1. The plaintiff in the suit for recovery of money on the basis of multi-purpose Life Insurance Policy -- Ex. A-4, is the appellant. The Life Insurance Corporation of India is the sole defendant in the suit. The plaintiff is the widow of late Mohd. Jafar Ali, a practising advocate at Warangal. He was the holder of Multipurpose policy Ex. A-4 issued by the defendant for an assured amount of Rs. 5,000/-. The policy commenced on 28-3-1962. Payment of premiums was in quarterly instalments. Each quarterly premium was Rs. 79-06. Jafar Ali paid the premiums regularly up to 28-6-1972. But owing to some unforeseen circumstances, he could not pay the premium due on 28-9-1972 in time. He however, paid this premium as well as the quarterly premium payable on 28-12-1972, on 2-4-1973 at Warangal branch office of the defendant-Corporation. The premium due on 28-3-1973 was paid on 5-4-1973. The insured, offered to give a personal declaration of health on 2-4-1973. But D.W. 2, the Branch Manager did not entertain the said request. On 9-4-1973, the policyholder was requested by the defendant by the letter Ex. B-3 to pay interest of Rs. 4-60 on the arrears of the premium and to appear before Dr. K.P. Reddy and submit a short medical report to consider the revival of the policy and adjust the amount in deposit. A short medical report Ex. B-4 was sent by Dr. K.P. Reddy to the Branch Manappr on 17-4-1973. It appears that Dr. K.P. Reddy certified that the life of the policyholder was 'first class'. He also paid the interest of Rs 4-60 on 18-4-1973 under the receipl Ex. B-5. On 14-5-1973 the insured was directed by the letter Ex B-1 to appear and get himself examined by Dr. K. Damodar Reddy. Assistant Professor of Ophthalmology as some additional information was required for consideration and revival of the policy. Dr. K. Damodar Reddy examined the insured on 29-5-1973 and submitted his report Ex. B-2 on the same day. The defendant's agent also wrote a letter to the Branch Manager, D.W. 1 informing him that the formalities were completed and the policy may be revived. The policyholder was under the impression that the policy had been reviewed. The policyholder died on 1-6-1973 in an accident. The defendant's agent wrote a letter dated 15-6-1973 to the Branch Manager, D.W. l informing him of the death of Mohd. Jafar Ali. The plaintiff is the nominee under the policy, Ex. A-4, Therefore, she submitted an application Ex. A-6 on 20-8-1973 to the defendant for the payment of the full amount due under the policy. But the defendant replied under Ex. A-7 that the policy was treated as paid-up for the non-payment of the premium due on 28-9-1972. Thereupon, the plaintiff issued a notice Ex. A-8 on 28-11-1973 claiming the full amount of insurance covered by the policy. The defendant replied under Ex. A-9 to the effect that the plaintiff was entitled to the paid-up value only. Therefore, the plaintiff filed the suit on 17-6-1975 for recovery of the amount due under the policy Ex. A-4.
2. The suit was resisted by the defendant mainly contending inter alia that the question of revival of the policy did not arise as the policyholder died on 1-6-1973 even before the receipt of the medical report for consideration of the revival of the policy from Dr. Damodar Reddy of the M.G.M. Hospital, Warangal and that the revival was not a matter of right rested in the policyholder and it would not automatically follow even after the receipt of the medical report. It was further averred that at the time of the revival of the policy the defendant could place restrictions on extra-premiums and it could even refuse to revive it. It was asserted that the mere payment of premium and submission of a declaration or medical report do not automatically revive a lapsed policy, nor do they clothe the policyholder to claim any revival much less to deem the policy as revived. It was, therefore, contended that the plaintiff was not entitled to the amounts under the policy as the policy was not in force on the date of the death of the policy-holder and was only entitled to the paid-up value and the bonus accrued on the policy after the date if lapse of the policy which the defendant had offered to pay and ready to nay in full discharge of obligation under the lapsed policy in question.
3. The learned Subordinate Judge, Warangal, on an effective valuation of the entire evidence in the case, held that the lapsed policy Ex. P-4 was not revived and therefore the policy was not in force, nor the policy could be deemed to have been in force on the date of the death of the policyholder. Accordingly, the learned Subordinate Judge granted a decree in respect of the paid-up value and bonus accrued on the policy after the date of lapse of the policy and dismissed the claim of the plaintiff in other respects. Hence this appeal by the aggrieved plaintiff.
4. The wide question and a question of general public importance that arises in this appeal is; what are the precise limits and conditions for the revival of a lapsed insurance policy? The answer must be found from the conditions and privileges printed on the back of the policy itself.
5. The conditions for revival of discontinued or lapsed policies read as follows :
'Revival of discontinued or lapsed policies :
'When the premium is not paid within the days of grace, the policy lapses, but may be revived during the lifetime of the life assured, but within a period of five years from the due date of the first unpaid premium and before the date of maturity on the following terms :
(a) within six months from the due date of the first unpaid premium without evidence of health on payment of the premium in arrears with interest at the rate of 1/2 per cent for each month or portion of a month, reckoning from the due date of each premium paid late, subject to a minimum payment on this account of 50 paise. If the revival is completed within fourteen days from the expiry of the days of grace simple revival charge of 50 naya paise only will be required, no matter what the amount of the premium may be.
(b) At any time after the first six months from the due date of the first unpaid premium but not later than the expiry of a period of five years from the due date of the first premium on production of evidence of health and habits of the life assured (including a Medical Report of his life from the Corporation's appointed Medical Examiner, wherever required by the Corporation, the fee for which must be paid in advance) to the satisfaction of the Corporation and of evidence to show that there has been no adverse change in personal or family history or occupation and on payment of the premiums in arrears with interest thereon at the rate of 6 per cent per annum compounding half-yearly reckoning from the due date of each premium paid late.'
6. Thus the policy confers a privilege or concession on the policyholder to revive a policy that had lapsed. But that privilege is subject to certain limitations and conditions. The limitations for the revival are: the revival can be (1) only during the lifetime of the assured and not after his death, (2) within a period of 5 years from the due date of the first unpaid premium and (3) before the date of maturity. Besides these limitations, the policy stipulates also conditions. Clause (a) deals with the conditions of revival of lapsed policies within six months from the due date of the first unpaid premium; and Clause (b) stipulates conditions for revival after the first six months from the due date of the first unpaid premium but not later than the expiry of a period of five years from the due date of the first unpaid premium. Under Clause (a) if the premium in arrears is paid with interest at the rate of half per cent for each month or a portion thereof is paid, the policy would be revived without any evidence of health. Under Clause (b) a policy may be revived at any time after the first six months from the due date of first unpaid premium but not later than the expiry of the period of 5 years of the due date of the first unpaid premium on production of evidence of health and habits of the life assured to the satisfaction of the Corporation and of evidence to show that there has been no adverse change in personal or family history or occupation and on payment of the premiums in arrears with interest thereon at the rate of 6 per cent per annum compounding half yearly reckoning from the due date of each premium paid late.
7. The learned counsel for the appellant, however, submits that when the insured did all that he ought to do and what was left was only the consideration of the question of revival of the policy on the basis of medical report, the policy could be revived by the Corporation even after the death of the policyholder. According to him, the policy-holder complied with the request of the defendant-Corporation to submit a medical report from Dr. K. Damodar Reddy and the medical report Ex. B-2 was submitted by the Doctor on 29-5-1973 to D.W. 1, the Branch Manager. It is the finding of the learned Subordinate Judge that Ex. B-2 report was received by the Branch Manager before the death of the policy-holder on 1-6-1973. Thus, according to the learned counsel, the policyholder did all that was required of him before the death and, therefore, the policy should have been revived by the Corporation. The learned counsel placed reliance on a decision of this Court in Hindusthan Ideal Insurance Co., Ltd. v. B. Jayalak-shmamma, : AIR1959AP562 Head-note (c) of the report reads.
'The renewal of lapsed policies follows as a matter of course on the fulfilment of the conditions mentioned in the policy. The insurer cannot add further terms and conditions if and when the revival is desired so as to affect the terms of the original agreement. Therefore, the contention that until the acceptance of the revival application and the issue of memorandum stating that the policy has been revived, the policy remains lapsed is not acceptable.
Where the original agreement did not require that the assured should continue to be alive at the time when the company takes up the application for the renewal for consideration the contention that the death of the assured so operated as to render the revival of the lapsed policy ineffective is not tenable.'
8. But in this case the original agreement Ex. A-4 precisely stipulated that the question of revival can be considered only during the lifetime of the life assured. Therefore, that decision is of no help to the learned counsel.
9. On the other hand, the learned counsel for the Corporation submits that with the lapse of the policy, the policy is dead and gone and the rights and liabilities under the policy do not begin until the contract has again started to run and in the absence of any effective revival the contract does not begin to run. According to the learned counsel, the mere payment and receipt of premium will not automatically revive the policy and it is only on the acceptance of the terms and conditions by the Corporation that the policy gets revived.
10. In Halsbury's Laws of England, Volume 25 at page 268 paragraphs 497 and 498 occurs the following passages on Revival of Policy.
497. Revival of lapsed policy: An insurance policy may lapse for a number of reasons, but the most usual one is the assured's failure to pay the consideration due from him in the form of premium on the due date or within the period of grace allowed. However, there may be a revival of a policy which has so lapsed, either by agreement between the parties or by conduct of the insurers such as to estop them from denying that there is subsisting policy.
498. Revival as new contract: A revival of an insurance policy operates as a new contract, and the parties' rights and liabilities, according to ordinary principles, do not begin until the new contract has started to run............ It is not unusual to find that fresh terms and conditions are laid down for the revival and there is then no effective revival until the new terms and conditions are accepted and complied with'.
11. In Pritchard v. Merchant's and Tradesman's Mutual Life Assurance Society (1858) 140 ER 885, Willes, J., observed:
'However that may be, the payment here was not made within the thirty days. But then comes this further condition,-- 'but this policy may be revived within three calendar months, on satisfactory proof of the health of the party on whose life the assurance is made, and the payment of fine of 2s. 6d. per cent upon the sum assured,' &c.; I am at a loss to see how that provision aids the plaintiff's case. It assumes that the subject upon which the insurance is to attach is a living person, otherwise the stipulation for satisfactory proof of the health would be idle and absurd. The very foundation of a life-policy, as explained by the Exchequer Chamber in Dalby v. India and London Life Assurance Co., (1854) 15 CB 365, is that it is a contract for the payment of a certain sum upon the future death of a person then in being, in consideration of the present payment of a premium. The renewals, like the original policy, clearly are only for the future assurance of a living person.'
12. In that case, a policy was effected in the usual form on the life of A, in consideration of the payment of certain annual premiums on the 13th October in each year -- with a condition that the policv should be void, amongst other grounds 'if the premiums were not paid within thirty days after they should respectively become due but that the policy might be revived within three calendar months, on satisfactory proof of the health of the party on whose life the insurance was made, and payment of certain fine. The annual premium due on the 13th of October, 1855, was not paid in time and the policy became void. A died on 12th November On 14th November, the nominee under the policy sent a cheque for the premium and a receipt was issued being ignorant of the death of A. It was held that the payment did not under the circumstances revive the policy.
13. In Me Kenna v. City Life Assurance Co.. (1919) 2 KB 491, the premium payable on July 31, 1915 and all subsequent premiums were unpaid. On August 7, 19115, the plaintiff, who was assignee of the policy with the object of keeping the policy on foot, offered to pay to the insurers the premiums then in arrear, contending that the twelve months mentioned in the conditions ran from the last of the days of grace, but the insurers refused to accept the premiums. It was held: 'that the last premium 'became due' on the date specified in the policy as that on or before which it was payable -- namely. July 31, 1915, that the offer on August 7, 1916, to pay the premiums in arrear was consequently too late, and that the policy had lapsed'.
14. From the aforesaid discussion devoted to the limitations and conditions for the revival of lapsed policies and the relevant rulings on the subject, the following principles emerge :
(1) Revival of a lapsed policy is a privilege or concession granted to the policyholder subject to certain limitations.
(2) The said limitations are :
(a) the revival could only be during the lifetime of the assured and not after his death;
(b) within a period of five years from the due date of the first unpaid premium;
(c) before the date of maturity; and
(d) the conditions relating to the payment of the premium due on the lapsed policies should be complied with.
(3) The revival of a policy is not a matter of right and it would not automatically follow even after the fulfilment of the conditions laid down in the policy.
(4) The revival operates as a new contract and the rights and liabilities do not begin to run until the new terms and conditions are accepted and complied with.
15. In P. Sankunni Menon v. Empire of India Life Insurance Co. Ltd, Bombay, (1931) 61 Mad LJ 388: (AIR 1932 Mad 241) Venkatasubba Rao, J., held:
'Where a person paid to the Insurance Company all the premiums payable up to a certain date and under the conditions, the policy had not only on that date acquired a surrender value, but he had in the alternative become entitled to a fully paid-up policy for a proportion of the original sum assured, and he made default in payment of premium due on a certain date, and then, about 31 months after the date of default, requested the Company to inform of him of the most favourable terms for reviving his policy and the company refused him such privileges on the questions whether his policy could be reinstated and whether he could be entitled to the paid up policy.'
It was further held: 'that since the premium was not paid within the days of grace allowed by the contract and since the request to revive the policy was not made within twelve calendar months along the payment of arrears of premiums, fine and interest, according to the conditions to which the policy was subjected, the policy became void and all premiums paid in respect of it forfeited.'
16. The learned counsel for the appellant relying on the above decision submits that the payment of premium was accepted and it was made within the period of grace allowed. Therefore, he argues that the production of anv medical certificate does not arise. But it is clear that the amount was not paid with interest, and the interest was paid only after the expiry of the six months from the due date of the first unpaid premium. Therefore, both the parties proceeded on the footing that the evidence of health was required under Clause (b) of the conditions for revival and so the notice Ex. B-1 was issued to the policyholder. But even if the contention is accepted, there can be revival if the assured is alive and there can be no revival after the death of the assured. In this case, the assured died on 1-6-1973, before the actual revival of the policy. Therefore. I have no hesitation in holding that there was no revival of the policy and therefore, the Court below rightly dismissed the claim for the entire amount due under the policy and granted the decree for the paid-up value and bonus accrued on it. The appeal fails and it is accordingly dismissed. However, there shall be no order as to costs.