2024 INSC 395

C.A. No.270 of 2012

Page 1 of 35

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

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

C.A. No.270 of 2012

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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

Vasireddy Komalavalli Kamba and Ors.

1. 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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Habubnagar

2, 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.

Going by the Oxford Dictionary of Law, 5

th

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

India & Ors.

3. 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

C.A. No.270 of 2012

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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

Insurance Co. Ltd. & Ors.

4, 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

Murthy v. State of Karnataka & Others

5 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.

LRs v. Axis Bank Ltd. and Anr.

6, 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

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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

Page 21 of 35

“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

Page 22 of 35

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

Page 25 of 35

…………. 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

Page 27 of 35

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

Page 28 of 35

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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Page 30 of 35

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

C.A. No.270 of 2012

Page 31 of 35

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 fu rther 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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Page 32 of 35

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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Page 33 of 35

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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Page 35 of 35

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.