State Consumer Disputes Redressal Commission
Andhra Bank, Narasannapeta vs 1. Smt Darapu Narayana W/O Late Naidu @ ... on 25 March, 2013
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL
COMMISSION AT HYDERABAD
F.A.No.335
OF 2012 AGAINST C.C.NO.53 OF
2009 DISTRICT FORUM SRIKAKULAM
Between:
Andhra
Bank, Narasannapeta
Srikakulam Dist. Rep. by its Branch Manager
Appellant/opposite party no.2
A N D
1. Smt Darapu Narayana
W/o late Naidu @ Rajanaidu
Age 36 yrs, R/o Boddapadu Village, Jiyyannapeta
Panchayat, Kotabommali Mandal, Srikakulam Dist.
Respondent/complainant
2. Life Insurance Corporation of India
rep. by its Senior Divisional Manager
P&GS Units, Divisional Office, Jeevan
Prakash, Hyderabad-63
Respondent/opposite party no.1
Counsel for the Appellant M/s K.Sridhar
Rau
Counsel for the Respondent M/s
Aravala Rama Rao
(R1)
M/s
Hari Rao Lakkaraju (R2)
QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
& SRI THOTA ASHOK KUMAR, HONBLE MEMBER MONDAY THE TWENTY FIFTH DAY OF MARCH TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The Andhra Bank, Narsannapet challenged the order of the District Forum in the appeal as regards to the direction fastening liability upon it to pay the sum assured under insurance policy issued by the Life Insurance Corporation of India.
2. The first respondents husband was account holder bearing, A.B.Jeevan Abhaya 301234 with the appellant-bank. The appellant entered into Memorandum of Understanding with the second respondent-insurance company to provide insurance cover to its account holders including the deceased husband of the first respondent. On 12.12.2008 the first respondents husband died in a road accident and she submitted claim to the second respondent through the appellant. The claim was not settled and the first respondent got issued notice dated 3.07.2009 to the appellant and the second respondent. The notice had not drawn any response from them and as such the complaint was filed.
3. The second respondent-insurance company had resisted the claim on the premise that it had not received claim form from the second respondent and it issued reply to the notice dated 3.07.2009 of the first respondent. It is contended that non-receipt of claim form from the second respondent was informed to the second respondent and the counsel of the first respondent. The appellant addressed letter dated 26.08.2009 to the second respondent to issue the claim form. As per the terms of MOU, intimation of death has to be given within 90 days and claim form along with documents has to be submitted within 180 days from the date of death of the account holder. It is stated that the accident benefit under the scheme is available for three months from 1.12.2007 to 29.02.2008 and the husband of the first respondent died on 12.12.2008 and as such the first respondent is not entitled to claim accident benefit .
4. The appellant-bank resisted the claim contending that the deceased husband of the first respondent did not maintain mininimum balance in his account and as such the appellant could not collect premium on prorata basis from his account by 30th November. It is contended that the first respondent had not filed claim form nor submitted the relevant documents to the appellant to process the claim. If the first respondent is found entitled to the amount under the insurance policy, she has to proceed against the second respondent as per the terms of the MOU and the appellant is not liable to pay any amount to the first respondent as there was no deficiency in service on its part.
5. The first respondent field her affidavit and the documents, ExA1 to A13. On behalf of the opposite parties, the Manager (L&HPF) of the opposite party no.1 and the Branch Manager of the opposite party no.2 filed their respective affidavits and the documents, Exs.B1 to B9.
6. The District Forum allowed the complaint against the appellant on the premise that the appellant failed to remit premium to the second respondent and the appellant could have collected the amount later and the appellant failed to issue notice to the account holder which amounts to deficiency in service on the part of the appellant-bank.
7. The second opposite party has filed appeal contending that the first respondents husband failed to maintain minimum balance in his account and the premium will be deducted by 30th November every year which will be paid to the second respondent for issuing the insurance policy for the period from December to the end of November the next year. The balance lying to the credit of his account was `172/- on 31.11.2008 and the premium to be paid is `409/-.
8. The point for consideration is whether the order of the District Forum suffers from misappreciation of facts or law?
9. It is an admitted fact that the first respondents husband was the account holder of the appellant-bank with his AB Jeevan Abhaya-301234 and the appellant entered into Memorandum of Understanding with the second-respondent insurance company to cover risk on the life of Abhaya account holders of the appellant-bank. The application form submitted by the first respondents husband to the appellant-bank contains authorization in favour of the appellant to debit to his account the insurance premium payable to the second respondent.
10. Andhra Bank Jeevan Abhaya Savings Bank Account is different from other saving bank account as it provides life insurance cover and accident benefit to the account holder in the age group of 18 to 55 years. The minimum balance prescribed is the same amount as in case of Saving Bank Account plus the amount for two premia. The sum assured is Rs.1,00,000/- in case of normal death and Rs.2,00,000/- in case of accidental death. Except submitting the Health Declaration Forim, the account holder is not required to undergo medical checkup to avail the insurance cover.
11. Condition 8 of the Pass Book stipulates that the second respondent would settle the claim and the appellant will act as facilitator. The quantum of premium payable is mentioned in the pass book as under:
A very nominal premium is payable p.a. in advance as below. First premium is payable on pro-rata basis depending on the month of joining the scheme.
Insurance coverage starts from the date of payment of premium. A nominal amount will be debited to the account every year as scheme administration charges by the bank.
12. As seen from the copy of statement of his account, the first respondents husband maintained an amount of `172/- on 12.11.2008. Thus, it is clear that he did not maintain minimum amount in his account to meet the requirement of payment of premium on prorate basis by the appellant to the second respondent. It is to be considered as to whether the failure of the account holder to maintain minimum balance in his abhaya account would disentitle his nominee to claim the sum assured.
13. The memorandum of understanding is the basis for creating rights and liabilities of the appellant bank and respondent insurance company as also the customers of the appellant bank. Clause 8 of Rule 1 of MoU provides for entry date which means the date from which account holder opens account under Abhaya Jeevan, ABJeevan Abhaya special accounts or submits good health declaration form or premium is debited from his account whichever is later. The husband of the first respondent opened his account on 16.9.2005 A.B.Jeevan Abhaya . Therefore, the date of debiting premium from his account would be the entry date for operation of insurance cover and there is no dispute as to the entry date applicable to the case of the first respondents husband.
14. Rule 7 stipulates admission of members during the policy year irrespective of entry date. Rule 7 reads as under:
Scheme envisages admission of members during the policy year irrespective of the entry date, premia are to be paid by way of proportionate premium from the 1st of month of joining till the close of the policy year namely 30th November, every year.
15. Rule 10 of MOU provides for maintenance of a Non-operative Jeevan Anhaya Premium Collection Account in the branches of the appellant-bank and as and when the account holder opens AB Jeevan Abhaya account,, the premium would be debited from his account and credited to Non-operative Jeevan Anhaya account and life insurance coverage in respect of any member would be commenced from the date of crediting the premium in the respective NOPC Account.
16. Rule 8 imposes restriction on the member to withdraw from the scheme.
His membership would continue unless he submits in writing to the appellant-bank expressing his intent to withdraw from the scheme and withdrawal would be effective from the next date of renewal. The husband of the first respondent did not apply to withdraw himself from the coverage of the scheme. His membership continued till he met with his death.
Rule 9 if read in conjunction with circular no.302 dated 27.11.2008 which makes it mandatory to the branch managers of Andhra Bank to inform the customers about the change of premium rates, it becomes manifest that the appellant bank did not inform the deceased husband about the change of premium rates and the deceased member continued to be member of the scheme.
17. The member of the scheme is the beneficiary and by virtue of his membership he is entitled the benefit conferred by the scheme. There is no condition mentioned in the pass book that the amount would be debited to the account of the first respondents husband by the end of November every year.
18. The appellant-bank has not produced the list of members of the scheme. MOU speaks of remittance of the amount by the appellant and not the individual customer of the appellant-bank. Unless list of customers of the appellant bank produced, the onus on the appellant and the respondent no.2 would not be discharged of the fact of payment of premium in respect of the first respondents husband. The reply dated 4.07.2009 would strengthen the entitlement of the first respondent to the claim. The letter reads as under:
We are in receipt of your Legal Notice dt.3.7.2009 regarding Abhaya Jeevan claim of Late Sri Darapu Naidu. While sympathizing the bereaved family, we wish to clarfy that we have not received any claim forms from Andhra Bank, Narasannapet so far.
1.
As per Rule 28 of our MOU with Andhra Bank, Intimation of death has to be given to the Bank branch within 90 days and the duly filled in claim form along with the documents are to be submitted to P&GS unit of LIC within 180 days through the respective Andhra Bank Branch. In this instant case, the death occurred on 12.12.2008 and the claim forms were received by us i.e. well beyond 180 days.
2. As per M.O.U. with Andhra Bank Accident benefit has been applicable for cases where death has occurred before 29.2.2008.
Hence, please note that accidental benefit of Rs.1,00,000/- is not applicable in this case since it has been withdrawn from 1.3.2008.
The claim is not admissible as per rules. However, since you are claiming that the claim forms were submitted to Andhra Bank, Narasannapet on 16.2.2009, we are writing to the said bank to send the claim forms immediately to consider the case.
19. The claim of the first respondent was refused to be entertained on the ground that death intimation was not furnished within 90 days and the claim with documents was not submitted within 180 days of the occurrence of the death of the husband of the respondent no.1.The objection as to the maintainability of the claim on maintenance of less than minimum balance in the account of the deceased member of the scheme was not raised at any time by the second respondent . All the circumstances would establish remittance of premium which included the amount in respect of the first respondents husband by the appellant-bank to the second respondent-insurance company. The documents placed on record such as FIR and Final Report would establish the death of the first respondents husband as accidental. The appellantbank acting as agent of the second respondent bank cannot be fastened with any liability and in terms of MOU it is the second respondent-insurance corporation which has to pay the amount to the first respondent.
20. The District Forum has exonerated the second respondent-insurance company on the premise that there was no negligence on its part. We do not subscribe to the view of the District Forum. The appellant was acting as the agent of the second respondent-insurance company for the purpose of the insurance policy under Abhaya saving scheme. The relationship of the employer of the insured vis--vis the insurance company was considered by the Honble Supreme Court in Delhi Electric Supply Undertaking Vs. Basanti Devi reported in AIR 2000 SC 43. The apex court held the liability of the insurance company for the act of the employer of the insured under the salary saving scheme as under:
11.
It was held that In the present case we are not concerned with the insurance agent. It is not the case of the LIC that DESU could be permitted as an insurance agent within the meaning of the Insurance Act and the Regulations. DESU is not procuring or soliciting any business for the LIC. DESU is certainly not an insurance agent within the meaning of aforesaid Insurance Act and the Regulations but DESU is certainly an agent as defined in Section 182 of the Contract Act. Mode of collection of premium has been indicated in the scheme itself and employer has been assigned the role of collecting premium and remitting the same to LIC. As far as employee as such is concerned, employer will be agent of the LIC. It is a matter of common knowledge that Insurance Companies employs agents. When there is no insurance agent as defined in Regulations in the Regulations and the Insurance Act, general principles of the law of agency as contained in the Contract Act are to be applied.
12. Agent in Section 182 means a person employed to do any act for another, or to represent other in dealings with third person and the person for whom such act is done, or who is so represented, is called the principal. Under Section 185 no consideration is necessary to create an agency. As far as Bhim Singh is concerned, there was no obligation cast on him to pay premium direct to LIC. Under the agreement between LIC and DESU, premium was payable to DESU who was to deduct every month from the salary of Bhim Singh and to transmit the same to LIC. DESU had, therefore, implied authority to collect premium from Bhim Singh on behalf of LIC. There was, thus, valid payment of premium by Bhim Singh. Authority of DESU to collect premium on behalf of LIC is implied. In any case, DESU had ostensible authority to collect premium from Bhim Singh on behalf of LIC. So far as Bhim Singh is concerned DESU was agent of LIC to collect premium on its behalf.
21. The principle is reiterated in Chairman, Life Insurance Corporation of India vs Rajiv Kumar Bhasker 2005SLT 567. The National Commission has referred to the aforementioned decision of the Supreme Court in LIC of India vs Basmati CDJ (2006)303 and held that the insurance company cannot escape its liability for payment of the polices to the nominee. In para 32 of the aforementioned decision , the Supreme Court held that the scheme clearly proves 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 therefore, he will have to pay 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 rejected to do so. In that view of the matter, we do not find any reason to take a differ view
22. For the foregoing reasons we are of the opinion that the second respondent-insurance company is liable to pay the sum assured of `2,00,000/- with interest and costs awarded by the District Forum to the first respondent. Accordingly, the order of the District Forum is liable to be modified by fastening liability on the respondent no.2 insurance company.
23. In the result the appeal is allowed. The order of the District Forum is modified to the extent of liability of the appellant/opposite party no.2. The opposite party no.1 is directed to pay `2 lakh together with interest at 6% p.a. from 1.5.2009 till the date of realization and costs of `3,000/-. The complaint against the appellant/opposite party no.2-bank is dismissed. Time for compliance four weeks.
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MEMBER Dt.25.03.2013 కె.ఎం.కె*