Life Insurance Corporation of India ( for short, the LIC) which was the Opposite Party before the District Forum has filed this Revision Petition against the order dated 25.7.2006 passed by the Gujarat State Consumer Disputes Redressal Commission (for short, the State Commission) in Appeal No.464/2002. By the impugned Order State Commission upheld the Order passed by the District Consumer Disputes Redressal Forum (for short, the District Forum) directing the Petitioner- LIC to pay the insured amount along with interest @ 12% till realization, Rs.5000/- towards compensation for mental agony and harassment and Rs.2000/- by way of costs., to the complainants. Late Shri Narendra Kantilal Modi gave his proposal along with proposal deposit amount of Rs.3388/- through a cheque dated 8.7.1996 seeking insurance cover for his life with accidental benefit for a sum of Rs.1,00,000/-. The contract of insurance, if accepted, was to take effect and commence from 28.6.1996. Five days thereafter, the proposer died owing to electric shock on 14.7.1996 Unaware of the death of the proposer on 14.7.1996, Petitioner accepted the proposal on 15th July, 1996. Policy No.832471906 was blocked by incorporating the same in the first premium receipt and the policy thereafter was to be prepared under the same number. Although the policy was subsequently prepared but owing to the demise of the proposer it was not issued. Complainants – Respondents (wife and children of the proposer) lodged claim with the Petitioner which was repudiated on the ground that no concluded contract had come into existence as the proposer had died prior to the acceptance of the proposal. The Petitioner had offered to pay a sum of Rs.1,00,000/- on ex gratia basis but the Respondents refused to accept the same and demanded the payment of Rs.2,00,000/-. Respondents, thereafter, issued legal notice to the Petitioner to which reply was sent. As the claim was not settled, Respondents filed the complaint before the District Forum. District Forum allowed the complaint and directed the Petitioner to pay the insured amount as per terms and conditions of the policy along with 12% interest per annum and Rs.5,000/- by way of compensation and Rs.2000/- costs. Petitioner being aggrieved, filed appeal before the State Commission which has been dismissed by the impugned order. Counsel for the Petitioner relying upon the judgement of the Supreme Court in the case of Life Insurance Corporation of India vs. Raja Vasireddy Komalavalli Kamba and Ors. – AIR 1984 SC 1014 contends that the Fora below have erred in directing the Petitioner to pay the insured amount as no contract of insurance between the Petitioner and the proposer had come into existence. That the proposer had died on 14th July, 1996 before the acceptance of the proposal on 15th July, 1996. That the contract of insurance is concluded only when the party to whom an offer is made accepts it unconditionally and communicates his acceptance to the person making the offer. Since in the present case proposer had died before the acceptance of offer, the Petitioner was not liable to make the payment. As against this, the learned counsel for the Respondents relying upon the judgement of this Commission in Life Insurance Corporation of India & Ors. vs. Mrs. Rakshna Devi – Revision Petition No.702 of 2003 decided on 20.10.2005 contended that the Fora below have rightly allowed the complaint and directed the Petitioner to pay the insured amount with accidental benefits. Counsel for the parties have been heard at length. In the case before the Supreme Court the proposer had died before the acceptance of the policy. The High Court allowed the claim. Life Insurance Corporation filed the appeal before the Supreme Court. Reversing the order of the High Court, the Supreme Court held that a contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. That though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract comes in existence till the person to whom an offer is made says or does something to signify his acceptance. Para 13 of the judgement reads as under: “13. When an insurance policy becomes effective is well-settled by the authorities but before we note the said authorities, it may be stated that it is clear that the expression “underwrite” signifies “accept liability under”. The dictionary meaning also indicates that. (See in this connection The Concise Oxford Dictionary, Sixth Edn., p. 1267.) It is true that normally the expression “underwrite” is used in marine insurance but the expression used in Chapter III of the Financial Powers of the Standing Order in this case specifically used the expression “underwriting and revivals” of policies in case of Life Insurance Corporation and stated that it was the Divisional Manager who was competent to underwrite policy for Rs 50,000 and above. The mere receipt “The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offeror, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the company’s executive officers.” In para 16 the Supreme Court observed: “16. Having regard to the clear position in law about acceptance of insurance proposal and the evidence on record in this case, we are, therefore, of the opinion that the High Court was in error in coming to the conclusion that there was a concluded contract of insurance between the deceased and Life Insurance Corporation and on that basis reversing the judgment and the decision of the learned Subordinate Judge.” The Judgement of this Commission in Rakshna Devi (supra) does support the case of the Respondents, but in view of the law laid down by the Supreme of India in Raja Vasireddy Komalavalli Kamba (supra), the view taken in Rakshna Devi (Supra) cannot be taken to be laying down correct law. Since the judgement of the Supreme Court is a binding precedent, the contention raised by the counsel for the Respondents cannot be accepted. It is well settled law that a contract is complete only on its acceptance and if death intervenes between the proposal and its acceptance, then the proposal itself gets extinguished. No contract can either be entered into or concluded with a deceased person by acceptance of his offer after his demise. The Supreme Court in Raja Vasireddy Komalavalli Kamba (supra) held that a contract of insurance is concluded only when the party to whom an offer is made accepts it unconditionally and communicates its acceptance to the person “making the offer”. Mere receipt and retention of premium until after the death of the applicant or even the mere preparation of the policy is not acceptance. Merely because the Petitioner had blocked Policy No.83241906 on acceptance of the proposal on 15.7.1996 and thereafter preparation of the policy under the number allotted in ignorance of death of the proposer does not result in a contract of insurance. Respectfully following the law laid down by the Supreme Court in Raja Vasireddy Komalavalli Kamba (supra), we accept this Revision Petition, set aside the order passed by the Fora below and dismiss the complaint. However, since the Petitioner had made an offer to the Respondents to pay the sum of Rs.1,00,000/- on ex gratia basis [see para 4(d) of memo of the Revision Petition], we direct the Petitioner to pay the aforesaid sum of Rs.1,00,000/- to the Respondents by way of ex gratia payment. No costs. | 
