1995 (2) TMI 450 - SC - Income Tax

Summary

Issues Involved: Interpretation of insurance policy terms regarding additional sum payable in case of death due to accident, relevance of circulars issued by the insurance corporation, and determination of further payment to the appellant.

Interpretation of Insurance Policy Terms: The appellant, widow of the deceased policyholder, claimed an additional sum equal to the sum assured due to the death of the policyholder in an accident. The respondent insurance corporation contended that no further amount was payable under the policy terms. The court noted that under normal circumstances, a policy lapses unless three premiums are paid, but the corporation had relaxed this condition through a circular. The circular specified that if death occurs after two premiums have been paid within three months of the due date of the next unpaid premium, the full sum assured along with bonuses would be paid. The appellant argued that the term "full sum assured" should include more than the basic sum assured of Rs. 1 lakh, while the respondent argued otherwise based on a subsequent circular clarifying the payment terms.

Relevance of Circulars: The court considered the interpretations presented by both parties and decided to favor the policyholder to advance the purpose for which the policy was taken and to align with the objective of ensuring lives assured. However, a subsequent circular issued by the corporation clarified that no Double Accident Benefit (DAB) is payable under certain plans, even if the claim is considered for the full sum assured. This circular was not brought to the notice of the lower commissions during the proceedings.

Determination of Further Payment: Despite the subsequent circular, considering the circumstances of the case including the policyholder's untimely death and the impact on his family, the court deemed it just to order a further payment of Rs. 50,000 to the appellant on an ex gratia basis. The court directed the respondent to make this payment within a month, ruling in favor of the appellant and allowing the appeal without any costs.