# LIFE INSURANCE CORPORATION OF INDIA AND ANOTHER v. SUNITA

- **Citation:** [2021] 10 S.C.R. 180
- **Court:** Supreme Court of India
- **Decided:** 2021-10-29
- **Case number:** Civil Appeal No. 6537 of 2021
- **Bench:** Sanjiv Khanna, Bela M. Trivedi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/life-insurance-corporation-of-india-and-another-v-sunita-34630
- **Pages:** 8

## Headnote

Insurance: Insurance policy - Construction of - Held: Terms
of insurance policy have to be strictly construed - It is not
permissible to rewrite the contract while interpreting the terms of
the Policy - In a contract of insurance there was a requirement of
Uberrima fides-good faith on the part of the assured - On facts,
condition of the Policy clearly stipulated that the policy has to be in
force when the accident takes place - Policy was lying in a lapsed
condition and was not in force on the date of accident - It was
sought to be revived after the accident and that too without disclosing
the fact of accident which took place three days before - Thus, the
complainant did not come with clean hands to claim the extra
Accident benefit of the policy - The said Accident benefit could
have been claimed and availed of only if the accident had taken
place subsequent to the renewal of the policy - Claim for Accident
benefit was not payable to the respondent as per the conditions of
the contract of insurance - Thus, the claim for extra Accident benefit
rightly rejected by the Corporation - Consumer Protection Act,
1986.
Allowing the appeal, the Court
HELD: 1.1 At the time of making payment of premium on
09.03.2012, it was not disclosed by the complainant or her husband
to the appellant-Corporation about the accident which had taken
placed on 06.03.2012. The said conduct on the part of the
complainant and her husband in not disclosing about the accident
to the corporation not only amounted to suppression of material
fact and lacked bona fides but smacked of their mala fide intention,
and therefore, the Accident benefit claim of the complainant was
liable to be rejected on the said ground alone. In a contract of
insurance there is a requirement of Uberrima fides i.e. good faith
on the part of the assured. [Para 8][185-G-H; 186-A-B]
[2021] 10 S.C.R. 180
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1.2 It is clear that the terms of insurance policy have to be
strictly construed, and it is not permissible to rewrite the contract
while interpreting the terms of the Policy. In the instant case,
condition no. 11 of the Policy clearly stipulated that the policy
has to be in force when the accident takes place. The policy had
lapsed on 14.10.2011 and was not in force on the date of accident
i.e. on 06.03.2012. It was sought to be revived on 09.03.2012
after the accident in question, and that too without disclosing the
fact of accident which had taken place on 06.03.2012. Thus, apart
from the fact that the respondent-complainant had not come with
clean hands to claim the add on/extra Accident benefit of the
policy, the policy in question being not in force on the date of
accident as per the condition no. 11 of the policy, the claim for
extra Accident benefit was rightly rejected by the appellantCorporation. Since, clause 3 of the said terms and conditions of
the policy permitted the renewal of discontinued policy, the
appellant-Corporation had revived the policy of the respondentcomplainant by accepting the payment of premium after the due
date and paid Rs. 3,75,000/- as assured under the policy,
nonetheless for the Accident benefit, the policy had to be in force
for the full sum assured on the date of accident as per the said
condition no. 11. The said Accident benefit could have been
claimed and availed of only if the accident had taken place
subsequent to the renewal of the policy. The policy was lying in a
lapsed condition since 14th October, 2011 and, thus, was not in
force as on 06.03.2012, resultantly, the claim over Accident benefit
was not payable to the respondent as per the conditions of the
contract of insurance. Thus, the impugned order passed by the
NCDRC setting aside the order passed by the State Commission
and reviving the order passed by the District Forum was highly
erroneous and is set aside.The claim of the respondent towards
Accident benefit stands rejected. [Para 9-11][186-H; 187-A-F]
Vikram Greentech (I) Ltd. & Anr vs New India Assurance
Co. Ltd

## Text

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180
SUPREME COURT REPORTS
[2021] 10 S.C.R.
180
LIFE INSURANCE CORPORATION OF INDIA AND ANOTHER
v.
SUNITA
(Civil Appeal No. 6537 of 2021)
OCTOBER 29, 2021
[SANJIV KHANNA AND BELA M. TRIVEDI, JJ.]
Insurance: Insurance policy - Construction of - Held: Terms
of insurance policy have to be strictly construed - It is not
permissible to rewrite the contract while interpreting the terms of
the Policy - In a contract of insurance there was a requirement of
Uberrima fides-good faith on the part of the assured - On facts,
condition of the Policy clearly stipulated that the policy has to be in
force when the accident takes place - Policy was lying in a lapsed
condition and was not in force on the date of accident - It was
sought to be revived after the accident and that too without disclosing
the fact of accident which took place three days before - Thus, the
complainant did not come with clean hands to claim the extra
Accident benefit of the policy - The said Accident benefit could
have been claimed and availed of only if the accident had taken
place subsequent to the renewal of the policy - Claim for Accident
benefit was not payable to the respondent as per the conditions of
the contract of insurance - Thus, the claim for extra Accident benefit
rightly rejected by the Corporation - Consumer Protection Act,
1986.
Allowing the appeal, the Court
HELD: 1.1 At the time of making payment of premium on
09.03.2012, it was not disclosed by the complainant or her husband
to the appellant-Corporation about the accident which had taken
placed on 06.03.2012. The said conduct on the part of the
complainant and her husband in not disclosing about the accident
to the corporation not only amounted to suppression of material
fact and lacked bona fides but smacked of their mala fide intention,
and therefore, the Accident benefit claim of the complainant was
liable to be rejected on the said ground alone. In a contract of
insurance there is a requirement of Uberrima fides i.e. good faith
on the part of the assured. [Para 8][185-G-H; 186-A-B]
[2021] 10 S.C.R. 180
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1.2 It is clear that the terms of insurance policy have to be
strictly construed, and it is not permissible to rewrite the contract
while interpreting the terms of the Policy. In the instant case,
condition no. 11 of the Policy clearly stipulated that the policy
has to be in force when the accident takes place. The policy had
lapsed on 14.10.2011 and was not in force on the date of accident
i.e. on 06.03.2012. It was sought to be revived on 09.03.2012
after the accident in question, and that too without disclosing the
fact of accident which had taken place on 06.03.2012. Thus, apart
from the fact that the respondent-complainant had not come with
clean hands to claim the add on/extra Accident benefit of the
policy, the policy in question being not in force on the date of
accident as per the condition no. 11 of the policy, the claim for
extra Accident benefit was rightly rejected by the appellantCorporation. Since, clause 3 of the said terms and conditions of
the policy permitted the renewal of discontinued policy, the
appellant-Corporation had revived the policy of the respondentcomplainant by accepting the payment of premium after the due
date and paid Rs. 3,75,000/- as assured under the policy,
nonetheless for the Accident benefit, the policy had to be in force
for the full sum assured on the date of accident as per the said
condition no. 11. The said Accident benefit could have been
claimed and availed of only if the accident had taken place
subsequent to the renewal of the policy. The policy was lying in a
lapsed condition since 14th October, 2011 and, thus, was not in
force as on 06.03.2012, resultantly, the claim over Accident benefit
was not payable to the respondent as per the conditions of the
contract of insurance. Thus, the impugned order passed by the
NCDRC setting aside the order passed by the State Commission
and reviving the order passed by the District Forum was highly
erroneous and is set aside.The claim of the respondent towards
Accident benefit stands rejected. [Para 9-11][186-H; 187-A-F]
Vikram Greentech (I) Ltd. & Anr vs New India Assurance
Co. Ltd (2009) 5 SCC 599 : [2009] 5 SCR 437; Life
Insurance Corporation of India Vs. Jaya Chandel
(2008) 3 SCC 382: [2008] 2 SCR 559; General
Assurance Society Ltd. v. Chandmull Jain (1966) 3 SCR
LIFE INSURANCE CORPORATION OF INDIA v. SUNITA
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SUPREME COURT REPORTS
[2021] 10 S.C.R.
500; Oriental Insurance Co. Ltd. v. Sony Cheriyan AIR
1999 SC 3252 : [1999] 1 Suppl. SCR 622; United India
Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004)
8 SCC 644 : [2004] 4 Suppl. SCR 662 - referred to.
Case Law Reference
[2009] 5 SCR 437
referred to
Para 5
[2008] 2 SCR 559
referred to
Para 5
(1966) 3 SCR 500
referred to
Para 8
[1999] 1 Suppl. SCR 622
referred to
Para 8
[2004] 4 Suppl. SCR 662
referred to
Para 8
CIVIL APPELLATE JURISDICTION: Civil Appeal No.6537 of
2021.
From the Judgment and Order dated 24.04.2019 of the National
Consumer Disputes Redressal Commission, New Delhi in Revision
Petition No.897 of 2018.
Kailash Vasdev, Sr. Adv., Rao Ranjit, Advs. for the Appellants.
Pushkar Anand, S. R. Setia, Advs. for the Respondent.
The Judgment of the Court was delivered by
BELA M. TRIVEDI, J.
1. Leave is granted.
2. The present appeal is directed against the judgment and order
dated 24th April, 2019 passed by the National Consumer Disputes
Redressal Commission, New Delhi (hereinafter referred to as the
NCDRC) in Revision Petition No. 897 of 2018, whereby the NCDRC
while allowing the said Revision Petition, has set aside the order passed
by the State Commission and has confirmed the order passed by the
District Forum.
3. The short facts giving rise to the present appeal are that Mr.
Pradeep Kumar, the husband of the respondent herein (original
complainant) had taken/purchased a life insurance policy under the
Jeevan Suraksha Yojana on 14.04.2021 from the appellant-Life Insurance
Corporation, under which a sum of Rs. 3,75,000/- was assured by the
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corporation, and in case of death by accident an additional sum of Rs.
3,75,000/- was also assured. The insurance premium of the said policy
was to be paid six monthly. The next premium was due to be paid by the
said insured Pradeep Kumar on 14th October, 2011. However, he
committed a default. On 06.03.2012, the said Pradeep Kumar i.e. the
husband of the complainant met with an accident and succumbed to the
injuries on 21.03.2012. In the meantime, he deposited the due premium
of October, 2011 on, 09.03.2012 for reviving the policy. The complainant
after the death of her husband filed a claim before the appellantCorporation. The appellant paid a sum of Rs. 3,75,000/- to the
complainant, however, did not pay the additional amount of Rs. 3,75,000/
- towards the Accident claim benefit. The complainant, therefore,
approached the District Forum by filing a complaint seeking the said
amount towards the Accident claim benefit. The said complaint was
resisted by the Life Insurance Corporation contending, inter alia, that
the day when the husband of the complainant met with an accident, the
said policy had already lapsed on account of non-payment of the due
premium.
4. The District Forum placing reliance upon the Ready reckoner
issued by the appellant-Corporation, allowed the said claim of the
respondent vide its judgment and order dated 14.10.2013. The appellantCorporation being aggrieved by the same preferred an appeal before
the State Consumer Disputes Redressal Commission. The State
Commission allowed the said appeal and set aside the said order passed
by the District Forum. The aggrieved complainant preferred a Revision
Petition being no. 897 of 2008 under Section 21(B) of the Consumer
Protection Act (hereinafter referred to as the said Act), before the
NCDRC challenging the order passed by the State Commission. The
NCDRC vide the impugned judgment dated 24.04.2019 allowed the said
Revision Petition of the respondent and set aside the order passed by
the State Commission. Hence, the present Appeal has been filed by the
appellant-Corporation.
5. The learned counsel appearing for the appellant-Corporation
placing heavy reliance on the condition no. 11 of the policy submitted
that the Accident claim benefit was payable only if the policy was in
force on the date of accident, however, in the instant case, the policy
had already lapsed in October, 2011 and the husband of the respondentcomplainant had sought to pay the premium on 09.03.2012, i.e. three
days after the occurrence of accident on 06.03.2012. According to him,
LIFE INSURANCE CORPORATION OF INDIA v. SUNITA
[BELA M. TRIVEDI, J.]
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SUPREME COURT REPORTS
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even the appellant-Corporation was not informed about the said accident
when the policy was sought to be revived on 09.03.2012. He has placed
reliance on the judgments of this court in case of Vikram Greentech (I)
Ltd. & Anr vs New India Assurance Co. Ltd (2009) 5 SCC 599 and
in case of Life Insurance Corporation of India Vs. Jaya Chandel
(2008) 3 SCC 382 to submit that there is a requirement of good faith on
the part of the insured in the contract of insurance.
6. However, the learned counsel appearing for the respondentcomplainant submitted that the said terms and conditions of the policy
were not brought to the notice of the insured i.e. the husband of the
complainant, and that the complainant was entitled to the Accident claim
benefit as per the Ready reckoner. He further submitted that the husband
of the complainant had made payment of premium on 09.03.2012 along
with the late fee charges and, therefore, the policy had stood revived
before the death of the complainant's husband. He also placed reliance
on LIC vs. Jaya Chandel (supra) to submit that since the insurance
company had issued the renewal premium receipt on 09.03.2012, it was
required to be construed that the policy which had already lapsed due to
non-payment of premium on time, had stood revived.
7. In order to appreciate the rival contentions raised by the learned
counsels for the parties, apt would be to reproduce the relevant conditions
of the policy in question. Relevant condition nos. 3, 4, and 11 read as
under:
"3. Revival of Discontinued Policies: If the policy has lapsed, it
may be revived during the life time of the Life Assured, but within
a period of five years, from the due date of the first unpaid premium
and before the date of Maturity, on submission of proof of continued
incurability to the satisfaction of the corporation and the payment
of all the arrears of premium together with interest compounding
half yearly at such rates as may be fixed by the Corporation from
time to time. The Corporation, reserves the rights to accept or
accept with modified terms or decline the revival of Discontinued
Policy. The revival of a Discontinued Policy shall take effect only
after the same is a approved by the Corporation and is specifically
communicated to the proposer/Life Assured.
4 Non-forfeiture Regulations:
(a) If, after at least 3 full years premiums have been paid in respect
of this Policy, any subsequent premiums be not duly paid, this
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Policy shall not be wholly void, but shall subsist as a Paid-up Value
which shall be payable in case of death/Matyrly and shall depend
on the number of years for which premiums have been paid and
shall be greater of a sum that bears the same ratio to the Maturity
Sum Assured as the number of premiums actually paid shall bear
to the total number of premiums originally stipulated in the Policy.
OR
The surrender value as per para 7 below assuming that the policy
has been surrendered on the date of death/Matyruty, as the case
may be.
11. Accident Benefit (If opted for): If at any time when this policy
is in force for the full sum assured or reduced sum assured in
case of partial surrender of the policy, the life assured, before the
expiry of the policy term or the policy anniversary on which the
age nearer birthday of the Life Assured is 70 years, whichever is
earlier, is involved in an accident resulting in either permanent
disability as hereinafter defined or death and the same is proved
to the satisfaction of the Corporation, the Corporation agrees in
the case of :-
(a)...................
(b) Death of the Life Assured: to pay an additional sum equal to
the Accident Benefit Sum Assured under this Policy, if the life
assured shall sustain and bodily injury resulting solely and directly
from the accident caused by outward, violent and visible means
and such injury shall within 180 days of its occurrence solely,
directly and independently of all other causes result in the death
of the life assured."
8. Now, so far as the facts of this case are concerned, it is not
disputed that the husband of the complainant had taken the life insurance
policy on 14.04.2011, that the next premium had fallen due on 14.10.2011
but was not paid by him, that the husband of the complainant met with
an accident on 06.03.2012, that thereafter the premium was paid on
09.03.2012 and that he expired on 21.03.2012. It is also not disputed that
at the time of making payment of premium on 09.03.2012, it was not
disclosed by the complainant or her husband to the appellant-Corporation
about the accident which had taken placed on 06.03.2012. The said
conduct on the part of the complainant and her husband in not disclosing
LIFE INSURANCE CORPORATION OF INDIA v. SUNITA
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about the accident to the corporation not only amounted to suppression
of material fact and lacked bona fides but smacked of their mala fide
intention, and therefore, the Accident benefit claim of the complainant
was liable to be rejected on the said ground alone. It is well settled legal
position that in a contract of insurance there is a requirement of Uberrima
fides i.e. good faith on the part of the assured. The Supreme Court in
case of Vikram Greentech (I) Ltd. V/s New India Assurance Co.
Ltd. (2009) 5 SCC 599, while dealing with the contract of insurance
held as under:-
"16. An insurance contract, is a species of commercial transactions
and must be construed like any other contract to its own terms
and by itself. In a contract of insurance, there is requirement of
uberrima fides i.e. good faith on the part of the insured. Except
that, in other respects, there is no difference between a contract
of insurance and any other contract.
17. The four essentials of a contract of insurance are: (I) the
definition of the risk, (ii) the duration of the risk, (iii) the premium,
and (iv) the amount of insurance. Since upon issuance of the
insurance policy, the insurer undertakes to indemnify the loss
suffered by the insured on account of the risks covered by the
insurance policy, its terms have to be strictly construed to
determine the extent of liability of the insurer.
18. The endeavour of the court must always be to interpret the
words in which the contract is expressed by the parties. The court
while construing the terms of policy is not expected to venture
into extra liberalism that may result in rewriting the contract of
substituting the terms which were not intended by the parties.
The insured cannot claim anything more than what is covered by
the insurance policy. (General Assurance Society Ltd. v.
Chandmull Jain (1966) 3 SCR 500, Oriental Insurance Co.
Ltd. v. Sony Cheriyan AIR 1999 SC 3252 and United India
Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8
SCC 644)."
9. From the afore-stated legal position, it is clear that the terms of
insurance policy have to be strictly construed, and it is not permissible to
rewrite the contract while interpreting the terms of the Policy. In the
instant case, condition no. 11 of the Policy clearly stipulated that the
policy has to be in force when the accident takes place. In the instant
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case, the policy had lapsed on 14.10.2011 and was not in force on the
date of accident i.e. on 06.03.2012. It was sought to be revived on
09.03.2012 after the accident in question, and that too without disclosing
the fact of accident which had taken place on 06.03.2012. Thus, apart
from the fact that the respondent-complainant had not come with clean
hands to claim the add on/extra Accident benefit of the policy, the policy
in question being not in force on the date of accident as per the condition
no. 11 of the policy, the claim for extra Accident benefit was rightly
rejected by the appellant-Corporation. Since, clause 3 of the said terms
and conditions of the policy permitted the renewal of discontinued policy,
the appellant-Corporation had revived the policy of the respondentcomplainant by accepting the payment of premium after the due date
and paid Rs. 3,75,000/- as assured under the policy, nonetheless for the
Accident benefit, the policy had to be in force for the full sum assured
on the date of accident as per the said condition no. 11. The said Accident
benefit could have been claimed and availed of only if the accident had
taken place subsequent to the renewal of the policy. The policy in the
instant case was lying in a lapsed condition since 14th October, 2011 and,
therefore, was not in force as on 06.03.2012, resultantly, the claim over
Accident benefit was not payable to the respondent as per the conditions
of the contract of insurance.
10. The Court, therefore, is of the opinion that the impugned order
passed by the NCDRC setting aside the order passed by the Commission
and reviving the order passed by the District Forum was highly erroneous
and liable to be set aside.
11. In the aforesaid premises, the present appeal is allowed and
the impugned order passed by the NCDRC is set aside. The claim of the
respondent towards Accident benefit stands rejected accordingly. Pending
applications, if any, are disposed of.
Nidhi Jain
Appeal allowed.
LIFE INSURANCE CORPORATION OF INDIA v. SUNITA
[BELA M. TRIVEDI, J.]