LIFE INSURANCE CORPORATION

V.
RAJA VASIREDDY
KOMALAVALLI KAMBA

ABHISHEK RAI
2014/BA.LLB/003
 Facts
• Raja Vasireddi filed a proposal for insurance
for Rs. 50,000 on 27th December, 1960.
• He eventually issued two cheques for Rs. 300
and Rs. 220 as first premium.
• While the first cheque was encashed, the
other cheque was dishonored three time
before finally getting encashed on 11th
January, 1961.
 Facts (Continued…)
• Raja Vasireddi died on 12th January, 1961 and on
16th January 1961, the plaintiff (widow) wrote to
the defendant and asked for payment of Rs.
50,000.
• On 28th January 1961, Divisional Manager,
Masulipatnam rejected it and denied any liability
on its part.
• Correspondences were exchanged between them
from 1961 – 1963.
• On 10th Jan 1964, plaintiff filed a suit in the court
of subordinate judge Masulipatnam.
 Contention (Plaintiff)
• The plaintiff contended that:
– The Deceased was assured and told by the local
agent and field officer that payment of first
premium would amount to acceptance of the
proposal.
– A valid insurance contract came in to being as
soon as the second cheque was encashed on 11th
January 1961
 Contention (Defendant)
• The defendant contended that:
– The cheques issued by the deceased were kept in
deposit in suspense account
– Payment of first premium does not amount to
acceptance of proposal
– Assurance given to the deceased is either:
• Factually incorrect
• Bad in Law.
 Question for consideration

• Whether there was a concluded valid

insurance contract between the deceased and
Life Insurance Corporation of India?
Chronology of the Courts Ruling

Trial Court • There was no concluded contract.

• There was acceptance of proposal and

High Court the contract of insurance was
completed.

Supreme • There was no concluded contract of

insurance between the deceased and
Court LIC
 Ratio
“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.”
 Ratio
“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.”
 Judgment
“It was concluded that no contract of
insurance existed between the deceased and
LIC. Also, LIC was entitled to Rs. 85,000 that had
already been paid to the family of the deceased
but LIC demanded only half the amount.”