The Divisional Manager LIC of India V/S Smt Seetamma W/o. Late Shankrappa - Consumer Court Case

Karnataka

Raichur

DCFR 89/06

Smt Seetamma W/o. Late Shankrappa - Complainant(s)

Versus

The Divisional Manager LIC of India - Opp.Party(s)

Sri. Somashekhar Hiremath

11 Dec 2006

ORDER

DIST. CONSUMER DISPUTES REDRESSAL FORUM
DIST. CONSUMER DISPUTES REDRESSAL FORUM,DC Office Compound, Sath Kacheri
consumer case(CC) No. DCFR 89/06

Smt Seetamma W/o. Late Shankrappa						...........Appellant(s)
Vs.
The Divisional Manager LIC of India The Branch Manager LIC of India The Zonal Manager LIC of India The General Manager Hutti Gold Mines Co. Ltd., The Finance Manager, Hutti Gold Mines Co. Ltd.,						...........Respondent(s)

BEFORE:

Complainant(s)/Appellant(s):

OppositeParty/Respondent(s):

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ORDER

This is a complaint filed U/s. 12 of Consumer Protection Act by the complainant Seetamma against Respondents Divisional Manager LIC of India, Branch Manager LIC of India Branch Sindhanoor, Zonal Manager LIC of India, Zonal Office Hyderabad, General Manager, Hutti Gold Mines Company Ltd., Hutti and Finance Manager Hutti Gold Mines Company Ltd., District Raichur. The brief facts of the complaint are as under:- Late Shankrappa the husband of the complainant was working in Hutti Gold Mines Ltd., Hutti as Ground Employee. During his life-time he had opted (9) policies from Respondent NO-2 for the respective assured sum bearing Policy No. namely:- 1) 661284521 for assured sum of Rs. 17,000/-, 2) 661284606 Rs. 20,000/-, 3) 661284756 Rs. 25,000/-, 4) 661312957 Rs. 25,000/-, 5) 661362588 Rs. 25,000/-, 6) 661363725 Rs. 25,000/-, 7) 661363857 Rs. 30,000/-, 8) 661366304 Rs. 30,000/- 9) 661392038 Rs. 30,000/-. The premium amount of the said policies were deducted from the salary of deceased Shankrappa and the complainant being legally wedded wife of late Shankrappa is made as nominee for all the above said policies. Her husband Shankrappa has expired on 10-10-03 while he was in service. After the death of her husband the complainant moved an application for claims of the policy amount. The Respondents have not paid the above policies. Thereafter the complainant made correspondence with Respondent No-1 & 3 through their letter dt. 23-06-04, 21-09-05 and 10-11-05 and also issued legal notice dt. 28-03-06. After receipt of the said legal notice Respondent No-1 has replied stating that the position of the claim will be informed within a short period of time. But Respondent NO-2 has replied on 21-04-06 stating that they have not received any information from the Employee i.e, Hutti Gold Mines Ltd., Hutti and all the policies are in lapsed condition. The Respondent NO-2 never intimated regarding non-payment of policy premium by Respondent No-4 & 5. In spite of several reminders & correspondence made with the Respondents, the Respondents never paid claim amount. This shows deficiency in service on the part of the Respondents. Due to non- settlement of claim amount with bonus and other benefit the complainant put to mental torture and agony. Hence for all these reasons the complainant has prayed for direction to the Respondents to make payment of all policy amount along with bonus and other benefits accrued there on along with 12% interest p.a. till realization and for awarding Rs. 50,000/- towards damages. 2. In-response to service of notice Respondent NO-1 to 3 appeared through Sri. N.R. Malagi Advocate and Respondent NO- 4 & 5 through M.Nagappa Advocate. Respondent NO-1 has filed written statement which has been adopted by Respondent No-2 & 3. In the written statement it is admitted that deceased Shankrappa the husband of complainant while working in Hutti Gold Mines Ltd., Company had taken (8) Insurance Policies under Salary Saving Scheme. By way of additional written statement these Respondents 1 to 3 have stated that they had forgotten to mention the another policy bearing No. 662363857 under Salary Saving Scheme. Hence late Shankarappa had obtained in all (9) policy. The complainant wife of the assured is the nominee in all the above said policies except to policy No. 661302038 for which she is not a nominee and as such she is not a consumer to the extent of this policy. These Respondents came to know the death of the assured through the letter of the complainant dt. 24-06-04 stating the death of the life assured on 10-10-03. Then these Respondents have replied to the letter of the complainant on 01-07-04. All the above said policy are in the lapsed condition and as number of gaps are more and even two years have not been completed under these policies. Hence nothing is payable and this fact has been informed to the complainant on 01-07-04 and 21-04-06. Under all the policies the premium have not been recovered for the period mentioned as below:- ------------------------------------------------------------------------------------------ Sl.No. Policy Numbers Period Gaps/Premium Gaps --------------------------------------------------------------------------------------------------------------------- 1) 661284606 7/2000,10/2001,6/2002,8/2002 & 8/03 and 9/03 2) 6613122957 11/01,6/02 to 2/03, 8/03 and 9/03 3) 661362588 3/01,10/01,11/01.6/02.7/02.to 12/02,5/03,8/03 and 9/03. 4) 661366304 11/01,6/02,7/02 to 2/03,6/03,8/03 and 9/03 5) 661284521 2/00,3/00,10/01,11/01,8/02, to 2/03,8/03 and 9/03. 6) 661284756 7/00,10/01,6/02,8/02, to 2/03,8/03,9/03. 7) 661363725 8/01,10/01,11/01,6/027/02 to/03 6/03,8/03 and 9/03. 8) 661392038 6/02 to 2/03,6/03,8/03 and 9/03. 9)* 661363857 7/2000,10/2001,6/2002 to 2/03 & 8/03 and 9/03. *( Added by additional written-version ) ------------------------------------------------------------------------------------------- These Respondents have written a letter to the employer-Respondent NO-5, the Finance Controler, Hutti Gold Mines Company Ltd., on 01-07-04 regarding the Gap premiums shown above in detail. But there is no any reply from Respondent NO-5. Hence there is no deficiency in service on the part of these Respondents 1 to 3. As such there is no cause of action to this complaint. These Respondents have suitably replied to the legal notice issued by the Advocate for the complainant. The deceased Shankrappa had under taken through a letter of Authorization while issuing above said policies that for any reason if the employer-Respondent NO-5 fail to deduct the premium of policies then his responsible for the payment of the premium. The letters given by deceased Shankrappa is self explanatory which shows that deceased Shankrappa who was also responsible for the payment of premium but failed to do so. As such, all the above said policies are in lapsed condition and hence nothing is payable as per the terms and conditions of the contract. Hence for all these reasons the Respondents 1 to 3 have prayed for dismissal of the complaint with cost. 3. Respondents NO 4 & 5 have filed written statement admitting that late husband of the complainant had taken Insurance Policy and he expired on 10-10-03. These Respondents have regularly remitted the premium of late Shankrappa to the LIC till July 2003. Thereafter due to non-availability of the sufficient wages of said Shankarappa so premium could not be remitted to LIC and the said fact was regularly informed to late Shankarappa who had knowledge of non payment of premium when he took his monthly wage-slip. Bbut even then late Shankarappa did not take any steps to remit the premium. In the entire complaint no specific allegations have been made against these Respondents 4 & 5 as such the very complaint is to be dismissed against these Respondents and prayed for dismissal of the complaint with cost. By way of additional written statement these Respondents No-4&5 have further contended that these Respondents neither necessary nor proper parties to the proceeding because they are not personally liable for payment of compensation if awaited by this Forum since they are working under the company by name Hutti Gold Mines company Ltd., Hutti. Unless the company is impleaded as Respondents the action against the Respondents alone is not maintainable. Hutti Gold Mines Company could not deduct the premium amount from the salary of the said employee from August 2003 because his earning for the month of August 2003 were not enough to recover the LIC premium which stands at clause-I sub section-2 of section-7 of the Payment of Wages Act as the deduction are to be made on the basis of priority as per the provisions of law. Therefore the non-payment of premium of said employee by deducting from his salary did not fall in the order of priority. So Hutti Gold Mines Ltd., is neither negligent nor violated any alleged undertaking given to the LIC. Hence for all these reasons they have prayed for the dismissal of the complaint. 4. During the course of enquiry the complainant has filed her sworn-affidavit by way of examination-in-chief the Respondent No 1 to 3 have filed sworn-affidavit of Manager of Respondent No-1 by way of rebuttal-evidence and Respondent No-4 & 5 have filed sworn-affidavit of Manager of Respondent NO-5 by way of rebuttal-evidence. On behalf of complainant (10) documents have been got marked at Ex.P-1 to P-10. On behalf of Respondents 1 to 3 three documents have been got marked at Ex.R-1 to R-3. The Respondents 4 & 5 have not produced any documents. 5. Heard the arguments of counsel for respective parties and perused the records. The following points arise for our consideration and determination:- 1. Whether the complainant proves deficiency in service by the Respondents, as alleged.? 2. Whether the complainant is entitled for the reliefs sought for? 6. Our finding on the above points are as under:- 1. In the affirmative. 2. As per final order for the following. REASONS POINT NO.1:- 7. There is no dispute that late Shankarappa, the husband of the complainant was an employee in Hutti Gold Mines and he had taken (9) LIC policies from Respondent NO-2 under Salary Saving Scheme through his employer-Respondent NO-4 & 5 and said Shankarappa died on 10-10-03. It is the case of the complainant that she being the legally wedded wife of late Shankarappa, she has been made as Nominee in all the (9) policies. But the Respondents 1 to 3 contends that the complainant is the Nominee of in (8) policies only and she is not Nominee for the policy bearing No. 661302038 however there is no mention of the name of Nominee of this policy. According to the Respondents all the policy are in lapsed conditions for non-payment of premium and the same has been intimated to the complainant-Seetamma vide letter dt. 01-07-04 (at Ex.R-1) and they have also intimated the non-remittance of premium of the policy to the Finance Controller, Hutti Gold Mines Company Ltd., vide letter dt. 01-07-04 at Ex.R-2. This Ex.R-1 letter dt. 01-07-04 addressed to Seetamma discloses that this letter is with reference to the letter of complainant-Seetamma dt. 24-06-04 intimating the death of her husband Shankarappa died on 10-10-03 and death claim of the policy. This in-turn strengthen the case of the complainant that after the death of her husband, the complainant had applied for the claim of the policy to the Respondent Corporation vide her letter dt. 23-06-04 (at Ex.P-1). It is also the case of the complainant that she made correspondence to Respondent NO-1 to 3 through letter dt. 21-09-05 and 10-11-05. She has produced copy of letter dt. 21-09-05 addressed to Branch Manager LIC of India at Ex.P-2 a copy marked to Respondents 1 & 3. She has produced Courier Receipt for having sent this letter dt. 21-09-05 to the Branch Manager LIC of India, Sindhanoor at Ex.P-7 and the acknowledgement receipt of the said Manager at Ex.P-8. She has also produced the Courier Receipt for having sent a copy to Divisional Manager LIC of India vide Ex.P-9 and acknowledgement receipt of the Divisional Office enclosed to copy at Ex.P-2. She has also produced Courier Receipt for having sent a copy to Zonal Manager LIC of India, Hyderabad at Ex.P-10. The complainant has also produced Legal Notice through her Advocate dt. 28-03-06 to Respondents 1 to 3 at Ex.P-3 through RPAD which were received by Respondent 1 to 3 vide Postal Acknowledgement at Ex.P-3 (1 to 3 ). The complainant has also produced the letter dt. 01-04-06 at Ex.P-4 regarding receipt of legal notice dt. 28-03-06 and seeking time to intimate the position of policy claim within a short period. She has also produced letter of the Respondent dt. 21-04-06 at Ex.P-5 with reference to legal notice dt. 28-03-06 stating in detail regarding lapsed condition all the policies for non-payment of premium. This letter of the Respondent dt. 21-04-06 at Ex.P-5 goes to show the gaps of non-payment of premium of each policy right from July-2000 onwards till June-2003. 8. As stated earlier the Respondent Corporation had intimated the complainant regarding lapsed condition of the policy through their letter dt. 01-07-04 at Ex.R-1 and they had sought clarification from Finance Controller, Hutti Gold Mines Company Ltd., Hutti (Respondent NO-4 & 5) through their letter dt. 01-07-04 at Ex.R-2 regarding the gaps of non-recovery of premium from the employee. The Respondents 4 & 5 the General Manager and Finance Manager Hutti Gold Mines Company Ltd., Hutti in their common written statement have specifically stated that the premium of all the policies of their employee-late Shankarappa have been regularly remitted to the LIC until July-2003 (vide para-6 of their written statement). In para-2 of the Additional written statement they have specifically stated that they could not deduct the premium from the salary of the said employee for the month of August-2003 because his earnings for August-2003 were not enough to recover the LIC premiums as per clause-I of sub-section-2 of section-7 of the Payment of Wages Act, according to which deductions are to be made on the basis of priority. So the non-payment of premium of said employee by deducting from his salary did not fall in the order of priority. Therefore they are neither negligent nor violated any alleged undertaking given to the LIC. 9. The Respondents 4 & 5 have not produced any scrap of paper to show that they have deducted LIC premium of employee-Shankarappa till July 2003. They have also not produced any scrap of paper to show the non-deduction of premium LIC amount from August 2003 on-account of priority basis under Payment of Wages Act. As seen above Ex.R-2 the letter of Insurance Company dt. 01-07-04 addressed to Respondents No-4 & 5 goes to show several gaps in non-payment/remittance of monthly premium of late insured Shankarappa from July-2000 till June-2003. This Ex.R-2 letter which is material for our purpose reads thus:- To, Dt. 01-07-04. The Finance Controller, HGM Co. Ltd., Hutti. Dear Sir, Ref:- The death claim under the policies of Shankarappa P.No. 32344. **** We have under the details of the policies under policies was not received regularly. The Gaps mentioned as against policies did not allow us to proceed further and nothing is payable as the policies are lapsed condition due to non-recovery of premium so we request you the reasons for non-recovery of the Gaps and at least two years premium were not recovered. -------------------------------------------------------------------------------------------- Sl.No.Policy DOC. First un-paid Premium Period Gaps/Premium Number Gaps --------------------------------------------------------------------------------------------------------------------- 1) 661284606 24-12-99. 8/2003 7/2000,10/2001,6/2002,8/2002 to12/02,1/03,2/036/03 2) 6613122957 28-07-2000. 8/2003 11/01,6/02, 8/02 to 3/03 & 6/03 3) 661362588 28-11-2000. 8/2003 3/01,10/01, to 11/01.6/02.to 12/02,3/03,& 6/03 4) 661366304 28-09-01. 8/2003 11/01,6/02, to 2/03,6/03. 5) 661284521 28-11-99. 8/2003 2/2000,3/2000,10/01,11/01,8/02, to 2/03. 6) 661284756 27-01-2000. 8/2003 7/2000,10/01,6/02,8/02, to 2/03. 7) 661363725 15-06-01. 8/2003 8/01,10/01,11/01,6/02,to 2/03 6/03. 8) 661392038 28-03-02. 8/2003 6/02 to 2/03,6/03. ------------------------------------------------------------------------------------------- Sd/- Branch Manager, LIC of India, Sindhanur. Even they have not produced any piece of evidence to show that they had informed the non-deduction of premium from the salary of the said employee either to the said employee or/and to the Insurance Corporation Authority. Similarly the LIC Authorities-Respondent No- 1 to 3 could have made correspondence with the employer-Hutti Gold Mines or/and to the employee-insured regarding non-receipt of premium amount so as to avoid lapsing of policies. So both the Insurance Authorities and the Hutti Gold Mines Authorities have failed to discharge their responsibility which resulted in lapsing of policy. Hence we are not inclined to accept the arguments of counsel for both the Respondents that by virtue of Authorisation letter issued by insured-employee the entire responsibility was on him for making of payment of LIC premium in case of non-deducting of monthly premium from his salary. This our view is supported by the decision reported in: 1) 2001 (2) CPR Page 148 Head Note (State commission Madhya Pradesh) which reads thus:- In a salary savings scheme policy if salary earned was not sufficient to remit monthly premium to LIC it is duty of employer to intimate life assured the reasons for non-remittance of premium and to pay the same directly and default on part of employer amounts to deficiency in service. 2) AIR 2000 S.C. Page 43 Head Note A & C which interalia reads thus:- Authority of employer to collect premium on behalf of LIC., implied__ Employer in any case had ostensible authority to collect premium on behalf of LIC__ Employer will be agent of LIC for employee under S. 182 though not insurance agent under Insurance Act. Civil P.C. (5 of 1908), S. 35__ costs__ Salary Savings Scheme of Life Insurance Corporation__ Employer to deduct premium from salary and to remit it to LIC__ Default committed by employer in not remitting premium to LIC__ Employer directed to pay cost of proceedings quantified at Rs. 25,000/- to heirs of employee. Even the Insurance Corporation-Respondent No- 1 to 3 have not produced any scrap of paper to show that they had made correspondence with employer-Respondent NO- 4 & 5 for non-remittance of monthly premium of the employee-policyholder. So the irresponsibility of the employer-Respondents No- 4 & 5 and the Insurance Company Respondents 1 to 3 resulted in lapsing of policies of the deceased which shows clear deficiency of service. If Insurance Company had made any correspondence with the employer-Respondents 4 & 5 or/and with policyholder late Shankarappa there would have been some chance to avoid lapsing of policy of the deceased insured. So the Insurance Company Respondents 1 to 3 cannot shirk its responsibility and so we hold that there is clear deficiency of service by Insurance Company Respondents No- 1 to 3. So Point No-1 is answered in the affirmative. POINT NO.2:- 10. The complainant has sought for direction to the Respondents has to make payment of all (9) policy amount along with bonus and other benefits accrued on along with 12% p.a. till realization and also has sought for awarding Rs. 50,000/- towards damages and cost of proceedings. As seen above the Respondents NO- 1 to 3 in their written statement have contended that the complainant is Nominee of only (8) policies except Policy No. 661302038. But the complaint-averments and the affidavit-evidence of the complainant and correspondence-Application of the complainant at Ex.P-1, Ex.P-2 & Ex.P-3 shows the number of this policy as 661392038. Even the reply/correspondence by Insurance Corporation at Ex.P4 & P-5 and at Ex.R-1, Ex.R-2 & Ex.R-3(8) shows the number of this policy as 661392038. Hence Policy No. 661302038 shown in the written statement & affidavit-evidence of Divisional Manager of Respondent NO-1 to 3 is not only wrong but it shows that they have not gone through the records pertaining to late Shankarappa however it requires scrutiny of records by the Respondents No. 1 to 3. Hence the complainant being the Nominee of (8) undisputed policies except the disputed Policy No. 661392038, is entitled to receive the policy amount with bonus and other benefits. So far as the disputed 9th policy bearing No. 661392038 is concerned, we feel it just and proper to issue direction to the Respondents No- 1 to 3 to finalize the name of Nominee of this disputed policy and if the complainant is the Nominee then they have to release policy amount with all its benefits. So far the claim for interest of 12% and awarding a compensation of Rs. 50,000/- towards damages is concerned, having regard to the facts and circumstance of the case, as discussed above, we feel it proper to award a global compensation of Rs. 25,000/- including cost of litigation. In this view of the matter we pass the following order: ORDER The complaint of the complainant is allowed in part. The Respondents 1 to 3 Insurance Corporation shall pay the policy amount along with bonus and other benefits in-respect of all (8) policy bearing Nos. 1) 661284521, 2) 661284606, 3) 661284756, 4) 661312957, 5) 661362588, 6) 661363725, 7) 661363857 & 8) 661366304 to the complainant being the Nominee. The Respondents shall ascertain the name of Nominee of disputed Policy No. 661392038 and if it is found that the complainant is the Nominee of this policy also, then they shall pay the policy amount with its benefits to the complainant. If not they shall issue a certificate stating that the complainant is not a Nominee of this disputed policy to the complainant under the intimation to this Forum. The Respondents No-1 to 3 shall pay a global compensation of Rs. 25,000/- including cost of litigation. The Respondents shall comply this order within (6) weeks from the date of receipt of copy of this order. (Dictated to the Stenographer, typed, corrected and then pronounced in the open Forum on 11-12-06) Sd/- Sri. N.H. Savalagi President Dist.Consumer Forum-Raichur. Sd/- Sri.Pampannagouda Member. Dist.Consumer Forum-Raichur. On leave Smt.Kavita Patil Member. Dist.Consumer Forum-Raichur.

This is a complaint filed U/s. 12 of Consumer Protection Act by the complainant Seetamma against Respondents Divisional Manager LIC of India, Branch Manager LIC of India Branch Sindhanoor, Zonal Manager LIC of India, Zonal Office Hyderabad, General Manager, Hutti Gold Mines Company Ltd., Hutti and Finance Manager Hutti Gold Mines Company Ltd., District Raichur. The brief facts of the complaint are as under:- Late Shankrappa the husband of the complainant was working in Hutti Gold Mines Ltd., Hutti as Ground Employee. During his life-time he had opted (9) policies from Respondent NO-2 for the respective assured sum bearing Policy No. namely:- 1) 661284521 for assured sum of Rs. 17,000/-, 2) 661284606 Rs. 20,000/-, 3) 661284756 Rs. 25,000/-, 4) 661312957 Rs. 25,000/-, 5) 661362588 Rs. 25,000/-, 6) 661363725 Rs. 25,000/-, 7) 661363857 Rs. 30,000/-, 8) 661366304 Rs. 30,000/- 9) 661392038 Rs. 30,000/-. The premium amount of the said policies were deducted from the salary of deceased Shankrappa and the complainant being legally wedded wife of late Shankrappa is made as nominee for all the above said policies. Her husband Shankrappa has expired on 10-10-03 while he was in service. After the death of her husband the complainant moved an application for claims of the policy amount. The Respondents have not paid the above policies. Thereafter the complainant made correspondence with Respondent No-1 & 3 through their letter dt. 23-06-04, 21-09-05 and 10-11-05 and also issued legal notice dt. 28-03-06. After receipt of the said legal notice Respondent No-1 has replied stating that the position of the claim will be informed within a short period of time. But Respondent NO-2 has replied on 21-04-06 stating that they have not received any information from the Employee i.e, Hutti Gold Mines Ltd., Hutti and all the policies are in lapsed condition. The Respondent NO-2 never intimated regarding non-payment of policy premium by Respondent No-4 & 5. In spite of several reminders & correspondence made with the Respondents, the Respondents never paid claim amount. This shows deficiency in service on the part of the Respondents. Due to non- settlement of claim amount with bonus and other benefit the complainant put to mental torture and agony. Hence for all these reasons the complainant has prayed for direction to the Respondents to make payment of all policy amount along with bonus and other benefits accrued there on along with 12% interest p.a. till realization and for awarding Rs. 50,000/- towards damages. 2. In-response to service of notice Respondent NO-1 to 3 appeared through Sri. N.R. Malagi Advocate and Respondent NO- 4 & 5 through M.Nagappa Advocate. Respondent NO-1 has filed written statement which has been adopted by Respondent No-2 & 3. In the written statement it is admitted that deceased Shankrappa the husband of complainant while working in Hutti Gold Mines Ltd., Company had taken (8) Insurance Policies under Salary Saving Scheme. By way of additional written statement these Respondents 1 to 3 have stated that they had forgotten to mention the another policy bearing No. 662363857 under Salary Saving Scheme. Hence late Shankarappa had obtained in all (9) policy. The complainant wife of the assured is the nominee in all the above said policies except to policy No. 661302038 for which she is not a nominee and as such she is not a consumer to the extent of this policy. These Respondents came to know the death of the assured through the letter of the complainant dt. 24-06-04 stating the death of the life assured on 10-10-03. Then these Respondents have replied to the letter of the complainant on 01-07-04. All the above said policy are in the lapsed condition and as number of gaps are more and even two years have not been completed under these policies. Hence nothing is payable and this fact has been informed to the complainant on 01-07-04 and 21-04-06. Under all the policies the premium have not been recovered for the period mentioned as below:- ------------------------------------------------------------------------------------------ Sl.No. Policy Numbers Period Gaps/Premium Gaps --------------------------------------------------------------------------------------------------------------------- 1) 661284606 7/2000,10/2001,6/2002,8/2002 & 8/03 and 9/03 2) 6613122957 11/01,6/02 to 2/03, 8/03 and 9/03 3) 661362588 3/01,10/01,11/01.6/02.7/02.to 12/02,5/03,8/03 and 9/03. 4) 661366304 11/01,6/02,7/02 to 2/03,6/03,8/03 and 9/03 5) 661284521 2/00,3/00,10/01,11/01,8/02, to 2/03,8/03 and 9/03. 6) 661284756 7/00,10/01,6/02,8/02, to 2/03,8/03,9/03. 7) 661363725 8/01,10/01,11/01,6/027/02 to/03 6/03,8/03 and 9/03. 8) 661392038 6/02 to 2/03,6/03,8/03 and 9/03. 9)* 661363857 7/2000,10/2001,6/2002 to 2/03 & 8/03 and 9/03. *( Added by additional written-version ) ------------------------------------------------------------------------------------------- These Respondents have written a letter to the employer-Respondent NO-5, the Finance Controler, Hutti Gold Mines Company Ltd., on 01-07-04 regarding the Gap premiums shown above in detail. But there is no any reply from Respondent NO-5. Hence there is no deficiency in service on the part of these Respondents 1 to 3. As such there is no cause of action to this complaint. These Respondents have suitably replied to the legal notice issued by the Advocate for the complainant. The deceased Shankrappa had under taken through a letter of Authorization while issuing above said policies that for any reason if the employer-Respondent NO-5 fail to deduct the premium of policies then his responsible for the payment of the premium. The letters given by deceased Shankrappa is self explanatory which shows that deceased Shankrappa who was also responsible for the payment of premium but failed to do so. As such, all the above said policies are in lapsed condition and hence nothing is payable as per the terms and conditions of the contract. Hence for all these reasons the Respondents 1 to 3 have prayed for dismissal of the complaint with cost. 3. Respondents NO 4 & 5 have filed written statement admitting that late husband of the complainant had taken Insurance Policy and he expired on 10-10-03. These Respondents have regularly remitted the premium of late Shankrappa to the LIC till July 2003. Thereafter due to non-availability of the sufficient wages of said Shankarappa so premium could not be remitted to LIC and the said fact was regularly informed to late Shankarappa who had knowledge of non payment of premium when he took his monthly wage-slip. Bbut even then late Shankarappa did not take any steps to remit the premium. In the entire complaint no specific allegations have been made against these Respondents 4 & 5 as such the very complaint is to be dismissed against these Respondents and prayed for dismissal of the complaint with cost. By way of additional written statement these Respondents No-4&5 have further contended that these Respondents neither necessary nor proper parties to the proceeding because they are not personally liable for payment of compensation if awaited by this Forum since they are working under the company by name Hutti Gold Mines company Ltd., Hutti. Unless the company is impleaded as Respondents the action against the Respondents alone is not maintainable. Hutti Gold Mines Company could not deduct the premium amount from the salary of the said employee from August 2003 because his earning for the month of August 2003 were not enough to recover the LIC premium which stands at clause-I sub section-2 of section-7 of the Payment of Wages Act as the deduction are to be made on the basis of priority as per the provisions of law. Therefore the non-payment of premium of said employee by deducting from his salary did not fall in the order of priority. So Hutti Gold Mines Ltd., is neither negligent nor violated any alleged undertaking given to the LIC. Hence for all these reasons they have prayed for the dismissal of the complaint. 4. During the course of enquiry the complainant has filed her sworn-affidavit by way of examination-in-chief the Respondent No 1 to 3 have filed sworn-affidavit of Manager of Respondent No-1 by way of rebuttal-evidence and Respondent No-4 & 5 have filed sworn-affidavit of Manager of Respondent NO-5 by way of rebuttal-evidence. On behalf of complainant (10) documents have been got marked at Ex.P-1 to P-10. On behalf of Respondents 1 to 3 three documents have been got marked at Ex.R-1 to R-3. The Respondents 4 & 5 have not produced any documents. 5. Heard the arguments of counsel for respective parties and perused the records. The following points arise for our consideration and determination:- 1. Whether the complainant proves deficiency in service by the Respondents, as alleged.? 2. Whether the complainant is entitled for the reliefs sought for? 6. Our finding on the above points are as under:- 1. In the affirmative. 2. As per final order for the following. REASONS POINT NO.1:- 7. There is no dispute that late Shankarappa, the husband of the complainant was an employee in Hutti Gold Mines and he had taken (9) LIC policies from Respondent NO-2 under Salary Saving Scheme through his employer-Respondent NO-4 & 5 and said Shankarappa died on 10-10-03. It is the case of the complainant that she being the legally wedded wife of late Shankarappa, she has been made as Nominee in all the (9) policies. But the Respondents 1 to 3 contends that the complainant is the Nominee of in (8) policies only and she is not Nominee for the policy bearing No. 661302038 however there is no mention of the name of Nominee of this policy. According to the Respondents all the policy are in lapsed conditions for non-payment of premium and the same has been intimated to the complainant-Seetamma vide letter dt. 01-07-04 (at Ex.R-1) and they have also intimated the non-remittance of premium of the policy to the Finance Controller, Hutti Gold Mines Company Ltd., vide letter dt. 01-07-04 at Ex.R-2. This Ex.R-1 letter dt. 01-07-04 addressed to Seetamma discloses that this letter is with reference to the letter of complainant-Seetamma dt. 24-06-04 intimating the death of her husband Shankarappa died on 10-10-03 and death claim of the policy. This in-turn strengthen the case of the complainant that after the death of her husband, the complainant had applied for the claim of the policy to the Respondent Corporation vide her letter dt. 23-06-04 (at Ex.P-1). It is also the case of the complainant that she made correspondence to Respondent NO-1 to 3 through letter dt. 21-09-05 and 10-11-05. She has produced copy of letter dt. 21-09-05 addressed to Branch Manager LIC of India at Ex.P-2 a copy marked to Respondents 1 & 3. She has produced Courier Receipt for having sent this letter dt. 21-09-05 to the Branch Manager LIC of India, Sindhanoor at Ex.P-7 and the acknowledgement receipt of the said Manager at Ex.P-8. She has also produced the Courier Receipt for having sent a copy to Divisional Manager LIC of India vide Ex.P-9 and acknowledgement receipt of the Divisional Office enclosed to copy at Ex.P-2. She has also produced Courier Receipt for having sent a copy to Zonal Manager LIC of India, Hyderabad at Ex.P-10. The complainant has also produced Legal Notice through her Advocate dt. 28-03-06 to Respondents 1 to 3 at Ex.P-3 through RPAD which were received by Respondent 1 to 3 vide Postal Acknowledgement at Ex.P-3 (1 to 3 ). The complainant has also produced the letter dt. 01-04-06 at Ex.P-4 regarding receipt of legal notice dt. 28-03-06 and seeking time to intimate the position of policy claim within a short period. She has also produced letter of the Respondent dt. 21-04-06 at Ex.P-5 with reference to legal notice dt. 28-03-06 stating in detail regarding lapsed condition all the policies for non-payment of premium. This letter of the Respondent dt. 21-04-06 at Ex.P-5 goes to show the gaps of non-payment of premium of each policy right from July-2000 onwards till June-2003. 8. As stated earlier the Respondent Corporation had intimated the complainant regarding lapsed condition of the policy through their letter dt. 01-07-04 at Ex.R-1 and they had sought clarification from Finance Controller, Hutti Gold Mines Company Ltd., Hutti (Respondent NO-4 & 5) through their letter dt. 01-07-04 at Ex.R-2 regarding the gaps of non-recovery of premium from the employee. The Respondents 4 & 5 the General Manager and Finance Manager Hutti Gold Mines Company Ltd., Hutti in their common written statement have specifically stated that the premium of all the policies of their employee-late Shankarappa have been regularly remitted to the LIC until July-2003 (vide para-6 of their written statement). In para-2 of the Additional written statement they have specifically stated that they could not deduct the premium from the salary of the said employee for the month of August-2003 because his earnings for August-2003 were not enough to recover the LIC premiums as per clause-I of sub-section-2 of section-7 of the Payment of Wages Act, according to which deductions are to be made on the basis of priority. So the non-payment of premium of said employee by deducting from his salary did not fall in the order of priority. Therefore they are neither negligent nor violated any alleged undertaking given to the LIC. 9. The Respondents 4 & 5 have not produced any scrap of paper to show that they have deducted LIC premium of employee-Shankarappa till July 2003. They have also not produced any scrap of paper to show the non-deduction of premium LIC amount from August 2003 on-account of priority basis under Payment of Wages Act. As seen above Ex.R-2 the letter of Insurance Company dt. 01-07-04 addressed to Respondents No-4 & 5 goes to show several gaps in non-payment/remittance of monthly premium of late insured Shankarappa from July-2000 till June-2003. This Ex.R-2 letter which is material for our purpose reads thus:- To, Dt. 01-07-04. The Finance Controller, HGM Co. Ltd., Hutti. Dear Sir, Ref:- The death claim under the policies of Shankarappa P.No. 32344. **** We have under the details of the policies under policies was not received regularly. The Gaps mentioned as against policies did not allow us to proceed further and nothing is payable as the policies are lapsed condition due to non-recovery of premium so we request you the reasons for non-recovery of the Gaps and at least two years premium were not recovered. -------------------------------------------------------------------------------------------- Sl.No.Policy DOC. First un-paid Premium Period Gaps/Premium Number Gaps --------------------------------------------------------------------------------------------------------------------- 1) 661284606 24-12-99. 8/2003 7/2000,10/2001,6/2002,8/2002 to12/02,1/03,2/036/03 2) 6613122957 28-07-2000. 8/2003 11/01,6/02, 8/02 to 3/03 & 6/03 3) 661362588 28-11-2000. 8/2003 3/01,10/01, to 11/01.6/02.to 12/02,3/03,& 6/03 4) 661366304 28-09-01. 8/2003 11/01,6/02, to 2/03,6/03. 5) 661284521 28-11-99. 8/2003 2/2000,3/2000,10/01,11/01,8/02, to 2/03. 6) 661284756 27-01-2000. 8/2003 7/2000,10/01,6/02,8/02, to 2/03. 7) 661363725 15-06-01. 8/2003 8/01,10/01,11/01,6/02,to 2/03 6/03. 8) 661392038 28-03-02. 8/2003 6/02 to 2/03,6/03. ------------------------------------------------------------------------------------------- Sd/- Branch Manager, LIC of India, Sindhanur. Even they have not produced any piece of evidence to show that they had informed the non-deduction of premium from the salary of the said employee either to the said employee or/and to the Insurance Corporation Authority. Similarly the LIC Authorities-Respondent No- 1 to 3 could have made correspondence with the employer-Hutti Gold Mines or/and to the employee-insured regarding non-receipt of premium amount so as to avoid lapsing of policies. So both the Insurance Authorities and the Hutti Gold Mines Authorities have failed to discharge their responsibility which resulted in lapsing of policy. Hence we are not inclined to accept the arguments of counsel for both the Respondents that by virtue of Authorisation letter issued by insured-employee the entire responsibility was on him for making of payment of LIC premium in case of non-deducting of monthly premium from his salary. This our view is supported by the decision reported in: 1) 2001 (2) CPR Page 148 Head Note (State commission Madhya Pradesh) which reads thus:- In a salary savings scheme policy if salary earned was not sufficient to remit monthly premium to LIC it is duty of employer to intimate life assured the reasons for non-remittance of premium and to pay the same directly and default on part of employer amounts to deficiency in service. 2) AIR 2000 S.C. Page 43 Head Note A & C which interalia reads thus:- Authority of employer to collect premium on behalf of LIC., implied__ Employer in any case had ostensible authority to collect premium on behalf of LIC__ Employer will be agent of LIC for employee under S. 182 though not insurance agent under Insurance Act. Civil P.C. (5 of 1908), S. 35__ costs__ Salary Savings Scheme of Life Insurance Corporation__ Employer to deduct premium from salary and to remit it to LIC__ Default committed by employer in not remitting premium to LIC__ Employer directed to pay cost of proceedings quantified at Rs. 25,000/- to heirs of employee. Even the Insurance Corporation-Respondent No- 1 to 3 have not produced any scrap of paper to show that they had made correspondence with employer-Respondent NO- 4 & 5 for non-remittance of monthly premium of the employee-policyholder. So the irresponsibility of the employer-Respondents No- 4 & 5 and the Insurance Company Respondents 1 to 3 resulted in lapsing of policies of the deceased which shows clear deficiency of service. If Insurance Company had made any correspondence with the employer-Respondents 4 & 5 or/and with policyholder late Shankarappa there would have been some chance to avoid lapsing of policy of the deceased insured. So the Insurance Company Respondents 1 to 3 cannot shirk its responsibility and so we hold that there is clear deficiency of service by Insurance Company Respondents No- 1 to 3. So Point No-1 is answered in the affirmative. POINT NO.2:- 10. The complainant has sought for direction to the Respondents has to make payment of all (9) policy amount along with bonus and other benefits accrued on along with 12% p.a. till realization and also has sought for awarding Rs. 50,000/- towards damages and cost of proceedings. As seen above the Respondents NO- 1 to 3 in their written statement have contended that the complainant is Nominee of only (8) policies except Policy No. 661302038. But the complaint-averments and the affidavit-evidence of the complainant and correspondence-Application of the complainant at Ex.P-1, Ex.P-2 & Ex.P-3 shows the number of this policy as 661392038. Even the reply/correspondence by Insurance Corporation at Ex.P4 & P-5 and at Ex.R-1, Ex.R-2 & Ex.R-3(8) shows the number of this policy as 661392038. Hence Policy No. 661302038 shown in the written statement & affidavit-evidence of Divisional Manager of Respondent NO-1 to 3 is not only wrong but it shows that they have not gone through the records pertaining to late Shankarappa however it requires scrutiny of records by the Respondents No. 1 to 3. Hence the complainant being the Nominee of (8) undisputed policies except the disputed Policy No. 661392038, is entitled to receive the policy amount with bonus and other benefits. So far as the disputed 9th policy bearing No. 661392038 is concerned, we feel it just and proper to issue direction to the Respondents No- 1 to 3 to finalize the name of Nominee of this disputed policy and if the complainant is the Nominee then they have to release policy amount with all its benefits. So far the claim for interest of 12% and awarding a compensation of Rs. 50,000/- towards damages is concerned, having regard to the facts and circumstance of the case, as discussed above, we feel it proper to award a global compensation of Rs. 25,000/- including cost of litigation. In this view of the matter we pass the following order: ORDER The complaint of the complainant is allowed in part. The Respondents 1 to 3 Insurance Corporation shall pay the policy amount along with bonus and other benefits in-respect of all (8) policy bearing Nos. 1) 661284521, 2) 661284606, 3) 661284756, 4) 661312957, 5) 661362588, 6) 661363725, 7) 661363857 & 8) 661366304 to the complainant being the Nominee. The Respondents shall ascertain the name of Nominee of disputed Policy No. 661392038 and if it is found that the complainant is the Nominee of this policy also, then they shall pay the policy amount with its benefits to the complainant. If not they shall issue a certificate stating that the complainant is not a Nominee of this disputed policy to the complainant under the intimation to this Forum. The Respondents No-1 to 3 shall pay a global compensation of Rs. 25,000/- including cost of litigation. The Respondents shall comply this order within (6) weeks from the date of receipt of copy of this order. (Dictated to the Stenographer, typed, corrected and then pronounced in the open Forum on 11-12-06) Sd/- Sri. N.H. Savalagi President Dist.Consumer Forum-Raichur. Sd/- Sri.Pampannagouda Member. Dist.Consumer Forum-Raichur. On leave Smt.Kavita Patil Member. Dist.Consumer Forum-Raichur.