JUDGMENT : 1. Heard Sri Manish Goyal, learned counsel for appellant and Sri Shri Prakash Gupta, learned counsel for respondent. 2. This is defendant's appeal under Section 100 of Code of Civil Procedure (hereinafter to be referred as 'CPC') arising from judgment and decree dated 15.07.1978 passed by Sri S. S. Gupta, 5th Additional District and Sessions Judge, Varanasi in Civil Appeal No.3 of 1976 whereby appeal has dismissed and judgment and decree dated 29.09.1975 passed by Sri S. N. Prasad, IIIrd Additional Civil Judge, Varanasi in Original Suit No.120 of 1974 has been confirmed. 3. The appeal was admitted on following substantial questions of law:- “(i) Whether in the absence of the payment of the first premium the contract between the insured and the Life Insurance Corporation of India came into existence? (ii) Whether on the facts and in the circumstances of the present case the payment of second premium could be considered to be a good payment as required under the terms of the contract? (iii) Whether the acceptance of the cheque by the Life Insurance Corporation constituted waiver and could be a ground for holding that the insured had made the payment within time?” 4. Plaintiff-respondent Smt. Shakuntala Devi instituted above suit in the Court of Civil Judge, Varanasi seeking a declaration that defendant-appellant was on risk under Policy No.8180099 issued on life of plaintiff's husband (Late Baboo Jwala Prasad Sao) and mandatory injunction was sought directing appellant to pay the sum due under aforesaid policy and also to pay any other amount which is due. 5. Late Baboo Jwala Prasad Sao obtained a life term policy of life insurance under the plan and term 34-20 for a sum of Rs.20,000/-in the year 1970 and completed all the formalities. An acceptance-cum-receipt dated 30.09.1970 was issued by Divisional Office, Varanasi. Plaintiff was a nominee in said policy. Premium was payable quaterly. Late husband of plaintiff paid second instalment on 18.03.1971 which fell due on 30.12.1970. Third instalment fell due on 30.03.1971, and payable upto 30.04.1971 with the grace period. Meanwhile on 21.04.1971 he died during Naxalite activities at Titagarh. 6. An acceptance-cum-receipt dated 30.09.1970 was issued by Divisional Office, Varanasi. Plaintiff was a nominee in said policy. Premium was payable quaterly. Late husband of plaintiff paid second instalment on 18.03.1971 which fell due on 30.12.1970. Third instalment fell due on 30.03.1971, and payable upto 30.04.1971 with the grace period. Meanwhile on 21.04.1971 he died during Naxalite activities at Titagarh. 6. Thereafter claim was made by plaintiff but Divisional Office of defendant-appellant vide letter dated 17.11.1972 informed plaintiff that claim has been repudiated on the ground that cheque of first instalment of premium tendered by plaintiff's late husband on 24.09.1970 vide receipt dated 30.09.1970 was returned/dishonoured by Banker, hence, no valid policy could ever come into existence. After serving notice, above suit was filed. 7. Trial Court formulated seven issues as under : “(1) Whether the court fee paid is insufficient? (2) Whether the suit is over valued and this Court has got no pecuniary jurisdiction to try this suit as alleged in para 41 of the W.S.? (3) Whether the contract of alleged Insurance was completed and defendant was on risk under it on the life of Sri Jwala Prasad Sao? If so, its effect? (4) Whether defendant waived its right to challenge the completion of the contract of Insurance by receipt of the contract of Insurance by receipt of the 2nd Premium, and if it is estopped from repudiating the claim on the plea of non-payment of 1st premium as alleged in paras 21 and 22 of the plaint? If so, its effect? (5) Whether payment of Rs.2.50/-only in cash towards 1st premium or the receipt of second premium placed the defendant on risk under the alleged Insurance? If so, its effect? (6) Is the suit maintainable as framed? (7) To what relief, if any, is the plaintiff entitled?” 8. Issue 1 was answered that appropriate court fee was not paid, hence, same was made good vide Court's Note dated 18.03.1975 and 20.03.1975. Issue 2 was also answered in favour of plaintiff as a preliminary issue vide order dated 08.03.1975. Thereafter, issues 3, 4 and 5 were taken together. Trial Court relying on the fact that 2nd instalment was received and accepted by Insurance Company and receipt thereof was issued, therefore, it cannot be said that a valid policy was not in existence or has not come into existence. Thereafter, issues 3, 4 and 5 were taken together. Trial Court relying on the fact that 2nd instalment was received and accepted by Insurance Company and receipt thereof was issued, therefore, it cannot be said that a valid policy was not in existence or has not come into existence. There was sufficient amount available in the account of deceased husband. The cheque was returned uncashed on the ground that it was not accompanied by Pass Book. The fact that Insurance Company accepted 2nd instalment brings in a binding contract between parties and, therefore, defendant-appellant was liable to pay claim of plaintiff. Suit was accordingly decreed with insured sum with further amount as and when due. 9. Defendant-appellant preferred Civil Appeal No.3 of 1976. Lower Appellate Court has considered two points for determination as under : “(1) Whether death of Jwala Prasad Sao was not proved by plaintiff? (2) Whether from the evidence it is not proved that contract was ever completed and the condition of making payment of first premium in cash was ever waived?” 10. Both these points were answered against defendant-appellant. Accordingly appeal was dismissed, hence, this second appeal. 11. Sri Manish Goyal, learned counsel for appellant contended that for taking above policy, plaintiff's deceased husband paid first premium amount through withdrawal slip (cheque) whereagainst acceptance-cum-receipt was issued on 30.09.1970. Quantum of first premium was Rs.270.60 whereagainst Rs.2.50 was paid in cash and for Rs.268.10 withdrawal slip was handed over by plaintiff's deceased husband to appellant's agent. It was also mentioned in receipt issued by appellant that acceptance by receipt is subject to realization of amount in cash. Since, withdrawal slip was not honoured by the Banker of plaintiff's husband, first premium remained unpaid and no valid policy came into existence. 12. Per contra, learned counsel appearing for respondents submitted that subsequent instalment was accepted by appellant which shows admission on its part of existence of a valid policy and appellant is stopped from taking plea that first premium was not paid, hence, no valid policy was in existence. 13. Facts are not in dispute and it is only the consequences of above facts, which have to be considered. 14. 13. Facts are not in dispute and it is only the consequences of above facts, which have to be considered. 14. It is evident that first premium remained, in effect, substantially unpaid, since, withdrawal slip/cheque issued by Policy Holder was dishonoured by his Banker though another subsequent instalment was paid by deceased Policy Holder, which was accepted by appellant-Insurance Company. 15. The question is “whether subsequent receipt of two premiums by Insurance Company can be treated to be an acceptance of continuance of a valid policy or not.” 16. A similar question has been considered by a learned Single Judge of Delhi High Court in Mrs. Surinder Kaur vs. Life Insurance Cooporation of India, (1994) 54 DLT 179 . There also in respect of premium due on 28.09.1983, a cheque was deposited for Rs.1367.50/-and receipt was issued by LIC which contained a condition that it was subject to encashment but subsequently cheque was dishonoured with remark “referred to drawer”. Consequently, receipt dated 21.09.1983 vide letter dated 20.10.1983 was cancelled. It is held that subsequent acceptance of premium by LIC cannot be treated to be continuance of valid policy and no amount can be claimed by legal representatives of deceased after death in respect to said policy. 17. In LIC Vs. Mani Ram, (2005) 6 SCC 274 , Court held, while considering validity of claim by beneficiary and denial thereof by Insurance Company, all the terms and conditions of policy have to be kept in mind. 18. In the present case, even subsequent payment of premium does not make deficiency good arising on account of dishonouring of payment of first premium and, therefore, default on the part of Policy Holder is writ large and subsequent acceptance of premium, cannot remove the said defect. In view thereof, first question is answered in favour of appellant. 19. In respect to second and third question, it is held that payment of second premium cannot be treated to be a good payment to continue a life policy which has not even commenced as required under terms of contract and both are answered against plaintiff-respondent. 20. In view thereof, judgment of Courts below cannot be sustained. Appeal is allowed and judgment and decree dated 15.07.1978 passed in Civil Appeal No.3 of 1976 is hereby set aside and plaintiff-respondent's suit is hereby dismissed.