While dismissing a revision petition filed by Shriram Life Insurance Company Ltd and upholding concurrent orders of the district and state consumer commissions, the national consumer disputes redressal commission (NCDRC) directed the insurer to settle a death claim and pay Rs1 lakh as costs to the complainant. The Commission held that the insurer had repudiated the claim with mala fide intent despite the insurance contract having been validly concluded before the death of the policyholder.
In an order last week, the NCDRC bench of air vice-marshal (AVM) J Rajendra (retd) and justice Anoop Kumar Mendiratta, says, "It has been categorically observed by the district forum that pursuant to the proposal dated 2 September 2015, the policy was issued by the insurance company on 7 September 2015 was dispatched at the address of the complainant on 8 September 2015. Admittedly, the death of the wife of the complainant occurred on 9 September 2015 after the acceptance of the proposal and issuance of the policy on 7 September 2015 during the lifetime of the proposer. In the facts and circumstances, the contract stood concluded on the acceptance of the proposal and issuance of policy and no further acceptance was required from the policyholder."
"Merely because the insurance policy was received after the death of the policyholder, the same does not lead to an inference that the contract was not concluded between the parties. Having unconditionally accepted the premium and on issuing the policy prior to the death of the proposer, coupled with the fact that the same was forwarded and dispatched on 8 September 2015, the repudiation by the insurance company was with mala fide intention," the order says.
The case arose from the tragic death of Kanta Devi, who had purchased a ‘Shriram New Shri Vivah’ life insurance plan on 2 September 2015 for an assured sum of Rs3 lakh with a term of 20 years. The policy was issued on 7 September 2015 and dispatched the following day. Unfortunately, Ms Kanta Devi, the policyholder, passed away due to a heart attack on 9 September 2015, two days after issuance and before the policy document reached her home on 11 September 2015. When her husband, Rakesh Kumar, informed the insurer and submitted the claim, Shriram Life rejected it, asserting that the contract had not been concluded because the policyholder died before physically receiving and acknowledging the policy.
In a letter dated 27 February 2016, the insurer stated that since the assured had passed away before receiving the policy documents, she was unaware of the terms and conditions and, hence, the contract remained 'un-concluded'. It offered only a refund of the premium amount paid.
Aggrieved by this decision, Mr Kumar issued a legal notice and later filed a complaint before the district consumer forum, Bharatpur, which ruled in his favour. The Forum held that the insurer’s liability commenced when the policy was issued and dispatched, not when it was physically delivered to the policyholder. The decision was subsequently upheld by the state consumer disputes redressal commission at Jaipur in January 2018.
Shriram Life then filed a revision petition before the NCDRC, challenging these orders. The company’s counsel argued that the state commission had erred in applying the law of contract, as acceptance of an insurance proposal becomes binding only when communicated to the proposer. Citing previous judicial precedents such as LIC vs Raja Vasireddy Komalavalli Kamba (1984) 2 SCC 719 and Maddi Jayalakshmi vs Shriram Life Insurance Co Ltd (NCDRC, 2014), the insurer contended that mere issuance or preparation of the policy does not constitute acceptance, and no binding contract arises until acceptance is duly communicated.
Counsel for the respondent argued that the insurance policy had been issued and dispatched during the lifetime of the policyholder, and the insurer had accepted the premium unconditionally. He relied on Supreme Court judgments in D Srinivas vs SBI Life Insurance Co Ltd (2018) 3 SCC 653 and Gokal Chand vs Axis Bank Ltd. (2024) 6 SCC 154, which emphasised that circumstances demonstrating clear acceptance by the insurer are sufficient to establish a valid contract.
After hearing both sides, the Bench found that the insurer’s repudiation was unjustified. The Commission noted that the proposal was accepted on 7 September 2015, the policy was dispatched on 8 September 2015, and the insured died on 9 September 2015. These facts, it held, clearly demonstrated that the contract had been concluded during the policyholder’s lifetime. “Merely because the policy document was received after the death of the insured does not lead to an inference that the contract did not conclude,” the order stated.
Referring to the Supreme Court’s observations in D Srinivas vs SBI Life Insurance Co, NCDRC reaffirmed that the contract of insurance, being one of utmost good faith, binds both parties once the insurer unconditionally accepts the proposal and issues the policy.
The Commission also noted that Raja Vasireddy Komalavalli Kamba case was distinguishable on facts, as in that case, the insurance proposal had never been accepted by the competent authority before the proposer’s death. In contrast, in the present case, acceptance and issuance had both taken place before the insured’s demise.
NCDRC observed that Shriram Life’s refusal to honour the claim “was actuated by mala fide intention.” It further held that the insurer had no basis to argue that the contract was incomplete when its own records showed that the policy had been formally executed, dispatched, and entered into the company’s system before the insured passed away.
“Having unconditionally accepted the premium and issued the policy prior to the death of the proposer, the insurer cannot evade liability under the pretext that the document was received posthumously,” the Commission noted.
Consequently, NCDRC dismissed the revision petition as devoid of merit and directed Shriram Life to comply with the District Forum’s order in full. The insurer must pay Rs1 lakh to the complainant as costs within four weeks. In case of default, the amount will attract interest at 10% per annum from the date of default until realisation. The Commission also clarified that all pending interlocutory applications stand disposed with the final order.
For policyholders and consumers, the ruling underscores the protection available under the Consumer Protection Act, ensuring that insurers remain accountable once they accept payment and issue policies. For Shriram Life Insurance, however, it marks another instance where its claim handling practices have drawn judicial censure for lack of fairness and transparency.
(Revision Petition No1301 of 2018 Date: 28 October 2025)
