National Consumer Disputes Redressal
Meenakshi Popat Kumbhoje & Ors. vs Life Insurance Corporation Of India & ... on 11 March, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 3016 OF 2008 (Against the Order dated 22/02/2008 in Appeal No. 474-937/2007 of the State Commission Maharastra) 1. MEENAKSHI POPAT KUMBHOJE & ORS. Residing at & post Sajani, Taluk-Hatkangale Kolhapur MAHARASHTRA 2. BABURAO DHONDI KUMbHOJE Residing at & Post Sanjani, Taluk - Hatkangale Kolhapur MAHARASHTRA 3. KUM. SHRIDHAR POPAT KUMBHOJE Residing at & Post Sanjani, Taluk - Hatkangale Kolhapur MAHARASHTRA ...........Petitioner(s) Versus 1. LIFE INSURANCE CORPORATION OF INDIA & ORS. Through its General Manager, Having its Western Zonal Office at Yogakeshema Jeevan Bima Marg Mumbai 400 021 MAHARASHTRA 2. DESHBHAKTA RATANAPPA KUMBHAR PANCHGANGA SAHAKARI SAKHAR KARKHANA LIMITED Ganganagar, Ichalkaranji Kolhapur MAHARASHTRA ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER HON'BLE MR. DR. B.C. GUPTA, MEMBER For the Petitioner : For the Respondent :
Dated : 11 Mar 2015 ORDER DATED : 30.05.2014 PER DR. B.C. GUPTA, MEMBER
This revision petition has been filed under section 21(b) of the Consumer Protection Act, 1986 against the impugned order dated 22.02.2008, passed by the Maharashtra State Consumer Disputes Redressal Commission (for short 'the State Commission') in the appeals, FA No. 474/2007, "Life Insurance Co. of India (hereinafter referred to as 'LIC') versus Smt. Meenakshi Popat Kumbhoje & Ors." and FA No. 937/2007, "Manager, Deshbhakt Ratnappa Anna Kumbhar Panchganga Sahakari Sakkar Karkhana Ltd. versus Meenakshi Popat Kumbhoje", vide which the said appeals filed against the order dated 05.03.2007, passed by the District Consumer Disputes Redressal Forum, Kolhapur, were allowed and the said order of the District Forum, allowing the consumer complaint no. 121/2005, in question, was set aside.
2. Brief facts of the case are that Smt. Meenakshi Popat Kumbhoje, widow of the deceased employee filed the consumer complaint in question along with complainant no. 2, who is father of the deceased and complainant no. 3, who is minor son of the deceased employee, Popat Baburao Kumbhoje, who was working in the Civil Water Supply Department of respondent no. 2 cooperative sugar mill since 1983. The sugar factory, respondent no. 2 had taken three policies from the LIC for its employees under the 'Salary Saving Scheme', under which the premium was to be deducted by the employer from their salaries and got deposited with the LIC through one single cheque, containing the premium for all the employees. The three policies were for assured sums of `50,000/-, `50,000/- and `20,000/- under the Bima Kiran Scheme. For the first policy, complainant no. 1, wife of the employee was the nominee; for the second policy, complainant no. 2, father of the employee was nominee, and in the third policy, complainant no. 3, son was the nominee. In the year 2003, the employee, Popat Baburao Kumbhoje suffered from jaundice and had to remain on leave from 13.03.2003 to 13.06.2003. Consequently, the premium could not be deducted by the employer from the salary, as the salary was not paid for the leave period. It has been stated in the complaint that the complainant and her relative, went to the LIC and requested for depositing the premium of the Insurance Policy but they were told by the LIC that they were unable to accept the premium amount from them and the same should be sent through the employer only. The complainant also approached the employer and stated that they were ready to pay the insurance premium, but the employer, OP No. 2 told them that the payment of premium shall be made to the LIC alongwith that for other workers. In fact, the economic condition of respondent no. 2 Sugar Mill, was quite bad and hence, they had not sent the premium to the LIC for all workers. Popat Baburao Kumbhoje died on 06.12.2003 due to jaundice, following which the complainants filed a claim with the LIC, for the payment of sum assured but the LIC informed them vide letter dated 25.5.2004 that the policies had already lapsed for non-payment of premium. The complainants have alleged that it was the duty of the LIC to remind the policy holders for payment of due premium. They requested that a sum of `1.25 lakh alongwith interest @18% p.a. should be paid to the complainants.
3. In the written statement, the LIC pleaded that the policies stood lapsed due to non-payment of premium and the LIC never refused to accept the premium from the complainant. The respondent no. 2 employer in their reply stated that the deceased employee was on leave without pay from 13.3.2003 to 13.06.2003, and hence, there was no question of payment of salary to him for that period, and as such, the premium could not be deducted from his salary for sending the same to the LIC. The sugar factory also stated that premium for the months of July 2003 to April 2004 was paid to the LIC on 27.08.2004 for all the workers, alongwith interest for delayed payment of premium. The total amount of premium was `31,37,192/- and the interest amount was `2,09,937/-. Under these circumstances, the policies for the deceased Popat Baburao Kumbhoje should not have lapsed since the premium had been accepted by the LIC alongwith interest. The respondent no. 2 took the plea that during the leave period, it was the duty of the employee to send the premium directly to the LIC and there was no obligation on the part of the respondent no. 2 to inform the employee in this regard. The District Forum vide their order dated 05.03.2007 reached the conclusion that there was deficiency in service on the part of the OP 1 & 2, because the employer was responsible to deduct the premium from the Salary and remit the same to the LIC. The District Forum ordered that both the opponents should pay an amount of `1,25,000/- alongwith interest @ 9% p.a. from the date of the death of the deceased till realisation, jointly and severally. Two appeals were preferred against this order before the State Commission - one by the LIC and the other by the Sugar mill. The State Commission allowed both these appeals and set aside the order passed by the District Forum and dismissed the consumer complaint in question. It is against this order that the present petition has been made.
4. At the time of hearing before us, the learned counsel for the petitioner stated that under the Salary Saving Scheme of the LIC, it was the duty of the employer to deduct the premium from the salary of the employee and send it directly to the LIC. As per the written version to the complaint, filed by the respondent no. 2 Sugar Factory before the District Forum, their financial position was not good and hence the payment of premium for all the employees to the LIC was delayed. The premium for the month of July 2003 to April 2004 was paid to the LIC on 27.08.2004 and it amounted to `31,37,192/-. It has been categorically stated in the reply of respondent no. 2 that the said amount including the premium amount, pertaining to the deceased employee, Popat Baburao Kumbhoje was paid to the LIC. It is clear, therefore, since the LIC had accepted the premium for the deceased employee, they should not have repudiated the claim filed by the complainants after the death of the employee. The learned counsel has further drawn our attention to the orders passed by this Commission in "Executive Engineer, Environmental Engineering (Cons.) Div. versus LIC & Anr." [I (1999) CPJ 74 (NC)], the order passed by the Hon'ble Supreme Court in "Chairman LIC & Ors. versus Rajiv Kumar Bhasker" [(2005) 6 SCC 188] and orders passed by the Supreme Court in "Delhi Electric Supply Undertaking versus Basanti Devi & Anr." [(1999) 8 SCC 229]. He has also referred to Condition 11 of the Insurance Policy in question issued by the LIC.
5. In "Executive Engineer versus LIC & Anr." (supra), it has been held by the National Commission that if the employer failed to deduct premium and pay to the LIC in due time, it amounted to deficiency in service. It has also been stated in this order that even if the employee had gone on leave and salary was not paid, it was obligatory on the part of the employer to inform the LIC of this position. Learned counsel quoted extensively from the order of the Hon'ble Supreme Court in "Chairman, LIC versus Rajiv Kumar Bhasker" (supra), in which it has been stated that the Salary Saving Scheme provides for a tripartite agreement between the employer, employee and the LIC and the employee could not approach the insurer directly and for all intents and purposes, the employer was acting as an agent of the LIC. Their Lordships observed as under:-
"We may, furthermore, observe that having induced the employer to act as a model employer and discharge its social obligations vis-'-vis its employees it may not be permissible for a 'State' within the meaning of Article 12 of the Constitution to contend at this belated stage that in the event of default on the part of the employer, it may get itself discharged from its contractual obligations in such a cavalier manner."
It has been further observed in this very order...............
When a contract of insurance is entered into by and between the insurer and the insured, no third party would have any role to play; but the said principle would not apply in a case of this nature. The Salary Savings Scheme provides for a tripartite arrangement . In a scheme of this nature, the employer was to make all endeavours to improve the service conditions of the employees and discharge its social obligations towards them. So far as the employees are concerned, they could not approach the insurer directly, and, thus, for all intent and purport they were to treat their employer as "agent" of the Corporation. The Scheme clearly and unequivocally demonstrates that not only was the contract of insurance entered into by and between the employee and the insurer through the employer but even the terms and conditions of the policy were to be performed only through the employer. In that limited sense, the employer would be the agent of the insurer.
(Paras 23, 24, 7, 9, 10, 18 and 20) The Corporation cannot make the employee suffer the consequences emanating from the default on the part of the employer. If for some reasons, the employer is unable to pay the salary to the employees, as for example, its financial constraints, the employee may be held to have a legitimate expectation to the effect that his employer would at least comply with its solemn obligations. Such obligations having been undertaken to be performed by the employer at the behest of the Corporation as its agent having the implied authority therefor, the Corporation cannot be permitted to take advantage of its own wrong as also the wrong of its agent. In any event, the employer was obligated to inform the employee that for some reason, he is not in a position to perform his obligation whereupon the latter could have paid the premium directly to the Appellant herein.
(Para 33) The Scheme clearly provides that in the event of cessation of employment the concerned employee if continues his employment under a new employer, the former employer has to inform the Corporation thereabout. Furthermore, upon retirement or in situations other than taking up of any job with any other employer, the employee would be entitled to continue with the policy but therefor, he will have to pay a higher premium. Even at that stage, the Corporation would have a duty to inform the employee concerned towards his right. Even in case of non-payment of premium for any reason whatsoever, in view of the object the Scheme seeks to achieve, it was the duty of the insurer to inform the employee about the consequences of non-receipt of such premium from the employer. The Corporation has failed or neglected to do so.
(Para 32)"
6. The learned counsel argued that in view of the judgement of the Hon'ble Apex Court quoted above, it was the duty of the LIC to inform the employee about the non-payment of premium if the premium was not paid for any reason whatsoever.
7. In reply, the learned counsel for the respondent has drawn our attention to the document entitled, "Salary Savings Scheme Authorisation" given by the policy-holder in favour of the respondent no. 2, in which it has been stated that the liability of the employer shall be confined to making arrangement for deduction of premium from the salary wherever this can be made and remitting the amount to the LIC in time. It has been further stated in this document that the policy holder shall be entirely responsible for any consequence on account of non-payment of premium for reasons beyond the control of the employer such as his proceeding on leave without pay etc. Learned counsel argued that in the present case, for the period when the insured was on leave without pay, it was not the duty of the employer to deduct the premium and pay to the LIC. Learned counsel stated that the State Commission had relied upon this document while passing the impugned order. The learned counsel has also drawn our attention to the judgement in Delhi Electric Supply Undertaking versus Basanti Devi & Anr." (supra) saying that in this case, the premium had been deducted by the employer, but it was not paid to the insurance company in time. However, in the present case, the premium was not deducted at all.
8. Learned counsel for respondent no. 2 also mentioned about the judgement of the Hon'ble Apex Court in "Chairman LIC & Ors. versus Rajiv Kumar Bhasker" (supra) and stated that LIC had not sent any intimation regarding non-payment of premium.
9. In reply, the learned counsel for the petitioner again referred to the judgement in "Chairman LIC & Ors. versus Rajiv Kumar Bhasker" (supra) and referred to the assertion that it was obligatory on the part of the employer to inform the employee that if for some reason, he was not in a position to perform his obligation, whereupon the latter could have paid the premium directly to the appellant herein. He also read out condition no. 11 attached with the Insurance Policy in question, in which it has been stated as follows:-
"This policy having been issued under the Corporation's Salary Savings Scheme, it is hereby declared that the instalment premium shall be payable at the rate shown in the Schedule of the Policy so long only as the Life Assured continues to be an employee of his present employer whose name is stated in the Proposal, and the premiums are collected by the said employer out of the salary of the employee and remitted to the Corporation without any charges. In the event of the Life Assured leaving the employment of the said employer or the premiums ceasing to be so collected and / or remitted to the Corporation, the Life Assured must intimate the fact to the Corporation and in the event of the Salary Savings Scheme being withdrawn from the said employer the Corporation shall intimate the fact to the Life Assured and all premiums falling due on and after the date of his leaving the employment of the said employer or cessation of collection of the premiums and remittance thereof in the manner aforesaid or withdrawal of the Salary Savings Scheme, as the case may be shall stand increased by the imposition of the additional charge for monthly payment that has been waived under the Salary Savings Scheme at five per cent of the premium exclusive of any premium charged for Double Accident Benefit or Extended Permanent Disability Benefit and any other extra premium charged."
10. We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us. In the instant case, the insurance policy in question has been issued under the "Salary Savings Scheme" of the LIC. The provisions of the said scheme have been discussed at length in the Judgement passed by the Hon'ble Supreme Court in "Delhi Electric Supply Undertaking versus Basanti Devi & Anr." (supra). The Hon'ble Supreme Court discussed the salient features of the Scheme as contained in the relevant brochure and then observed as under:-
"It is, thus, the sole responsibility of the DESU to collect premium from all the employees and remit the same by means of one cheque. A reconciliation statement is also to be sent in the form prescribed by the Life Insurance Corporation. No individual premium notice is to be sent by the Life Insurance Corporation to any employee and no receipt is to be given to him for the premium received. It is the DESU which is to inform the Life Insurance Corporation of all the changes in the staff as soon as they occur, so also the fact when any employee leaves the service of the DESU. An employee is kept ignorant of the happenings between the Life Insurance Corporation and the DESU except that he is made aware of deduction of premium from his salary every month."
11. In the same Judgement, the condition no. 11 of the Scheme as stated by the learned counsel for the petitioner has also been discussed. It has been brought out very clearly that under the said Scheme, an employee is kept ignorant of the happenings between the LIC and the employer. The possible eventualities and implications for the life assured on leaving his employment or withdrawal of Salary Savings Scheme have also been discussed. In the event of the Salary Savings Schemes being withdrawn from the employer, it is the duty of the LIC to intimate the facts to the life assured. It is made out, therefore, that there are special provisions governing the insurance policy taken under the Salary Savings Scheme, in comparison with those under the usual schemes of the LIC.
12. Further, the judgement given in the "Chairman LIC & Ors. versus Rajiv Kumar Bhasker" (supra) makes it very clear that the LIC shall have a duty to inform the employee in case of non--payment of premium for any reason whatsoever. The same 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. It has been mentioned in para 13.4 as follows:-
"13.4 LOSS OF PAY:
Loss of Pay : Default in payment of premia should be intimated to the party and arrears of premia should be called for. If the number of premiums unpaid are 6, lapse action should be taken."
13. Further, it has been mentioned in para 16 & 17 as follows:-
"16. DEFAULT AND FINAL LAPSE NOTICE:
While posting the Group Ledger any default in payment of premia should be communicated to the employer on a special form No. 5227. If the premiums remain unpaid for 6 months, a lapse intimation on the prescribed form No. 5228 should be sent to the employee. A lapse Register is also to be maintained for preparing statistics in respect of lapses.
17. STRAY DEFAULT OF PREMIUMS:
In case of stray default for any reason the defaulted premiums can be allowed to remain, pending for collection later on. Further, premiums as and when received should be credited towards the months for which deduction has been made instead of towards an earlier default or instead of holding all collections in deposit till the full arrears are received."
14. Learned counsel for the respondent has argued that an undertaking was given by the insured that he shall be responsible for payment of premium when the premium was not deducted by the employer as the employee was on leave without pay. However, a plain perusal of the salient features of the Salary Savings Scheme as contained in their own manual of the LIC, and extensively examined and interpreted by the Hon'ble Supreme Court, bring out very clearly that the employer as well as LIC cannot escape the responsibility of informing the insured in case of default in the payment of premium. The manual of the LIC has clearly prescribed special form no. 5227 and 5228 on which the lapse intimation has to be sent to the employee. It is also provided that a lapse register is also to be maintained for preparing statistics in respect of lapses.
15. The above view is further strengthened from a plain reading of section 50 of the Insurance Act, 1938, which states as follows:-
"50. An insurer shall, before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable but not paid, give notice to the policy-holder informing him of the options available to him unless these are set forth in the policy."
16. A material fact in the present case is that the employer has very clearly stated that because of their poor financial condition, they could not make payment of premium to the LIC in respect of all employees working under them. They have stated in their written statement that payment of premium amounting to `31,37,192/- for all employees for the period July 2003 to April 2004 was made to the LIC on 27.08.2004 and the interest for late payment was also paid. It has been categorically stated by respondent no. 2 that the name of the deceased Popat Baburao Kumbhoje was also included in the list of the employees for whom the said premium was paid. These facts have nowhere been denied by the LIC, neither they have stated anything about the case of deceased employee Popat Baburao Kumbhoje. In the light of these facts, it is very clear that when LIC has accepted the premium in respect of all employees including that for the deceased Popat Baburao Kumbhoje, the question of lapse of policy does not arise at all.
17. Further, it is made out from the complaint and the replies to the complaint filed by both OPs that the complainant no. 1 and her relatives went to both the OPs and stated that they were ready to pay the premium for the insurance policy in question. However, they were told that the responsibility to deduct and pay the premium to the LIC was that of the employer. They also came to know that the financial position of the OP No. 2 sugar mill was not good and hence the payment of premium for all workers was being withheld.
18. It is clear from the facts stated above and the law laid down by the Hon'ble Supreme Court in similar cases under the Salary Savings Scheme that it was the responsibility of the employer to deduct and pay the premium and there is absolutely no fault of the complainant, if the premium was not paid in time. In fact, it has been clearly brought out that because of the bad financial health of the OP No. 2, the sugar mill, they were not in a position to remit the premium for other employees as well, and same was deposited after a lapse of more than one year and the deposited amount included the premium for the deceased employee, who is the husband of complainant.
19. It can be stated, therefore, that in the current case, it is the duty of the LIC to make payment of claim for the deceased employee to the complainants. The employer can also not be saddled with the liability of making payment of claim to the complainant because they are supposed to make payment for all the employees together under the Scheme and they have already done so and the premium was accepted by the LIC, though it was paid late. The present revision petition, therefore succeeds. The order passed by the State Commission is set aside and the order passed by the District Forum is modified and the respondent no. 1, LIC, alone is directed to make payment of the claimed amount, i.e., `1,25,000/- with interest @9% p.a. with effect from 06.12.2003 till realisation. There shall be no order as to costs.
(DR. B.C. GUPTA) MEMBER DATED : 30.05.2014 PER JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER This revision petition has been filed by the petitioners against the order dated 22.02.2008 passed by Maharashtra State Consumer Disputes Redressal Commission, Mumbai (in short, 'the State Commission') in Appeal Nos. 474 & 937 of 2007 - LIC Vs. Smt. Meenakshi Popat Kumbhoje & Ors. and Manager, Deshbhakta Ratanappa Kumbhar, Panchganga Sahakari Sakhar Karkhana Ltd. Vs. Smt. Meenakshi Popat Kumbhoje by which, while allowing appeal, order of District Forum allowing complaint was set aside.
2. Brief facts of the case are that complainant/petitioner's husband Shri Popat Baburao Kumbhoje working with OP No. 2/Respondent No. 2 obtained three policies from OP NO. 1/Respondent No. 1 for Rs.50,000/-, Rs. 50,000/- and Rs. 25,000/- which were to mature respectively on 15.9.2018, 28.3.2027 and 15.7.2013. OP No. 2 agreed to deduct premium of these policies directly from the monthly salary payable to the assured. In the year 2003, Shri Popat Baburao Kumbhoje suffered jaundice and he was on leave from 13.3.2003 to 13.6.2003; so, he could not pay premium of the policies. Complainant No. 1 approached OPs and volunteered to pay premium for the polices, but OP No. 1 informed that premium be paid through OP No. 2 and OP No. 2 assured that premium will be remitted along with other workers' premium. Shri Popat Baburao Kumbhoje died on 6.12.2013 due to illness. It was further alleged that OP No. 2 was also having provident fund amounts and other amounts payable to the deceased and it was their duty to remit premium of deceased's policy, but premium was not remitted; so, complainant could not get insurance amount of 3 policies. Alleging deficiency on the part of OPs, complainant filed complaint before District Forum. OP No. 1 resisted complaint and submitted that as policies stood lapsed for non-payment of premium of all the 3 polices, claim was rightly repudiated and prayed for dismissal of complaint. OP No. 2 admitted that deceased was on leave without pay from 13.3.2003 to 13.6.2003; so, there was no question of payment of salary to him for that period and so, no premium could have been deducted from his salary for the aforesaid 3 months for remitting to LIC. It was also denied that during illness, complainant no. 1 approached OPs and volunteered to pay unpaid premium of 3 policies and it was a made up story. It was further submitted that premium from July, 2003 to April, 2004 of the workers was paid to OP No. 1 on 27.8.2004 totaling Rs.31,37,192/- inclusive of interest of Rs.2,09,937/-on delayed payment and prayed for dismissal of complaint. Learned District Forum after hearing both the parties allowed complaint and directed OP to pay Rs.1,25,000/- along with 9% p.a. interest and further awarded Rs.500/- as cost. Appeal filed by the OP No. 1 was allowed by learned State Commission vide impugned order against which, this revision petition has been filed.
3. Heard learned Counsel for the parties and perused record.
4. Learned Counsel for the petitioner submitted that as LIC did not intimate deceased for remittance of unpaid premium of the policies and OP No. 2 committed deficiency in remitting premium to LIC, learned District Forum rightly allowed complaint, but learned State Commission committed error in allowing appeal; hence, revision petition be allowed and impugned order be set aside. On the other hand, learned Counsel for the respondent submitted that order passed by learned State Commission is in accordance with law; hence, revision petition be dismissed.
5. It is not disputed that deceased Shri Popat Baburao Kumbhoje took three policies from LIC and premium was to be paid by OP after deducting it from the salary of Shri Popat Baburao Kumbhoje. It is also not disputed that Shri Popat Baburao Kumbhoje was on leave without pay from 13.3.2003 to 13.6.2003 on account of jaundice and premium for this period was not remitted to LIC by OP No. 2/employer. It is also not disputed that OP NO. 2 remitted Rs.31,37,192/- as premium of workers from July, 2003 to April, 2004 on 27.8.2004. It is also not disputed that Shri Popat Baburao Kumbhoje died on 6.12.2013.
6. Now, the core question to be decided is whether LIC committed any error in repudiating claim on account of lapse of polices for want of premium.
7. As premium of polices remained unpaid for 3 months, policies lapsed and after lapse of polices, assured died on 6.12.2013. Learned Counsel for the petitioner submitted that as OP No. 2 was acting as an agent of the OP No. 1 and OP No. 2 failed to fulfill its obligation in remitting premium to OP No. 1, complainants were entitled to get the sum assured under the policies. In support of his contention, he has placed reliance on judgment of Hon'ble Apex Court in (1999) 8 SCC 229 - Delhi Electric Supply Undertaking Vs. Basanti Devi & Anr. and (2005) 6 SCC 188 - Chairman, Life Insurance Corpn. & Ors. Vs. Rajiv Kumar Bhasker. Perusal of aforesaid judgments makes it clear that OP No. 2 being employer of assured was acting as agent of OP No. 1. OP No. 2 was under an obligation to deduct premium from salary of assured and was further under an obligation to remit this amount to OP No. 2.
8. In the case in hand, it is admitted position that assured was on leave without pay for 3 months and in such circumstances, no salary was payable to him for these 3 months. As salary was not payable there could not have been deduction of premium from salary and OP No. 2 was not under an obligation to remit premium of policy to OP No. 1. In Basanti Devi & Anr. case (supra), Hon'ble Apex Court held LIC responsible as premium was deducted by the employer from the salary of assured, but was not remitted to LIC, but in the present case neither any premium was deducted by OP No. 2, nor OP No. 2 was under any obligation to send premium from other funds of the assured. In such circumstances, Basanti Devi & Anr. case (Supra) does not help to the complainant.
9. Learned Counsel for the petitioner further submitted that neither LIC, nor employer/OP No. 2 informed assured for remittance of premium and thus committed deficiency and in such circumstances, policies do not lapse. In Rajiv Kumar Bhasker casa (Supra), Hon'ble Apex Court observed that in 'Salary Savings Scheme' which provides for a tripartite agreement, employer is under an obligation to inform the employer that for some reasons, he is not in a position to perform his obligation whereupon the employee could have paid the premium directly to LIC. Perusal of Salary Savings Scheme Authorisation signed by assured runs as under:
"I agree that your ability will be confined to making arrangement for deduction of premium from my salary wherever this can be made, the remitting the amount to the Corporation in time. I shall be entirely responsible for any consequence on account of non-payment of premium on my policy for reasons beyond your control, such as, in the event of my proceeding on leave without pay or my drawing advance salary without deduction of premium or my cancelling this authorization for deduction of premium or my leaving your employment. In any such case, or in case of withdrawal of the Salary Saving Scheme with you by Life Insurance Corporation of India for any reasons whatever, it will be my responsibility to make arrangements for remittance of the premium directly to the Corporation at the increased rate specified in the policy to prevent my policy from going into a lapsed condition"
which makes it clear that in the event of employee proceeding on leave without pay, it was employees responsibility to make arrangements for remittance of the premium directly to LIC. This declaration signed by the assured casted burden on him to deposit premium as he was on leave without pay. Complainant has alleged in the complaint that complainant approached OPs for acceptance of premium for this period, but they refused to accept. This fact has been denied by OPs in their written statement. Complainant has not proved by any cogent evidence that complainant ever approached LIC for depositing premium for this period. For the sake of argument if any officer of LIC refused to accept the premium, complainant could have sent it by bank draft, etc., but as complainant/assured failed to deposit premium for this period, policy stood lapsed and in such circumstances, no payment was to be made to the complainant on the death of assured.
10. Learned Counsel for the Respondent No. 2 submitted that premium amount of the assured along with other workers was deposited with interest on 27.8.2004; hence, acceptance of premium by LIC revives lapsed policy. I do not agree with this submission because no premium for the months of April to June, 2003 was remitted by OP No. 2 to OP No. 1. Even if it is presumed that premium for this period was also remitted on 27.8.2004, policies which had lapsed long back do not revive. Not only this, premium amount remitted after death of the assured does not revive lapsed insurance policy. Learned Counsel for the Respondent No. 2 submitted that LIC should not have accepted premium. This argument is devoid of force because OP No. 2 deposited premium for number of workers for many months and in such circumstances, it was not obligatory on the part of LIC staff to ascertain whether any premium has been deposited against the lapsed policy or not and merely by acceptance of premium of all workers by LIC, lapsed policies do not revive.
11. I do not find any infirmity, illegality or jurisdictional error in the impugned order and revision petition is liable to be dismissed.
12. Consequently, revision petition filed by the petitioner is dismissed with no order as to costs.
(K.S. CHAUDHARI) PRESIDING MEMBER DATED : 30.05.2014 PER DR. B.C. GUPTA, MEMBER In Revision Petition No. 3016/2008, Smt. Meenakshi Popat Kumbhoje & Ors. Versus Life Insurance Corporation of India & Anr., the draft order recorded by Dr. B.C. Gupta, Member was sent for concurrence before pronouncement to Hon'ble Presiding Member Justice K.S. Chaudhari. The presiding Member has however, sent his dissenting order. Since the Members of the bench differ in their opinion, the matter may be referred to the Hon'ble President, NCDRC under Section 20(IA)(iii) of the Consumer Protection Act, 1986 for further necessary action.
The main points of difference in the two draft orders are as follows:
(i) In an insurance policy taken under the "Salary Savings Scheme" (SSS) of the LIC, whether LIC is bound to inform the employee on prescribed forms No. 5227 and 5228 in case of non-payment of premium for any reason as laid down in their Manual for Policy Servicing Department No.14-Salary Savings Scheme, issued on 31.12.1990;
(ii) Whether the LIC is liable to pay claim in accordance with law laid down by the Hon'ble Supreme Court in "Delhi Electric Supply Undertaking versus Basanti Devi & Anr." (1999) 8 SCC 229 and "Chairman, LIC and Anr. Versus Rajeev Kumar Bhaskar [(2005) 6 SCC 188], even when the payment of premium for all the employees of the Establishment was made late by many months by the employer due to his poor financial condition;
(iii) Whether the policy issued in favour of the deceased lapsed due to non-payment of premium and cannot be revived after his death, whereas for hundreds of other employees, the lapsed policies can be revived after the late payment of premium by many months?
(DR. B.C. GUPTA) MEMBER DATED : 29-01-2015 JUSTICE V.B. GUPTA, MEMBER Heard.
2. Earlier final arguments in this case were heard by Bench of Hon'ble Mr. Justice K.S. Chaudhari, Presiding Member and Hon'ble Dr. B.C. Gupta, Member.
3. Since, there was difference of opinion amongst the Members of the Bench, separate judgments were pronounced by the Hon'ble Members on 30.05.2014.
4. By virtue of provisions of Section 20(1A) (iii) of Consumer Protection Act, 1986(for short, 'Act'), the matter has been placed before this Bench.
5. Learned Non-Judicial Member has framed the following points of difference;
"(i) In an insurance policy taken under the "Salary Savings Scheme" (SSS) of the LIC, whether LIC is bound to inform the employee on prescribed Forms No.5227 and 5228 in case of non-payment of premium for any reason as laid down in their Manual for Policy Servicing Department No. 14-Salary Savings Scheme, issued on 31.12.1990;
(ii) Whether the LIC is liable to pay claim in accordance with law laid down by the Hon'ble Supreme Court in "Delhi Electric Supply Undertaking versus Basanti Devi & Anr." (1999) 8 SCC 229 and "Chairman, LIC and Anr. Versus Rajeev Kumar Bhaskar [(2005) 6 SCC 188], even when the payment of premium for all the employees of the Establishment was made late by many months by the employer due to his poor financial condition;
(iii) Whether the policy issued in favour of the deceased lapsed due to non-payment of premium and cannot be revived after his death, whereas for hundreds of other employees, the lapsed policies can be revived after the late payment of premium by many months?
6. That is how the matter has come up before me as a third Member.
7. I have heard Mr. Kailash Pandey, Advocate appearing on behalf of the petitioner and Mr. Mohinder Singh, Advocate representing Respondent No.1-Insurance Corporation and Mr. Mahaling Pandarge, Advocate for Respondent No. 2 and gone through the record.
8. In view of the recent decision of Full Bench of this Commission in Revision Petition No.4150 of 2007, Life Insurance Corporation of India and Ors. Vs. Smt. Ram Sakhi and Ors, the issues involved in this case are not more res integra.
9. Therefore, in view of the decision in Life Insurance Corporation of India Vs. Smt. Ram Ram Sakhi (Supra), since, there was a clear lapse on the part of the Insurance Corporation which undoubtedly amounted to deficiency in rendering service by it to the insured. I am, therefore of the considered opinion that there was a clear breach of the terms and conditions of the policy issued under the "Salary Saving Scheme", which was in the nature of a contract, by the Insurance Company and therefore, it was not justified in repudiating the claim of the Petitioners preferred by them on the demise of deceased, Sh. Popat Baburao Kumbhoje- the Insured.
10. Therefore, the impugned order dated 22.2.2008 passed by the State Commission is set aside and the revision petition filed by the petitioners stand allowed.
11. No order as to cost.
(V.B. GUPTA) MEMBER DATED :- 11.03.2015 PER JUSTICE K.S. CHAUDHARI & DR. B.C. GUPTA, MEMBER In Revision Petition No. 3016 of 2008 - Smt. Meenakshi Popat Kumbhoje & Ors. Vs. LIC of India & Anr. arguments were heard on 8.10.2013 by our Bench. Judgment was dictated by Hon'ble Dr. B.C. Gupta, Member and sent for approval to Hon'ble Justice K.S. Chaudhari, Presiding Member. The Presiding Member sent his dissenting judgment. As Members of the Bench differed in their opinion, the matter was placed before Hon'ble President, NCDRC under Section 20 (i) (iii) of the Consumer Protection Act for appropriate directions. . The Hon'ble President referred the matter to Hon'ble Mr. Justice V.B. Gupta, Member. Hon'ble Mr. Justice V.B. Gupta, Presiding Member agreed with the view of Hon'ble Dr. B.C. Gupta, Member.
Consequently, in the light of majority judgment, Revision Petition filed by the petitioners is allowed. The order passed by the State Commission is set aside and the order passed by the District Forum is modified and the respondent no.1, LIC, alone is directed to make payment of the claimed amount, i.e., Rs.1,25,000/- with interest @ 9% p.a. with effect from 06.12.2003 till realization. There shall be no order as to costs.
......................J K.S. CHAUDHARI PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER