Holding

The Acceptance‑cum‑First Premium Receipt evidences acceptance of the proposal, establishing a concluded contract before the insured's death, and the NCDRC exceeded its limited revisional powers under Section 21(b), so the lower forum orders are restored.

Summary

The deceased submitted a life insurance proposal on 6 July 1996 and paid the first premium by cheque on 9 July 1996; he died accidentally on 14 July 1996. The insurer issued an Acceptance‑cum‑First Premium Receipt on 9 July, which the appellants (widow and children) relied on to claim policy benefits. The insurer argued that acceptance occurred only on 15 July, after the death, and thus no contract existed. The District Forum and State Commission held that the receipt created a presumption of acceptance and ordered payment of benefits, but the NCDRC reversed those orders and only directed an ex gratia payment. The Supreme Court examined the factual record, held that the receipt clearly indicated acceptance of the proposal before death, and that the NCDRC had misapplied the law and exceeded its limited revisional power under Section 21(b) of the Consumer Protection Act. Consequently, the Court set aside the NCDRC order, restored the lower courts' orders, and directed the insurer to pay the policy benefits within two months.

Issues considered

Whether the issuance of an Acceptance‑cum‑First Premium Receipt gives rise to a presumption of acceptance of the life insurance policy, thereby creating a concluded contract before the insured's death.
Whether the National Consumer Disputes Redressal Commission was justified in exercising its revisional jurisdiction under Section 21(b) of the Consumer Protection Act, 1986 to set aside the orders of the District Forum and State Commission.

Legislation cited

Consumer Protection Act, 1986s. 21(a), s. 21(b)
Life Insurance Corporation Act, 1956

Subjects

InsuranceLife Insurance PolicyProposal formAccidental deathDistrict ForumState CommissionAcceptance of the policy by insurerRevisional jurisdictionCompensationCheque towards premiumPremium acceptedDuly signed receiptAcceptance-cum-First Premium ReceiptCheque amount received prior to the death of deceasedAcceptance of the proposal prior to the death of deceasedConcluded contractex gratia

Judgment

[2024] 6 S.C.R. 452 : 2024 INSC 395

Mrs. Bhumikaben N. Modi & Ors.
v.
Life Insurance Corporation of India
(Civil Appeal No.270 of 2012)
08 May 2024
[A. S. Bopanna and C. T. Ravikumar,* JJ.]

Issue for Consideration
Whether the issuance of Acceptance-cum-First Premium Receipt
gave rise to a presumption of acceptance of the policy by the insurer;
whether the NCDRC was justified in dismissing the appellants’
complaint and reversing the concurrent orders of the forums
below, in exercise of its revisional jurisdiction, wherein directions
were issued for payment of benefits in terms of the subject life
insurance policy and for grant of compensation.

Headnotes†
Consumer Protection Act, 1986 – s.21(b) – Revisional power –
Insurance – Life Insurance Policy – Deceased submitted
proposal for Life Insurance Policy on 06.07.1996 – Issued
cheque towards premium on 09.07.1996 – Met with an
accidental death on 14.07.1996 – Appellants (widow and
children of deceased) claimed benefits based on Insurance
Policy – Claim repudiated by respondent primarily contending
that the proposal form was accepted only on 15.07.1996
whereas the death of the deceased was on 14.07.1996 and
therefore, there was no concluded contract as mere preparation
of the policy document is not acceptance so as to create a
concluded contract – District Forum allowed the complaint
filed by appellants – Appeal thereagainst dismissed by State
Commission – In revision, NCDRC reversed the said orders of
the forums below and dismissed the complaint – Sustainability:
Held: It is the case of the appellants that the first premium was
accepted and a duly signed receipt (Acceptance-cum-First Premium
Receipt-Annexure B) therefor was issued by the respondent on
09.07.1996 – The factum of receipt of cheque amount cannot be
disputed by the respondent – The cheque amount was received
prior to the death of ‘the deceased’ is also not in dispute – In
Annexure B, it is specifically stated that the acceptance of

* Author
[2024] 6 S.C.R. 453

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

payment would place the insurer on risk with effect from the date
of the said Acceptance-cum-First Premium Receipt, subject to the
realization of the amount in cash and the terms and conditions of
acceptance printed overleaf – What is printed overleaf is not on
record as the same was not produced – The circumstances justify
the conclusion of acceptance of the proposal prior to the death of
‘the deceased’ – Annexure B would justify drawing of presumption
of acceptance of the policy and not otherwise – Thus, in view of
the entire circumstances based on the documents in the orders
of the District Forum and the State Commission, in the light of the
decision in D. Srinivas’s case, the proposal was accepted – No
material irregularity or illegality in the conclusions drawn with regard
to the acceptance of proposal by the District Forum confirmed by
the State Commission with reasons – In the absence of anything
suggesting that the State Commission acted in the exercise of its
jurisdiction illegally or with material irregularity, interference with an
order of the State Commission confirming the order of the District
Forum, in exercise of the limited revisional power u/s.21 (b), by
NCDRC, is unsustainable – Impugned order set aside and that of
the District Forum which was confirmed by the State Commission,is
restored. [Paras 19, 23, 24-27, 29]
Consumer Protection Act, 1986 – s.21(b) – Revisional power –
Despite reversing the concurrent orders of the forums below
in revision and thus, dismissing the appellants’ complaint
seeking benefits in terms of the subject policy, NCDRC directed
for payment of ex-gratia taking note of the offer made by the
respondent to the appellant:
Held: Powers u/s.21(a) and (b) are different and distinct – Powers
u/s.21 (b) is very limited – Further, ex gratia is an act of gratis and
has no connection with the liability, payable as a legal duty – Also,
such an offer was made by the Respondent much earlier even before
the matter reached the District Forum, but the appellant had denied
to accept such an offer – The impugned order virtually partakes
the character of an order modifying the order of the District Forum
which was confirmed by the State Commission – No justification
for NCDRC to upturn the concurrent orders and to order for the
dismissal of the complaint and at the same time issue a direction
only to grant Rs.1 lakh as ex gratia merely because such an offer
was made by the respondent-insurer in the memorandum of the
revision petition – There cannot be any doubt with respect to the
position that in the absence of anything suggesting that the State
454 [2024] 6 S.C.R.

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Commission had acted in the exercise of its jurisdiction illegally
or with material irregularity, interference with an order of the State
Commission confirming the order of the District Forum, in exercise
of the limited revisional power under Section 21 (b) of the Act, by
NCDRC, is without rhyme or reason and cannot be sustained.
[Paras 10, 11, 27]
Practice and Procedure – Decision of the Supreme Court,
applicable to all cases irrespective of the stage of pendency
thereof:
Held: Normally, the decision of the Supreme Court enunciating a
principle of law is applicable to all cases irrespective of the stage
of pendency thereof because it is assumed that what is enunciated
by the Supreme Court is, in fact, the law from inception. [Para 16]
Words and Phrases – “ex gratia” – Discussed.

Case Law Cited
Life Insurance Corporation of India v. Raja Vasireddy
Komalavalli Kamba and Ors. [1984] 3 SCR 350 : (1984)
2 SCC 719 – held inapplicable.
D. Srinivas v. SBI Life Insurance Co. Ltd. & Ors. (2018) 3
SCC 653; Murthy v. State of Karnataka & Others [2003]
Supp. 3 SCR 327 : (2003) 7 SCC 517 – relied on.
Kongaraananthram v. Telecom Distt. Engineer, Ma-
Habubnagar 1990 SCC OnLine NCDRC 24; Sudesh
Dogra v. Union of India & Ors. (2014) 6 SCC 486; Gokal
Chand (D) Thr. Lrs. v. Axis Bank Ltd. and Anr. [2022]
17 SCR 739 : 2022 SCC OnLine 1720 – referred to.

Books and Periodicals Cited
Oxford Dictionary of Law, 5th Edition.

List of Acts
Consumer Protection Act, 1986; Life Insurance Corporation Act,
1956.

List of Keywords
Insurance; Life Insurance Policy; Proposal form; Accidental death;
District Forum; State Commission; Acceptance of the policy by
insurer; Revisional jurisdiction; Compensation; Cheque towards
[2024] 6 S.C.R. 455

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

premium; Repudiation of claim; Premium accepted; Duly signed
receipt; Acceptance-cum-First Premium Receipt; Cheque amount
received prior to the death of deceased; Acceptance of the proposal
prior to the death of deceased; Concluded contract; “ex gratia”.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 270 of 2012
From the Judgment and Order dated 09.12.2010 of the National
Consumers Disputes Redressal Commission, New Delhi in RP No.
3384 of 2006
Appearances for Parties
Ms. Manisha T. Karia, Ms. Nidhi Nagpal, Adarsh Kumar, Aditya Kesar,
Rohan Trivedi, Advs. for the Appellants.
Kailash Vasdev, Sr. Adv., Ms. Indra Sawhney, Advs. for the
Respondent.
Judgment / Order of the Supreme Court
Judgment
C.T. Ravikumar, J.
1. The appellants herein were the respondents before the National
Consumer Disputes Redressal Commission, New Delhi (for short ‘the
NCDRC’). As per the impugned order, the NCDRC allowed revision
petition No. 3384 of 2006 filed by the Life Insurance Corporation
of India, the respondent herein and reversed the concurrent orders
of the forums below passed in favour of the appellants herein and
dismissed their complaint that culminated in a direction in their favour
for grant of compensation.
2. Succinctly stated, the facts that led to the captioned appeal, are as
follows: -
The appellants are the widow and the children of one Shri Narender
Kumar Kantilal Modi (hereafter referred to as ‘the deceased’) who
met with an accidental death due to electric shock on 14.07.1996.
Prior to his death, the deceased submitted a proposal form for Life
Insurance Policy on 06.07.1996 and issued cheque of Rs. 3388/-
towards premium on 09.07.1996 through cheque No. 187009
dated 08.07.1996 of Dhokla Branch of State Bank of Saurastra.
456 [2024] 6 S.C.R.

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At this juncture, it is to be noted that there is no dispute regarding
the permissibility of effecting premium in the said mode. After the
death of the deceased the appellants herein claimed benefits based
on Insurance Policy Diary No. 832471906. Even after 14 months
since the death of the policy holder, the respondent did not give
any benefit and as such the appellants were constrained to cause
legal notice. The stand of the respondent for repudiating the claim
was that the proposal submitted by the deceased was not accepted
and therefore there is no concluded contract between the deceased
and the respondent. In fact, the respondent had blocked policy
No.832471906 and issued Acceptance-cum-First Premium Receipt
showing the policy No. 832471906.
3. In the aforementioned circumstances, aggrieved by the repudiation,
the appellants herein approached the District Forum by filing complaint
No. 1044 of 1997 in terms of Section 11 of the Consumer Protection
Act, 1986 (for short “the Act”). As per order dated 19.07.2001, the
District Forum allowed the complaint and directed the respondent to
pay total outstanding amount payable to the appellants as per terms
and conditions of Insurance Policy No. 832471906 along with interest
at the rate of 12% per annum till realization within 30 days from the
date of receipt of the copy of the order. Further, it was directed to
pay Rs. 5000/- to the appellants towards compensation for mental
agony and harassment as also Rs. 2000/- towards costs. Aggrieved
by the order of the District Forum, the respondent herein/the opponent
therein filed an appeal viz. appeal No. 464 of 2002 before the State
Commission. The State Commission dismissed the appeal as per
order dated 25.07.2006 against which the respondent herein filed
a revision petition before the National Commission in terms of the
provisions of the Section 21 (b) of the Act. The impugned order was
passed thereon and it resulted in reversal of the concurrent orders
of the forums below and dismissal of the complaint.
4. Heard, learned counsel for the appellant and also the learned Senior
Counsel appearing for the respondent. The factum of submission of
proposal for Life Insurance Policy on 06.07.1996 by the deceased and
also issuance of cheque bearing No. 1870092 therewithal towards
premium are not in dispute. The allotment of policy No. 832471906,
rather its blocking in the name of the deceased is also not in dispute.
The contention of the appellants before the District Forum was that
the respondent had accepted the first premium amount and issued
[2024] 6 S.C.R. 457

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

Acceptance-cum-First Premium Receipt on 09.07.1996 and in view
of the nature of the receipt issued the respondent could not have
repudiated the claim and wriggled out of the liability to assume the risk.
5. Per contra, the respondent took the stand that the policy prepared
was not actually communicated to the deceased and it was blocked
on 15.07.1996 owing to the demise of the proposer Shri Narender
Kumar Kantilal Modi. Further, it was contended that in the aforesaid
circumstances there was no concluded contract between the
deceased and the respondent. It is to be noted that even after
taking such a stand the respondent offered Rs. 1 Lakh on ex gratia
basis to the appellants. However, the appellants refused to accept
the same and claimed the amount payable in terms of the terms
and conditions in Policy No. 832471906. Obviously, the District
Forum took note of the rival factual contentions and also the further
fact of payment of commission in respect of the policy to the agent
and consequently, the defence raised on behalf of the respondent
herein to justify that the repudiation of the claim was rejected and
the complaint was allowed.
6. In the appeal before the State Commission, the respondent reiterated
the contentions unsuccessfully taken before the District Forum. As
noticed before, the core contention was that on the date of death of
“the deceased” there was no concluded contract between the insurer
and the deceased. The contentions raised did not find favour with
the State Commission and the State Commission found that the
acceptance of the proposal was unconditional and in favour of the
deceased and therefore the contract should relate back to the date
from which the insurance coverage was granted i.e., w.e.f. 28.06.1996.
Assigning such a reason, the State Commission dismissed the appeal.
It is the order of the appeal confirming the order of the District Forum
that was taken up in revision before the NCDRC by the respondent
herein, which culminated in the impugned order.
7. A perusal of the impugned order would reveal that for reversing the
concurrent orders and dismissing the complaint, the NCDRC assigned
the reason that mere receipt and retention of the premium until after
the death of the deceased-applicant or even the mere preparation
of the policy and its blocking would not amount to acceptance of
the proposal for insurance policy. To arrive at such conclusions, it
relied on the decision of this Court in Life Insurance Corporation
458 [2024] 6 S.C.R.

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of India v. Raja Vasireddy Komalavalli Kamba and Ors.1. It was
held that the fora below had erred in directing for payment of benefits
in terms of the subject policy.
8. Various contentions were raised on behalf of the parties before us
to support their rival contentions. We have already taken note of the
factual contentions raised on behalf of the parties. In the light of the
contentions the question to be considered is whether the NCDRC
was justified in reversing the concurrent orders of the forums below
and in dismissing the complaint. It is to be noted that even after
dismissing the complaint NCDRC took note of the offer made by the
respondent to the appellant for payment of an amount of Rs. 1 Lakh
ex-gratia vide paragraph 4 (d) of the memo of the revision petition,
and issued a specific direction to the respondent to pay a sum of
Rs. 1 Lakh to the appellant by way of ex-gratia. Before adverting to
the rival contentions and looking into the correctness or otherwise of
the reversal of the concurrent orders we find it appropriate to dilate
this aspect of the impugned order.
9. As noted hereinbefore, as per the impugned order the NCDRC
dismissed the complaint. Therefore, the question is how can an
order carrying a specific direction for payment, even by way of ex-
gratia, be issued in a complaint after dismissing the same. It is to
be noted that such an order was passed in a revision petition filed
by the respondent herein. Jurisdiction of the NCDRC under the Act
is provided under Section 21 thereof. Section 21 (a) has two Sub-
clauses and Sub-clause (i) thereof deals with the original jurisdiction
of NCDRC to entertain complaints and Sub-clause (ii) thereof deals
with appeals against orders of the State Commission. Section 21 (b)
deals with its revisional power. Section 21 of the Act reads thus: -
“21. Jurisdiction of the National Commission.—
Subject to the other provisions of this Act, the National
Commission shall have jurisdiction—
(a) to entertain—
(i) complaints where the value of the goods or
services and compensation, if any, claimed
exceeds [rupees one crore]; and

1 [1984] 3 SCR 350 : (1984) 2 SCC 719
[2024] 6 S.C.R. 459

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

(ii) appeals against the orders of any State
Commission; and
(b) to call for the records and pass appropriate orders
in any consumer dispute which is pending before or
has been decided by any State Commission where it
appears to the National Commission that such State
Commission has exercised a jurisdiction not vested
in it by law, or has failed to exercise a jurisdiction so
vested, or has acted in the exercise of its jurisdiction
illegally or with material irregularity.”
10. A bare perusal of Sections 21 (a) and 21 (b) would reveal that the
powers thereunder are different and distinct and the powers under
Section 21 (b) is very limited. The NCDRC itself, in the decision in
Kongaraananthram v. Telecom Distt. Engineer, Ma- Habubnagar2,
held that its revisional powers under the said Section are very limited.
The said Section provides power to call for the records from the State
Commission and to set aside its order issued sans jurisdiction vested
in it by law or if the State Commission failed to exercise a jurisdiction
so vested or if the State Commission has acted in exercise of its
jurisdiction illegally or with material irregularity.
11. As noticed hereinbefore, a specific direction was issued under the
impugned order by NCDRC after dismissing the complaint which
was allowed by the District Forum and got confirmance from the
State Commission. It is true that what was ordered by NCDRC is not
for payment of benefits based on the policy bearing No.832471906
but only payment of Rs.1 lakh by way of ex gratia, as offered in the
memorandum of the revision petition. Ex gratia is an act of gratis and
has no connection with the liability, payable as a legal duty. Going
by the Oxford Dictionary of Law, 5th Edition, the term “ex gratia” is
payment not required to be made by a legal duty.
12. In the contextual situation, it is relevant to refer to the decision of this
Court in Sudesh Dogra v. Union of India & Ors.3. This Court held
therein that ex gratia is an act of gratis and it got no connection with
the liability of the State under law and the very nature of the relief

2 1990 SCC OnLine NCDRC 24
3 (2014) 6 SCC 486
460 [2024] 6 S.C.R.

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and its dispensation by the State could not be governed by directions
in the nature of mandamus unless, of course, there is an apparent
discrimination in the manner of grant of such relief.
13. In the context of the directions, it is also to be noted that such an
offer was made by the Respondent much earlier even before the
matter reached the District Forum, but the appellant had denied to
accept such an offer. The specific direction, in such circumstances
issued in exercise of the revisional power dissuade us to accept
the impugned order as one dismissing the complaint in toto and in
the aforesaid circumstances, the impugned order virtually partakes
the character of an order modifying the order of the District Forum
which was confirmed by the State Commission. Be that as it may, we
will further consider the question whether the NCDRC is justified in
reversing the concurrent order in the complaint filed by the appellants
in exercise of its revisional jurisdiction.
14. A perusal of the impugned order would reveal, as noted earlier, that
the reversal of the concurrent order(s) of the forums below and the
consequential rejection of the complaint made by the NCDRC after
coming to a conclusion of non-existence of a concluded contract was
by relying on a decision of this Court in Raja Vasireddy Komalavalli
Kamba’s case (supra). It is true that in the said decision this Court
held thus:-
“15. 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 offerer. 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 unconditionally 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
MacGillivray & Parkington on Insurance Law, Seventh
Edn., p. 94, para 215.”
[2024] 6 S.C.R. 461

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

15. The factual position obtained in the case on hand tend us to hold
that the NCDRC had failed to bestow proper consideration of the
factual position which consequently led to the mis-application of the
decision in Raja Vasireddy Komalavalli Kamba’s case (supra). In
view of the decision in D. Srinivas v. SBI Life Insurance Co. Ltd. &
Ors.4, wherein this Court distinguished the decision in Raja Vasireddy
Komalavalli Kamba’s case (supra), we are of the view that NCDRC
had misdirected itself in considering the relevant question involved,
which was rightly considered by the District Forum. In the decision
in D. Srinivas case, this Court held thus:-
“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.”
16. Paragraph 11 of the decision in D. Srinivas case (supra) would
reveal that the afore-quoted recital was made thereunder after
considering the decision in Raja Vasireddy Komalavalli Kamba
case (supra). In short, the decision in D. Srinivas case (supra)
would obligate us to consider whether the circumstances obtained
in this case give rise to a very clear presumption of acceptance of
the policy by the insurer instead of merely giving imprimatur to the
impugned order of NCDRC on the ground that it was rendered relying
on the decision in Raja Vasireddy Komalavalli Kamba’s case. In
this context, it is only apposite to note that though the orders were
passed by the District Forum which was confirmed by the State
Commission would reveal that the analysis and the consequential
conclusion arrived at thereunder lie in conformity with the exercise

4 (2018) 3 SCC 653
462 [2024] 6 S.C.R.

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expected to be undertaken based on the aforementioned exposition
of law in D. Srinivas’s case (supra). We are not oblivious of the
fact that the decision in D. Srinivas’s case (supra) was rendered
much later to the order impugned in this appeal. But then, in view
of the exposition of law in Murthy v. State of Karnataka & Others5
as also in view of D. Srinivas’s case (supra), if the analysis and
the ultimate conclusions of the District Forum is in tune with the
decision in D. Srinivas’s case, we are bound to restore the same.
In Murthy’s case (supra), this Court held that normally the decision
of the Supreme Court enunciating a principle of law is applicable
to all cases irrespective of the stage of pendency thereof because
it is assumed that what is enunciated by the Supreme Court is, in
fact, the law from inception.
17. The decision in D. Srinivas’s case was followed by this Court again
in the decision in Gokal Chand (D) Thr. LRs v. Axis Bank Ltd.
and Anr.6, after rejecting a defence relying on the decision in Raja
Vasireddy Komalavalli Kamba’s case.
18. Now, we will proceed to consider the question whether circumstances
obtained in this case carry clear presumption of the acceptance of
the policy by the insurer, as has been obligated under the decision
in D. Srinivas’s case (supra).
19. Evidently, it is the case of the appellants that the first premium
was accepted and a duly signed receipt therefor, noting policy
No.832471906 was issued by the respondent on 09.07.1996. The
contents of the same has been reproduced in the synopsis of this
case at page ‘E’ as hereunder.
“Annexure B
Dear Sir/Madam
Your proposal for Assurance as per particulars noted in
the schedule has been accepted by the corporation as
proposed at ordinary rates with E.D.B .................................
............................................................................................

5 [2003] Supp. 3 SCR 327 : (2003) 7 SCC 517
6 [2022] 17 SCR 739 : 2022 SCC OnLine 1720
[2024] 6 S.C.R. 463

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

We have also received amount noted in the schedule
being the First Premium on the policy of assurance for the
plan and amount indicated therein. The acceptance of this
payment places the corporation on risk with effect from
the date of this Acceptance cum First Premium Receipt or
if the proposal is under the Children/Deferred or Children
Anticipated Assurance Plan from the deferred date on
terms & conditions of the policy of assurance which will
be sent shortly.
The issue of this receipt is also subject to this realisation
of the amount in cash and the terms and conditions of
acceptance printed over leaf.
Policy will be despatched shortly, if you do not receive the
same within next 90 days please write to us.”
20. The photocopy of the Acceptance-cum-First Premium Receipt is
produced by the respondent along with its written submission as
Annexure B. In fact, Annexure B would reveal the accuracy and
correctness of what is stated at page ‘E’ of the synopsis of the
captioned appeal. A perusal of the same would make it clear that the
acceptance of the payment would place the Corporation to assume
the risk with effect from the date of the Acceptance-cum-First Premium
Receipt. True that in Annexure B, it is stated that it would be subject
to the realization of the amount in cash and the terms and conditions
of acceptance printed overleaf. Though this Court called upon the
respondent to produce the original, the same was not produced
and what was produced was only a photo copy as Annexure B. In
this context, as also in view of the decision in D. Srinivas’s case,
it is only appropriate to refer to certain recitals from the order of the
District Forum. They, in so far as relevant, read thus:-
“1…………………………………..…………………………
…………….
The deceased had filled up the proposal form of the said
disputed policy on 06.07.1996 and issued cheque of Rs.
3388/- towards premium on 09.07.1996 through’ cheque of
Rs. 187009/- of State Bank of Saurastra and the opponent
accepted the said premium and issued said policy no.
832471906. The opponent also prepared cover note with
the details of said policy. The opponent also issued receipt
464 [2024] 6 S.C.R.

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for the said premium. The deceased has accordingly
accident benefit policy. The policy holder insured Narendra
Kumar K. Modi, the complainant husband died due
to electric shock and it is proved by death certificate
issued the Medical caused by electric shock passing
through the body. He died at young age. It was sudden
and accidental death……………………………………
……………..…This complaint was filed before this forum
on 19.07.1997. the complainant has engaged learned
advocate Shri A.V. Modi and D. V. Modi under Vakalatnama
and produced 22 documentary evidence as stated in the
list of documents including Suspense Memorandum dated
09.07.1996 and copy of the police i.e. disputed policy no.
832471906, copy of opponent’s notice to call for second
installment premium, copy of death certificate and policy
papers and certificate issued by Police Inspector, Dholka
Police Station and documents issued by the Medical
Officer of Sheth G.K. Municipal Hospital and all relevant
documents issued by the opponent and notice given
by the complainant to the opponent dated 10.09.1996
and opponent letter dated 29.08.1996 and copy of other
correspondence including notice given by Shri T.S.
Nanavati dated 25.03.1997 to the opponent and notice
dated 21.04.1997 notice given through Shri A.V. Modi
dated 14.08.1997 to the opponent.
4. The complainant’s advocate notice to the opponent
on 03 .07.1998 and requested the opponent to produce
required original documents and requested the opponent’s
authorized person Shri Mukund Krishnarao Joshi (Shri.
M. K Joshi) to remain present with the said documents.
In response to that Shri. M. K. Joshi, Manager (Lega) of
opponent LIC of India has filed affidavit. He has explained
about the documents produced by the complainant along
with complaint.
5…………………………..…………………………….
………….The complainant have produced documentary
evidence with complaint from no. 6061830 and the
opponent issued policy no. 832417906 and as per
the suspense memorandum BOC No. 600392 dated
[2024] 6 S.C.R. 465

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

09.07.1996 issued by the opponent LIC of India, SM
Market, Bavla, Dist. Ahmadabad. It was issued against
policy/proposal no. F.P. of Rs. 3388/- and as per the case
of the complainant the opponent LIC accepted the proposal
form and accepted the premium thereof of Rs.3388/- and
issued receipt dated policy no.832471906 and in the
said receipt issued by the opponent, policy number is
written and date of commencement of policy is written
as 28.06.1996 and maturity is 27.06.2016 and all the
details including sum insured Rs. 1.00 lakh, instatement
premium Rs. 3388/- table and term no. 75/20, short name
of insured N. K. Modi, due date, mode of payment half
yearly, date of birth, age whether admitted: yes and all
other details about BR. DO. DO code, Agent code etc
are written and full address of policy holder Mr. Narendra
Kumar Modi is written and office of the LI C of India has
issued the legal receipt and the same original receipt is
produced by the complainant along with complaint. The
opponents have also produce copy of the insurance policy
issued by the opponent, the policy no.832471906 all the
details of commencement of policy, mode of premium,
date of proposal, name. and address of proposer and life
assured of Shri. Narendra Kumar Kantila Modi and full
address is written and it was signed by the office of the
LIC and the opponent have of commencement of policy
and policy no. is written 832471906 and commencement
of policy 28.06.1996 and all necessary details are stated.
The State Bank of Saurashtra, Dholka Branch has issued
certificate that the . cheque no. 187009 dated 8.07.1996
favoring LIC of India Rs. 3388/- drawn by Narendra Kumar
Modi paid by them as on 12.07.1996. The opponent also
issued first premium commission bill in the favour of Shri.
P.B. Shah, the agent of the policy issued in the favour of
complaint and in the said bill policy no. -· 832471906, sum
insured Rs. 1.00 lakh, mode of payment, table and term, all
details are stated. The said first premium commission bill
issued by the opponent……………………………………..….
…………... We have to note that when policy number itself
is stated in the said letter dated 29.08.1996 of disputed
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policy, means all procedure prior to issuance of policy were
completed and then only the policy number can be allotted
to the proposer and in this case when policy number was
already given to the proposer, means the contract was
started or concluded so the opponent cannot go back with
the terms and conditions of the said contract i.e. policy
no.832471906…………………………………………
…………. The opponent wrote letter dated 17.06.1997 in
connection of complaint’s notice given through advocate
dated 25.03.1997 and 21.04.1997. We have noted that the
title of the letter is stated by the opponent that the title of
the letter is stated by the opponent that “Re: Policy No.
832471906 addressed to Shri T.S. Nanavati, who gave two
legal notices on behalf of the complainants, the opponent
have shown their failings to pay exgratia payment sum
insured only in full and final settlement of the dues under
the aforesaid policy. At this juncture, we have to interpret
the said all words used by the LIC i.e. Ex- gratia or basic
sum insured only in full and final settlement of the dues
under the · above policy all the said words are proving
that the opponent have issued the policy and accepted
the risk ……………............................................................
…………………………….….. We have also noted that the
opponent has deliberately not examined any witness to
prove that the decision to accept the proposal was taken
by the opponent on 15.07.1996 and the death of the
proposer has taken place on 14.07.1996, the contract could
not be said to have been concluded and the contract was
never in existence. We have noted that the contract was
already concluded prior to the death of the policy holder
Shri Narendra Kumar Modi, if the opponent were and
are in possession of the documentary evidence to prove
that the decision to accept the proposal was taken by the
opponent on 15.07.1996, then definitely, the opponent
would have produced oral or documentary evidence to
prove the said facts as this is a crucial point, but the
opponent has not taken . any action to produce oral or
documentary evidence oat this point i.e. only defense of
the opponent in the written statement which amounts to
[2024] 6 S.C.R. 467

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

crush the object of LIC act and other prevailing act to give
protection and risk coverage ………………………....……
...........................................The opponent have not
produced their own record to prove that after the receipt
of the proposal and cheque of premium of Rs3388/- dated
09.07.1996, the decision to accept the proposal was not
taken on 09.07.1996 or immediately within reasonable
period 213 days and took only on 15.07.1996………….”
21. Obviously, the said First Premium Receipt contains the number of the
policy as 832471906 and the next premium date was shown therein
as 28.12.1996. In addition to the aforesaid recitals from the order of
the District Forum, we are of the view that certain other emerging
aspects also assume relevance.
22. Though it is stated, as can be seen from the extracted portion, that
the issue of the receipt is subject to the realization of the amount in
cash and the terms and condition of acceptance printed overleaf,
the printing on overleaf is conspicuously absent in Annexure B. So
also, there is no case for the respondent that the cheque issued
was dishonored.
23. The factum of receipt of cheque amount cannot be disputed by
the respondent. In fact, the statement in the counter affidavit of
the respondent in this appeal that the appellant’s entitlement is
only to get refund of the amount tendered as initial deposit at the
time of submitting proposal would reveal the said position. Another
circumstance is also relevant in the context of consideration based
on the decision in D. Srinivas’s case (supra) viz., the stand of the
respondent that mere preparation of the policy document is not
acceptance so as to create a concluded contract. The cheque amount
was received prior to the death of ‘the deceased’ is not in dispute.
Paragraph 5 of the order of the District Forum would reveal that the
Dhokla Branch of the State Bank of Saurashtra issued certificate that
Cheque No.187009 favouring the respondent herein for Rs.3388/-
drawn by ‘the deceased’ was paid by him on 12.07.1996. The order
of the State Commission in paragraph 3 would reveal the consistent
stand of the respondent that the proposal form was accepted only on
15.07.1996 whereas the death of ‘the deceased’ was on the previous
day viz., on 14.07.1996 and therefore, there was no concluded
contract. The documents pertaining to the proposal were perused by
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both the District Forum and the State Commission and the said fact
is discernible from their respective orders. The various documents
were referred to in the orders with reference to the page numbers,
in which they are available. In the said context, paragraph 6 of the
orders of the State Commission assumes relevance and the same
to the extent it is relevant, read thus:-
“6. Page 125 is the proposal form. Perusal of the same
suggests that the amount of Rs. 3,388/- is shown as deposit
amount and the risk date is shown to be 28.06.1996. Thus,
it will be seen that the policy was desired to be effective
and risk commenced retrospectively with effect from
28.06.1996. It is also suggested that the said proposal form
was filled in on 09.07.1996. Page 126 reads the same to
be suspense memorandum with BOC No. 600392 dated
09 .07 .1996 and the policy of proposal number is shown
as F.P. Page 130 reads that next premium would become
due on 28.12.1996…….”
24. In the circumstances, referred to in the orders of the District Forum
and the State Commission as also noted hereinbefore, the question
is whether a clear presumption as to the acceptance of the policy by
the insurer is available in the case on hand. In Annexure B receipt
of the first premium, it is specifically stated that the acceptance of
payment would place the Corporation on risk with effect from the
date of the said Acceptance-cum-First Premium Receipt, subject to
the realization of the amount in cash and the terms and conditions
of acceptance printed overleaf. What is printed overleaf is not on
record as the same was not produced, though it should be a part
of Annexure B. Thus, the entire circumstances discussed based
on the documents in the orders of the District Forum and the State
Commission hereinbefore in this judgment, in the light of the decision
in D. Srinivas’s case (supra) constrain us to hold that the proposal
was accepted.
25. When the aforesaid being the circumstances revealed from the
conclusions and concurrent findings by the District Forum and the
State Commission entered with reference to the documents perused
by them, in exercise of revisional power the NCDRC could not have
arrived at a finding that the forums below acted in the exercise of
jurisdiction illegally or that there occurred a material irregularity. In
[2024] 6 S.C.R. 469

Mrs. Bhumikaben N. Modi & Ors. v.
Life Insurance Corporation of India

fact, all the circumstances discussed above justify the conclusion
of acceptance of the proposal prior to the death of ‘the deceased’.
26. There is no case for the respondent that Annexure B viz., the First
Premium Receipt carrying the assurance, as mentioned earlier, was
not issued. Annexure B would justify drawing of presumption of
acceptance of the policy and not otherwise. We have also found that
no material irregularity or illegality could be found in the conclusions
drawn with regard to the acceptance of proposal by the District Forum
which was confirmed by the State Commission with reasons. We are
fortified in our view by the following further reasons/ circumstances.
The entry 15.07.1996 in Annexure B and the contentions that the
factum of death was made known on 15.07.1996 and the acceptance
of policy also on 15.07.1996 cannot co-exist. If the amount received
on account of encashment of cheque is kept as deposit/suspense
and was not accepted by way of premium, as has been contended
before the State Commission and duly recorded in paragraph 3
of its order what was the necessity to prepare the First Premium
Receipt on 15.07.1996. There is incongruity in the contentions and
the documents. Along with the written submission on behalf of the
respondent herein, true copy of the suspense memorandum/First
Premium Receipt is produced in this proceeding as Annexure B.
A perusal of the same with reference to what is extracted from
paragraph 6 of the order of the State Commission, would reveal
certain disturbing aspects. As stated in paragraph 6 thereunder
Annexure B would reveal that the date for next premium would
become due on 28.12.1996. At the same time a dubious entry ‘NIL’
is also appearing thereon. Another dubious entry is the writing on
the right top corner of Annexure B i.e., 15.07.1996. The dubiousness
on account of that entry is because of the specific stand taken by
the respondent. As noted earlier, the stand of the respondent is that
the policy was prepared on 15.07.1996 and that the First Premium
Receipt was issued earlier. If it be so why an entry of 15.07.1996
should be made in Annexure B. As stated in paragraph 6 of the order
of the State Commission, the next premium date is shown as due
as 28.12.1996. The name and address of Narendra Kumar Kantilal
Modi and the policy number are also specifically entered therein.
27. In the aforesaid circumstances, there was absolutely no reason or
justification for NCDRC to upturn the concurrent orders and to order
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for the dismissal of the complaint and at the same time issuing a
direction only to grant Rs.1 lakh as ex gratia merely because such
an offer was made by the respondent-insurer in the memorandum of
the revision petition. There cannot be any doubt with respect to the
position that in the absence of anything suggesting that the State
Commission had acted in the exercise of its jurisdiction illegally or
with materially irregularity, interference with an order of the State
Commission confirming the order of the District Forum, in exercise
of the limited revisional power under Section 21 (b) of the Act, by
NCDRC, is without rhyme or reason and cannot be sustained.
28. Before the year 1956, life insurance business was in the hands of
private companies which were operating mostly in urban areas. The
avowed objects and reasons of the Life Insurance Corporation Act,
1956 would reveal that the main object and reason is to ensure
absolute security to the policy-holder in the matter of his life insurance
protection.
29. In the circumstances, the impugned order is set aside and the order
of the District Forum in complaint No.1044 of 1997 dated 19.07.2001
which was confirmed by the State Commission as per order dated
25.07.2006 in appeal No.464 of 2002 is restored. The respondent
is granted two months’ time to effect payment in terms of the order
thus restored.
30. The appeal is allowed.

Result of the case: Appeal allowed.

†
Headnotes prepared by: Divya Pandey