L.I.C. Of India vs A. MANGAYARKARASI

THE complainant is the wife of one Arunachalam who died intestate on 21.11.1996. THE said Arunachalam was employed as an Assistant Operator at the office of the 3rd opposite party. He had taken three policies for Rs. 5,000/-, Rs. 10,000/- and Rs. 50,000/- and the Policy Nos. are 750750598, 750753202 and 750753965 respectively. THE premiums due were deducted by the 3rd opposite party from the salary of the deceased and was remitted regularly to the L.I.C. Arunachalam was on medical leave from 3.10.1996 to 21.11.1996. On the death of her husband, the complainant made a claim for the amounts. THE opposite parties rejected her claim stating that the premium amounts for the policies 2 and 3 above were not remitted in time. THE non-payment of the premium was not on account of any mistake on the part of the complainant''s husband. THE salaries due to the complainant''s husband for October and November, 1996 were drawn only on 4.2.1997 and they were sent by cheque by the 3rd opposite party on 7.2.1997. THE L.I.C. accepted the premium only for the Policy No. 750750598 and returned the amount of Rs. 474/- by means of a cheque dated 10.6.1997. THE complainant cannot be made liable for the inadvertence on the part of the opposite parties. Hence the complainant issued a notice to the opposite parties. THE opposite parties 1 to 3 denied their liability. THE complainant, therefore, prayed for a direction to the opposite parties to pay a sum of Rs. 60,000/- due under the policy Nos. 750753202 and 750753965 and also a sum of Rs. 25,000/- towards mental agony and hardship.

THE opposite parties 1 and 2 filed a version pleading as follows : THEre was no deficiency on the part of these opposite parties. THE insured took the policies under salary savings scheme. THE said two policies were taken in 1995 and the insured died on 21.7.1996. THEy are early claims. Unless the premiums are paid within the time, the policies would lapse. THE premiums due for October and November, 1996 were not paid in time. THE cheque was received only on 7.2.1997 viz., out of time and also after the death of the life assured. THEse opposite parties are within their right to receive the premium due on the first policy which is a non-early claim. If at all, it will be only the 3rd opposite party who will be directly responsible for any consequence of non-payment of premium. THE provisions of the Act will not apply and the Consumer Forum has no jurisdiction. Hence the opposite parties 1 and 2 prayed that the complaint be dismissed with costs. The 3rd opposite party filed a version contending as follows : The 3rd opposite party is one of the units of Tamil Nadu Co-operative Marketing Federation Limited, Madras. Therefore, it is only the Secretary of the Tamil Nadu Co-operative Marketing Federation who can be sued and proceeded against. As such the complaint is bad for mis-rejoinder and non-joinder of proper parties. The complainant is not entitled to file the complaint against this opposite party regarding the claim since the service rendered by this opposite party is only a service free of charge. As there are other heirs, the complaint is bad for non-joinder of necessary parties. The deceased Arunachalam went on leave from 3.10.1996 onwards. He died on 21.7.1996. He has sent leave letters on 15.10.1996 and 10.11.1996 praying for leave upto 30.11.1996 on medical grounds without medical certificate. The leave application should be followed by medical certificate. The insurance premiums had to be paid from out of his salary. Since no medical certificate was sent, the leave could not be regularised and only if the leave is regularised, his pay can be drawn and disbursed after deducting the insurance premiums. Only after his death, the complainant sent the medical certificate on 27.1.1997 and requested this opposite party to pay his leave salary which was sanctioned and disbursed on 4.2.1997. The insurance premium was deducted and sent to the 1st opposite party. The sending of premium was a service done by this opposite party free of cost. It was not an hired service. The 3rd opposite party has acted as per the bye-laws, standing orders. There is no deficiency of service. The complainant is not entitled to any relief as against this opposite party.

The lower Forum held that the complainant is entitled to a sum of Rs. 60,000/- covered under the two policies with interest at 15% p.a. along with a compensation of Rs. 2,500/- and cost of Rs. 500/-. Hence this appeal by the 1st and 2nd opposite parties.

THE point for determination is whether the order passed by the lower Forum can be sustained? The Point: The complainant''s husband was employed under the 3 opposite party. He was on leave from 3.10.1996. He applied for medical leave but did not submit any certificate from the doctor along with his application. He had applied for leave till 30.11.1996. He had applied for leave from 3.10.1996 to 15.10.1996 and again for leave from 15.10.196 to 30.11.1996 by sending another application on 10.11.1996. Both these applications were not accompanied by the required medical certificate and, therefore, the 3rd opposite party could not sanction the leave. Since the period of his absence from 3.10.1996 till his death which was on 21.11.1996 was not regularised for the absence of the required medical certificate, the salary could not be drawn and paid to him. Since the salary could not be drawn, the premium amounts due and payable by the said Arunachalam towards the LIC policies held by him could not be recovered and remitted to the LIC by the 3rd opposite party. The deceased had taken three policies viz., (1) for Rs. 5,000/- on 20.2.1992 under Policy No. 750750598; (2) for Rs. 10,000/- on 1.2.1995 under Policy No. 750753202; and (3) for Rs. 50,000/- on 15.9.1995 under Policy No. 750753965. These policies were availed by the deceased under salary savings scheme and the premium amounts due and payable have to be recovered from the salary amount and remitted to the LIC. Since the deceased did not send the proper application for the grant of medical leave by failing to produce the medical certificate along with the same, the leave was not regularised with the result that the salary could not be claimed, drawn and paid. It is not disputed that the medical certificate was sent by the complainant only after the death of the complainant''s husband. The medical certificate was sent only on 27.1.1997 nearly two months after the death, by the complainant and thereafter the period of absence was regularised by sanctioning the leave on medical grounds and disbursement of salary was effected on 4.2.1997 on which date the premiums were deducted from the salary and sent by the 3rd opposite party. The LIC accepted the premium as far as the first policy was concerned and refused to accept the premium for the 2nd and 3rd policies on the ground that the said policies had lapsed and because it was these two policies were taken only in the year 1995 and the death was in 1996 and thus they were early claims. In such circumstance we have to see whether there is any liability on the part of the opposite parties. This is not a case where there was any default committed by the 3rd opposite party in not sending the premium. The premium could not be recovered from the salary because the period of absence was not regularised. The period of absence was not regularised because of the fault of the deceased in not sending the proper leave application. Therefore, if the salary could not be drawn, it is because of the failure of the deceased to comply with the rules and apply for the leave. Therefore, there was no neglect or default on the part of the 3rd opposite party. The 3rd opposite party could be pinned down only if the salary had been drawn and the amounts were available with them and yet they failed to send that amount towards the premiums due by the complainant''s husband to the 1st and 2nd opposite parties. That is not the case here. Further, the regularisation of the period of absence was done only after the death of the complainant''s husband. In fact, the complainant''s husband died on 21.11.1996. The complainant sent the medical certificate only on 27.1.1997 and requested the 3rd opposite party to draw the salary and pay her the same. Even in this letter which has been marked as Ex. B-3, she has not stated that the amount due towards the premium may be recovered from out of the salary due and remitted to the L.I.C. On the other hand, she had only prayed that the leave salary due to her husband may be disbursed to her. Under Ex. B-5 she has also written a letter dated 22.2.1997 stating that she approached the LIC and they said that the policies had become lapsed because of on-payment of premiums for October 96 and, therefore, she had solicited information from the 3rd opposite party whether the premiums were paid for October 1996 or whether there was any delay and the reasons therefor.

THUS in this case we find that two of the three policies have lapsed for non-payment of premium that was due for the month of October and November, 1996. The premiums due were recovered by the 3rd opposite party from the pay of the complainant''s husband only in the month of February 1997 and remitted. On the date when the premiums were remitted, the insured was not alive. He had died two months prior to the same. In such circumstances, one has to see whether the opposite parties 1 to 3 can be made liable. Contract of insurance is a contract based upon good faith. The conditions have to be, therefore, scrupulously followed. The policies had lapsed which is not due to any act attributable to any of the opposite parties. The lapse of the policy is only the direct result of the complainant''s husband''s omission to file the medical certificate along with his leave application because of which the salary could not be claimed, drawn and paid. When the policies had lapsed for non-payment of premiums, in such circumstances, there is no existing contract between the parties. Merely because the premiums were paid immediately after the drawing of the salary, it cannot bring in any altered situation. For non-payment of the premiums the policy had lapsed and thus the contract had come to an end. When it has thus come to an end, it cannot be revived unless steps were taken by the deceased or even the complainant to ratify it. Assuming they can do so and it can be revived either by the 3rd opposite party or by the complainant at their own instance by merely making the payment of premiums, if non-payment of premium and the consequent lapse is on account of the lapse on the part of the 3rd opposite party. THUS it was a direct consequence, then one can take a different view. But that is not the case here. The lower Forum has chosen to rely upon a decision reported in General Manager, Hotel Kanishka v. Saroj Attal and Another, III (1997) CPJ 72 (NC), where the employer undertook to deduct the monthly premium from the salary of the insured and the insured died on 13.7.1990, the claim was repudiated on account of non-payment of monthly premiums of May and June, 1990 in time, the District Forum accepted the complaint, the State Commission accepted the appeal and directed the employer to pay the entire insured amount and on appeal to National Commission it was held that there was negligence on the part of the Insurance Company and they are liable. But on fact, the above case is quite different. It was a case where the insured died on 13.7.1990 but the employer committed a mistake in not paying the premium due for the month of May and June when he had the salary of the employee with him when he disbursed the same. But, here in this case, the salary of the employee could not be drawn owning to the mistake of the employee and, therefore, the salary was not available with the employer for being remitted to the Insurance Company towards the premium. Therefore, it is quite a different situation and hence the decision relied upon by the lower Forum cannot apply. The remittance of premium amount by the 3rd opposite party cannot date back as held by the lower Forum. If it was so, there was no reason for so many conditions in the policy. Anyone can make a payment keeping the premiums in arrears for years together and sent the amount in one lumpsum and if it is received by the Insurance Company and then claim that it was to take effect from the date when the premiums were actually due an payable. Such a far-fetched contention cannot be accepted, more so, when this is being a contract of insurance, we have to be more careful and scrupulous interpreting the same to see if there is proper adherence to the same. Moreover, this is a case where they have not accepted the premiums but have returned the premiums. Therefore, it is clear that these policies having lapsed, cannot be revived, much less by making payment of the premiums and long after the death of the insured. Hence, in our opinion, the appeal has to be accepted and the judgment of the lower Forum set aside. In the result, the appeal is allowed, but in the circumstances without costs. The order of the lower Forum will stand set aside. The complaint will stand dismissed, but without costs. Appeal allowed.