LIC Can Backdate Insurance Policies: Punjab & Haryana High Court Clarifies Date of Risk Commencement Under Insurance Act
Case Name: Branch Manager LIC of India and Another v. Vinod Kumar and Another
Date of Judgment: 06 May 2026
Citation: CWP-3917-2015
Bench: Justice Jagmohan Bansal
Held: The Punjab and Haryana High Court held that an insurance policy can validly commence from a retrospective date if such commencement is specifically agreed between the parties and permitted under the Insurance Manual. The Court clarified that Section 64VB of the Insurance Act, 1938 merely prohibits an insurer from assuming risk before receipt of premium, but does not prohibit issuance of an ante-dated or backdated policy once premium is received. Consequently, the Court set aside the order of the Permanent Lok Adalat which had treated the policy commencement date as the date of premium payment instead of the agreed retrospective date.
Summary: The dispute arose after the wife of respondent Vinod Kumar purchased a life insurance policy from LIC. The proposal form was submitted on 11.05.2011, while the first premium was paid on 23.05.2011. However, the policy bond specifically mentioned the commencement date as 27.04.2011. The insured later defaulted in payment of the second premium, which was subsequently paid along with delayed charges calculated by considering 27.04.2011 as the commencement date.
The insured died on 02.06.2012 before payment of the third premium. LIC repudiated the claim on the ground that the policy had lapsed because the grace period expired on 27.05.2012 if the commencement date was treated as 27.04.2011. On the other hand, the respondent contended that under Section 64VB of the Insurance Act, risk could not commence prior to payment of premium and therefore the policy should be treated as commencing from 23.05.2011, which would keep the policy alive on the date of death.
The High Court examined Section 64VB of the Insurance Act and observed that the provision only restrains insurers from assuming risk before receipt of premium. It does not create an absolute prohibition against retrospective commencement of policies once premium is received. The Court noted that the Supreme Court in earlier decisions had acknowledged situations where policies commenced prior to the actual payment date and nowhere laid down that such retrospective commencement was impermissible.
The Court further relied upon Clause 8 of the LIC Insurance Manual which expressly permits “dating back” of policies within specified limits and also contemplates charging interest for delayed commencement periods. It was noticed that the insured herself had sought commencement from 27.04.2011 and had also paid delayed charges calculated on that basis. These circumstances clearly demonstrated acceptance of the retrospective commencement date by both parties.
Rejecting the respondent’s contention regarding estoppel against statute, the Court held that the contractual terms were not contrary to Section 64VB. Since the policy validly commenced from 27.04.2011, the grace period expired prior to the insured’s death and therefore LIC was justified in repudiating the claim. The order passed by the Permanent Lok Adalat was accordingly set aside.
Decision: The writ petition filed by LIC was allowed. The Punjab and Haryana High Court set aside the order dated 17.12.2014 passed by the Permanent Lok Adalat, Fatehabad and held that the insurance policy had commenced from 27.04.2011, i.e., the retrospective date mentioned in the policy bond, and not from the date of payment of premium.