State Consumer Disputes Redressal Commission
Life Insurance Corporation Of India, vs Smt.Gayabai Keshav Kadam,And Other 4 on 18 February, 2010
Date of filing:11.10.2005 Date of order:18.02.2010 MAHARASHTRA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, MUMBAI, CIRCUIT BENCH AT AURANGABAD. F.A. NO.: 1933 OF 2005 IN COMPLAINT CASE NO. : 378 OF 2004 DISTRICT FORUM :PARBHANI & HINGOLI. Life Insurance Corporation of India, Through its Branch Office, Jeevan Jyoti, Station Road, Parbhani. Life Insurance Corporation of India, Through its Zonal Office, Yogakshema, Jeevan Bima Marg, Mumbai 400 021. APPELLANT (Org.Opp.No.1) VERSUS 1. Smt.Gayabai Keshav Kadam, 2. Santosh Annasaheb Shinde, 3. Sonu Annasaheb Shinde, 4. Gangasagar Annasaheb Shinde, All residing at Khanpur Nagar, Parbhani. 5. Associate Dean, College of Veterinary & Animal Sciences, M.A.F.S.U., Parbhani. 431 402. RESPONDENTS (No.1 to 4-Org. Complainants, No.5-Org.Opp.No.2) Coram : Shri.S.G.Deshmukh, Hon`ble Presiding Judicial Member.
Mrs.Uma S.Bora, Hon`ble Member.
Present : Adv.Shri.S.R.Malani for appellant, Adv.Shri.T.K.Pandit for respondent No.1 to 4, None for respondent No.5.
O R A L O R D E R Per Shri.S.G.Deshmukh, Hon`ble Presiding Judicial Member.
1. The present appeal is filed by LIC of India against the judgment and order dated 26.08.2005 in complaint case No. 378/05 passed by District Forum, Parbhani and Hingoli.
2. Respondent No.1 to 4/Org.Complainants` case before the Forum is that, deceased Annasaheb their father was working as a laborer in Veterinary college, MAFSU, Parbhani. It is contended that he had obtained endowment assurance policy with profit for sum assured of Rs.25,000/- from present appellant under salary savings scheme. It is contended that the premium used to be deducted by respondent No.5 from his salary and used to be remitted to the LIC. It is contended that Annasaheb died on 3.7.2003 and thus respondent No.2 to 4 under guardianship of respondent No.1 being legal heirs preferred the claim before appellant. Appellant repudiated the claim vide its letter dated 4.8.2004 on the ground that premium for June 2002, July 2002 and May 2003, June 2003 were not deposited.
Thus policy was in lapsed condition.
It is contended that as the deceased had not received the salary for May 2003 & June 2003 premiums were not deducted. It is contended that it was not intimated about non deduction of the premiums. Thus they approached the Forum.
3. Present appellant appeared before the Forum and resisted the claim. It is contended that premiums for the month of June 02, July 02 & May 03, June 03 were not deposited and thus policy was in lapsed condition at the time of death of policy holder. They have rightly repudiated the claim.
4. Respondent No.5 appeared before the Forum and contended that they had deducted the premiums from monthly salary of deceased and they have remitted the same to appellant. It is contended that policy holder died on 03.07.2003 he was not on duty. Salary for month of May 03 & June 03 were not paid to him. After death of Annasaheb salary for May 03 & June 03 was paid to her in December 2003.
5. The Forum below after going through the papers and hearing the parties allowed the complaint and directed appellant to pay Rs.25,000/- with interest @ 9% p.a. from 3.7.2003. Forum also directed appellant to pay Rs.3000/- towards mental agony and Rs.2000/- towards cost.
6. Being aggrieved by the said judgment and order passed by the District Forum, Parbhani & Hingoli, LIC came in appeal.
7. Notices were issued to the appellant as well as respondent. Learned counsel Shri.S.R.Malani appeared on behalf of appellant whereas learned counsel Shri.T.K.Pandit appeared on behalf of respondent No.1 to 4. We heard both the counsels at sufficient length. Learned counsel Shri.Malani submitted that premium for month of June 02, July 02 & May 03, June 03 were not received by appellant. Policy was in lapsed condition at the time of death of policy holder. Learned counsel submitted that Forum over looked the declaration and special policy Clause No.22 which has incorporated in the policy condition with the specific consent of the life assured which clearly stipulates that it is primary duty and responsibility of the life assured to keep the policy in force. Learned counsel further submitted that at the time of submission of proposal policyholder had given declaration in which he authorized his employer to deduct monthly payment of premium and to remit the same with LIC. He has specifically mentioned that employer in no way is representing the Corporation.
Learned counsel submitted that Forum erred in relying the ratio in Delhi Electricity -vs- Basanti Devi reported in AIR 2000 AC 43 that employer is agent of the Corporation and hence Corporation is liable. He submitted that policy holder himself has stated in his declaration that employer is not representing the Corporation but is representing himself only.
8. On the other hand, learned counsel Shri.Pandit submitted that policy in question was under salary savings scheme. According to him employer was authorized to deduct the premium from monthly salary and to remit the same to the appellant. He submitted that no individual premium used to be sent to the LIC by policy holder or no receipt about the premium received is issued by LIC. Employee was ignorant in that respect. He submitted that the employer had implied authority to collect the premium from employee on behalf of LIC. Thus he is to be as considered agent of LIC to collect the premium. He submitted that Forum has rightly considered the ratio in Basanti Devi`s case.
9. We perused the papers and gave our anxious thoughts to the arguments advanced by both the counsels. There is no dispute that deceased Annasaheb father of respondent No.2 to 4 was serving with College of Veterinary, MAFSU, Parbhani. There is also no dispute that he had obtained Endowment Assurance Police with profit for sum assured of Rs.25,000/- for the period 28.4.2002 to 28.4.2017 under salary saving scheme. There is also no dispute that Annasaheb died on 03.07.2003. There is no dispute that salary savings scheme has been floated by LIC. The scheme has been introduced by LIC purely on the basis of consideration and not for any particular benefit of insurance conferred on the employee working in the organization. Formation of contract of insurance is between LIC and employee. This is not group insurance. Each employee owns his policy individually and is entitled to all its benefits and can continue the policy in the event of any change in the employer.
Under agreement between LIC and employer, premium was payable but employer who was to deduct every month from salary of the employee and transit the same to LIC. Thus it is for employer to deduct premium from salary of the employee and remit the same to LIC. Responsibility for collection of premium by deducting from salary of the employee and making over the same to the LIC is of employer. It is sole responsibility of employer to collect premium from all the employees and remit the same by means of one cheque and reconciliation statement in the form prescribed by LIC. No individual notice is to be sent by LIC to any employee. Even no receipt is given to policy holder for the premium received.
It is the employer who is to inform LIC all the changes in the staff as soon as they occur. So also the fact when employee leaves the service of employer. An employee is kept ignorant of the happenings between LIC and employer.
10. It is the contention of appellant that while authorizing his employer to deduct the premium through his salary, policy holder took responsibility to keep policy in force by paying premium directly to the Corporation in case when employer is not able to deduct the premium for the reasons beyond the control of his employer. Further it is the contention of appellant that as per Clause 22 attached to the policy life assured also declared that it shall be his responsibility to ensure that premium is deducted from his salary and remitted to the Corporation, On failing premium is paid directly to the Corporation within days of grace at increased rates. It is also declared that policy shall stand lapsed if premium is not received by Corporation. It is also apparent that while authorizing employer to make monthly premium amount deducted from his salary and to remit to the Corporation, employee admitted that employer is acting as his representative on his behalf in no way employer is representing the Corporation.
11. It is apparent from the salary savings scheme that all the responsibility is cast on the employer to collect the premium from all the employees from their monthly salaries. Not only that but employer is to remit the same by means of one cheque alongwith reconciliation statement in the form prescribed by LIC. No individual premium notice is sent by LIC to any life assured, nor employee is given receipt for premium received by LIC. We have mentioned that employer is to inform all the changes in staff occurred so also fact of leaving of service of employee.
12. In para 6 of Basanti Devi`s case it has been observed by Hon`ble Apex Court that the premium deducted by DESU from salaries of employees and remitted to LIC is without any charge. When the employee leaves the employment of the said employer or his premium is ceased to be collected and/or remitted to the LIC this fact is to be intimated by the employer to the LIC. When scheme is withdrawn it is LIC which intimates that the fact to the employee whose life has been insured. Then premium is payable with an extra charge. This endorsement is in conflict with the terms of the scheme as spelled out in the Brochure. Considering the conditions as to how premium is to be deducted from the salaries of the employees and remitted to the LIC by the DESU by one cheque for all the employees with the reconciliation statement it is not possible for any employee to know if the amount of the premium deducted from his salary has been remitted or not. An employee is not being given any separate premium notice nor is he given any receipt for the premium received. If a condition is now placed on the employee that it is he who is to intimate the LIC if there is no remittance of the premium deducted by DESU it will be too onerous a condition to be of any validity. Considering the scheme such a condition can not be imposed on an employee.
It is impracticable. A purposive interpretation has be to be given to the endorsement and it has to be held that since payment of premium after deducting from the salary of the employees is between DESU and LIC. It will not be for employee to intimate the LIC about non-remittance of the premium.
13. In the instant case it is the contention of appellant that policy holder had declared and admitted that it shall be his responsibility to ensure that premium is deducted from his salary and remitted to the Corporation on failing the premium is paid directly to the Corporation within grace period. It is also contention that policy holder while authorizing employer to make monthly deduction from his salary, stated that employer is acting as representative on his behalf and in no way employer is representing Corporation. We have mentioned that employer had implied authority to collect the premium from the salary of employee on behalf of LIC under agreement between LIC and employer. Employer is to deduct the premium from salary and to remit the same to LIC by one cheque alongwith conciliation statement in the form prescribed by LIC. We have also mentioned that neither individual premium notice used to be given to the policy holder nor receipt used to be given to him for the premium received. In the circumstances it is not possible for employee to know if the amount of premium deducted from his salary has been remitted or not. Employer is certainly an agent as defined in Sec.182 of Contract Act.
Mode of collection of premium has been indicated in scheme itself and the employer has been assured the role of collecting premium and remitting the same to L.I.C. As far as employee is concerned, in the circumstances of case and scheme there can not be obligation cast on him to pay premium direct to L.I.C. He can not be held liable for the lapse of policy for non deduction and remittance of premium to L.I.C. by the employer. The Hon`ble Apex court has observed that such condition can not be imposed on employee it is impracticable. A purposive interpretation has to be given to the endorsement and it has to be held that since payment of premium after deducting from the salary of the employees is between DESU and LIC. It will not be for the employee to intimate non remittance of the premium. Forum has rightly considered this aspect and rightly allowed the complaint. We are not inclined to interfere the order passed by the Forum. We pass the following order.
O R D E R
1. Appeal is dismissed.
2. No order as to cost.
3. Copies of the order be sent to both the parties.
Mrs.Uma S.Bora S.G.Deshmukh, Member Presiding Judicial Member Mane