Sipra Chaterjee vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 1230 Del

JUDGMENT

Manmohan Sarin, J.

1. Petitioner, the widow of late Shri M.N. Chatterjee, has filed this writ petition aggrieved by the decision of the Life Insurance Corporation of India (LIC) in rejecting her claim under the Life Insurance Policy bearing No. 111793283, for the death of her husband. Respondent LIC rejected the claim on the ground that the insurance policy had lapsed on account of failure to pay the premium. It however offered a sum of Rs. 10,000/- being the paid up value of the policy, which was not acceptable to the petitioner. The relevant facts leading to the filing of this writ petition are given hereinafter:

2. Petitioner's husband late Shri M.N. Chatterjee, a young Advocate, met with an accident on 1.3.1997. He was hit by a truck belonging to the Central Industrial Security Forces (CISF), Petitioner was immediately rushed to the All India Institute of Medical Sciences (AIIMS). Petitioner claims as a result of the serious head injuries sustained, her husband Mr. M.N. Chatterjee went into a coma and remained in that state till his death on 18.12.1997. This assertion has not been refuted by the respondents in the counter affidavit in reply and is stated to be a matter of record.

3. The ground on which LIC rejected the claim is that the premium which fell due in the month of March, 1997, was not paid. Reliance was placed on Clause 2 of the terms and conditions of the policy to urge that on account of default in payment, policy stood lapsed. LIC, therefore, offered to return the paid-up value of the policy. Admittedly there was no payment of the premium amount and this was sought to be treated by the respondents as default resulting in lapse of the policy.

4. The insured from the date of the accident had gone into coma, and so remained till his death. Whether in such circumstances the cause of action could be said to have arisen on the date of the accident and continued till death of the insured? Should non-payment, in such an eventuality be treated as a default, leading to the lapse of the policy, are questions which fall for consideration. Mr. P.V. Kapoor, Senior Advocate was requested by the Court to act as amices curiae. Mr. Kapoor has given valuable assistance to the Court in the case.

5. Mr. Kapoor has drawn my attention to Clause 10 of the terms and conditions of the policy, which is as under:

10. Accident benefit: If at any time when this policy is in force for the full Sum Assured, the Life Assured, before the expiry of the period for which the premium is payable or before the policy anniversary on which the age nearer birthday of the Life Assured is 70 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) Disability to the Life Assured: (i) to pay in monthly Installments spread over 10 years an additional sum equal to the Sum Assured under this policy. If the policy becomes a claim before the expiry of the said period of 10 years, the disability benefit Installments which have not fallen due will be paid along with the claim, (ii) to waive the payment of future premiums.

The maximum aggregate limit of assurance under all policies on the same life to which benefits (i) and (ii) above apply shall not in any event exceed Rs. 5,00,000/-. If there be more policies than one and if the total assurance exceeds Rs. 5,00,000/- the benefits shall apply to the first Rs. 5,00,000/- sum assured in order of date of the policies issued.

This waiver of premiums shall extinguish all options under this policy and also the benefits covered by para (b) of this clause except as to such assurance, if any, as exceeds the maximum aggregate limit of Rs. 5,00,000/- and which have been kept in force by continued payment of premiums.

The disability above referred to must be disability which is the result of an accident and must be total and permanent and such that there is neither than nor to any time thereafter any work, occupation or professions that the Life Assured can ever sufficiently do or follow to earn or obtain any wages, compensation or profit, accidental injuries which independentaly of all other cause and within 120 days from the happening of such accident result in the irrecoverable loss of the entire sight of both eyes or in the amputation of both hands at or above the wrists, or in the amputation of both feet at or above ankles, or in the amputation of one hand at or above the wrist and one foot at or above the ankle, shall also be deemed to constitute such disability.

Immediately after the happening of the disability, full particulars thereof must be given in writing to the office of the Corporation where this policy is serviced together with the then address and whereabouts of the Life Assured and within 120 days after the happening of the disability there must be given the servicing office of Corporation in the manner required by it, proof of disability satisfactory to the Corporation and without any expense to the Corporation and thereafter similar proof must be given, as and when required by the Corporation, if the continuance of such disability. Any Medical Examiner nominated by the Corporation shall be allowed to examine the person of the Life Assured in respect of any disability claimed, in such manner and at such times before and/or after the disability is accepted by the Corporation as the Corporation may require.

In the event of its being discovered at any time that a claim under this clause has been wrongly admitted, all premiums falling due after the Corporation's intimation to that effect shall be paid and not further Installments of the additional Sum-Assured shall be paid as if no disability had occurred.

(b) Death of Life Assured: To pay an additional sum equal to the Sum Assured under this policy, if the Life Assured shall sustain any bodily injury resulting solely and directly from the accident caused by outward, violent and visible means and such injury shall within 120 days of its occurrence solely, directly and independently of all other causes result in the death of the Life Assured. However, such additional sum payable in respect of policy, together with any such additional sums payable under other policies on the life of the Life Assured shall not exceed Rs. 5,00,000/-.

The Corporation shall not be liable to pay the additional sum referred to, in (a) or (b) above, if the disability or the death of the Life Assured shall:....

Exceptions are provided for situations where death results from self inflicted injury, attempted suicide, insanity or while under the influence of liquor etc.

6. Mr. P.V. Kapoor relying on Clause 10 above submitted that in the present case the petitioner suffered the accident, when the policy was in force and incurred permanent disability from day one when he went into coma. Hence LIC became liable to make the payments as stipulated for disability. Further, liability to pay the future premium stood waived in terms of this clause. Not only this the respondent/LIC was under an obligation to pay the amount of disability of monthly Installments spread over 10 years equivalent to the additional sum assured. The accident benefit was to be in addition to the liability to pay the sum assured on account of death.

7. There is merit in the submission of Mr. P.V. Kapoor, Senior Advocate. The insured met with an accident and went into coma immediately and incurred the permanent disability which continued till his death. Clearly in terms of Clause 10 the liability of the insured for future premium stood waived during the continuance of disability and additionally the LIC became liable to pay the disability Installments as noted above. Hence, there would be no question of the policy lapsing on account of default in the payment of premium.

8. Learned Counsel for the respondents during the course of arguments urged that the petitioner was also in breach of Clause 2 as the intimation regarding the accident was sent only on 17th April, 1998, and not within the stipulated time. This is not a ground taken in the counter affidavit. Respondent-LIC rejected the claim not due to delayed intimation, but on the ground that the policy stood lapsed, due to failure to make the payment of premium within grace period of 30 days from March, 1997, when the premium fell due. Hence this ground being urged as an after-thought is not available. Moreover, in so far as Clause 2 provides for extinguishment of the rights under the policy on account of default in intimation about the happening of the accident, and furnishing proof, within a specified period, it would be hit by Section 28(b) of the Indian Contract Act and would not be enforceable. In the instant case, death followed after a period of 9 months of the accident. The petitioner's husband from the date of accident had gone into coma and delayed intimation. In these circumstances, would not entitle the respondents to avoid the policy.

9. I am of the view that upon the happening of the accident, the liability to pay premium stood waived under Clause 10. Thus, there was no question of payment of premium and policy cannot be said to have lapsed.

10. In view of the foregoing discussion, the stand taken by the LIC that the policy had lapsed on account of default in making the premium cannot be sustained. LIC, which is a statutory Corporation having at the relevant time monopoly of life insurance business owes a public duty to settle such claims promptly. In this case, the petitioner has been denied relief for a period of nearly 5 years. Accordingly a writ of mandamus shall issue to the LIC to make the payment under the policy as due of the sum assured along with accident benefit together with interest @ 10%, after making allowance for reasonable time of processing claim of 2 moths. Learned Counsel for respondent, Mr. S.K. Taneja at this stage points out that the intimation was received in the month of April and at least 3 months' time should be given for processing of claim. Taking these factors into account the LIC is directed to pay the sum assured and the accident benefit together with interest at 10% per annum with effect from 1.7.1998.

The writ petition is allowed in the above terms.