1.      These two Revision Petitions have been filed under Section 21(b) of the Consumer Protection Act, 1986 (the “Act”) against order dated 28.02.2018, passed by Telangana State Consumer Disputes Redressal Commission, Hyderabad (‘State Commission’) in FA Nos.170 and 171 of 2014 respectively wherein the State Commission allowed the Appeals and set aside the District Consumer Disputes Redressal Forum, Warangal (“District Forum”) order in C.C. Nos.222 and 220 of 2012 dated 19.02.2014 wherein the Complaint No.220/ 2012 was allowed in part and Complaint no.222/2012 was dismissed.

2.      As per report of the Registry, there is 8 days’ delay in filing the Revision Petitions. In view of the facts and circumstances of the case, the delay is condoned.

3.      Since the facts and questions of law involved in both Revision Petitions are substantially similar, except for minor variations in dates and events, both the petitions are being disposed of by this common Order. For ease of reference, RP No.1803 of 2018 is considered as the lead case, and the facts below are drawn from CC No. 222/2012.

4. For convenience, the parties are referred to as placed in the original Complaint before the District Forum.                

5.      Brief facts of the case, as per the complainant, are that during the lifetime of the deceased, Nagaraju, obtained a life insurance policy from Opposite Party (OP) No.1 (Insurance Company) vide Policy No. 686904632 for sum assured of Rs. 1,00,000, commenced on 07.03.2007 under the Salary Savings Scheme. The complainant, who is the nominee under this policy, states that the deceased also obtained six other policies from OP-1. Nagaraju authorized OP-1 to deduct the monthly premiums for all policies from his salary through his employer. On 24.05.2008, Nagaraju passed away. After his death, in June 2008, the complainant approached OP-1, submitted the claim along with required forms, and requested the settlement of the death claim. However, the OPs delayed settlement, citing various excuses. In September 2009, she again approached OP-1, but this time, they refused to settle the claim unless she signed a prescribed form (Form No.3801), which she was allegedly forced to sign without being explained the contents. The claims for two policies were repudiated by OPs vide letter dated 31.03.2010. She then filed an application under the Right to Information (RTI) Act, 2005, to obtain documents related to the policies, but OP-2 did not furnish any information. Frustrated by the lack of response and action, she issued a legal notice on 30.05.2012, demanding settlement of the death claims. However, no reply was received. As per the complainant, the actions of OPs amount to deficiency in service. Therefore, she filed a complaint before the District Forum, seeking a direction to OP-1 to pay Rs.1,00,000 along with vested bonuses, interest at 9% p.a. from 01.11.2008 to 03.07.2012, compensation of Rs.10,000 and costs.

6.      OPs resisted the complaint, contending that the deceased life assured (DLA) did not pay the monthly premiums regularly. Due to non-payment of premium installments from June 2007 onwards, the policy lapsed without acquiring any Paid-Up or Surrender Value. Thus, the policy was not in force as of the date of the life assured's death on 24.05.2008. They further argued that she did not provide any proof showing that the premium was deducted from the salary of the deceased or remitted by him directly. A review of the DLA’s salary slip revealed that no deductions were made for insurance premiums.  Additionally, the OPs argued that, as per the terms and conditions of the policy, they were under no obligation to issue notices to the insured or the employer to remind them to pay the monthly premium or clear any arrears. It was the responsibility of the DLA to ensure that the premiums are deducted from his salary and regularly remitted to the insurance company. Since the employer failed to remit the premium, the policy lapsed, and therefore, the insurance company claimed there was no deficiency in service on their part. They prayed for the dismissal of the complaint.

7.      The District Forum in its Order dated 19.02.2014 dismissed the complaint and passed the relevant order as under:-

“11. For the foregoing reasons stated above, we are of the opinion that there is no deficiency of service on the part of the opposite parties, hence we hold this point in favour of the opposite parties.

12. Point N0.2: To What Relief:- As we held that there is no deficiency of service on the part of the opposite parties as stated supra, this point is also decided in favour of the opposite parties against the complainant.

13. In the result, this complaint is dismissed without costs.”

8.      Being aggrieved by the District Forum order, the Complainant filed Appeal No.170/2014 and the State Commission vide Order dated 18.02.2018 allowed the Appeal and set aside the Order of the District Forum dated 19.02.2014, with the following observation:

 “8.     Counsel for both sides present and were heard. The counsel for both parties filed their respective written arguments.

9. The point that arises for consideration is whether the impugned orders passezd by the District Forum suffer from any error or irregularity or whether they are liable to be set aside, modified or interfered with, in any manner? To what relief?

10.      It is not in dispute that the deceased life assured obtained the policy under salary savings scheme. It is also not in denial as to the death of the policy holder on 24.05.2008. After the death of the husband of the complainant, she made claim with the opposite parties but the opposite parties failed to settle the claim on the ground that the policy was in lapsed condition since June, 2007. On the other hand the opposite parties contended that due to non-payment installment premium from June 2007 the said policy had lapsed without acquiring paid up/surrender value and was not in force as on the date of death of life assured i.e., 24.05.2008. The complainant also not filed any proof of payment of monthly installment premium either by deduction from salary of deceased life assured or remittance of premiums directly by the deceased life assured. Further, the deceased had given authorization to his employer to deduct monthly premium from his salary and to remit the same to the opposite parties and also undertakes that it is his responsibility to see that the monthly premiums are regularly paid to the opposite parties by his employer and in support of their contention they filed Ex.B1. Though the opposite parties filed Ex.B1 but they failed to whisper a single word whether they informed the employer or the insured about non-receipt of premium due.

11.  The policy is stated to have been in lapsed condition for non payment of premia dues. Admittedly, the employer is not made as party to the proceedings and no objection is raised for the same by the opposite parties. There is an obligation on the pan of the opposite parties to inform the employer of the deceased life assured as to the falling of premia due towards the policy, which it failed to. Even it also failed to inform the deceased life assured. The death of the life assured occasioned on 24.05.2008. Had the opposite parties informed the employer of the deceased life assured, the employer could have responded immediately and could have remitted the premia amount.

12. There is a duty cast on the part of the opposite parties to inform the policy holder as to the lapsed condition of the policy or else the gaps in the payment of premium, which it failed to and the only reason assigned for this is that as per letter of authorization, there is a duty cast on the part of the life assured to make payment of premium regularly, admittedly, the opposite parties to prove this letter. It didn't took any pains in addressing a letter and informing the employer to remit the premium. The deceased life assured was under bonafide impression that the premium amount had been settled and paid.

13. In the above regard, we may state that the Hon'ble Supreme Court in Chairman, LIC of India Vs. Rajiv Kumar Bhasker reported in AIR 2005 SO 3087 considered the liability of the employer wherein it accepted the responsibility to collect premiums from its employees and remit the same their Lordships' opined

"In terms of the Scheme, significantly the employee for all transactions was required to contact his employer only. In view of our findings, the Corporation, thus, cannot be permitted to take a different stand so as to 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, its financial constraints, the employee may be held to have a legitimate expectation to the effect that his employer would at least comply with its solemn obligations. Such obligations having been undertaken to be performed by the employer at the behest of the Corporation as its agent having the implied authority therefor, the Corporation cannot be permitted to take advantage of its own wrong as also the wrong of its agent. In any event, the employer was obligated to inform the employee that for some reason, he is not in a position to perform his obligation whereupon the latter could have paid the premium directly to the corporation.”

14. Admittedly, in the case on hand, employer was not made as party and the opposite parties never raised any objection for the same, may be under an impression that employer is its agent. No information is sought for by the opposite parties from the employer as to what prevented the employer from not remitting the insurance premium for the gap period from 06/2007 onwards. We may state that for the fault of the employer, employee should not suffer. Equally the insurance company cannot be found fault with in view of the fact that it has informed and reminded the employer to send the premium amounts. However, the opposite parties neither addressed any letters nor informed the deceased life assured that the policy stood lapsed. In the circumstances, we hold that employer and the opposite parties are equally liable to pay the benefits that were accrued under the policies.

15. For the foregoing reasons we are of the opinion that the appeal is to be accepted. The impugned order is set aside and the opposite party no.1 is to be directed to pay to the Complainant a sum of Rs.1,00,000 along with interest @ 9% per annum from 01.11.2008 till the date of payment with costs. The complaint is to be dismissed against the opposite party no.2.

   In the result the appeal is allowed and the opposite party no. 1 is directed to pay Rs. 1,00,000 to the complainant along with vested bonus with interest @ 9% per annum from 01.11.2008 till the date of payment together with costs of Rs.5,000/-. Time for compliance four weeks. The complaint against the opposite party no.2 is dismissed without costs.”

9.      Being dissatisfied by the impugned Order dated 28.02.2019 passed by the State Commission, the Petitioner/ OP-1 filed the instant Revision Petitions.

10.    In his arguments, the learned Counsel for the Petitioner/OP-1 asserted that admittedly the premium was not paid on 06/2007 when it became due and even after the grace period of 30 days and the policy lapsed. In the meanwhile, the insured died. Thus, the policy was not in force when the insurer died. Therefore, there cannot be any liability for payment of the sum assured. He sought to allow the present Revision Petition and set aside the impugned order of the State Commission and uphold the District Forum order. He relied on the following judgments:

A. LIC of India vs. Seeta and Anr., 2018 2 CPR (NC) 172;

B. LIC of India vs. Smt Ranjana Misra & Ors 2009(2)CPR 143 (NC);

C. Chairman LIC & Ors. Vs Rajiv Kumar Bhaskar, 2005(5) Supreme Court 649.

11.    On the other hand, the Respondents did not appear despite service of notice.

12.    I have examined the pleadings and associated documents placed on record, including the orders of the learned District Forum and the State Commission and rendered thoughtful consideration to the arguments advanced by the learned counsel for the Petitioners.

13.    The central issue at hand is whether the Complainant is entitled to claim the sum assured under the said balance policies obtained by the DLA from the OPs?

14.    It is an admitted position that the insurance policy No. 686904632, initiated in March, 2007 was regularly paid until May 2007. However, the insured failed to pay the premium due on June 2007 and onwards, even after the 30 days grace period, resulting in the policy lapsing.  The life assured died on 24.05.2008. The relevant conditions and privileges of the policy in question are as under:

“…

2. Payment of premium: A grace period of one month but not less than 30 days is allowed where the mode of payment is yearly, half-yearly or quarterly and 15 days for monthly payments. If death occurs within this period, the life assured is covered for full sum assured. If death occurs within this period and before the payment of premium when due the policy will still be valid and the sum assured paid after deduction of the due premium as also unpaid premium/s falling due before the next anniversary of the policy. If the premium is not paid before the expiry of the days of grace, the policy lapses. If the policy has not lapsed and the claim is admitted in case of death under a policy where the mode of payment of premium is other than yearly, unpaid premiums. If any, falling due before the next policy anniversary shall be deducted from the claim amount.

3. Revival of Discontinued Policies: If the policy has lapsed, it may be revived during the life time of the Life Assured, but before the end of the premium paying term and within a period of 5 years from the date of the first unpaid premium on submission of proof of continued insurability to the satisfaction of the corporation and the payment of all the arrears of premium together with interest at such rate as may be prevailing at the time of the payment. The corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the Lite Assured.

4. Non-Forfeiture Regulations: If, after at least three full year's premiums have been paid in respect of this policy, any subsequent premium be not duly paid, this policy shall not be wholly void, but the Sum Assured by it shall be reduced to such a sum (paid up value) as shall bear the same ratio to the full Sum Assured as the number of premiums actually paid shall bear to the total number originally stipulated for in the policy, provided such reduced sum be not less than Rs.250/-. The Policy so reduced shall thereafter be free from all liability tor payment of the within-mentioned premium. It shall not be entitled to participate in future profits, but existing vested bonus additions, if any will remain attached to the reduced paid up policy.

Notwithstanding what is above stated, if after at least three full year's premiums have been paid in respect of this policy, any subsequent premiums be not duly paid, in the event of the death of the Life Assured within six months from the due date of the first unpaid premium, the Policy moneys will be paid as if the policy had remained in full force after deduction of (a) the premium or premiums unpaid with interest thereon to the date of death on the same terms as for revival of the Policy during such period and (b) the unpaid premium falling due before the next anniversary of the Policy.

Notwithstanding what is above stated if after at least five full years premiums have been paid in respect of this policy any subsequent premiums be not duly paid, in the event of the death of the Life Assured within six months from the due date of the first unpaid premium, the Policy moneys will be paid as if the policy had remained in full force after deduction of, (a) the premium or premiums unpaid with interest thereon to the date of death on the same terms as for revival of the Policy during such period, and (b) the unpaid premiums due before the next anniversary of the Policy.

5. Forfeiture in certain events : In case the premiums shall not be duly paid in case any condition herein contained or endorsed hereon shall be contravened or in case it is found that any untrue or incorrect statement is contained in the proposal, personal statement, declaration and connected documents or any material information is withheld, then and in every such case but subject to the provisions of Section 45 of the Insurance Act. 1938, wherever applicable, this policy shall be void and all claims to any benefit in virtue hereof shall cease and determine and all moneys that have been paid in consequence hereof shall belong to the Corporation, excepting always in so far as relief is provided in terms of the Privileges herein contained or may be lawfully granted by the Corporation.

…”

16.    The Hon’ble Supreme Court in the case of Life Insurance Corporation of India and Anr. Vs. Sunita, SLP (Civil) No.13868 of 2019, decided on 29.10.2021 has held as under:

“7. In order to appreciate the rival contentions raised by the learned counsels for the parties, apt would be to reproduce the relevant conditions of the policy in question. Relevant condition nos. 3, 4, and 11 read as under:

“3. Revival of Discontinued Policies: If the policy has lapsed, it may be revived during the life time of the Life Assured, but within a period of five years, from the due date of the first unpaid premium and before the date of Maturity, on submission of proof of continued incurability to the satisfaction of the corporation and the payment of all the arrears of premium together with interest compounding half yearly at such rates as may be fixed by the Corporation from time to time. The Corporation, reserves the rights to accept or accept with modified terms or decline the revival of Discontinued Policy. The revival of a Discontinued Policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the proposer/Life Assured.

4 Non-forfeiture Regulations:

(a) If, after at least 3 full years premiums have been paid in respect of this Policy, any subsequent premiums be not duly paid, this Policy shall not be wholly void, but shall subsist as a Paid-up Value which shall be payable in case of death/Maturity and shall depend on the number of years for which premiums have been paid and shall be greater of a sum that bears the same ratio to the Maturity Sum Assured as the number of premiums actually paid shall bear to the total number of premiums originally stipulated in the Policy.

OR

The surrender value as per para 7 below assuming that the policy has been surrendered on the date of death/Maturity, as the case may be.

11. Accident Benefit (If opted for): If at any time when this policy is in force for the full sum assured or reduced sum assured in case of partial surrender of the policy, the life assured, before the expiry of the policy term or the policy anniversary on which the age nearer birthday of the Life Assured is 70 years, whichever is earlier, is involved in an accident resulting in either permanent disability as hereinafter defined or death and the same is proved to the satisfaction of the Corporation, the Corporation agrees in the case of :-

(a)……………….

(b) Death of the Life Assured: to pay an additional sum equal to the Accident Benefit Sum Assured under this Policy, if the life assured shall sustain and bodily injury resulting solely and directly from the accident caused by outward, violent and visible means and such injury shall within 180 days of its occurrence solely, directly and independently of all other causes result in the death of the life assured.”

8.   Now, so far as the facts of this case are concerned, it is not disputed that the husband of the complainant had taken the life insurance policy on 14.04.2011, that the next premium had fallen due on 14.10.2011 but was not paid by him, that the husband of the complainant met with an accident on 06.03.2012, that thereafter the premium was paid on 09.03.2012 and that he expired on 21.03.2012. It is also not disputed that at the time of making payment of premium on 09.03.2012, it was not disclosed by the complainant or her husband to the appellant-Corporation about the accident which had taken placed on 06.03.2012. The said conduct on the part of the complainant and her husband in not disclosing about the accident to the corporation not only amounted to suppression of material fact and lacked bona fides but smacked of their mala fide intention, and therefore, the Accident benefit claim of the complainant was liable to be rejected on the said ground alone. It is well settled legal position that in a contract of insurance there is a requirement of Uberrima fides i.e. good faith on the part of the assured. The Supreme Court in case of Vikram Greentech (I) Ltd. V/s New India Assurance Co. Ltd. (2009) 5 SCC 599, while dealing with the contract of insurance held as under:-

“16. An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberrima fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract.

17. The four essentials of a contract of insurance are: (I) the definition of the risk, (ii) the duration of the risk, (iii) the premium, and (iv) the amount of insurance. Since upon issuance of the insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of the risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer.

18. The endeavour of the court must always be to interpret the words in which the contract is expressed by the parties. The court while construing the terms of policy is not expected to venture into extra liberalism that may result in rewriting the contract of substituting the terms which were not intended by the parties. The insured cannot claim anything more than what is covered by the insurance policy. (General Assurance Society Ltd. v. Chandmull Jain (1966) 3 SCR 500, Oriental Insurance Co. Ltd. v. Sony Cheriyan AIR 1999 SC 3252 and United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644).”

9.   From the afore-stated legal position, it is clear that the terms of insurance policy have to be strictly construed, and it is not permissible to rewrite the contract while interpreting the terms of the Policy. In the instant case, condition no. 11 of the Policy clearly stipulated that the policy has to be in force when the accident takes place. In the instant case, the policy had lapsed on 14.10.2011 and was not in force on the date of accident i.e. on 06.03.2012. It was sought to be revived on 09.03.2012 after the accident in question, and that too without disclosing the fact of accident which had taken place on 06.03.2012. Thus, apart from the fact that the respondent-complainant had not come with clean hands to claim the add on/extra Accident benefit of the policy, the policy in question being not in force on the date of accident as per the condition no. 11 of the policy, the claim for extra Accident benefit was rightly rejected by the appellant-Corporation. Since, clause 3 of the said terms and conditions of the policy permitted the renewal of discontinued policy, the appellant-Corporation had revived the policy of the respondent-complainant by accepting the payment of premium after the due date and paid Rs. 3,75,000/- as assured under the policy, nonetheless for the Accident benefit, the policy had to be in force for the full sum assured on the date of accident as per the said condition no. 11. The said Accident benefit could have been claimed and availed of only if the accident had taken place subsequent to the renewal of the policy. The policy in the instant case was lying in a lapsed condition since 14th October, 2011 and, therefore, was not in force as on 06.03.2012, resultantly, the claim over Accident benefit was not payable to the respondent as per the conditions of the contract of insurance.”

17.    The Hon’ble Supreme Court in LIC of India Vs Sunita (Supra), has held that if a policy is not active, the claim of the sum assured is not payable to the complainant and also the policy has not acquired any paid up value as per the terms outlined in the insurance contract nothing is payable under the policy.

18.    Considering the above discussion, it is evident that the orders of the learned State Commission dated 28.02.2018 in Appeal Nos. 170/2014 and 171/2014 respectively are erroneous for being violative of the terms of insurance contract in question. As the Complainant failed to make the employer a party to the case, it is inexpedient to determine the liability of the employer in not remitting the insurance premium to the insurer. However, there is no scope to exceed the terms of contract and make the insurer liable, without remitting the premium which rendered the policy to lapsed in July 2007 after which the death of the life assured occasioned on 25.05.2008. Therefore, the orders of the learned State Commission dated 28.02.2018 in Appeal Nos. 170/2014 and 171/2014 respectively are set aside and the orders of District Forum dated 19.02.2014 in CC No.222/2012 and 220/2012 respectively are upheld. Consequently, the Revision Petitions Nos.1803 and 1804 of 2018 are allowed.

19.    Needless to say, the Complainant has right to approach appropriate legal fora to seek relief in respect of the grievances against the employer of the deceased life assured. She may also seek benefit of the provisions of Section 14 of the Limitation Act, 1963 in doing so.

20.    Considering the circumstances of the case, there shall be no order as to costs.

21.    All pending applications, if any, are disposed of accordingly.