SC ordered LIC to reimburse the insured amount along with interest and damages for mental anguish and harrasment.
Case Title: Mrs. Bhumikaben N. Modi & Ors. Versus Life Insurance Corporation of India
Case No: Civil Appeal No. 270 of 2012
Decided on: 8th May, 2024
Quorum: HON’BLE MR. JUSTICE C.T. RAVIKUMAR
Facts of the case
The Life Insurance Corporation (“LIC”), as the respondent, denied the appellant’s husband’s claim on the basis that the policy would not be considered effective from the date of the receipt for the first premium payment.
The undisputed fact remains that the first premium for the insurance policy was received and a duly signed receipt was issued by LIC on 09.07.1996. Subsequently, the cheque issued by the appellant for the premium payment was cashed on 12.07.1996. Tragically, the appellant’s husband passed away on 14.07.1996, and the policy was prepared on 15.07.1996.
Issues
Whether the issuance of a receipt for the initial premium payment to LIC would imply the acceptance of the policy by LIC?
Legal Provisions
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.
Appellant’s Contentions
As the appellant, the LIC argued that the District Forum and State Commission, the lower For a, had made mistakes in their rulings. The primary contention was that since the request was approved only after the proposer’s passing, no insurance contract had been established at the time of his passing.
Respondent’s Contentions
Respondent Mrs. Bhumikaben N. Modi contended that the For a below, which ordered the LIC to pay the insured amount with accidental benefits, had properly approved the complaint. The argument stemmed from the idea that the proposal and deposit formed a legally enforceable agreement, and the proposer’s later passing shouldn’t invalidate the claim.
Court Analysis and Judgement
The District Forum and State Commission’s rulings, which favored Mrs. Bhumikaben N. Modi, were upheld by the Supreme Court. The ruling ordered the LIC to reimburse the insured amount plus interest, expenses, and damages for mental anguish and harassment. This ruling emphasized the need to safeguard consumer rights and insurance firms’ responsibilities when a proposal is accepted but the proposer passes away soon after.
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Judgement Analysis Written by – K.Immey Grace