LIFE INSURANCE CORPORATION OF INDIA AND ANR. versus SHRL DHARAM VIR ANAND

Citation: [1998] SUPP. 2 S.C.R. 295 · Decided: 09-10-1998 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Disposed off

Judgment (excerpt)

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LIFE INSURANCE CORPORATION OF INDIA AND ANR. 
A 
v. 
SHRl DHARAM VIR ANAND 
OCTOBER 9, 1998 
[M.M. PUNCHHI, CJ., G.B. PATTANAIK AND A.P. MISRA, JJ.] 
B 
Life insurance-Policy-Exoneration clause-Limited liability of insurer 
in case of suicide at any time on or after the date on which the risk under 
the policy has commenced but before the expiry of three years from the date 
of policy-Option given to insured to date back the policy-Insured opted C 
for dating back the policy and paying premium for the entire period-
Suicide committed by assured within three years of the date of Issue of 
policy-Exoneration clause held applicable-Assured held entitled only to 
limited claim under the clause and not to entire insurance sum-Held date 
of policy was date on which policy was issued and not the date on which D 
risk had commenced by allowing back dating. 
Insurance policy-Words and terms used in-Construction of-
Expression "the date on which risk under the policy has commenced" and 
"the date of policy"-Distinction between. 
Clause 4-B of the Policy of Life Insurance taken by respondent on the E 
life of his minor daughter provided that in the event of death of life assured 
occurring as a result of suicide at any time on or after the date on which 
the risk under the policy has commenced but before the expiry of three years 
from the date of policy, the Corporation's liability shall be limited to the sum 
• 
equal to the total amount of premiums paid under the policy without interest F 
The proposal for the said policy was submitted on 25.3.1990 and the policy 
was issued on 31.3.1990. On being called upon by the appellant-insurer 
whether the policy should be back dated and if so from which date, the 
respondent opted that it should be dated back from 10.5.1989 and also paid 
premium for the entire period. The respondent's daughter committed suicide 
on 15.11.1992. His cl:lim for payment of the entire sum for which deceased G 
was insured was rejected by the appellant-Corporation on the ground that as 
the assured had committed suicide within three years of the date of issue of 
policy, clause 4-B of the policy was applicable and therefore, the liability of 
. insurance-Corporation was limited to the sum equal to the total amount of 
· premiums paid under the policy. The respondent approached the District H 
295 
296 
SUPREME COURT REPORTS (1998] SUPP. 2 S.C.R. 
A Consumer Forum which held that the policy in the eye of law having 
commenced w.e.f. 10.5.89, the three years period under Clause 4-B of the 
Policy would run from the said date and not from the date of issuance of the 
policy and, therefore, the Corporation cannot have a limited liability as per 
Clause 4-B of the policy. The view taken by the District Forum was upheld 
B by State Forum as well as the National Forum. 
In appeal to this Court it was contended on behalf of the appellant-
Corporation that (i) the two expressions used in clause 4-B viz. "the date of 
policy" and "the date on which the risk under the policy has commenced' 
cannot have the one and same meaning; (ii) while construning a policy of 
C insurance which is nothing but an agreement between the "f>arties the 
commercial practice cannot be ignored and therefore the dating back of the 
policy being merely to confer certain relief in tax to the insured, the date 
of dating back cannot be held to be date of policy itself. 
D 
Disposing of the appeal, this Court 
HELD: 1. Under Clause 4-B of the policy the date of the policy is the 
date on which the policy had been issued and not the date on which the risk 
under the policy had commenced by way of allowing dating back. The Forums 
under the Consumer Protection Act committed gross error in construing 
Clause 4-B of the policy and giving the same meaning to the two expressions 
E in the aforesaid Clause 4-B namely "the date on which the risk under the 
policy has commenced" and "the date of the policy". [301-C; 300-G) 
F 
2. In construing a particular Clause of the Contract it is only 
reasonable to construe that the words and the terms used therein must be 
given effect to. One part of the contract cannot be made otiose by giving a 
meaning to the policy of the contract. When the same Clause of a contract 
uses two different expressions, ordinarily those different expressions convey 
different meaning and both the expression cannot be held to be conveying one 
and the same meaning. [300-C) 
G 
3. If Clause 4-8 of the terms of policy is scrutin

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