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Andhra Pradesh High Court
Judges : BHIMASANKARAM, MUNI KANNIAH
Hindusthan Ideal Insurance Co.Ltd. - Appellant
Versus
B.Jayalakshmamma - Respondent
Decided On : 09-24-58
INSURANCE - REVIVAL OF LAPSED POLICY - PAYMENT OF PREMIUM AND INTEREST AND HANDING OVER OF DECLARATION OF GOOD HEALTH TO INSURANCE COMPANY OR AUTHORIZED PERSON REVIVES LAPSED POLICY CO INSTANTI - DIRECTORS' DECISION ON SATISFACTORY NATURE OF PROOF OF CONTINUED GOOD HEALTH NOT REQUIRED - DEATH OF ASSURED SUBSEQUENT TO PAYMENT OF PREMIUM AND INTEREST AND HANDING OVER OF DECLARATION OF GOOD HEALTH DOES NOT DISQUALIFY CLAIM - CONTINUED GOOD HEALTH REFERS TO GOOD HEALTH FROM DATE OF ORIGINAL POLICY TO DATE OF DECLARATION - ADJUSTMENT OF PREMIUM IN BOOKS OF INSURANCE COMPANY AFTER DEATH OF ASSURED DOES NOT AFFECT LIABILITY OF INSURER.
Fact of the Case:
The assured's life insurance policy lapsed due to non-payment of premium. The assured paid the premium and interest and handed over the declaration of good health to the insurance company's agent before his death. The insurance company adjusted the premium in its books after the assured's death and issued a revival notice. However, the insurance company later denied the claim, stating that the policy was lapsed at the time of the assured's death.
Finding of the Court:
The court held that the payment of premium and interest and the handing over of the declaration of good health to the insurance company or its authorized person revived the lapsed policy co instanti. The court further held that the directors' decision on the satisfactory nature of the proof of continued good health was not required. The court also held that the death of the assured subsequent to the payment of premium and interest and the handing over of the declaration of good health did not disqualify the claim. The court further held that continued good health referred to good health from the date of the original policy to the date of the declaration. The court also held that the adjustment of the premium in the books of the insurance company after the death of the assured did not affect the liability of the insurer.
Issues: 1. Whether the payment of premium and interest and the handing over of the declaration of good health to the insurance company or its authorized person revives the lapsed policy co instanti? 2. Whether the directors' decision on the satisfactory nature of the proof of continued good health is required? 3. Whether the death of the assured subsequent to the payment of premium and interest and the handing over of the declaration of good health disqualifies the claim? 4. Whether continued good health refers to good health from the date of the original policy to the date of the declaration? 5. Whether the adjustment of the premium in the books of the insurance company after the death of the assured affects the liability of the insurer?
Ratio Decidendi: 1. The terms of the insurance policy provide that a lapsed policy may be revived upon payment of arrears of premium with interest and a satisfactory declaration of good health. The court held that the payment of premium and interest and the handing over of the declaration of good health to the insurance company or its authorized person revives the lapsed policy co instanti. 2. The court held that the directors' decision on the satisfactory nature of the proof of continued good health is not required, as the insurance company has already decided to issue the printed form of declaration of good health treating the particular case as a matter where that declaration by the assured is enough to satisfy the Directors. 3. The court held that the death of the assured subsequent to the payment of premium and interest and the handing over of the declaration of good health does not disqualify the claim, as the policy was revived before the death of the assured. 4. The court held that continued good health refers to good health from the date of the original policy to the date of the declaration, as the policy does not require that the assured should continue to be alive at the time when the company takes up the application for renewal for consideration. 5. The court held that the adjustment of the premium in the books of the insurance company after the death of the assured does not affect the liability of the insurer, as the policy was revived before the death of the assured.
Final Decision: The court dismissed the appeal and held that the insurance company was liable to pay the claim.
( 2 ) THE respondents husband B. Venkatarama Naidu of Chelepalli had insured his life with the appellant-company who issued policy No, 10765 on 4-2-1949 marked as Exhibit A-1 under which the risk was to take effect from 20-12-1948. The premium was payable in half-yearly installments of Rs. 302-8-0 and the second installment was due to be paid on 20-6-1949. The assured did not pay this installment within the period of grace which expired on 20-7-1949. On 30-7-1949 he paid Rs. 302-8-0 in the District Co-operative Central Bank Ltd. , Chittoor, who were the bankers of the insurer. The appellant passed a receipt therefor on 1-8-1949, but as this installment of the premium was paid out of time, the insurance company wrote Exhibit A-4 to the assured that the amount was credited to the anamath account and reiterated the request to send interest and the form of health certificate in order to enable them to take necessary action in respect of the lapsed policy. Exhibit B-6 is yet another letter sent by the insurer. In this the insurance company wrote: "immediately after seeing this letter, if you send a sum of Rs. 3. 00 towards interest along with the health certificate sent herewith duly filled in signed and also attested by witnesses, we can take proper action.
( 3 ) THE assured in compliance therewith filled in Exhibit B-4, the declaration of good health and handed it over to P. W. 2 on 13-11-1949 along with a sum of Rs. 5. 00 towards interest. P. W. 2 paid this sum into the Chittoor District Co-operative Central Bank Ltd. , on 15-11-1919 and forwarded the Challan therefor and Exhibit B-4 to the insurance Company on the same date. It is not denied by the appellant that on 19-11-1949 the company condoned the delay and admitted the assured as a policy-holder by adjusting the amounts from the suspense account to the policy account and thus revived the policy, and also sent an intimation of this fact to the assured. On the same day. Exhibit A-14 the premium notice was also sent to the address of the assured stating that the nest premium was due in December, 1949. The company has also mentioned in Exhibit A-12, which is a list of premiums due for the month of December, 1949, the name of Venkatarama Naidu as one of the policy-holders from whom the premium was due and the attention of P. W. 2 was invited for immediate compliance. Meanwhile the respondents husband was stabbed at 8. 00 a. m. , at Chelepalli on 15-11-1949 and died in the Government Head-quarters Hospital at Chittoor the same day at 11. 00 p. m. , having been brought there for treatment. Later on when the notice Exhibit A-6 was issued on behalf of the plaintiff who was the nominee of her husband under Section 39 of the Insurance Act, the insurer sent the reply Exhibit A-7 which is extracted hereunder; "we acknowledge receipt of your registered letter of the 17th instant and regret to note that the above gentleman was murdered. The policy has been under lapse with effect from 20-6-1949 and it was not revived till the day of his death. As the policy had thus been under lapse on the date of the partys death, we regret to say that no claim, can be sustained on the policy. "thereupon the respondent filed the suit and against the decree in that suit, the insurer has come on appeal.
( 4 ) BEFORE we deal with the contentions raised on behalf of the appellant, we may point out that Sri Manavala Choudary, the learned Counsel for the appellant, has not seriously questioned before us the finding that the assured did fill in the form of health declaration on 13-11-1949 and Hand over this declaration and a sum of Rs. 5. 00 to P. W. 2 at Chelepalli on that day. Even if this fact is in serious dispute, we still consider that having regard to the evidence of P. W. 3, the karnam of that village who attested Exhibit B-4, and the testimony of P. W. 2 who had collected the first premium and paid it to the company and also r
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