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Kiranjit Kaur v. HDFC Standard Life Insurance Co. Ltd., (NCDRC)(New Delhi) Law Finder Doc Id #
1010364
2018(2) C.P.J. 149 : 2018(1) C.P.R. 854 : 2018(3) CLT 51
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
(New Delhi)
Before:-Mrs. M. Shreesha, Presiding Member.
Revision Petition No. 2480 of 2014 in Appeal No. 751 of 2012. D/d. 5.2.2018.
Kiranjit Kaur and 3 Ors. - Petitioners
Versus
HDFC Standard Life Insurance Co. Ltd. and Anr. - Respondents
For the Petitioners:- Mr. Joginder Singh Saggu, A/R.
For the Respondents:- Mr. Joydeep Bhattacharya, Advocate.
Consumer Protection Act, 1986 Sections 2(1)(g), 14(1)(d) and 21(b) Insurance - Death claim -
Repudiation of claim - Complaint filed before Dist. Forum alleging deficiency in service -
Complaint allowed - Appeal against same allowed by State Commission - Hence present
revision - Insurance Companies cannot apply the 90 day waiting period and reject the claim on
the ground that in this case the death occurred on the 90th day - Insurance Company has taken
a hyper technical objection in repudiating the claim on the ground that the death occurred on
the 90th day - Also, the evidence on record does not show that the Complainant was in any
manner taking advantage of the death of the policy holder - In the instant case the deferred
period was 90 days and it is not as if the time of death was planned only to take advantage,
under the policy expecting that the insured may not live beyond the period of 90 days - It a fit
case to accept the interpretation which favours the policy holder as the purpose for which the
policy is taken would be in consonance with the object for getting the life assured.
[Paras 16 to 19]
Cases Referred :-
B.V. Nagaraju v. M/s. Oriental Insurance Co. Ltd., Divisional Officer, Hassan, (1996) 4 SCC 648.
HDFC Standard life Insurance v. Babu Ram Jain, Revision Petition No. 1387 of 2010, decided on
04.08.2015.
LIC v. Raj Kumar Baigarhia, (1999) 3 SCC 465.
Life Insurance Corporation of India v. Shri Dharam Vir Anand, (1998) CPJ 3 (SC).
M/s. Suraj Mal Ram Niwas Oil Mills (P.) Ltd. v. United India Insurance Co. Ltd., 2010 (95) AIC 28.
Rajiv Khosla v. Union of India, (2010) 170 DLT 103.

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Shahi Gupta v. LIC of India, (1995) CPJ 15 (SC).

Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan, (1987) 2 SCC 654.
ORDER
Mrs. M. Shreesha, Presiding Member - Challenge in this Revision Petition under section 21 (b) of
the Consumer Protection Act (in short "the Act") is to the order dated 22.04.2014 in Appeal No. 751 of
2012 passed by the Punjab State Consumer Disputes Redressal Commission, Chandigarh (in short
"the State Commission"). By the impugned order the State Commission allowed the Appeal preferred
by the Insurance Company and set aside the order of the District Consumer Disputes Redressal
Forum, Sriganganagar (in short "the District Forum") and consequently the Complaint was
dismissed.
2. The facts material to the case are that the life assured took an Insurance Policy on 28.05.2010
covering the risk of his life for 2,49,995/- and paid an amount of 49,999/-, which was acknowledged
by the Opposite Parties (hereinafter referred to as "the Insurance Company") vide receipt dated
28.05.2010. The first and second Complainants are the legal heirs of the life assured namely wife
and children respectively. On 25.08.2010, the life assured died on account of heart attack and the
same was intimated to the Insurance Company on 18.11.2010, it was averred that the first
Complainant was called to the Insurance Company's office and she was asked to sign the discharge
voucher which was attested and the same was handed over to the officer of the Insurance
Company. It was pleaded that she was assured that the entire amount would be paid within a
month.
3. On 15.01.2011, the first Complainant received a cheque dated 07.01.2011 for an amount of
49,2350.50 stating that their claim is repudiated on the ground that the life assured had died within
90 days of the commencement of the coverage under the Policy. It was pleaded that a copy of the
Insurance Policy was never furnished to the policy holder and neither was the exclusion clause
brought to their notice and hence the repudiation on that ground is unjustified. Therefore the
Complainant's approached the District Forum seeking a direction to the Insurance Company to pay
an amount of 2,49,995/- with interest, compensation and costs.
4. The Insurance Company filed their Written Version stating that the deceased life assured had
submitted the proposal dated 26.05.2010 and a policy NO. 13694777 dated 29.05.2010 was issued. It
was averred that before issuance of policy all the contents there explained to the life assured and
that before acceptance of the proposal, adequate information with regard to the terms and
conditions was provided to him. Clause 3(1)(b) of the said policy stipulates that no amount is
payable other than the value of units held at the time of intimation of death, if the death occurs
within 90 days of the date of commencement, date of issue or date of revival whichever is later.
Unfortunately, the life assured died on 25.08.2010, which is within 90 days of the issuance of the
policy and therefore the claim was repudiated and cheque for an amount of 49,235.50 towards
unutilised fund value was sent to the first Complainant which was duly received by her. Hence, no
deficiency of service can be attributed to them and they seek dismissal of the Complaint with costs.
5. The District Forum based on the evidence adduced allowed the Complaint directing the Insurance
Company to pay an amount of 2,49,995/- after deducting the amount already received by the first
Complainant together with costs of 2,500/-. If the order was not complied within 30 days from the
date of receipt of copy of the order, the Insurance Company was liable to pay interest at 9% p.a. on
the amount of claim form 11.01.2011 till the date of actual realisation.

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6. Aggrieved by the said order the Insurance Company preferred First Appeal No. 751 of 2012 before
the State Commission on the ground that the District Forum has wrongly relied on section 28 of the
Contract Act, 1872 to interpret the terms and conditions of the policy and that it has failed to
appreciate clause 3(1)(b). The State Commission allowed the Appeal observing as follows:
9. No doubt, this is a marginal case where the life of the DLA fell short by just one day. The
District Forum has wrongly relied upon the section 28 of the Contract Act, 1872 to interpret the
terms and conditions of the policy agreed to by the parties. The Hon'ble supreme Court in case
M/s. Suraj Mal Ram Niwas Oil Mills (P.) Ltd. v. United India Insurance Co. Ltd. & Anr.,
Reported as 2010 (95) AIC 28, has clearly set the law and was pleased to hold as under:
"Thus, it needs little emphasis that in construing the terms of a contract of issuance, the words
used therein must be given paramount importance, and it is not open for the court to add,
delete or substitute any words. It is also well settled that since upon issuance of an insurance
policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks
covered by the policy, its terms have to strictly construed to determine the extent of liability of
the insurer. Therefore, the endeavour of the court should always be to interpret the words in
which the contract is expressed by the parties."
10. In view of the above findings and the law set by the Hon'ble Supreme Court, the appeal of
the appellants/opposite parties is accepted and the impugned order of the District Forum is set
aside. Consequently, the complaint filed by the respondents/complainants is dismissed no order
as to costs.
7. The Authorised Representative, who was present in person submitted that the proposal is dated
26.05.2010 and that the premium was paid in cash on the same date, which was accepted by the
Insurance Company and therefore the risk is to begin from that date. He further argued that in the
policies issued by the other Insurance Company namely Max New York Life Insurance Company, the
risk of coverage invariably begins from the date of proposal. In support of his case he brought to
my notice a policy issued by Max New York Life Insurance Company to Mrs. Kirnajeet Kaur, who is
also the first Complainant herein which states that the risk coverage is from the date of proposal
form. He further brought to the notice of the Bench the policy issued to the deceased life assured
Mr. Kulwinder Singh by Reliance Life Insurance Company wherein the date of commencement of
risk was 24.07.2010 which is the same date as the date of commencement of Policy. He further
pointed out that the date of issuance of Policy was 26.07.2010 but the date of commencement of risk
was 24.07.2010 and that the Insurance Company in the instant case has wrongly mentioned that the
risk commences from 28.05.2010 when the proposal form was accepted on 26.05.2010.
8. Learned Counsel for the Insurance Company argued that in the Proposal form it is stated that
the contract would be governed by the provisions of the Insurance Act, 1938 and the Indian
Contract Act, 1872 and the same will not commence until written acceptance of the Application from
the Insurance Company is received by the life assured.
9. The policy in question is mentioned as HDFC Young Star Champion Suvidha Policy, whereas in the
proposal form the policy is titled as Simple life and Suvidha Proposal Form. Be that as it may, in the
Policy schedule of HDFC Young Star Champion Suvidha Policy, the date of commencement of the
policy is stated to be 28.05.2010, which is the same date as issuance of the policy. It has been stated
that all unit linked policies are different from traditional Insurance Policies and are subject to
different risk factors and that in the subject policy the investment risk in the investment portfolio
was to be borne by the policy holder.

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10. Learned Counsel for the Insurance Company submitted that a valid contract comes into
existence when the Proposal is duly accepted and the acceptance is communicated to the parties.
He relied on section 3 of the Contract Act in support of his case stating that the Proposal was
accepted on 28.05.2010 and the same was communicated to the nominee on 29.05.2010. He relied on
the judgement of this commission in HDFC Standard life Insurance v. Babu Ram Jain, Revision
Petition No. 1387 of 2010, Decided on 04.08.2015, in which this Commission has relied on the
judgment of the Hon'ble Apex Court in Life Insurance Corporation of India & Anr. v. Shri
Dharam Vir Anand, (1998) CPJ 3 (SC), in this judgement the date of risk and the date of the policy
was discussed keeping in view clause 4(b) of the terms of the policy. The Hon'ble Supreme court
observed as follows:
" In the case in hand undoubtedly the date on which the risk under the policy has commenced
is 10.5.89 but the date of the policy is 31st March, 1990 on which date the policy had been
issued. Even though the Insurer had given the option to the Insured to indicate as to whether
the policy is to be dated back and the Insured indicted that the policy should be dated back to
10.5.89 and did pay the premium for that period, thereby the risk under the policy can be said
to have commenced with effect from 10.5.89 but the date of the policy still remains the date on
which the policy was issued i.e. 31st March, 1990. The death of the life assured having
occurred as a result of suicide committed by the assured before the expiry of three years from
the date of the policy, the terms contained in Clause 4-B of the policy would be attracted and,
therefore, the liability of the Corporation would be limited to the sum equal to the total
amount of premium paid under the policy without interest and not the entire sum for which
the life had been insured. The Forums under the consumer Protection Act committed gross
error in construing Clause-4-B of the policy and giving the same meaning to the two
expressions in the aforesaid Clause 4-B namely "the date on which the risk under the policy
has commenced" and "the date of the policy". The construction given by us to the provisions
contained in Clause 4-B get support, if the proviso to Clause 4-B is looked into. Under the
proviso if the life assured commits suicide before the expiry of one year reckoned from the
date of the policy then the provision of the Clause under the heading "suicide" printed on the
back of the policy would apply. In a case therefore a policy is dated back for one year prior to
the date of the issue of the policy the proviso contained in Clause 4-B cannot be operated at
all. When parties had agreed to the terms of the contract it is impermissible to hold that a
particular term was never intended to be acted upon. The proviso to Clause 4-B will have its
full play if the expression "the date of the policy" is interpreted to mean the date on which the
policy was issued and not the date on which the risk under the policy has commenced."
11. The aforenoted judgement is clearly distinguishable on facts, in as much as in the instant case,
under the proviso to clause 4(b), if the life assured commits suicide before expiry of one year
reckoned from the date of policy, then the provision of the clause under the heading suicide printed
on the back of policy would apply. The proviso to clause 4(b) would come into force if the
expression, the date of policy is interpreted to mean the date on which the policy was issued and
not the date on which the risk has commenced. As aforestated, the facts in the instant case are
different from the facts of the cited case in the sense that the point for consideration in the present
case is whether the Insurance Company was justified in repudiating the claim when the death
occurred on the 90th day. Indeed the terms of contract of insurance have to be strictly construed
and the words used therein must be given paramount importance and it is not open for the court
to add or delete any word.
12. Though the Complainant who is present in person brought to the notice of the Bench the

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policies issued by other Insurance Companies, the risk date mentioned in those policies cannot be
binding on the facts of this case. It is an admitted fact that on the date of Proposal Form i.e.
26.05.2010 the premium of 45,999/- was accepted in cash and a receipt was issued. However, the
date of commencement of policy is stated to be 28.05.2010 that is two days after the acceptance of
the proposal. It is not in dispute that the policy holder died due to heart attack on 25.08.2010. The
repudiation of the Insurance Company was solely on the ground that the policy holder died "within"
90 days of the commencement of the risk i.e. 28.05.2010 and attracts Clause 3 (1) (b) of the policy.
For better understanding of the clause, it is reproduced as hereunder:
"Death Benefit:-
We will not pay any benefit other than the value of units held at the date of intimation of
death if death occurs within 90 days of the date of commencement, date of issue or date of
revival whichever is later."
13. In a catena of judgements the Hon'ble Supreme Court has held that in interpreting documents
relating to contract of insurance, the duty of the court is to strictly interpret the words in which the
contract is expressed by the parties, because the terms of the policy have to be construed as it is
and the words cannot be liberally substituted. It is also well settled law that upon issuance of an
insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of
risk covered by the policy, its terms have to be construed to determine the extent of the liability of
the insurer. Therefore, the endeavour of the Commission should always be to interpret the words in
which the contract is expressed by the parties. Macmillan dictionary has defines the word "within"
as 'inside a period of time, before the end of a period of time'. The Cambridge Dictionary defines
"within" as 'inside or not further than an area or period of time'. "Within" means 'inside or not
further than a particular area or space'. At the cost of repetition, the meaning of "within" is defined
as follows:
Within
(i) In; inside includes or encashed by
(ii) Before (a period of time) as elapsed
(iii) Not beyond the limits; not differing by more than (a specified amount) from."
14. Thus, strictly construed the word "within" means inside the time period. It is not the case of the
Insurance Company that the policy holder died on the 89th day, it is their case that he died on the
90th day. As words of the contract are to be strictly construed, the clause does not specify on or
before the 90th day. It only states "within" 90 days and therefore the contention of the counsel for
the Insurance Company that the repudiation is justified as the death took place on the 90th day
and attracts clause 3 (1) (b), is unsustainable.
15. It may not be out of place to take cognizance of a very significant development relating to the
same Insurance Company. The Insurance Regulatory Development Authority (IRDA) in its onsite
inspection of the record of the Insurance Company namely, M/s. HDFC Standard Life Insurance Co.
Ltd., for the period between 26.07.2010 to 30.07.2010 has observed that there were violations of the
provisions of the Insurance Act, 1938 including the Charge in question. The said final order in the
matter of M/s. HDFC Standard Life Insurance Co. Ltd. dated 27.06.2012, reference No.
IRDA/Life/ORD/Misc/146/06/2012, was chaired by the Chairman IRDA in which charge No. 21 refers to
similar facts of the case wherein death claim was denied as the death occurred within 90 days from

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the date of commencement of the policy. For easy understanding of the same the 'Charge' and the
'Decision' is reproduced as hereunder:
(21) Charge 21 - Death Claim under Home Loan Protection policies was denied where death
occurred within 90 days from the date of commencement of the policy despite the authority
advising the Insurer to delete this exclusion clause at F&U approval stage of the product.
Violation of File and Use.
Decision- The insurer filed for F&U clearance for Home Loan Protection Policy on 3rd
September, 2003 which included a provision of waiting period of 90 days for consideration of
death claim. The Authority while considering the F&U clearance for this product had noted the
profile and the targeted market segment which was to be addressed. This market segment
consists of persons who had primarily obtained a home loan and the policy was supposed to
cover the outstanding home loan. For this reason, as there was no possibility of an adverse
selection the IRDA while clearing the policy vide its letter of 6th October 2003, specifically
directed the insurer to remove all exclusion clauses other than suicide clause. This would
mean removing the clause relating to 90 day waiting period. However, during inspection, a few
cases were found where death claims were rejected on the ground that death occurred within
the so called waiting period of 90 days. On a further examination, it was found that there
were 21 cases which were rejected as the death occurred during the said waiting period.
The insurer sought a lenient view on the ground that from 15th April, 2011 they were not
applying this particular provision and further since there are only 21 cases, a lenient view
sought.
The contention of the insurer is totally unacceptable; in the first instance, the insurer had no
business inserting a clause of 90 day waiting period knowing fully well that the Authority had
specifically directed that such clause may not be included. This clearly shows the scant regard
paid by the insurer to the directions of the Authority on a matter which critically affects the
policyholder welfare. It is always open for any insurer to consider the settlement of a death
claim in accordance to the provisions of section 45 of the Insurance Act, 1938. In the instant
cases, the insurer has merely applied the 90 day waiting period and has rejected the claim. For
this gross and serious violation of the directions of the Authority under File and Use, the
Authority has concluded that this is a fit case where a penalty on each occurrence of up to Rs.
5 lakhs should be imposed and, consequently, a fine of Rs. 1,05,00,000 (One Crore Five Lakhs
only) is imposed for this violation. Further, the insurer is directed to reopen all the 21 rejected
claims and settle them within thirty days of receipt of this order. Insurer is also directed to
forward a communication as an endorsement to the original policy contract specifically
deleting the clause in respect of all the policy contracts that were issued since the launch of
the product and are in force. This task shall be completed within 30 days from the date of
receipt of this order and shall confirm to the Authority the action taken report accordingly.
16. From the aforenoted Charge and the Decision taken by the Chairman, IRDA, it is clear that
Insurance Companies cannot apply the 90 day waiting period and reject the claim on the ground
that in this case the death occurred on the 90th day.
17. It is manifest that the Insurance Company has taken a hyper technical objection in repudiating
the claim on the ground that the death occurred on the 90th day. Also, the evidence on record does
not show that the Complainant was in any manner taking advantage of the death of the policy
holder. The time of death is in nobody's hand and I find it a fit case to rely on the judgement of the

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Hon'ble Delhi High Court in Rajiv Khosla v. Union of India & Ors., (2010) 170 DLT 103, in which
the Hon'ble High Court has held that the schemes made under the Jeevan Kishore Policy will not be
repudiated by the LIC on the ground that they have been made before the "differed date", subject
of course, to other conditions being satisfied.
18. Even in the instant case the deferred period was 90 days and it is not as if the time of death
was planned only to take advantage, under the policy expecting that the insured may not live
beyond the period of 90 days. Be that as it may, as both the interpretations are reasonably possible,
as the policy holder died on the 90th day, I find it a fit case to accept the interpretation which
favours the policy holder as the purpose for which the policy is taken would be in consonance with
the object for getting the life assured. The law on the subject is settled by the Hon'ble Apex Court in
Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan & Ors., (1987) 2 SCC 654: Shahi Gupta
v. LIC of India & Anr., (1995) CPJ 15 (SC): B.V. Nagaraju v. M/s. Oriental Insurance Co. Ltd.,
Divisional Officer, Hassan (1996) 4 SCC 648 and LIC v. Raj Kumar Baigarhia & Anr., (1999) 3 SCC
465.
19. For all the aforenoted reasons, the order of the State Commission is set aside and this Revision
Petition is allowed directing the Insurance Company to pay 2,49,995/- with interest @ 9% p.a. from
the date of repudiation till the date of realisation together with costs of 10,000/-. The amount shall
be paid within 4 weeks from the date of receipt of this order, failing which, the amount shall
attract interest @12% p.a. from the date of repudiation till the date of realisation.
Revision petition allowed.

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