Insurance contracts require strict adherence to premium payment terms, and claims can be denied if premiums are unpaid, regardless of the insured's health circumstances.

JUDGMENT

A.K.Jayasankaran Nambiar, J.

The respondents in W.P.(C)No.33315 of 2006 are the appellants before us. The Writ Petition was preferred by the respondent herein (husband of late Ambili Kailas, who succumbed to Lymphoma on 3.10.2005). The case of the respondent in the Writ Petition was that the said Ambili Kailas had taken a Life Insurance Policy in 2005 for a 20 year period where under she was obliged to pay the premium quarterly. It is not in dispute that the first two quarterly premiums were paid by the said Ambili Kailas and the 3rd quarterly premium became due and payable on 19.8.2005. As per the terms of the policy, there is a grace period, of one month from the due date of premium, provided for the payment of premium. In the instant case, while the due date of premium for the 3rd instalment was 19.8.2005, the grace period expired on 19.9.2005. It would appear that, on account of the ailment of the said insured person, she could not effect the payment of premium either by the due date or by the end of the grace period. As a result, consequent to her death on 3.10.2005, when a claim was made for payment of the insurance amount, the same was rejected by the appellants herein on the ground that the policy had lapsed on account of non-payment of the 3rd instalment of premium.

2. The respondent therefore approached the Insurance Ombudsman, who by Ext.P6 award, while sympathising with the respondent for the predicament he was in, found that an insurance policy being a contract, the conditions of which had to be strictly interpreted, no further relaxation, other than what was allowed in the contract, could be granted to the respondent. The Ombudsman found that the appellants were justified in rejecting the claim and complaint filed by the respondent.

3. The decision of the appellants, as also Ext.P6 order of the Ombudsman, were impugned before this court in W.P.(C)No.33315 of 2006 preferred by the respondent. The learned single Judge considered the submissions made on behalf of the respondent herein and found that the insured was suffering from a malignancy from a date much prior to the date on which the premium ought to have been paid. The learned Judge opined that, on account of the nature of the ailment, the insured could not have been expected to have sufficient cognitive faculty to have kept in mind the date of payment of premium. It was felt that the provision for grace period, that was inserted in the contract of insurance, should not be interpreted in a way that would deprive the insured of the benefit in appropriate cases. On the facts of the case projected in the Writ Petition, the learned Judge found that the biological life of the insured was sustained after she became unconscious on 19.9.2005 'on a hairy bridge created artificially on the strength of life saving equipments'. It was held that the deceased was to be deemed as dead on 9.9.2005 irrespective of her biological death on 3.10.2005. On the above reasoning, the learned Judge quashed Ext.P6 award of the Ombudsman and directed the appellants herein to pay the policy amount due under the policy to the respondent herein within a period of one month from the date of receipt of a copy of the judgment.

4. In the appeal before us, the specific contention of the appellants is that, in as much as insurance contracts are contracts uberrimae fidei, the terms of which have to be strictly construed, the liability to pay the premium amount had to be seen as discharged only if the payment was done either on the due date for payment of premium or within the grace period granted under the contract. In the instant case, it is pointed out that, while the due date for payment of premium was 19.8.2005, the premium was not paid by the insured person either on that date or before 19.9.2005, which marked the culmination of the grace period. The observations of the learned single Judge are contested on the ground that a person cannot be deemed to have died on any date anterior to th