(Passed on 03/11/2022)

Passed by Shri Atul D. Alsi, Hon’ble President 

1.         Complainants being the legal heirs  of deceased  filed  complaint  case against  the  repudiation  of insurance claim of Rs. 3,00,000/- for the non payment  of premium   amount by the employer O.P. No. 3 from the  salary  of deceased and thereby  claiming  sum assured  of  insurance  policy  along with interest  with compensation  for physical  and. mental  harassment  and cost of litigation.

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2.         Story in short is as under:-

            The complainant No. 1 being  the  legal heir  and wife and complainant  No. 2 is mother  of  deceased  Prakash Kashinath Shende  who was in  employment  with the O.P.No. 3- Maharashtra State Electricity  Distribution Company at  Sawali, District Chandrapur  insured  himself  under  insurance policy  with  O.P.No. 1- Life Insurance Corporation at Chandrapur office with Regional Office at Nagpur under the Policy bearing No. 978812192 for monthly premium of Rs. 1530/- for sum assured  of Rs. 3,00,000/- on 28/01/2015. The premium has to be deducted by the O.P.No. 3 from  his salary of deceased.  The O.P.No. 3 has deducted the premium from the salary for the month of February -2017. The health condition of the deceased was not good in month  of March -2017 and therefore, admitted  at District Government  Hospital, Chandrarpur but during the treatment, the deceased was died on 19/04/2017 at Government  Hospital, Chandrapur. Due to ill health the deceased was unable to attend the office of O.P.No. 3 from March -2017. The complainant has filed insurance claim with relevant documents to O.P. No. 1 on 27/09/2018 but O.P.No. 1 has repudiated  the insurance claim arbitrarily  on the ground of nonpayment  of policy premium from March-2017 till death of  the insured  and due to  lapsesion  of policy  the claim was rejected. The complainant issued legal notice to O.P.Nos. 1&2 through Adv. Mr. Y.C. Itankar of Chandrapur on  dated 10/06/2019 but O.P. Nos. 1&2 did not comply with the notice, hence, petition is filed.

3.         O.P. Nos. 1&2 filed reply and admitted  the insurance policy  of  deceased  and also admitted  that the premium  for the  policy  is to be paid by the  O.P.No. 3 after salary deduction scheme. Complainant’s claim came to be rejected for the nonpayment of monthly premium from March -2017. The due date of policy premium is 28 of every month. The deceased failed to pay the premium within the grace period of 15 days i.e. 13/04/2017. As per term and condition Nos. 1&2 of the policy if  less than  three years  premium has not been  paid in respect of  policy  and any subsequent  premium be  not duly paid, all the benefits under this  policy  all the benefits  cease after expiry  of grace period.  The deceased policy was commenced from 28/01/2015 and last premium has been  paid in the month of  February -2017. The premiums of two years and one month have been paid for the policy of the deceased.  The deceased policy was in lapsed condition, therefore, the complainants is not entitled for any claim. Hence, the insurance claim has been rightly repudiated by the O.P.Nos. 1&2. Therefore, there is no deficiency on the part of the O.P.Nos. 1&2.

4.         The O.P. No. 3 is served but  not appeared  before  the Commission. Hence,  the case is proceeded exparte  against  the O.P. No. 3 as per order dated 19/11/2019.

5.         The counsel for the complainant  has submitted that  the deceased  was  insured  under the  policy scheme  of salary  saving  scheme  and premium  has to be deducted  from the salary and to be credited  with the insurance company by the employer of the deceased  person.  In such scheme the employer act an agent of the O.Ps. –LIC and therefore, further act of an agent the O.Ps.-LIC is responsible to pay assured amount. The O.P. has not cancelled the policy for nonpayment of premium by written communication on record nor intimation for nonpayment of premium has been given to the employer or insured.  Therefore, for the lapsed of policy premium   repudiation of claim does amount to deficiency of service.

6.         The counsel for the O.P. Nos. 1&2 submitted that the policy has not been revived within a grace period of 15 days in case of monthly, half yearly and yearly policy by paying premium. If  the death  occurred  beyond  the period  of mentioned  grace  period  and payment of premium  due  or outstanding  the policy  lapses. The policy  can be revived  only during the life time of life  assured but within  the period of 5 years  from the  date of first  unpaid  premium and before  the date of maturity. Nonpayment of  premium by employer  within  prescribed  period  resulted  in the policy  lapsed and at the time of death  the life  was not  covered by  the insurance policy , therefore,  the LIC is not liable to pay the insured  amount. The policy is lapsed when the premium was not paid within grace period of time as per A. Ahmedunisa Bagum Vs. L.I.C. of India , 1981 AIR (A.P.) 50. Therefore,  the repudiation  of claim  as per  terms and conditions  of the policy  does not  amount  to deficiency  of service and therefore,  the complaint  deserves to be dismissed with cost.

REASONING

7.         The deceased was the in employment of the O.P.No.3 and premiums were being paid from the Salary Deduction Scheme through employer of deceased directly to the Insurance Company. The O.P. No. 3 has paid the insurance premium for month of February -2017. The deceased was ill health and admitted in the Government Hospital, Chandrapur and Nagpur and during the treatment the insured was died on 19/04/2017. The due date for the payment of premium was 28 of every month. The grace period for the premium for the month of March-2017 was 13/04/2017. Under the Salary  Saving Scheme  guidelines  the employer  act as an agent  of Life Insurance Corporation   and therefore  responsible to pay the assured amount  even though  the employer  committed  default  in  payment of premium. The   O.P.-LIC has not cancelled  the insurance  policy of the deceased  and  communicated to the  complainant  nor  any intimation  of nonpayment  of premium  had been given  to the  employer or insured. Once the employer has under taken solemn obligation to pay the premium from salary to the Life Insurance Company, in that case  the corporation  cannot be  permitted   advantage  of its own  wrong as the  policy  as also  the wrong  of its agent. In any event the employer  was obligated  to  inform   the employee that  for  what  reason  is not in position   to perform  his obligation  where  upon the latter  could  have  paid  premium  directly to the Life  Insurance Corporation. In spite of fact the premium has not been collected and paid by the employer, the insurance company is liable  to pay the assured  amount to the  assured  or his nominee as per decision  of Hon’ble Supreme Court of India  in Life Insurance Corporation  Vs.  Rajiv Kumar  Bhaskar, reported  in V (2005) SLT 567 and as per  judgment of  National  Consumer Disputes Redressal Commission, New Delhi, reported in IV(2012)CPJ 21(NC) in Post Master Office Vs. Samadhan Subash Patil holding that  the death of  insured – Lapse of policy –Not  communicated- premium not paid  regularly-  The claim  repudiated  by  insurance company. Holding  that  there  is  nothing  to show whether  the  lapse of policy was communicated in any manner to  the deceased or  complainant therefore, the repudiation of claim was not justified.  Admittedly,  the insurance company  has not cancelled  the insurance  policy  of  the deceased and communicated  to the  complainant  about  lapsesion   of policy  and intimation  for nonpayment  of premium  to the  employer under  salary deduction  scheme  or directly  to the complainant. Therefore,  the  repudiation  of insurance  claim  for nonpayment  of policy  premium  does  amount to  deficiency of service.  Therefore, complainant is entitled for insurance claim of Rs. 3,00,000/- with  benefit, if any under the policy  bearing No.  978812192 along with compensation of Rs. 10,000/- and cost of litigation of Rs. 10,000/- as per following order.

ORDER

i.          The complaint No. CC/19/90 is partly allowed.

ii.          The O.P.Nos. 1&2 shall liable to  pay sum assured  of Rs. 3,00,000/- with  benefit, if any, under the  policy  bearing  No. 978812192 to the complainant  Nos. 1&2 from  completion  of 30 days  from  date of judgment  interest  @ 7% till  realization of entire  claim. .

iii.         The O.P.Nos. 1&2 shall also liable to  pay to the complainant Nos. 1&2  sum of Rs. 10,000/- towards compensation  for mental  torture  and Rs. 10,000/- towards cost of  litigation  -.

iv.        No order is passed against the O.P.No. 3.

v.         Copy of order  be furnished to both the parties free of cost.