Page 10 - Suri’s - NCDRC ON LIFE INSURANCE 2017 V1.3

Suri’s - NCDRC ON LIFE INSURANCE 2017 10

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, accep-
tance must be communicated to the offeror. Similarly the mere receipt and reten-
tion of premium until after the death of the applicant or the mere preparation of
the policy document is not acceptance.‖

10. The facts and circumstances of the case bring out that medical examination
was conducted on the husband of the complainant at the time of submitting the pro-
posal form. According to the LIC, the medical reports were in the process of being
evaluated by their Divisional Office, when the husband of the complainant died. It is
made out from these facts that there was no acceptance of the proposal in any form on
the part of the LIC when the applicant died on 11.07.98. The State Commission have
also observed that the amount of ₹1,051/- in respect of each policy was received un-
der the proposal ―deposited receipts‖, and not as a part of the premium for the pro-
posal submitted. The LIC have also stated that the first premium receipt-cum-
acceptance letter had not been sent by them to the applicant. We, therefore, have no
reason to disagree with the conclusion of the State Commission that the mere accep-
tance of a certain amount from the applicant, does not amount to a concluded contract
between the parties.

11. The petitioner have tried to place reliance on section 8 of the Indian Con-
tract Act saying that the acceptance of any consideration for a reciprocal promise
amounts to an acceptance of the proposal. The said provision, however, does not help
the petitioner at all because there is no acceptance of the proposal by the LIC in any
form. As held by the Hon‘ble Apex Court in ―Life Insurance Corporation of India
versus Raja Vasireddy Kamalavalli Kamba & Ors.‖ (supra), a contract of insurance
gets concluded only when the parties to whom an offer has been made accepts it un-
conditionally and communicates its acceptance to the person making the offer. It has
further been stated that in case of insurance proposal, even silence on the part of the
other party does not denote consent and no binding contract arises. It is made out,
therefore, that there was no question of any concluded contract between the parties in
the matter.
12. The matter has been considered in detail by this Commission in the order
dated 03.02.2017, passed in FA No. 560/2012, “SBI Life Insurance Co. Ltd. vs D.
Srinivas & Ors.” (supra). It has been brought out in the said order that the accep-
tance of premium by the insurance Company before the mandatory medical examina-
tion, would not amount to unfair trade practice under the provisions of the Consumer
Protection Act, 1986. In the said order, the applicability of the IRDA Regulations
was also discussed and it was concluded that the non-compliance of 15 days‘ period
for processing of the proposal by an insurance company will not come in the way of
the said company repudiating the insurance claim. In so far as the order passed by the
Hon‘ble Delhi High Court in ―Life Insurance Corporation of India versus Anita
Rani & Ors.‖ (supra) is concerned, it has been stated therein as follows:-
―18. A co-joint reading of these statutory provisions shows that the acceptance

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