BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION

AT PORVORIM–GOA

Coram : Ms. Bela N. Naik, President

               Mr. Auroliano De Oliveira, Member

     Ms. Rejitha Rajan, Member

                                                                   Consumer Complaint No. 21/2022

1. Housidas Surya Mainikar,

          House No. 168,

          Pethwada-Kudne,

         Sanquelim- Goa  

2. Swati Housidas Mainikar,

W/o of Housidas Surya Mainikar,

House No. 168,

Pethwada-Kudne

Sanquelim-Goa, Pin Code : 403505

Ph. No. 8208419454                                  ....... Complainants/Applicants

Versus

1. Life Insurance Corporation of India,

          Through it’s Branch Manager, Panjim Branch.

           Susheela Building,

           18^th June Road

           Panaji-Goa, 403001.

2. The Branch Manager, Bicholim Branch,

           Life Insurance Corporation of India,

           Town Centre,

           2^nd Floor, Bicholim-Goa, 403504.

3. The Manager (CRM),

          Life Insurance Corporation of India,

          Goa Divisional Office,

          Jivan Vishwas,

          Patto, Panaji-Goa, 403001                                  .......... Opposite Parties

Date of Complaint :- 25-03-2022

Date of Judgement/Order :-20-04-2023

Counsel for the Parties :

For the Complainant : Ld. Adv. Mr. S. Dhargalkar for the Complainant.

For the Opposite Parties (OP-1, OP-2 and OP-3) : Ld. Adv. Priolkar for the Opposite Parties.

JUDGEMENT

(Per Ms. Rejitha Rajan, Member)

By this Judgement and Order, we shall finally dispose off the Consumer Complaint bearing No. 21/2022 dated 25-03-2022 filed by the Complainants alleging deficiency of services (insurance) by the Opposite Parties (for short the OP-1, OP-2, OP-3 or OP’s) herein under Section 35 Consumer Protection Act, 2019.

The brief facts of the case of the Complainants are that :

1. That the Complainant No. 1 and Complainant No. 2 are the parents of their deceased daughter Kum. Janvi Housidas Mainikar and states that their daughter was insured with Life Insurance Corporation of India, Bicholim Branch, Bicholim-Goa, under policy number 931614929 for a total sum assured of Rs. 2,00,000/-. The date of commencement of this policy was 28-05-2017 and the date of commencement of risk was 27-05-2019 with a monthly premium amount of Rs. 964/- which was to be deducted from the salary of the Complainant No. 1 who is a permanent employee of M/s. Vedanta Limited having it’s plant at Codli-Goa.

2. The Complainants state that at the time of submitting the proposal of insurance of their daughter through the LIC Agent (Mrs. Pritam Mahesh Kamat bearing Agency Code 0131593B) of the Opposite Parties, the Complainant No. 1 paid the first and second instalment/premium of insurance and also sent a letter through his agent to the Opposite Party No. 1 in the first week of June, 2017 providing details of the employment of the Complainant No. 1 with M/s. Vedanta Limited having it’s Plant at Codli-Goa and vide that letter sent through the agent had authorized them (Opposite Party No. 1) to deduct the amount of premium in respect of the aforesaid policy from the salary paid by the employer M/s. Vedanta Limited to the Complainant No. 1. The Complainants thus stated that it was the responsibility of OP-1 to address the necessary letter and on the strength of the aforesaid letter and upon receipt of such letter, it was the duty of the employer of the Complainant No. 1 to deduct the necessary payment due towards aforesaid insurance premium from the salary of the Complainant No. 1.

3. The Complainants states that their daughter Kum. Janvi Housidas Mainikar expired on 11-02-2020 due to E’wings Sarcoma tumour cancer. Thereafter, the Complainant filed insurance claim of the policy bearing No. 931614929 along with all the necessary documents related to the sad demise of their daughter to the Opposite Party. The Complainant states that in the most arbitrary manner, the branch manager of Life Insurance Corporation of India, Panaji Branch vide letter dated 09-07-2021 without assigning any reasons informed the Complainant No. 1 that the Competent Authority have declined the claim. Thereafter the Complainant No. 1 addressed a letter dated 16-08-2016 through his Advocate Mr. M.P. Sawaikar to Life Insurance Corporation of India, Bicholim Branch requesting to submit reasons for declining the legitimate claim of the Complainants and also requested to provide certified copy of the entire claim file. The Branch Manager of Life Insurance Corporation of India, Panaji Branch vide letter dated 09-09-2021 have informed the advocate of the Complainant No. 1 that the premiums under the aforesaid policy were not paid for the minimum period of 3 years and hence the same was in a lapsed condition. The Complainants state that the OP have not furnished any documents as was requested by the advocate and the reason assigned by the OP was not satisfactory which was not good enough to reject the legitimate claim of the Complainants and thus the reasons given by OP-1 was totally arbitrary.

4. The Complainants state thereafter vide letter dated 08-11-2021, the Complainant No. 1 again requested for Claim papers and related documents and in reply to this letter for the first time the Opposite Party have informed the Complainant No. 1 that the policy was in lapsed condition due to default of the premium due for 07/2017 to 10/2017 and the OP-1 have also mentioned in this letter that the policy was serviced under Salary Saving Scheme. The Complainants states that as per the Policy serviced under Salary Service Scheme, it is the primary duty of the Insurer and the employer to keep the policy in force by securing the payment of insurance premium in time by deducting the same from the salary of the employee. That after the initial two premium instalments amounts were paid by the Complainant No. 1 by cash, it was the duty of the insurer/opposite party to address a letter to the employer of the Complainant No. 1 immediately before the next premium amount is due to secure the payment of the insurance premium in respect of the above policy from the salary of the Complainant No. 1 so that there is no default in payment of insurance premium.

5. The Complainants state that the letter dated 31-10-2020 received by the Complainant No. 1 from his Employer M/s. Vedanta Limited having Plant at Codli-Goa clearly shows that the Opposite Party have sent a letter requesting for deduction of insurance premium from the salary of the Complainant No. 1 only in the month of October 2017 and therefore the deduction of insurance premium from the salary had started from the month of November, 2017. Thus it is clear that though the Insurance policy had started from the 28-05-2017 and the payment of first and second premium was paid by the Complainant No. 1 in cash, however thereafter deduction from the salary account started only from the November 2017 solely due to laziness and the fault on the part of the Opposite Party. Therefore there is a clear deficiency in service on the part of the opposite party. Therefore, non payment of insurance premium if any has occurred than the same has happened solely due to the fault and deficiency in service of the Opposite Party. That the Complainants were always under the bonafide impression that the amount of insurance premiums in respect of above policy have been regularly deducted from the salary of the Complainant No. 1. That in any case, Opposite party have never informed the Complainants about this non payment or default of any premiums till the same was informed by Opposite party for the first time through it’s letter dated 09-09-2021 addressed by it to the advocate of the Complainant.

6. The Complainants state that the Complainant No. 1 has always paid all the premiums in respect of the aforesaid policy diligently and that the Complainants always believed that there is not a single default of any insurance premium amount on the part of the Complainants. If at all any unpaid premium was there as alleged by the Opposite party, then the same was totally owing to the Opposite Party’s fault of sending the letter belatedly requesting for deduction of insurance premium amount from the salary of the Complainant in the month of October, 2017 to the Employer of the Complainant though the Opposite Party had received the insurance proposal along with proposal deposit  of Rs. 2000/- and the letter authorizing the deduction from my salary  in the first week of June, 2017. Therefore the Complainants always rightly had a legitimate expectation and bonafide belief that the opposite party must have sent the letter to the employer of the Complainant No. 1 in reasonable time for the deduction of insurance premium amount from the salary of the Complainant No. 1 and that all the insurance premium amount is deducted regularly from the salary of the Complainant No. 1.

7. The Complainants state that before the letter dated 09-09-2021, the Opposite Party have never informed the Complainants in writing that the aforesaid policy has lapsed. It is only after the Complainants have filed their claim, the Opposite Party for the first time have by this letter dated 09-09-2021, with malafide intention to repudiate the legitimate claim illegally and arbitrarily have termed the policy as lapsed. The Opposite Party having continued to receive insurance premium amount even after the death of the daughter of the Complainants, at this belated stage after the period of two years time is over, are estopped from raising such ground of non payment of insurance premium for the month of July 2017 to October 2017 solely with the object to repudiate the legitimate claim of the Complainants.

8. The Complainants state that the Complainants have at the time of raising the claim, submitted the claim statement, policy papers and all other documents required to raise the insurance claim to the OP No. 1. Therefore vide letter dated 08-11-2021 requested the Opposite Party having it’s office at Panaji-Goa to return the copies of the documents submitted to it as the same are required to file the necessary complaint before this Hon’ble Authority. However, the Opposite Party did not return any documents. Infact, vide letter dated 12-10-2021 for the first time  Manager (Claims) the Branch Office Panaji of LIC informed the Complainants that the policy was in lapsed condition on account of default of the premium due for the month of 07/2017 to 10/2017. Till the letter dated 12-10-2021, the Opposite Party have never informed the Complainants about the non payment of insurance premium for the month of July 2017 till October, 2017.

9. That if at all there was default of premium amount than the Opposite Party ought to have either discontinued the policy or should have first deducted from the salary of the Complainants the amount of the premiums due in respect of these months of July 2017 till October 2017. If the same was in lapsed condition than the Opposite Party ought not to have deducted any further the premium amount from the salary of the Complainant No. 1 which the Opposite Party continued for atleast 4-5 months even after the death of the daughter of the Complainant. The Opposite Party needs to return the premium amount collected by it after the death of the daughter of the Complainant.

10. The Complainants state that the very fact that the Opposite Party continued deducting the premium amount from the salary of the Complainant No. 1 shows that the aforesaid policy was very much alive and not in a lapsed condition. The Complainants have therefore every legitimate expectation and right to believe that the policy was alive and very much in force.

11. The Complainants states that their daughter has expired after the commencement of risk period and therefore the OP’s are liable to pay the compensation due under the said policy to the Complainants.

12. The Complainants state that the Complainant had accordingly issued the notice dated 10-01-2022 to the OP No. 1 demanding the amount of compensation due along with interest @15% per annum under the aforesaid policy, however till date the Opposite Parties have failed to respond to the claim raised by the Complainant and therefore the Complainants are constrained to file the present Complaint before this Honourable Authority under the law.

13. That the Complainants (Claimants) have undergone lots of mental agony, trauma and pain due to untimely death of their beloved daughter at such a young age. The Complainants (Claimants) have undergone huge suffering, harassment, mental agony, pain and trauma due to arbitrary rejection of claim by the Opposite Party for which they need to compensate the Complainants for unnecessarily forcing the Complainants to file the present litigation to get their legitimate dues under the claim and that the Complainants are entitled for compensation of minimum of Rs. 3,00,000/- for all these sufferings, harassment, mental agony, pain, trauma which could have been avoided if the Opposite Parties had not arbitrarily declined the valid legal claim of the Complainants.

14. The Complainants state that the daughter of the Complainants have expired on 11-02-2022 and thereafter upon raising the insurance claim with the Opposite Party, the OP No. 1 vide letter dated 09-07-2021 without assigning any reason have informed the Complainant No. 1 that the competent Authority has declined the claim. That because of this non speaking one line order, the Complainants were constrained to address the legal notice dated 16-08-2021 to the Opposite Party demanding the reasons for rejecting the valid claim. And that for the first time reasons for repudiating the claim were informed to the Complainants by the OP No. 1 vide it’s letter dated 09-09-2021. Thereafter vide letter dated 12-10-2021 for the first time  Manager (Claims) the Branch Office Panaji of LIC informed the Complainants that the policy was in lapsed condition on account of default of the premium due for 07/2017 to 10/2017. Therefore, the cause of action first arose on 09-07-2021 when the Opposite Party arbitrarily informed about the rejection of claim and thereafter again on 09-09-2021 and on 12-10-2021 when the opposite party for the first time informed the reasons for rejecting the claim. The cause of action is continuing on as the rejection is totally illegal.

15. The Complainants prays for the reliefs a) to hold the Opposite Parties jointly and severally liable for the deficiency in service under the Consumer Protection Act direct the Opposite Parties to pay to the Complainants claim in respect of the aforesaid policy a compensation of Rs. 2,00,000/- towards sum assured alongwith interest @ 15% per annum, the day when the amount becomes due on the sad death of the daughter of the Complainants.  b) to direct the Opposite Parties to pay a sum of Rs. 3,00,000/- to the Complainants towards the mental agony, pain, sufferings, harassment, trauma and the cost of litigation.

16.  The Written Statement of the OP’s mentions that OP-1 is Life Insurance Corporation, OP-2 and OP-3 are it’s organs and their interest are not adverse and or conflicting to each other and as such this written version is filed by it’s authorized signatory on behalf of all the OP’s and states that the Complaint is bad in law as a) there is no cause of action against the OP’s as the OP’s have not made any breach of terms and conditions of the insurance policy. b) for nonjoinder of necessary party and on this count itself the Complaint deserves to be dismissed.

17.  The OP’s state that the Complainant has taken a policy for a sum assured of Rs. 2,00,000/- and the monthly premium amount was Rs. 964/- and the date of commencement of policy was 28-05-2017. The date of Commencement of risk was 27-05-2019. The amount of the premium in respect of this policy were to be deducted from the salary of the Complainant No. 1. That the Complainant had opted for the SSS mode of premium payment for the said policy and has voluntarily chose the SSS Mode and accordingly requested the Corporation to issue the policy under SSS(“Salary Savings Scheme”). That as per the request in proposal form, policy was issued under the SSS Scheme and in the proposal form the Complainant has signed an authorization letter for SSS, which states that under the SSS Scheme, to give effect to this arrangement, the Complainant alongwith the proposal form, has also signed Authority Letter, addressed to his employer to deduct the premium amount from his salary and remit the same to the Corporation on his behalf. The OP’s has relied upon the said Proposal Form, Policy Bond Authorization and Policy Clause No. 22(A) .

18. It is also stated by the OP’s that the Complainant has further consented and accorded for imposition of Clause 22 (A) to the policy. In the said Clause No. 22 (A), the life assured has accepted responsibility to ensure that the instalments premium is deducted from his salary and remitted to Corporation and failing that premium is paid directly to the Corporation within days of grace period at increased rate. It is further provided in the said Clause No. 22 and accepted by the policy holder that the due date for premium payment shall be 20^th day of each month. The copy of said Clause No. 22 is duly signed by the policy holder and is relied herewith by the Opposite Parties.

19. The OP’s submit that the OP’s had sent the authorization letter to the employer with instructions to deduct a sum of Rs. 1000/- (the premium amount along with GST) from his salary commencing from 07/2017. The OP’s further state that the OP’s had also sent an invoice and statement of inclusions for the month of July, 2017 in the month of July, 2017 which is the practice/procedure to deduct the monthly premium collected from various SSS Scheme with the said employer. The Copy of the said invoice statement and inclusions is relied by the Opposite Parties. The authorization along with the hard copy of the invoice, which premium for the month of July 2017 would be due and payable by 20-08-2017 was sent to the employer in the month on July 2017. The said SSS invoice statement of inclusion etc. Gaps, lapse, default notices has been dispatched on 04-07-2017.

20.  The OP’s state that if the instructions in his policy were received then, the same invoice would also carry details of the policy of Janvi Housidas Mainikar (Statement enclosed).

21. The OP’s also state that, it is the primary duty of the Complainant to make/ensure the payments of the premium amount to the insurance company on or before the due dates so as to keep the policy in force and get all benefits under the policy, which the Complainant failed to do. The OP’s submits that it is false that the OP’s in a most arbitrary manner, the Branch Manager of Life Insurance Corporation of India, Panaji Branch, vide letter dated 09-07-2021 without assigning any reason, informed Complainant No. 1 that the Competent Authority have declined the Claim.

22. The OP’s state that as the policy is in lapsed conditions as premiums have not been received for a minimum period of 3 years due to 4 SSS gaps from 07/2017 to 10/2017 and as such the Branch Manager has informed the Complainant that his claim has been denied. It is further submitted that as per the Condition D, of non forfeiture clause which states that if less than three years have been paid in respect of this policy and any subsequent premium be not paid, all the benefits under this policy shall cease after the expiry of grace period from the date of first unpaid premium and nothing shall be payable. However, if after atleast three full years premium have been paid in respect of this policy and any subsequent premium be not duly paid, this policy shall not be wholly void, but shall subsist as a paid-up policy. The sum assured on death under paid-up policy shall be deducted to such a sum called Death paid up sum assured and shall be equal to nos of premium paid multiplied by sum assured on death.

23. The OP’s state that the Complainant No. 1 addressed a letter dated 16-08-2021 through his Advocate Mr. M.P. Sawaikar to Life Insurance Corporation of India, Bicholim Branch and the OP’s informed the said Advocate vide letter dated 09-09-2021 that the claim is denied as the premium under the aforesaid policy were not paid for minimum period of 3 years and hence the policy was in a lapsed condition. There was a gap of 4 SSS from 07/2017 to 10/2017 and as such, the policy was in lapsed conditions. It is denied that the Opposite Party have not furnished any documents as was requested by the advocate. It is denied that the reason assigned by the opposite party was not satisfactory and was not good enough to reject the legitimate claim of the Complainants. It is further denied that the reasons given by the Opposite Party No. 1was totally arbitrary.

24. The OP’s states that when the Complainant visited the office of the OP’s, he was explained the factual position of his claim and discharge forms for refund of the premium post the Claim was given to the complainant. The Complainant has received the documents as well as the discharge voucher (Copy of the letter dated 02-02-2022 along with the acknowledgement dated 11-04-2022 is relied by the Opposite Parties). The Complainants, thereafter vide letter dated 08-11-2021 requested for Claim papers and related documents, however the same were requested to be collected on 2/2/2022 and handed over to the Complainant who collected it on 11-04-2022.

25. The OP’s state that OP’s had vide letter dated 09-09-2021 and 12-10-2021 have clearly stated the reason for decline of the claim raised by the Complainant. The reason being, policy was in a lapsed condition on account of default of payment due from 07/2017 to 10/2017. Also the said policy was serviced under Salary Service Scheme and the proposer is primarily responsible to keep policy in force. In the event of the premium dues not remitted to the Corporation either by the employer or the proposer, policy becomes lapsed. Further it is also stated that as the policy is in lapsed condition without paid-up value as aforestated as above and policy has not run for minimum 3 years to acquire paid up value. The Complainant himself has availed the said policy under SSS and he has undertaken that he shall ensure that the payments be remitted by his employer and in default it shall be his duty to pay the premium and service the policy.

26. The OP’s state that it is the primary duty of the proposer to pay the monthly premium and keep the policy in force as per the Clause 22(A) signed by the proposer. The proposer has availed the said policy under the SSS mode for premium payment. He has authorized his employer to deduct the premium amount from his salary and remit the same to Corporation on his behalf. He has further given his consent to Policy Clause No. 22(A) wherein the life assured has accepted responsibility to ensure that the instalments premium is deducted from his Salary and remitted to Corporation and failing that premium shall directly be paid to Corporation within days of Grace period at increased rate. It is further provided in the said Clause No. 22 and accepted by the Policy holder that the due date for premium payment shall be 20^th day of each month. In the said declaration he has accepted the responsibility to ensure that the instalments premium is deducted from his salary and remitted to the Corporation or failing that premium is paid directly to the Corporation within days of grace at increased rates. The above authorization and clause 22 clearly states that it is the proposer’s responsibility to ensure that the premium is paid and the policy is kept in force. The Complainant cannot shift his responsibility on the OP’s.

27.  The OP’s has stated that the document at Exhibit D statement of invoice sent for the month of July 2017, which is sent in the first week of every month i.e. in July 2017 clearly shows that the invoice was sent to the employer in the month of July 2017 and the statement that the OP’s sent the letter to the employer in the month of October 2017 is a false statement. It is denied by the OP’s that there is clear deficiency in service on the part of the Opposite Party and further denied that non-payment of insurance premium if any has occurred is solely due to the fault and deficiency of service of the Opposite Party.

28. The OP’s state that the Complainant No. 1 cannot be so cajole in servicing his premium and without paying assuming that he has paid his premium. Also, he can ascertain the fact of payment in his salary slip/memo which he receives every month. It is stated by the OP’s that the premium is fixed for the entire term of policy and is not variable like utility bills. Therefore, it is very convenient to policy holder to trace the payment from the salary slips. The OP’s states that the Complainant is well aware that his premium amount is not getting deducted and remitted with LIC and as per the undertaking and obligations under the policy contract, he is entirely responsible for making the direct payment to the OP’s. It is denied that the Opposite Party have never informed the Complainants about this no payment or default of any premiums till the same was informed by the Opposite Party for the first time through it’s letter dated 09-09-2021 addressed by it to the Advocate of the Complainant. The OP’s states that the Gap intimation letters are being sent to the policy holder on regular basis. These are system generated “Gap Intimation” letters, which are posted in mass mail. The OP’s further states that intimations were sent by mass mail. Also seen from the annual status report, the Complainant’s mobile number was registered with the OP’s and the gap, lapse, default etc, messages have been received by the Complainant on his registered mobile. The OP’s further state that the OP’s are not under obligation to intimate the policy holder about receipt/non-receipt of premium. It is submitted that the SSS Mode of premium payment is opted by the policy holder himself and the policy bond provided to the policy holder has all the information about amount of premium and its due dates.

29. Further as per authorization/instructions from the policy holder, his employer deduct the premium and remit the same to LIC on his behalf and policy holder was getting information about deduction /non-deduction of the premium through salary slips. Further, the policy holder and the LIC, through the terms and condition of the policy, it is no-where, the responsibility of LIC to intimate the policy holder about receipt/non-receipt of the premium from employer. In fact the policy holder was regularly getting knowledge of the deduction of the premium through his salary slips and in case of non-deduction/non-remittance of premium by employer, he has undertaken to remit the same directly to LIC. And as such, LIC is under no obligation, contractual or otherwise to intimate or give notice to the policy holder about non-receipt of premium in any month or in the event after the policy has lapsed.

30.  It is denied that the Opposite party having continued to receive insurance premium amount even after the death of the daughter of the Complainants, at this belated stage after the period of two years time is over are estopped from raising such ground of non-payment of insurance premium for the month of July 2017 to October 2017 solely with the object to repudiate the legitimate claim of the Complainants. The OP’s state that the Gaps Intimation are mass mail which are computer generated and sent to the Policy holders on regular basis.

31. It is the contention of the OP’s that life insurance policy is a personal financial instruments and it is choice of the policy holder whether to keep the policy in-force by regularly paying the premiums or to discontinue the payment of premiums. Insurance company cannot insist/make compulsion to the policy holder to make payments of premium. However it is submitted that OP’s have sent lapsed, gap and default intimations which are computer generated and sent by mass mail. In the instant case, the policy holder has himself opted the mode of payment through SSS scheme, and he was regularly getting information about the deduction of premium through salary slips. It is further submitted that upon the Complainant informing the OP’s about the death of his daughter, the premiums were stopped and the last premium adjusted was 01/2020 (January 2020), the policy holder expired on 11/02/2020  and the remaining premiums collected for refund and the discharge voucher was requested from the Complainant. The policy had commenced on May 2017, the premiums received were adjusted for w.e.f May, 2017 till January 2020. The OP’s did not receive the premium for the period 07/2017 to 10/2017. As per Corporate guidelines if there is a gap in payment of premium under SSS policies, the last premium paid position is shifted back at the time of surrender/Maturity/Death Claim. Though the premium were received and adjusted upto Jan’2020, due to gap in payment of premium, the last premium paid position under policy was shifted back to September, 2019. Hence the said policy was in a lapsed condition at the time of the death of the policy holder.

32.  As per the policy condition to acquire the paid up value, the policy is required to be in force for at least 3 years. In the present case the policy did not run for 3 years and therefore nothing is payable. It is denied by the OP’s that in fact vide letter dated 12/10/2021 for the first time Manager (Claims), the Branch Office Panaji of LIC informed the Complainants that the policy was in lapsed condition on account of default of the premium due for the month of 07/2017 to 10/2017. It is further denied that till the letter dated 12/10/2021, the Opposite Party have never informed  the Complainants about the non-payment of insurance premium for the month of July 2017 till October, 2017.

33. The OP’s state that is it not for the LIC to deduct the premium but the employer to do the same and or it is the duty of the policy holder to ensure that the premium is timely paid  and the policy is kept in force.

34. It is denied by the OP’s that if at all there was default of premium amount then the Opposite Party ought to have either discontinued the policy or should have first deducted from the salary of the Complainants the amount of the premiums due in respect of these months of July 2017 till October, 2017 and also further denied that the Opposite Party continued deducting the premium amount from the salary of the Complainant No. 1 shows that the aforesaid policy was very much alive and not in a lapsed condition.

35. The OP’s states that the LIC does not stop remittance of the premium as the policy are revived upon payment of the premium. However in the present case, the policy cannot be revived upon the death of the Policy Holder. The OP’s submit that the OP’s accepted the premium as the policy holder could pay the gap premium and keep the policy in force during her life time.

36.  The OP’s states that the deductions of premium are done by the employer and remitted to LIC. Upon receiving the invoice by the employer, the employer had to deduct and remit the premium or the policy holder. It is denied by the Opposite parties that the Complainants have therefore every legitimate expectation and right to believe that the policy was alive and very much in force. As the policy was in lapsed condition, the question of availing the benefits does not arise.

37.  The contention of the OP’s is that as per the conditions of the policy, as the policy is in lapsed condition and there is no question of paying the claim amount since policy has to be in force for a minimum period of 3 years to enable the OP’s to make a payment.  The Complainant is not entitled for any claim in view of the statements stated above.

38. The OP’s denied that the Complainants have undergone huge suffering, harassment, mental agony, pain and trauma due to arbitrary rejection of claim by the Opposite Party. The Opposite Parties reiterate that as the policy was in a lapsed condition, the claim cannot be honoured and also as per the terms and conditions of the policy, the policy needs to be in force for a minimum period of 3 years to atleast acquire the paid up value.

39. The OP’s states that there is no deficiency in service on the part of the OP’s in the present case and the averments made by the Complainant are false. The OP’s have clearly informed the complainant that as the policy has lapsed, due to non payment of premium, the claim cannot be honoured. The OP’s state that if the policy had run for a minimum of three years, and subsequently premium not paid, then LIC would have paid death paid up sum assured as per Part D Clause 2(Paragraph 1 and 2) of the policy conditions.

40.  The Advocate for the Complainant in the written arguments on the issue arising out of  “Salary Saving Scheme” have relied on the Judgement passed by the Hon’ble Supreme Court in the case of “ Chairman, Life Insurance Corporation and Others Versus Rajiv Kumar Bhasker (Reported in 2005(6) SCC 188. The Hon’ble Supreme Court has held in this case “ The Corporation cannot make the employee suffer the consequences emanating from the default on the part of the employer. If for some reasons, the employer is unable to pay the salary to the employees, as for example, it’s financial constraints, the employee may be held to have a legitimate expectation to the effect that his employer would at least comply with it’s solemn obligations. Such obligations having been undertaken to be performed by the employer at the behest of the Corporation , as it’s agent having the implied authority therefore, the Corporation cannot be permitted to take advantage of its own wrong as also the wrong of its agent…”

It further states that

“……having induced the employer to act as a model employer and discharge its social obligation vis-à-vis its employees it may not be permissible for LIC, which is a part of the “State” within the meaning of Article 12 of the Constitution to contend at this belated stage that in the event of default on the part of the employer, it may get itself discharged from its contractual obligations in such a cavalier manner”.

41.  The Advocate for the Opposite Parties in the written argument stated that the Complainant has consented and accorded for imposition of Clause 22 (A) to the policy and the copy of said Clause No. 22 is duly signed by the policy holder. That the policy was in lapsed conditions as premiums have not been received for a minimum period of 3 years and due to 4 SSS gaps i.e. default of premium payment due from 07/2017 to 10/2017. Also stated about the Part D : Conditions related to servicing aspects Clause 2 (Paragraph 1 and 2) – Non-forfeiture Clause/Regulations. That the Complainant is well aware that his premium amount is not getting deducted and remitted with LIC and as per the undertaking and obligations under the policy contract, he is entirely responsible for making the direct payment to the OP’s and the policy bond provided to the policy holder has all the information about amount of premium and its due dates. That as per authorization/instructions from the policy holder, his employer deduct the premium and remit the same to LIC on his behalf and policy holder was getting information about deduction /non-deduction of the premium through salary slips and if so there was a default on part of the employer, the employer could have been made a party to the Complaint by the Complainants and that in the present complaint, the employer is not made a party thus it is seen that the Complaint is bad in law for nonjoinder of necessary party. The Advocate for the Opposite Parties during the Oral Arguments relied upon the Order of the State Commission Disputes Redressal Commission, Maharashtra, Mumbai delivered on 6^th December, 2022 (as per Hon’ble Justice Shri. S.P. Tavade) in the Appeal No. A/17/1251 which clearly emphasized on Clause No. 22(A) mentioned in the policy.

42. Upon perusal of the Complaint, documents annexed, and that upon the arguments advanced on admission of the Complaint, the OP-1, OP-2, OP-3 were duly notified vide the issuance of the notice(s) by Regd. AD along with the copy of Complaint and list of documents annexed. An opportunity for filing of Written Version to contest the case was provided to all the Opposite Parties. Accordingly the Advocate for the OP’s filed the Written Version collectively.  Adv. for the Complainant filed the Affidavit-in-Evidence and subsequently the Affidavit–in-Evidence was filed by Ms. Sheela Ana Gracias, Manager (Legal & Housing Property), LIC representative of the Opposite Parties. Thereafter the written arguments were filed by the Adv. for the Complainant and the Adv. of the Opposite Parties. The final oral arguments were advanced by the Ld. Adv. for the Complainant and the Adv. for the Opposite Parties before this Honourable Commission on 23-03-2023.

43. We have heard the Oral Arguments advanced by the Ld. Adv. S. Dhargalkar for the Complainant and Ld. Adv. S. Priolkar for the OP-1, OP-2 and OP-3(Opposite Parties).

44.  We have perused the Complaint, Written version of the OP’s, the Affidavit-in-Evidence of the Complainant and the Opposite Parties and also taken into consideration the advanced Oral and Written Arguments by the Ld. Advocates for the Complainant and the Opposite Parties upon which the following points arise for our determination and consideration :

1. Whether there is deficiency of insurance services on part of the Opposite Parties and was the rejection of the claim arbitrary?

Ans. Negative

2. Whether the Complainants are entitled to compensation/reliefs(s)?

Ans. Negative

Our answer to the same is in Negative for the following reasons

Reason on Point (a)

Upon perusal of the complaint and annexed documentary evidences it can be observed in the present complaint that the Complainants have taken a policy for a sum assured of Rs. 2,00,000/- with a monthly premium of Rs. 964/- and the amount of the premium in respect of this policy was to be deducted from the Salary of Complainant No. 1 as the policy was taken under Salary Savings Scheme (SSS). The Date of Commencement of Policy was 28-05-2017 and the date of commencement of risk was 27-05-2017 as per the averments of the Complainants and the Opposite Parties.

It is also observed that the Complainants child Late Miss Janvi Housidas Mainikar date of birth is 26-12-2011 (as per the birth certificate) and the policy was taken in the child’s name by her parent (Complainant No. 1) on 28-05-2017 (Date of Commencement of Policy). The child expired on 11-02-2020 (as per death certificate). The policy term of three years ends on approximately around 27-05-2020. As the child expired on 11-02-2020 which is before the expiry of policy term of three years and also that as per the contentions of the OP’s the policy had commenced on May 2017, the premiums received were adjusted for w.e.f May, 2017 till January 2020. The OP’s did not receive the premium for the period 07/2017 to 10/2017 and as per Corporate guidelines if there is a gap in payment of premium under SSS policies, the last premium paid position is shifted back at the time of surrender/Maturity/Death Claim. Though the premium were received and adjusted upto Jan’2020, due to gap in payment of premium, the last premium paid position under policy was shifted back to September, 2019. Hence the said policy was in a lapsed condition at the time of the death of the policy holder. As per the Opposite Parties, the terms and conditions of the policy taken by the Complainants, as the policy is in lapsed condition and there is no question of paying the claim amount since policy has to be in force for a minimum period of 3 years to enable the OP’s to make a payment and further that the policy needs to be in force for a minimum period of 3 years to atleast acquire the paid up value.

It is also the contention of the OP’s that the LIC does not stop remittance of the premium as the policy is revived upon payment of the premium. However in the present case, the policy cannot be revived upon the death of the Policy Holder. The OP’s also submitted that they accepted the premium as the policy holder could pay the gap premium and keep the policy in force during her life time.

The OP’s state that if the policy had run for a minimum of three years, and subsequently premium not paid, then LIC would have paid death paid up sum assured as per Part D Clause 2(Paragraph 1 and 2) of the policy conditions. It is observed from the copy of the Children’s Money Back Plan Policy at Sr. No. 1 in the list of Documents provided by the Complainants that the “Annexure of Plan 832, Part D : Conditions Related to Servicing Aspects, Clause 2 (Para 1 and 2) 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 this policy shall cease after the expiry of grace period from the date of first unpaid premium and nothing shall be payable. However, if after atleast three full year’s premiums have been paid in respect of this policy and any subsequent premiums be not duly paid, this policy shall not be wholly void, but shall subsist as a paid-up policy. The sum assured on Death under paid up policy shall be reduced to such a sum called “Death Paid-up Sum Assured” and shall be equal to (Number of Premiums Paid/Total Number of Premiums payable) x Sum Assured on Death)”.

However it is also the contention of the OP’s that they have sent lapsed, gap and default intimations which are computer generated and sent by mass mail. And that in the instant case, the OP’s state that the policy holder has himself opted the mode of payment through SSS scheme, and he was regularly getting information about the deduction of premium through salary slips and also submitted that upon the Complainant informing the OP’s about the death of his daughter, the premiums were stopped and the last premium adjusted was 01/2020 (January 2020), the policy holder expired on 11/02/2020 and the remaining premiums collected to be refunded and the discharge voucher was requested from the Complainant.

The OP’s has relied upon the said proposal form, policy bond authorization and Policy Clause No. 22(A). It is also the contention of the OP’s that the Complainant has further consented and accorded for imposition of Clause 22 (A) to the policy. That in the said Clause No. 22 (A), the life assured has accepted responsibility to ensure that the instalments premium is deducted from his salary and remitted to Corporation and failing that premium is paid directly to the Corporation within days of grace period at increased rate. It is further provided in the said Clause No. 22 and accepted by the policy holder that the due date for premium payment shall be 20^th day of each month and that the copy of said Clause No. 22 is duly signed by the policy holder. It is observed from the Proposal Form (Proposal for Insurance on own life) and Policy Bond Authorization and Policy Clause No. 22(A)-(Proposal for insurance on another life ) For Attention of Proposer/Policy Holder (Kindly ensure deduction of Premiums from Salary to avoid lapsation of the Policy)- S.S.Scheme Authorization(Rev.) which states as “ I have taken a Life Insurance Policy with the Life Insurance Corporation of India and I desire to pay premium by deduction from the Salary every month. I request you to kindly arrange to deduct and pay to the Life Insurance Corporation of India ………..Divisional Office/Branch Office ……………….. the premium amount stated below from my salary due for the month given below and also to continue to deduct and pay such amounts every month till further advice.

I agree that your liability will be confined to making arrangements of deduction of premium from my salary whenever this can be made and remitting the amount to Corporation in time. I shall be entirely responsible for any consequences on account of non-payment of premium on my policy for reasons beyond your control, such as in the event of my proceeding on leave without pay, or my drawing advance salary without deduction of premium, of my cancelling the authorisation for deduction of premium or my leaving your employment. In any such case or in case of withdrawal of the Salary Savings Scheme with you by the Life Insurance Corporation of India for any reason whatsoever, it will be my responsibility to make arrangements for remittance of the premium directly to the Corporation at the increased rate specified in the policy to prevent my policy from going into a lapsed condition” wherein it is observed that the Complainant No. 1 have agreed and duly signed. 

That under Policy Clause No. 22 (A)                        Annexure -IIA

“ …………………………..”  wherein the signature of the policy Holder Mr. Housidas Surya Mainikar (Complainant No. 1) and the signature of the witness (Mr. Pritam M. Kamat) is obtained and that the policy holder has given his consent for the imposition of the Clause No. 22 (A) on the policy.

Policy Clause No. 22  (A) which states as under :-

1. This Policy having been issued under the Corporation’s Salary Savings Scheme, it is hereby declared that the instalment premium shall be payable at the rate shown in the Schedule of the Policy so long only as the life assured/ Proposer continues to be an employee of his/her present employer whose name is stated in the proposal, and the premiums are collected by the said employer out of the Salary of the life assured/proposer as authorized by him/her and remitted to the Corporation without any charge. It shall be the responsibility of the life assured/proposer to ensure that the instalment premium is deducted from his/her salary and remitted to the Corporation or failing that premium is paid directly to the Corporation within days of grace at increased rates.

2. In the event of the life assured/proposer leaving the employment of the said employer or the premiums ceasing to be so collected or the collected premium not remitted to the Corporation, the life assured/proposer must intimate the fact to the Corporation and in the event of the Salary Savings Scheme being withdrawn from the said employer, the Corporation shall intimate the fact to the life assured/proposer and all premiums falling due on and after the date of his/her leaving the employment of the said employer or cessation of collection of premiums or remittance thereof in the manner as aforesaid or withdrawal of the Salary Savings Scheme, as the case may be , shall stand increased by the imposition of the additional charge for monthly payment that has been waived under the Salary Savings Scheme at five percent of the premium exclusive of any premium charged for Accident Benefit and any other extra premium charged.

3. During the period in which the premium is remitted to the Corporation through the employer, the instalment premium will be deemed to fall due on the 20^th day of each month instead of the due date within mentioned.

4. It is also declared that this policy shall stand lapsed if the due premium is not received by the Corporation with 15 days of the due date as mentioned above and the Life assured/Proposer, being primarily responsible to keep the policy in force, shall remit the defaulted premium dues together with the additional charges applicable for monthly payment and with interest, if any, at the prevailing rates charged by the Corporation for the belated payment of premiums. In the event of the premium dues not remitted to the Corporation either by the employer or by the Life Assured /Proposer, and the policy becoming lapsed, the liability of the Corporation under the within mentioned policy will be restricted to the extent of the premiums actually received by it and to the provisions of the conditions and privileges governing the policy and no further relief for any claim shall lie with the Corporation.

I hereby give my consent for the imposition of the above Clause No. 22 (A) on the Policy.”

The above S.S.Scheme Authorization(Rev.) and Clause 22(A) clearly states that it is the Life Assured/ Proposer’s responsibility to ensure that the premium is paid and the policy is kept in force. The OP’s also stated that life insurance policy is a personal financial instruments and it is choice of the policy holder whether to keep the policy in-force by regularly paying the premiums or to discontinue the payment of premiums.

The OP’s have relied on the Order delivered on 6^th December, 2022 ( as per Hon’ble Justice Shri S,P. Tavade) in Appeal No. A/17/1251 before the State Consumer Redressal Commission, Maharahtra, Mumbai which clearly emphasized on Clause No. 22(A) where the Complainant No. 1 has given his consent for the imposition of the Clause No. 22 (A) on the policy.

As the policy was in lapsed condition, the question of availing the benefits does not arise. And in view of the terms and conditions of the policy, facts averred by the Complainant and the OP’s, it is observed that the premium under the said Policy bearing No. 931614929 were not paid for a minimum period of 3 years and there was a gap of 4 SSS i.e. default of premium payment due from 07/2017 to 10/2017 and hence the policy was in lapsed condition and it is agreed by the Complainant No. 1 in the S. S. Scheme Authorization(Rev.) that he shall be entirely responsible for any consequences on account of non-payment of premium on his policy for reasons beyond his control under certain eventualities as mentioned and also in the Policy Clause No. 22 (A)  it is consented by the Complainant No. 1 that “......It shall be the responsibility of the life assured/proposer to ensure that the instalment premium is deducted from his/her salary and remitted to the Corporation or failing that premium is paid directly to the Corporation within days of grace at increased rates.” And thus it clearly shows that the decision of rejection of claim has been in accordance with the provisions/clauses/terms and conditions of the policy and thus there is no deficiency of insurance services by the OP’s and neither the rejection of claim is arbitrary.

Reason on Point (b)

The contention of the OP’s is that as per the conditions of the policy, as the policy is in lapsed condition and there is no question of paying the claim amount since policy has to be in force for a minimum period of 3 years to enable the OP’s to make a payment.  The Complainant is not entitled for any claim in view of the statements stated above. The OP’s denied that the Complainants have undergone huge suffering, harassment, mental agony, pain and trauma due to arbitrary rejection of claim by the Opposite Party. It is observed from the contention of the Opposite Parties that as the policy was in a lapsed condition, the claim cannot be honoured and also as per the terms and conditions of the policy, the policy needs to be in force for minimum periods of 3 years to atleast acquire the paid up value.

That in view of the reasoning to point (a), and in the light of all the documentary evidences relied upon by the Complainants and the Opposite Parties, it clearly establishes that there is no deficiency of insurance services and the rejection of claim is not arbitrary and this by itself negates the consideration at point (b) and thus the Complainants are not entitled to compensation/reliefs as prayed.

In the light of the perused complaint, Written Version along with annexed documents with documentary evidences to substantiate the averred facts, Affidavit-in-Evidence, Written and advanced Oral Arguments, the Order relied upon by the Opposite Parties, from the above discussions and reasoning, it is observed that the Opposite Parties have not made any breach of terms and conditions of the insurance policy and thus there is no deficiency of insurance services and the rejection of claim is not arbitrary. And in view of the above, we pass the following order :-

ORDER

The Complaint is dismissed with no order as to costs.

Pronounced in Open Court.

Proceedings  closed.

Ms. Bela N. Naik

                                                 President

                                                                                                                               Mr. Auroliano De Oliveira

              Member

                                                                                                     Ms. Rejitha Rajan       

Member