1.                     The brief history of the case of the complainant is that he is the nominee of late Santosh Kumar Sadangi, who was the policy holder of LIC vide Policy No.573961202 commenced from 28.9.2013 for a sum assured of Rs.2.00 lacs and Santosh Kumar Sandangi who was working as Teacher under OP.3 died on 06.07.2014 due to heart failure.  It is submitted that the complainant furnished all relevant documents claiming death benefits of his brother before OP.2 but the OP.2 sent the claim file to OP.1 for consideration and the complainant also sent all documents required by OP.1.  It is further submitted that on 09.08.2016 the OP.2 intimated the complainant that premiums for the month of May & June, 2014 has not been deposited with them.  The complainant submitted that on 22.07.2016 the OP.3 has issued a certificate stating that due to lack of allotment, the salary for the month of May & June, 2014 has been drawn on 09.08.2014 and hence salary of late Sadangi could not be drawn in time.  In spite of above certificate, the Ops did not settle the claim.  A legal notice to the Ops from the complainant also did not yield any result.  Thus alleging deficiency in service on the part of the Ops, he filed this case praying the Forum to direct the Ops to pay Rs.4.00 lacs towards claim amount, Rs.300/- per day from 06.07.2014 till payment towards compensation, Rs.1000/- towards legal notice and to pay Rs.Rs.5000/- towards cost to the complainant.

2.                     The Ops.1 & 2 filed counter in joint admitting Policy No.573961202 under SSS mode commencing from 28.9.2013 for a sum assured of Rs.2.00 lacs obtained by Sri Santosh Kumar Sadangi, under which Sri Srikant Sadangi, the present complainant was nominee and contended that the premiums under the policy have been deducted from the salary of the policyholder up to April, 2014 and remitted to the Jeypore branch of LIC.  It is contended that as the death of the life assured recorded on 06.07.2014, monthly premium for 05/14 and 06/14 should have been deducted from his salary but the said 2 month dues were not remitted to the Ops.  It is further contended that since the policy holder died after 9 months and 08 days, it being an early claim, the OP.2 forwarded all the claim papers to OP No.1 and wrote a letter to the complainant asking him to furnish deduction particulars for the month of 05/14 & 06/14 and the complainant submitted a certificate issued by the employer-OP.3 stating that due to lack of allotment of salary for the above 2 months, the salary of the DLA could not be drawn in time and it was drawn on 09.08.2014.  The Ops submitted that the policy under SSS lapses if premium under the policy is not duly paid within 15 days of grace period and it was the duty of the policy holder to keep his policy in force as per conditions of policy.  The Ops further submitted that due to lapse of the policy, nothing is payable to the claimant.  Thus denying any deficiency in service on their part, the Ops 1 & 2 prayed to dismiss the case of the complainant.

3.                     The OP.3 though appeared by self and moved a time petition but neither filed counter nor participated in the proceeding in any manner.

4.                     The parties have filed certain documents in support of their cases.  The complainant has filed written argument.  Heard from the parties through their respective A/Rs and perused the materials available on record.

5.                     In this case, Policy No.573961202 under SSS commenced from 28.9.2013 for a SA of Rs.2.00 lacs obtained by Santosh Kumar Sadangi with nomination of Srikant Sadangi and the death of the LA on 06.07.2014 are all admitted facts.  It is also an admitted fact that the premiums have been deposited by OP.3 till April, 2014.  The case of the complainant is that he being the nominee advanced death claim of his brother before OP.2 who forwarded all those papers to OP.1 treating it as early claim.  The Ops 1 & 2 in their counter stated that as the policy has been lapsed due to non deposit of premiums for 05/14 & 06/14, the policy in question accrued no value and nothing is payable under the policy.

6.                     On perusal of record it is seen that the OP.3 being the DDO has issued a certificate dt.22.7.2016 that due to non availability of allotment the salary of the DLA for the month of 05/14 & 06/14 was not drawn and it was only drawn on 09.08.2014 whereas the employee died on 06.07.2014 for which premiums for last two months could not be deposited with LIC.  The Ops on the other hand stated that for non deposit of premiums for 2 months, the policy lapsed and nothing is payable under the policy.

7.                     In the above circumstances, the term and condition of SSS is to be followed and ascertained the fact as to whether the complainant is eligible for death claim of his deceased brother.  This type of issue has been decided by the Hon’ble Supreme Court and Hon’ble National Commission in a number of judgments from time to time.  In an order passed by Hon’ble National Commission on 11.03.2015 in Revision Petition No.3016/2008, in the case of Smt. Meenakshi Popat Kambhoje & Ors Vrs. LIC of India & Anr., it is 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 Vrs. Rajiv Kumar Bhaskar 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 default in payment of the premium should be intimated to the party.  It has been mentioned in para 16 and 17 of that Manual that :

8.                     “While posting Group Ledger, any default in payment of premium should be communicated to the employer on a special Form No.5227.  If the premiums remain unpaid for 6 months, lapse intimation on the prescribed Form No.5228 should be sent to the employee.  A lapse Register is also to be maintained for preparing statistics in respect of the lapses.

9.                     It was stated that in case of stray default for any reason, the defaulted premiums can be allowed to remain pending for collection later on.  Further, premiums as and when received should be credited towards the months for which deduction has been made instead of towards an earlier default or instead of holding all collections in deposit till the full arrears are received.”

10.                   It was also 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.    Therefore, a notice shall be given to the policy holder informing him of the options available for the expiry of three months of the date on which the premium in respect of the policy of life assured was payable.

11.                   In view of the judgments delivered by the Hon’ble Supreme Court and Hon’ble National Commission, it was ascertained 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 necessary 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.

12.                   In the instant case, the salary of the insured could not be drawn due to want of allotment and the insured had no scope to know about communication of allotment to the DDO by the Government.  Neither the DDO nor the LIC has intimated the employee/LA regarding non deposit of premiums for 2 months due to obvious reasons and hence the life assured had no role to play regarding deposit of premiums.  Thus the Ops committed fault by not intimating the LA regarding non deposit of premiums for two months and hence the present complainant being the nominee under the policy is eligible to get death benefit of the DLA.  It is seen from the policy bond that the death of the life assured before the date of maturity accrues the sum assured plus vested bonus.  Hence the Ops 1 & 2 are to pay the sum assured of Rs.2, 00,000/- plus vested bonus to the complainant with interest @ 9% p.a. from the date of filing of this case.  In the peculiar circumstances of the case, we are not inclined to grant any compensation except a sum of Rs.5000/- towards cost of this litigation.

13.                   Hence ordered that the complaint petition is allowed in part and the Ops 1 & 2 being jointly and severally liable are directed to pay Rs.2, 00,000/- plus vested bonus with interest @ 9% p.a. from 17.05.2017 and to pay Rs.5000/- towards cost to the complainant within 30 days from the date of communication of this order.

(to dict.)