Case Note & Summary
The dispute arose from a life insurance policy taken by Karan Singh Chandel, who was insured for Rs.1,50,000 with an annual premium of Rs.12,821. The policy was initiated on 28.3.1994, but the premium due on 28.3.1995 was not paid, leading to the policy becoming inoperative. The insured died on 1.7.1995, and a cheque for the premium was issued on 27.6.1995 but received after the death on 12.7.1995. The widow of the deceased claimed that the cheque was issued before the death, but the appellant, Life Insurance Corporation of India, contended that the policy had lapsed due to non-payment. The District Forum initially ruled in favor of the claimant, stating the cheque was received within the grace period. However, the State Commission upheld this decision, leading to the National Commission dismissing the revision petition. The appellant argued that the cheque was issued by a third party and received after the death, thus invalidating the claim. The court analyzed the relevant conditions of the policy and the applicability of Section 64-VB of the Insurance Act, concluding that the policy had lapsed and the revival was not valid as it was not communicated or approved. The Supreme Court ultimately set aside the orders of the lower forums and allowed the appeal, ruling in favor of the appellant.
Headnote
A) Insurance Law - Policy Lapse - Non-Payment of Premium - Insurance Act, 1938, Section 64-VB - The policy lapsed due to non-payment of premium within the grace period, and the cheque was received after the insured's death, thus the claim was rightly repudiated. Held that the revival of the policy was not valid as it was not communicated and approved by the Corporation (Paras 3-9).
Issue of Consideration
Whether the insurance policy was in force at the time of the insured's death and if the claim was rightly repudiated.
Final Decision
The Supreme Court allowed the appeal, set aside the orders of the District Forum, State Commission, and National Commission, ruling that the policy had lapsed due to non-payment of premium and the revival was not valid.
Law Points
- Insurance policy
- grace period
- revival of policy
- applicability of Insurance Act
- repudiation of claim
