Chandigarh

DF-II

CC/725/2018

Shivam Jindal - Complainant(s)

Versus

Life Insurance Corporation, Pension & Group Scheme (P&SG) - Opp.Party(s)

Harsh Goyal Adv.

06 Jun 2019

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

======

Consumer Complaint  No	:	725 of 2018
Date  of  Institution	:	20.12.2018
Date   of   Decision	:	06.06.2019

 

 

 

 

Shivam Jindal aged about 21 year’s son of Late Sh.Keshav Kumar Jindal, resident of Tagore Street, Balwant Colony, Malerkotla, District Sangrur.           

             ……..Complainant

 

Versus

 

1]  Life Insurance Corporation, Pension & Group Scheme (P&SG), Unit, Jeevan Parkash Building, Sector 17-B, Chandigarh through its Manager.

 

2]  Life Insurance Corporation, Satta Chowk, Malerkotla District Sangrur through its Branch Manager/Authorised Representative.

 

3]  Executive Director (P&GS), Life Insurance Corporation, Agency Section, 3^rd Floor, Central office, “Yogaksgema”, Jeevan Bima Marg, Mumbai 400021

 

………. Opposite Parties

 

BEFORE:  SH.RAJAN DEWAN        PRESIDENT

SMT.PRITI MALHOTRA    MEMBER

         SH.RAVINDER SINGH     MEMBER

 

 

Argued By:       Sh.Harsh Goyal, Adv. for complainant.

Sh.Piyush Sharma, Adv. for OPs.

 

 

PER PRITI MALHOTRA, MEMBER

 

                                The case of the complainant in brief is that his father, an LIC Agent of OPs at Malerkotla Branch from 1987 to 7.11.2016, was covered under Group Insurance for Confirmed Tied Agents of the Corporation w.e.f 1.9.2007 and had paid the due premium of Rs.1200/- and complainant is nominee under said scheme.  Thereafter, the coverage under the said Insurance was enhanced from Rs.5 lacs to Rs.10 lacs and the father of complainant opted the same and the got the policy/insurance renewed from 1.9.2015 at Malerkotla Branch itself.  It is stated that the father of the complainant has given permission to the branch official to deduct the premium for the said insurance in advance from his commission.

         It is stated that the father of the complainant expired on 7.11.2016 and thereafter, the complainant lodged death claim with OPs, which they rejected vide letter dated 23.10.2018 stating that neither the name of his father appears in the date for the year 2016-17 nor have they received premium (Ann.C-2).  Then the complainant sent legal notice to the Opposite Parties, whereupon Opposite Party NO.1 replied vide letter dated 5.12.2018 stating that due to insufficient commission earned by the agent in 9/2016 and onwards, the premium amount could not be deducted.  However, the Opposite Parties vide letter dated 30.11.2018 stated that the GTI premium for the last two years was deducted on 30.11.2015 & 19.8.2014.  It is submitted that from the statement of earnings (Ann.C-7) it is clear that the deceased father of the complainant had received appropriate commission in the year 2016, but the Officials of OPs failed to deduct the premium therefrom on time.  Hence, this complaint has been filed alleging the above act & conduct of the Opposite Parties as gross deficiency in service and unfair trade practice.

 

2]       The Opposite Parties have filed joint reply and while admitting the factual matrix of the case, stated that  as per Circular dated 16.8.2007 on the matter in question (Ann.R-1), it is specifically mentioned that the recovery of annual premium is to be made from the August Commission Bill generated/payable in the month of September. It is stated that from the Circular (Ann.R-1) it is clear that the premium has to be deducted in month of September only, however, the commission of deceased agent was not sufficient even in the following months to recover the premium.  It is also stated that from the account statement Ann.C-7, it is clear that on 17.9.2016 only Rs.3151.55 commission was available for the deceased father of the complainant, therefore, the premium due could not be deducted due to insufficient commission available in that particular month and scheme could not be renewed and hence at the time of death of father of complainant, he was not covered by said scheme and the claim was rightly rejected on 23.10.2018.  Denying other allegation, the OPs have prayed for dismissal of the complaint. 

 

3]       Replication has also been filed by the complainant thereby reiterating the assertions as made in the complaint and controverting that of the Opposite Parties made in their reply.  

 

4]      Parties led evidence in support of their contentions.

 

5]       We have heard the ld.Counsel for the parties and have also perused the entire record.

 

6]       Pertinent to mention that the present complaint has been filed by Sh.Shivam Jindal, who is named as nomine in the policy obtained by his father Sh.Keshav Kumar Jindal (an employee/agent of OPs – now deceased).  Facts that are admitted and well proved on record states that the father of the complainant worked with OPs as an agent at Malerkotla Branch to earn his livelihood by way of self-employment by running agency under Code No.0020136 and worked since 1987 to 7.11.2016 i.e. approximately for 29 years of his life.  Further admitted that the OPs launched a scheme of Group Insurance for Confirmed Tied Agents of the OP Corporation with effect from 1.9.2007 and complainant’s father opted for the said insurance cover in category for more than 10 years and as per the scheme the premium was to be deducted by the concerned branch from the commission account of the agent; for which the complainant father also gave his consent.  It is further admitted and well proved on record that vide letter dated 14.9.2015, the existing coverage under the said Group Insurance Scheme, on account of greater uncertainty, needs of the family, longevity and various requests, was enhanced from the coverage of Rs.5 lacs to Rs.10 lacs with enhanced premium amount of Rs.1200/- to Rs.3420/- annually.  The complainant’s father again consented to pay the enhanced premium and opted to continue with the enhanced coverage.  It is very well admitted and proved on record that the branch office of policyholder i.e. Opposite Party No.2 regularly deducted the premium amount every year since 2007 from the commission earned by the father of the complainant i.e. from the commission account of the complainant’s father.

 

7]       After discussing the admitted/proved facts of the case, now it is required to shift upon the moot point involved in the present complaint.  The dispute erupts between the parties when the claim lodged by the complainant being nominee under the insurance policy availed by his father Sh.Keshav Kumar Jindal, after his untimely death on 7.11.2016, was declined by the OPs. 

 

8]       As per record (Ann.C-2), the claim raised in the year 2016 under the policy in question was ultimately rejected on 23.10.2018 with observations that “as per our record the name of deceased does not appear in the date for the year 2016-2017 and we have not received the premium in respect of Sh.Keshav Kumar Jindal. Hence we are unable to settle the claim.”  

 

9]       On further enquiry and in response to the legal notice sent on 20.11.2018 (Annexure C-4), the OPs vide letter dated 5.12.2018 (Ann.C-5), clarified to the following effects:-

“as per our Branch Office Malerkotla annual premium of Rs.3450/- was due on Annual Renewal date in 09/2016 under Group Insurance Scheme which is a One Year renewable group Term Insurance (OYRGTA), but due to insufficient commission earned by the agent in the month of 09/2016 & onwards i.e. 9/2016, 10/2016 & 11/2016, the premium amount could not be deducted in respect to the above agent, by the branch office Malerkotla.  As no premium was received by P & GS Unit, Chandigarh in respect to the above agent, hence no claim is payable in respect to the above mentioned agent.”

 

10]      In continuation to the above clarification, it has been submitted on behalf of the OPs that as per Circular No.Mktg./ZD/16/2007-08, dated 16.8.2007, it is specifically mentioned that the recovery of annual premium is to be made from August Commission Bill generated/payable in the month of September. It is further submitted that as per the Account Statement of the deceased policyholder on 17.9.2016 only Rs.3151.55 commission was available, therefore, the  premium could not be deducted due to insufficient commission available in that particular month and scheme/policy could not be renewed, hence at the time of death of policyholder i.e. the father of complainant, was not covered by the said scheme as no premium for said insurance cover could be deducted and risk was not covered at the time of death of deceased policyholder. 

 

11]      Giving thoughtful consideration to the admitted facts & submissions made on behalf of the Opposite Parties along with evidence produced by both the parties, we are of the considered opinion that the claim of the complainant has wrongly been rejected by the OPs vide letter dated 23.10.2018 (Ann.C-2) with reasons recorded as under:-

“This has reference to your letter dt. 16.10.2018 regarding death claim of Sh.Keshav Kumar Jindal, we have to inform you that “as per our record the name of deceased does not appear in the date for the year 2016-2017 and we have not received the premium in respect of Sh.Keshav Kumar Jindal. Hence we are unable to settle the claim.” 

 

12]      Annexure R-1, dated 16.8.2007 (Group Insurance Scheme for Agents of the Corporation) reveals as under:-

“The scheme is compulsory for all the new agents who are eligible to join the scheme.  A one time option is available for all the existing eligible agents for jointing the scheme.  The existing eligible agent, who is not interested in joining this scheme, has to submit to his/her Branch on or before 31.08.2007, his option to opt out of the scheme.  Such agents who opt out of this scheme will not be allowed to join the scheme later. In case no communication is received by the concerned Branch Office till 31.08.2007, it will be construed that the agent concerned has consented to join the scheme.”

 

13]      In view of the above referred document, it is clear that the Policy – ‘Group Insurance Scheme’ for Agents of the Corporation, was compulsory for all the eligible agents with clear option given to opt out of the scheme under intimation only.  It is apt to mention here that in the present complaint, the father of the complainant i.e. agent of OPs (now deceased) very well opt for the said insurance scheme and not, at any point of time, exercised the option to quit or not to join or continue the said insurance scheme.  Rather it has been duly admitted & proved on record that the premium amount for the policy in question was duly deducted by the OPs from commission account of complainant’s father since 2007 till 2015.  This reveals that the complainant’s father had fully intended to continue with the policy in question.  He had also opted to pay the enhanced premium of Rs.3214/- when vide letter dated 14.9.2015, the risk cover from existing cover of Rs.5 lacs was enhanced to Rs.10 lacs with enhancement of premium from Rs.1200/- to Rs.3420/-.  This clearly indicates that the insured policyholder (complainant’s father) was completely inclined to continue with the cover, who unfortunately expired on 7.11.2016. 

         It needs to be highlighted that the complainant’s father (deceased policyholder) was never intimated, at any point of time, by the Branch Office of OPs i.e. OP No.2 or OP Corporation/OP No.1 that the premium for the renewal of the policy in question for the period 2016-17 could not be deducted from his commission account for the alleged want of sufficient amount.  He was never intimated by the Branch Office of Opposite Party that in the month of August, he could not earn sufficient commission to pay the premium amount for the renewal of the policy in question, even till his death.

 

14]      The above lapse on the part of Opposite Parties of not intimating about the due premium amounts to grave deficiency in service, which further cost dearer to the nominee of the deceased policyholder, who till date is struggling hard to get his rightful claim under the policy in question. 

 

15]      It is so contended by the Opposite Parties that since the commission earned in the month of August, generated/payable in September, was to be deducted for further remitting of premium for renewal of the policy in question, but as the complainant’s father failed to earn the appropriate commission in the month of August, 2016 so the premium could not be deducted in the month of Sept.,2016 and also for the want of sufficient fund in the account of policyholder, the premium also could not be deducted in the subsequent months of October & November, 2016. This contention of the Opposite Parties is not sustainable in light of the account statement of the policy holder i.e. agent (now deceased) of the OPs.  The account statement of Savings Bank Account for Commission Agents Account No.419010100068925 (Keshav Kumar Jindal, policyholder), for the period from 01.04.2016 to 31.3.2017 reveals that since 1.7.2016 till his death, there was sufficient amount all the times in the Commission Account of the deceased policyholder for the payment of premium amounting to Rs.3420/- only.

 

16]      Needful to refer that the nominee (complainant) of the deceased policyholder obtained information from OPs under Right to Information Act, 2005 which was provided vide letter dated 30.11.2018 (Ann.C-6) revealing that the OPs do deduct the premium for the policy in question in the month of August, 2014 for the policy period year 2014-2015 and also deduct the premium in the month of November, 2015 for the policy period 2015-2016, whereas the Opposite Parties claimed that they were under obligation to deduct the annual premium from the agent’s commission earned in the month of August and bill generated/payable in the month of September.  The above disclosure under Right to Information Act discloses that the premium against the policy was deducted in August, 2014 for renewal period of 2014-2015 and also deducted the premium in the month of November, 2015 for the renewal policy period of 2015-2016, which establish that the Branch office of OPs had not opted for any hard & fast rule to deduct the premium only in the month of September, rather it got deducted in the month of August & also in the month of November of the year.  It has duly been reflected in the account statement of the deceased policyholder that he earned sufficient & good commission in the month of July, 2015, reflected in the bill generated in the month of August, 2015 and the OPs could have deducted the same and remitted the premium for the renewal of the policy in question in Aug., 2015, likewise as they deducted the premium on 19.8.2014 for the policy year 2014-2015    (Ann.C-6). Also the policyholder was having a sufficient amount in his commission account even in the month of August & September.

         The criteria adopted by the Opposite Parties for deduction of the premium seems to be arbitrary and reflects gross deficiency in service on their part.

 

17]      In our concerted view, the Opposite Parties not only failed to deduct and remit the premium, but also failed to inform the policyholder giving him due notice that the premium for the renewal of the policy for the year 2016-2017 is due for want of earning less commission in the month of August in his commission account.  In this backdrop of the case, the main question arises for consideration is whether the claim was still payable to the complainant even when the deduction of premium was not made by the employer from the commission of the policyholder and hence same could not be debited with the LIC/OP Corporation, as a result of which, the policy went in lapsed mode.  This question has duly been raised in Revision Petition No.3482 of 2017 – Life Insurance Corporation of India Vs. Seeta and Anr., decided on 13.2.2018, wherein it has categorically held as under:-

“8.    The matter has been considered in a catena of judgments passed by Hon'ble Supreme Court and this Commission from time to time.  In an order passed by this Commission on 11.03.2015 in Revision Petition No. 3016/2008, Smt. Meenakshi Popat Kambhoje & Ors. vs. Life Insurance Corporation of India & Anr., it was held by majority judgment that the LIC was liable to pay the claim to the claimant, even in the wake of the fact that the premium was not deducted by the employer in time and paid to the LIC.  In the said order, reliance was placed on the order passed by the Hon'ble Supreme Court in Chairman, LIC of India vs. Rajiv Kumar Bhaskar (supra), in which, it has been stated that the Salary Savings Scheme provides for a tripartite agreement between the employer, the employee and the LIC.  The employee could not approach the insurer directly and for all intents and purposes, the employer was acting as an agent of the LIC.  It has also been stated that the LIC shall have a duty to inform the employee, in case of non-payment of premium for any reason whatsoever.  It has been mentioned in the Manual for Policy Servicing Department no. 14 - Salary Savings Scheme issued by the LIC on 31.12.1990, in para 13.4 that the fault in payment of the premium should be intimated to the party. 

 

9.     It was further stated that although an undertaking was given by the insured that he shall be responsible for payment of premium, when the premium was not deducted by the employer, but a plain perusal of the salient features of the Salary Savings Scheme indicate that the employer as well as the LIC could not escape their responsibility of informing the insured, in case of default in the payment of premium.  In the order, Smt. Meenakshi Popat Kambhoje & Ors. vs. Life Insurance Corporation of India & Anr. (supra), reliance has also been placed on Section 50 of the Insurance Act, 1938, in which it has been mentioned that a notice shall be given to the policy-holder, informing him of the options available before the expiry of three months of the date on which, the premium in respect of the policy of life assured was payable.

 

18]           In the referred judgment, the Hon’ble National Commission, New Delhi has also taken into account the judgment passed by the Hon’ble Apex Court in Delhi Electric Supply Undertaking Vs. Basanti Devi & Anr., (1999) 8 SCC 229, wherein it has been held as follows:-

"It is, thus, the sole responsibility of the DESU to collect premium from all the employees and remit the same by means of one cheque. A reconciliation statement is also to be sent in the form prescribed by the Life Insurance Corporation. No individual premium notice is to be sent by the Life Insurance Corporation to any employee and no receipt is to be given to him for the premium received. It is the DESU which is to inform the Life Insurance Corporation of all the changes in the staff as soon as they occur, so also the fact when any employee leaves the service of the DESU. An employee is kept ignorant of the happenings between the Life Insurance Corporation and the DESU except that he is made aware of deduction of premium from his salary every month." 

 

            In the concluding paragraph of the referred judgment – LIC of India vs. Seeta & Anr. (supra) the Hon’ble National Commission, New Delhi has held as under:-

 

12.    Taking into account the judgments delivered by the Hon'ble Supreme Court in Chairman, LIC of India vs. Rajiv Kumar Bhaskar (supra) and Delhi Electric Supply Undertaking vs. Basanti Devi & Anr. (supra), it is made out that it was the primary duty of the employer to have deducted the premium out of the salary of the deceased insured.  In case, they were not able to do so, on account of non-payment of the salary, it was the duty of the employer as well as the LIC to provide appropriate information to the insured, who could have then taken the requisite steps to ensure that the policy did not lapse for non-payment of the premium.”

 

19]           Being duly guided by the law laid down by the Hon’ble Apex Court as well as Hon’ble National Commission, New Delhi, it has now clear enough that the employer and the insurance company cannot wriggle out from their liability to provide appropriate information to the insured, who could have then taken the requisite steps to ensure that the policy did not lapse for non-payment of the premium. The matter in question has squarely been covered by the judgments, as referred above, and without any iota of doubt, this complaint deserves to be allowed against the OPs as service provided by the OPs duly proved to be deficient and also reflects their indulgence into unfair trade practice.

 

20]        It is pertinent to mention that letter dated 29.9.2018 (Ann.C-9 annexed with rejoinder) has also been ignored by the Opposite Parties whereby the Branch Office of OPs at Malerkotla duly endorsed that the complainant’s father’s agency was in force at the time of his death and recommended to release his group insurance payment.  The relevant extract of the said letter is reproduced as under:-

“it is stated that Sh.Keshav Kumar Jindal, was an agent of Our branch  under agency Code No.00201316.  He expired on 07.11.2016. His agency was inforce at the time of his death.  His other payments i.e. gratuity, swavalamban fund & ……… have been released.  Kindly release his group insurance payment.”

 

21]      The information obtained under Right to Information Act, 2005 (Ann.C-6) reveals that it was incumbent on the part of Opposite Parties to settle the claim within 3 days, whereas in the present case, the OPs have taken approximately two years to decide the fate of the claim and that too had wrongly rejected the same, forcing the nominee(present complainant) to struggle hard not only to get the employment benefits but also the claim amount due under the policy in question. This act & conduct on the part of the Opposite Parties not only projects the highhandedness but also reflect their insensitivity in dealing with genuine claims. 

 

22]      From the above discussion & findings, as discussed in the preceding paragraphs, as well as law on the subject matter, we are of the opinion that the OPs No.1 to 3 remained deficient in their service and also indulged into unfair trade practice by illegally & wrongly rejecting the genuine claim of the complainant. Therefore, the present complainant is allowed against Opposite Parties NO.1 to 3 with following directions. 

a]  To pay the sum assured of Rs.10 lacs to the complainant, after deducting the premium amount of Rs.3420/- therefrom, along with interest @9% per annum from 7.12.2016 (after one month from the date of policyholder’s death) till payment;

b)  To pay an amount of Rs.25,000/- as compensation on account of deficient services coupled with unfair trade practice.  

 

c)  To pay litigation cost of Rs.8000/- to the complainant.

 

         This order shall be complied with by the Opposite Parties No.1 to 3 within a period of 30 days from the date of receipt of its copy, failing which they shall be liable to pay additional compensatory cost of Rs.20,000/- apart from the above relief.

 

         The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

6^th June, 2019                        

                                                                   Sd/-                       (RAJAN DEWAN)

PRESIDENT

         

 

                                                          Sd/-

                                                                     (PRITI MALHOTRA)

MEMBER

 

Sd/-

(RAVINDER SINGH)

MEMBER