BEFORE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CIRCUIT BENCH, RAJASTHAN, JAIPUR


APPEAL No. 1302/2003


1.

LIC of India, through Branch Manager, Fatehpur, Distt. Sikar.
2.

Manager, LIC of India, Sikar.
3.

The Chairman, LIC of India, Ajmer.

..Appellants-Opposite Parties


VS


1.

Smt. Sumitra Devi W/o Late Shri Jagan Singh, R/o Tajsar, Tehsil, Fatehpur, Distt. Sikar.

..Respondent-Complainant


2.

Block Education Officer, Fatehpur, Distt. Sikar.

..Respondent-Opposite Party


Before:

1.

Mr. G.S. Hora, Presiding Member
2.

Mr. Sikandar Punjabi, Member


Present:

Mr. Punit Gupta, counsel for the Appellants

None appeared for the Respondents


ORDER Dated:08.05.2009


PER Mr. G.S. HORA, PRESIDING MEMBER


This appeal arises out of the order dated 6.6.2003 passed by the learned District Forum, Sikar whereby the complaint was allowed directing the Appellants to pay to the Complainant a sum of Rs. 50,000/- + double benefit + bonus and interest @ 12% per annum on the above amount from 31.7.2002 till the amount is paid besides Rs. 5,000/- as compensation for mental agony and litigation expenses.


The facts of the case in brief are that Late Shri Jagan Singh, Husband of the Complainant obtained a life policy commencing from 28.3.1998 for a sum of Rs. 50,000/- under Salary Savings Scheme (SSS). He died on 13.4.2002. A claim was filed by the Complainant, being the nominee. The same was repudiated on the ground that premium for the period from June, 2000 to August, 2001 was not paid, therefore, the policy had come in a lapsed condition. The question is whether repudiation by the Appellants was justified or not?

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From the perusal of record, it is clear that the concerned Department did not remit the premium of the aforesaid period to the Appellant Insurance Corporation. The Department was the Agent of the Insurance Corporation and therefore to collect the premium and to transmit the same to the Insurance Corporation was the duty of the Agent. In case of failure to deduct the amount, the insured cannot be made responsible for the lapse. The Insurance Corporation should have seen whether the amount has been sent by the Agent regularly or not and in case of non-receipt of premium, it was the duty of the Insurance Corporation to have sent the notice to the insured as well as to the concerned Department. We would like to quote some of the instructions issued by the Corporation under the SSS which are reproduced as under:


“Clause 13.4 Default in payment of premium should be intimated to the party and arrears of premium should be called for. If the number of premiums unpaid are six, lapse action should be taken.”


“Clause 16. While posting the group ledger any default in payment of premium should be communicated to the employer on a special Form No. 5227. If the premium remained unpaid for six months, a lapse intimation to the prescribed form No. 5228 should be sent to the employee. A lapse register is also to be maintained for preparing statistics in respect of lapses.”


“Clause 17. In case of stray default for any reason, the defaulted premium can be allowed to remain, pending for collection later on. Further, premiums as and when received should be credited towards the months for which deductions has been made instead of towards an earlier default or instead of holding all collection in deposit till the full arrears are received.”


The entire Scheme goes to show that due to any reason if the default of payment of premium is made then intimation has to be given to the party, calling for the payment of arrears. The Scheme further goes to show that the number of premiums, if remain unpaid for six months, then lapse action can be taken. This means that the policy does not get lapsed automatically in case of default, but lapse action is required to be taken by the Corporation. Clause 16 enjoins upon the Corporation to communicate the default in payment of premium to the employer and if the premium remain unpaid for six months, a lapse intimation has to be sent to the employee. The entire

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Scheme goes to show that as and when there is non-receipt of premium, there cannot be automatic lapse of policy. If there is any condition in the policy, which runs counter to the Scheme will have to be ignored.

In the instant case, a letter dated 3.5.2002 was sent in the name of Life Assured (LA) Jagan Singh but at that time the LA had already died. Letters dated 3.5.2002 and 18.5.2002 go to show that the insured was asked to deposit the amount of premium along with interest so that policy might be saved from becoming a lapsed policy. The language used further goes to show that the policy was not treated as a lapsed policy till then. Keeping in view the entire Scheme and the facts on record, the policy cannot be treated as a lapsed policy and therefore the Complainant was entitled to get the assured amount obviously after deduction of what was due as a premium and interest thereon.


By the impugned order, the learned District Forum has awarded double benefit. From the policy, it does not appear to be a policy conferring double benefit or accidential benefit. To that extent, the order of the learned District Forum is liable to be set aside.


Consequently, while allowing the appeal partly, the order regarding giving double benefit to the Complainant is set aside and rest of the order is confirmed.


Looking to the facts of the case, the parties are left to bear their own cost of appeal.



Member Presiding Member


Hira Lal