Date of Filing : 19.03.2021
Date of Disposal: 27.10.2022
DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION
THIRUVALLUR
BEFORE TMT. Dr.S.M. LATHA MAHESWARI, M.A.,M.L, Ph.D (Law) .…. PRESIDENT
THIRU.P.MURUGAN,.MCom., ICWA(Inter)., B.L., ....MEMBER-II
CC. No.20/2021
THIS WEDNESDAY, THE 27th DAY OF OCTOBER 2022
Mrs.P.Saroja, W/o, Mr.Parasuraman,
M/o.P.Sivaraman, LIC Agent, 72970T (Late),
Aiyyanthangal Kandigai Village,
Kizhavanam Post,
Arakonam Taluk – 631 101. .........Complainant.
//Vs//
1.The Regional Manager (CRM),
LIC of India, South Zone,
Anna Salai, Chennai 600 002.
2.The Senior Divisional Manager,
LIC of India,
Divisional Office, Chennai DO –II,
C-47, Second Avenue,
Anna Nagar, Chennai 600 040.
3.The Branch Manager,
LIC of India, Branch Office,
No.23, Akkaiah Naidu Street,
Thiruttani -631 209. ...Opposite parties.
Counsel for the complainant : Mr.P.D.Ravichandran, Advocate.
Counsel for the opposite parties : Mr.S.Sushilkumar, Advocate.
This complaint is coming before us on various dates and finally on 10.10.2022 in the presence of Mr.P.D.Ravichandran Advocate, counsel for the complainant and Mr.S.Sushilkumar Advocate, counsel for the opposite parties and upon perusing the documents and evidences of both sides, this Commission delivered the following:
ORDER
PRONOUNCED BY TMT. Dr.S.M. LATHA MAHESWARI, PRESIDENT.
This complaint has been filed by the complainant u/s 35 of the Consumer Protection Act, 2019 alleging deficiency in service in not honouring the death claim amount with bonus along with a prayer to direct the 3rd opposite party to pay the death claim amount of full sum assured with bonuses for two polices i.e. 719241963 and 708546527 along with interest as per the regulations of IRDAI and to pay a sum of Rs.50,000/- as compensation for the mental agony and hardship caused to the complainant along with cost of the proceedings t the complainant.
Summary of facts culminating into complaint:-
The complainant submits that her son P.Sivaraman worked as an agent of the Life Insurance Corporation of India since 2007 in the Tiruttani Branch Office and in the course of his association with LIC of India, he had taken six policies under the Salary Savings Scheme. The complainant’s son P.Sivaraman expired on 26.04.2018 and the same was intimated to the Tiruttani Branch office and claim forms were submitted in the month of May 2018 after duly filled. After nearly 10 months the complainant had received a letter from Tiruttani Branch Office stating that due to non-payment of installments premium for 01/2016 and 03/2018 for policy No.719241963 and 07/2017 and 03/2018 for policy No.708546527 the claim amounts were not payable. Therefore the complainant had written a letter to the Regional Manager (CRM), South Zone, LIC of India, Chennai-600 002 on 20.09.2019 with a copy sent to the Senior Divisional Manager, LIC of India, Chennai Division II, Anna Nagar, Chennai 600 040 and the Branch Manager, LIC of India, Tiruttani Branch for redressal and review of the decision. The complainant waited for nearly two months but no reply was given and hence complainant lodged a complaint with the Insurance Ombudsman office at Chennai and the Insurance Ombudsman pronounced the Award No.10/CHN/A/LI/0088/2019-2020 on 18.11.2019 in favour of LIC of India. In a Life Insurance contract, for other modes of payment of premium, i.e. yearly, Half Yearly, Quarterly and Monthly, the insurer and the policy holder are directly involved whereas in the Salary Savings mode of payment of premium, three different entities i.e. the Insurer, the Employer and the policy holder are involved. In the particular case, the insurer and the employer happen to be single entity i.e. LIC of India, Tiruttani Branch Office. Disputes for the policies under reference were that the monthly premium of January 2016 for policy No.719241963 and the monthly premium of July 2017 for policy No.708546527 were not paid. These are known as the intermittent gap. Further for both the policies, the premium for March 2018 was not paid which was known as the terminal gap. On verification of the available records it was found that there was sufficient commission to recover the premium of Rs.1442/- for policy No.708546527 from the commission bill for July 2017 as the net commission paid after all the recoveries was Rs.2442/-. It was the fault of the branch office who failed to recover the premium which was deliberately not brought to the knowledge of Insurance Ombudsman Office by LIC of India. Even if there was any difficulty to recover the premium from 07.2017 commission bill, the branch office should have covered the arrear premium of 07.2017 installment from the August 2017 commission bill in which there was sufficient amount for recovery i.e. Rs.1442/- after all the recoveries had been made since the net payment was Rs.1615/-. For the policy No.719241963, the installment premium of Rs.820/- for Jan 2016 should have been recovered from either the commission bill of Jan 2016 or failing which from the commission bill of Feb 2016 wherein sufficient commission was available. Having accepted to recover and remit the premium from the agents to the insurer, the LIC of India as an employer cannot escape from its responsibilities. Each policy was a separate contract and the employer need not wait for the cumulative amount to be earned by the agent and instead should have recovered to the extent commission was available. Thus aggrieved by the act of the opposite parties the present complaint was filed for the following reliefs;
To direct the 3rd opposite party to pay the death claim amount of full sum assured with bonuses for two polices i.e. 719241963 and 708546527 along with interest as per the regulations of IRDAI;
To pay a sum of Rs.50,000/- as compensation for the mental agony and hardship caused to the complainant along with cost of the proceedings t the complainant.
Crux of the defence put forth by the opposite parties:-
The allegation that P.Sivaraman worked as an agent in Life Insurance Corporation was admitted. However, the allegation that P.Sivaraman has taken six policies under Salary Saving Schemes (Recovered from commission) out of which two polices had fallen under early claim category was denied. The allegation that priority of deduction of monthly premium was vested with the commission paying authority i.e. Branch Office, LIC of India, Tiruttani was also false. Mr.P.Sivaraman had taken six policies at LIC of India, Tiruttani Branch under Salary Saving Scheme mode and he died on 26.04.2018 under suspicious circumstances. He has nominated his mother P.Saraja, as nominee for all the six polices. He was also the agent of the corporation with agent code 0072970T. Out of the six policies, four polices -719240257, 718332497, 719239435 and 718687766 were non early claim which were settled at Branch Office on 09.07.2018. Other two polices viz.719241936 and 708546527, the claim occurred within 3 years and were in lapsed condition due to two SSS gaps and were sent to Divisional Office for consideration. Death claims under policy Nos.719240257, 718332497, 719239435 and 718687766 were eligible under non-forfeiture regulation of policy condition and hence the claim for the said policies were admitted inspite of intermittent gaps and terminal gaps. Policy Nos.719241963 and 708546527 were in lapsed condition as on the date of death and hence were not eligible under Non-Forfeiture regulation of policy condition. The claim was not admissible as per forfeiture regulation of policy condition as per circular CO/CRM/1023/23 dated 20.05.2016 and hence both the claims were rejected. As per the said circular, SSS Ex-gratia/Chairman’s Relaxation rules will not apply for all new plans issued after 01.01.2014. For the above said two policies, SSS Ex-gratia was not applicable as per circular CO/CRM/1023/23 dated 20.05.2016 since both the said polices were commenced after 2014. For both the two policies, Divisional Office rejected the claims vide their letter dated 22.03.2019 and the same was conveyed to the nominee by Branch Office on 28.03.2019 through registered post. Since the Life Assured was an agent, he should be well aware of the consequences of non payment of premium, more than any ordinary policy holder. The deceased agent paid the gap premium for policy No.718332497 to the branch on 24.04.2018 vide collection No.2 for Rs.2880/- being premium for the due 02/2015, 04/2015, 05/2015 and 01/2016. Branch sent gap intimation to this policy on 05.07.2017, but he chose, not to remit gap premium for the two policies. LIC would deduct the premium for all the policies in a single stretch. If commission was not sufficient to recover the premium for all policies, then premium would not be deducted for any of the policy. There was no justification for demanding settlement of death claim along with full sum assured, bonus, interest on delayed settlement and Rs.50,000/- compensation. Since the claim has been denied as per policy condition only and there was no deficiency in service or unlawful trade practice as alleged by the complainant thus the opposite parties sought for the complaint to be dismissed.
The complainant filed proof affidavit and documents Ex.A1 to Ex.12 were marked on their side. On the side of opposite parties proof affidavit was filed and documents Ex.B1to Ex.B6 were filed by them.
Point for consideration:-
Whether the opposite parties had committed deficiency in service in not honouring the death claim amount with bonus for the complainant along with bonus as agreed on the death of the life assured/complainant’s son vide policy Nos. 719241936 and 708546527 has been successfully proved by the complainant?
If so to what relief the complainant is entitled?
Point No.1:-
On the side of the complainant the following documents were filed in support of the complaint allegations;
Status report of the policy No.719241963 dated 04.10.2018 was marked as Ex.A1;
Status report of the policy No.708546527 dated 04.10.2018 was marked as Ex.A2;
The 3rd opposite party issued a letter to the complainant dated 28.03.2019 was marked as Ex.A3;
Letter issued by the complainant to the 1st opposite party dated 21.05.2019 was marked as Ex.A4;
Track consignment for proof of deliver was marked as Ex.A5;
Complaint filed by the complainant to Insurance Ombudsman dated 29.07.2019 was marked as Ex.A6;
Written submission to the Insurance Ombudsman dated 19.10.2019 was marked as Ex.A7;
The Insurance Ombudsman Award Copy dated 18.11.2019 was marked as Ex.A8;
Commission bills from April 2017 to March 2018 was marked as Ex.A9;
Commission bills for July 2017 and August 2017 was marked as Ex.A10;
Death Certificate of P.Sivaraman dated 02.05.2018 was marked as Ex.A11;
Legal Heir Certificate of P.Sivaraman dated 07.07.2018 was marked as Ex.A12;
On the side of opposite parties the following documents were filed in support of their defence;
Copy of policy No.719241963 was marked as Ex.B1;
Copy of policy No.708546527 was marked as Ex.B2;
Copy of Gap intimation letter sent to policy holder dated 05.07.2017 was marked as Ex.B3;
Copy of SSS Authorization letter given by the policy holder was marked as Ex.B4;
Copy of LIC’s Circular No.1023 dated 20.05.2016 was marked as Ex.B5;
Copy of LIC claims Manual page No.94 & 95 was marked as Ex.B6;
We heard the oral arguments of both parties and perused the written arguments and material evidence produced by them.
It was the case of the complainant that the insurance policies bearing Nos.719241963 and 708546527 issued under the Salary Saving Scheme mode got lapsed as no premium was recovered from the commission earnings of the deceased i.e. complainant’s son for the month of January 2016, July 2017 and March 2018 inspite of sufficient commission available in the corresponding months in his credit. The premium gap of January 2016 and July 2017 was known as intermittent gaps and the March 2018 gap premium was known as the terminal gap. Complainant relied upon the Authorization letter issued by the policy holder while taking the policy and stated that none of the situations as stated in the authorization letter arose and it was not beyond the control of the employer to deduct of premium from his commission earnings. Thus it was argued that the LIC of India cannot simply be discharged from its responsibility and liability. It was also argued that when the deceased policyholder paid the gap premium just two days before death i.e.24.04.2018 for a policy No.718332497 for which gap intimation was sent on 05.07.2017, he might have also paid for other policies which are in dispute provided, he received the gap intimation. It was argued that LIC was taking shelter under section 27 of the General Clause Act i.e. a letter sent by post was presumed to have been delivered if not returned, but in the present case receipt by the policyholder was of paramount importance over the presumption of delivery which LIC failed to establish. It was further submitted that the deceased agent was earning around Rs.12,039/- as commission in March 2018 which was more than sufficient for the recovery of the total premium of all three policies. There was sufficient commission to recover the premium for the month of July 2017 for the policy No.708546527 and also in March 2018 to recover the premium of Rs.7618/-and as the employer failed to recover the same just because the commission was paid in three batches. Thus for non recovery of terminal gaps i.e. March 2018 for both policies since the employer failed to recover the premium it amounted to deficiency in service on their part. By quoting the order passed in the case of Delhi Electric Supply Vs Basanti Devi & Anr dated 28.09.1999 and an order passed by Supreme Court in the case of Chairman, Life Insurance Corporation & Others Vs Rajiv Kumar Bhasker dated 28.07.2005, the complainant submitted that the LIC failed to perform its role as insurer as well as Employer in fulfilling the obligations of the policy contract. Thus argued that the complainant is entitled for death benefit of both policies i.e. 719241963 and 708546527 along with compensation of Rs.50,000/- prayed for the complaint to be allowed.
On the other hand the learned counsel appearing for the opposite parties argued that the complainant’s son took totally six policies, 4 policies before 2014 and two policies after 2014. He submitted that the authorization letter applies only for 4 policies which were settled and the disputes were respect only to the two policies. He relied upon Ex.A3 the letter addressed to the complainant with regard to the policy No.719241963 &708546527 wherein it has been stated that the premium was due on 01/2016 and 03/2018 for the policy No.719241963 and 07/2017 and 03.2018 for the policy No.708546527 were not paid. It was further stated that as on the date of death of the complainant’s son both the policies were not in force. The counsel citied Ex.A4 reply letter given by the complainant and submitted that if any unpaid premium was there, the same would not be deducted from the subsequent month’s commission. He also explained why the recovery for policy No.719241963 & for policy No.708546527 was not effected when the recovery for other policies were effected for 07/2017. Further the counsel for the opposite parties also quoted the claim concession for the policies that the 4 policies commenced before 2014 are eligible under claim concession full death benefit and was considered inspite of the gap. For the query submitted by the complainant, he answered that arrears of premium cannot be deducted from the commission in the next cycle. Further, the insurer need not given any explanation for non deduction of premium as per the Salary Saving Scheme Authorization letter and argued that the complainant’s son was only an agent and not an employee of the LIC and the recovery of the premium from the commission were extended only as a facility. As the agent’s commission depends on the performance the allegation that the LIC had not fulfilled the obligation of recovery of premium from the commission was denied. Thus contending that there is no deficiency in service he sought for the dismissal of the complaint.
On appreciation of the entire pleadings and material evidences it is seen that totally there are 6 policies and on the death of the complainant’s son, the death benefit for 4 policies had already been settled and the issue lies only with regard to the 2 policies alleged to have been taken after 2014. Simple defence raised by the opposite parties is that as no commission was available for the relevant months no premium was deducted by the LIC. We are in agreement with the reply given by the opposite party that when the total premium for all the policies put together work out to Rs.7618+GST, it can be recovered in only one installment from the commission and if the commission is insufficient then premiums cannot be recovered in piecemeal. Further it is seen that the gap intimation was sent for policy No.719241963 on 05.07.2017 and for policy No.708546527 on July 2017 and hence it is responsibility of the insured to remit the gap premium to the insurer. When the insured had not remitted the same the insurer cannot be found fault with. This commission is also in agreement with the defence made by the opposite parties that the late P.Sivaraman i.e. complainant’s son was only an agent and not an employee of the opposite parties and hence LIC could not be Fastened with the liability to answer for non deduction of premiums. Also, the defence put forth by the opposite parties with regards to policies eligible under claim concession policy also seems to be accepted. Thus we found that there is no deficiency in service in repudiation of claim for two policies Nos.719241963 and 708546527 on the reason that on the date of death of complainant’s son both policies got lapsed for non payment of premium amount. Thus we answer the point accordingly as against the complainant.
Point No.2:
As we have held above that the complainant had failed to prove any deficiency in service on the part of the opposite parties, he is not entitled any reliefs as claimed in the complaint from the opposite parties. Thus we answer this point accordingly.
In the result, the complaint is dismissed. No order as to cost.
Dictated by the President to the steno-typist, transcribed and computerized by him, corrected by the President and pronounced by us in the open Commission on this the 27th day of October 2022.
-Sd- -Sd-
MEMBER-II PRESIDENT
List of document filed by the complainant:-
Ex.A1 04.10.2018 Status report of the policy No.719241963. Xerox
Ex.A2 04.10.2018 Status report of the policy No.708546527. Xerox
Ex.A3 28.03.2019 Letter issued by the 3rd opposite party to the complainant. Xerox
Ex.A4 21.05.2019 Letter issued by the complainant to the 1st opposite party. Xerox
Ex.A5 ................ Track consignment. Xerox
Ex.A6 29.07.2019 Complaint to Insurance Ombudsman. Xerox
Ex.A7 19.10.2019 Wirtten submission to the Insurance Ombudsman. Xerox
Ex.A8 18.11.2019 Award copy of Insurance Ombudsman. Xerox
Ex.A9 .............. Commission bills from April 2017 to March 2018. Xerox
Ex.A10 .............. Commission bills from July 2017 and August 2017. Xerox
Ex.A11 02.05.2018 Death certificate of P.Sivaraman. Xerox
Ex.A12 07.07.2018 Legal Heir Certificate of P.Sivaraman. Xerox
List of documents filed by the opposite parties:-
Ex.B1 28.07.2016 Copy of policy No.708546527 Xerox
Ex.B2 23.07.2015 Copy of policy No.719241963. Xerox
Ex.B3 05.07.2017 Copy of gap intimation letter sent to policy holder. Xerox
Ex.B4 ............ Copy of SSS Authorization letter given by the policy holder. Xerox
Ex.B5 20.05.2016 Copy of LIC’s circular No.1023/23. Xerox
Ex.B6 ............... Copy of LIC claims Manual page No.94&95. Xerox
-Sd- -Sd-
MEMBER-II PRESIDENT
