ORAL JUDGMENT AS PER JUSTICE MR. V.R. KINGAONKAR This appeal is directed against oral judgment of the State Commission, Delhi in complaint case no. C-179/1997. By that judgment, the State Commission allowed the complaint filed by Respondent No. 1 – Smt. Sarita Jain and directed to pay Rs. Two lakhs to her along with Rs.25,000/- as compensation. 2. Though the Respondent No. 1 was duly served yet she did not appear in the proceedings of the present appeal. The Respondent No. 2 – Smt. Bir Bala Jain has appeared through the counsel. She, being insurance agent, is a formal party. 3. The dispute lies in a narrow compass. The Respondent No. 1 (complainant) alleged that the appellant had taken a Double Benefit policy by paying premium amount of Rs.13,468/- vide cheque no. 266501 dated 13-05-1996 drawn on Syndicate Bank, Chandni Chowk Branch, Delhi through Respondent No. 2 – Smt. Bir Bala Jain on 13-05-1996. She was nominated as beneficiary for all the benefits arising out of the insurance policy in case of death of her husband. The agent i.e. Respondent No. 2 delivered a proposal deposit receipt to her husband. The cheque was encashed on 27-05-1996. Her husband died on 09-06-1996 during course of vehicular accident. She preferred claim on 13-07-1996, which was repudiated by the appellant vide letter dated 01-01-1997 as well as by letter dated 08-01-1997. 4. The appellant interalia contended that there was no actual contract of the insurance between the deceased Rajiv Jain and the appellant and as such the complainant could not be treated as “Consumer” qua appellant - LIC. It was alleged that there was no proposal received by the appellant nor it was approved. It was the chief contention of the appellant that mere acceptance of the amount being the prospective payment for the insurance policy could not have completed the contract between the parties. It was also alleged that another insurance policy of deceased Rajiv Jain was for Rs.1 lakh and was settled in as much as it was old policy and the claim was fair and legally permissible. 5. The State Commission held that when the cheque was accepted and encashed by the office of the appellant, the appellant was required to place on record the terms of the insurance policy. It is observed : “Merely because there was no proposal form duly filled in by the insured does not mean that there was no contract of insurance. O.P. carries on the business of insurance and, therefore, any consideration received by it is towards the insurance of an insured and not against any other head.” 6. Crux of the problem is “Whether there was contract of insurance between the appellant and the assured i.e. deceased Rajiv Jain?” 7. The insurance contract is not a lop-sided transaction. The insured is required to complete certain formalities before the insurance policy is duly insured by the insurer. The assured had not undergone any medical examination nor the proposal form was filled in. The State Commission itself has rendered finding that there was no proposal form nor it was verified by the agent or the appellant. There was mere acceptance of the amount of cheque, which was issued in contemplation of the insurance policy, which was yet to be issued. Such mere acceptance of the amount of the cheque by itself will not conclude the contract of the insurance policy. The Supreme Court in “Life Insurance Corporation of India Vs. Raja Vasireddy Komalvalli Kamba & Ors.” 1984 (2) SCC 719 held: “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 Edition 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 to underwrite policy for Rs.50,000/- and above. The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. See in this connection the statement of law in Corpus Juris Secundum, Vol. XLIV page 986 where it has been stated as:-- “The mere receipt and retention of premiums until after the death of applicant does not given 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 offerer, 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’ 14. 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 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, acceptance must be communicated to the offeror. The general rule is that the 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. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed. See in this connection statement of law in MacGillivray and Parkington on Insurance Law, Seventh Edition page 94 paragraph 215.” 8. The above authority is followed by this Commission in Life Insurance Corporation of India Vs. Gita Sharma while deciding R.P. No. 1481/2009 by order dated 12th March, 2010. Needless to say the legal position is crystal clear. In the absence of mutual and binding contract of insurance, the appellant could not be fastened with liability to pay the amount, which was yet to be assured. This aspect is over looked by the State Commission while passing the impugned order. 9. Considering the legal and factual aspects discussed herein above, we allow the appeal and set aside the impugned order of the State Commission. The appellant is directed to refund the premium amount with interest @ 6% p.a. from the date of receipt till it was not paid or will be paid. The statutory deposit made by the appellant be returned to him along with accruals. The first appeal is accordingly allowed and disposed of. | 
