The Delhi High Court has held that LIC Premium Waiver Benefit is applicable to a policy which is revived after the death of the proposer. The judgment was delivered by Justice Vibhu Bakru.
The writ petition was filed by a minor, aggreived by the refusal of LIC to waive the premium payable on account of the death of the proposer, the petitioner‟s late father. The petitioner sought refund of a sum of ₹31,148/- collected by LIC as premium/late fee for the period after the demise of her father.
The late father of the petitioner had purchased the insurance policy for the petitioner when she was just a few months old. The annual premium payable for the said policy was Rs. 7787. The date of commencement of the said policy was 28.04.2003 and it would have vested after a period of eight years, that is, on 28.04.2021. The said policy would have matured eight years later, that is, on 28.04.2029. The said policy was for a sum of Rs.1 lakh, which was payable to the petitioner after maturity.
The petitioner’s father, who was the proposer, continued to pay the annual premium regularly till the year 2008. However, after that he was diagnosed with a cancerous brain tumor that took his life in the year 2010. He could not pay the insurance premium during the period when he was ailing. Therefore, no annual premium could be paid for the said policy in the years 2008 and 2009. As a result, the policy lapsed.
After the demise of the petitioner’s father, LIC sent a letter to the petitioner’s mother advising her to contact the branch office for appointing the petitioner’s legal guardian since her father had expired and also deposit the outstanding premium for revival of the said policy. Thereafter, the petitioner’s mother made a payment of Rs. 37,800 towards the settlement of outstanding premium.
The main issue that came up for consideration in front of the Court was whether the petitioner was entitled to waiver of the insurance premium for the period after the demise of her father.
Writ Jurisdiction Can Be Invoked Against Arbitrary Action
The Court rejected the preliminary objection raised by the respondent that writ petition was not maintainable as the issue was contractual in nature. It was held :
"The contention that this Court cannot exercise jurisdiction in any matter relating to contract between the parties is unmerited. Ordinarily,a Court would not exercise its jurisdiction under Article 226 of the Constitution of India in contractual disputes, however, it is erroneous to contend that the Court lacks jurisdiction to do so. It is well settled that a remedy under Article 226 would be available against any State action which is arbitrary, unreasonable or falls foul of the constitution of India"
Reference was made to the decision in Karnataka State Forest Industries Corporation v. Indian Rocks : (2009) 1 SCC 150 for this conclusion.
Premium Waiver Benefit Applicable
Referring to the clauses of the Premium Waiver Benefit scheme, the Court held that the LIC‟s stand that a lapsed policy cannot be revived after the demise of the proposer, is not merited.
"It is also clear that in terms of sub-clause (a), that the premiums falling due after the death of the proposer and before the vesting date are liable to be waived. The petitioner‟s father (who was a proposer of the policy) had expired on 19.04.2010 and thus premium falling due after the death were liable to be waived"
Mother Substituted As Legal Guardian; Not A Fresh Policy
The Court also rejected the contention of LIC that the policy revived with mother as legal guardian was a fresh policy.
"It is not open for LIC to avoid its obligation of waiving the premium payable after the demise of the petitioner‟s father on account of her mother now acting as her guardian. It is clear from LIC‟s letter dated 13.12.2010 that the petitioner‟s mother was called upon to contact the branch office for appointment of a legal guardian. It is clearly not the intention of the petitioner‟s mother to purchase a new policy", the Court ruled.