Ashwani Kumar and Life Insurance Corporation of India vs Baldev Singh Rohal

BALDEV Singh/Complainant filed a Consumer Complaint under Section 12 of the Consumer Protection Act, 1986 (for short, ''Act'') against Life Insurance Corporation of India/O.P No. 1 and its agent Ashwani Kumar/O.P. No. 2 on the allegations that his son Rajnish Rohal got himself insured with Life Insurance Corporation of India (for short, ''L.I.C.'') on 22.6.2001 through their Agent Ashwani Kumar and Policy Bond was issued on 28.6.2001. It is further stated that complainant used to deposit the premium through that Agent and he had already paid the instalments of March, 2002 in the same month and for June, 2002 in the month of July. On 12.7.2002, Rajnish Rohal (since deceased) met with an accident and consequently he died. When the Agent came to know about the death, he went to Branch Office of L.I.C. and deposited the premium at 10.30 a.m. along with late fee. Thus, the Agent did not deposit the premium for month of March and June, in time. Later on, complainant wrote letter to the Branch Manager of LIC to settle the Claim. However, complainant could not produce the original receipt as it was with the Agent. Consequently, complainant was informed by the LIC that quarterly premium of March, 2002 has been received by them on 12.7.2002, that is, after the death of the deceased. Thus, loss has been caused to the complainant due to the act of Ashwani Kumar, Agent, LIC is also liable for negligence of its Agent. Thereafter, a Consumer Complaint was filed in which Complainant had claimed a sum of Rs. 1 lac along with Rs. 2,500 as litigation cost.

L .I.C. contested the complaint and raised preliminary objections. On merits, it is stated that policy of the deceased had lapsed since the amount of premium was deposited after the death of deceased on 12.7.2002. It is further stated that answering respondent never authorized Ashwani Kumar to receive the premium. Even otherwise, as per rules, the Agents are not authorized to collect the premium on behalf of the answering respondent. It is further stated that intimation regarding the death of life assured was received in the office of answering respondent only on 7.8.2002. Further, at the time of death of the life assured, the policy in question was lying in lapsed condition and thereafter claims of the complainant was repudiated. Ashwani Kumar -Agent in its reply has stated that he works for L.I.C. to guide the public at large about salient features of the insurance. It is further stated that payment of premium is the sole responsibility of the insured and as such no duty was ever cast by L.I.C. on the answering respondent. Thus, no cause of action has accrued against him.

DISTRICT Consumer Disputes Redressal Forum, Shimla (for short, ''District Forum'') vide order dated 2.4.2007, dismissed the complaint.

BEING aggrieved, complainant filed an appeal before the State Commission which vide impugned order 25.6.2008, allowed the appeal and quashed the order of the District Forum and allowed the Complaint. State Commission in its order held: In view of the aforesaid discussion, we are of the considered view that the District Forum below has erred while dismissing the complaint and passing the impugned order and as such this appeal deserves to be allowed. Ordered accordingly. Consequently the order dated 2.4.2007 passed by District Forum below in Complaint No. 43/2004 is hereby quashed and set aside. And the said complaint is allowed. Since admittedly the insurance policy in question was double accident benefit policy, and the insured late Sh Rajnish Lal has died as a result of accident, it is held that the appellant is entitled to Rs. one lac along with other admissible benefits like bonus and interest, etc., as per law. Sum of Rs. one lac shall carry interest at the rate of 9% per annum from the date of filing of the complaint i.e. 24.2.2004 till the date of payment/deposit whichever is earlier. Both the respondents are held liable jointly and severally for payment of this amount. However, in the first instance respondent No. 1 shall reimburse the appellant. And thereafter if it so decides, it will be at liberty to take such action for being reimbursed as is available to it in law against respondent No. 2, Sh. Ashwani Kumar who at the relevant time was admittedly the agent of respondent No. 1, but had exceeded his brief by accepting the premium as per respondent No. 1. These facts he had not specifically denied in his reply to the complaint. Subject to these directions this appeal is disposed of, leaving the parties to bear their own cost.

BEING aggrieved, Ashwani Kumar -Agent has filed (Revision Petition No. 3767 of 2008) whereas, L.I.C. has filed (Re vision Petition No. 55 of 2009).

WE have heard the learned Counsel for the parties and gone through the record. It has been contended by the learned Counsel for the LIC that payment of premium to the Agent cannot be deemed as payment to the LIC. Moreover, the Agent was not authorized to collect any money or accept any risk for and on behalf of the LIC

IT is further contended that 4th and 5th instalments of the premium were due on 28th March, 2002 and 28th June, 2002. Admittedly, payment of the same were made on 12.7.2002, that is, after the death of the life assured. Policy in question had already lapsed on 28.4.2002 even after taking the grace period. Though, the premium was received without knowing the death of the life assured by the LIC on 12.7.2002, this itself will not amount to revival of the policy. Hence, the claim made by the complainant is not maintainable.

IN support, learned Counsel has relied upon decision of this Commission reported as Life Insurance Corporation of India v. Consumer Education and Research Society and Ors.,, I (1994) CPJ 95 (NC). On the other hand, it has been contended by the learned Counsel for the Agent that it did not receive any instalment towards the payment of premium in respect of the life assured. The premium of March, 2002 and June, 2002 was deposited by the brother of the deceased on 12.7.2002, after the death of the life assured. As such there was no question for the Agent to deposit the premium. Under these circumstances, no liability can be fastened upon the Agent.

ON the other hand, it has been contended by learned Counsel for the complainant -Baldev Singh Rohal, that premium for March, 2002 and June, 2002 were paid to the Agent but he did not deposit the same within the time. The moment complainant came to know that the Agent has not deposited the premium for 2 quarters, immediately the same were deposited and which were accepted by the LIC also. Under these circumstances, LIC as well as its Agent are liable.

DISTRICT Forum in its order held: 5. The stand taken by the OP -LIC to repudiate the claim of the complainant is legally sustainable. Though, Shri Rajnish Lal obtained the insurance policy in June, 2001, yet it is evident that the premiums were payable quarterly in the months of June, September, December and March. The premiums were paid for the months of June, September and December, 2001. Quarterly premiums were payable in March and June, 2002 which were not deposited by the complainant with the OP -LIC prior to his death. On account of non -payment of premium, the policy stood lapsed and could have been revived by the complainant during his life time subject to deposit of interest. The deceased admittedly, did not deposit the premium and interest during his life time. The premium came to be deposited after his death on 12.7.2002 without notice of his death to the OP -LIC which makes it evident that the OP -LIC did not consent for revival of the lapsed policy. On account of the conduct of the complainant in depositing the amount after death, it is evident that there is suppression of facts which also makes out that equity is not made out for invocation of equity in his favour. The ratio of decision in case of Smt. Kiran Sinha v. Life Insurance Corporation of India and Others reported in : AIR 1983 Patna 142, is distinguishable. Rather the decision rendered by the Hon''ble HP State Consumer Commission in case of Life Insurance Corporation of India v. Smt. Giana Devi and Others in Appeal No. 6 of 2005 decided on 28.7.2006 makes it evident that the deposit of premium after the death of the insured does not revive the policy and as such the complainant is not entitled to the revival of the policy.

It is an admitted fact that premiums for two quarters ending on 31st March, 2002 and 30th June, 2002 respectively, were not deposited by the life assured within the specific period. It is also an admitted fact that premium was deposited only on 12.7.2002, after the death of the life assured.

IN Consumer Education and Research Society (supra), it was observed: 5. According to the rules of Corporation the insurance agent had no authority to collect any moneys or to accept any risk for and on behalf of Corporation or to bind the Corporation in any manner whatsoever. In view of this specific provision it was the duty of the insurance agent to refuse the bearer cheque when tendered by the insured. If, however, he acted contrary to his mandate he cannot by such unauthorized act pass any consequential liability to the LIC.

The mere acceptance of the amount as premia deposit on 10.8.1987 in the absence of knowledge of the death of the deceased on the part of the Insurer cannot mean that the latter had accepted the premia and condoned the breach of the contract of Insurance.

SINCE , in the case in hand the premium was paid only after the death of the life assured though the same was accepted by the LIC, but it will not mean that LIC had condoned the breach of contract of the Insurance. Under these circumstances, order passed by the State Commission fastening liability on LIC as well as on Ashwani Kumar -Agent cannot be sustained and same is liable hereby set aside.

HENCE , both the revision petitions are hereby allowed. The order of the District Forum stand restored and complaint filed by the Complainant Sh. Baldev Singh Rohal, stands dismissed.

BE parting with, as a note of caution we would like to advise the LIC to devise a mechanism, so that no insurance premiums are accepted from the life assured, after his death. Parties shall bear their own costs.