Life Insurance Corporation of India vs MEENAKSHI POPAT KUMBHOJE

-APPEAL No. 474/2007 is directed by original O. P. No. 1 Life Insurance Corporation of India and Appeal No. 237/2007 is directed by original O. P. No. 2 against the order passed by District Forum, Kolhapur in Consumer Complaint No. 121/2005 dated 5. 3. 2005 whereby the complaint was allowed and O. P. Nos. 1 and 2 jointly and severally were directed to pay a sum of Rs. 1,25,000 to the complainant with interest at the rate of 9% per annum and Rs. 500 as cost. By this common judgment we are disposing of both these appeals filed by original O. Ps.

THERE is delay in filing Appeal No. 937/2007. Therefore application for condonation of delay is filed. Since we want to decide appeal on merits, we are inclined to condone the delay by allowing condonation of delay application filed by the appellant sugar factory. Just and sufficient cause has also been made out by the appellant sugar factory. We, therefore, allow M. A. No. 1267/2007 and condone the delay. Facts to the extent material may be stated as under.

Complainants Smt. Meenakshi Kumbhoje and two others had filed the consumer complaint in the Forum below alleging that complainant No. 1''s husband Shri Popat Baburao Kumbhoje was working in Deshbhakta Ratnappa Kumbhar Panchaganga Co-operative Sugar Factory, Ichalkaranji in its civil water supply department from 1983. Sugar factory had taken three policies for its employees. One was Bima Kiran for assured sum of Rs. 50,000; another was Bima Kiran also for amount of Rs. 50,000 and third was Bima Kiran of Rs. 25,000. In all these three policies maturity date was 15. 9. 2018, 28. 3. 2027 and 15. 7. 2013. In first policy, nominee was Smt. Meenakshi Kumbhoje, in second policy, his father Shri Baburao Dhondu Kumbhoje and in third policy, Mast. Shridhar Popat Kumbhoje, son was shown as nominee on policies. Therefore, these three persons jointly filed complain against L. I. C. and sugar factory. They pleaded that O. P. No. 2 sugar factory had agreed to deduct premium of these polices directly from the monthly salary payable to Popat Baburao Kumbhoje. In the year 2003 Shri Popat Kumbhoje suffered badly in health. He was therefore on leave in the first week of April 2003. He was also on leave from 13. 3. 2003 to 13. 6. 2003 because he was suffering from jaundice. Complainant No. 1 had approached L. I. C. and volunteered to pay premium for the policies but O. P. No. 1 informed her that she should send premium through O. P. No. 2 sugar factory. The O. P. No. 2 assured complainants that along with other workers'' premium, premium of Shri Popat Baburao Kumbhoje would also be sent to L. I. C. O. P. No. 2 allegedly sent premium amounts to O. P. No. 2 directly. Shri Popat Kumbhoje died owing to illness on 6. 12. 2003. It was the contention of the complainants that O. P. No. 2 sugar factory was also having provident fund amounts and other amounts payable to Shri Popat Kumbhoje, the deceased. So, it was their duty to send premium dues of deceased Shri Popat Kumbhoje directly to L. I. C. However, they did not do so and therefore the complainants could not get insurance amount in respect of three policies from L. I. C. On claim being lodged with them L. I. C. informed complainants that the policies lapsed because of non-receipt of monthly premiums either from them directly or from the sugar factory. So alleging deficiency in service on the part of L. I. C. as well as on the part of sugar factory, they filed consumer complaint against both the O. Ps in the Forum below for recovering assured amounts under three policies.

O. P. No. 1 filed written statement and pleaded that the policies stood lapsed for non-payment of premiums of all the three policies and on that ground alone claims were repudiated. The L. I. C. pleaded that it was the duty of the complainants or the deceased himself to ensure that monthly premium were deducted from the salary and it was the default of sugar factory in not remitting premium amounts towards those policies. So for non-payment of premium they had not paid the amount assured under those three polices. L. I. C. therefore pleaded that complaint should be dismissed with cost. O. P. No. 2 filed written statement and denied the complaint of the complainants. According to sugar factory, deceased Shri Popat Kumbhoje had purchased three policies and every month after deducting premium dues they had sent premium for these three policies to the L. I. C. But in the year-2003 Shri Popat Kumbhoje was on leave because of illness. From 13. 3. 2003 to 13. 6. 2003 he was on without pay leave and therefore there was no question of payment of salary to him for that period and as such for that period no premium could be deducted from his salary for transmitting the same to L. I. C. However according to sugar factory whenever salary was paid to deceased Shri Popat Kumbhoje premiums were deducted and sent to L. I. C. It denied that during the illness of Shri Popat Kumbhoje, complainant No. 1 had approached O. P. No. 1 and sugar factory and volunteered to pay unpaid premiums to the L. I. C. for those three policies. This was just a made-up story. The sugar factory further pleaded that premium for the month of July-2003 to April, 2004 was paid to O. P. No. 1 on 27. 8. 2004 and factory further paid interest of delayed payment of premium of all its workers and interest amount was Rs. 2,09,937 and total premium belatedly sent by sugar factory to L. I. C. for its workers on 27. 8. 2004 was Rs. 31,37,192. Sugar factory pleaded that under the circumstances, policy of deceased Shri Popat Kumbhoje should not have been lapsed. The premium has been paid by O. P. No. 2 to O. P. No. 1 and O. P. No. 1 accepted the same with interest. Sugar factory admitted that Shri Popat Kumbhoje had died on 6. 12. 2003. It pleaded that when Shri Popat Kumbhoje was drawing the salary, his premiums were sent to L. I. C. But when he was on leave without pay it was the responsibility of the complainant to pay the premium to L. I. C. directly. The O. P. No. 2 sugar factory was not under legal obligation to issue letter or notices to the complainants or deceased Shri Popat Kumbhoje regarding payment of premiums. So, O. P. No. 2 pleaded that complaint against it should be dismissed with cost.

ON the basis of affidavits and documents filed before it, the learned District Forum held that O. P. Nos. 1 and 2 were deficient in service. O. P. No. 1 or 2 had not issued notices to the deceased Shri Popat Kumbhoje or the present complainants directing to them to pay the premium directly to the L. I. C. since Shri Kumbhoje was not earning any salary during his period of illness. According to learned District Forum some amounts were payable to deceased by sugar factory including Provident Fund amounts from which premium could have been paid by the sugar factory. The Forum was also of the view that Panchaganga Sugar factory was agent of L. I. C. and for its default or deficiency in service, O. P. No. 1 L. I. C. was also equally responsible and thus relying on some rulings of Hon''ble Supreme Court and National Commission, they allowed complaint and directed both the O. Ps. to pay assured amount of three policies with interest at the rate of 9% per annum and to pay cost of Rs. 500 as such L. I. C. filed Appeal No. 474/2007 and O. P. No. 2 Deshbhakta Ratnappa Kumbhar Panchaganga Sugar Factory also filed Appeal No. 937/2007. We heard submission of Mr. S. P. Bhave, Advocate for the L. I. C. , Mr. K. R. Khatavkar, Advocate for the respondent/original complainants, Mr. A. J. Chougule, Advance for the Sugar factory. It is pertinent to note that polices Exhs. B-1, B-2 and B-3 are the policies issued by L. I. C. in favour of Shri Popat Baburao Kumbhoje whose employer was Deshbhakta Ratnappa Anna Kumbhar Panchaganga Sugar Factory, Ichalkaranji. For all these three policies salary saving scheme authorization was given by the policy holder under his own signature. A copy of which is at Exh. C on page 35 in Appeal No. 474/2007. The authority was given to sugar factory by policy holder Shri Popat Baburao Kumbhoje authorizing the sugar factory to deduct the monthly premiums from his salary every month and to pay the same to L. I. C. of India at Ichalkaranji branch. He further agreed in the same authorization that "it will be my responsibility to make arrangements for remittance of the premium directly to the Corporation at the increased rate specified in the policy to prevent my policy from going into a lapsed condition". In view of this authorization, it is thus clear that deceased Shri Popat Kumbhoje had given undertaking to the employer as well as to the L. I. C. of India that in the event of his proceeding on leave without pay or in the event of his resigning from the service it will be his responsibility to make arrangements for remittance of premium directly to the Corporation at the increased rate specified in the policy to prevent his policy from lapsing. So this was the main condition between L. I. C. and the policy holder and employer sugar factory. Now admittedly, between 13. 3. 2003 and 13. 6. 2003 roughly for three months deceased Shri Popat Kumbhoje was on leave without pay owing to illness. As per this authorization it was his duty to ensure that every month during the period of his illness or being on leave without pay, he remitted premium amounts to the L. I. C. promptly without fail. He failed in his contractual duty to remit the amount for three consecutive months and therefore ultimately all the three policies stood lapsed for non-receipt of premiums and repudiation was made on that basis by L. I. C.

IT was tried to be contended by Advocate Khatavkar that Sugar factory/appellant herein had sent premium of deceased Shri Popat Kumbhoje along with all other workers on 27. 8. 2004. He stated that amount of Rs. 31,37,192 was paid towards premium of all the employees by the sugar factory. But this amount cannot be held to be inclusive of deceased Shri Popat''s premium for the simple reason that for three months period he was totally on leave without pay and when employee is on leave without pay, no salary is payable to the employee and when no salary was payable to the employee, question of making deduction of the premium dues of such employee and sending it to the Insurance Company would not arise at all. So, argument of Mr. Khatavkar in this behalf is appearing to be without any substance.

RELIANCE was placed by learned District Forum on the ruling of Hon''ble Supreme Court reported in III (1999) CPJ 15 (SC)=viii (1999) SLT 279=air 2000 SC 43, Delhi Electric Supply Undertaking v. Basanti Devi and Others. As also on the ruling of Hon''ble National Commission, United India Insurance Ltd. v. Surjit Singh Asai, III (1999) CPJ 79 (NC)=national Commission and Supreme Court on Consumer Cases 1986-2002 Part IV page 6224. However both these rulings were wrongly applied by the learned District Forum ignoring the document like Exhs. C, C-1 and C-2 wherein Shri Popat Kumbhoje had clearly in authorization had mentioned (given to employer) that it will be his own responsibility to make arrangements for remittance of premium directly to the Corporation in case he is on leave without pay or for any other reason he was not getting his monthly salary. In those two rulings there was no such a clause and therefore in those rulings Hon''ble Supreme Court and National Commission respectively held that under salary saving scheme employer acts as agent of Insurance Company and therefore for agents'' default, Insurance Company must be made liable. In our case, however, personal liability was undertaken by life assured that in the event of his being on leave without pay or that in the event he does not get monthly salary, it will be his own responsibility to pay monthly premiums directly to L. I. C. to prevent his policies getting lapsed. It is in the light of this personal undertaking mentioned in Exhs. C, C-1 and C-2, the rulings relied upon by the learned District Forum cannot be invoked or applied to the facts of our case and we are of the view that, reliance on these rulings was erroneously placed by the learned District Forum in allowing the complaint. We are of the view that it was the duty of deceased Shri Popat Kumbhoje to make payment of monthly premiums on the due dates directly to the L. I. C. when he was on leave without pay owing to illness and since for non-payment of three monthly premiums the polices lapsed, the deceased himself is to be blamed and not the present appellants in both the appeals. In the circumstances, we are unable to agree with the finding recorded by the learned District Forum. It committed patent error of law in allowing the complaint and directing payment of dues under three policies to the complainants. The said award as such must be quashed and set aside by allowing both these appeals. Hence, we pass the following order. ORDER 1. Appeal No. 474/2007 filed by L. I. C. of India is allowed. 2. M. A. No. 1267/2007 filed in Appeal No. 937/2007 which is for condonation of delay is allowed. Delay is condoned. 3. Appeal No. 937/2007 filed by Deshbhakta Ratnappa Kumbhar Panchaganga Sugar Factory is also allowed. 4. The award passed by the District Forum, Kolhapur is quashed and set aside. The complaint No. 121/2005 stands dismissed as against both the appellants. 5. Parties are left to bear their own costs. 6. The appellants in both these appeals are permitted to withdraw the amounts they have deposited in the Forum below while filing the appeal to obtain stay. 7. M. A. No. 665/2007 filed in Appeal No. 474/2007 which is for stay stands disposed of. 8. Copies of this order be sent to the parties free of charge.

Appeals allowed.