Patna High Court
Life Insurance Corporation Of India vs Ramdas Agarwal And Anr. on 4 May, 1978
Equivalent citations: AIR1979PAT124, AIR 1979 PATNA 124, 1979 BLJR 225, (1979) 49 COMCAS 867, (1979) PAT LJR 232
Author: Lalit Mohan Sharma
Bench: Lalit Mohan Sharma
JUDGMENT B.P. Jha, J.
1. The Life Insurance Corporation of India (hereinafter referred to as 'the Corporation') preferred an appeal against the judgment dated 14th Feb., 1972 in Money Suit No. 40 of 1969.
2. Ramdas Agrawal, being the son of Babulal Agrawal, instituted a suit for recovery of Rs. 12,980/- from the Corporation. Babulal Agrawal, the father of the plaintiff, submitted a proposal for insurance of his life. The sum assured in the policy was Rs. 11,000/-The Corporation accepted the proposal of Babulal Agrawal and issued life insurance policy No. 10402073 dated 28th August, 1963. Babulal was required to pay premium each year on 18th April. The grace period prescribed in the policy (Ext. 1) was thirty days. If the premium was not paid within the grace period, the policy would lapse. A condition in the policy was that the policy could be revived during the lifetime of the Life Assured within a period of five years from the due date of the first unpaid premium and before the date of maturity. It is said that the assured died on 11th Sept. 1967. Before his death, he paid five premiums. It is for this reason the plaintiff filed the suit for recovery of the sum assured, that is, Rs. 11,000/- plus interest thereon.
3. The suit was resisted by the Corporation on the ground that the plaintiff was not entitled to a decree for the assured sum for the simple reason that the policy of the assured had lapsed. The condition of the policy (Ext. 1) was that the assured shall pay the premium in each year on or before 18th April. It was also the condition in the policy that if premium was not paid on 18th April or thirty days thereafter, t he policy shall lapse. In the present case, the second premium was paid on 18th July, 1964 (Ext. B/1), that is, after the grace period. On the basis of Ext. B/1, the case of the Corporation was that the assured did not pay the premium within thirty days of the grace period, that is, on 18th May, 1964, and, as such, the policy of the assured had lapsed. The further case of the defendants was that in view of the fact that the policy which had lapsed was not revived by the assured, the plaintiff was not entitled to the sum assured.
4. On these facts, the trial court decreed the suit.
5. Learned counsel for the appellant contends that the court below erred in granting the decree for the assured sum.
6. In this connection, learned counsel for the appellant refers to the deposit memos dated 18th July 1964 (Ext. B/1), dated 6th Aug., 1965 (Ext. B), dated 31st Jan., 1967 (Ext. 3) and dated 8th June, 1967 (Ext. B/2). These memos suggest that the Corporation accepted the premium amount sent by the assured. The Corporation did not issue any official receipt but issued deposit memos certifying that the premium amounts sent by the assured were received in the office of the Corporation. On a perusal of these memos, it is clear that the assured sent the premium amounts in 1964, 1965 and 1967. The premium amount for 1966 was sent in January, 1967 and the premium amount for 1967 was sent in June, 1967.
7. The main case of the defendants was that as the assured did not pay the premium amount in May 1965 within thirty days of the grace period, the policy of the assured had lapsed. If it is so, learned counsel for the appellant contends that unless the policy is revived, the plaintiff is not entitled to the assured sum. In the insurance policy (Ext. 1), there is a condition that the policy can be revived either within six months or within five years from the date of the first unpaid premium. The first upheld (unpaid?) premium was in 1964 and as such the policy could be revived either within six months or within five years commencing from 18-5-1964. In case, the policy is revived within six months, then no medical certificate is required to be filed in the Corporation. If the policy is revived within five years from the due date of the first unpaid premium, then the assured is required to produce the evidence of his health as well as to pay interest on the premium due. In the present case, the policy was revived by the assured within five years from the due date of the first unpaid premium. It is for this reason that the assured got himself examined by a medical officer of the Insurance Company, namely, Dr. Shridhar Sikdar on 30th July, 1967. To this effect, Dr. Shridhar Sikdar submitted a confidential report directly to the Corporation. According to the report of Dr. Shridhar Sikdar, the assured had good health (Ext. C). On 30th October, 1967 (Ext. 4), Sri K. Gopalan, Administrative Officer (D. W. 1) asked the assured to be examined either by Dr, Niranjan Sinha or by Dr. J. K. Majumdar. Thereafter, the Assistant Branch Manager of the Corporation of Chakradharpur sent a reply on 15th November, 1967 (Ext. D/l) that the assured expired in the month of Sept., 1967. It was for this reason, the assured could not be examined by the doctors mentioned in the letter dated 30th October, 1967 (Ext. 4).
8. The simple point in this case is : Whether the policy of the assured was revived or not?
9. In my opinion, the policy of the assured was revived as he fulfilled the conditions laid down in the life insurance policy (Ext. 1). The condition in the policy is that the assured can revive the policy during his life time, provided he submits the health certificate within a period of five years from the due date of the first unpaid premium as well as pays interest as mentioned in the policy. The first condition he satisfied by getting himself examined by Dr. Shridhar Sikdar on 30th July, 1967 (see Ext. C). So far as th9 payment of interest by the assured is concerned, the Corporation waived the right by its conduct. In only two letters dated 18th July, 1964 and 25th September, 1965 (Exts. B/1 and D/2), the Corporation directed the assured to pay the interest. In Ext. B/1, the Corporation directed the assured to pay Rs. 10.09 paise and in Ext. D/2, the Corporation asked the assured to pay a sum of Rs. 23.56 paise towards interest. Learned counsel for the appellant concedes that the amounts mentioned in these two memos have been paid by the assured towards interest as is clear from the memo dated 31st Jan., 1967 (Ext. 3). Ext. 3 suggests that the assured paid Rs. 700/- including the interest.
10. Learned counsel for the appellant contends that the interest in respect of other periods has not been paid by the assured. Learned counsel for the plaintiff-respondent replied that interest was never demanded in respect of other periods, and, as such, the amount was not paid. In other words, learned counsel for the respondent No. 1 contends that the Corporation has waived the right to realise the interest from the assured. In my opinion, there is substance in the contention of the learned counsel for the respondent. In this connection, a reference was made to the Indian Contract Act by Pollock and Mulla, 1972 Edition, at p. 451 where in commenting on 'Waiver', the learned authors have said as follows :
"Waiver-- Waiver is the abandonment of a right which normally everybody is at liberty to waive. A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right. Waiver must be an intentional act with knowledge. Firstly some distinct act ought to be done to constitute a waiver; next it must be intentional, and lastly it must be with knowledge", Relying on the abovementioned principle, I hold that, the Corporation had abandoned the right to realise the interest from the assured, and, as such, it never issued any notice for the realisation of the interest amount. It is clear from paragraph No. 5 of the evidence of the Administrative Officer (D. W. 1) that on 31st Jan., 1967, the interest due was Rs. 102.95 paise, and on 8th June, 1967, the interest amount due was Rupees 132.5.6 paise only. It is, therefore, clear that the Corporation had knowledge about the condition in the policy, and it had also knowledge that such amount is due as interest with the assured, and, in spite of this knowledge the Corporation never intended to realise the interest and never informed the assured to that effect. In this circumstance, I hold that the waiver on the part of the Corporation was an intentional act with knowledge. If it is so, the Corporation is precluded from realising the interest. In this circumstance, I hold that if the policy had lapsed, the policy was duly revived by the assured during his life time within five years from the due date of the unpaid premium amount by getting himself examined by a doctor of the Corporation, namely, Dr. Shridhar Sikdar and the interest amount was waived by the Cor-poration.
11. In the present case, the plaintiff has examined himself as P. W. 1, He proved that he was entitled to the assured amount. The defence has examined four witnesses. D. W. 1 is the Administrative Officer of the Corporation. In his evidence in paragraph No. 16, he stated that Dr. Shridhar had sent the short medical report to the Corporation and the report (Ext. C) was a confidential document. He has further stated that the party cannot have access to it. To this effect, the evidence of D. W. 1 is corroborated by D. W. 3 Dr. Niranjan Sinha who medically examined the assured at the time of submitting the proposal for the insurance by the assured. He has stated that the medical report is a confidential report and this is sent directly to the Corporation. D. W. 2 is the receiving clerk. He has proved the entries in the receiving register. D. W. 4 has proved the deposit memos (Exts. B, B/1 and B/2). D. W. 1 is an important witness as he was a responsible officer of the Corporation being its Administrative Officer. In his evidence, he did not state that the policy of the assured had lapsed on account of non-payment of the premium within the grace period. The other D. Ws. have also not stated so.
12. Learned counsel for the appellant relies on the conditions mentioned in the policy. He submits that the policy of the assured had lapsed as he had not paid the second premium within thirty days of the grace period. In other words, he means to say that the assured was required to pay the premium amount on 18th April or by 18th May, that is, within thirty days from the due date of the premium required to be paid. In my opinion, the policy had not lapsed for the simple reason that the Corporation went on accepting the premium even after 1964. It is clear from Exts. B, B/1, B/2 and 3 that the premium amount was received and accepted by the Corporation in the years 1964, 1965 and 1967. The Corporation kept the premium amount in deposit. The Corporation never refused to accept the amount. If it is so in my opin ion the Corporation is precluded from saying that it had received it otherwise than for the purpose of the premium. In this connection, the decision in Wing v. Harvey ((1854) 5 De G M and G 265) may be referred to. In that case, the condition of the policy was that if the assured went beyond the limits of Europe without licence, then the policy would become void. In fact, the assured went outside Europe, but he went on sending the premium to the agent and the agent accepted the premium on behalf of the Assurance Society. The case of the Assurance Society was that in view of the fact that the assured had gone outside Europe, the policy became void. It was not accepted by their Lordships who held as follows :
"The directors, taking the money, were and are precluded from saying that they received it otherwise than for the purpose and in the faith, for which, and in which Mr. Wing expressly paid it."
Relying on this decision, I hold that by accepting the premiums even after the policy had lapsed, the Corporation is precluded from saying that it: accepted the money not as premium but otherwise, I also hold that by accepting the premium, the Corporation cannot take the plea that the policy had lapsed. By accepting the premium, the Corporation kept the policy alive and it never lapsed. In these circumstances, I afirm the findings and hold that the plaintiff is entitled to a decree for the assured amount.
13. In the result, the appeal, is dismissed but without costs.
Lalit Mohan Sharma, J.
14. I agree but wish to add a few words.
15. Mr. Mustafi contended that since the plea of waiver or of estoppel by conduct was not included in the plaint the plaintiff was not entitled to rely upon it. An examination of the plaint will show that it has been drafted in a simple form basing the claim on the policy. In the written statement filed by the Corporation, a question as to whether the policy itself lapsed or not was raised and in reply thereto, the question of waiver arose. In that view, I do not see any point raised on behalf of the appellant,
16. Mr. Mustafi next urged that the onus in regard to the plea of waiver has been wrongly placed by the court beiow on the defendants. He referred to paragraph No. 13 of the judgment. The learned counsel has this appreciated the judgment on this point. What the court below has said is that the onus to show that the policy stood lapsed lies on the defendants. The observation is not in regard to the plea of waiver. In the present case, since the parties have led evidence which we have considered in the appeal being a first appeal, the question of onus is academic. The decision of, the court below on the plea of waiver is founded on the evidence led on behalf of the defendants themselves, and the judgment of the High Court is also on the same basis. The second point urged on behalf of the appellants, therefore, also does not have any merit. Mr. Mustafi relied upon a decision in Yorkshire Insurance Co. Ltd. v. Craine, (1922) 2 AC 541. In that case, the claim was founded on a policy taken in regard to certain properties against fire which were burnt down on September 30, 1917. Under a condition of the policy, the claim should have been made on or before the 15th October, 1917. In spite of this period having been extended, the claim was actually filed still later and the agent of the company, on receiving it, made an express endorsement that he was doing so without setting up any waiver of any of the provisions or requirements of the policy conditions. The Company, however, in accordance with certain other conditions of the policy took possession of the property and remained so for some time. The Privy Council, while upholding the decision of the courts below in favour of the claimant, held as follows:--
"Under these circumstances their Lordships think it is more durable to dispose of the appeal on the ground of estoppel by conduct in going into possession, if that course be under the circum-stances permissible, which they think it is."
This decision, to my mind, appears to assist the plaintiff mure than it can lend any support to the appellant's case. Reliance was placed by Mr. Mustafi on this decision for the proposition that the estoppel by conduct can apply only by an act which is intentional on the part of i he person with knowledge of this fight against whom the plea is raised. As has been pointed out by my learned brother, all the facts were known to the Corporation and its officers and it cannot be legitimately suggested that the acceptance of one premium after another premium was in ignorance of the rights which the Corporation could claim under the conditions of the policy.
17. Mr. S. C. Ghosh appearing for the plaintiff-respondent, argued that it should be assumed in the circumstances of the case that nothing remained due from the plaintiff on account of interest payable due to the late deposit of the premiums. He referred to the different notices sent by the Corporation and rightly argued that in only the first letter sent on the 18th July, 1964, there was a claim of a specific amount of money by way of interest. The second letter sent in August, 1965 mentioned the payment of interest in vague terms. On the 31st January, 1967, a sum of Rs. 700 was sent by the policy holder and accepted by the Corporation although the premium was less than Rupees 674. The court below has referred to the evidence of D.W. 1 who is the Administrative Officer of the appellant-Corporation stating that the money which is received in similar circumstances as the money received from the plaintiff is generally put in a Bank earning interest. He further said that at the time of charging interest from the party concerned, allowance is given to the extent of the interest earned in the meantime. If this statement is correct and if it be further assumed that the Corporation was insisting upon its right of claiming the policy as having lapsed, the amounts which were received from the plaintiff's father in 1964 and 1965 must have been put in the Bank and were earning interest. The policy holder sent a larger amount on the 31st January, 1967, which was accepted by the Corporation. The other facts which have been mentioned in some detail by my learned brother happened in this background. The Corporation completely omitted to mention anything about the payment of interest, in their later letters and were only concerned with the medical certificate. In these circumstances, it can legitimately be argued that either there were no outstanding dues against the plaintiff's father on account of interest and alternatively if a small amount of money could be shown to be still payable by him, the right to such an account must be deemed to have been waived.
18. On the question of waiver, Mr. Ghosh relied upon several circumstances which appear to be relevant and are as follows:--
(i) The appellant received one premium after another for several years instead of refusing the amount on the ground that the policy had lapsed and no premium was payable;
(ii) The money was deposited in a Bank earning interest;
(iii) Even later on, the amount of premiums so deposited was never returned to the assured, nor was such an offer made;
(iv) No demand of payment of any interest or any other amount was made in the year 1967; instead the appellants entered into a correspondence on the question of furnishing a medical certificate; and,
(v) The letter (Ext. 4), although sent after the death of the assured, furnishes evidence suggesting that the Corporation was not exercising its right or treating the policy as lapsed.
19. There appears to be considerable substance in the argument of Mr. Ghosh on the basis of the above circumstances.
20. Mr. Mustafi lastly contended that since the policy was issued in the year 1963 and a question of its revival was under consideration in the year 1967 and acceptable medical report was essential in the case and since no such report was received by the Corporation before the death of the policy holder, it must be held that the conditions for revival as envisaged by the contract between the parties were not fulfilled. In this regard, it will have to be seen that the medical report (Ext. C) is dated the 30th July, 1967, that is, more than a month before the death of the policy holder. It has been pointed out by my learned brother that the doctor who had examined the assured was on the panel of the Corporation and, according to the evidence of the Corporation itself, the report had to be sent direct by the doctor to the Corporation. It was confidential in nature and was not available to the assured at all. It is, therefore, futile to suggest that since the doctor who was obviously an agent of the Corporation did not promptly send the report, the assured had to suffer. Besides, the court below has considered the evidence and the circumstances suggesting that the report must have been received in the office of the Corporation long before the death of the assured and as such the case in this regard attempted to be made out by the appellants is false. I entirely agree with the consideration of the evidence by the court below and although the same has not been placed in detail before us, I have gone through the entire oral evidence on the point as also the other documents and I am in agreement with the finding of the court below. It must, therefore, be held that the medical report must have been received by the Corporation during the lifetime of the assured and that the Corporation did not raise any objection thereto within reasonable time. The belated suggestion in the letter (Ext. D) dated the 30th October 1967, is of no avail whatsoever, since the assured was dead by then. It follows that the deceased had complied with the condition about the submission of a medical report in time. This, however, may be considered to be a circumstance, in addition to the other arguments of Mr. Ghosh which have been accepted.
21. In the result, the appeal has to be dismissed but without costs.