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It is clear that 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 as held by the Supreme Court through the learned bench led by Justice Bela M. Trivedi in the case of Life Insurance Corporation of India and Another v. Sunita (@ SPECIAL LEAVE PETITION (CIVIL) NO. 13868 OF 2019)

Brief facts of the case are that Mr. Pradeep Kumar, the husband of the respondent herein had taken/purchased a life insurance policy under the Jeevan Suraksha Yojana on 14.04.2021 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 06.03.2012, the said Pradeep Kumar met with an accident and succumbed to the injuries on 21.03.2012. In the meantime, he deposited the due premium of October, 2011 on, 09.03.2012 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, inter alia, 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 and order dated 14.10.2013. The 2 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 being no. 897 of 2008 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 dated 24.04.2019 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 Hon’ble Court held, “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 06.03.2012, resultantly, the claim over Accident benefit was not payable to the respondent as per the conditions of the contract of insurance. The Court, 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 and liable to be set aside. In the aforesaid premises, the present appeal is allowed and the impugned order passed by the NCDRC is set aside.”

Click here to read the Judgment

Judgment reviewed by Vandana Ragwani