1998 Supreme(SC) 1057

1998(8) Supreme 61
Supreme Court of India
(From National Consumer Disputes Redressal Commission)
M.M. Punchhi CJI, G.B. Pattanaik & A.P. Misra, JJ.
Life Insurance Corporation of India & Anr. -Appellants
versus
Shri Dharam Vir Anand -Respondent
Civil Appeal No. 5063 of 1998
(Arising out of SLP (C) No. 10830 of 1998)
Decided on 9-10-1998
Counsel for the Parties :
For the Appellants : Harish N. Salve, Sr. Advocate, K.K. Sharma, C.K. Sasi, Kailash Vasdev, Advocates.
For the Respondent : Amit Chadha and Ms. Redkha Pandey, Advocates.

Important Point
Where Life Insurance policy is back dated, date of commencement of risk as back dated cannot be taken as date of policy for purpose of determination of extent of liability limited in clause of policy agreement when contract specifies date of policy is the determining point.

Headnote:(i) Consumer Protection Act, 1986-Section 23-Appeal against order of National Commission-Proposal of life insurance of minor daughter submitted on 25.3.1990 -Policy issued on 31.3.1990- Policy dated back to 10.5.1989 at option of proposer-Risk commenced from 10.5.1989-Premium paid accordingly-Minor girl committed suicide on 15.11.1992-Clause 4-B of policy limited liability equal to total premium paid without interest in case suicide before expiry of three years from date of policy-Claim for payment of entire sum assured contending that date of policy must be held to be date on which policy had commenced i.e. from date of risk and so construed death took place after three years-Plea accepted by State Commission and National Commission-Whether correct-Held, No-Date of policy is date on which policy had been issued and not on the date on which risk under policy had commenced by way of allowing dated back.

       (ii) Life Insurance Policy-Cons­truction of terms of agreement-Proposal submitted on 25.3.1990-Policy issued on 31.3.1990-Policy dated back to 10.5.1989 at option of proposer-Premium paid accordingly and risk was to commence from 10.5.1989-Clause 4B of policy limited liability, in case of suicide within three years of date of policy; to actual amount of premium paid-Insured committed sui­cide within three years of date of policy but after three years of commencement of risk date-Plea that clause 4B not attracted and LIC liable to entire full sum assured-Not tenable-In terms of Clause 4B of agreement date of policy is date on which policy had been issued and not the date on which risk under policy had commenced.

       Held : In construing a particular Clause of the Contract it is only reasonable to construe that the words and the terms used therein must be given effect to. In other words one part of the Contract cannot be made otiose by giving a meaning to the policy of the contract. Then again when the same Clause of a contract uses two different expressions, ordinarily those different expressions convey different meaning and both the expressions cannot be held to be conveying one and the same meaning. Bearing in mind the aforesaid principle of construction, if Clause 4-B of the terms of policy is scrutinized, it becomes crystal clear that the date on which the risk under the policy has commenced is different from the date of the policy. In the case in hand undoubt­edly the date on which the risk under the policy has commenced is 10.5.89 but the date of the policy is 31st of March, 1990 on which date the policy had been issued. Even though the Insurer had given the option to the Insured to indicate as to whether the policy is to be dated back and the Insured indicated that the policy should be dated back to 10.5.89 and did pay the premium for that period, thereby the risk under the policy can be said to have commenced with effect from 10.5.89 but the date of the policy still remains the date on which the policy was issued i.e. 31st of March, 1990. The death of the life assured having occurred as a result of suicide committed by the as­sured before the expiry of three years from the date of the policy, the terms contained in Clause 4-B of the policy would be attracted and, therefore, the liability of the Corporation would be limi­ted to the sum equal to the total amount of premium paid under the policy without interest and not the entire sum for which the life had been insured. The Forums under the Consumer Protection Act committed gross error in construing Clause 4-B of the policy and giving the same meaning to the two expressions in the aforesaid Clause 4-B namely “the date on which the risk under the policy has commenced” and “the date of the policy”. The construction given by us to the provisions con­tained in Clause 4-B get support, if the proviso to Clause 4-B is looked into. Under the proviso if the life assured commits suicide before expiry of one year reckoned from the date of the policy then the provisions of the Clause under the heading “suicide” printed on the back of the policy would apply. In a case therefore a policy is dated back for one year prior to the date of the issue of the policy the proviso contained in Clause 4-B cannot be operated at all. When parties had agreed to the terms of the contract it is impermissible to hold that a particular term was never intended to be acted upon. The proviso to Clause 4-B will have its full play if the expression “the date of the policy” is interpreted to mean the date on which the policy was issued and not the date on which the risk under the policy has commenced. In the aforesaid premises we are of the considered opinion that under Clause 4-B of the policy the date of the policy is the date on which the policy had been issued and not the date on which the risk under the policy had commenced by way of allowing dated back. In view of our aforesaid construction to Clause 4-B, in the case in hand the respondent in law would be entitled to only the sum equal to the total amount of premium paid under the policy without any interest inasmuch as the death of the life assured has occurred before the expiry of three years from the date of the policy i.e. 31.3.1990. (Para 5)