State Consumer Disputes Redressal Commission
Smt.Usha Kiran Bhagwat & Anr vs Life Insurance Corporation Of India, & ... on 4 February, 2008
CONSUMER DISPUTES REDRESSAL COMMISSION CONSUMER DISPUTES REDRESSAL COMMISSION MAHARASHTRA STATE, MUMBAI FIRST APPEAL NO.128 OF 2007 Date of filing : 02/02/2007 IN CONSUMER COMPLAINT NO.44 OF 2006 Date of order : 04/02/2008 DISTRICT CONSUMER FORUM, SATARA @ MISC.APPLICATION NO.192/2007 1. Smt.Usha Kiran Bhagwat 2. Kum.Prathamesh Kiran Bhagwat Through Guardian Smt.Usha Bhagwat R/o.Plot no.6, Vikas Nagar, Post Sangam Nagar Taluka District Satara ..Appellants/org.complainants V/s. 1. The Divisional Manager Life Insurance Corporation of India, Satara division, Opp.Collector office, Satara 2. The Sr.Divisional Manager Life Insurance Corporation of India, Branch Vaduj, District Satara 3. The State of Maharashtra through Collector Satara, District Satara 4. The State of Maharashtra through Tahsildar, Khatav, Tal.Khatav, District Satara..Respondents/org.O.Ps Corum: Mr.P.N.Kashalkar, Honble Presiding Judicial Member
Smt. S.P. Lale, Honble Member Present: Mr. Pandurang Pol-Advocate @ Mr.S.S.Suryavanshi-Advocate for the appellants.
L/o.Mr.A.S.Vidyarthi-Advocate for respondent nos.1&2 None for rest of respondents : ORDER:
Per Mr.P.N.Kashalkar, Honble Presiding Judicial Member
1. This is an appeal filed by original complainants, who are aggrieved by the fact that their consumer complaint no.44/06 was dismissed by the District Consumer Forum, Satara by its impugned judgement dated 30/12/06. The facts to the extent material may be stated as under:-
2. Complainants are legal heirs of deceased Mr.Kiran Shankar Bhagwat, who was resident of Satara and he died owing to accident on 18/2/2005. According to complainants, deceased Kiran Bhagwat while in service had purchased a policy for Rs.1 lakh bearing no.942355820. Policy was purchased from the present respondents, who were O.Ps vide proposal form on 15/11/03. Premium payable was under Salary Saving scheme and employer i.e.Tahsildar Khatav was required to deduct premium from his monthly salary payable to deceased Kiran Bhagwat and to transmit the same to LIC. Till February 2005, every month the premium of Rs.546/- was being deducted from the salary of deceased complainant Kiran Bhagwat and was being sent to LIC.
However, there was some default committed by employer of Kiran Shankar Bhagwat and hence when claim was lodged on account of accidental death of Kiran Shankar Bhagwat, the claim was repudiated by O.Ps on the ground that they had not received premium and policy had lapsed. Therefore complainants filed consumer complaint and claimed Rs.3,20,000/- with interest @ 12% p.a. on the said amount and also claimed Rs.15,000/- for mental harassment and Rs.5000/- towards cost.
3. O.Ps filed written statement and admitted that O.Ps had issued policy to deceased life assured Kiran Bhagwat. Sum assured was Rs.1 lakh and premium payable per month was Rs.546/-. It was Money Back Policy with profits under Corporations Salary Saving Scheme, where under the life assured was to receive benefits of the policy. Policy was in force as on the death of life assured. They further pleaded that deceased had agreed and had given undertaking vide policy clause no.22 that in case of policy stand shall lapsed, if the due premium was not received by the Corporation within 15 days of the due date, life assured or proposer shall be primarily liable to keep the policy in force and shall remit defaulted premium dues together with additional charges applicable for monthly payment and with interest, if any at the prevailing rates as charged by the Corporation for the delayed payment of premium. In the event of premium dues not remitted to the Corporation either by employer or by the life assured and the policy being lapsed, liability of the Corporation under such lapsed policy shall be restricted to the extent of premium actually received by it and no further relief for any claim shall lie with the Corporation.
4. According to LIC, respondents herein, life assured had given Authorization Letter on 3/10/04 addressed to his employer Tahsildar, Tahsildar office, Vaduj, Taluka Khatav and authorized employer to deduct monthly premium from his salary w.e.f. January 2005 and remit the amount to the Corporation. As such Tahsildar, Khatav was agent of life assured and he failed to remit some premiums to the Corporation w.e.f. January 2005 onwards. On receipt of claim of the applicants, opponents enquired with opponent no.4 as to non-receipt of monthly premiums of deceased life assured vide letter dated 9/8/05. However, O.P. no.4 gave no reply. Since the policy of the deceased life assured had lapsed from January 2005 due to non receipt of month premiums from O.P.no.4, they had repudiated the claim and therefore, LIC pleaded that employer of the life assured and deceased himself are to be blamed for non payment of monthly premiums and for ultimate lapse of policy and since policy lapsed as per terms and conditions they were simply entitled to get refund of premium paid towards policy and nothing more. Therefore, they pleaded that complaint should be dismissed.
5. Forum below agreed with the submissions made by LIC and since it was found that Kiran Bhagwat had not paid monthly premium of January 2005 and since O.P.no.4 had not deposited monthly premiums from January 2005 onwards, they were not liable to make payment under the policy, since it was in lapsed condition. By so holding, Forum below was pleased to dismiss the complaint.
6. Heard Mr. Pandurang Pol-Advocate @ Mr.S.S.Suryavanshi-Advocate for the appellants. L/o.Mr.A.S.Vidyarthi-Advocate for respondent nos.1 & 2. None for rest of respondents.
7. It is not disputed that life assured had purchased the policy from LIC and it was Salary Saving Scheme policy, where under employer had agreed to pay monthly premiums to the LIC directly. Question is if employer commits default in transmitting a few monthly premiums, whether policy can be held to have legally lapsed on account of non sending of payment of certain monthly premiums and it is whose liability to pay monthly premium to avoid lapse of policy. In our view it is liability of employer- O.P.no.4 to make payment of monthly premiums by taking requisite amounts from the monthly salary payable to the life assured or employee of the institution. Question is whether, O.P.no.4 Tahsildar Khatav, District Satara in whose employment life assured was, could be treated as an agent of life assured or whether O.P.no.4 Tahsildar, employer of life assured could be treated as agent of LIC.
8. This question was taken by parties before apex court in Chairman LIC and others v/s.Rajukumar Bhaskar (2005) AIR SCW Supreme Court 3636. Honble Supreme Court was pleased to lay down that in any contract of insurance, employer under Salary Saving Scheme of LIC would be treated as an agent of LIC. Employer had accepted sole responsibility to collect premium from its employees and to remit the same by means of one cheque to the Corporation. No individual premium notice was required to be sent to any employee. Furthermore, no receipt was to be given therefor. Employer was to inform Corporation about changes in staff and employees were not made aware the communication between LIC and employer. Employer though not agent of LIC qua its Regulations, Honble Supreme Court held that it could be inferred that employer had implied authority to act as an agent of LIC in view of section 186 of Contract Act.
9. As such, failure on the part of employer to make payment of premium to LIC would be the liability of LIC itself, because its agent had failed to deduct monthly premiums and transmit them to LIC under Salary Saving Scheme of LIC. This ruling is squarely applicable to the facts and circumstances of our case. Once employee-life assured had given authorization to the employer, permitting him to deduct monthly premium from his salary and permitting him to transmit the same to LIC towards monthly premium under Salary Saving Scheme, relying on the judgement of Supreme Court mentioned Supra, we are of the view that O.P.no.4 Tahsildar Khatav was the agent of LIC and if agent of LIC failed to deduct certain monthly premiums, LIC cannot be heard to say that its agent had not transmitted the amount of monthly premium to it under this policy of life assured i.e.Kiran Bhagwat. So defaults, if any was committed by agent of LIC who was employer of deceased life assured. As such, as per policy assured amount must be paid to the legal heirs of deceased, since deceased Kiran Bhagwat died in an accident. It is also pertinent to note that before lodging of claim, LIC nowhere informed the life assured that his monthly premiums of some months had not been transmitted and he should himself pay those monthly premiums with interest. In absence of any such letter from LIC, it is not possible to act upon the contentions of LIC that it was the duty of life assured to ensure that LIC received monthly premiums on due date without fail and since it had not received certain payments, the policy stood lapsed and they owe no duty to honour the said lapsed policy.
10. In yet another case, reported in AIR 2000 Supreme Court 43, Delhi Electric Supply Undertaking V/s.Basanti Devi and another, Honble Supreme Court held that in a Salary Saving Scheme of LIC, when premiums payable by employer to LIC was agreed to be deducted every month from the salary of employee and agreed to be transmitted to LIC, employer in any case had ostensible authority to collect premiums on behalf of LIC and as such, employer will be agent of LIC for the employees under section 182 of Contract Act and general principles of law of agent as contained in Contract Act would be applicable and LIC would be held to be liable even if some monthly premiums were not sent by employer to the LIC pertaining to a particular employee.
11. These two rulings are squarely applicable to the facts and circumstances of our case and as mentioned above, there was no intimation given by LIC about non-receipt of certain monthly premiums from employer and since life assured or his legal heirs were not knowing about the non receipt of certain monthly premiums from O.P.no.4 to LIC, the default committed by O.P.no.4 was the default of agent of LIC and therefore, LIC cannot be heard to say that since policy lapsed they were not entitled to honour the policy and to given sum assured to the legal heirs of life assured Kiran Bhagwat. In the circumstances, we hold that appeal is having merit. Complaint was wrongly dismissed by the Forum below and by allowing this appeal, complaint will have to be allowed directing LIC to make payment as per the policy in question. Hence, the following order:-
ORDER
1.
Appeal is allowed.
2. Order of dismissal of complaint is quashed and set aside.
3. Complaint stands allowed.
4. Misc.application stands disposed of.
5. Appellant/LIC is directed to make payment to the complainants in terms of policy purchased by Kiran Shankar Bhagwat.
6. Said amount shall carry interest @ 6% p.a. from the date of repudiation of the claim, till realization of entire amount.
7. LIC is further directed to pay cost of Rs.300/- to the appellants.
8. Copies of the order herein be furnished to the parties.
(S.P.Lale) (P.N.Kashalkar) Member Presiding Judicial Member Ms.