FIRST APPEAL No. 679 of 1993 Against the Judgment and Decree dated 08.07.1993 passed by Sri Chandra Deo Jha ‘Vikal’, Sub Judge-Ist, Munger in Money Suit No.6 of 1989. ------- LIFE INSURANCE CORPN.OF INDIA ------------Defendant-Appellant Versus GOPAL PRASAD VERMA ------------Plaintiff-Respondent For the Appellant : Sri Umesh Prasad Singh, Sr. Advocate Sri Rajeev Ranjan Prasad, Advocate Sri Amod Kumar, Advocate For the respondent : Sri Ashok Kumar Jha, Advocate Sri Dhirendra Nath Jha, Advocate Dated 28th day of July, 2010. P R E S E N T HON'BLE MR. JUSTICE MUNGESHWAR SAHOO ------------- J U D G M E N T Mungeshwar Sahoo, J. (1) The defendant-Life Insurance Corporation of India has filed this First Appeal against the Judge and Decree dated 8th July, 1993 passed by the learned Sub Judgement, Ist Court Munger in Money Suit No.6 of 1989 decreeing the plaintiff-respondent suit for realization of Rs.78,000/- with interest at the rate of 12 per cent per annum from 17.03.1989. (2) The plaintiff-respondent, Gopal Prasad Verma filed the aforesaid suit praying for the aforesaid relief on the facts which may be stated briefly that his wife, Smt. Shakuntala Devi was educated woman and was earning a lot from tuition and tailoring. She was insured in L.I.C. from before. Subsequently with a view to obtain double accident benefit submitted a fresh proposal for insurance of her life for Rs.75,000/- on 2 30.03.1987 under table No.75.20 in the Branch office of L.I.C. at Munger through agent B.P. Fitkiriwala. She deposited on 30.03.1987 itself first yearly premium of RS.5,460/- which was accepted by Branch Manager who was the competent authority to accept the proposal. According to the plaintiff if the proposal were not for double accident benefit and extended permanent disability benefit then according to table of rates the yearly premium would have been Rs.5,385/- only. However, unfortunately, Smt. Shakuntala Devi died on 05.12.1987. Because of negligence on the part of the Life Insurance Corporation and its officers neither the policy bond nor the first premium receipt was granted and communicated to her in her life time. (3) The further case is that after the death of Smt. Shakuntala Devi, the plaintiff filed claim before the Branch office at Munger, but he was paid only Rs.75,000/- and the L.I.C. denied the payment of double accident benefit which is further Rs.75,000/- and a letter dated 16.06.1989 was communicated to him informing him that under the Rules then prevalent the life assured could not be for double accident benefit, so the amount of Rs.75/- was kept in deposit for refund. The policy was issued without double accident benefit. It is further pleaded that the said policy was issued after death of Smt. Shakuntala Devi and during her life time she was never informed that double accident benefit was not allowed to her. It is said that there was no such rule which prohibited acceptance of double accident benefit to educated woman with huge income. The defendants have accepted the first premium but not communicated to Smt. Shakuntala Devi during her life time so they are estopped by the rule of estopple to repudiate the liability to pay compensation for double 3 accident benefit. (4) On being noticed, the defendants-appellants appeared and field a contesting written statement. The main defence is that the deposit of Rs.5,460/- was without any instruction from the office, so, it cannot be called to be the yearly premium. The premium is determined only after the acceptance of the proposal and issuance of premium receipt. Since the deposit was made before acceptance of proposal, it cannot be termed as premium rather it is merely a deposit only. In paragraph 11 of the written statement, the appellants admitted to have granted the first premium receipt of Rs.5,385/- only on 31.03.1987. However, it is said that the policy bond was prepared and issued on 21.03.1988 because normally, it takes time for preparation. It is further alleged that the policy was accepted without double accident benefit and, therefore, claim for double accident benefit was not entertained. Out of the deposit of Rs.5,460/-, the amount of Rs.5,385/- was adjusted towards the first premium leaving in deposit a sum of Rs.75/- for subsequent refund to the proposer. The first premium receipt dated 31.03.1987 was issued much before the date of death of the life assured. All allegations were denied. (5) On the basis of the above pleadings, the learned Court below framed 6 issues. It is not necessary to go into great detail regarding other issues except issue No.5 which is whether the plaintiff is entitled to realize Rs.78,000/- principal with interest pendene lite and future from the defendant. (6) The learned Court below while deciding this issue came to the conclusion that Smt. Shakuntala Devi was an educated lady and she had her person source of income and she was paying income-tax since 1985- 4 86 and her proposal for insurance of her life for Rs.75,000/- with double accident benefit was accepted by the authority concerned on 31.03.1987 and till her life, it was never communicated to her that her proposal for life insurance with double accident benefit was not accepted. Rs.75/- was not returned to her in her life time and first premium receipt as well as policy bond were also not issued to her during her life time and, therefore, ultimately, decreed the plaintiff suit. (7) The learned senior counsel, Sri Umesh Prasad Singh appearing for the appellant submitted that Exhibit ‘E’, the Insurance policy shows that the proposal for double accident benefit was not accepted and, therefore, the claim for double accident benefit was not entertained. The plaintiffs surrendered the original insurance policy, Exhibit ‘E’ with the Corporation at the time of claim and on the basis of the said policy, the claim has been settled and the plaintiff received the entire claim under the said policy amounting to Rs.75,000/- with full and final satisfaction. According to the learned counsel, the plaintiff admitted that the acceptance of double accident benefit was never communicated to the deceased, Smt. Shakuntala Devi during her life time and, therefore, there was no concluded contract regarding the double accident benefit. But the learned Court below without considering the legal position has held that the Life Insurance Corporation accepted the proposal for double accident benefit but did not communicated to the deceased. According to the learned counsel when there was no communication, there was no concluded contract and, therefore, the learned Court below has wrongly decreed the plaintiff suit. The learned counsel further submitted that to prove the case, the defendants-appellants produced many documents 5 which have been marked Exhibit in the case but the learned Court below without discussing the effect of those documents has enlisted only and, therefore, the Judgment suffers for non-consideration of important documents. (8) The learned counsel further submitted that it was the duty of the Court to interpret the words in which the contract is expressed by the parties because it is not for the Court to make a new contract, if the parties have not made it themselves. The learned counsel submitted that in the present case, there was no concluded contract between the parties regarding giving of double accident benefit, but the learned Court below relying on Exhibit ‘5’, the review slip created a contract between the parties. (9) The learned counsel further submitted that if the plaintiff’s case as pleaded in the plaint as a whole is taken to be true then also there was no contract between the parties regarding even for single accident benefit because it is specifically pleaded by the plaintiff that during her life time, the Life Insurance Corporation never communicated the insurance policy or the first premium receipt. If this is believed then there was no contract at all between the parties and even the plaintiff was not entitled for the claim of Rs.75,000/- which has already been paid by the L.I.C. The learned counsel further submitted that there was no pleading in the plaint regarding Exhibit ‘5’ nor Exhibit ‘5’ was filed along with the plaint, therefore, the same could not have been relied upon by the learned Court below. On these grounds, the learned counsel submitted that the impugned Judgment and Decree are liable to be set aside. (10) On the other hand, the learned counsel appearing for the 6 respondent-plaintiff submitted that Exhibit ‘5’ is review slip which clearly indicate that the proposal for double accident benefit was accepted but the same was never communicated to the deceased during her life time. During trial, the plaintiff produced the said document which is a photocopy of review slip and the defendant was directed to produce the original of Exhibit ‘5’ but it was not produced so the Court marked the photocopy as Exhibit ‘5’ and relying upon Exhibit ‘5’ has rightly decreed the plaintiff suit. The learned counsel fully supported the impugned Judgment and submitted that there is no illegality, as such cannot be interfered with. (11) In view of the above rival contentions of the parties, the points arises for consideration in this Appeal is as to whether there was concluded contract between the parties, L.I.C. on the one hand and the deceased Smt. Shakuntala Devi on the other hand regarding double accident benefit and whether the learned Court below has rightly decreed the plaintiff suit. F I N D I N G S (12) For better appreciation, the pleading of the parties may be briefly summarised here that the deceased Smt. Shakuntala Devi submitted afresh proposal with a view to obtain double accident benefit for Rs.75,000/- on 30.03.1987 and deposited Rs.5,460/- According to the pleading in the plaint, the L.I.C. neither granted first premium receipt nor communicated the insurance policy during the life time of Smt. Shakuntala Devi. According to the L.I.C., first premium receipt of Rs.5,385/- dated 30.03.1987 was communicated to Smt. Shakuntala Devi and the Insurance policy was subsequently communicated on 21.03.1988. Now, therefore, according to the plaintiff case, there was only proposal for 7 insurance policy for double accident benefit but there was even no communication regarding single accident benefit. However, according to the L.I.C., first premium receipt of Rs.5,385/- was communicated and after her death, the policy was communicated regarding single accident claim, the said policy has been proved as Exhibit ‘E’. In such circumstances when the Life Insurance Corporation has admitted the case of issuance of first premium receipt regarding single accident claim amounting to Rs.5,385/- in my opinion, there was concluded contract between the parties regarding the single accident claim. So far the double accident claim is concerned, it is the case of the plaintiff that it was never communicated. The case of the defendant is also that it was never accepted. Exhibit ‘E’ clearly shows that it was for single accident claim. This policy was effective from 14.03.1987. On the basis of this Exhibit ‘E’, claim was settled and the plaintiff was paid Rs.79,350/- on 17.03.1989 as would be evidence from Exhibit ‘D’ which is discharge voucher and the policy has been issued on 21.03.1988. (13) So far double accident benefit is concerned, it appears that the learned Court below has relied upon Exhibit ‘5’ which is a photo copy of review slip. Admittedly, the said review slip was never communicated. It is a public document that too only for official communication inter see. Review slip is only a proposal which is generally sent to the Branch Manager for final acceptance and if it is accepted by the Branch Manager then only the initial insurance policy is issued to the proposers. In the present case, the review slip which was the proposal sent to the Branch Manager was not accepted and only single accident benefit policy was issued. 8 (14) This Exhibit ‘E’ is a concluded contract between the parties and the terms and conditions cannot be added or subtracted by adducing oral evidence. So far Exhibit ‘5’ is concerned, it is specific case of the plaintiff that it was never communicated. (15) In a decision reported in A.I.R. 1966 (S.C.) 1644 (General Assurance Society Ltd. Vs. Chandmul Jain), the Hon’ble Supreme Court has held that in interpreting documents relating to a contract of insurance, duty of the Court is to interpret the words in which the contract is expressed by the parties because it is not for the Court to make anew contract, however, reasonable, if the parties have not made it themselves. Contract is formed when there is unqualified acceptance of the proposals which may be expressed in wiring or it may even be implied. In the present case at our hand, the only case of the plaintiff is that she deposited Rs.5,460/- on 30.03.1987, she died on 05.12.1987 i.e., after 8 months but during this period she never took any step to obtain the first premium receipt of Rs.5,460/- nor she ever took any step to obtain the insurance policy. (16) In A.I.R. 1984 (S.C.) 1014 (Life Insurance Corporation of India Vs. Raja Vasiriddi Komavalli Kamba), the Hon’ble Supreme Court has held that the mere receipt and retention on premium until after the death of the applicant or the mere preparation of the policy document is not acceptance. Though, in certain human relationship, silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. It appears that in the aforesaid decision, the deceased has filed a proposal 9 for insurance for Rs.50,000/- on 27.12.1960. He had issued two cheques for Rs.300/- and Rs.220/- as first premium. Cheque for Rs.300/- was encashed on 29.12.1960. Cheque for Rs.220/- was finally encashed on 11th January, 1961. However, the proposer late Raja died on 12.01.1961. The widow made claim of Rs.50,000/- with the insurance company. The Insurance company denied liability. On 10.01.1964, suit was filed. In the said suit, the L.I.C. also produced Exhibit B-4, the review slip prepared by the Branch office, Guntur and sent to the Divisional Officer who was competent authority for accepting the proposal. The learned Subordinate Judge held that there was no concluded contract. The learned trial Court was of the opinion that encashing of the cheques and the want of any further action to be done by the deceased does not themselves create a contract of insurance between the deceased and the corporation. The proposal must be accepted by the Divisional Manager and that alone could give rise to a valid contract of insurance which never happened in the case. The trial Court also held that the payment of premium could never amount the acceptance of the proposal if the proposal was not otherwise accepted and, therefore, in the result plaintiff suit was dismissed. On appeal, the Hon’ble High Court relied on the alleged adjustment and endorsement on the review slip recommending that the proposal may be accepted made on the relevant file by the Asstt. Divisional Manager and relying upon other documents came to the conclusion that there was a valid contract and, therefore, decreed the plaintiff suit. The Hon’ble Supreme Court at paragraph 13 held that the mere receipt and retention until after the death of the applicant or the mere preparation of the policy document is not acceptance. Acceptance must be signified by some act or 10 acts agreed on by the parties or from which the law raises a presumption of acceptance. At paragraph 14 and 16, the Hon’ble Supreme Court held as follows : “14. Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance, as prima facie, acceptance must be communicated to the offeror. The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it uncondititonally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed. See in this connection statement of law in MacGillivrary & Parkington on Insurance Law, Seventh Edition page 94 paragraph 215. 16. Having regard to the clear position in law about acceptance of insurance proposal and the evidence on record in this case, we are, therefore, of the opinion that the High Court was in error in coming to the conclusion that there was a concluded contract of insurance between the deceased and the Life Insurance Corporation and on that basis reversing the judgment and the decision of the learned Subordinate Judge.” (17) The other facts which were relied upon by the learned Court below in the present case are that Smt. Shakuntala Devi was educated lady and was paying income tax and there was no prohibition for acceptance of her proposal for double accident benefit is concerned, in my opinion on that ground a contract which was not entered upon cannot be imposed by the Court. It further appears that the learned Court below gave much emphasis only on Exhibit ‘5’ which was only a review slip and on the basis of that it cannot be said that there was concluded contract between the parties regarding double accident benefit. (18) In view of my above discussion, it appears that this claim of 11 the plaintiff-respondent is fully covered by the decision of the Hon’ble Supreme Court reported in 1984 Supreme Court 1014. In that case also, initial deposit was made but no communication was made to the deceased prior to his death. In the present case also initial deposit was only made but no communication regarding acceptance of her proposal was made by the L.I.C. The learned Court below has not considered the well settled principal of law as laid down by the Hon’ble Supreme Court referred to above regarding Insurance contract and merely on the basis of Exhibit ‘5’ and other oral evidences came to the conclusion that there was concluded contract between the parties and decreed the suit. In my opinion, therefore, the impugned Judgment and Decree are unsustainable in the eye of law. I find that there was no concluded contract between the parties regarding double accident benefit. The plaintiff by Exhibit ‘D’ accepted the benefit payable according to the contract Exhibit ‘E’ and subsequently this suit has been field claiming compensation under double accident benefit which cannot be termed as bona fide action of the plaintiff. Although, the plaintiff in his evidence has admitted that he obtained the photocopy of Exhibit ‘5’ before 16.06.1989 but then there was no pleading regarding the said Exhibit ‘5’, i.e., review slip, although, the plaint was filed on 11th July, 1989. The said Exhibit ‘5’, i.e., photocopy of review slip was even not annexed with the plaint. Therefore, there was no pleading in the plaint regarding Exhibit ‘5’. In such circumstances, the plaintiff could not have adduced evidence. (19) In view of my above discussion, I find that there was no concluded contract between the parties regarding double accident claim. The finding of the learned trial Court on this point is, therefore, reversed. 12 (20) In the result, this Appeal is allowed. The impugned Judgment and Decree are set aside and the plaintiff suit is dismissed with cost of Rs.10,000/- to be paid by the plaintiff to the L.I.C. (21) It appears that as directed by this Court on 04.05.1994, the appellant has deposited the amount in the Executing Court in Execution Case No.18 of 1993. If it has not been withdrawn by the plaintiff- respondent, the said amount may be returned to the appellant-Life Insurance Corporation of India. If the said amount has been withdrawn by furnishing bank guarantee as directed by this Court, the appellant may recover the amount. Patna High Court, Patna Dated 28 th , July, 2010 AFR/ Sanjeev (Mungeshwar Sahoo, J.)