Orissa High Court
Mrs. Pranati Dash vs The Chairman-Cum-Managing Director, ... on 14 May, 1998
Equivalent citations: 1998(II)OLR458
Author: A. Pasayat
Bench: A. Pasayat, S.C. Datta
JUDGMENT A. Pasayat, J.
1. Petitioner, widow of one Ashwinee Kumar Dash, makes allegation of redtapism and apathy by the Life Insurance Corporation of India (in short 'LIC') and Oil & Natural Gas Corporation Limited (in short 'ONGC'). Denial by the LIC to make payment in respect of policies bearing No. 87072477 and 870373535 obtained by late Ashwinee under the Salary Savings Scheme (in short, the 'Scheme') is the bone of dispute. According to petitioner, both LIC and ONGC are trying to avoid their liability on tenable premises.
2. A few facts need to be noted before going into the disputed aspects.
Ashwinee joined in ONGC as an Assistant Executive Engineer, and was posted at Baroda. During the posting there, he had obtained the aforesaid two policies under the Scheme and there was regular deduction of premium from his salary from May, 1990 onwards. In April, 1991 he was promoted and transferred to Sibasagar Project under the control of Regional Director, ONGC, Eastern Region (opp. party No. 2). No premium was deducted and deposited with LIC after such transfer resulting in policies getting lapsed. On 31.7.1991, Ashwinee met with an accident and breathed his last at the tender age of 32 years. Death intimation in respect of late Ashwinee was sent to LIC. On 30.10.1992, the LIC {vide Annexure - 3) turned down the prayer for settlement of death claim taking the plea of non-payment of premium. After getting the letter from LIC, petitioner moved ONGC for undoing the wrong. An official of opposite party No. 2 sent petitioner's letter to the General Manager (Finance) for taking necessary action. On 20.9.1993, an official of opposite party No. 2 vide Annexure - 5 advised the petitioner to deposit the past premium and avail the opportunity to revive the LIC policies in respect of late Ashwinee, which had lapsed for non-deduction of premium from his salary from April, 1991 to July, 1991. An officer of opposite party No. 1,i.e., Chairman-cum-Managing Director, ONGC vide Annexure - 6 requested opposite party No. 2, the Regional Director to look into the matter personally and remedy the grievances of the petitioner in connection with deduction of LIC premium for the period for which no deduction had been made. Similar request was again made vide Annexure - 7. Opp. party No. 2 communicated a letter (Annexure - 8) to the Senior Branch Manager, LIC (opp. party No. 3) indicating therein that before certain formalities of getting the policies transferred to LIC, Sibasagar Branch could be completed, late Ashwinee Kumar Dash expired in July, 1991 and hence monthly premium for April, May, June and July, 1991 could not be deducted from the salary slips of the deceased. Further enquiry was made whether LIC has some other alternative recourse for settling such unfortunate cases of ultimately death, because the widow of the deceased was hard-pressed for money for sustenance of herself and her young son. The Division Office of LIC vide Annexure - 9 intimated the petitioner that revival of a policy is novation of contract between insurer and life assured, and when one of the parties to the contract, i.e., life assured dies such novation of contract is out of question. Opp. party No. 3 intimated the petitioner vide Annexure - 10 that the two policies were in a lapsed position at the time of accident, and hence nothing was payable in respect of the policies. Subsequently the Divisional Manager, LIC (opp. party No. 4) intimated to opp. party No. 2 that a policy can be revived during the life time of the assured, and also intimated vide Annexure - 11 that as LIC is acting as a trustee of life fund it cannot go beyond its frame-work to pay the claim under lapsed policies. According to it, there are thousands of such lapsed policies cases where nothing is payable. On 13.9.1995 opposite party No. 2 wanted to know from the petitioner as to on what basis she had arrived at the figure of Rs. 60,000/- to be receivable by her, had the LIC policies been kept alive. Details were required to be examined in respect of the petitioner's case at ONGC's end. Letter in this connection is Annexure - 13. Petitioner intimated to the opposite parties that the actual figure of claim amount was Rs. 58,381.25 paise. Subsequently opp. party No. 2 intimated to the petitioner that while her tragic situation was fully appreciated, authorities were unable to accommodate her claim in question under the Rules and Regulations of ONGC in vogue. It was, however, intimated to the petitioner vide Annexure - 14 that a proposal was made for special consideration and sanction. Alternatively, it was suggested that an appeal may be made to the officers-community to rise to the occasion and remit the donations/proceedings to her. At last, on 18.12.1995 opp. party No. 2 intimated to the petitioner vide Annexure - 15 that LIC is not payable for the claims as the policies were in lapsed condition on the death of Ashwinee Kumar Dash for non-payment of premium from April to July, 1991 under the Scheme. However, as a special case the grievance of the petitioner was given due consideration by the Regional Headquarters at Nazira, and sent to Headquarters at Dehradun for sanction. Thereafter opp. party No. 2 promised the petitioner that as soon as sanction is received from the headquarters, the amount shall be paid to her without loss of time. Nothing worthwhile happened thereafter and therefore, writ application has been filed.
3. Petitioner has made a grievance that because of non-deduction of premium which was to be done by the employer, she is not to be deprived of the amount receivable in respect of the two policies.
ONGC has taken the stand that it was the employee, i.e., late Ashwinee Kumar Dash who ought to have taken care to see that deduction was made for premiums, and he having not done the same, the petitioner cannot make any grievance.
LIC has taken the plea that since premiums were not received by it, even after extending the permissible limit, it has no liability, as the policies were lapsed. A copy of the policy, containing the terms and conditions in respect of the Scheme was filed by it. The conditions and privileges so far as relevant are as follows :
"CONDITIONS AND PRIVILEGES WITHIN REFERRED TO XXX XXX XXX
2. Payment of Premium : A grace period of one month but not less than 30 days will be allowed for payment of yearly, half yearly or quarterly premiums, and 15 days for monthly premiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid and the sum assured paid after deduction of the said premium as also the unpaid premium falling due before the next anniversary of the policy. In the case of death, unpaid premium if any, falling due before the next policy anniversary shall be deducted from the claim amount.
XXX XXX XXX
5. Forfeiture in certain events : In case the premiums shall not be duly paid or in case any condition herein condoned or endorsed hereon shall be contravened or in case it is found that any untrue or incorrect statement is contained in the proposal, personal statement declaration and connected documents or any material information is withheld, then and in every such case but subject to the provisions of Section 45 of the Insurance Act, 1938. wherever applicable, this policy shall be void and all claims to any benefit in virtue hereof shall cease and determine and all moneys that have been paid in consequence hereof shall belong to the Corporation, excepting always in so far as relief is provided in terms of the Privileges herein contained or may be lawfully granted by the Corporation."
SPECIAL CONDITIONS " 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.
During the period in which the premium is remitted to the Corporation through the employer, the instalment premium will be deemed to fall due on the 20th day of each month instead of the due date after within mentioned".
The authorisation letter, so far relevant for this case and concerning the employer is quoted below:
"I have taken out a life insurance policy with the Life Insurance Corporation of India, and I desire to pay premium by deduction from salary every month. I request you to kindly arrange to deduct and pay to the Life Insurance Corporation of India. Branch Office..........under Varoda Divisional Office the premium amount stated below from my salary due for the month given below and also to continue to deduct and pay such amounts every month till further advice.
I agree that your liability will be confined to making arrangement for deduction of premium from my salary remitting the amount to the Corporation in time. I shall be entire responsible for any consequences 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 authorisation for deduction of premium or my leaving your employment in any such case or in case of withdrawal of the Salary Savings Scheme with you by Life Insurance Corporation of India for any reason whatsoever. 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 lapse condition"
(Underlining for emphasis) The authorisation letter as extracted above clearly shows that it is the duty of employer to make the payment of premium to LIC in time. The letter of authorisation concerning the LIC in Form No. 'A' (SSS) so far as relevant reads as follows : ' "Dear Sir, Re : Policy No. Under P.A. Code No. SALARY SAVINGS SCHEMES I have taken out a policy with the Life Insurance Corporation of India and desire to pay premium by deduction from salary every month. I request you to arrange for deduction and pay to the Life Insurance Corporation of India.... the premium amount stated below from my salary due for the month stated below and also continue and pay such amounts every month till further advice.
I agree that your liability will be confined to making arrangements for deduction of premium from my salary whenever this can be made and for remitting the amount of deduction to the Corporation in time upto the month and year of last instalment stated below or till, I give you and LIC a specific Notice of withdrawal of this authorisation after a minimum period of three years from the commencement of the policy. I shall be entirely responsible for any consequences on account of nonpayment 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 per chance or my withdrawing this authorisation by a due notice to you and the Corporation after the initial period of 3 years as stated above or my cancelling this authorisation for deduction in case of my leaving Service. In any such case, it will be my responsibility to make arrangements for remittance of premium directly to the Corporation to prevent my policy from lapsing".
It may be noted here that the employer has no liability in such cases as enumerated in the letter of authorisation itself. The case at hand is not one of that type.
4. Learned counsel for ONGC submitted that late Ashwinee should have deposited the instalments in advance before his transfer or arranged to pay the premium at Sibasagar of his own, and by doing so delay in transfer of policy could have been avoided. This stand is clearly untenable in view of clear stipulation in the Scheme that payment of premium is required to be done on monthly basis by deduction from the salary of the employee, and as such question of making advance deposit of premium does not arise. Further, plea of ONGC that it has no liability to pay is not acceptable. In Annexure - 8 addressed to the Manager, LIC of India, Vadodara Branch - 3, it has been clearly stated by the Deputy General Manager (per) as follows:
"The last premium deducted was for the month of March, 1991 from the salary of the deceased. Thereafter the deceased was transferred to our work-centre at Sibasagar, Assam from Baroda in April, 1991. Before certain official formalities of getting the policies transferred to the LIC's Sibasagar Branch, could be completed, late Dash expired in July, 1991 and hence monthly premium for April, May, June and July, 1991 could not be deducted from the salary - Slips of the deceased prepared here at Sibasagar.
XXX XXX XXX"
In other words, it has been clearly stated that the duty to make deduction of the premium was that of the employer, and the requisition for payment has not been done. This clearly establishes that the duty of ONGC is to make the transfer. In addition, as appears from Annexure - 14 issued by the Deputy Manager (P. & A) for Deputy General Manager (Per) the piquant situation was appreciated by the authorities, but it was expressed that the claim was not being accommodated under the Rules and regulations of the Corporation in vogue. However, a proposal was made for special consideration and sanction of headquarters. To similar effect is the letter issued by Sr. P. & A. Officer (OBG) to the petitioner vide Annexure - 15 in which it was indicated as follows :
"I have personally inquired about your pending case of non-payment of LIC dues with the Regional Estt. Section at Nazira. The position is explained as below :
LIC is not payable for the claims as policy was in lapsed condition on the death of Shri A. K. Dash, Ex. E.E. (C. & M) for non-payment of premium from April to July, 1991 under S.S.S. Scheme.
However, as special case due consideration was given to your case by the Regional HQs at Nazira and it will be sent to HQs Dehradun for sanction.
As soon as sanction will be received from HQs it will be paid to you without loss of time."
5. From the salary sheets filed vide Annexures 17 and 18, it is clear that the employer was making deduction for payment of LIC premium. The inevitable conclusion therefore is that ONGC was required to make the deduction and make deposit of same. This was being done earlier. The policies lapsed because of non-deposit. It being the responsibility of employer-ONGC to make deduction, the consequences flowing from non-deposit are to be borne by it. It has to be noted that ONGC was aware that there was some delay in getting the policies transferred and for this reason, the Deputy Manager (P. & A) has written letter to the Branch Manager, Sibasagar requesting him to accept the premiums deducted from salary and keep the same in suspense account, or to remit the same to the branch where the policies were originally maintained. Of course this was subsequent to the denial by it in respect of the claim for deduction. Be that as it may. the document in question goes to show that ONGC was aware of the situation that there was delay in transfer of the policies and the modalities to be adopted during the intervening period.
6. Considering the aforesaid aspects, we are of the view that as per policies lapsed on account of non-deduction and non-payment by ONGC, it has to make good the lossto the petitioner. There is some dispute as to the quantum. While the petitioner originally claimed Rs. 60,000/-, as revealed from Annexure - 13, the actual claim is Rs. 58.381.25 paise. But ONGC has worked out it at Rs. 55,356/-as stated in paragraph 17 of the counter affidavit. Taking into consideration all the aspects, we direct ONGC to pay Rs. 50,000/- to the petitioner within three months from today. On deposit of the aforesaid amount, a sum of Rs. 40,000/- shall be kept in a fixed deposit in the name of the petitioner in a nationalised bank for a period of five years with the stipulation that no withdrawal shall be allowed within the aforesaid period. However, this Court on being moved for withdrawal of any amount out of the fixed deposit, and on being satisfied about the urgent need of money, may permit withdrawal of such amount by the petitioner, as would meet the urgent requirement.
The writ application is disposed of accordingly. No costs.
S.C. Datta, J.
7. I agree.