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Sulakshna vs Oriental Insurance Co. Ltd. and Another

Civil Appeal · 2022 INSC 1009Decided 23 Sept 2022
Civil Appeal No. 6731 of 2022
M.R. Shah · Krishna Murari

Background

The appellant's husband paid Rs. 4,000 as premium for group insurance policies to an authorised collecting agent (respondent No. 2) on 31.12.2006, and a cover note was issued the same day. He died in a road accident on 17.02.2007. The insurance company (respondent No. 1, Oriental Insurance) refused to honour the claim, contending the policy period only ran from 09.03.2007 to 08.02.2008 because the agent had remitted the premium to the company only on 09.03.2007, after the death. After a first complaint was disposed of on an assurance of settlement that was never honoured, the widow filed a fresh consumer complaint. The District Forum ruled in her favour and was upheld by the State Commission, but the National Consumer Disputes Redressal Commission reversed both on revision, holding the policy had not commenced before the death.

Decision Breakdown

The Supreme Court held that respondent No. 2 was authorised by the insurance company to collect premiums on its behalf, so once the premium was paid to that authorised agent on 31.12.2006, the insurance cover was deemed to have commenced (after the standard 15-day waiting period) from that date, regardless of any delay by the agent in remitting the amount to the insurance company. The insured could not be made to suffer for the agent's delay in internal remittance. The Court held the National Commission had committed a serious error in reversing the concurrent findings of the District Forum and State Commission, restored the District Forum's order, and directed payment of the insured sums (Rs. 2,50,000 and Rs. 2,00,000) with 9% annual interest within eight weeks.

Lesson Learnt

When a policyholder pays a premium to an insurer's authorised collection agent, insurance coverage is deemed to run from that payment date: an insurer cannot deny a genuine claim by blaming its own agent's delay in internally remitting the premium; the risk of such delay falls on the insurer, not the insured.

Official source (sci.gov.in)View Judgment (PDF)

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