LIFE INSURANCE CORPORATION OF INDIA v.

KALLURI SIDDAIAH

FIRST APPEAL NO. 718 OF 2019 (Against the Order dated 21/02/2019 in Complaint No. 312/2014 of the
State Commission Andhra Pradesh)

It is evident from a bare perusal of the aforesaid section that it had absolutely no application to the case
in hand. The aforesaid section applies to a case where a contract contains an amount to be paid in case
of breach of the contract or it contains any other stipulations by way of penalty. The contract of
insurance is not a contract of the nature referred in section 74 of the Indian Contract Act. Therefore
Reliance upon the said provision, in my opinion, was only misplaced.

As rightly submitted by the Learned Counsel for the appellant, the Corporation insures the risk to the life
of the insured for a consideration which comes to it in the form of the premium. Had the complainant
unfortunately died at any point of time before he stopped paying premium to the Corporation, the sum
insured by the Corporation would have been payable to his nominee. Therefore, the Corporation incurs
cost in ensuring the life of the policyholders. If it is made to refund the premium in the lifetime of the
insured, in derogation of the terms of the insurance policy, it will not be possible for the Corporation to
remain financially viable and it will not be in a position to grant insurance cover to the policyholders.

For the reasons stated hereinabove the impugned order cannot be sustained and the same is
accordingly set aside. The consumer complaint consequently stands dismissed with no order as to costs.

It is also submitted by the learned counsel for the appellant this the consumer complaint was otherwise
barred by limitation having been filed about seven years after the policy had discontinued on account of
default in payment of premium. However, since on merits I find that the prayer made by the
complainant cannot be granted I need not examine the plea of limitation taken by the learned counsel
for the appellant.

The amount, if any, deposited by the appellant be refunded to it along with interest which may have
been accrued on that amount