Andhra Pradesh

Nellore

CC/18/2017

Nagisetty Dharmaiah,S/o. Late Lazarus - Complainant(s)

Versus

L.I.C of India, Branch Office rep by its Branch Manager - Opp.Party(s)

K.Ramachandra Rao

13 Oct 2017

ORDER

Date of Filing     :14-03-2017

                                                                             Date of Disposal:13-10-2017

 

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM:NELLORE

Friday, this the  13^th  day of   OCTOBER, 2017

 

          Present: Sri Sk.Mohd.Ismail, M.A., LL.B., President

                         Sri K. Umamaheswara Rao, M.A., B.L., Member

 

C.C.No.18/2017

Nagisetty Dharmaiah,

S/o.Late Lazarus,

Aged  about 46 years,

Higher Grade Assistant,

L.I.C. of India,Divisional Office,

Dargamitta, Nellore.

R/o.Flat No.503, Crescent Heights,

Sujathamma Colony, Dargamita, Nellore.                                   ..… Complainant      

 

                                                             Vs.

L.I.C. of India, Branch Office, Represented by it’s Branch Manger, C.B.-1, Post Box No.6,  Dargamitta, Nellore-524 003.                                                  ..…Opposite party

                                                             .

          This complaint coming on 11-10-2017  before us for hearing in the presence of Sri K. Ramachandra Rao, advocate for the complainant and                                    Sri  D. Phaniratnam,   advocate for the opposite party  and having stood over for consideration till this day and this Forum made the following:

 

ORDER

                       (ORDER BY  Sri.Sk.MOHD.ISMAIL, PRESIDENT)

 

             The complaint filed  this complaint against the  opposite party  to direct the opposite party  to pay the sum assured of   Rs.2,00,000/-  plus bonus and other benefits due with interest @ 24% p.a. from the date of death of the deceased employee i.e., since 15-10-2016,   an amount of Rs.50,000/- towards deliberate  deficiency of service and  an amount of Rs.50,000/-  towards  the mental agony caused  to the complainant   by the opposite party and for costs of the complaint.

 

2.   The brief averments of the complaint  are as follows that:- the  complainant’s  wife  Engilela Vidyullaha, who worked as HGA in  opposite party’s office  had taken a life insurance policy  on her life from the opposite party company under “Corporation Employees Insurance Scheme” naming the complainant  as nominee to receive the death benefits in case of her death prior to the date of maturity of the policy.

The following are the particulars of the said policy:

Policy No.	:	842242373
Name of the Life Assured	:	Engilela Vidyullatha
Nature of Policy	:	L.I.C. Jeevan Rakshak with Profits
Nominee	:	Nagisetty Dharmaiah
Relationship to the Life Assured	:	Husband
Basic sum assured	:	Rs.2.00 lakhs
Plan and Term	:	827-20-20
Instalment Premium	:	Rs.603/-
Mode of payment	:	Salary Savings Scheme in monthly deduction
P.A.Code No.	:	0000037711
Sub P.A. Code No.	:	000001

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                

 

The complainant submits that the  life assured Smt.E. Vidyullatha died on                       15-10-2016 due to cancer disease.  The policy status report  given on 05-11-2016  by the  opposite party’s office indicate that the policy was in force with SSS  premia  adjusted  upto July, 2016 with 1^st unpaid premium since August, 2016 onwards.  The complainant as nominee had submitted death claim forms  to the opposite party  and waiting for receipt of death benefits.  But the  opposite party sent  a letter dated 27-01-2017 informing  that nothing is payable under the said policy as the policy was in lapsed condition.

The complainant submits that the irony is the opposite party  himself is the employer / paying  authority and also insurer.  If the policy is in lapsed condition as stated by the opposite party in his letter dated 27-01-2017 the opposite party (LIC) itself is the  responsible  as LIC office had failed in deducting the SSS premia though there is no letter from the employee  to stop deduction of  SSS premia from her salary.  The actual fact is the life assured E. Vidyullatha, noticed this non deduction of SSS premia and pointed out the same.  Then the office had informed her that they missed to deduct the premia by over sight and further requested the life assured to pay the said  premia direct in cash counter with an assurance  to  recover and adjust the SSS premia from her  salary from subsequent month onwards.  Accordingly  the life assured had paid the opposite party omitted SSS premia directly in the cash counter.  Later as her disease  and suffering became severe she could not concentrate  on other things.  She believed in good faith that office  will not repeat the  mistake of omission of SSS premia deduction further because of their assurance.  This matter came to lime light  after seeing the reply notice letter of the opposite party  dated 27-01-2017.  This deliberate omission by the employee / paying authority / opposite party and by deduction of  death  claim payment  as insurer amount to deliberate deficiency of service caused and caused  lot of mental agony to the nominee / complainant.

The complainant submits that  the divisional office level management had purposefully   taken steps to reject the death claim on the said policy  to take personal vengeance against the complainant.  The complainant being SC /ST Association  leader had pointed out the lapses of the LIC  Divisional  Office management and for that  they  bore grudge against  him.  Recent example is when Government of India and L.I.C Central Office had  directed to celebrate the 125^th Birth Anniversary of Baba Saheb Ambedkar on a grand scale in a befitting manner the  L.I.C.  Divisional Office did not respond properly.  When this matter was pointed out and reported to higher ups  by the  complainant as SC/ST leader they became wild   against the complainant  and waiting for an opportunity  to take  revenge.  They had taken this death claim application as a chance by rejecting the death claim benefits on the policy of E.Vidyullatha, wife of  complainant  on a flimsy ground that the policy is in lapsed condition, though the lapse is because of opposite party’s fault.  To support their contention the opposite party LIC  had created a story   that the deceased employee had orally requested them to stop recovery of  premia  so as to enable her to show higher net salary to avail housing loan in the month of June, 2016. Again there is no clear information regarding the adjustment  of the said policy by the opposite party.  In the reply notice it was informed that SSS premia on the said policy was adjusted upto  June, 2016.  But   the policy status  report reveals that necessary  premia is adjusted upto July, 2016 and 1^st unpaid premia was since August, 2016.  Further it was also informed the said policy is in full force.  Therefore   this complainant prays to  ESTOP the opposite party in  changing defence from time to time.  According to Salary  Savings Scheme once an employee opted for deduction of monthly premia from their salary under SSS the employer cannot stop the same unless there is a written communication from the employee.  In this case the deceased employee had never given  any letter or orally instructed to stop deduction of premia from her salary.  Hence the contention of the  opposite party  that the employee  had orally informed to stop deduction is not tenable.  It is clearly proved that because of the negligence of the  opposite party ‘s office the policy became lapsed for which the employee  is no way concerned.  In this case the opposite party  miserably failed  as employer / paying authority in deducting  and adjusting the SSS premia under the said policy and deliberately  rejected the death benefits due as insurer which amount to deliberate deficiency of service and caused lot of mental agony to the  complainant who is nominee under the policy and submits to allow the complaint with costs.

3.       The opposite party filed written version  with the following averments that:- the opposite party submits that the policy bearing No.842242373  on the life of late E. Vidyullatha  SR No.610432 HGA, LIC of  India, CBI Nellore got   lapsed due to non payment of terminal premium dues for the  months  of August, 2016 and September, 2016 as  the life assured  died on 15-10-2016.  The opposite party  submits  that the above policy was issued in March, 2015 and premiums were paid for one year four months only i.e., less than three years and policy was under lapsed conditions   on date of death of deceased life assured.

“As per policy conditions No.4 (Non forfeiture Regulations), if less than three years premiums have been paid in respect of this policy and any subsequent premium be not duly paid, all the benefits under the policy shall ceased after  expiry of grace period from the date of first unpaid premium and nothing  shall be paid.”

Basing  on this condition LIC  of India,  opposite party informed  the same their letter dated 27-01-2017 to the nominee / complainant that nothing is payable under the policy in question.

The opposite party submitted that  the deceased employee E. Vidyullatha requested the LIC   of India CB1 Nellore orally to stop the recovery of premiums from her salary  temporary for few months.  The opposite party submits that employee the premia direct payment of cash counter  itself  establishing evidence that request of the employee to stop recovery   of insurance premium from her salary.  Prior to that every month premia amount was being recovered  regularly from her salary by the employer towards insurance premium.

The opposite party submitted that  in this case, question of notice of non deduction of SSS premium does not arose as there was no missing of recovery of insurance  premiums at the time of payment of insurance premium by the employee in the cash counter on 23-06-2016.  In insurance premiums were recovered by LIC in the month of May, 2016 and June, 2016 salaries of the employee.

The opposite party submitted that the deceased  life assured at the time of  submission of proposal for insurance under present policy, submitted letter of authorisation  under Salary Savings Scheme  and Addendum to the  proposal for Insurance under SSS  (Annexure-1A).

Annexure 1A

As per Point-5  “As stated I shall be entirely responsible for keeping  the policy to be issued by the Corporation  in force by ensuring the payment of premium to the Corporation within stipulated time.  In the event of non-payment  of premium to the Corporation by the employer for whatever reason,  it shall be my responsibility to make the  payment of premiums  directly to the Corporation together with any additional  charges as  applicable   for monthly payment of premium and with interest, if any to keep the policy in force”.

As per point-6    “I agree that in the said policy becoming lapsed on account of the non-payment of premiums to the corporation within the event of the stipulated time for whatever reasons, the liability of the Corporation will be limited to the extent of the premiums actually received by it and the Corporation shall not be held responsible for any claim beyond this liability    as accrued to the policy at the time of lapsation”.

 

        The deceased being employee of LIC of India  clearly aware of these rules and procedures and failed to keep   the same in force.

          The opposite party submitted that only to request the employer for stopping of her monthly insurance premium recovery from her salary, the employee has remitted LIC premium ofRs.8,634/-  alongwith other  insurasnce premium of her husband byname N. Dharmaiah (complainant)  ofRs.4,993/-  and LIC                          Emp-loyees’  Co-operative Bank loan recovery  amount of Rs.15,000/- totaling amounting Rs.28,627/-  by way of employee own cheque   bearing No.019364, dated 23-06-2016  drawn on Andhra bank, Nellore vide SSS   miscellaneous receipt No.552, dated 23-06-2016.  Thus  there was no missing of premiums recovery n the month of  May, 2016 salary of employee and moreover even on payment of June, 2016 premiums  in cash  counter by the employee, the LIC has recovered premiums in June, 2016 salary also, only on further oral request of the employee by giving assurance that she will remit insurance   premiu7ms in cash counter LIC   has stopped recovery of the premiums from July, 2016 salary of the employee.  The present complainant N. Dharmaiah, husband of deceased clearly know  about the direct payment of SSS premium by way of cheque directly in cash counter for the month of June, 2016.

               The opposite party submitted that  the life assured / employee got 13 LIC  policies in her name in our branch apart from this policy.  Those policies are under salary savings scheme  and recovered premium of Rs.9,945/- every month upto the month of June, 2016  from her salary since the inception  of all these policies.  Due to non-payment of premiums above said 13 policies  and this policy became lapse.  Though the policies   were in lapsed condition, as premiums were paid for more than three years under 13 policies, they  were eligible for the claims concessions and LIC  has admitted all the 13 policies net amount of Rs.19,84,031/- towards death claim to the nominee / complainant except the policy in question.  The reason for  non admission of this policy is that the policy did not get eligibility for claim concessions.  As per the policy conditions if the premiums not paid within grace  period from the due date and  date and date of commencement of the policy within three years, then the policy will become  lapse and nothing is payable on lapsed policy.

               The opposite party submitted that  all the 13 policies on the life assured mentioned above were settled and claim amount as mentioned above were paid to the  complainant / nominee as claim concession is available   for the policies as premiums were paid for more than three years.

               Claim Concession:

               As per policy  condition No.4 (Non forfeiture Regulations) if at least three full  years premiums have been paid in respect of the policy and any subsequent premiums be not duly paid, in the event of death of life assured within six months from the date of first unpaid premium, basic sum assured will be paid after deduction of unpaid premium with interest and also unpaid premiums for  policy before next policy anniversary.

               The opposite party submitted that  the policy in question as premiums were paid for less than three years i.e., 1 year 4 months only and also claims concession is not applicable and nothing is payable as the policy is under lapsed condition as on date of death of the life assured.  The rejection of payment of claim amount under the policy No.842242373  on the  life assured was as per policy conditions only and the process of settlement of claim is same  for every policy holder and  blaming divisional level management with irrelevant matters is baseless and to get undue advantage of the complainant.  It is general practice to accept the request of the employees for welfare of their own and not give any jugglery of figures.

               The opposite party further submitted that with regard to adjustment of premium on policy is very clear June, 2016 premium which were remitted by employee on 23-06-2016  was adjusted for June, 2016  month due and June, 2016  premiums which were recovered from  salary of the   employee in June, 2016 were adjusted for July, 2016 and hence first unpaid premium was from August, 2016   on this policy. Because the premiums for August, 2016 and September, 2016 were not remitted, the policy became lapse   and for nothing is payable on lapsed policy and hence submits  for the dismissal  of the complaint with costs.

4.      On behalf of the complainant, the affidavit of the P.W.1 received  in evidence    and Exs.A1 to A5 were marked.

5.     On behalf of the opposite party, the affidavit of R.W.1 received in evidence and Exs.B1 to B6 were marked.

6.        On behalf of the  complainant  and opposite party written arguments filed.

7.         Perused  the written arguments filed on behalf of the both parties.

8.         Heard learned counsels for the both parties.

9.         Now the points for consideration are:

(1)  Whether complaint filed by the complainant under Section-12 of

       Consumer Protection Act, 1986 alleging deficiency of service against

       the opposite party is maintainable?

 

(2)   To what relief, the complainant  is entitled?

 

10.    POINT No.1:   The learned counsel for the complainant submits by relying  upon evidence of P.W.1   and Exs.A1 to A5 that the wife of the complainant is a policy holder bearing No.842242373 and the premium has to be deducted from salary of Smt.Engilela Vidyullatha, who is the wife of the complainant and during the life time of Smt.Engilela Vidyullatha, she paid the premium regularly and inspite of payment of premium regularly, the opposite party repudiated the claim of the  complainant and inspite of issuing  of legal notice  as the opposite party failed to pay the policy amount.  The complainant filed his complaint against  the opposite party to direct the opposite party to pay the policy amount and submits to allow the complaint with costs.

On the other hand the learned counsel for the opposite party submits by relying upon  the evidence of  R.W.1 and  Exs.B1 to B6 that the life assured namely Engilela Vidyullatha  did not pay the premium for the month of  August, 2016 and September, 2016 and hence  the  said policy was lapsed and the insured  Smt.Engilela Vidyullatha   died on 15-10-2016   and as the policy was lapsed and as per  the  terms and conditions under Exs.B2  and B3 were the insured failed to remit the premium.  He submits that the complainant  is not entitled   for the amount under the policy as the policy was lapsed and hence the complaint filed by the complainant is not maintainable   and submits for the dismissal of the complaint against the opposite party.  In view of the arguments submitted by the learned counsels for the both parties, it is an  admitted fact that                              Smt. Engilela Vidyullatha  is the policy holder of policy No.842242373 and  she died on 15-10-2016  and it is also an admitted  fact that the policy holder did not paid the payment  for the month of August, 2016 and September, 2016. 

The terms and conditions in Ex.B3 at  column No.5 reads as follows:

As started, I shall be entirely  responsible for keeping the policy to be issued by the Corporation in force by ensuring the payment of premium to the Corporation within the stipulated time.  In the event of the non payment of the premium to the corporation by the employer for whatever reason.  It shall be my responsibility to make the payment of premiums directly to  the corporation together with any additional charges as applicable for monthly payment of premium and with interest, if any, to keep the policy in force.”

 

The terms and conditions in Ex.B3 at  column No.6 reads as follows:

“I agree that  in the said policy becoming lapsed on account of the non-payment of the premiums to the Corporation within the event of the  stipulated time for whatever reasons, the liability of the Corporation will be limited to the extent of  the premiums actually received by it and the  Corporation  shall not be  held responsible    for any claim beyond this liability as accured to the said policy at the time of its lapsation.”

 

By relying upon the terms  and  conditions as mentioned in Ex.B3 the case of the complainant has to be examined.  Admittedly  the life insured who is the  wife of the complainant did not paid the premiums for the month of August, 2016 and September, 2016 and died on 15-10-2016  as the policy was lapsed on the ground of non-payment of the premiums.

In   LIC of India Vs.  Anuradha reported  in  2012 (3) CPJ 12 (SC).

Wherein the  Hon’ble Apex Court held as follows: “  In order to successfully maintain a claim for benefit under insurance policy, the policy   should have been kept alive  by punctual   payment of  premiums until the claim  was made.  All that could be paid to the claimants was  only  the paid up value of the policy.”

In Life Insurance Corporation of India Vs.  D.G.K.Murthy reported in 2002 CTJ 579 (AP)(CP).

Wherein   the Hon’ble   State Commission held as follows:  “Where the complainant took upon himself in writing to be responsible for the consequences  arising  on account of  non-payment of premium by the principal the  repudiation by the Corporation was not wrong.”

In Ind Swift Limited  Vs. New India Assurance Company Limited & Others reported in  IV (2012) CPJ 148 (NC)

 

Wherein  the Hon’ble  National  commission held the terms and conditions in policy are binding and nothing  can be added  or subtracted.”

 

In   Usha Sharma & Others Vs. New India Assurasnce Company Limited & Others reported in I (2012) CPJ 488 (NC)

 

Wherein   the Hon’ble  National Commission held that  policy is a contract between  parties and parties bound by terms and contract.  

        By relying upon the above decisions and the facts of the case, we are of the opinion that as the policy was lapsed  as on the  date of death, we are of the opinion that the  complaint filed by the complainant against the opposite party is not maintainable.

       By relying upon the   above decisions and the discussion made above, we answered this point against the complainant and in favour of the opposite party.

 

     11.   POINT No.2:  In view of our answering on point No.1 against the complainant and in favour of the  opposite party, the complaint filed by the complainant against the opposite party is not maintainable and the same has to be dismissed.

 

          In the result, the complaint is dismissed but in the circumstances no costs.

 

          Dictated to Stenographer, transcribed by her corrected  and pronounced by us in the open  Forum, this the  13^th  day of  OCTOBER, 2017.

 

Sd/-                                                                                          Sd/-

      MEMBER                                                                            PRESIDENT

 

                                      APPENDIX OF EVIDENCE

 

Witnesses Examined for the complainant

 

P.W.1  -

16-08-2017

Sri Nagisetti Dharmaiah, S/o.Late Lazarus, Working as Higher Grade  Assistant in L.I.C. Divisional Office, Nellore (chief affidavit filed).

 

Witnesses Examined for the opposite party

R.W.1  -

16-08-2017

Sri S. Raghunath, S/o.Sreerama Sarma, Working as Administrative officer in LIC of India, Nellore (Affidavit filed).

 

                           EXHIBITS MARKED FOR THE COMPLAINANT

 

Ex.A1  -	27-01-2017	Letter from opposite party to the complainant.
Ex.A2  -	04-02-2017	Legal notice from complainant’s advocate to the opposite party alongwith served postal acknowledgement.
Ex.A3  -	16-02-2017	Letter from opposite party to the complainant’s advocate.
Ex.A4  -	23-03-2015	Policy No.842242373 in favour of  Engilela Vidyullatha issued by the opposite party in LIC’s  Jeevan Rakshak (with profits) policy.
Ex.A5  -	-	Copy  of  Status Report of policy No.842242373.

 

                         EXHIBITS MARKED FOR THE OPPOSITE PARTY

 

Ex.B1  -	17-03-2015	Photostat copy of proposal form for LIC’s Jeevan Rakshak (UIN 512N289V01) (On own life) infavour of Vidyullatha Engilela issued by the opposite party.
Ex.B2  -	23-03-2015	Policy No.842242373 in favour of  Engilela Vidyullatha issued by the opposite party in LIC’s  Jeevan Rakshak (with profits) policy.
Ex.B3  -	-	Photostat copy of Addendum to the proposal for insurance under SSS in favour of Engilela Vidyullatha issued by the opposite party branch office at Gudur.
Ex.B4  -	23-06-2016	Photostat copy of  cheque bearing No.019364   for Rs.28,627/- through  Andhra bank alongwith details of receipt for issuance of SSS.
Ex.B5  -	23-06-2016	SSS collection cash book entries printed on 20-05-2017  issued by the opposite party.
Ex.B6  -	-	Statement of policies  stands in the name of  E. Vidhyullatha.

                                                                                                             Id/-

                                                                                                      PRESIDENT

Copies to:

1.	Sri K. Ramachandra Rao, Advocate,  25-2-256, New Military Colony,                      1st Cross Road, Near Nippo, A.K.Nagar (P.O.), Nellore-4.
2.	Sri D. Phaniratnam, Advocate,  16/1089, K.V.Agraharam,  Trunk Road, Nellore-524 001.

Date when free copy was issued: