Reliance Life Insurance Company Ltd. vs. Jaya Wadhwani
Citation: 2024 INSC 10; [2024] 1 S.C.R. 65; Civil Appeal No. 35 of 2024
Bench: Justice Vikram Nath, Justice Rajesh Bindal
Background
This case addressed a crucial question in insurance law: What is the effective date of a life insurance policy for the purpose of enforcing the suicide exclusion clause? Jaya Wadhwani’s claim arose after the assured, her husband, committed suicide on July 15, 2013. The policy had been proposed on July 14, 2012, but was issued on July 16, 2012. The insurance company repudiated the claim, citing Clause 9 of the policy, which excludes liability if the assured commits suicide within 12 months of policy issuance. Lower consumer forums and the National Consumer Disputes Redressal Commission (NCDRC) ruled in favor of the claimant, holding the relevant date to be the proposal or deposit receipt date, thus placing the suicide outside the 12-month exclusion period.
Supreme Court’s Analysis
Core Legal Issue:
The Supreme Court was called to determine whether the 12-month period for the suicide exclusion should be calculated from the date of proposal, the date of deposit receipt, or the actual date of policy issuance.
Interpretation of Policy Terms:
The Court closely examined Clause 9 of the policy, which clearly stated that the company would not pay any claim on death by suicide “within 12 months from the date of issue of this Policy or the date of any reinstatement of this Policy.” The Court held that the contract’s language was unambiguous and must be strictly construed.
Rejection of Alternative Dates:
The Court rejected the argument that the date of proposal or deposit receipt could be considered the policy’s effective date. It reasoned that the contract of insurance is only concluded upon actual issuance of the policy, and mere payment of premium or submission of proposal does not create enforceable coverage.
Precedent and Consumer Protection:
The judgment reaffirmed the principle that insurance contracts are governed by their express terms. The Court cited LIC v. Dharam Vir Anand and emphasized that consumer protection cannot override clear contractual stipulations.
Decision
The Supreme Court allowed the appeals of Reliance Life Insurance, set aside the orders of the NCDRC and lower consumer forums, and held that the date of issuance of the policy is the only relevant date for enforcing the suicide exclusion clause. Since the suicide occurred within 12 months from the policy issuance, the insurer was not liable to pay the claim.
Significance
This judgment provides authoritative clarity that, for insurance contracts, the effective date for all policy conditions—including suicide exclusion—remains the date of policy issuance, not the date of proposal or premium payment. It upholds the sanctity of contract terms and ensures uniformity and certainty for insurers and policyholders alike.
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