The central legal point established in the judgment is the limited liability of the insurer in case of suicide within 3 years of the policy, as governed by Clause 4-b and Section 45 of the Insurance Act, 1938.

Mr. Justice S.K. Dubey, President—The Life Insurance Corporation of India (for short the ‘LIC’) aggrieved of the order dated 30.6.2001 passed in Case No. 96/2000 by the District Consumer Disputes Redressal Forum, Datia (for short the ‘District Forum’) has filed this appeal.

2. Facts giving rise to this appeal are thus: the respondent’s wife late Smt. Mamta Devi Sahu aged about 26 years for assuring her life submitted a proposal on 5.2.1998 through agent Maniram Kushwaha. Admittedly, she was a non-earning woman. The proposal was accepted and a 20 years Money-back policy with profits and accident benefit No. 200523221 of Table and Term 75-20 of yearly premium of Rs. 3,185/- for the sum assured of Rs. 50,000/- for a woman falling under Category three with an endorsement of Clause 4-b was issued. The life assured committed suicide on 23.6.2000 i.e., after two years of commencement of policy. The respondent claim submitted was repudiated by the LIC on the ground that the policy was issued with the endorsement of Clause 4-b i.e., Special Female Clause, according to which sum assured was not payable, as life assured died within a period of 3 years from the date of the policy, hence, returned the premium deposited of Rs. 9,330/- by draft which was refused. The respondent filed the complaint which was resisted.

3. The District Forum after appreciation of evidence and in particular the statement of the agent who submitted proposal held that the Clause 4-b was not the part of the policy, therefore, the LIC was deficient in service, hence, ordered to pay the sum assured with interest thereon at the rate of 18 per cent p.a. from the date of its payability and compensation of Rs. 2,000/- for mental pain along with Rs. 500/- as costs of the proceedings.

4. True, endorsement of Clause 4-b is not part of the policy. However, with the proposal Clause 4-b was sent. In any case, even if Clause 4-b was not sent with the proposal, the proposal fell in Category III of the underwriting manual of the LIC wherein it lays down that the Clause 4-b should be imposed on lives aged 35 years and below nearer birthday on the date of proposal for cases of the women falling in Clauses (a), (b) and (c) of the Category III. Proposal Clause No. 4(b) reads thus :

Category III

“Women not covered by I and II

(a) Single Women : On consideration of Insurance needs subject to a maximum of Rs. 2 lakhs. The actual amount would depend on the financial status etc., of the family and the father and other insurable members of the family being sufficiently insured. In all cases a M.H.R. by the Branch Manager giving full details of the life assured, her own income, other sources of income including parents’ income, need for insurance and insurance on the lives of other members of the family, etc., is essential.

(b) Married Women : Maximum limit of Rs. 5 lakhs not exceeding husband’s insurance in force for full sum assured (on risk covered plans). The underwriter should, however, examine whether the income of the husband can support the total insurance on his own life as well as on wife’s life and on the lives of his dependent children and also have regard to other aspects such as social status of the family, moral hazard etc., before deciding the amount of insurance that can be granted on each such proposal.

(c) Widows : On consideration of insurance needs MHR by BM is necessary giving full details of her income, source and need for insurance.”

5. Admittedly, at the time of submitting the proposal and at the time of death the life assured was below 35 years of age who committed suicide after commencement of the policy but before expiry of period of three years from the date of policy, therefore, the liability of the LIC was only to return the premiums deposited and not the amount assured merely because inadvertenly, endorsement of Clause 4-b was not made in the policy. As the life assured was below 35 years of age and non-earning woman, the proposal could not have been accepted wi