Supreme Court

Life Insurance Corporation of India and Ors. vs. Sunita

MANU/SC/1018/2021

29.10.2021

Insurance

It is not permissible to rewrite the contract while interpreting the terms of the Insurance Policy

In facts of present case, Pradeep Kumar, the husband of the Respondent (original complainant) had taken/purchased a life insurance policy under the Jeevan Suraksha Yojana on 14th April, 2011 from the Appellant-Life Insurance Corporation, under which a sum of Rs. 3,75,000 was assured by the corporation, and in case of death by accident an additional sum of Rs. 3,75,000 was also assured. The insurance premium of the said policy was to be paid six monthly. The next premium was due to be paid by the said insured Pradeep Kumar on 14th October, 2011. However, he committed a default. On 6th March, 2012, the said Pradeep Kumar i.e. the husband of the complainant met with an accident and succumbed to the injuries on 21st March, 2012. In the meantime, he deposited the due premium of October, 2011 on, 9th March, 2012 for reviving the policy.

The complainant after the death of her husband filed a claim before the Appellant-Corporation. The appellant paid a sum of Rs. 3,75,000 to the complainant, however, did not pay the additional amount of Rs. 3,75,000 towards the Accident claim benefit. The complainant, therefore, approached the District Forum by filing a complaint seeking the said amount towards the Accident claim benefit. The said complaint was resisted by the Life Insurance Corporation contending, that the day when the husband of the complainant met with an accident, the said policy had already lapsed on account of non-payment of the due premium.

The District Forum placing reliance upon the Ready reckoner issued by the Appellant-Corporation, allowed the said claim of the Respondent vide its judgment. The Appellant-Corporation being aggrieved by the same preferred an appeal before the State Consumer Disputes Redressal Commission. The State Commission allowed the said appeal and set aside the said order passed by the District Forum. The aggrieved complainant preferred a Revision Petition under Section 21(B) of the Consumer Protection Act, before the NCDRC challenging the order passed by the State Commission. The NCDRC vide the impugned judgment allowed the said Revision Petition of the Respondent and set aside the order passed by the State Commission. Hence, the present Appeal has been filed by the appellant-Corporation.

The Supreme Court in case of Vikram Greentech (I) Ltd. Vs. New India Assurance Co. Ltd., while dealing with the contract of insurance held that an insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberrima fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract.

The terms of insurance policy have to be strictly construed, and it is not permissible to rewrite the contract while interpreting the terms of the Policy. In the instant case, condition no. 11 of the Policy clearly stipulated that, the policy has to be in force, when the accident takes place. In the instant case, the policy had lapsed on 14th October, 2011 and was not in force on the date of accident i.e. on 6th March, 2012. It was sought to be revived on 9th March, 2012 after the accident in question, and that too without disclosing the fact of accident which had taken place on 6th March, 2012. Thus, apart from the fact that the respondent- complainant had not come with clean hands to claim the add on/extra Accident benefit of the policy, the policy in question being not in force on the date of accident as per the Condition no. 11 of the policy, the claim for extra Accident benefit was rightly rejected by the Appellant-Corporation.

Since, Clause 3 of the said terms and conditions of the policy permitted the renewal of discontinued policy, the Appellant-Corporation had revived the policy of the Respondent-complainant by accepting the payment of premium after the due date and paid Rs. 3,75,000 as assured under the policy, nonetheless for the Accident benefit, the policy had to be in force for the full sum assured on the date of accident as per the said Condition no. 11. The said Accident benefit could have been claimed and availed of, only if the accident had taken place subsequent to the renewal of the policy. The policy in the instant case was lying in a lapsed condition since 14th October, 2011 and, therefore, was not in force as on 6th March, 2012, resultantly, the claim over Accident benefit was not payable to the Respondent as per the conditions of the contract of insurance.

The Court, therefore, is of the opinion that the impugned order passed by the NCDRC setting aside the order passed by the Commission and reviving the order passed by the District Forum was highly erroneous. The impugned order passed by the NCDRC is set aside. Appeal allowed.

Tags : Terms Insurance policy Revival

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