1. Life insurance claim dispute — Proposal submitted and premium paid — Repudiation based on absence of concluded contract — Complaint under Consumer Protection Act. (Para 2 , 4 )
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2024 Supreme(SC) 437
SUPREME COURT OF INDIA
A.S. BOPANNA, C.T. RAVIKUMAR, JJ.
Mrs. Bhumikaben N. Modi and Others – Appellants
Versus
Life Insurance Corporation of India – Respondent
Civil Appeal No. 270 of 2012
Decided On : 08-05-2024
Advocates appeared:
For the Appellant(s) : Ms. Manisha T. Karia, AOR Ms. Nidhi Nagpal, Adv. Mr. Adarsh Kumar, Adv. Mr. Rohan Trivedi, Adv. Ms. Swapnil Baudh, Adv. Ms. Ananya Arora, Adv. Mr. Deepin Deepak Sahni, Adv.
For the Respondent(s): Ms. Indra Sawhney, AOR Mr. Lakshay Sawhneyj, Adv.
For the Appellant(s) : Ms. Manisha T. Karia, AOR Ms. Nidhi Nagpal, Adv. Mr. Adarsh Kumar, Adv. Mr. Rohan Trivedi, Adv. Ms. Swapnil Baudh, Adv. Ms. Ananya Arora, Adv. Mr. Deepin Deepak Sahni, Adv.
For the Respondent(s): Ms. Indra Sawhney, AOR Mr. Lakshay Sawhneyj, Adv.
IMPORTANT POINTS
(1) Ex-gratia is an act of gratis and has no connection with liability, payable as a legal duty.
(2) Scope and ambit of Revisional Jurisdiction is very limited.
Headnote:
(A) Consumer Protection Act, 1986 – Section 23[Consumer Protection Act, 2019 – Section 67] – Insurance – Life Insurance Policy – Non-settlement of death claim on the ground that there is no concluded contract between deceased and respondent – Impugned order passed by National Commission resulted in reversal of concurrent orders of Forum below and dismissal of complaint – Specific direction was issued under impugned order by NCDRC for payment of Rs. 1 lakh by way of ex-gratia, after dismissing complaint which was allowed by District Forum and got confirmation from State Commission – Ex-gratia is an act of gratis and has no connection with liability, payable as a legal duty – Such an offer was made by Respondent much earlier even before matter reached District Forum, but appellant had denied to accept such an offer – Impugned order virtually partakes character of an order modifying order of District Forum which was confirmed by State Commission – Circumstances justify conclusion of acceptance of proposal prior to death of deceased – There was absolutely no reason or justification for NCDRC to upturn concurrent orders and to order for dismissal of 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 respondent-insurer in memorandum of revision petition – Impugned order set aside and order of District Forum which was confirmed by State Commission restored – Respondent granted two months’ time to effect payment in terms of order restored. (Paras 11, 13, 25, 27 and 29)
(B) Consumer Protection Act, 1986 – Section 21(b) – Revisional Jurisdiction – Scope and ambit – Powers under Section 21 (b) is very limited – Section 21 provides power to call for records from State Commission and to set aside its order issued sans jurisdiction vested in it by law or if State Commission failed to exercise a jurisdiction so vested or if State Commission has acted in exercise of its jurisdiction illegally or with material irregularity. (Para 10)
Facts of the case:
Appellants herein were respondents before National Consumer Disputes Redressal Commission, New Delhi (‘NCDRC’). As per impugned order, NCDRC allowed revision petition filed by Life Insurance Corporation of India, respondent herein and reversed concurrent orders of Forum below passed in favour of appellants herein and dismissed their complaint that culminated in a direction in their favour for grant of compensation.
Findings of Court:
Before year 1956, life insurance business was in hands of private companies which were operating mostly in urban areas. Avowed objects and reasons of Life Insurance Corporation Act, 1956 would reveal that main object and reason is to ensure absolute security to policy-holder in the matter of his life insurance protection.
Result : Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Insurer contends no concluded contract as proposal was not communicated; claimants argue acceptance of premium and issuance of receipt signify acceptance of risk. (Para 4 , 5 )
3. NCDRC misapplied legal precedents by ignoring factual evidence of policy number allotment and premium receipt, which created a clear presumption of acceptance of the insurance proposal. (Para 14 , 15 , 19 , 20 , 24 , 26 )
4. Acceptance of premium and issuance of a receipt with a policy number create a clear presumption of acceptance, concluding the insurance contract. (Para 15 , 24 , 26 )
5. Impugned order set aside — Concurrent orders of District Forum and State Commission restored — Respondent directed to effect payment. (Para 29 , 30 )
6. What is the scope of the revisional jurisdiction of the NCDRC under Section 21(b) of the Consumer Protection Act?
The revisional powers are limited to calling for records and passing orders where a State Commission has exercised jurisdiction not vested in it, failed to exercise vested jurisdiction, or acted illegally or with material irregularity. (Para 9 , 10 )
7. When is an insurance contract considered concluded despite the absence of a formal policy document?
A contract is concluded when circumstances create a clear presumption of acceptance, such as the insurer accepting the first premium and issuing an acceptance-cum-first premium receipt noting a policy number. (Para 15 , 19 , 24 , 26 )
8. Does a direction for ex-gratia payment imply a legal liability or a concluded contract?
No, ex-gratia is an act of gratis and has no connection with liability payable as a legal duty; it is a payment not required to be made by legal duty. (Para 11 , 12 )
9. Do principles of law enunciated by the Supreme Court apply to cases pending at different stages?
Yes, decisions of the Supreme Court enunciating a principle of law are generally applicable to all cases regardless of the stage of pendency, as they are considered law from inception. (Para 16 )
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 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 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 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 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
