C.RAJESWARI vs L.I.C. of India

THIS is the case of lapsed Life Insurance Corporation Policy under Salary Savings Scheme. Under this Scheme, the employer had to deduct an amount every month from the salary of the employee and forward it to the Life Insurance Corporation as premium. There is no dispute that Andhra Pradesh Public Service Commission had to deduct a premium of Rs. 122/- per month from the salary of late Shri C. Nagaraju and pay it to the Life Insurance Corporation every month. Unfortunately, the Policy No. 640297363 lapsed due to the failure on the part of the Andhra Pradesh Public Service Commission to deduct and pay the premium of the deceased employee on time. Shri C. Nagaraju died on 1.5.1992. His widow should have got a sum of Rs. 20,000/- under the Salary Saving Insurance Scheme from the L.I.C. upon the death of Shri Nagaraju. However, L.I.C. refused to pay on the ground that the policy had lapsed due to non-payment of the premia on time.

THE question before us is whether Mrs. Nagaraju is entitled to get the amount of Rs. 20,000/-, if so, from whom ? It has been stated in the Affidavit filed on behalf of the Andhra Pradesh Public Service Commission by the Assistant Registrar-cum-P.S. to President of the A.P. State Commission that "it is not in dispute that Shri C. Nagaraju while in service with the A.P. Public Service Commission i.e. opposite party No. 2 insured his life for a sum of Rs. 20,000/- under Salary Savings Scheme commencing from 25.1.1989, whereunder the opposite party No. 2 i.e. employer was required to deduct a premium of Rs. 122/- per month from the salary of the deceased, from March, 1989 onwards for a period of 15 years and to send the same to the first opposite party i.e. L.I.C. of India. To that effect, a letter was written by the L.I.C. of India to the opposite party No. 2 i.e. A.P. Public Service Commission on 17.2.1989 requesting them to deduct from the salary the premium amount from March, 1989. But the second opposite party started making deductions only from September, 1989. No premiums were paid from March to August, 1989 either by the employer or by the deceased. Again the second opposite party, as found by the Distt. Forum, which is not disputed, did not deduct the premiums from April, 1990 to June, 1990 and thereafter from September, 1990 to November, 1990. The premia was deducted and sent to L.I.C. of India from December, 1990 to April, 1992 without any break. The insured died on 1.5.1992. Smt. Rajeswari, wife of Shri C. Nagaraju claimed the amount from the Insurance Company in June, 1992 but by letter dated 29.6.1992, the L.I.C. of India repudiated its liability on the ground that the policy was in lapsed condition without acquiring any value as premia was not received."

This affidavit goes to show that the policy lapsed from the very beginning. The date of commencement of the policy was 25.1.1989 and the first premium should have been paid in March, 1989. No premium was paid at all in March, April, May, June, July and August, 1989. The first payment of premium took place only in September, 1989 when the policy had already lapsed. No effort was made to revive the lapsed policy by payment of arrears with interest. Thereafter, premiums were paid with occasional lapses which were again not made up by the respondent No. 2.

WE have heard all the parties. WE have perused the order of the State Commission. The Secretary of the Andhra Pradesh Public Service Commission-the respondent No. 2 has not appeared before us although an affidavit has been filed on his behalf. In the affidavit, it has been stated that there was a failure on its part to remit the premium amounts in time, as a result of which the insurance policy lapsed. The only explanation for this failure on the part of the Andhra Pradesh Public Service Commission is that it failed to pay the amount of premium in time due to administrative problems. The consequences of this failure must be faced by the Andhra Pradesh Public Service Commission. The maturity value of the insurance was Rs. 20,000/- payable on death of the employee who died on 1.5.1992. The complainant who is the widow should have got this amount immediately after the death. Since the complainant did not get this amount of Rs. 20,000/- for the failure on the part of the Andhra Pradesh Public Service Commission, A.P.S.S.C. (respondent No. 2) is directed to pay to the complainant Rs. 20,000/- with interest @ 12% from 1.7.1992 till the date of payment. It is surprising that the Insurance Company went on receiving premium, month after month on this policy without pointing out that the policy had lapsed. The Insurance Company must refund the entire amount of the premiums received by it on the lapsed policy to the Andhra Pradesh Service Commission within a period of eight weeks. The Andhra Pradesh Service Commission must pay the amount of Rs. 20,000/- with interest at the rate of 12% to the complainant within a period of six weeks from date. The order of the State Commission is set aside. The Revision Petition is finally disposed of of as above. Revision Petition disposed of.