Case Title: RELIANCE LIFE INSURANCE COMPANY LTD vs. JAYA WADHWANI., Diary No.- 12162 – 2019
Summary
The Supreme Court has ruled that the date of policy issuance is the pertinent date in an insurance protection context. The court disregarded the Consumer Forums’ contention that the commencement of the policy occurs on the date the initial deposit receipt of premium is issued. The court also explained that the date of proposal cannot be considered the date of policy unless both the initial deposit and policy issuance occur on the same date. The court also noted that a cheque alone might not be sufficient as collateral for the deposit. The case involved a life assured who committed suicide, and the Supreme Court reviewed clause 9 of the policy’s privileges and conditions. The court emphasized that reinstatement should have been taken into account, as the policy specifies that the 12-month period begins from the date of policy issuance or reinstatement.
About the case
The Supreme Court ruled that the date of policy issuance is the pertinent date for all intents and purposes in an insurance protection context. The matter at hand regarding the date the policy enters into force was before the court. It was unclear whether the date the policy is issued, the date of commencement specified in the policy, or the date the deposit receipt or cover note is issued would constitute that date. “In the present appeals, we do not find any such issue of backdating,” the court ruled. “For all intents and purposes, the date of issuance of the policy shall be the relevant date, not the date of proposal or receipt issuance.”
Justices Vikram Nath and Rajesh Bindal concurred. In doing so, the Court disregarded the Consumer Forums’ contention that the commencement of the Policy occurs on the date the initial deposit receipt of premium is issued. The Court also explained in its decision that, absent an initial deposit, the date of proposal cannot be considered the date of policy. It also specified that a cheque alone might not be sufficient as collateral for the deposit. “The date of proposal cannot be considered the date of policy until and unless both the initial deposit and policy issuance occur on the same date. For instance, if the premium is paid in cash on the date of proposal, the policy could be issued promptly. Mere submission of a cheque for tender may not suffice, as the contract would remain inactive until the cheque is cashed. The cheque’s issuer may revoke payment at any time after the cheque has been issued, insufficient funds may be available in the account from which the cheque is drawn, or there are numerous other possible reasons why the cheque might be returned uncashed. Two sets of appeals were pending adjudication, in which the life assured had committed suicide. Upon the demise of the insured, the District Forum, State Commission, and National Commission all determined that the appellant (Reliance Life Insurance Company Limited) is obligated to pay the sum assured. In light of this context, the issue was brought before the Supreme Court.
The Court initially reviewed clause 9 of the Policy’s privileges and conditions as well as the terms and conditions. 9. Suicide: The Company shall not be liable for any death benefit claims resulting from the Life Assured’s suicide within 12 months from the date of policy issuance or reinstatement, regardless of mental state. The court made the following observation in light of this: “Insofar as the policy specifies that the 12-month period begins from the date of policy issuance or reinstatement, reinstatement should have been taken into account.” Among the precedents that bolstered the Court’s position was Life Insurance Corporation of India v. Mani Ram. The court ruled in that case that the date of policy issuance remained applicable despite the implementation of backdating. As a result of these circumstances and facts, the Court set aside the challenged order and rendered the aforementioned observations.
