[Cites 26, Cited by 0]
Bombay High Court
Shri. Narendra Babarao Deshmukh And Ors vs Life Insurance Corporation Of India And ... on 16 December, 2025
Author: R.I. Chagla
Bench: R.I. Chagla
2025:BHC-AS:55838-DB
RJ-WP 4559.2010.doc
Narendra B. Deshmukh Vs. LIC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 4559 OF 2010
Narendra Babarao Deshmukh ...Petitioner
Versus
1. Life Insurance Corporation of India
2. The National Consumer Disputes Redressal
Commission
3. Maharashtra State Consumer Disputes
Redressal Commission
4. The Consumer Disputes Redressal District Forum ...Respondents
WITH
CIVIL APPLICATION NO.7 OF 2025
IN
WRIT PETITION NO. 4559 OF 2010
----------
Mr. Narendra Babarao Deshmukh, Petitioner (in person).
Advocate Manish Kelkar a/w Ms. Saakshi Bhosale & Ms.Gauri
Phadake for Respondent No.1 - LIC.
----------
CORAM : R.I. CHAGLA AND
FARHAN P. DUBASH, JJ.
RESERVED ON : 21st NOVEMBER, 2025.
PRONOUNCED ON : 16th DECEMBER, 2025.
JUDGMENT :
(Per R.I. Chagla, J.)
KAVITA
SUSHIL 1. By this Writ Petition, the Petitioner has impugned
JADHAV
Order dated 10th February, 2003 passed by the Insurance
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Narendra B. Deshmukh Vs. LIC
Ombudsman; Order dated 9th August, 2004 passed by the District
Consumer Disputes Redressal Forum; Order dated 9 th March, 2005
passed by the State Consumer Disputes Redressal Commission; Order
dated 19th December, 2006 passed by the National Consumer
Disputes Redressal Commission; and Review Order dated 30 th
October, 2009 passed by the National Consumer Disputes Redressal
Commission (collectively, the "impugned orders") and has sought for
quashing and setting aside of the same.
2. The facts briefly stated are as under:
(i) The Petitioner is a holder of four individual
Life Insurance Corporation of India ("LIC") policies
and is a nominee in the individual LIC policies of
Mr. Jitendra B. Deshmukh and Ms. Bhagyashree B.
Deshmukh (Original Petitioner Nos. 2 & 3, now
deceased). The details of these six individual
policies issued under different terms have been
provided in tabular form by LIC and which has been
reproduced hereinafter.
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(ii) The Original Petitioner No.1 (referred to as
"Petitioner") had been substituted in the array of
parties in place and stead of Original Petitioner Nos.
2 & 3 as a nominee - legal representative on
account of their death vide Orders dated 22 nd
February, 2023 and 13th November, 2024 passed by
the Registrar (Judicial - I) of this Court.
(iii) The Petitioner discontinued payment of
premiums after paying for a few years i.e. in some
cases after 3 years and in others after 5 years and
thereafter each policy automatically converted to
Reduced Paid-up Policy as per Non-Forfeiture
Regulations - Condition No.4 of the "Conditions
and Privileges" forming part of the respective policy
contracts.
(iv) There were disputes between the Petitioner
and LIC as to the interpretation of the Non-
Forfeiture Regulations - Condition No.4 and for
which the Petitioner approached the Insurance
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Ombudsman in the year 2002-2003 seeking
payment of paid-up value under the policy with
bonus additions before the date of maturity
mentioned in the Schedule of Policy. The Insurance
Ombudsman by Order dated 10th February, 2003
dismissed the Petitioner's complaints holding that
the paid-up value under such policies become
payable only on the scheduled maturity date or
upon the death of the Life Assured (whichever is
earlier) and that the Petitioner's interpretation of
Condition No.4 was untenable.
(v) The Petitioner filed six Complaints before the
District Consumer Dispute Redressal Forum under
Sections 11 and 12 of the Consumer Protection Act,
1986 ("the Act"). The District Consumer Forum by
common Order dated 9th August, 2004 passed under
Section 14 of the Act in Complaint Nos. 91 to 96 of
2003 re-iterated that the LIC had rightly informed
the Petitioner that the Reduced Paid-up value is
payable only at maturity or death, and dismissed all
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six complaints with costs.
(vi) The Petitioner aggrieved by the Order dated
6th August 2004, filed 6 Appeals before the
Maharashtra State Consumer Redressal Commission
under Section 15 of the Act. The State Consumer
Redressal Commission by common Order dated 9th
March, 2005 passed under Section 17 of the Act in
Appeal No.2035 to 2040 of 2004 confirmed the
District Forum's findings.
(vii) The Petitioner then approached the National
Consumer Dispute Redressal Commission by filing
Appeals under Section 21(a)(ii) of the Act. The
National Consumer Dispute Redressal Commission
by Orders dated 19th December, 2006 and 23rd
October, 2007 upheld the concurrent findings and
dismissed the Appeal.
(viii) The Petitioner thereafter filed a Miscellaneous
Application before the National Commission in
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October, 2009 seeking recall or review of the earlier
orders. The National Commission found no
grounds to recall or review the earlier orders and
dismissed the Miscellaneous Application despite
delay in filing, on merits on 30th October, 2009.
(ix) The Petitioner has accordingly filed the
present Writ Petition on 7th June, 2010.
3. By the impugned orders, it has been held that the
Respondent No.1 - LIC has acted strictly in accordance with the
contractual terms of the policies and the governing Non-Forfeiture
Regulations ("NFR"). The Petitioner by this Petition has sought for
this Court to interpret Condition No.4 pertaining to Non-Forfeiture
Regulations which forms a part of the 6 LIC policies in a manner
contrary to the interpretation by the Authorities in the impugned
orders.
4. It is necessary to reproduce Condition No.4 which reads
as under:
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"4. Non-Forfeiture Regulations: If, after atleast three
full years premiums have been paid in respect of this
Policy, any subsequent premium be not duly paid,
this Policy shall not be wholly void, but shall subsist
as a paid-up policy for a reduced sum payable on the
Date of Maturity or at the Life Assured's prior death
provided the paid-up sum assured is not less than
Rs.250/-. The amount of paid-up assurance per
integral number of years' premiums paid is
calculated as per the Table. The policy so reduced
shall thereafter be free from all liability for payment
of the within-mentioned premium, but shall not be
entitled to participate in future profits. The existing
vested bonus additions, if any, will remain attached
to the reduced paid-up policy.
Notwithstanding what is above stated, if after atleast
three full years' premiums have been paid in respect
of this Policy, any subsequent premium be not duly
paid, in the event of the death of the Life Assured
within six months from the due date of the first
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unpaid premium the policy moneys will be paid as if
the Policy had remained in full force after deduction
of (a) the premium or premiums unpaid with
interest hereon to the date of death on the same
terms as for revival of the policy during such period,
and (b) the unpaid premium falling due before the
next anniversary of the Policy.
Notwithstanding what is above stated, if after
atleast five full years premiums have been paid in
respect of this Policy, any subsequent premium be
not duly paid, in the event of the death of the Life
Assured within 12 months from the due date of the
first unpaid premium, the policy moneys will be paid
as if the Policy had remained in full force after
deduction of (a) the premium or premiums unpaid
with interest hereon to the date of death on the
same terms as for revival of the policy during such
period and (b) the unpaid premiums falling due
before the next anniversary of the Policy."
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5. The Petitioner who appears in person has submitted that
Condition No.4 extracted above would apply once the LIC Policy
holder has paid premium continuously for atleast three or five full
years, and then does not pay premiums for the entire tenure. It is
then, that the Policy would not be treated as having lapsed, merely
because subsequent premiums were not paid. It is his submission
that the policy automatically converts into "Reduced Paid-up Policy"
which remains in force, albeit for a proportionately reduced sum
assured, depending upon the number of years' premium actually paid
and for "a legally determined date of maturity of the converted
reduced paid up policies".
6. The Petitioner has interpreted the said Condition No.4 to
read as where three full years' premium has been paid to LIC, then
LIC must treat the policy as continuing for a further six months from
the date of the first unpaid premium, and where five full years'
premiums has been paid to the LIC, the coverage must extend for a
further twelve months from the first unpaid premium. The Petitioner
has claimed that if the life assured dies during this extended period,
the nominee or legal heir is entitled to receive the full policy amount,
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subject to the deduction of the unpaid premiums with interest.
Further, in the event, no death occurs during the said six or twelve
months, the policy stands matured and LIC must pay the reduced
sum assured together with vested bonuses on the legally determined
date of maturity of the converted reduced paid up policies which as
per the Petitioner is the date of completion of six months / twelve
months respectively.
7. The Petitioner submits that the exercise of power of LIC
is with a view to ensure that the Life Insurance Business is developed
to the best advantage of the community within the meaning of
provisions of Section 6(1) of the LIC Act, 1956. He has submitted
that the said Condition No.4 protects the confidence of the individual
policy holder and the individual so that their part of the money is
safely secured and legally remains protected and this secured sense of
feeling generated by the Non-Forfeiture Regulations Clause in the LIC
Policy has to a great extent contributed to the development of the Life
Insurance Business of LIC.
8. The Petitioner has further submitted that the release of
the reduced paid up amount alongwith vested bonus as per the Non-
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Forfeiture Regulations clause - Condition No.4 in the form of actual
cash payment is guaranteed under Section 37 of the LIC Act, 1956 by
the Central Government.
9. The Petitioner has submitted that the release of the
actual cash payment as per the Non-Forfeiture Regulations provision
is statutorily authorized by conferring power on LIC within the
provisions of Section 6(2)(f) of the LIC Act which provides "do all
such thing as may be incidental or conducive to the proper exercise of
any of the powers of the co-operation".
10. The Petitioner has submitted that as per the provision of
Section 6(3), 2(6)(10) of the LIC Act, 1956 read with Section 2(11)
and 113 of the Insurance Act, 1938, "the date of maturity" of the
reduced paid up policy as per Non-Forfeiture Regulations is on the
expiry of six months in the case of three years' insurance premiums
having been paid and the further LIC premium installments falling
due and remaining unpaid. He has submitted that these provisions of
the LIC Act provide for the very principle objective and purposive
element of providing life insurance cover as per the Non-Forfeiture
Regulations Clause of the LIC Policy and which policy ceases to exist
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after the expiry of six months from the date of three years' LIC
premium being paid and further LIC premium falling due and
remaining unpaid. LIC in these facts and circumstances is no more
liable to discharge its functions on the point of Life Insurance
Business principle under the said Reduced Paid-up Policy.
11. The Petitioner has submitted that the term and
expression "so far as may be" used in Section 6(3) is expansive of the
future contingencies of the happening or non happening of certain
events in future based on human life which is the fundamental basis
of the Life Insurance Business Principles of the LIC. Therefore, LIC is
not liable to continue with providing of Life Insurance Business risk
cover under the said Non-Forfeiture Regulations after the expiry of six
months or twelve months in case of number of premiums being paid
for three years or five years respectively and thereafter the premium
due remaining unpaid.
12. The Petitioner has submitted that it is well settled that
when the statute mandates a particular thing is required to be done
in a particular manner, it must be done only in that manner and not
otherwise. He has placed reliance upon the Judgment of this Court in
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Narendra B. Deshmukh Vs. LIC
Vijay Pundlikrao Gohod & Ors., Vs. Vidarbha Youth Welfare Society,
Amravati & Ors.,1. He has also placed reliance upon the Judgment of
the Supreme Court in Balram Kumawat Vs. Union of India and
Others2 in support of his submission that a statute must be construed
as a workable instrument and that the interpretation thereof by a
Court should be to secure that object, unless crucial omission or clear
direction makes that end unattainable. It has also been held that
whilst interpreting a statute the consideration of the inconvenience
and hardships should be avoided and that when the language is clear
and explicit and the words used are plain and unambiguous, the
Courts are bound to construe them in their ordinary sense with
reference to other clauses of the Act or Rules as the case may be, so
far as possible, to make a consistent enactment of the whole statute
or series of statutes / rules / regulations relating to the subject
matter. The Courts have to ascertain the intention of the law-making
authority in the backdrop of the dominant purpose and the
underlying intendment of the said statute and that every statute is to
be interpreted without any violence to its language and applied as far
as its explicit language admits consistency with the established rule of
1 2007(2) ALL MR 643
2 (2003) 7 SCC 628
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interpretation. He has submitted that applying these principles it is
clear that the interpretation of the Non-Forfeiture Regulations Clause
as canvassed by the Petitioner ought to be accepted.
13. The Petitioner has submitted that the epicenter of this
Writ Petition and legal controversy involved is the clear and conscious
illegal and unlawful interpretation of the Non-Forfeiture Regulations
- Condition No.4 of the six LIC policies by LIC as well as the
impugned orders which has been passed by the respective Forum. He
has submitted that the provisions of the Non-Forfeiture Regulations
are clear and unambiguous and requires no interpretation as the
need for interpretation arises only in the case of ambiguity or
uncertainty within the meaning of the terms and expression applied
in the said Non-Forfeiture Regulations.
14. The Petitioner has submitted that in incorporating the
Non-Forfeiture Regulations, the date of maturity of the Reduced Paid-
up Policy is to be legally and lawfully calculated and determined in
the prompt discharge of the legal obligations by the LIC. He has
submitted that by LIC linking the date of maturity of converted
Reduced Paid-up Policy with the date of maturity of the Fully Paid up
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Policy, LIC has failed in its duty of prompt discharge of its legal
obligations as provided under the LIC Act, 1956 read with the
provisions of the Insurance Act, 1948. He has submitted that the
interpretation of LIC results in avoidance of the legal duty and
obligations of the LIC. He has submitted that in the discharge of
LIC's functions it is required under Section 6(3) to act so far as may
be on business principles. This is to be read with provisions of
Section 2(3)(4) of the LIC Act. In the relevant context of the LIC
policies and the converted Reduced Paid-up Policies, the Non-
Forfeiture Regulations is the Life Insurance Business within the
meaning of aforementioned sections. By LIC stretching the date of
maturity of the converted Reduced Paid-up Policy beyond the period
of such six or twelve months as the case may be would result in LIC
controverting and violating the material relevant contractual
contextual provisions of Section 6(3) of the LIC Act and the relevant
contextual material provisions of Section 2 (11) of the Insurance Act.
15. The Petitioner has submitted that the LIC by omitting to
consider the overriding regulatory provisions of the Non-Forfeiture
Regulations viz. the second last and last Paragraph therein which are
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having the basis and support of the provisions of Section 6(1)(2)(3)
of the LIC Act has resulted in denial of equality before law and equal
protection of law to the Non-Forfeiture Regulations Policy Holder
which violates Article 14 of the Constitution of India.
16. The Petitioner has submitted that the contingent date of
maturity of the converted Reduced Paid-up Policies is prescribed
within the two overriding regulatory conditions of the Non-Forfeiture
Regulations - Condition No.4 of the LIC policies as provided in the
bottom two paragraphs of the Non-Forfeiture Regulations. The
contingent date of maturity of the Non-Forfeiture Regulations in the
event of converted Reduced Paid-up Policy is made dependent and
contingent upon happening and non-happening of the two future
uncertain events i.e. either "death" or "remaining alive" occurring
within the prescribed period of six months or twelve months. The
contingent date of maturity of the Non-Forfeiture Regulations in the
converted Reduced Paid-up policy is on the expiry or immediately on
the next following day of the expiry of the period of six months or
twelve months (dependent on the LIC premiums being paid either for
three years or five years) and is definitely determined finally.
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17. The Petitioner has submitted that LIC is obligated to
promptly, carefully and consciously exercise its statutory duties,
functions and obligations as per the provisions of Section 43 of the
LIC Act read with Section 2(11) of the Insurance Act and
immediately release proper payments due and payable as per the
relevant material provisions of the Non-Forfeiture Regulations in
respect of the subject six converted Reduced Paid-up policies which
have actually matured. LIC is to release of proper payments on the
expiry of six or twelve months as regulated and restricted within the
regulatory overriding two conditions of the Non-Forfeiture
Regulations provisions which are made determinative, decisive and
final.
18. The Petitioner has submitted that the LIC by failing in its
aforementioned duty, amounts to legal malice and malafide conduct
on their part. He has placed reliance upon the decision of the
Supreme Court in Punjab State Electricity Board Ltd. Vs. Zora Singh
& Ors.3 at Paragraph 40 in this context.
19. The Petitioner has submitted that the LIC being a State
3 (2005) 6 SCC 766
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cannot act like a private litigant and is bound and liable to act as a
responsible litigant tilting towards settlement of the insurance claim
urgently and not by acting negligently and / or carelessly. The LIC
ought to have settled the Petitioner's legal claim which is amounting
to Rs.9,64,261.38 till 31st March, 2024 or an amount of
Rs.14,60,224.46 in the event the claim of Rs.7,30,112.23 demanded
on 4th January, 2017 had been allowed and paid and which has now
doubled in the span of 7 years, taking into account interest at 15%
per annum. He has submitted that this legal claim is as per the Non-
Forfeiture Regulations i.e. at the end of the period of six or twelve
months in the event the LIC premiums have been paid for three years
or five years respectively.
20. The Petitioner has submitted that all the impugned
orders have misinterpreted the Non-Forfeiture Regulations -
Condition No.4 in a manner contrary to its plain language and which
renders the impugned orders null and void ab initio, nullity in the
eyes of law and non-est and the same requires to be quashed and set
aside.
21. Mr. Manish Kelkar, learned Counsel appearing for
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Respondent No.1 - LIC has submitted that LIC disagrees with the
interpretation advanced by the Petitioner of revision of date of
maturity in case of non-payment of all premium installments. He has
submitted that on a plain reading of the Non-Forfeiture Regulations -
Condition No.4, it is clear that the subject LIC policies continue to
remain valid till the date of maturity albeit for a reduced sum
assured, except in cases where the policy holder demises before the
date of maturity.
22. Mr. Kelkar has submitted that the Petitioner in the
present case despite not paying up the premium for the entire tenure,
continued to remain insured for the entire tenure for the reduced
sum assured. LIC has acted only as per their contractual obligations
as has been rightly held by all the Authorities in the impugned
orders.
23. Mr. Kelkar has submitted that the Petitioner is a holder of
four LIC policies & nominee in two LIC policies i.e. totalling six LIC
policies issued under different terms. He has for the sake of brevity
provided the summary of relevant details of policies which are
reproduced as under:
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I II III IV V VII VIII VI
Sr. Name/ Policy Sum Comm- First Date of Date of
No. Type of Number/ Assured ence Unpaid Maturity of Maturity
Policy Instalment Amt. Date Premium Reduced
Amt (FUP)/ Paid Up
Reduced Policy as
paid-up claimed
sum by
assured Petitioner
1. Narendra 66800751 25,000/- 28 March 28 March March 28 March
/ Rs.249.40 Rs.8,000/-
Endowment
Assurance
Policy
2. Narendra 890105723 5000/- 4 July 4 July July 1994 4 January
/ Rs.327.50 Rs.1,400/-
Money Back
Policy
3 Narendra 890111618 5000/- 8 March 8 March March 8
Deshmukh / 1991 2006 1995 / September
/ Rs.412.60 Rs.1,700/- 1995
Money Back
Policy
4 Narendra 917052699 5000/- 2 July 2 July July 2 July
/ Rs.410.90 Rs.418/-
Money Back
Policy
5 Bhagyashree 890111121 5000/- 6 March 6 March March 6
Deshmukh / 1991 2006 1995 / September
/ Rs.409.50 Rs.1,700/- 1995
Money Back
Policy
6 Jitendra 890111572 5000/- 5 March 5 March March 5
Deshmukh / 1991 2006 1995 / September
/ Rs.413.60 Rs.1,700/- 1995
Money Back
Policy
24. Mr. Kelkar has submitted that the Petitioner, Bhagyashree
Deshmukh and Jitendra Deshmukh discontinued payment of
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premiums after paying them for few years as per Column VII of the
above table and each such policy automatically stood converted into
a Reduced Paid-up Policy as per the Non-Forfeiture Regulations -
Condition No.4 of the "Conditions and Privileges" forming part of the
policy contract. He has submitted that in case of unfortunate demise
of the policy holder till the original maturity date of policies, they
were entitled to receive "reduced paid up sum assured" as per
Column VII in the table hereinabove alongwith the accrued bonus.
25. Mr. Kelkar has submitted that the relevant Condition
No.4 clearly provides that upon payment of atleast three full years'
premiums, if any subsequent premium is not duly paid, the policy
shall not become wholly void but shall continue as a paid-up policy
for a reduced sum assured. The policy so converted shall thereafter
subsist as a paid-up policy for a reduced sum payable on the date of
maturity or at the Life Assured's prior death provided the paid-up
sum assured is not less than Rs.250/-
26. Mr. Kelkar has submitted that the interpretation
advanced by the Petitioner that date of maturity is revised based on
the date of reduced paid up premium is wholly erroneous and
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contrary to both the language and intent of Condition No.4 of the
"Conditions and Privileges" attached to the policies. The Non-
Forfeiture Clause, on a plain reading, does not create any new or
shortened maturity date but merely preserves a reduced benefit in
the form of a reduced sum assured upon discontinuance of premium
payments. The clause thus ensures that the policy holder does not
lose all benefit of the premiums paid, but it does not substitute or
alter the original maturity date expressly printed in the policy
schedule.
27. Mr. Kelkar has submitted that the Non-Forfeiture Clause
is meant only to protect the policy holder from losing all benefits if
premiums stop, it does not create an early maturity or change the
basic terms of the policy agreed upon at issuance.
28. Mr. Kelkar has submitted that in case the Petitioner
desired to receive any amounts prior to maturity, then they had the
option to seek a "surrender value" as per unamended Section 113 of
the Insurance Act, 1938. He has submitted that in the present case,
LIC had offered the Petitioner an option to surrender the policies and
receive the surrender value before maturity vide letter dated 8 th June,
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2002 alongwith with a Discharge Form and Declaration Form
No.5074 which were also sent, but the Petitioner declined this option
and returned the surrender forms. He has submitted that having
refused the contractual right to surrender, the Petitioner cannot
further demand full maturity payments prematurely under a self-
interpreted formula inconsistent with the policy.
29. Mr. Kelkar has submitted that the Miscellaneous
Application filed by the Petitioner before the National Commission in
October 2009 seeking recall or review of the earlier orders was
rejected on the ground that under Regulation 14 of the Consumer
Protection Regulations, 2005, any Review Application must be filed
within thirty days from the date of passing or receipt of the order
under Section 22(2) of the Consumer Protection Act, 1986. The
Petitioner filed the application over two years later, without any
explanation or request for condonation of delay and hence, it was
clearly time-barred. He has submitted that the Consumer Forums are
expected to decide cases expeditiously within 90 days where no
evidence is required and within 150 days where evidence is to be led
and that the Petitioner had slept over his rights for more than two
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years without any valid reason. He has submitted that in these
circumstances, the National Commission found no ground to recall or
review its earlier orders and dismissed the Miscellaneous Application
as without any merit.
30. Mr. Kelkar has submitted that the contentions of the
Petitioner proceed on an incorrect premise that the maturity date is
preponed and thus all the grounds of challenge which proceed on this
premise are denied in toto since it is factually incorrect to say that the
maturity date is preponed.
31. Mr. Kelkar has submitted that the LIC has always been
ready and willing to make payment of the reduced paid-up value on
maturity, alongwith vested bonuses if any, subject to production of
discharge forms, policy bonds, NEFT details, and KYC particulars. He
has submitted that LIC even sent e-mail communications dated 13 th
January, 2024 and 23rd January, 2024 requesting the Petitioner to
submit the required documents in compliance with the Court's
directions dated 8th January, 2024 and 15th April, 2024. However, the
Petitioner failed to complete the documentation despite reminders.
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32. Mr. Kelkar has submitted that the total maturity amount
payable under the six reduced paid-up policies stands at Rs.33,708/-
as of the present date, which LIC is ready to disburse immediately
upon receipt of the requisite documents. He has submitted that this
clearly shows that LIC has never denied its contractual obligation but
only insists on compliance with procedural requirements.
33. Mr. Kelkar has submitted that LIC is a public institution
whose funds and surpluses are meant for the security and benefit of
policy holders, leaving no room for any private or profit motive.
34. Mr. Kelkar has submitted that the scope of judicial review
under Article 226 does not extend to re-appreciating evidence or re-
interpreting contractual terms already adjudicated upon by
competent quasi-judicial bodies. He has submitted that the present
Writ Petition involves no question of public law or violation of any
constitutional or statutory duty. It is purely a contractual dispute, for
which the Petitioner had already availed and exhausted the remedies
available to them under the Consumer Protection Act and under the
terms of the policy. Having failed before the competent forums, the
Petitioner has now invoked the extraordinary jurisdiction of this
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Court under Article 226, which is impermissible in law except in
exceptional circumstances as recognized by the Supreme Court in
various cases. He has in this context placed reliance upon the
Judgment of the Supreme Court in Assistant Commissioner of State
Tax and Ors., Vs. Commercial Steel Limited in Civil Appeal No.5121
of 2021 dated 3rd September, 2021 at Paragraph 10.
35. Mr. Kelkar has submitted that all the impugned orders
dated 9th August 2004, 9th March 2005, 19th December 2006 and 30th
October 2009 are lawful, valid and based on proper interpretation of
the Non-Forfeiture Regulations and the policy conditions. He has
submitted that LIC has neither violated any statutory provision nor
denied any legitimate claim of the Petitioner. LIC remains ready and
willing to settle the maturity amount of Rs.33,708/- strictly in
accordance with the terms of the policies upon the Petitioner
furnishing the requisite documents. He has submitted that this
demonstrates LIC's good faith and compliance with its statutory
obligations.
36. Mr. Kelkar has accordingly submitted that the present
Writ Petition be dismissed with costs.
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37. Having considered the submissions, the issue which
arises in the present Writ Petition is whether under the Non-
Forfeiture Regulations - Condition No.4 of the LIC Policy, in case the
policy is converted to a Reduced Paid-up Policy, the policy subsists till
the date of maturity or till a new "proportionate maturity date" i.e.
completion of six months / twelve months from non-payment of
premium after payment of premium for 3 years or 5 years
respectively.
38. From the plain language of Condition No.4 it is evident
that upon payment of atleast three full years' premiums, if any
subsequent premium is not duly paid, the policy shall not become
void but shall continue as a paid-up policy for the reduced sum
assured. The policy so converted shall subsist till the date of maturity
or till the Life Assured's prior death (whichever is earlier). The
interpretation advanced by the Petitioner that the date of maturity is
revised based on the date of reduced paid-up premium is erroneous
and contrary to both the plain language and intent of Condition No.4.
The Non-Forfeiture Clause, on a plain reading, does not create any
new or shortened maturity date but merely preserves a reduced
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benefit in the form of a reduced sum assured upon discontinuance of
premium payments. Thereby the Non-Forfeiture Regulations ensure
that the policy holder does not lose all benefits of the premiums paid,
but it does not substitute or alter the original maturity date expressly
printed in the policy schedule.
39. The Petitioner in the present case is holder of four
individual LIC policies and nominee in two individual LIC policies i.e.
totaling six individual LIC policies and it can be seen from the details
which have been enumerated in the aforementioned chart, the
Petitioner after paying premiums for few years i.e. in some cases
three years and in other cases five years had discontinued payment of
premium. The policy had accordingly automatically stood converted
into Reduced Paid-up Policy as per said Condition No.4 of the
"Conditions and Privileges" forming part of the policy contract. The
original maturity dates of the policies would remain unaffected and
only in the event of unfortunate demise of the policy holders till the
original maturity date of policies, the Petitioner will be entitled to
receive "reduced paid up sum assured" as per Column VII in the table
hereinabove alongwith the accrued bonus.
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40. The quasi judicial bodies whose orders are impugned in
the present Petition have all interpreted the Non-Forfeiture
Regulations - Condition No.4 in the manner interpreted by LIC. If the
interpretation of the Petitioner of the Non-Forfeiture Regulations
Clause was to be accepted, this would result in undermining the
actuarial basis of endowment and money-back policies. This would in
effect turn every paid up policy into one that matures early disturbing
the balance between the premium payments, risk coverage, and
maturity benefits.
41. Further, if the interpretation of the Petitioner is to be
accepted, it would result in a situation where policy holders (like the
Petitioner in the present case) are given a free hand and permitted to
alter/prepone the maturity date of the policy as per his own whims
and fancies, by choosing not to pay premium (after three/five years)
and then demanding that the Insurance company give him the
maturity benefits immediately upon the expiry of 6/12 months of
such default, instead of on the agreed maturity date of the policy.
Such an interpretation is clearly contrary to the language of
Condition No.4.
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42. The Petitioner in the present case who has not paid the
premiums for the entire tenure continues to remain insured for the
entire tenure of the reduced sum assured. The Petitioner cannot seek
the reduced sum assured mid course. Accordingly, we are of the view
that LIC has acted only as per contractual obligations as held by all
the Authorities below.
43. We also find much merit in the submission of Mr. Kelkar
for LIC that the present dispute is a contractual dispute, for which the
Petitioner has availed and exhausted the remedies available to the
Petitioner under the Consumer Protection Act and under the terms of
the policy. The Petitioner having failed before the competent forums,
has now sought to invoke the extraordinary jurisdiction of this Court
under Article 226, which is impermissible in law except in
exceptional circumstances as recognized by the Supreme Court in
various cases. In Assistant Commissioner of State Tax (supra) the
Supreme Court has held that there are exceptional circumstances
where the existence of an alternative remedy is not an absolute bar to
the maintainability of a Writ Petition under Article 226 of the
Constitution. These exceptional circumstances are as under:
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(i) a breach of fundamental rights;
(ii) a violation of the principles of natural justice;
(iii) an excess of jurisdiction; or
(iv) a challenge to the vires of the statute or delegated
legislation.
44. The invoking of writ jurisdiction in the present case is
not in the exceptional circumstances as laid down by the Supreme
Court in the above decision. The present Writ Petition involves no
question of public law or violation of any constitutional or statutory
duty. It merely seeks interpretation of contractual terms viz. Non-
Forfeiture Regulations for which the scope of judicial review under
Article 226 does not extend.
45. Accordingly, we find no merit in the present Writ
Petition. LIC has neither violated any statutory provision nor denied
any legitimate claims. In fact it has been stated on behalf of LIC that
LIC is ready and willing to settle the maturity amount of Rs.33,708/-
strictly in accordance with the terms of the policies upon the
Petitioner furnishing the requisite documents.
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46. The Judgments relied upon by the Petitioner do not in
any manner come to the Petitioner's aid in the interpretation of the
Non-Forfeiture Regulations - Condition No.4 which is the only issue
that arises in the present Writ Petition.
47. The Writ Petition is accordingly dismissed. There shall
be no orders as to costs.
48. Civil Application No.7 of 2025 does not survive and is
accordingly disposed of.
49. It is made clear that the dismissal of the present Writ
Petition will not come in the way of the Petitioner claiming the
maturity amounts strictly in accordance with the terms of the LIC
policies and as per the Non-Forfeiture Regulations as interpreted in
this Judgment.
[FARHAN P. DUBASH, J.] [R.I. CHAGLA, J.]
Kavita S.J.
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Judgment dated 16th December, 2025
