LexLIFE INSURANCE CORPORATION OF INDIA versus RAJA VASIREDDY KOMALLAVALLI KAMBA & OTHERS
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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350
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UJ'E INSURANCE CORPORATION OF INDIA
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RAJA VASIREDDY KOMALLAVALLI KA MBA & OTHERS
March 27, 1984
f.\1. BALAKRISHN!' ERADI AND SABAYASACHI MUKHARJI, JJ.]
Insurance Law~ Contratt of lnsuran-ce.:;_P,rOpoJa/ an(!. acceptanre-lnsli.red
filling up the proposr:il for .insurance for Rs. 50,000 on 27. f2.!960 and after 'under-
gofffg-tnedical exa111ination rm the same d;te issues two cheques of. Rs. 300. and
Rs. 210 towards cotisideration Dy w~y fir"st p'emium-Thi-Jnsuran_ce .Corporation·
encash the cheques 011 1 J. I .196/ and the insured dies on I 2~1.1961~ Whethur there
is a co11cluded contract ·of fnsl1ra11ce-When is. the acceplance said to be con1plete
in Cases of contract of 1!1surance-C(}nfrac( Act, Sect(ons 2(h) and 4:
·One Lare Raja: Vasireddi Chandr-a Dhara. Prasad died intest::1te on 12th
January, 1961.
He had fil.led a propo.;;·a1 for i{lsurance ·for Rs. 50,000 cry 27th
December 1960. There was medical examination by the. doctor on the life of
the deceased on 27th, D.ecembcr, ]960. The deceased issued two ch!qu:s being
the consideration. ·!award'> tho! first premium f0r Rs 300 and.Rs. 220 respecti-
vely which. were cncashed by the appellant on 29th Decembe~ 1960 and 11th
Ja.nuary1I96!. On 16th January, 1961," the widow of the deceased wrote to the
appe11ant iiitint<lting the deatl\ of. the deceased and de1nanded payment cir
Rs. so;ooo: The Divisi;Oal Manager, Masulipat~m Branch denied liabilit)i" on
behalf of. the ·"appelJant .on 28lh January~ l961. Thereafter·there was cones~
pondence between the parfies between 1st February 1961 and 23rd December
1963 .. On ·10th Janl:1ai:y. 19.64, th~ . respo.:ident5 filed a suit in the Court of
Subordin~e Judge,· MaSUliIJi,tam. The trial court dismissed the suit holding,
interalia 1 that there Was no .conclud.:d contra"ct, th.at. the Proposal was not.
accepted by the Divisional Manager· for so·me reas6n or the other by the time
the decea~d.had died,. that neitiler the encashmen~ of the two Cheques crea-ted
a contract of ins.ura.1ce. In appeal, the High Caurt aft~r ordering c_eqain
other. additional documents set aside t:1e Trial Court Judgment.
He.nee the
appeal by the Corporation after .obtaining thi! s'p.:cial leave.
~ · Allowing the.appeal, the Court
' HELD ; f. Havin'g regar2f to the clear position in law about acceptance of
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insu.rance proposal and the evidence of record in thi'> case, it is. clear ·that the,
·• High CQurt was in· error in coming to th~ conclusion that ther!!. was a ~on-.
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·eluded contract
of ·irisurancc between th.:
d~c_eased and the Life
I11surance.
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Corporation. [360D'E]
·? .. '(hough in certain human r-elatipilship silence to a pfoposal n1i-ght
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L.J.C. v. R.V. KA!\IBA
351
convey acceptance ~ut in the ca"se of insurance proposal, sil~nc~ docs not denote
consent and· no binding contract arises until the person to \Vhom an offer is ·
made 5ays or does something to signife' his _acceptance.
Mere delny in giving
3R an'i\Ver canilot be const(ued.as an acceptance, as, p-rin1a facie, acceptance
must be communicated to the offerer. Thi! general rule_ is that the contract of
insurance will be concluded only wh.:n -the p1rty to whorr1 an off:r has been
n1ade ·accepts it unconditionally and con1municate-; his acceptance to the per-
- son-making the 9ffer.
Wbe~her the final ac:;eptance i'i- that of the assured or
insurers, hOWC\.'Cr, d~pCnds sfrnply :on the way in which negotiations for an
insurance hilv~ progressed. [359H, 360A-B)
3 : 1. When an· insurance policy becon1es- effective is v.'Cll-scHled by the
authorities bufit is clear that the eApressio:i "underwrite" sig1;1ifics accept 1ia-
bility unOer that. The. dictionclry meaning a.lso indicaies that. lt is true 1l1at
normally the expressi.on "uod~rwrite" is used in ivlarine insui:ancc bu~ 'the
expression used in Chapter Ill of the Financial Powers of the S1a·nding Order in
this casi; specifically used the expl-cssiOn 'funder ... riting and rev iYals" of policies
in case of Lifo Insurance Gorj1oration and stated 1l~at it was. the Divisional
Manager who \vas Competent to uil.derwrite policy for Rs, 50,000 iJnd al~ove.
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[3598,-D]
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3 : 2. The mere receipt and retention of pren1ium until after the death of
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the applicant or the mere preparation of the policy document is n·ot acceptance;
Acceptance 1nust be signified by some acts or acts agreed on -by the parties of
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