The court ruled that a life insurance policy cannot be deemed lapsed if the premium is paid after the insured's death if evidence supports the policy's continuity.

ORDER

JUSTICE A.P. SAHI, PRESIDENT

The dispute in this Revision Petition lies in a short compass. Late Jeevan Singh was the life insured under a policy acquired from the Petitioners on 28.11.2014 for a sum of Rs.2 lacs for a term of 21 years on a half yearly premium of Rs.4731/-. He suddenly died on 26.11.2016 at Tbilisi, the capital of Georgia in Europe due to a Gas leak at the place where he was working. This gave rise to the claim under the policy by the Respondent who was the nominee.

It is the timing of the death on the said date which is one of the crucial facts that was in contest before the fora below. The contention of the Insurance Corporation was that according to the information given on behalf of the nominee in the claim form, was that the insured died at 02:00 am on 26.11.2016. The policy had decidedly lapsed and it was during the grace period that on 26.11.2016 itself, the premium was deposited at 11:47 am for which a receipt of Rs.5045/- was issued. The Insurance Company maintained that the death certificate issued from the competent authority in Georgia did not contain the timing of the death but the disclosure on behalf of the Complainant of 02:00 am establishes that the premium in respect of the said lapsed policy was deposited at 11:47 am which is more than 9 hours after the death of the insured. Accordingly, since the policy had lapsed at the time of the death of the insured and there was no premium deposited upto the time of his death, therefore, the claim was liable to be rejected.

On these facts, CC/198/2018 was filed before DCDRC, Patiala and the stand of the Insurance Company was rejected on the ground that no document was filed from Georgia where Jeevan Singh had died indicating the time of his death and therefore, since there is no timing mentioned in the death certificate, the resistance by the LIC was untenable and the Complaint was allowed for release of Rs.2 lacs alongwith interest @ 6% per annum from the date of repudiation till the date of actual payment.

This decision of District Commission dated 04.05.2021 was assailed by the Corporation in FA/211/2021. After contest, the Appeal has been dismissed after rejecting the contentions and confirming the order of the District Commission recording that the premium had been deposited after lapse of the due date as usual with late fee and therefore, the Insurance Company will be presumed to have revived a discontinued policy even if no revival form was got filled up. In the past also and every time the premium was deposited with late fee. The last premium on 26.11.2016 was also deposited with late fee and therefore, the policy was not in a lapsed condition. The State Commission relied and discussed a couple of judgments that have been dealt with and ultimately, came to the conclusion that the repudiation letter dated 31.10.2017 was not tenable. It was also held that the premium had not been refunded nor any receipt or document was produced to that effect, consequently, the same amounted to deficiency in service.

While coming to the issue of the deposit of the premium after the death of the insured, the State Commission recorded the following findings in para-14:

“14. As far as the argument of learned counsel for the appellants/OPs with regard to deposit of premium after the death of DLA to take the benefit of the policy is concerned, no such document has been produced on record by the appellants that Sarabjit Kaur has Redressal deposited the premium just after the death of her husband. It is hard to digest that after receiving the information of death of her young husband, who was at the age of 30 years, Sarabjit Kaur would like to rush to Insurance Company's office to deposit the premium to take the benefit of the policy by leaving her minor daughter at home, who was only 2-3 years of age at that time or managed someone to pay amount of premium to take the undue benefit of the policy. The deposit of premium might have happened co-incidentally in the case in