In Brief
A son died of a heart attack approximately 15 months after his parents and he obtained a housing loan with mandatory life insurance. The insurance premium of ₹78,150 was debited from the loan account on 29 September 2008, accompanied by a health declaration form. The insurer later claimed the policy was never issued because mandatory medical examination had not been completed, and refunded the premium over two years later. The Supreme Court held that by accepting and retaining the premium without timely rejection, the insurer waived the medical examination requirement and accepted the policy. The unreasonable delay in notifying rejection, combined with the duty of good faith in insurance contracts, created a presumption of acceptance in favour of the proposer. The appeal was allowed and the insurer was held liable to discharge the outstanding loan amount.
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