BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, PONDICHERRY

C.C.No. 41/2013

Dated this the 30^th day of August, 2018

(Date of Institution: 27.8.2013)

1.  J. Pandurangan (died)

Represented by his Legal heirs 2 to 5

2. P. Shanthi

3. P. Senthil Kumar

4. P. Meena

5. P. Raja                                                              ….     Complainant

vs

1.  Life Insurance Corporation of India,

          Pondicherry Branch,

          Represented by its Branch Manager

2. The Commissioner

          Employees Provident Funds Organization,

          Represented by its Sub-Regional Officer,

          The Assistant Provident Funds

Commission/OIC                                        ….     Opposite Parties

          (Complaint was amended as per order passed in M.P. No.19/2015 dated 1.7.2015 by impleading the complainants 2 to 5)

BEFORE:

          THIRU A.ASOKAN, B.A., B.L.,

          PRESIDENT 

Thiru V.V. STEEPHEN, B.A., LL.B., 

MEMBER

Tmt. D. KAVITHA, B.A., LL.B.,

           MEMBER

FOR THE COMPLAINANT:  Thiru  S. Vimal, Advocate           

FOR THE OPPOSITE PARTIES: Thiru K. Balaji, Advocate for O.P.1

                                                          Thiru K. Ravikumar, Advocate for O.P.2

O R  D  E  R

(by Tmt. D. Kavitha, Member)

              This is a complaint filed by the complainant u/s 12 of Consumer Protection Act, to direct the Opposite Parties to jointly or severally pay 40% (Rs.10,000/-) of the assured amount due on the date of maturity of the Policy i.e. 10.08.2011 and the vested bonus (less 19,176/- paid on 30.8.2011) with interest at the rate of 18% p.a. from the date of due till complete payment and discharge and to direct the opposite parties to jointly or severally pay the complainants compensation of Rs.2,00,000/- for the physical hardship & suffering and mental agony caused to the complainant due to their deficiency and negligence in service and to pay a sum of Rs.3,000/-  towards costs of the proceedings.

2.       The case of the complainant is as follows:

The 1^st complainant is a retired employee of Anglo French Textile Mill, Pondicherry.  In the course of his employment with said Anglo French Textile Mill, the 1^st complainant had insured himself with the 1^st opposite party vide Jeevan Surabhi policy (106) in No.730738231.  The date of commencement of policy was Rs.25,000/- 1^st complainant said Insurance Policy in No.730738231 dated 10.08.1996.  The terms of policy includes payment to be made to the 1^st complainant assured on the happening of the events as follow:

1. On the life Assured’s death     - Sum Assured with Vested Bonus

2. On the life assured surviving 4,8 & 12 Years from the commencement of

    the policy - 30%,30%&40% of sum at end of each period

3. On the life assured surviving the stipulated maturity date-  Vested Bonus.

The 1^st complainant being a member under the Employees Provident Funds scheme 1952 has been contributing his subscription to the provident funds scheme through his employer the Anglo French Textile Mills.  On 14.07.1997 the 1^st complainant has assigned his above said policy under Form-15 of the Employees Provident Scheme-1952 as security for payment of all sums which were due under para 67 (1) and 68 of the Employee Provident Funds Scheme the 1^st complainant thereafter becomes due to said funds. Said fact was also brought to the Notice of 1^st complainant’s Employer, Anglo French Textile Mill as also the insurer the 1^st opposite party.    Thus on said assignment the premium under the 1^st complainant’s policy was to be paid by the 2^nd opposite party to the 1^st opposite party as and when the same fell due to be paid.  Thus, the 1^st complainant was in an impression that all the yearly premiums were paid to the 1^st opposite party as and when the same fell due.  In said circumstances the 1^st complainant though having survived the maturity period under the policy till 10.08.2011.   On maturity the 1^st complainant found that he was paid only the first two installments of payment 30% each as promised and a partial amount of Bonus Rs.19,176/- on 30.08.2011 as per the status report of his policy.  Upon perusal of the status report of the 1^st complainant’s policy as provided by the 1^st opposite party at the time for last payment on 28.08.2013, 1^st complainant was highly disappointed and at loss, physically, mentally and monetarily to know that the 3^rd installment of the assured amount of 40% was not paid by the 1^st opposite party to the 1^st complainant.  Despite no fault on his side 1^st complainant was deprived of the third installment of 40% of the amount due to him.  1^st complainant made several and repeated requests and demands for payment of the amount due to him in person as also through his sons as also through letters including vide letter dated 13.02.2012 to the 2^nd opposite party and letter dated 03.07.2012 (sent on 07.07.2012 ) to the opposite parties but for no avail.    In response to the first complainant's letter the second opposite party sent a letter dt.25.4.2012 to the first opposite party's superior office at Chennai demanding explanation for payment of lesser amount to first complainant on maturity of the policy and addressed a copy of said letter to the first complainant.   The first opposite party remain silent to the second opposite party's said letter and thereby failed to disclose reasons for payment of lesser amount to the first complainant.  

3.                The complainant on his retirement was jobless and dependant on his family members since June 2009 for he had developed severe disabilities.   He was unable to walk, talk or eat himself.   He had to be tube fed his daily food and is under constant medication.   Complainant's medical records since June 2009 till 01.05.2010 for his treatment at Jipmer Hospital are filed along with this complaint.   The first complainant was always a dependant on his children and family members for all purpose.   The opposite parties are under an obligation to serve the complainant as mentioned above under the contracts (Insurance & Assignment).   They have failed to provide their services in proper and timely manner and have been negligent and deficient in service to the first complainant by their non-payment of the maturity value and accumulated bonus under the policy.   The opposite parties deficiency and negligence in service has caused inexplicable physical hardship, mental agony and monetary loss to the first complainant and his family members.   Apparent the opposite parties are jointly and severally liable to pay the complainants the monetary loss of 40% of the sum assured with accrued bonus at the time of maturity of the policy with the first opposite party with accrued interest at 18% p.a. from the date of due till the date of payment and discharge.   The opposite parties having caused severe physical hardship and mental agony to the complainants are liable to appropriately compensate the complainants for the same.   Though the physical hardship and mental agony caused to the complainants is not assessable in terms of money the same is valued to its minimum for a sum of Rs.2,00,000/- and for the litigation costs of Rs.5,000/- which also the opposite parties are jointly and severally liable to pay the complainants and hence the complainant filed this complaint.

4.       The reply version filed by the O.P.1 briefly discloses the following:

           The allegation contained in the complaint filed by the complainant is absolutely false.   It is submitted that once a policy is assigned under Form-15 as security for payment of all sums due to the Employee Provident Fund Scheme, it is the duty of the second opposite party to promptly pay the policy premium to the first opposite even without demand from the first opposite party.   The first opposite party is not a party to the assignment contract between first complaint and second opposite party and therefore it is not incumbent upon the first opposite party to raise demand every time when the policy premium falls due.   It is the first complainant who ought to have been vigilant and taken steps to see that the second opposite party paid the policy premium as and when it fell due.   Under the Jeevan Surabi Policy the complainant had agreed to pay annual premium of Rs.3,110/- from August 1996 to August 2008.   Since the first complainant had assigned the policy on 14.7.1997 to the second opposite party, the duty of paying the premium fell upon the second opposite party.   As per the policy terms, if the first complainant or the assignee fails to pay even a single premium within the stipulated time, the policy will lapse.   Since the second opposite party failed to pay the premium for the year 2006, the policy lapsed and the first complainant who had already received 30% of sum assured twice, became ineligible receive 40% of sum assured at the end of 12^th year of commencement of policy.   The first complainant was eligible to bonus of only Rs.19,176/- for the period of payment of premium and hence the maturity proceeds of the policy were sent to the second opposite party on completion of the policy period.   The non payment of premium in time by the second opposite party caused the policy to lapse and the first opposite party cannot be held liable for the same.   The Insurance is subject matter of solicitation "which means that Insurance Policy cannot be sold and it is the responsibility of the insured to ask for and buy the right Insurance Policy which suits his needs.   Under the Contract of Insurance, it is the duty of the insured person to keep the Insurance policy alive, by paying the periodical premium amount within the prescribed time.   The first opposite party is not duty bound to raise any demand for payment of premium from the insured person.   The first opposite party usually sends reminder letters for payment of premium to the insured person, only as a matter of service to remind the insured person to pay the premium.   It is not mandatory on the part of the first opposite party either raise a demand or issue reminder letter for payment of premium.   In this case the first complainant had assigned his policy to the second opposite party, as security for payment of all sums which the first complainant may become liable to pay to the second opposite party.   The assignment of the policy under Form – 15 of the Employees Provident Fund Scheme, 1952, is a contract between the first complainant and the second opposite party.   The first opposite party is not a party to the said contract.   Once a policy is assigned as security, it is the duty and responsibility of the assignee to pay the periodical premium to the first opposite party without fail.   Section 38 of the Insurance Act, 1938 mandates that the assignee namely the second opposite party shall issue a notice of transfer or assignment to the first opposite party, get an endorsement of assignment upon the policy, by the first opposite party, get an endorsement of the assignment upon the policy, by the first opposite party.   Once notice as contemplated under section 38(2) of the Insurance Act, is issued and acknowledged by the first opposite party, the second opposite party steps into the shoes of the insured person and it is the second opposite party who ought to have paid the periodical premium amount out of the funds contributed by the first complainant.   Neither section 38 of the Insurance Act, nor para 67 of the Employees Provident Fund Scheme 1952, impose any duty on the first opposite party, to raise a demand with the second opposite party for payment of premium due under the policies assigned to the second opposite party.   It is the duty of the first complainant to keep his policy alive and he ought to have regularly followed up with the second opposite party to see that the periodical premium is duly paid to the first opposite party.   Therefore the first opposite party is not liable in any manner to compensate the complainant and prayed for dismissal of the complaint against him with cost.

5.                The reply version filed by the O.P.2 briefly discloses the following:

                   The second opposite party denies all the allegations leveled against him in the complaint.   The second opposite party is a formal party.   The second opposite party is neither an agent nor principal to the first opposite party or the complainant has not hired service for any consideration from second opposite party.   Hence there is no contributory negligence or negligence on the part of second opposite party according to Consumer Protection Act.   The complainant misconceived fundamental settled law of Consumer Protection Act and wrongly arrayed the opposite party No.2 is a misjoinder of the necessary party instead of formal party.   The second opposite party had neither received any consideration nor any indirect commission from the complainant for under taking this work to attract the Consumer Protection Act.  

6.                The maturity proceeds of Rs.19,196/- had been received by the second opposite party from the first opposite party vide cheque No.858298 dated 30.8.2011 for Rs.19,176/- and two other sums of Rs.7,500/- each towards two survival benefit each vide cheque No.1744370, dated 11.8.2003 and 396399, dated 25.5.2005 respectively.   All the above amounts have been credited into the Provident Fund Account of the complainant as per the Discharge Voucher sent by the First opposite Party at the time of maturity for the reason that since the premium for the above said policy had been financed from the accumulation available in the Provident Fund Account of the complainant, the maturity proceeds cannot be paid to the complainant directly but will be credited into his Provident Fund Account.   But since the demand had not been raised by the first opposite party to the second opposite party, the premium for the last spell of period of insurance had not been paid and hence the third cum the last Survival benefit i.e. 40% of the sum insured onto 12^th year from commencement had not been received by the complainant from the First opposite party.   It is understood that the complainant had ascertained the first opposite party's office that the third Survival Benefit had not been sent against this policy from non-payment of premium amount due for August, 2006.   It is submitted that the complainant caused to issue a letter dated 13.2.2012 to this second opposite party aggrieving about the non-payment of third Survival Benefit by the First Opposite Party due to non-payment of premium amount by this Second Opposite Party endorsing a copy of it to the complainant explaining the fact that since the name of complainant had been omitted in the statement of demand for the year August, 2006 by the first opposite party, this second opposite party could not be blamed of non-payment of premium amount for August, 2006 and requested the First Opposite Party to make the loss suffered by the complainant good.   In response to the letter dated 25.4.2012 of this second opposite party, the first opposite party has neither issued any reply letter to the second opposite party nor issued any letter to the complainant undertaking to make the loss sustained by his good.   All receipts received on behalf of the complainant and payments made against the demand of the complainant were duly accounted and this rendered the service required the service required under the statue.   Therefore it is proved beyond doubt that this second opposite party had acted promptly as per law in all issues relating to the complainant without leaving any room for any allegation of deficiency in service even for no cast.   Hence prayed for dismissal of the complaint against him with costs.

7.                The additional reply version filed by the O.P.2 briefly discloses the following:          The formation of contract in the above case between O.P.1 and the deceased complainant only.   In the absence of formation of enforceable contract between O.P.2 and the deceased complainant O.P.2 is not liable under this Act and hence prayed for dismissal of the complaint.   The ratio of Basanti Devi's case Apex court is applicable in this case also.

8.                 Points for determination are :

1. Whether the Complainant is the Consumer?
2. Whether the opposite parties attributed any deficiency in service?
3. To what relief the complainant is entitled for?

9.                Point No.1:

                    The first complainant had insured himself with the first opposite party vide Jeevan Surabi Policy "106" in No.730738231 on 10.8.1996 and it was matured on 10.8.2011 vide Ex.C7 dt.10.8.1996 and the same was assigned by the complainant to the second opposite party under form 15 of the Employees Provident Funds Scheme 1952 as security for payment of all sums which were due under para 67 (1) and 68 of the Employees Provident Funds Scheme 1952, vide Ex.C8 dt.4.8.1997.   Hence the Complainant is considered to be a Consumer to the opposite parties No.1 and 2, as per the Consumer Protection Act.

10.              Point No.2:

We have perused the complaint and reply filed by the opposite parties No.1 and 2 and the exhibits filed by the parties.   The complainant No.5 was examined as CW1 and Ex.C1 to Ex.C15 were marked.   On the side of opposite party No.1, one Alexander Devadass Administrative Officer was examined as RW2.   On opposite party No.2 side one O. Ram Mohan Accounts Officer was examined as RW1 and marked Ex.R1 to Ex.R5.  

11.             The complainant stated that he is a retired employee of Anglo French Textile Mills, Pondicherry.   During the course of employment, he had insured himself with the first opposite party vide Jeevan Surabi Policy "106" in No.730738231 on 10.8.1996, was due to mature by 10.8.2011 the sum assured under the policy was Rs.25,000/-, vide Ex.C7.   The terms of the policy includes payment to be made to the first complainant/Assured on the happening of the events as follows:

1. On the life Assured's death – Sum Assured with Vested Bonus
2. On the life assured surviving 4,8 &12 years from the commencement of policy – 30%, 30% and 40% of sum at end of each period.
3. On the life assured surviving the Stipulated Maturity date – Vested Bonus.

12.             Being as a member of Employees Provident Funds Scheme 1952, the first complainant had assigned his policy to the second opposite party under Form 15 of the Employees Provident Funds Scheme 1952, as security for payment of all sums which were due under para 67 (1) and 68 of the Employees Provident Funds Scheme 1952, vide Ex.C8, dt.14.7.1997.   As per the assignment the premium under the first complainant's policy was to be paid by the second opposite party to the first opposite party as and when the same fell due to be paid.   Thus the complainant was in an impression that all the yearly premiums were paid to the first opposite party as and when the same fell due.   While so the complainant survived till maturity period on 10.8.2011.   On Maturity the complainant found that he paid only the first two instalments of payment of 30% each as promised and a partial amount of Rs.19,176/- on 30.8.2011, as per the status report of the policy.  

13.             On perusing the status report the complainant came to know that the third instalments of the assured amount of 40% was not paid by the first opposite party to the first complainant, vide Ex.C9, dt.26.12.2011.   The complainant made several request and demands for payment of amount due to him in person and also through his sons.   Further the complainant has sent letters dated 13.2.2012 to the second opposite party and also dated 3.7.2012 to both the opposite parties vide Ex.C10.   Subsequently the second opposite party sent a letter to the first opposite party's superior office at Chennai demanding the details of payment of lesser amount to the complainant on maturity of policy and addressed the same to the

complainant also vide Ex.C11, dt.25.4.2012.   By receiving the letter from second opposite party, the first opposite party also remained silent and failed to disclose the reasons for payment of lesser amount to the complainant.   After the retirement the complainant was dependant on his family members since June 2009 and he had developed several disabilities, Ex.C12 dated June 2009 to 1.5.2010, Ex.C13 dated 2.8.2010, Ex.C14 dt.2.6.2012 and Ex.C15 are the corresponding medical records where he has taken treatment at various hospitals.   Even though no fault on the first complainant, he was deprived of the third instalment of 40% of the amount due to him.   The opposite party failed to provide their service in proper and timely manner and have been negligent and deficient in service by their non payment of maturity value and accumulated bonus under the policy to the first complainant.   Therefore the first complainant approached this forum to redress his grievance against the opposite parties.   During the pendency of this complaint, since the first complainant was expired, the legal heirs of the deceased have been included as complainants 2 to 5.   To prove the same, Ex.C1 to Ex.C6 were marked by CW1.  

14.             The first opposite party in the reply version admitted the insurance policy taken by the first complainant with the first opposite party on 10.8.1996, vide Jeevan Surabi policy "106" in No.730738231.    As per the terms of the policy, the first complainant has to pay annual premium of Rs.3,110/- from August 1996 to August 2007.   Since the complainant had assigned the policy on 14.7.1997 to the second opposite party, the duty of  paying the premium fell upon the second opposite party.   As per the policy terms and conditions if the first complainant or the assignee fails to pay even a single premium within time the policy will lapse.   Since the second opposite party failed to pay premium for the year 2006, the policy lapsed and the first complainant, who had already received 30% of sum assured twice, became ineligible to receive 40% of sum assured as third instalments at the end of 12^th year of commencement of the policy.   Hence the first complainant was eligible to bonus of only Rs.19,176/- for the period of payment of premium.   The first opposite party denies the allegation of the second opposite party that the first opposite party omitted to mention the name of the complainant in the statement of demand for the year August 2006.   The first opposite party submits that once the policy is assigned under Form-15 as security for the payment of all sums due to the Employees Provident Funds Scheme 1952, it is the duty of the second opposite party to pay the policy premium to the first opposite party even without demand from the first opposite party.   In fact, once a

notice has contemplated under section 38 (2) of the Insurance Act is issued and acknowledged by the first opposite party, the second opposite party steps into the shoes of the insured persons and the second opposite party who ought to have paid the periodical premium amount out of the funds contributed by the first complainant.    However the first opposite party sent reminder letters for payment of premium to the insured person only as a matter of service and remin the insured person to pay the premium.   It is not mandatory on the part of first opposite party either to raise a demand for issue a reminder letter for payment of premium.   Therefore the first complainant who ought to have been vigilant and taken steps to see that second opposite party paid the policy premium as and when it fell due.    Therefore the first opposite party denies the allegations that the opposite parties are vicariously liable to compensate the complainant and prays to dismiss the complaint as against first opposite party.  

15.             The opposite party No.2 contended that the first complainant had taken life insurance policy with the first opposite party and the complainant had assigned the same with the second opposite party on execution of Form-15 of the Employees Provident Funds Scheme 1952.   As per the assignment the complainant became eligible for financing the said insurance policy out of the accumulation available in this provident funds account on receiving the annual demand from the first opposite party.   Hence the annual premium from August 1996 to August 2007 had been paid by the second opposite party on receiving the statement of demand from the first opposite party regularly for every year without any break, except for the period of August 2006.   This was due to the fact that the first opposite party did not raise any demand for payment of premium for August 2006, vide Ex.R2.   The opposite party cannot make any payment as sue motto, unless and other wise a demand is raised every year by the first opposite party, as per the functional order and procedure of the department, vide Ex.R3 for the year 2007.   After receiving the letters from the complainant on 13.2.2012 and 3.7.2012 the second opposite party issued a letter dated 25.4.2012 to the first opposite party explaining the reason for omission of complainants name in the demand list of August 2006 and requested the first opposite party to make the loss suffered by the complainant good vide ex.R4.   Ex.R5 is the original annual demand.   But the first opposite party neither issued any reply to the second opposite party nor issued any letter to the complainant undertaking to make the loss sustained by him is good.   Therefore the second opposite party acted promptly as per law in all issues relating to the complainant.   Therefore, prayed to dismiss the complaint as against the opposite party No.2.  

16.             This Forum has gone through the pleadings, exhibits and arguments submitted by the counsel.   On perusal of Ex.C7 clearly shows that the first complainant had taken insurance policy with the first opposite party vide Jeevan Surabi Policy "106" in no.730738231 on 10.8.1996 and matured on 10.8.2011.   The sum assured under the policy was Rs.25,000/-.   Wherein there is no dispute in respect of insurance policy taken by the first complainant.   The dispute is only with regard to the payment of third instalment of assured amount of 40% and vested bonus.   The complainant stated that being as a member of Employees Provident Funds Scheme 1952, he had assigned his policy to the second opposite party under form-15 of the Employees Provident Funds Scheme 1952 as security for payment of all sums which were due under para 67 (1) and 68 of the Employees Provident Funds Scheme 1952, vide Ex.C8.   As per the assignment, the premium of the first complainant's policy should be paid by the second opposite party to the first opposite party.   Since the second opposite party failed to make the premium for the year 2006 the policy lapsed.   Infact the complainant did not know about the policy lapsed, because he was under an impression that all the yearly premiums were paid to first opposite party by the second opposite party.   The complainant came to know the actual status of the policy only on 26.12.2011 i.e. after maturity period, when he received the status report vide Ex.C9.   Then the complainant had issued letters to opposite party 1 and 2, vide Ex.C10, the second opposite party replied through their letter dated 25.4.2012 vide Ex.R4.   In which the second opposite party stated that since the name of the complainant was not mentioned, the demand list received from opposite party No.1 for the year 2006, they could not pay the premium for the particular year.   If it is really so, opposite party No.2 should have approached the first opposite party or the complainant, because once the policy is assigned under form-15 as security for payment of all sums due to the Employees Provident Funds Scheme 1952, it is the bounden duty of the second opposite party to pay the policy premium or to take any other steps to continue the policy instead of to left the policy for lapse.   This Forum observed that in this complaint that the second opposite party was kept silent after receiving the demand list for the year 2006 from first opposite party, they did not take any effort with regard to the absence of policy holder name or his incorrect policy number in the demand notice.   But RW1 deposed in his evidence,

"it is true that once the insurance policy was assigned by the first complainant to us, it is our responsibility to deal with the said insurance policy with the OP1 Life Insurance Corporation of India.   It is our responsibility to pay premium due under the insurance policy of the complainant to the OP1 as per Ex.C7 and Ex.C8".

17.             Hence this Forum finds that issuance of demand list by first opposite party to second opposite party for payment of premium is not mandatory.   Further, first opposite party stated in their reply

"the first opposite party usual sends reminder letters for payment of premium to the insured persons only as a matter of service to remind the insured person to pay the premium"

To prove the same, first opposite party has not produced any document to show that they have sent notice to the complainant or second opposite party.   Hence from the above discussions, this Forum observed that it is the duty of the second opposite party to pay policy premium of the complainant to opposite party No.1, because the policy is assigned by the complainant under Form-15 as security for payment of all sums which were due under para 67(1) and 68 of the Employees Provident Funds Scheme 1952.   Further the opposite party also should have sent reminder letter to the complainant to pay the premium.   But both the opposite parties failed to do so.   Thus the complainant clearly established his case and proved negligent act, deficiency in service of the opposite parties which caused physical hardship, mental agony and monetary loss to the complainant.   Therefore the complainant is entitled for the claim and opposite parties are jointly and severally liable for the same.

18.              POINT No.3:

                    In view of the decision taken in point No.2, this complaint is hereby allowed and the OPs are jointly and severally liable and hence they are directed:

1. to pay Rs.10,000/-, the 40% of the assured amount due on the date of maturity of the policy i.e. 10.8.2011 and the vested Bonus yet to be paid with interest at the rate of 12% p.a. from 30.08.2011 till realization
2. to pay a sum of Rs.25,000/- as compensation for the loss and injury and mental agony suffered by the complainant due to deficiency in service of Opposite Parties. 

          iii)     to pay a sum of Rs.5,000/- towards cost of this proceedings. 

Dated this the 30^th August, 2018.

1. ASOKAN)

PRESIDENT

(V.V. STEEPHEN)

   MEMBER

(D. KAVITHA)

MEMBER

COMPLAINANTS' WITNESS: NIL

CW1           22.1.2016             P. Raja

OPPOSITE PARTY'S WITNESS:

RW1           15.11.2016           O. Ram Mohan

RW2           15.5.2017             C. Alexander

COMPLAINANTS' EXHIBITS:

OPPOSITE PARTY'S EXHIBITS:

LIST OF MATERIAL OBJECTS:  NIL

1. ASOKAN)

PRESIDENT

(V.V. STEEPHEN)

   MEMBER

(D. KAVITHA)

MEMBER