State Consumer Disputes Redressal Commission
Gurrapu Karnakar vs Life Insurance Corporation Of India on 4 July, 2024
1
BEFORE THE TELANGANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION : HYDERABAD.
FA.NO.258 OF 2023
AGAINST ORDERS IN CC.NO.376 OF 2015, DISTRICT
CONSUMER COMMISSION, KARIMNAGAR
Between:
Gurrapu Karnakar, S/o.Late Laxman,
Age: 23 years, Occ: Private Employee,
R/o.H.No.1-53, Govindpally Village,
Gollapally Mandal of Dist. Karimnagar.
.....Appellant/Complainant
And
1.Life Insurance Corporation of India, Mancherial Branch, R/by its Manager, Post: Mancherial, Dist. Adilabad.
2. The Divisional Manager, Divisional Office, Life Insurance Corporation of India, 2-7-105, Jeevan Prakash, Dr.B.R.Ambedkar Stadium Road, Karimnagar.
.....Respondents/Opposite Parties Counsel for the Appellant/Complainant: M/s.V.Shiva Shankar Babu Counsel for the Respondents/Opposite Parties: M/s.Srinivas Karra QUORAM:
HON'BLE SMT.MEENA RAMANATHAN...IN-CHARGE PRESIDENT & HON'BLE SRI V.V.SESHUBABU....MEMBER-JUDICIAL THURSDAY, THE FOURTH DAY OF JULY TWO THOUSAND TWENTY FOUR ******* Order : (Per Smt.Meena Ramanathan, Hon'ble I/c President)
1. This is an appeal filed U/s.41 of Consumer Protection Act,2019 against the order dated 14.03.2023 of the District Consumer Commission, Karimnagar, made in CC.No.376/2015.
The Appellant is the Complainant and the Respondents are the Opposite Parties in CC.No.376/2015.
22. For the sake of convenience, the parties are described as arrayed in the complaint.
3. Briefly stated, the facts are, that the Complainant is the son of the Deceased Life Assured (DLA) who had obtained several Life Insurance Policies from the Opposite Parties under Salary Saving Scheme vide Nos.682647507 and 682974775. As per the terms and conditions of the policy, in case of death of the policy holder, the nominee is entitled to receive the death benefits covered under the said policies.
4. The life assured died on 05.01.2008 and the nominee Smt.Gurrapu Sathamma also died on 19.05.2012. On the death of his mother, the Complainant approached the Opposite Parties along with relevant documents and requested for the death benefits payable under the said policies. In respect of policy No. 682647507 and 682974775, the Opposite Parties paid the premium instalments of Rs.12,064/- and Rs.14,630/- only instead of sum assured. Despite his repeated requests, the Opposite Parties failed to settle the claim in toto and hence the Complainant has approached this Commission for redressal.
5. The Opposite Parties filed their written version admitting to the fact that the above said policies were issued under the Salary Saving Scheme on the life of Complainant's father late Laxman during his lifetime. The said policies were issued under the Salary Saving Scheme but were in lapsed condition for non-payment of premiums. As per the policy conditions, since the policies were in a lapsed condition, nothing is payable to the Complainant. The life assured died on 05.01.2008 and premiums were paid up to 10/2007 under the above policies. The policies were under lapsed condition since 11/2007 but have acquired paid-up value as per the policy conditions, which was paid to the nominee under both the policies on 30.03.2011.
6. They have further submitted that the life assured had signed an authorization letter before issuance of the policies admitting to 3 make arrangements for remittance of premiums directly to the Corporation in the event the policy stood lapsed. The letter of authorization is the basis for entering into the contract and the policy bond evidences this. They claim that there has been no delay or deficiency in service on their part and that this Opposite Party is not liable pay the claim under the said policies.
7. Before the District Forum, the Complainant filed evidence affidavit and Ex.A1 to A8 marked on his behalf. Evidence affidavit of Opposite Parties filed. Ex.B1 and B2 are marked on their behalf.
8. The District Commission after hearing and considering the material on record, dismissed the complaint with no order as to costs.
9. Aggrieved by the said order of the District Commission, the Complainant filed this appeal contending that the Commission below had failed to consider the following:
The District Commission failed to appreciate the decision of the Hon'ble National Commission in M/s.Murari Woolen Mills Ltd., Vs. United India Insurance Co.Ltd., reported in 2005 (2) CPR 122 (NC) wherein it was observed that cause of action in insurance cases arises on the date of repudiation but not on the date of accident.
The District Commission ought to have maintained consistency in the orders passed by it with regard to the period of limitation.
The District Commission failed to observe that the judgment of Hon'ble Chattisgarh State Commission is not binding on the District Commission in the presence of various judgments rendered by A.P.State Commission and Telangana State Commission.
The District Commission failed to observe that the decision of Hon'ble National Commission reported in 2009 (2) CPR 303 NC has no application to the facts of the present case and the decision pertains to disconnection of telephone 4 whereas the present complaint is with regard to Life Insurance.
The District Commission failed to observe that judgments of the State Commission in Boioni Padma Vs. LIC of India in FA.No.552/2017 and in Gopagani Swathi Vs. LIC of India in FA.No.550/2017, Erumall Laxmi Vs. LIC of India in FA.No.256/2018, Pudari Rajendra Vs. LIC of India in FA.No.67/2017 and Jangili Madavi @ Madhavi Vs. LIC of India in FA.No.553/2017, the period of limitation would start from the date of the last letter sent to the Appellant/Complainant i.e., 15.07.2015 vide Ex.A1. The cause of action subsisted till the repudiation or status report filed and non-settlement of claim constitutes continuation cause of action.
10. The point that arises for consideration is whether the impugned order as passed by the District Forum suffers from any error or irregularity or whether it is liable to be set aside, modified or interfered with, in any manner? To what relief?
11. The docket proceedings of this appeal dated 06.06.2024 shows that : "Heard counsel for Respondent. No representation for Appellant since inception. Arguments of Appellant are treated as heard and reserved for orders with a liberty to file written arguments by serving copy on the other side within one week from today."
12. The fact that the policy holder obtained several policies including the policies vide Nos. 682647507 and 682974775 under Ex.A1 and A2, are not in dispute. The life assured died on 05.01.2008 as evidenced vide Ex.A3. The son i.e., the Complainant in the present case raised the claim by issuance of legal notice dated 27.06.2015.
13. It is pertinent to mention that after the death of life assured his wife, the nominee died on 19.05.2012 and the son being the 5 nominee has now raised the claim which is being repudiated by the Respondents/Opposite Parties. Their main defense is that they paid the amounts of Rs.12,064/- and Rs.14,630/- towards policy Nos. 682647507 and 682974775 on 30.03.2011 as evidenced vide Ex.B2 and after receiving the said amounts, the present complaint cannot be raised after a hiatus of 4 years.
14. The Commission below only stressed the aspect of limitation and that no application has been filed by the Appellant/Complainant for condonation of delay and that the complaint was barred by limitation. The Commission below failed to discuss the Salary Saving Scheme in its entirety and focused solely on the aspect of limitation. This Commission has elaborately discussed the issues relating to Salary Saving Scheme in its numerous orders and will yet again point out the lapses on the part of the Respondents/Opposite Parties which were unfortunately not highlighted or emphasized by the Commission below.
15. The two issues are non-payment of monthly premiums and that the complaint is barred by limitation.
16. When the monthly premium was not received after issuance of policy, it is the duty of the Respondent/Insurance Company to send a reminder to the employer who is acting as an agent of the employee. When the Respondents/Opposite Parties have admittedly settled other existing policies issued in the name of the deceased, there has to be accountability from the employer as to why the deduction for this policy did not take place in the normal course. The period of limitation in such extraneous matters will only begin from the date of repudiation or date of death. When the family is unaware of the existence of the policy, it is the duty of the Respondents/Opposite Parties to maintain proper records and keep the employer informed and also if a poor coal filler/miner has passed away, it is the duty of the employer to inform the Insurance Company. None of the big wigs seek to shoulder the responsibility 6 and at the time of claim, the repudiation in Salary Saving Scheme stands on a different footing.
17. The impugned order failed to consider these issues in the proper perspective and also failed to maintain consistency in their discussion vis-à-vis the policies issued under the Salary Saving Scheme. Merely paying the nominee the amounts paid towards premium and then stating that the said amounts were accepted in the year 2011 does not exonerate their responsibility in settling the sum assured. The fact that they repaid the installments paid by way of premiums shows that the Respondents/Opposite Parties were aware of the death of the life assured and have failed in their primary duty as mandated by the Salary Saving Scheme.
18. Having issued the policies under the Salary Saving Scheme, the Opposite Party cannot evade their responsibility or liability on the ground of non-receipt of monthly premiums. This matter has been considered in a catena of judgments passed by the Hon'ble Supreme Court and the National Commission from time to time. We rely on the following decisions in support of our view of the matter.
(i) 2009(2) CPR 143 (NC) in a case Life Insurance Corporation of India Vs. Smt.Ranjana Misra & Ors, wherein it is held that:
"Where premium for LIC policy was to be remitted from salary and failure in remittance was for no fault of insured and employer was liable for that fault, employer being agent of LIC, Corporation was liable to pay policy amount."
(ii) Hon'ble National Commission reported in 2015 (1) CPR 263 (NC) in a case LIC of India Vs. Smt.Ram Sakhi, it was held that:
"it is the bounded duty of the Opposite Parties to inform the same to employee and his employer, by way of issuing a notice in accordance with Sec.50 of the Insurance Act, 1938 and same 7 position has been enunciated in the manual for policy servicing department No.14 Salary Saving Scheme issued by LIC of India on 31.12.1990".
(iii) Hon'ble National Commission in RP.No.3482 of 2017 in a case LIC of India Vs. Seeta & Anr decided on 13.02.2018, it was held that:
"the matter has been considered in a catena of judgments passed by Hon'ble Supreme Court and this Commission from time to time. In an order passed by this Commission on 11.03.2015 in RP.No.3016/2008, Smt.Meenakshi Popat Kambhoje & Ors Vs. LIC of India & Anr, it was held by majority judgments that the LIC was liable to pay the claim to the claimant, even in the wake of the fact that the premium was not deducted by the employer in time and paid to the LIC".
19. At this juncture, it would be appropriate to understand Salary Saving Scheme of LIC. It is a simple economical plan whereby employees obtain Life Insurance protection for their families and retirement income for themselves under advantageous conditions which might not be available to them otherwise. Having issued the policy under the Salary Saving Scheme, the Respondents/Opposite Parties cannot escape their liability to pay the sum assured on the ground of non-receipt of monthly premiums. This view is further fortified by the judgment reported in "DESU Vs. Basanthi Devi" reported in III (1999) CPJ 15 SC- the Hon'ble Supreme Court while considering the relationship of employee and the Insurance Company in the matter of Insurance Policy issued under Salary Saving Scheme, held that: "the employer is an agent of the Insurance Company in terms of Section- 230 of the Indian Contract Act and any lapse on the part of the employer while acting as the agent of the Insurance Company was made basis to fasten the liability on the Insurance Company."
20. The fact that premiums were not paid regularly was never intimated to the policy holder. Only the employer is responsible as the agent of the Respondents/Opposite Parties. The consequences 8 of non-payment of premiums were never informed to the Insured. This action on the part of the Respondents/Opposite Parties is extremely unfair, especially when their acceptance letter has the following clauses:
a) The employer will receive list of premiums to be deducted called his demand invoice in duplicate each month on the specified date.
b) One copy of the invoice is to be returned along with the remittance and second copy is to be retained by the employer for his record.
c) Reconciliation Statement in a specified form to be supplied by Respondents/Opposite Parties/LIC will accompany the statement.
21. The Respondents/Opposite Parties have not complied with their terms and conditions and clauses as specified above. Therefore, the plea taken by Respondents/Opposite Parties/LIC that due to non-receipt of premiums, the policy was considered as "lapsed" and time barred is unjustified.
22. We have no hesitation in holding that the impugned order has not considered the facts in proper perspective and requires interference whatsoever. The relief on the ground of limitation when discussing the nature of the Salary Saving Scheme stands on a different footing and the Forum has not laid proper emphasis on these aspects.
23. In the result, the appeal is allowed with the following direction:
The Respondents/Opposite Parties are directed to pay the Appellant/Complainant as follows:
(a) A sum of Rs.87,936/- towards Policy No. 682647507.
(sum assured of Rs.1,00,000/- minus amount already paid Rs.12,064/-) along with interest @ 7% p.a. from the date of complaint (22.09.2015) till realization.
9(b) A sum of Rs.85,370/- towards Policy No. 682974775. (sum assured of Rs.1,00,000/- minus amount already paid Rs. 14,630/-) along with interest @ 7% p.a. from the date of complaint (22.09.2015) till realization. Time for compliance is four weeks from the date of this order.
Sd/- Sd/-
I/C PRESIDENT MEMBER-J
Dt: 04.07.2024
UC*