Kerala High Court
Hdfc Life Insurance Company Ltd vs Jyothi Madhavan U on 28 October, 2025
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W.P(C) No.42110/2024 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
TUESDAY, THE 28TH DAY OF OCTOBER 2025 / 6TH KARTHIKA, 1947
WP(C) NO. 42110 OF 2024
PETITIONER/S:
HDFC LIFE INSURANCE COMPANY LTD,
2ND FLOOR, LODHA EXCELUS, APPOLLO MILLS COMPOUND,
N.M JOSHI MARG, MAHALAKSHMI, MUMBAI REPRESENTED BY ITS
AUTHORISED SIGNATORY VINAY PRAKASH, PIN - 400001
BY ADVS.
SHRI.K.J.SAJI ISAAC
DR.ELIZABETH VARKEY
SRI.JITHIN SAJI ISAAC
SHRI.ABHISHEK S. KUMAR
SHRI.JOSHUA SEBASTIAN
RESPONDENT/S:
JYOTHI MADHAVAN U.
AGED 45 YEARS,W/O.LATE MADHU MENON, JYOTHIS, SUDHINAM
COMPOUND, FORT ROAD, KANNUR, PIN - 670001
BY ADVS.
SRI.K.P.SREEKUMAR
SRI.P.M.SATHEESH
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
22.09.2025, THE COURT ON 28.10.2025 DELIVERED THE FOLLOWING:
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W.P(C) No.42110/2024 2
"C.R."
MOHAMMED NIAS C.P., J.
......................................................
W.P(C) No.42110 of 2024
................................................................
Dated this the 28th day of October, 2025
JUDGMENT
The writ petition is filed by HDFC Life Insurance Company
Limited, challenging the award dated 07.11.2024 passed by the Insurance
Ombudsman, Ernakulam, on a complaint preferred by the respondent
herein. The petitioner is hereinafter referred to as 'the insurer' and the
late husband of the respondent is hereinafter referred to as 'the insured'
for brevity.
2. The brief facts necessary for disposal of the writ petition are
as follows:-
The Insured (husband of the respondent) died on 11.04.2021 due
to COVID-19. He availed a housing loan to the tune of Rs. 1,73,00,000/- in
November 2018 from HDFC Bank. To secure the aforementioned loan, he
had taken two life insurance policies from HDFC Life Insurance Company
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Ltd, in addition to the immovable properties owned by him being offered
as security. The policies were taken by the insured as insisted by HDFC
Bank, which offered the loan, as a mandatory condition for granting the
loan. For the sole purpose of insurance premium funding, the insured
opened an account bearing No.637607046 with Rs. 2,07,931/- and two
insurance policies were subscribed on 30.11.2018.
2.1. The Policy bearing No.20910176 has a maturity value of Rs.30
Lakhs, while Policy No.20924808 has a maturity value of Rs. 1.40 Crores.
The premium amount with regard to Policy No.20910176 was also paid on
30.11.2018 by the HDFC Bank Limited directly to the HDFC Life Insurance
Company from the loan account No.637607046. It is seen from the
transaction history of the aforesaid account with the HDFC Limited that
the EMI has been collected by the bank from the account of the insured
till May 2021.
2.2. Though the policy, as per proposal No.20924808, was taken in
November 2018, the Insurance Company, for reasons best known to them,
delayed the issue of a policy against this proposal despite collecting the
premium. The wife of the insured/respondent herein, on 26.05.2021, went
to the office of the HDFC Standard Life Insurance Company Limited and
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submitted the claim forms with all proofs for policy No.20910176 and also
furnished the details about the second policy in respect of proposal
No.20924808. It was only then that the respondent insured was informed
that the Insurance Company had not issued the second policy, even
though the factum of acceptance of the premium amount in 2018 was
acknowledged. It is an admitted fact that proposal No.20924808 was for
the purpose of covering all the housing loans in case of the occurrence of
any unforeseen events. On 05.06.2021, as requested by the Insurance
Company, all the relevant documents concerning the above-stated two
policies were submitted. On 17.06.2021, the Insurance Company issued an
online communication to the petitioner stating that, as per the
confirmation received by their team, the application relating to the above
proposal No.20924808 was withdrawn, since the requirements were not
submitted within the time limit and the Insurance Company offered to
initiate steps for refunding the premium, based on updated NEFT details
and the same would be credited within 9 to 14 working days.
2.3. The wife of the insured, feeling aggrieved by the conduct of
the Insurance Company, sought the intervention of the grievance officer
of the insurer, informing about the unwillingness to accept the proposal
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of the refund of the premium, demanding that the assured sum be
credited to the loan account, so that the uncleared liabilities towards the
loan availed of by the deceased could be cleared. On 25.06.2021, the HDFC
Standard Life Insurance Company Limited rejected the claim made by the
respondent herein and informed her to approach the Insurance
Ombudsman.
2.4. Thereupon, the respondent herein approached the Insurance
Ombudsman, Kochi, on 23.07.2021. On receiving her complaint, the
Insurance Company filed a written reply, but no copy was provided to her.
She therefore requested the Registrar of the Insurance Ombudsman for a
copy of the insurer's statement and documents. Since these were not
furnished, she sent follow-up emails to the Insurance Company.
2.5. The Ombudsman heard the matter online on 13.09.2021. The
Ombudsman, by award dated 16.09.2021, found that there was no
communication from the Insurance Company regarding any requirement
in connection with the policy. It was also found that there was no
intimation by the insurer regarding the non-issuance of the second
policy, and the corporate agent of HDFC Life themselves have procured
the policy while granting the housing loan and that the policy has been
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assigned to them against the loan as security. Though findings were
entered in favour of the respondent herein, the Ombudsman concluded
that the complaint cannot be entertained by the Ombudsman, as the claim
under consideration is above Rs 30 lakhs and hence, beyond the pecuniary
jurisdiction of the Ombudsman, and the Ombudsman has no authority to
decide on such a complaint. Aggrieved by the rejection, the respondent
herein has approached this Court by filing W.P(C) No. 29499/2021.
3. The main contentions rendered by the insurance company
were that the insured has deposited the first premium along with the
proposal form and in the said proposal form, it is specifically mandated
that the company will be at risk in pursuance of this proposal for
insurance only after the risk under the proposal form is accepted by the
company and such acceptance is communicated to the petitioner in
writing by the company and further that the company has the right either
to accept or reject the proposal without giving reasons thereto. It is also
mandated that if the proposal of insurance is not accepted by the
company, the aforesaid deposit shall be refunded without interest. Also,
the company has requested the insured to appear for a medical
examination, which is mandatory for the issuance of the policy under
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proposal No.20924808, but he did not turn up for the same. Since the
insured has not satisfactorily furnished the necessary declarations as
required by the insurer, including the underwriting requirements, the
proposal was not accepted. It is also admitted that an amount of
Rs.57,931/-, which was deposited, has not been appropriated towards the
premium. The said amount could be appropriated towards the premium
only after a medical examination and after determining the premium
based on the medical report of the petitioner's husband. The proposal was
not considered for want of a Medical Examination Report, which was a
prerequisite for considering the proposal. It is also stated that the amount
of Rs.57,931/-, was refunded, which was lying in the suspense account, to
the wife of the insured through NEFT.
4. After considering the contentions advanced on either side, this
Court, in W.P.(C) No. 29499 of 2021, quashed the award of the Insurance
Ombudsman, which had rejected the complaint on the ground of
pecuniary limits, and directed reconsideration of the complaint preferred
by the respondent.
5. The insurer filed Writ Appeal No.2121/2023 against the
judgment of the learned Single Judge, wherein the judgment was modified
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to the limited extent permitting parties to raise all contentions on merits
before the Ombudsman.
6. After reconsideration, the Insurance Ombudsman passed the
impugned award directing the insurer to admit the claim of the
complainant under proposal number 20924808, and pay the Death Benefit
claim amount of Rs.1,40,00,000.00 to her along with interest @ 8.75% p.a.
calculated for the exact number of days from 29.05.2021 till the date of
actual payment to her in satisfaction of this Award, which is under
challenge in this writ petition.
7. Learned counsel for the petitioner, Sri. K.J. Saji Isaac and
Jithin Saji Isaac, for the insurer, argued that the Ombudsman went wrong
in relying on the observations made by the Single Judge in W.P(C)
No.29499 of 2021. It is also argued that the insured had not submitted
himself for medical examination, which was mandatory for issuance of
the policy, and because of the non-submission of the medical examination
report, the policy could not be issued. It is also stated that since the same
was not received, the insurer could not accept or decline the proposal.
They cited the following judgments to support their contentions: Life
Insurance Corporation of India v. Raja Vasireddy Komalvalli Kamba and
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Others [1984 KHC 660], LIC of India v. Prasanna Devaraj [1994 KHC 383].
8. The learned counsel for the respondent, Sri. K.P. Sreekumar
argues that the allegation of insurer that the insured had not undergone
the required medical tests is wrong and that the proposal form itself
contains several enquiries on the personal details of the life of the
assured, all of which had been filled up. The premium for the policy was
debited by the bank from the loan account of the insured. It is also stated
that to secure the loan, apart from the immovable properties, the
deceased husband of the respondent herein had assigned the two policies
referred to above in favor of HDFC Bank Limited, which the bank had
accepted. On 11.04.2021, the husband of the respondent died due to
COVID-19 pandemic, and the policy for the maturity amount of Rs.
30,00,000/- was honoured. The payment was adjusted by the HDFC Bank
towards the loan availed by the deceased husband of the petitioner, and
with respect to the second policy for Rs. 1.43 crores, the insurer took a
stand that no value policy was issued.
8.1. It is also argued that the stand of the insurer is against the
Insurance Regulatory and Development Authority of India
(Protection of Policyholders' Interests) Regulations, 2017 (hereinafter
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referred to as IRDAI Regulations, 2017), which are framed in exercise of the
powers conferred by clause (zc) of sub-section (2) of section 114A of the
Insurance Act, 1938 read with clause (b) of sub-section (2) of section 14
and section 26 of the Insurance Regulatory and Development Authority
Act, 1999, where a proposal is to be processed and to be communicated to
the proposer within a reasonable period, but not exceeding 15 days from
the date of receipt of the proposal and where the proposal refund is to be
made, the same is to be done within 15 days of the decision of the
proposal. The alleged request for medical examination was allegedly made
on 09.02.2018, after 2 and a half months of the acceptance of the initial
premium. The objection by the insurer comes only after the death of the
husband of the respondent, and, after taking all the relevant facts on the
record into account, including the legal issues raised by the insurer, the
Insurance Ombudsman had rightly rejected the claim of the insurer. The
learned counsel for the respondent relied on the following judgments:
Kerala Solvent Extractions Ltd. v. Unnikrishnan [1993 (2) KLT 208], SBI Life
Insurance Co. Ltd. v. Asha Latha Parida and Anr (2010 3 CPJ (NC) 228),
Srinivas D., v. SBI Life Insurance Co. Ltd. and Others [2018 KHC 6117] and
Mrs.Bhumikaben N.Modi and Ors. v. Life Insurance Corporation of India
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[Civil Appeal No.270 of 2012], Gokal Chand (D) Thr. Lrs. v. Axix Bank Ltd. &
Anr. (2022 SCC Online 1720).
9. Heard the learned counsel appearing on both sides and
perused the records.
10. At the outset, a few undisputed facts are to be noticed. It is
not disputed that the complainant's husband had availed a housing loan
for Rs. 1.73 crore from the HDFC Bank Limited and that to secu re the
loan from any unfortunate/unforeseen circumstances, he had opted for
two life insurance policies of HDFC Life Insurance. One for a sum assured
of Rs. 30,00,000/- and the second one for Rs.1.40 crore/-. It is also
undisputed that the premiums for these two policies were funded with
another loan for Rs. 2,07,931/-. The loan repayment through the EMIs
continued to be paid to the HDFC Bank Ltd since November 2018. It is also
not disputed that HDFC Bank Ltd transferred the entire premium,
amounting to Rs.2,07,931/-, to HDFC Life Insurance Company Ltd., out of
which Rs.1,50,000/- was converted as premium for policy No. 20910176 for
sum assured of Rs. 30,00,000/-. The balance amount of Rs. 57,931/- meant
for the second policy for a sum assured of Rs. 1.40 crores was kept with
the petitioner insurer, and the policy was not issued allegedly for want of
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medical requirements, and as the life assured did not respond to the
alleged demands for these tests. Upon the death of the life assured, the
insurer settled the death benefit of Rs.30,00,000/- for Policy No. 20910176
on 28.05.2021 and informed that they would refund the premium
collected for the second policy since the policy process had not been
completed.
11. It is relevant to note that the contention of the insurer that
multiple reminders were sent to the life assured for a mandatory health
check-up was stoutly denied by the insurer. There was no intimation
whatsoever of the rejection of the policy till the death of the life assured.
The premium collected was also not returned till the death of the life
assured. It is curious to note that even in the present writ petition, in
Ground No.9, the case of the insurer is that they could not decide as to
whether to accept or decline the proposal, only after obtaining the
mandatory medical examination report, which was not submitted by the
life assured. Thus, it is clear that the insurer does not have a case whether
they have accepted or rejected, even while filing this writ petition. The
Insurance company contends that mere acceptance of the part of the
premium is not execution of the policy. Since there is no concluded
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contract, no valid policy has come into existence.
12. In the context of the rival contentions, it is relevant to note
the Rules and regulations in the IRDAI Regulations, 2017.
"8. PROPOSAL FOR INSURANCE
1. Except in case of a marine insurance cover, or such other covers
approved by the Authority exempting usage of proposal form, a
proposal for grant of insurance cover, either for life insurance business
or for general insurance business or for health insurance business, must
be evidenced by a document in written or electronic or any other format
as approved by the Authority. It is the duty of the insurer to furnish to
the insured, free of charge, within 30 days of the acceptance of a
proposal, a copy of the proposal submitted by the Insured.
2. In case of marine insurance cover or other insurance covers where a
proposal form is not used, the insurer shall record the information
obtained orally or in writing or electronically, and confirm it within a
period of 15 days thereof with the prospect and incorporate the
information in its cover note or policy. Where the insurer claims that
the prospect suppressed any material information or provided
misleading or false information on any matter material to the grant of a
cover, then the onus of proof rests with the insurer only in respect of
any information not so recorded.
3. Any proposal form seeking information for grant of life cover shall
prominently state therein the requirements of Section 45 of the Act.
4. While answering the questions in the proposal form for obtaining life
insurance cover, the prospect is to be guided by the provisions of Section
45 of the Act.
5. Wherever the benefit of nomination is available to the proposer, in
terms of the Act or the conditions of policy, the insurer or the
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distribution channel shall draw the attention of the proposer to it and
encourage the proposer to avail the facility and inform him of the
provisions of section 39 of the Act.
6. Insurer shall process the proposals with speed and efficiency and the
decision on the proposal thereof, shall be communicated in writing to
the proposer within a reasonable period but not exceeding 15 days from
the date of receipt of proposals or any requirements called for by the
insurer.
7. Where a proposal deposit is refundable in a prospect under any
circumstances, the same shall be refunded within 15 days from the date
of the underwriting decision on the proposal.
14. CLAIMS PROCEDURE IN RESPECT OF A LIFE
INSURANCE POLICY
1. A life insurer, upon receiving a death claim, shall process the claim
without delay. Any queries or requirement of additional documents,
shall be raised all together and not in a piece-meal manner. within a
period of 15 days of the receipt of the claim.
2(i) A death claim under a life insurance policy shall be paid or be
rejected or repudiated giving all the relevant reasons, within 30 days
from the date of receipt of all relevant papers and required
clarifications. However, where the circumstances of a claim warrant an
investigation in the opinion of the insurer, it shall initiate the same at
the earliest and complete such investigation expeditiously, in any case
not later than 90 days from the date of receipt of claim intimation and
the claim shall be settled within 30 days thereafter.
(ii) If there is delay on the part of Insurer beyond the timelines
mentioned in sub regulation (i) above, the insurer shall pay interest at a
rate, which is 2% above bank rate from the date of receipt of last
necessary document.
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(iii) Except in the case of claims where an application is made under
section 47 of the Act to the court, if a claim is ready for payment but the
payment cannot be made due to any reasons of proper identification of
the payee, the life insurer shall pay interest on the claim amount at the
bank rate from the date on which claim is ready for payment.
(iv) In respect of Maturity, Survival Benefit claims and Annuities, the
Life Insurer shall initiate the claim process by sending intimation
sufficiently in advance or send post-dated cheque or give direct credit to
the bank account of claimant through any electronic mode approved by
RBI, so as to pay the claim on or before the due date. In case of any delay
on the part of the Insurer in settling the claim on due date, the life
insurer shall pay interest at a rate, which is 2% above bank rate from
the due date of payment or date of receipt of last necessary document
from the insured/claimant, whichever is later.
(v) In respect of free look cancellation, surrender, withdrawal, request
for refund of proposal deposit, refund of outstanding proposal deposit if
any, shall be processed and paid within 15 days of receipt of request or
last necessary document, failing which the insurer shall pay penal
interest at a rate, which is 2% above bank rate from the date of request
or receipt of last necessary document if any whichever is later, from the
insured/claimant.
Explanation: Administration of Health Insurance Policies issued by Life
Insurers shall also be governed by Chapter IV of IRDAI (Health
Insurance) Regulations, 2016.
(vi) The interest payments referred above in sub regulations (ii), (iii),
(iv), (v) shall be paid by the Life Insurer suo moto without waiting for
specific demand from the insured/claimant."
13. The short question that arises is whether the insurer can,
after the death of the proposer, set up a plea of non-acceptance of the
proposal when such non-acceptance was never communicated during the
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proposer's lifetime. A reading of Regulation 8 clearly indicates a timeline
for the issuance of a policy, and also provides that the proposal shall be
processed by the insurer with speed and efficiency, and all decisions
thereon shall be communicated in writing within a reasonable period not
exceeding 15 days from the receipt of the proposal. The timelines
prescribed under the IRDAI Regulations, 2017, are mandatory and are
designed to ensure that the proposer, while alive, is made aware of the
insurer's decision and thereby afforded the opportunity to exercise his
options. The very object of regulations would be frustrated if an insurer
were permitted to remain silent during the proposer's lifetime and later
defeat the claim by raising a contention of non-acceptance. Such a course
cannot be countenanced. Accordingly, the failure to communicate non-
acceptance within the stipulated period fastens liability on the insurer,
and the plea of non-acceptance raised only after the death of the proposer
is unsustainable in law. If the insurer does not do that and retains the
premium till the death of the sum assured, they must be estopped from
contending that the policy had not come into existence or that the
proposal was rejected.
14. The purpose of prescribing such a time frame is to guarantee
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transparency and bona fide conduct on the part of the insurers, and to
protect the proposal from the prejudice that would inevitably follow from
a belated disclosure. This duty assumes greater significance in the context
of housing loan insurance, where the very object of the policy is to secure
the loan and protect the family of the borrower from being saddled with
liability in the event of his untimely death. To permit an insurer to
withhold communication during the proposer's lifetime and thereafter
defeat the claim by raising a plea of non-acceptance after his death would
be wholly destructive of the object of the insurance and the regulatory
mandate. The insurer, having failed to act within the mandatory timeline
and to discharge its duty of bona fide communication, must be held liable.
The IRDAI Regulations, 2017 stipulate that where the proposal deposit is
refundable in any circumstance, the refund shall be made within 15 days
from the date of the underwriting decision on the proposal. These
stipulations are not directory but mandatory, for they are intended to
protect the proposer against uncertainty and to compel the insurer to act
with diligence, fairness, and bona fides. The entire regulatory framework
rests on the principle that the proposer is entitled to know, within the
fixed timeline, whether his proposal has been accepted or rejected, so
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that he may exercise his rights and options accordingly. Non-
communication within the period prescribed is not a mere irregularity,
but a violation of statutory duty, and an insurer cannot be permitted to
take advantage of its own omission by raising a plea of non-acceptance at
a later stage.
15. The decision on the proposal must, therefore, be taken and
communicated within the prescribed period, and any deviation therefrom
would render the insurer liable for the consequences. The retention of the
premium for more than two years without communication or refund is
therefore a patent violation of these mandatory time limits, apart from
being contrary to the principle of utmost good faith that governs
contracts of insurance.
16. On the undisputed facts obtaining in the present case, as
distinct from the cases relied on by the insurer, there was no intimation
regarding the proposal submitted by the complainant as well, and such
intimation regarding the non-acceptance of the proposal was given only
after the death of the insured. In short, an intimation as well as the
refund of the premium amount was made almost 2 and a half years after
the date of the proposal, that too after the death of the insured and after a
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claim was raised by the wife of the deceased. There is nothing on record
to show that the husband of the respondent did not comply with any
request made by the insurer. Regulation 14 further provides that a death
claim must be settled or repudiated within thirty days from the date of
receipt of all relevant documents, failing which interest at two per cent
above the bank rate shall be payable.
17. The Supreme Court of India in the Judgment reported in
Srinivas D. (supra) held as follows:-
"10. It is clear from the above that the proposer was willing to join the
life insurance coverage from the respondent insurance company subject
to his undertaking medical examination and for his willingness he
authorized the bank to debit his account for payment of the premium.
This clearly implies that medical examination was to take place prior to
the premium being debited from the bank account of the proposer. The
specific condition in the policy is that in case the loan amount exceeds
Rs.7.5 lacs the medical examination was compulsory. If the medical
examination was compulsory for such cases it should have been done
along with filing of the proposal form before the payment of the
premium. If the proposal was not accepted for any reason the premium
would have been credited to the account of the proposer. The premium
has been refunded after 23.2.2011. From this, it is clear that the
insurance company had not rejected the proposal before 23.2.2011.
11. Our attention has been drawn to the case of LIC v. Raja Vasireddy
Komalavalli Kamba and Ors., (1984) 2 SCC 719, wherein this Court has
clearly stated that the acceptance of an insurance contract may not be
completed by mere retention of the premium or preparation of the policy
document rather the acceptance must be signified by some act or acts
agreed on by the parties or from which the law raises a presumption of
acceptance.
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12. Although we do not have any quarrel with the proposition laid
therein, it should be noted that aforesaid judgments only laid down a
flexible formula for the court to see as to whether there was clear
indication of acceptance of the insurance. It is to be noted that the
impugned majority order merely cites the aforesaid judgment, without
appreciating the circumstances which give rise to a very clear
presumption of acceptance of the policy by the insurer in this case at
hand. The insurance contract being a contract of utmost good faith, is a
two-way door. The standards of conduct as expected under the utmost
good faith obligation should be met by either party to
such contract.
13. From the aforesaid clause it may be seen that the condition
precedent for acceptance of the premium was the medical examination.
It would be logical for an underwriter to accept the premium based on
the medical examination and not otherwise. Therefore, by the very fact
that they accepted the premium waived the condition precedent of
medical examination.
14. It is an admitted fact that the premium was paid on 29.09.2008. That
it was only in 18.01.2011 that the respondent insurance company
informed the appellant that the policy was not accepted by them. We are
unable to fathom the reason for such excessive delay in informing the
appellant, which cannot be excused. We are of the opinion that the
rejection of the policy must be made in a reasonable time so as to be fair
and in consonance with the good faith standards. In this case, we cannot
hold that such enormous delay was reasonable. Moreover, it is borne
from the records that the premium was only re-paid on 24.02.2011, after
a delay of more than one year five months. If we consider above aspects,
it can be reasonably concluded that the insurer is only trying to get out
of the bargain, which they had willfully accepted. From the aforesaid
circumstances we can easily conclude that the policy was accepted by
the insurer.
15. In the circumstances, there is no reason to believe that there was no
complete contract. There is clear presumption of the acceptance of the
proposal in favour of the proposer. Therefore, the majority view of the
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Commission would not sustain."
18. In the said decision, the Hon'ble Supreme Court distinguished
the earlier ruling in Raja Vasireddy Komalavalli Kamba (supra), observing
that the said judgment laid down only a flexible formula to determine
whether there was a clear indication of acceptance, and that the insurer's
conduct and surrounding circumstances are decisive. It was held that
where the premium was accepted and retained without communication of
rejection, there arises a presumption of acceptance of the proposal. The
Court further held that rejection of the proposal after an unreasonable
delay violates the standard of good faith expected under the contract.
19. The principle laid down in Srinivas D. (supra) was
subsequently reiterated by the Hon'ble Supreme Court in Gokal Chand (D)
through LRs v. Axis Bank Ltd. (AIR 2023 SC 177) and Mrs. Bhumikaben N.
Modi v. LIC of India (Civil Appeal No.270 of 2012, judgment dated
08.05.2024), holding that the earlier decision in Raja Vasireddy (supra)
cannot be mechanically applied. The Court held that acceptance of the
premium itself amounts to a waiver of preconditions such as medical
examination and creates a presumption of a concluded contract, and that
refund of the premium only after the death of the insured reveals mala
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fides and amounts to a deficiency of service.
20. The view taken in Srinivas D. (supra) has also been followed
by various High Courts. In Rajeswari v. Shriram Life Insurance Co. Ltd.
(MANU/TN/7343/2023), the Madras High Court, relying on Srinivas D.
(supra) held that the finance company's act of recovering the loan while
denying the insurance benefit amounted to harassment and violation of
good faith. In Tata AIG General Insurance Co. Ltd. v. Vinay Sah
(MANU/MH/5475/2025), the Bombay High Court observed that where
the insurance policy is bundled with a home loan, the insurer is bound to
honour the claim and not take technical pleas to defeat it. Similarly, in
Jeyalakshmi v. RBI (MANU/TN/7077/2023), it was held that if the insurer
fails to reject a proposal within a reasonable time after receiving the
premium, a presumption of acceptance arises, and retaining the premium
constitutes waiver of any conditions, such as medical examination. All
these decisions have applied the ratio of Srinivas D. (supra) and Gokal
Chand (supra) to similar factual situations, particularly in cases of
insurance policies taken along with housing loans.
21. In view of the above, the contention of the insurance
company based on the decision in Raja Vasireddy Komalavalli Kamba
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(supra) and Prasanna Devaraj (supra) that on a mere receipt of the
insurance premium, without actual communication of acceptance
by giving an insurance policy certificate, the contract is not
concluded, cannot be accepted in the facts and circumstances of this
case.
22. It may also be noted that the factual situation in the present
case is identical to those considered in the aforesaid line of decisions,
since the life insurance policy was a precondition for the housing loan,
and the premium was collected and retained by the insurer through the
bank. Thus, on the facts of the case and going by the IRDAI Regulations,
2017, there is a clear indication of acceptance of the insurance proposal,
and the subsequent refund of premium only after the death of the insured
reinforces this inference.
23. Moreover, it is submitted by the counsel for the petitioner
that the Insurance Company did not require the fulfilment of any medical
examination with respect to policy No.20910176, and both the policies
were proposed on the same date, and the premium was also accepted by
the Insurance Company on the same date. The policies to which the
deceased subscribed were not Health Insurance policies, and the death of
2025:KER:80535
the assured was due to COVID and not due to any other ailments.
24. No illegality can be found with the direction of the Insurance
Ombudsman. Even otherwise, the IRDAI Regulations, 2017, changed the
entire landscape of insurance-related activities, and none of the
judgments considered the impact of the mandatory IRDAI guidelines and
thus, those precedents cannot be made applicable to the facts of this case,
which is squarely covered by the principles in Srinivas D. (supra).
25. The very policy was taken to secure the loan in the
event of unforeseen circumstances. The insured, having taken the
risk of violating the regulations and not intimating about the
acceptability of rejection of the proposal within the time granted
to him, cannot be heard to say that the insured did not honour the
conditions of the policy.
26. It is trite that interference in cases that would result
in any illegality or injustice has to be avoided. It is profitable to
refer to the decision in A.M. Allison v. B.L. Sen, (AIR 1957 SC 227),
the Hon'ble Supreme Court which held as follows:
"Proceedings by way of certiorari under Art.226 are 'not of course'. The
High Court has the power to refuse the writ if it is satisfied that there
was no failure of justice, and in appeals which are directed against the
orders of the High Court in applications under Art 226 the Supreme
2025:KER:80535
Court can refuse to interfere unless it is satisfied that the justice of the
case requires it. But where it is not so satisfied, it will not interfere.
In Sanaram Singh v. Election Tribunal, Kotah, AIR 1955 SC 425, it was
observed by the Supreme Court:
"That, however, is not to say that the jurisdiction will be exercised
whenever there is an error of law..... Their powers are purely
discretionary and though no limits can be placed upon that discretion
it must be exercised along recognised lines and not arbitrarily, and one
of the limitations imposed by the Courts on themselves is that they will
not exercise jurisdiction in this class of case unless substantial injustice
has ensued, or is likely to ensue. They will not allow themselves to be
turned into Courts of appeal or revision to set right mere errors of law
which do not occasion injustice in a broad and general sense, for
though no legislature can impose limitation on these Constitutional
powers it is a sound exercise of discretion to bear in mind the policy of
the legislature to have disputes about these special rights decided as
speedily as may be. Therefore, writ petitions should not be lightly
entertained in this class of case."
For the foregoing reasons, the order of the Insurance Ombudsman is
perfectly legal and calls for no interference from this Court in a judicial review.
There is no merit in the writ petition, and the same will stand dismissed, with a
direction to the petitioner to comply with Ext. P1 order of the Ombudsman
dated 07.11.2024, forthwith, in view of proceeding under the SARFAESI Act
initiated by the HDFC Bank Limited against the respondent herein.
MOHAMMED NIAS C.P.
JUDGE
okb/
2025:KER:80535
APPENDIX OF WP(C) 42110/2024
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE AWARD DATED 07.11.2024 IN
KOC-L-019-2425-0233 BEFORE THE INSURANCE
OMBUDSMAN, ERNAKULAM
Exhibit P2 TRUE COPY OF THE PROPOSAL FORM ALONG WITH
CUSTOMER CONSENT DATED 01.12.2018 SUBMITTED
BY MADHU MENON
Exhibit P3 TRUE COPY OF LETTER DATED 09.02.2019 SENT BY
THE PETITIONER TO MADHU MENON
RESPONDENT EXHIBITS
EXHIBIT R1(A) A TRUE COPY OF THE COUNTER AFFIDAVIT DATED
05.03.2022 FILED BY THE RESPONDENTS 2 AND 3
IN W.P.(C)NO.29499 OF 2021
EXHIBIT R1(B) A TRUE COPY OF THE AWARD OF THE INSURANCE
OMBUDSMAN DATED 16.09.2021 IN COMPLAINT
NO.KOC-L-019-2122-0128
EXHIBIT R1(E) A TRUE COPY OF THE JUDGMENT DATED 05.09.2024
IN W.A.NO.2121 OF 2023
EXHIBIT R1(H) A TRUE COPY OF THE ORDER ON 17.11.2023 IN
W.P.(C)NO.38135 OF 2023 OF THIS COURT
EXHIBIT R1(C) A TRUE COPY OF THE JUDGMENT DATED 25.07.2023
IN WP(C) 29499/2021OF THE HIGH COURT OF
KERALA
EXHIBIT R1(G) A TRUE COPY OF THE NOTICE DATED 30.10.2023
ISSUED UNDER SECTION 13(2) OF THE SARFAESI
ACT
EXHIBIT R1(D) A TRUE COPY OF THE ORDER OF THIS COURT DATED
14.03.2024 IN W.A.NO.2121 OF 2023
EXHIBIT R1(F) A TRUE COPY OF THE NOTICE DATED 10.10.2023
