MANGILAL vs DIVISIONAL MANAGER, JEEVAN BIMA NIGAM

THIS appeal is directed against the order dated 9.6.2000 passed in Case No. 105/1998 by the District Consumer Disputes Redressal Forum, Mandsaur (for short the "District Forum") whereby the complaint for deficiency in service in not making the payment under the Mediclaim Policy of Rs. 33,733/- by the respondents was dismissed.

FACTS giving rise to this appeal are thus : The appellant is a retired employee of the Life Insurance Corporation of India (for short the "LIC") and is a subscriber of Group Mediclaim Policy obtained for the existing and retired employees of the LIC in view of the contributory scheme for reimbursement for hospitalization and maternity expenses to all classes of employees of the LIC which was enforced with effect from 1.1.1988. As per the said scheme, the appellant and his wife were the beneficiaries under the policy and for that the appellant paid the premium for the calendar year from 1.1.1997 to 31.12.1997. This period was changed to final year from 1.4.1997 to 31.3.1998. The LIC employees were noticed to pay the difference of premium before 31.5.1997 due to categorisation for the new mediclaim policy on the basis of increase in basic pay, for the period from 1.4.1997 to 31.3.1998 and to that effect a notice was affixed on the notice board by the LIC. The appellant prior to that paid the premium of Category III. The appellant''s mediclaim of the expenses of treatment of his wife was repudiated by the New India Assurance Company Limited (for short "insurer") vide letter dated 17.5.1998 on the ground that the premium was not deposited with the insurer within the stipulated time by the LIC which was a non-compliance of Section 64 VB of the Insurance Act, 1938 (for short the "Insurance Act"), hence the insurer has no alternative but to repudiate the claim as "no claim". The appellant filed the complaint against the LIC as well as the insurer, which was resisted. The District Forum after appreciation of evidence found that in view of non-payment of the difference of the premium in higher category in advance as mandated by Section 64 VB of the Insurance Act, 1938 (for short the "Insurance Act"), the policy in relation to the appellant had lapsed and that payment of the premium after lapsation of the policy will not revive the policy as beneficiary, the wife of the appellant by that time had already died. After hearing learned Counsel for the parties and on reappraisal of evidence on record, we find that under the Group Mediclaim Policy there was three categories. Category III is of the sum assured of Rs. 50,000/- relates to the beneficiaries who were drawing the basic pay below Rs. 5,910/-. Category III of which sum assured of Rs. 70,000/- relates to the beneficiaries drawing the basic pay in between Rs. 5,910/- to Rs. 8,049/-. Category I of which sum assured of Rs. 1,10,000/- is related to the beneficiary insured who were drawing the basic pay of Rs. 8,050/- and above. The premium was to be deducted by the LIC from the salary of the existing employees and for the retired employees. The LIC issued circular dated April 12, 1997 to Zonal and Divisional Offices of the Corporation requesting to calculate the premium to be paid by the retired employees and intimate the same to them along with the option forms, Annexure 1 before 31st April, 1997. On that the retired employees have to exercise the option in the format enclosed as to whether they want to continue with the mediclaim policy on or before 31st May, 1997. If, a retired officer/employee opts for the scheme, the balance of the premium shall be deposited by him along with the option letter on or before 31st May, 1997. In case any retired employee opts out of the scheme, the offices were directed to return the proportionate premium for the nine months, April, 1997 to December, 1997, to such of those retired employee who opt not to continue with the scheme, by 30th June, 1997 debiting in Account Code No. 1295. There will be no mediclaim cover for such retired employees with effect from 1.4.1997. The appellant retired from the services from 30th March, 1998 who was covered under the mediclaim policy as he deposited the premium of Rs. 322/- on 27.5.1997 with the LIC and not the difference premium on revision of the scheme. According to the LIC the difference of the premium was to be calculated by the appellant and deposited, the appellant which was not deposited. To that effect, in compliance of the circular of the Central Office, Mumbai dated April 12, 1997 the change of coverage of the risk of the financial year and for payment of the difference in premium was affixed on the notice board. Hence, he was directed to deposit the difference of premium that is Rs. 273/-, which he deposited on 10.10.1997, which was remitted to the insurer and to that effect a letter dated 8.11.1997 was also sent by the LIC for settlement of the claim. The insurer contends that in view of the revised premium of the Group Mediclaim Policy as the difference of the premium was not deposited in advance as mandated by Section 64 VB of the Insurance Act, the risk was not covered.

It cannot be doubted that the risk can be covered of a person if the premium is received in advance as laid down in Section 64 VB of the Insurance Act, which lays down that no insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.

THE LIC having obtained the policy for the benefits of their existing or retired employees under the Group Insurance Scheme used to remit the premium. When the scheme was revised covering the risk from 1.4.1997, the Central Office, Mumbai of the LIC issued a circular to all the Zonal and Divisional Offices of the Corporation dated April 12, 1997. It is the stand of the appellant that he was not informed of payment of the revised premium to be calculated by him. Moreover, in view of the circular, the office concerned was bound to calculate the premium to be paid by the retired employee and intimated him the same to such retired employees along with the option form before 30th April, 1997. THEreafter, the retired employee was to exercise the option in the format and to deposit the difference in the premium by on or before 31st May, 1997. THE LIC has not produced any material to show that in compliance of the circular dated April 12, 1997 the appellant was intimated to exercise the option and to deposit the difference in premium which was calculated by the LIC on the basis of the revised pay scale. In such circumstances, the deficiency lies with the LIC which has resulted in treating the claim by the insurer as "no claim". In view of the facts, which have come on record, in our opinion, though the insurer was rightly exonerated as risk was not covered in view of the fact that the revised premium was not deposited in advance which was due to deficiency on behalf of the LIC who obtained the Group Insurance Hospitalisation and Domiciliary Hospitalisation Benefit Policy, but, did not send the intimation along with the format as directed in circular, therefore, the LIC had to pay the amount of the claim. Hence, the LIC is ordered to pay the amount of the mediclaim of Rs. 33,733/- with costs of the proceedings quantified at Rs. 1,000/- within a period of two months from the date of receipt of certified copy of this order, failing which the amount of Rs. 33,733/- shall carry interest at the rate of 6 per cent per annum from the date of this order.

ACCORDINGLY, the appeal is allowed. The order of the District Forum shall stand substituted as indicated hereinabove. A copy of this order be conveyed to the parties and a copy be sent to the District Forum along with the record of the case. Appeal allowed.