The main legal point established in the judgment is the conclusive proof of the existence of a binding contract of insurance, based on the unconditional acceptance of the premium and the competence of the officers as per the 1960 Standing Order.

1. The appellant, the Life Insurance Corporation of India (the "L. I. C.") is the first defendant in a suit for recovery of money allegedly due under a contract of insurance Gopalakrishnan Unnithan made as per Ext. B3 dated 30-12-1976 a proposal for insurance on his life. The proposal is made in the standard form issued for the purpose by the L I. C. containing the necessary details of the contract. The proposal was accompanied by cheque dated 30-12-1976 for a sum of Rs. 725.80 representing the first premium payable under the contract. Ext. Al dated 30-12-1976 is the receipt issued by the Development Officer of the L. I, C. who is described as the authorised representative. Ext. Al reads:

"While acknowledging your remittance of Rs. 725.80 (Rupees seven hundred and twenty five and paise eighty only) by cheque, I wish to inform you that the official receipt will be issued by Life Insurance Corporation of India, Kayamkulam Branch.

Immediate reference to the above Branch should be made if Corporation's official receipt is not received by you within two weeks.

Cheque No. No. 350084

16

Date: 30-12-76

Ext. AT was issued at Kayamkulam. On the next day, that is on 31-12-1976, Unnithan was informed that the amount paid by him was deficient to the extent of Rs 15.60 and was called upon to make good the deficiency. Admittedly the deficiency arose on account of an arithmetical error made by the office of the LIC. This amount was paid on 31-12-1976. Exts. B8 and B9 are two counterfoils produced by the defendants alleged to be the carbon copies of receipts issued for Rs. 725.80 and Rs. 15.60 We shall have occasion to refer to these documents presently. However the fact is that payment of these two sums on 30th and 31st December, 1976 is admitted by the defendants.

2. At about 1 A.M. on 1-1-1977 Unnithan died unexpectedly. Ext. B5 dated 31-12-1976 is a carbon copy of an internal correspondence between the Trivandrum and Kayamkulam offices of the L.I.C. It shows that on 31-12-1976 the Trivandrum Divisional Office informed the Kayamkulam Branch Office of the L.I.C. that the premium paid was still deficient by Rs. 3.10. Although Ext B5 is dated 31-12-1976 there is no evidence as to when it was despatched by the Trivandrum Office and whether the Kayamkulam Office bad sent any communication to the deceased or his legal representative regarding the balance amount, By letter dated 18-1-1977 the plaintiff, who is the wife of the deceased, made a claim upon the L.I C. for payment of the contract amount due to her from the L.I C. in her capacity as the legal representative and nominee of the deceased. To this the L.I.C replied by Ext. A2 dated January 24, 1977 repudiating the claim on the ground that no contract of insurance had come into existence. The ground stated for denying the existence of the contract is that the proposal had not been accepted by competent authority. Consequently the plaintiff instituted the present suit which was decreed by the court below stating that the evidence on record clearly proved that the contract of insurance bad come into existence and that the L.I.C. was liable to settle the plaintiff's claim.

3. Counsel for the appellant Shri. C. Subramani submits that the cheque paid by the deceased on 30-12-1976 for a sum of Rs. 725 80 together with the balance amount of Rs. 15.60 had been held in suspense as evidenced by Exts. B8 and B9. This shows that the proposal was in suspended animation pending consideration and final decision. Before any such decision could be made the deceased had died. In the circumstances no contract had come into existence. Counsel further refers to Ext. B5 dated 31-12-1976 which shows that the first premium had not been paid in full. Counsel relies upon Ext. B12 which is the standing order in 1960 containing provisions relating to the competence of various authorities. Ext. BI2 shows that in respect of contract of insurance for Rs 50,000/-the competent authority was the assistant Divisional Mana