TMI Blog1994 (8) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted the proposal and encashed the cheque and acknowledged the same by granting the receipt dated 9-3-1982 (Ext. A1), (the office copy of which is marked as Ext. B1(c)). Shri Davis Thomas, the agent of the appellant informed late Devaraj that issuance of the policy is only an office formality and would come in due course. But, Devaraj expired on 19-3-1982 on account of sudden renal failure. According to the plaintiff, grant of receipt Ext. A1 would indicate that there was an unconditional acceptance of a tender made in payment of the premium due under the contract, the offer of which was contained in the receipt; it constituted the first premium and consequently a contract of insurance came into existence; it is binding on the defendant-Corporation. But, when the plaintiff put forth her claim by the letter dated 16-6-1982 (Ex. A3), a reply dated 22-6-1982 (Ext. A4) was received from the Divisional Manager, LIC of India, Trivandrum stating that the proposal by her husband was not accepted by the Corporation and hence the contract was not complete. The appellant, therefore, declined to pay the amount as claimed. 3. The defendant-appellant resisted the claim on the ground that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat arises for consideration is whether acceptance of the cheque that accompanied the proposal form would amount to the acceptance of the proposal and a contract of insurance concluded despite non-issue of a policy signifying the acceptance of the proposal. 7. Admittedly, the defendant-Corporation never issued any policy of life insurance, nor a demand was made by it on the proposer to pay any premium before his death. The amount under Ext. A1 was said to have been paid on the advice of one Shri Devis Thomas, who is an agent of the Corporation. There is nothing in the evidence on record to show that he is a salaried employee of the Corporation. The work of an agent of the Insurance Corporation is only to solicit persons to take out insurance policies. He is not involved in the adminstrative affairs of the Corporation, much less authorised to take decisions on matters pertaining to the issue of policy. Therefore, he cannot be said to be a person authorised to make statements on behalf of the Corporation. That being so, the Corporation is not bound by the conduct of the agent in advising the deceased to remit an amount of ₹ 2625/- as premium or his statement that issue of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in Ext. B2 -- Underwriting Manual, compiled by the authorities concerned of the Life Insurance Corporation, the legal validity of which has not been challenged. The Corporation officers are bound to act according to the said instructions. The expression suspense account in the common parlance means an account in which the amount is held in deposit in favour of the person who remitted it and may be refunded in future, if the same is not appropriated or utilised for the purpose for which it was remitted. On a plain reading of the contents of Ext. Al, in our opinion, it does not admit of an intepretation that the money sent along with the proposal unasked for and kept in suspense account by the Corporation before the settlement of the actual rate of premium should be treated as the first premium. 10. The proposal form, when duly filled in and signed by the proposed assured and forwarded to the insurers, operates as a formal offer by the proposed assured to the insurers to enter into a contract of insurance. The proposal form shows the terms on which he is willing to contract, and if the offer is accented, he cannot insist on having an insurance differing in its terms from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a reasonable inference that the parties were tacitly agreed. Without such agreement, it would be impossible for the courts to give effect to the parties contract except by virtually writing the contract for them, which it is not the function of the courts to do. The general rule is 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. Whether the final acceptance is that of the assured or insurers depends simply on the way in which the negotiations for an insurance have progressed. In many cases both offer and acceptance are made and given respectively through the parties' authorised agents. It is particularly important that the person accepting for the insurers should be someone empowered to make contracts on their behalf. In life assurance especially it is traditional for the assured's proposal to be put before the directors for their appraisal and decision. A purported acceptance by someone without actual or ostensible authority to give it does not bind the insurers. Silence does not denote consent and therefore no binding contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12-1976. The Division Bench by referring to Halsbury's Laws of England observed that any positive act indicative of an intention to create a contract may be sufficient acceptance; for example, the receipt of the permium. On facts, it was found that the amount sent by the deceased along with the proposal was treated as premium. On the finding that the evidence in that case conclusively proved the existence of a contract during the life time of the deceased, it was held that the contract was binding on the insurance corporation. The Supreme Court decision in Vasireddy's case, AIR 1984 SC 1014 was distinguished by stating that the facts of that case clearly indicated the total absence of a contract and the facts of this case (Kamalamma's case) speak to the contrary. But in the present case there was no acceptance of the proposal creating a concluded contract. Firstly, the amount remitted under Ext. A1 was not treated as premium. Secondly, Ext. A1 nowhere spells out that receipt of the amount which is the initial deposit towards the proposal signifies the consent of the insurer to accept the offer or the proposal. Moreover, at no point of time the acceptance of the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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