State Consumer Disputes Redressal Commission
Committe Of Management Arya Mahila P G ... vs L I C on 24 April, 2017
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UP C-1 Vikrant Khand 1 (Near Shaheed Path), Gomti Nagar Lucknow-226010 First Appeal No. A/2013/2871 (Arisen out of Order Dated in Case No. of District State Commission) 1. Committe Of Management Arya Mahila P G Collage a ...........Appellant(s) Versus 1. L I C A ...........Respondent(s) BEFORE: HON'BLE MR. Raj Kamal Gupta PRESIDING MEMBER HON'BLE MR. Mahesh Chand MEMBER For the Appellant: For the Respondent: Dated : 24 Apr 2017 Final Order / Judgement RESERVED State Consumer Dispute Redressal Commission, Uttar Pradesh Appeal No(s). 2440 of 2013 & 2871 of 2013 Appeal No. 2440 of 2013 Life Insurance Corporation of India, Divisional Office-16/98, Mahatma Gandhi Marg, District-Kanpur, through Secretary (Legal) Zonal Office Legal Cell, 30, Hazratganj, Lucknow. .......Appellant. Versus 1- Brij Bhushan Lal, Major in Age sone of late Gyan Chand, R/o House no.60/1, Gudari Bazar, District Muzaffarnagar, C/o Shushma Cards & Arts, Dr. Suresh Market, Bhagat Singh Road, Muzaffarnagar. 2- Committee of Management, Arya Mahila P.G. College, Sadar Bazar, Shahjanpur through Manager. ......Respondents. And Appeal No. 2871 of 2013 Committee of Management Arya Mahila, P.G. College, Shahjahanpur .......Appellant. Versus Bhartiya Jeevan Bima Nigam Pension and Samuhik Bima EKAI & Others ......Respondents Present:- Hon'ble Sri Raj Kamal Gupta, Presiding Member.
Hon'ble Sri Mahesh Chand, Member.
Sri Arvind Tilhari Advocate for the Appellant.
Sri S.P.PandeyAdvocate for the Respondents.
Date: -06-2017 Judgment Sri Mahesh Chandra, Member-
TheseAppeals have been filed against the judgement & order dated 23.9.2013 passed by the District Consumer Dispute Redressal Forum, Shahjahanpur in Complaint Case No. 69 of 2011, Brij Bhushan Lal vs. Life Insurance Corporation of India. Appeal No 2440 of 2013 has been filed by Life Insurance Corporation of India, Divisional office Mahatma Gandhi Marg, Kanpur, through Secretary (Legal), Zonal Office Legal Cell, 30 Hazratganj, Lucknow. In this Appeal Brij Bhushan Lal and Committee of Management, Arya Mahila P.G.College, Shahjahanpur are the respondents. The Appeal No. 2871 of 2013 has been filed by Committee of Management, Arya Mahila P.G.College, Shahjahanpur where in Life Insurance Company and 2 others are the respondents. Since both these appeals are connected and against the one impugned order dated 23.9.2013, hence these are being decided by this judgement. The Appeal 2440 will be the leading case.
Briefly, the facts of the case are that Km. Alka Rani Kashyap, the daughter of respondent No.1 Mr Brij Bhushan Lal was a lecturer in the college of the respondent No. 2. It is admitted that she was the member of the Master Policy No GSLI-54946 under Group Savings Linked Insurance Scheme of the Appellant-Life Insurance Corporation of India. The sixth monthly premium of all the members of the staff including that of Km Alka Rani Kashyap was deducted from their salary and remitted to the Appellant. The respondent No. 1, Mr Brij Bhushan Lal was the nominee of Km. Alka Rani Kashyap in the said policy. Km. Alka Rani Kashyap died on dated 01.7.2008. After her death, the respondent No. 1, made a claim under the said policy and the Appellant paid a sum of Rs.33,331/- to the respondent No.2 on 19.2.2010.According to the complainant-respondent No.1,he was entitled for a sum of Rs. 350,000/- assured under the said Group Insurance Policy but the insurance company repudiated the claim of the balance amount of Rs. 316,669/- on the pretext that the said policy was lapsed as the premium was not deposited in time and the last instalment was received after the death of the life insured Km. Alka Rani Kashyap. According to the Appellant-LIC, the last premium for the six months period from dated 1.3.2008 to dated 31.8.2008 was remitted to the appellant in the month of October, 2008 but did not include the premium of the insured Km. Alka Rani Kashyap. The premium amount of Rs.2100/- for Km. Alka Rani Kashyap was remitted on dated 21.11.2008. Thus the total deposit amount was refunded to the respondent No.1 through respondent No. 2. Being aggrieved with the repudiation of the claim of the sum assured under the policy, the Respondent No. 1 filed the Complaint Case No . 69 of 2011 before the District Forum, Shahjahanpur. The Complaint Case No. 69 of 2011 was contested by the Appellant. The parties filed their evidences before the District Forum. After hearing the parties and perusing their evidences, the learned District Forum passed the following order dated 23.9.2013:
"सभी विपक्षीगण के विरूद्ध संयुक्तत: एवं पृथक्कत: यह आदेश पारित किया जाता है कि वे परिवादी को अंकन 3,16,669/-रू0 का भुगतान करे तथा इस धनराशि पर बीमित की मृत्यु की तिथि 01-07-2008 से कुल भुगतान होने के बीच 7 प्रतिशत प्रतिवर्ष की दर से दण्डात्मक ब्याज का भी भुगतान करें।
परिवादी को पहुँचाये गये मानसिक कष्ट की प्रतिपूर्ति के रूप में अंकन 3,000/-रू0 तथा वाद व्यय के रूप में अंकन 1,000/-रू0 का भुगतान भी विपक्षीगण द्वारा किया जाये।'' Being aggrieved with the impugned order, these appeals have been filed before this Commission. Appeal No 2440 of 2013 was admitted vide order dated 7.11.2013 and Appeal No. 2871 of 2014 was admitted vide order dated 29.1.2014 of this Commission. Both these Appeals were connected together for hearing vide commission's order dated 25.10.2016.The Life Insurance Corporation has assailed impugned order on the ground that the learned District Forum has erred in entertaining the complaint because there was no contract between the appellant and the respondent No.1. The respondent No. 1 was not the consumer of the Appellant since the master policy was purchased by the respondent No. 2. The respondent No. 2 did not remit the premium in time i.e. on 1.3.2008. The Appellant wrote letters to deposit the insurance premium on dated 5.3.2008 and 15.11.2008 intimating therein that the Insurance Corporation will not be liable to pay the risk coverage for the delayed period. For making default in depositing the premium amount in time.Hence the policy ceased to operate. Due to death of the insured on dated 1.7.2008, Km Alka Rani Kashyap, ceased to remain the member of the Group Insurance Policy. The premium amount was remitted on dated 21.11.2008 after the death of the insured and this was returned to the respondent No. 2. The learned district forum ignored all these facts. The learned district forum wrongly concluded that despite the delayed payment of premium by the respondent No.2, the Appellant did not terminate the policy by exercising its right given in Schedule Part-II, so the complainant claim can't be denied. The insurance corporation discriminated with the life assured. The learned district forum vide impugned order has held respondent No. 2 responsible for delayed payment of the premium but made jointly liable to pay the claim while there was no deficiency on the part of the Appellant. The Appellant assailed the impugned order to be suffering from legal infirmities, arbitrariness and delivered without application of mind and prayed to set aside the order.
In the Appeal No 2871 of 2013 filed by the Committee of Management, Arya Mahila P.G.College, Sadar Bazar, Shahejahanpur, it has been stated that the premium of all the staff members of the college covered under the policy no. GSLI-54946 was used to be sent to the Insurance Corporation by a common cheque/draft and they continuously accepted the premium without any objection and even till the death of the insured Km. Alka Rani Kashyap. The insurance corporation can not say the risk was not covered. The appellant management committee can't be held responsible to pay the claim amount in any manner, jointly or severally.
We heard the arguments of all the parties concerned and perused the record on file.
The moot question in this matter is whether the deceased employee of Arya Mahila P.G.College, Shahjahanpur was eligible to get benefits on the date of commencement of the said policy.In this regard, it would be appropriate to refer to the terms and conditions of the policy in regard to liability and payment of premium. It would be useful to refer to the provisions of clause 2 and 4 of Part II of the Master Group Policy. For ready reference they are being reproduced as follows:
"Clause 2. The Grantees shall pay the premiums in respect of all the members in one lump-sum.
Clause 4. If the premium is not paid in respect of all members for a particular month or if the premium is not paid on the due date, the Grantees shall be deemed to have discontinued payment of premium in respect of this policy as whole and the Corporation reserves the right to terminate the policy forthwith, The Grantees shall not, thereafter, be entitled to resume payment except with the consent of Corporation and on such terms an conditions as the Corporation may prescribe in this regard."
In the instant matter the College used to deduct the premium amount from the salaries of all the staff members and who are the members of the Master Group Policy also and remit the total amount through one single instrument like cheque or bank draft to the insurance company and the insurance company used to accept it without any objection.There is no provision in Clause 4 of the Policy that in case, the premium is not paid on the due date by the Grantees like College here, the policy as a whole would automatic lapse.Rather in this clause 4 there is clear mention that in such eventuality the corporation reserves the right to terminate the policy forthwith. In this matter the College delayed in remitting the premium to the Insurance corporation and the Insurance Company accepted it and did not terminate the policy though the insurance corporation had the right to do so. The Master Policy was not terminated till the filing of the complaint as there is no record on file in this regard. The policy was valid at the time of death of Complainant-Respondent Km. Alka Rani Kashyap. The Applellant can't escape the responsibility of covering the risk of the insured. In the matter of Group Insurance Policy, the insurance company is the service provider to the employees of the organization whose life is insured and life risk is covered under such Master Policies. The employees are the ultimate beneficiaries, hence they are the real consumer and not body which collect their premium and remit the consolidated amount to the insurance corporation. The College is merely a coordinator or an agent. In the similar matter Hon'ble National Commission have observed in the matter of Central Bank of India & Another vs Heera Soni & Others, 2004 (3) CPR-165 (NC) as follows:
"If contributions are paid by the employees in full and the employer just acts only as a co-ordinator and monthly contributions from the salaries of the employees are required to be remitted to LIC every month, failure of the Co-ordinator would not and ought not absolve the Life Insurance Corporation of its responsibility. It is not a policy of an individual. It would affect hundreds of employees for none of their faults. This appears to be the reason to reserve the right to terminate the policy and not to automatically terminate the policy."
In the matter of DESU (Delhi Electricity Supply Undertaking) vs Basanti Devi, (1999) 8 SCC 229=AIR 2000 SC 43, the Hon'ble Supreme Court in relation to a similar kind of Group Insurance Scheme observed the relationship between DESU and LIC in the following words:
"DESU is certainly not an insurance agent within the meaning of the aforesaid Insurance Actand the regulations but Desu is certainly an agent as defined in Section 182 of the Contract Act. The mode of collection of premium has been indicated in the Scheme itself and the employer has been assigned the role of collecting premium and remitting the same to LIC. As far as the employee as such is concerned, the employer will be an agent of LIC. It is a matter of common knowledge that insurance companies employ agents. When there is no insurance agent as defined in the regulations and Insurance Act, the general principles of the law of agency as contained in the Contract Act are to be applied."
The Hon'ble Supreme Court observed that the authority of DESU to collect premium was implied and DESU was an agent of LIC to collect the premium on its behalf. Hon'ble Supreme Court directed LIC to pay to Basanti Devi insurance amount of Rs.50,000/- with interest of 15% p.a. The learned advocate of the appellant referred to Judgment & Order passed by a co-ordinate bench of this Commission in the matter Appeal No 1152/2001 Smt. Pushpa vs Life Insurance Corporation & others in which the above mentioned case DESU vs Basanti Devihas been referred and drawn the different conclusion in its Judgement. But we do not agree with that in the light of discussion as above. The other cases referred by the Appellant's learned counsel are also not applicable in the light of the case law DESU vs Basanti Devi, (1999) 8 SCC 229=AIR 2000 SC 43.
We are of the view that since in the instant matter termination of the policy has not taken place.The Insured Km Alka Rani Kashyap continued to be covered under the said Group Insurance Master Policy. In the instant matter the learned District Forum have analyzed all the facts and legal points in detail but erred in holding the employer Arya Mahila P.G. College, Shahjanpur jointly liable to pay the sum insured in the Master policy. The College is mere co-ordinator and can't held responsible for the lapse of delayed remittance to LIC. It is the LIC which is Service Provider and responsible for the coverage of the risk of the insured. The appeal No 2440/2013 filed by LIC does not have any merit and the Appeal No 2871/2013 filed by the Management Committee of the College have merit to the extent of exonerating them to absolve from the responsibility of the payment of the insurance claim. In the light of the above discussion, the impugned order need to be modified accordingly.The Appellant Life Insurance Corporation shall be solely responsible to comply with the directions of the impugned order.
Order AppealNo 2440/2013 dismissed and Appeal No 2871/2013 is allowed to the extent that the Management Committee of Arya Mahila P.G. College, Shahjanpur College is Exonerated from the liability of the payment as ordered by the impugned order.The Appellant Life Insurance Corporation is directed to comply with the directions of the impugned order with in a period of 45 days from the date of this order failing which the Appellant shall have to pay an additional amount of interest @9% per annum on the total awarded amount. The parties will bear their own costs. Let the copy of this Judgement & Order be placed on the file of Appeal No. 2871/2013 and also be made available to all the parties as per rules.
(Raj Kamal Gupta) (Mahesh Chand) Presiding Member Member S.k. st. ct-3 [HON'BLE MR. Raj Kamal Gupta] PRESIDING MEMBER [HON'BLE MR. Mahesh Chand] MEMBER