the necessity to prepare the First
Premium Receipt on 15.07.1996. There is incongruity in
the contentions and the documents. Along with the
written submission on behalf of the respondent herein,
true copy of the suspense memorandum/First Premium
Receipt is produced in this proceeding as Annexure B. A
perusal of the same with reference to what is extracted
from paragraph 6 of the order of the State Commission,
would reveal certain disturbing aspects. As stated in
paragraph 6 thereunder Annexure B would reveal that
the date for next premium would become due on
28.12.1996. At the same time a dubious entry ‘NIL’ is also
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appearing thereon. Another dubious entry is the writing
on the right top corner of Annexure B i.e., 15.07.1996.
The dubiousness on account of that entry is because of
the specific stand taken by the respondent. As noted
earlier, the stand of the respondent is that the policy was
prepared on 15.07.1996 and that the First Premium
Receipt was issued earlier. If it be so why an entry of
15.07.1996 should be made in Annexure B. As stated in
paragraph 6 of the order of the State Commission, the
next premium date is shown as due as 28.12.1996. The
name and address of Narendra Kumar Kantilal Modi and
the policy number are also specifically entered therein.
27. In the aforesaid circumstances, there was
absolutely no reason or justification for NCDRC to upturn
the concurrent orders and to order for the dismissal of
the complaint and at the same time issuing a direction
only to grant Rs.1 lakh as ex gratia merely because such
an offer was made by the respondent-insurer in the
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memorandum of the revision petition. There cannot be
any doubt with respect to the position that in the absence
of anything suggesting that the State Commission had
acted in the exercise of its jurisdiction illegally or with
materially irregularity, interference with an order of the
State Commission confirming the order of the District
Forum, in exercise of the limited revisional power under
Section 21 (b) of the Act, by NCDRC, is without rhyme or
reason and cannot be sustained.
28. Before the year 1956, life insurance business was in
the hands of private companies which were operating
mostly in urban areas. The avowed objects and reasons
of the Life Insurance Corporation Act, 1956 would reveal
that the main object and reason is to ensure absolute
security to the policy-holder in the matter of his life
insurance protection.
29. In the circumstances, the impugned order is set
aside and the order of the District Forum in complaint
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No.1044 of 1997 dated 19.07.2001 which was confirmed
by the State Commission as per order dated 25.07.2006
in appeal No.464 of 2002 is restored. The respondent is
granted two months’ time to effect payment in terms of
the order thus restored.
30. The appeal is allowed.
.........................J.
(A. S. Bopanna)
.........................J.
(C.T. Ravikumar)
New Delhi;
May 08, 2024.
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