SENIOR BRANCH MANAGER vs MUDDA KAMALA FLAWRENCE

THE unsuccessful second opposite party in O.P. No. 78/1997 on the file of the District Consumer Forum, West Godavari at Eluru is the appellant before this Commission. THE facts in brief are that the complainant''s husband, who was working in S.D.S. Junior College, Jangareddigudem, as a Junior Lecturer, died on 29.4.1996 in an accident. He joined the Group Insurance Scheme, which was a compulsory scheme. THE claim filed by the complainant with the opposite parties for the insurance amount was delayed and not paid and, therefore, there is deficiency of service on their part. THE complainant, therefore, approached the District Forum.

THE first opposite party, the management of the college, filed written version alleging that the policy being the Group Insurance Policy linked with the salary, the premia are paid from time to time whenever the Government releases funds because the college is an aided college, and the salaries of its employees had to be paid as and when the grant is released by the Government. The second opposite party filed its written version stating that there is no privity of contract between it and the complainant''s husband and as per the proceedings of the Director of Higher Education dated 20.3.1989, the premia had to be paid by 20th of each month, and in this case, the premia for the months of 1/1996, 2/1996 and 3/1996 were paid on 30.4.1996 after the death of the insured and that by that time the policy had lapsed and, therefore, there is no question of revival of the policy after the death of the complainant''s husband, and the second opposite party is not liable to pay the insured amount and there was no deficiency of service on its part.

Basing on these pleadings and the evidence adduced, the District Forum framed appropriate points for consideration and held that there was deficiency of service on the part of the second opposite party and directed it to pay a sum of Rs. 6,750/- towards the premia paid after the death of the insured Rs. 1,00,000/- with interest at 12% per annum from 29.4.1996 and Rs. 5,000/- together with interest at 12% per annum as compensation, besides costs of Rs. 2,000/-. Aggrieved by the said finding and order, the second opposite party preferred this appeal.

THE point for consideration is whether there is any deficiency of service on the part of the second opposite party. The facts which are not in dispute are that the complainant''s husband C. Prabhakar Rao, who was working as a Junior Lecturer in S.D.S. Junior College, Jangareddigudem, was included in the Group Savings Linked Insurance Scheme (G.S.L.I.) which was compulsory for all the Junior Lecturers, as per the proceedings dated 20.3.1989 of the Director of Higher Education, A.P., Hyderabad. The premia had to be paid by the management of the college (first opposite party) after deducting the same from the salary of the insured. The first opposite party, the management of the college, was paying the premia accordingly. But the premia relating to 1/1996, 2/1996 and 3/1996 were paid on 30.4.1996, as per Exs. A-3 to A-5. The complainant''s husband Prabhakar Rao died in an accident on 29.4.1996. When she putforth her claim for the insurance amount, being the nominee under the policy, the appellant herein repudiated the claim through Ex. A-1 letter dated 27.5.1996 on the ground that the premia for the months 1/1996, 2/1996, 3/1996 and 4/1996 were not received before the date of the death of insured. As per Ex. A-6 the premium for the month of 4/1996 was sent on 26.7.1996. The defence of the management of the college is that the premium is paid as and when the salaries are paid to the employees. The premia were being deducted from their salaries and then sent to opposite party No. 2, and accordingly from the salaries of January to April 1996, the premia of the employees was deducted and sent to the second opposite party after receipt of the grant. As per Ex. B-1 proceedings of the Director of Higher Education and as per the scheme contained therein, the management has to advance the premium amount every month in case of payment of salaries is delayed. But this is not done in the present case. But the said provision does not come to the aid of the second opposite party.

UNDER Section 64-VB of the Insurance Act, no insurer shall assume any risk in respect of any insurance business until the premium payable is received by the insurer or is guaranteed to be paid by such person. In the case on hand, the premium has to be paid from out of the salary payable to the insured by the management and it is the management who deducts the said amount from the salary of the insured and remit the same to the insurer. The payment of the premium is guaranteed by the management of the college, and the said guarantee falls within the ambit of Section 64-VB. Besides that the scheme is linked with savings from the salaries. Therefore, there is guarantee of payment made by the insured through the first opposite party to the insurer with regard to the payment of the premium. Thus Section 64-VB of the Insurance Act is complied with in this case. In Union of India v. Smt. Jageswari, 1993 CPR 604, the National Commission held that as per the Salary Savings Scheme the premium amount is to be collected by the insurer from the employer and the employer has to deduct the premium from the pay of the insured and there is no obligation on the part of the insured to pay the monthly premium and, therefore, the repudiation of claim by the insurer after the death of the insured, amounts to deficiency of service. This decision is squarely applicable to the facts of the present case. In that view of the matter, the District Forum held that the complainant is entitled for the insurance amount apart from the savings and damages of Rs. 5,000/-. There is deficiency of service on the part of the second opposite party, and the complainant is entitled for the insurance amount, and the compensation of Rs. 5,000/-. But, however, we reduce the rate of interest from 12% per annum to 9% per annum on the insurance amount as well as compensation in view of the judgment of the Supreme Court. With this modification, the appeal is dismissed with costs of Rs. 500/-. Time for payment six weeks. Appeal dismissed with costs.