Supreme Court of India
INSURANCE CORPORATION OF INDIA AND ANOTHER versus SUNITA on 29 October 2021
180
[2021] 10 S.C.R.
ALIFE INSURANCE CORPORATION OF INDIA AND ANOTHER
v.
SUNITA
(Civil Appeal No. 6537 of 2021)
BOCTOBER 29, 2021
[SANJIV KHANNA AND BELA M. TRIVEDI, JJ.]
Insurance: Insurance policy – Construction of – Held: Termsof insurance policy have to be strictly construed – It is notpermissible to rewrite the contract while interpreting the terms ofCthe Policy – In a contract of insurance there was a requirement ofUberrima fides-good faith on the part of the assured – On facts,condition of the Policy clearly stipulated that the policy has to be inforce when the accident takes place – Policy was lying in a lapsedcondition and was not in force on the date of accident – It wasDsought to be revived after the accident and that too without disclosingthe fact of accident which took place three days before – Thus, thecomplainant did not come with clean hands to claim the extraAccident benefit of the policy – The said Accident benefit couldhave been claimed and availed of only if the accident had takenplace subsequent to the renewal of the policy – Claim for AccidentEbenefit was not payable to the respondent as per the conditions ofthe contract of insurance – Thus, the claim for extra Accident benefitrightly rejected by the Corporation – Consumer Protection Act,1986.Allowing the appeal, the CourtF
HELD: 1.1 At the time of making payment of premium on09.03.2012, it was not disclosed by the complainant or her husbandto the appellant-Corporation about the accident which had takenplaced on 06.03.2012. The said conduct on the part of thecomplainant and her husband in not disclosing about the accidentGto the corporation not only amounted to suppression of materialfact and lacked bona fides but smacked of their mala fide intention,and therefore, the Accident benefit claim of the complainant wasliable to be rejected on the said ground alone. In a contract ofinsurance there is a requirement of Uberrima fides i.e. good faithHon the part of the assured. [Para 8][185-G-H; 186-A-B]
1.2 It is clear that the terms of insurance policy have to bestrictly construed, and it is not permissible to rewrite the contractwhile interpreting the terms of the Policy. In the instant case,condition no. 11 of the Policy clearly stipulated that the policyhas to be in force when the accident takes place. The policy hadlapsed on 14.10.2011 and was not in force on the date of accidenti.e. on 06.03.2012. It was sought to be revived on 09.03.2012after the accident in question, and that too without disclosing thefact of accident which had taken place on 06.03.2012. Thus, apartfrom the fact that the respondent-complainant had not come withclean hands to claim the add on/extra Accident benefit of thepolicy, the policy in question being not in force on the date ofaccident as per the condition no. 11 of the policy, the claim forextra Accident benefit was rightly rejected by the appellant-Corporation. Since, clause 3 of the said terms and conditions ofthe policy permitted the renewal of discontinued policy, theappellant-Corporation had revived the policy of the respondent-complainant by accepting the payment of premium after the duedate and paid Rs. 3,75,000/- as assured under the policy,nonetheless for the Accident benefit, the policy had to be in forcefor the full sum assured on the date of accident as per the saidcondition no. 11. The said Accident benefit could have beenclaimed and availed of only if the accident had taken placesubsequent to the renewal of the policy. The policy was lying in alapsed condition since 14th October, 2011 and, thus, was not inforce as on 06.03.2012, resultantly, the claim over Accident benefitwas not payable to the respondent as per the conditions of thecontract of insurance. Thus, the impugned order passed by theNCDRC setting aside the order passed by the State Commissionand reviving the order passed by the District Forum was highlyerroneous and is set aside.The claim of the respondent towardsAccident benefit stands rejected. [Para 9-11][186-H; 187-A-F]
Vikram Greentech (I) Ltd. & Anr vs New India AssuranceCo. Ltd (2009) 5 SCC 599 : [2009] 5 SCR 437; LifeInsurance Corporation of India Vs. Jaya Chandel(2008) 3 SCC 382: [2008] 2 SCR 559; GeneralAssurance Society Ltd. v. Chandmull Jain (1966) 3 SCR
AB
C
D
E
F
G
A500; Oriental Insurance Co. Ltd. v. Sony Cheriyan AIR1999 SC 3252 : [1999] 1 Suppl. SCR 622; United IndiaInsurance Co. Ltd. v. Harchand Rai Chandan Lal (2004)8 SCC 644 : [2004] 4 Suppl. SCR 662 – referred to.
Case Law Reference
B
CIVIL APPELLATE JURISDICTION: Civil Appeal No.6537 of2021.
From the Judgment and Order dated 24.04.2019 of the NationalDConsumer Disputes Redressal Commission, New Delhi in RevisionPetition No.897 of 2018.
Kailash Vasdev, Sr. Adv., Rao Ranjit, Advs. for the Appellants.Pushkar Anand, S. R. Setia, Advs. for the Respondent.
EThe Judgment of the Court was delivered by BELA M. TRIVEDI, J.
Citations and Judicial Treatment
Cited by
0
Decisions in the index citing it
Cites
7
Decisions referred to
In this index
3
Of the decisions it cites
Overruled / Questioned
0
No negative treatment found
Loading the citing and cited decisions…
This judgment in the centre: on the left the decisions it cites, on the right the decisions citing it. Colour is the treatment; choose a decision to open it.
1. Leave is granted.
2. The present appeal is directed against the judgment and orderFdated 24[th] April, 2019 passed by the National Consumer DisputesRedressal Commission, New Delhi (hereinafter referred to as theNCDRC) in Revision Petition No. 897 of 2018, whereby the NCDRCwhile allowing the said Revision Petition, has set aside the order passedby the State Commission and has confirmed the order passed by theDistrict Forum.G
3. The short facts giving rise to the present appeal are that Mr.Pradeep Kumar, the husband of the respondent herein (originalcomplainant) had taken/purchased a life insurance policy under theJeevan Suraksha Yojana on 14.04.2021 from the appellant-Life InsuranceCorporation, under which a sum of Rs. 3,75,000/- was assured by theH
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 policywas to be paid six monthly. The next premium was due to be paid by thesaid insured Pradeep Kumar on 14[th] October, 2011. However, hecommitted a default. On 06.03.2012, the said Pradeep Kumar i.e. thehusband of the complainant met with an accident and succumbed to theinjuries on 21.03.2012. In the meantime, he deposited the due premiumof October, 2011 on, 09.03.2012 for reviving the policy. The complainantafter the death of her husband filed a claim before the appellant-Corporation. The appellant paid a sum of Rs. 3,75,000/- to thecomplainant, 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 saidamount towards the Accident claim benefit. The said complaint wasresisted by the Life Insurance Corporation contending, inter alia, thatthe day when the husband of the complainant met with an accident, thesaid policy had already lapsed on account of non-payment of the duepremium.
4. The District Forum placing reliance upon the Ready reckonerissued by the appellant-Corporation, allowed the said claim of therespondent vide its judgment and order dated 14.10.2013. The appellant-Corporation being aggrieved by the same preferred an appeal beforethe State Consumer Disputes Redressal Commission. The StateCommission allowed the said appeal and set aside the said order passedby the District Forum. The aggrieved complainant preferred a RevisionPetition being no. 897 of 2008 under Section 21(B) of the ConsumerProtection Act (hereinafter referred to as the said Act), before theNCDRC challenging the order passed by the State Commission. TheNCDRC vide the impugned judgment dated 24.04.2019 allowed the saidRevision Petition of the respondent and set aside the order passed bythe State Commission. Hence, the present Appeal has been filed by theappellant-Corporation.
5. The learned counsel appearing for the appellant-Corporationplacing heavy reliance on the condition no. 11 of the policy submittedthat the Accident claim benefit was payable only if the policy was inforce on the date of accident, however, in the instant case, the policyhad already lapsed in October, 2011 and the husband of the respondent-complainant had sought to pay the premium on 09.03.2012, i.e. threedays after the occurrence of accident on 06.03.2012. According to him, A
B
C
D
E
F
G
H
Aeven the appellant-Corporation was not informed about the said accidentwhen the policy was sought to be revived on 09.03.2012. He has placedreliance on the judgments of this court in case of Vikram Greentech (I)Ltd. & Anr vs New India Assurance Co. Ltd (2009) 5 SCC 599 andin case of Life Insurance Corporation of India Vs. Jaya Chandel(2008) 3 SCC 382 to submit that there is a requirement of good faith onBthe part of the insured in the contract of insurance.
6. However, the learned counsel appearing for the respondent-complainant submitted that the said terms and conditions of the policywere not brought to the notice of the insured i.e. the husband of thecomplainant, and that the complainant was entitled to the Accident claimCbenefit as per the Ready reckoner. He further submitted that the husbandof the complainant had made payment of premium on 09.03.2012 alongwith the late fee charges and, therefore, the policy had stood revivedbefore the death of the complainant’s husband. He also placed relianceon LIC vs. Jaya Chandel (supra) to submit that since the insuranceDcompany had issued the renewal premium receipt on 09.03.2012, it wasrequired to be construed that the policy which had already lapsed due tonon-payment of premium on time, had stood revived.
7. In order to appreciate the rival contentions raised by the learnedcounsels for the parties, apt would be to reproduce the relevant conditionsof the policy in question. Relevant condition nos. 3, 4, and 11 read asEunder:
“3. Revival of Discontinued Policies: If the policy has lapsed, itmay be revived during the life time of the Life Assured, but withina period of five years, from the due date of the first unpaid premiumand before the date of Maturity, on submission of proof of continuedFincurability to the satisfaction of the corporation and the paymentof all the arrears of premium together with interest compoundinghalf yearly at such rates as may be fixed by the Corporation fromtime to time. The Corporation, reserves the rights to accept oraccept with modified terms or decline the revival of DiscontinuedGPolicy. The revival of a Discontinued Policy shall take effect onlyafter the same is a approved by the Corporation and is specificallycommunicated to the proposer/Life Assured.
4 Non-forfeiture Regulations:
(a) If, after at least 3 full years premiums have been paid in respectHof this Policy, any subsequent premiums be not duly paid, this Policy shall not be wholly void, but shall subsist as a Paid-up Valuewhich shall be payable in case of death/Matyrly and shall dependon the number of years for which premiums have been paid andshall be greater of a sum that bears the same ratio to the MaturitySum Assured as the number of premiums actually paid shall bearto the total number of premiums originally stipulated in the Policy.
OR
The surrender value as per para 7 below assuming that the policyhas been surrendered on the date of death/Matyruty, as the casemay be.
11. Accident Benefit (If opted for): If at any time when this policyis in force for the full sum assured or reduced sum assured incase of partial surrender of the policy, the life assured, before theexpiry of the policy term or the policy anniversary on which theage nearer birthday of the Life Assured is 70 years, whichever isearlier, is involved in an accident resulting in either permanentdisability as hereinafter defined or death and the same is provedto the satisfaction of the Corporation, the Corporation agrees inthe case of :- (a)……………….
(a) ……………….
(b) Death of the Life Assured: to pay an additional sum equal tothe Accident Benefit Sum Assured under this Policy, if the lifeassured shall sustain and bodily injury resulting solely and directlyfrom the accident caused by outward, violent and visible meansand such injury shall within 180 days of its occurrence solely,directly and independently of all other causes result in the deathof the life assured.”
8. Now, so far as the facts of this case are concerned, it is notdisputed that the husband of the complainant had taken the life insurancepolicy on 14.04.2011, that the next premium had fallen due on 14.10.2011but was not paid by him, that the husband of the complainant met withan accident on 06.03.2012, that thereafter the premium was paid on09.03.2012 and that he expired on 21.03.2012. It is also not disputed thatat the time of making payment of premium on 09.03.2012, it was notdisclosed by the complainant or her husband to the appellant-Corporationabout the accident which had taken placed on 06.03.2012. The saidconduct on the part of the complainant and her husband in not disclosing A
B
C
D
EF
G
H
Aabout the accident to the corporation not only amounted to suppressionof material fact and lacked bona fides but smacked of their mala fideintention, and therefore, the Accident benefit claim of the complainantwas liable to be rejected on the said ground alone. It is well settled legalposition that in a contract of insurance there is a requirement of Uberrimafides i.e. good faith on the part of the assured. The Supreme Court inBcase of Vikram Greentech (I) Ltd. V/s New India Assurance Co.Ltd. (2009) 5 SCC 599, while dealing with the contract of insuranceheld as under:- “16. An insurance contract, is a species of commercial transactionsand must be construed like any other contract to its own termsCand by itself. In a contract of insurance, there is requirement ofuberrima fides i.e. good faith on the part of the insured. Exceptthat, in other respects, there is no difference between a contractof insurance and any other contract.
17. The four essentials of a contract of insurance are: (I) theDdefinition of the risk, (ii) the duration of the risk, (iii) the premium,and (iv) the amount of insurance. Since upon issuance of theinsurance policy, the insurer undertakes to indemnify the losssuffered by the insured on account of the risks covered by theinsurance policy, its terms have to be strictly construed toEdetermine the extent of liability of the insurer.
18. The endeavour of the court must always be to interpret thewords in which the contract is expressed by the parties. The courtwhile construing the terms of policy is not expected to ventureinto extra liberalism that may result in rewriting the contract ofFsubstituting the terms which were not intended by the parties.The insured cannot claim anything more than what is covered bythe insurance policy. (General Assurance Society Ltd. v.Chandmull Jain (1966) 3 SCR 500, Oriental Insurance Co.Ltd. v. Sony Cheriyan AIR 1999 SC 3252 and United IndiaInsurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8GSCC 644).”
9. From the afore-stated legal position, it is clear that the terms ofinsurance policy have to be strictly construed, and it is not permissible torewrite the contract while interpreting the terms of the Policy. In theinstant case, condition no. 11 of the Policy clearly stipulated that theHpolicy has to be in force when the accident takes place. In the instant
case, the policy had lapsed on 14.10.2011 and was not in force on thedate of accident i.e. on 06.03.2012. It was sought to be revived on09.03.2012 after the accident in question, and that too without disclosingthe fact of accident which had taken place on 06.03.2012. Thus, apartfrom the fact that the respondent-complainant had not come with cleanhands to claim the add on/extra Accident benefit of the policy, the policyin question being not in force on the date of accident as per the conditionno. 11 of the policy, the claim for extra Accident benefit was rightlyrejected by the appellant-Corporation. Since, clause 3 of the said termsand 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 dateand paid Rs. 3,75,000/- as assured under the policy, nonetheless for theAccident benefit, the policy had to be in force for the full sum assuredon the date of accident as per the said condition no. 11. The said Accidentbenefit could have been claimed and availed of only if the accident hadtaken place subsequent to the renewal of the policy. The policy in theinstant case was lying in a lapsed condition since 14[th] October, 2011 and,therefore, was not in force as on 06.03.2012, resultantly, the claim overAccident benefit was not payable to the respondent as per the conditionsof the contract of insurance.
10. The Court, therefore, is of the opinion that the impugned orderpassed by the NCDRC setting aside the order passed by the Commissionand reviving the order passed by the District Forum was highly erroneousand liable to be set aside.
11. In the aforesaid premises, the present appeal is allowed andthe impugned order passed by the NCDRC is set aside. The claim of therespondent towards Accident benefit stands rejected accordingly. Pendingapplications, if any, are disposed of.
Nidhi Jain
Appeal allowed.
A
B
C
D
E
F
G
H