Life Insurance Corporation of India vs RAJENDRA KHANDU DHOBALE

THIS appeal is directed against the award passed by Additional District Consumer Forum, Pune on 9. 5. 2003 in Consumer Complaint No. 121/2000, whereby LIC of India has been directed to pay amount of Rs. 50,000 to the complainant with interest @ 9% p. a. with 6 weeks and also to pay Rs. 5,000 as cost. By filing this appeal, LIC of India has taken strong exception to the award passed by Additional District Consumer Forum, Pune.

FACTS to the extent material may be stated as under: complainant''s brother Mr. Sanjay Dhobale was employee of Whirlpool of India Ltd. at Pune. According to complainant, who is brother of Mr. Sanjay Dhobale, Mr. Sanjay Dhobale had purchased policy from LIC of India on his own life for Rs. 50,000. The premium payable was monthly and premium payable was under Salary Saving Scheme. O. P. No. 1-Whirlpool of India Ltd. agreed to deduct monthly premium and to transmit the same to LIC of India as per tripartite agreement arrived at between LIC of India, Whirlpool of India Ltd. and his brother. LIC of India issued policy on 31. 12. 1997 bearing No. 9510544390. However, his borther died on 30. 3. 1998 i. e. within 3 months since the issuance of policy. Brother as such nominee of deceased, lodged claim with LIC of India. Some documents were sought by LIC of India and ultimately, LIC of India repudiated the claim by sending letter dated 2. 3. 2000. Thereafter complainant''s Advocate sent notice to LIC of India and filed consumer complaint in the Forum below for claiming assured amount with interest. O. P. No. 1-Whirlpool of India Ltd. did not appear and contest the matter. It was proceeded ex parte. O. P No. 2 filed written statement cum affidavit in reply. According to LIC of India, deceased brother was issued policy for the assured amount of Rs. 50,000 on 12. 12. 1997. He paid premium amount till January 1998 and deceased expired on 30. 3. 1998. As policy holder failed to pay premium of February 1998 and March 1998, policy lapsed and therefore, claim was rightly repudiated by LIC of India and it was so informed to the complainant vide their letter dated 2. 3. 2000. LIC of India therefore pleaded that there was no merit in the complaint and complaint should be dismissed with cost.

Both the parties filed certain documents and affidavits in support of their rival claims. Upon hearing Counsel for both the parties, Forum below was pleased to allow the complaint and directed LIC of India to pay amount assured with interest @ 9% p. a. and cost of Rs. 5,000. As such, LIC of India has filed this appeal.

WE heard extensively Mr. Rajiv Chavan-Advocate for the appellant and Mr. A. V. Patwardhan-Advocate for respondent No. 1/org. complainant. None appeared for respondent No. 2-Whirlpool of India Ltd. It is not in dispute that brother of complainant i. e. Mr. Sanjay Dhobale was working in Whirlpool of India Ltd. at Pune and he had purchased policy on his life from LIC of India Ltd. The policy was issued on 31. 12. 97 and premium was paid upto January 1998. This is an admitted position. The question is whether premiums for the month of February 1998 and March 1998 were paid by the company or by the deceased of the LIC of India and if premium was not paid by Whirlpool of India Ltd.-employer of deceased Mr. Sanjay Dhobale, whether LIC of India can be still held liable for the default committed by employer of the deceased employee Mr. Sanjay Dhobale. Our answer is that the duty was cast on Whirlpool of India Ltd. to deduct from the salary of employee every month, monthly premium of Rs. 267 and to transmit the same on or before 13th of each month, the said amount to LIC of India. When premium is payable under Salary Saving Scheme by the employer, it is to be held that employer, in the instant case, Whirlpool of India Ltd. acts as an agent of LIC and if agent fails to perform its obligation under tripartite agreement, the failure is of the employer, as such agent of LIC of India. Simply because Whirlpool of India Ltd. failed to deduct two monthly premiums from the salary of February and March 1998 payable to deceased Mr. Sanjay Dhobale. That would not absolve LIC of India from its liability to pay assured sum to the legal heirs of deceased Mr. Sanjay Dhobale.

IN the case of Chairman, LIC of India and Others v. Rajiv Kumar Bhaskar reported in 2002 ACJ 204, Hon''ble Supreme Court clearly laid down that if the policy is having clause that employer shall deduct monthly premium from the salary of the employee and transmit the same to LIC under Salary Saving Scheme floated by LIC of India, responsibility for collection of premium and remittance of the same to LIC of India having been accepted by employer and if employer fails to deduct premium from the salary of concerned employee and to remit the same to LIC, LIC was duty bound to pay the sum assured, even if employer, who acts as an agent of LIC failed to deduct monthly premium from the salary of concerned employee. The Hon''ble Supreme Court while deciding this case noted that scheme clearly demonstrated that not only contract of insurance was entered into by and between employee and LIC through the employer, but even the terms and conditions of the policy were to be performed only through the employer. Employee for all the transactions was required to contact his employer only. Employer was obliged to inform employee that for some reason he was not in a position to perform his obligation, where upon employee could have paid the premium himself. Hon''ble Supreme Court clearly laid down that in such a scheme employer must be held to be an agent of LIC and LIC cannot be permitted to take advantage of the wrong of its agent. So if there is non-deduction of monthly premium by the employer and because of non-deduction of monthly premiums, the policy has lapsed, then LIC is still liable to honour the policy, because default was committed by its own agent i. e. employer of the employee and for default of employer, who was agent of LIC, LIC must be held squarely liable to honour the policy. This ruling is squarely applicable to the facts and circumstances of our case. In this case premium upto January 1998 was paid, but two other premiums were not deducted by the employer from the salary of employee and were not transmitted to LIC of India. So default herein was committed by LIC of India''s agent i. e. employer of Mr. Sanjay Dhobale. So if the default committed by its agent, as per Supreme Court ruling, LIC of India must be held liable and it cannot be heard to say that since policy has lapsed before the death of said employee, they were not liable to honour the policy. This argument will have to be turned down in view of the ruling of the Supreme Court mentioned above.

IN another case Delhi Electric Supply Undertaking v. Basanti Devi and Another reported in III (1999) CPJ 15 (SC)=viii (1999) SLT 279=iv (1999) CLT 36 (SC)=1999 CTJ 713 (SC) (CP), again Supreme Court held that the widow of the deceased policy holder will have to be paid amount of sum assured if employer Delhi Electric Supply Undertaking under Salary Saving Scheme failed to discharge its obligation qua LIC of India. Employer was assigned the task of collecting premium by the LIC of India form the employee''s salary and to remit the same to LIC. So DESU was thus given implied or ostensible authority by LIC as its agent to collect premium from employees on their behalf for onward payment to it. Thus DESU acted as LIC''s agent under Contract Act though not under Insurance Act or Regulations framed thereunder.

HON''ble Supreme Court also held LIC liable for the fault of its agent in not remitting the premium amount in time. As such, LIC was directed to pay the sum assured to the party entitled in that case. This ruling is also squarely applicable to the facts and circumstances of our case. On these two rulings, we hold that Whirlpool of India Ltd. acted as agent of LIC. It was collecting agent for all Salary Saving Schemes and it was the duty of Whirlpool of India Ltd. to deduct monthly premiums from the salary payable to Mr. Sanjay Dhobale and collection of premium and transmission of the same was the duty being discharged by Whirlpool of India Ltd. on behalf of LIC, as such its agent. Whirlpool of India Ltd. as such agent of LIC failed to discharge its obligation and in the meantime, policy lapsed. Still on account of death of Mr. Sanjay Dhobale in the month of March 1998, it must be held that the default was committed by Whirlpool of India Ltd. , as such agent of LIC and for the default of agent, LIC must be held liable to honour the policy. So repudiation made by LIC in the instant case was bad in law and learned District Consumer Forum rightly directed LIC to pay sum assured with interest thereon. We are finding no substance in the appeal filed by LIC. One Bihar State Commission judgment was relied upon by Mr. Rajiv Chavan Advocate for the appellant while arguing the appeal, but unfortunately in our files said ruling is not available. However, suffice it to say that when we are relying upon two rulings of Apex Court, ruling of Bihar State Commission cannot come to the rescue of appellant in saving its skin and, therefore, we are inclined to pass following order: ORDER 1. Appeal stands dismissed. 2. Parties are left to bear their own costs. 3. Misc. application stands disposed of. 4. Copies of the order herein be furnished to the parties.

Appeal dismissed.