Supreme Court Allows Appeal Against Insurance Company for Ante-Dated Postponement of Life Insurance Policy After Death of Insured in Home Loan Case. The Court Held That the Insurer's Conduct Was Malafide and Constituted Deficiency in Service, Directing Payment of the Sum Assured to Settle the Loan Account.

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2026-05-18 12:16:38

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Case Note & Summary

The appeal arose from a home loan transaction where the appellant's husband, Gokal Chand, obtained a loan from Axis Bank, which required him to obtain a life insurance policy from Max Life Insurance. The bank sanctioned a loan of Rs. 70,99,172 on 25.7.2017 and deducted Rs. 6,24,172 as insurance premium, remitting it to the insurance company. Gokal Chand underwent a treadmill test on 30.7.2017, which showed normal results. He died of cardiac arrest on 8.8.2017. The appellants informed the bank of the death on 16.8.2017, and the insurance company then sent an ante-dated letter dated 3.8.2017 postponing the proposal for six months, citing treadmill test findings. The premium was refunded on 17.8.2017. The State Commission dismissed the consumer complaint, holding no privity of contract, and the National Commission affirmed. The Supreme Court allowed the appeal, finding that the insurance company's actions were malafide and constituted deficiency in service. The Court noted that the premium was paid and the medical test was normal, indicating that all requirements were satisfied. The ante-dated letter was dispatched after the death intimation, and the refund was unilateral. The Court held that a concluded contract existed and directed the insurance company to pay the sum assured of Rs. 70,99,172 to the bank to settle the loan account, with interest at 9% per annum from the date of the complaint until payment.

Headnote

A) Insurance Law - Life Insurance - Proposal and Acceptance - Premium Retention - The issue was whether a concluded contract of insurance existed when the premium was paid and medical tests were normal, but the insurer postponed the proposal after the insured's death. The Court held that the insurer's act of dispatching an ante-dated letter postponing the proposal after receiving intimation of death, and subsequently refunding the premium, was malafide and constituted deficiency in service. The Court found that all requirements for the policy were satisfied at the time of premium payment, and the insurer could not unilaterally avoid liability. (Paras 11-19)

B) Consumer Law - Deficiency in Service - Insurance - Ante-Dated Communication - The Court examined whether the insurance company's conduct in sending an ante-dated letter postponing the proposal after the insured's death and refunding the premium amounted to deficiency in service under the Consumer Protection Act, 1986. The Court held that the insurer's actions were malafide and that the insurer was deficient in rendering service to the appellants. The Court directed the insurance company to pay the sum assured of Rs. 70,99,172/- to the bank to settle the loan account. (Paras 15-22)

C) Insurance Law - Contract Formation - Acceptance - The Court distinguished the precedent in LIC vs. Raja Vasireddy Komalavalli Kamba, noting that in the present case, the premium was paid and the medical test was normal, indicating acceptance. The Court held that the insurer's subsequent actions could not negate the concluded contract. (Paras 20-21)

Issue of Consideration

Whether the insurance company's act of postponing the proposal and refunding premium after the death of the insured, based on an ante-dated letter, constitutes deficiency in service and whether a concluded contract of insurance existed.

Final Decision

The Supreme Court allowed the appeal, set aside the orders of the State Commission and National Commission, and directed the insurance company (respondent No. 2) to pay the sum assured of Rs. 70,99,172 to the bank (respondent No. 1) to settle the loan account, with interest at 9% per annum from the date of the consumer complaint until payment. The bank was directed to adjust the amount against the loan and refund any surplus to the appellants.

Law Points

Insurance contract
proposal acceptance
premium retention
ante-dated letter
deficiency in service
Consumer Protection Act
1986

Case Details

2022 LawText (SC) (12) 3

Civil Appeal No. _ of 2022 (Arising out of SLP (C) No. 14140 of 2020)

2022-01-01

Hrishikesh Roy

Harshit Khanduja (for appellants), Suman Bagga (for respondent No. 2), Devendra Kumar Singh (for respondent No. 1)

Gokal Chand (D) Thr. Lrs.

Axis Bank Ltd. & Anr.

Nature of Litigation

Consumer complaint against insurance company and bank for repudiation of life insurance claim after death of insured.

Remedy Sought

Appellants sought settlement of home loan account by insurance company under the life insurance policy.

Filing Reason

Insurance company refused to settle the loan account after the death of Gokal Chand, despite premium being paid and medical tests being normal.

Previous Decisions

State Consumer Disputes Redressal Commission, Haryana dismissed the complaint holding no privity of contract; National Consumer Disputes Redressal Commission affirmed the dismissal.

Issues

Whether the insurance company's act of postponing the proposal and refunding premium after the death of the insured constitutes deficiency in service. Whether a concluded contract of insurance existed between the insured and the insurance company.

Submissions/Arguments

Appellants argued that the insurance company ante-dated the postponement letter after receiving intimation of death, and the medical test was normal, so the repudiation was malafide. Insurance company argued that the proposal was only postponed, no policy was issued, and thus no liability arose. Bank argued that it forwarded the proposal and remitted premium, so it was not deficient in service.

Ratio Decidendi

The insurance company's act of dispatching an ante-dated letter postponing the proposal after receiving intimation of the insured's death, and subsequently refunding the premium, was malafide and constituted deficiency in service. A concluded contract of insurance existed as the premium was paid and all requirements were satisfied, and the insurer could not unilaterally avoid liability.

Judgment Excerpts

The above would suggest that the insurance company hurriedly dispatched the ante dated letter, purporting to postpone the proposal, only after getting information about the death of Gokal Chand on 16.8.2017. In such backdrop, the communication of the insurance company for postponing the life insurance coverage by six months by adverting to the treadmill test report and that too at a stage after intimation about the death of the insured to the respondents, appears to be a malafide act. The decision by the insurance company declining the policy by unilaterally refunding the insurance premium in the given circumstances, would suggest that the respondent No. 2 were deficient in rendering services to the appellant.

Procedural History

The appellants filed a consumer complaint before the State Consumer Disputes Redressal Commission, Haryana, which was dismissed. An appeal to the National Consumer Disputes Redressal Commission was also dismissed. The appellants then filed a Special Leave Petition before the Supreme Court, which was converted into the present civil appeal.