BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
F.A. 1579/2008 against C.C. 8/2008, Dist. Forum, Kurnool
Between:
Branch Manager, LIC of India
H.No. 13-1-14,Behind Goudia Matham
Kothapet, Guntur *** Appellant/
O.P. No. 2
And
1. Vankuri Sitha Ramanjaneyulu
S/o. Late V. Venkata Subbaiah
H.No. 17/183, Kota, Nandyal
Kurnool Dist. *** Respondent/
Complainant.
2. The Chief Executive Officer
Zilla Parishad, Kurnool.
(2nd Respondent is not a necessary party
to the appeal) *** Respondent/
O.P. No. 1
Counsel for the Appellant: M/s. Srinivas Karra
Counsel for the Respondents: M/s. P. Vasudeva Reddy (R1).
CORAM:
HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.
&
SMT.M.SHREESHA, LADY MEMBER.
FRIDAY, THIS THE TWENTY FOURTH DAY OF SEPTEMBER TWO THOUSAND TEN
ORAL ORDER: (Per Hon’ble Sri Justice D. Appa Rao, President.)
***
1) This is an appeal preferred by R2 insurance company against the order of the Dist. Forum directing it to pay Rs. 1 lakh covered under the policy together with interest and costs.
2) The case of the complainant in brief is that he had obtained an insurance policy from the appellant for a sum of Rs. 1 lakh in the year 2004. As per instructions R1 the Chief Executive Officer, Zilla Parishad wherein he worked, deducted the premium of Rs. 21,903/- and sent it to the appellant. While so on 29.11.2006 the appellant sent a letter stating that the policy was lapsed due to non-payment of premium. On that he approached R1 which in turn informed that the premium for 2006 was sent in September, 2006. On his further enquiry he came to know that R1 did not send the premium in time due to which he suffered mental agony. He was entitled to Rs. 1 lakh under the policy, and Rs. 10,000/- towards mental agony and Rs. 5,000/- towards costs.
3) R1 Zilla Parishad resisted the case. It alleged that it had been remitting the premia consecutively for all the three years 2004, 2005 and 2006 after drawing from his GPF account by way of cheques or demand drafts. There was no delay on its part. In fact it will not make any payment on behalf of subscribers to the insurance company nor take steps to keep the policy alive. It will not take any responsibility for any loss caused due to delay in payment or insufficient payment of premia as per GPF Rule 19 and therefore it prayed for dismissal of the complaint with costs.
4) R2 insurance company equally resisted the case. While admitting issuance of policy for Rs. 1 lakh on receipt of premium of Rs. 21,903/- on 28.4.2004 it alleged that except the first premium it did not receive any subsequent premiums. Later it had received Rs. 21,903/- in September, 2006. By then two instalments of premium i.e., 28.4.2005 and 28.4.2006 were fallen due and the policy had been lapsed and part-payment could not be accepted and as such the said amount was returned to R1. R1 has failed to perform his part of obligation in sending the premia for which it would not be liable to pay the policy amount. The policy has not acquired any paid up value, and for such an entitlement. It had to be paid for a period of three years. It was ready to revive the policy provided the arrears are paid together with declaration of good health, medical report etc. The maturity date of the policy is 28.4.2009. It would pay the policy amount of Rs. 1 lakh with accrued bonus for five years if the policy is revived in April, 2008 but before the date of maturity. Therefore it prayed for dismissal of the complaint with costs.
5) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A4 marked while the opposite parties filed the affidavit evidence of their officers and got Exs. B1 to B12 marked.
6) The Dist. Forum after considering the evidence placed on record and in the light of decision of the Supreme Court in DESU Vs. Basanti Devi reported in AIR 2000 SC 43 opined that in the scheme itself the employer has been assigned the role of agent for collecting premium and remitting the amount to the LIC and when agency has been created R1 was acting as agent for collecting the insurance premium and the moment it was paid to R1 it deemed to have been paid to R2. Failure on the part of R1 in remitting the premium would not lead lapse of policy and therefore directed the entire amount of Rs. 1 lakh to be paid by R2 together with interest @ 12% p.a., besides costs of Rs. 10,000/- payable by R1.
7) Aggrieved by the said decision R2 insurance company preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. The ratio laid down by the Supreme Court in the above case has no application to the case on hand. That was a case where there was a tripartite agreement between the parties. When the policy was lapsed for non-payment of premium for 2005, 2006 by no stretch of imagination the Dist. Forum could direct the entire amount of Rs. 1 lakh be paid. The policy was neither matured nor was it a death claim. For the fault of R1 it cannot be directed to pay the amount and therefore prayed that the appeal be allowed.
8) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
9) It is an undisputed fact that the complainant had taken an insurance policy for his life for a sum of Rs. 1 lakh covering the period from 28.4.2004 on payment of yearly premium of Rs. 21,903/- and the date of maturity being 28.4.2009 vide Ex. A1 policy. It may also be stated that the complainant herein was an employee of Zilla Parishad requested the Chief Executive Officer, Zilla Parishad (R1) to make payment of premium from his GPF account evidenced under Ex. A2. The insurance company is not a party to the said understanding between the complainants and R1 his employer. Admittedly on payment of first premium on 28.4.2004 under Exs. B8 & B9 policy Ex. A1 was issued. It looks as though the premium amount for 2005 was not paid. When the premium amount of 2006 was paid in September, 2006 the insurance company informed that the policy was lapsed and that only on payment of amounts due it would be revived. Ex. B7 is the statement showing the LIC premium payment particulars pertaining to the complainant. It shows that for the amount payable for the year 2005 it was paid on 27.1.2006. The amount for April, 2006 was paid by way of demand draft on 18.4.2006 though sent belatedly. There is no proof that the DD that was sent to insurance company covers the premium amounts payable by the complainant both for 2005 and 2006.
R1 reiterated in its reply to the interrogatories served by the complainant for the question:
You are responsible to keep the policy alive on behalf of the subscriber?
Reply: As per GPF Rule 19(1) Government/Zilla Parishad will not make any payments on behalf of the subscriber to insurance companies or take steps to keep the policy alive.
For the question that Zilla Parishad had agreed to deduct the premium amount from complainant P.F. account No. 11470 and sending the same to LIC Guntur. It had given reply by stating ‘No’.
10) We may state herein that the Zilla Parishad basing on the letter issued by the complainant, as we have earlier pointed out sent the premium amount. In regard to rest of the years there is no proof that the premium amounts payable on behalf of the complainant was sent through DD or cheques as alleged by it in its written version. No evidence whatsoever was filed in order to substantiate the said fact. However, the fact remains that the premium for the years 2005 and 2006 were not sent to the insurance company and the policy was lapsed.
11) At this juncture it is relevant to quote GPF Rule 19(1) which reads as follows:
“The Government will not make any payments on behalf of subscriber to insurance companies nor take steps to keep a policy alive.”
12) Despite the fact that the insurance company informed that the policy was lapsed for non-receipt of amount, the complainant did not pay the amount nor sought for revival of the policy. On the other hand he imputes deficiency in service on the part of R1 and consequently claiming the entire amount of Rs. 1 lakh without even paying the remaining premia.
13) Ex. A1 policy makes it clear that the complainant would be entitled to the entire amount of Rs. 1 lakh on payment of premium till the date of maturity April, 2009. In other words the insurance company would pay the policy amount of Rs. 1 lakh with accrued bonus of five years on the date of maturity of the policy i.e., on 28.4.2009. We may also state herein that when the premia amounts were not paid by the complainant except for payment of initial one yearly premium, and without seeking revival of the policy he could not have claimed the amount. In fact the insurance company mentioned in its counter that it would be willing to revive the policy before 28.4.2009 provided the arrears were paid. The complainant did not choose to pay the amount and seek reimbursement of the amount from R1.
14) We may state that R1 could not prove that it had paid the premia amount except mentioning the cheque numbers and DD numbers. It was sending the amounts in regard to some other employees along with complainant evidenced from their own proceedings Exs. B8. Since the amount payable by the complainant is not included, it cannot be said that the amount payable in 2005 was paid by it. Undoubtedly the complainant is not entitled to the amount covered under the policy without payment of premiums. It is not a death claim if we may say so. He is alive. He would be entitled to the amount covered under
the policy only on payment of premiums, and when the policy was lapsed unless the same is revived he cannot claim the amount covered under the policy. The Dist. Forum has mis-appreciated the fact and relied the decision of the Supreme Court mentioned supra, which was a case where there was tripartite agreement between the employees, employer, and LIC. In fact there was no agreement between the employer and employee for sending the premium from out of his GPF accumulations. Insurance company is not a party to the said agreement even if there is one. However, in the interests of equity, and principles of natural justice, we are of the opinion that at least the amount that has been paid by the complainant could be returned without any interest and costs.
15) In the result the appeal is allowed modifying the order of the Dist. Forum directing the insurance company only to pay Rs. 21,903/- paid by the complainant. The direction to pay Rs. 1 lakh together with interest and costs of Rs. 10,000/- is set-aside. No costs in the appeal. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 24. 09. 2010.
*pnr
“UP LOAD – O.K.”
