LIFE INSURANCE CORPORATION OF INDIA versus MANI RAM

Citation: [2005] SUPP. 2 S.C.R. 342 · Decided: 05-08-2005 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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LIFE INSURANCE CORPORATION OF INDIA 
v. 
MANI RAM 
AUGUST 5, 2005 
[R.C. LAHOTI, CJ., C.K. THAKKER AND P.K. 
BALASUBRAMANY AN, JJ.] 
Life Insurance-Grace period for payment of premium allowed as per 
terms of policy-However, insured making payment thereof after expiry of 
that period-Effect of-Held: There was no subsisting policy on date of death 
of insured and Insurance Company was justified in rejecting the claim of 
insured 
Respondent filed a complaint under Consumer Protection Act, 1986 
alleging that his son had been insured withthe appellant-insurance company 
on August 21, 1995 and premium amount was paid on the same day. His 
next installment was due on August 21, 1996. The insured however died 
in an accident on August 2, 1996, Respondent accordingly requested the 
appellant company to pay the insurance claim amount. As appellant 
refused to pay any amount he approached District Forum. Appellant 
resisted the complaint on the ground that policy had elapsed due to non-
payment of premium within the prescribed period. District Forum allowed 
the claim holding that though the policy was back dated to April 28, 1995, 
as the premium was paid on August 21, 19~5, foe next premium became 
due on August 21, 1996, and since insured met with an accident on August 
2, 1996, the insurance company was liable. State Coin mission and National 
Commission upheld the order of the District Forum. Hence, the present 
appeal. 
Question for consideration for the Court was whether on August 2, 
1996, the policy could be said to be valid and subsisting. 
Allowing the appeal, the Court 
HELD : 1.1. From condition no. 2 of terms and conditions of the 
policy, it is abundantly clear that payment of premium due had to be 
made within a grace period of one month. If such payment was made 
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within the said period, the policy would be treated as valid and the 
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L.I.C. OF lNDIA v. MANI RAM [THAKKER, J.] 
343 
·assured would be paid the amount to which he was entitled after deducting 
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the premium amount. But it was also made clear that ifthe premium was 
not paid before the expiry of the days of grace, the policy would lapse. 
[347-E-F[ 
2. The material date was not the date of deposiUpayment of premium 
amount which was August 21, 1995, but the date of policy which was April 
28, 1995. Since it was yearly, the payment was due on April 28, 1996, but 
the assured was entitled to grace period of one month up to May 28, 1996. 
Neither the premium was paid on April 28, 1996 nor on May 28, 1996. 
As per condition No. 2, policy lapsed on May 28, 1996. In the eyes of law, 
there was no subsisting policy, on August 2, 1996. Insurance Company 
was therefore wholly justified in rejecting the claim of the complainant 
and no exception can be taken against such a decision. [347-F-H[ 
All the terms and conditions of the policy have to be kept in mind· 
and given effect to Court of law cannot construe a document in manner 
that any term would make redundant, otioise and inoperative; and a 
court of law cannot construe a document in the manner. The fora below 
hence, committed an error in allowing the complaint of the respondent; 
its orders are liable to be set aside. [349-E-F[ 
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Life insurance Corporation of India and Another v. Dharam Vir Anand, 
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[1998) 7 sec 348, distinguished. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4806 of2005. 
From the Judgment and Order dated 10.10.2002 of the National 
Consumer Disputes Redressal Commission, New Delhi in R.P. No. 1875 of F 
2002. 
G.L. Sanghi, A.V. Rangam, A. Rangandhan and Buddy A. Ranganadhan. 
The Judgment of the Court was delivered by 
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C.K. THAKKER, J. : Leave granted. 
This appeal is filed by the Life Insurance Corporation of India 
("\n5urance Company" for short) against the order passed by the District 
Consumer Disputes Redressal Forum, Bilaspur (Himachal Pradesh), confirmed 
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SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R. 
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by the Himachal Pradesh State Consumer Disputes Redressal Commission, 
Shim la and also confirmed by the National Consumer Disputes Redressal 
Commission, New Delhi. 
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Few facts giving rise to the present appeal may now be stated. 
Mani Ram-respondent herein, son of one Budhu Ram, resident of 
village Khatehar, Pargana and Tehsil Sadar, District Bilaspur (HP) filed a 
complaint under Section 12 of the Consumer Protection Act, 1986 (hercinafte~ 
referred to as "the Act"), before the District Forum, Bilasp

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