GENERAL MANAGER, HOTEL KANISHKA vs SAROJ ATTAL

THIS Revision Petition is directed against the order dated 19.9.95 of the Delhi State Consumer Disputes Redressal Commission whereby the General Manager, Hotel Kanishka of ITDC, New Delhi, opposite party No. 1 (revision petitioner herein) has been held liable to pay to the complainant the insurance amount together with interest @ 15% per annum from 19.7.90.

FACTS of the case are that opposite party No. 2-LIC of India (respondent No. 2 herein) issued an insurance policy for Rs. 25,000/- effective from 30.8.89 in favour of one Sudhir Attal, an employee of opposite party No. 1 under the Salary Savings Scheme. One of the features of the scheme was that the employer undertook to deduct the monthly premium from the salary payable to the insured employee and to remit the same to the LIC. Sudhir Attal, the insured fell ill on 1.3.90, proceeded on leave and died on 13.7.90. His mother Smt. Saroj Attal, as nominee under the policy, claimed the amount from opposite party No. 2 by letter dated 19.7.90. The claim was repudiated by letter dated 26.7.90 on the ground that the policy had lapsed on 23.5.90 on account of non-payment of monthly premium for the months of May and June, 90. She, therefore, filed a complaint in the District Forum impleading Hotel Kanishka as opposite party No. 1 and LIC as opposite party No. 2. By order dated 14.2.94, the District Forum held that there was deficiency of service as far as both the opposite parties were concerned and accordingly directed the opposite parties to pay the amount of the insurance policy in equal proportion alongwith interest @ 15% per annum from the date of claim till date of payment besides Rs. 1,000/- each as compensation. Aggrieved by this order, opposite party No. 2 - LIC preferred an appeal before the State Commission. The State Commission observed that there was privity of contract between the appellant-LIC and respondent No. 2-employer. Relying on the majority decision of the National Commission in MCD/DESU v. Basanti Devi and Another in First Appeal No. 129 of 1994 [1995 (1) Consumer P 201 (NS)], the State Commission allowed the appeal of the LIC and directed respondent No. 2 to pay to the complainant the entire insured amount together with interest at the rate of 15% per annum from 19.7.90.

IN the revision petition against this order, the petitioner-employer has stressed, inter alia, that it was not the responsibility of the employer to ensure payment of premium since there was no privity of contract between the employer and the L.I.C of India and that therefore, LIC is solely responsible for all contigencies arising therefrom. We have heard the case and carefully gone through the available records. During the hearing, Counsel for the revision petitioner produced a copy of the order of the Supreme Court of India dated 18.3.96 in State of Orissa v. Divisional Manager, LIC and Anr., Civil Appeal No. 7092 of 1996=II (1996) CPJ 31(SC).setting aside the order of the National Commission in F.A. No. 510/92, Divisional Manager, LIC v. Haribandhu Setha and Ors., (JT 1996 (4) SC 288). In their order, the Supreme Court of India inter alia held as follows: "It is not in dispute that the respondent was a Government servant and, therefore, he is bound by the service conditions and the State was rendering services free of charge to the contesting respondent. Under those circumstances, the Government servant has been excluded from the purview of the Act to claim any damages against the State under the Act. Therefore, if any claim arises for the contesting respondent, it would be open to him to claim, in any other Forum, but not under the Act."

The instant case is fully covered by the above judgment of the Supreme Court of India in so far as the revision petitioner is concerned.

HOWEVER , there is the question of the onus of the LIC in the proper implementation of the scheme. Admittedly, there is a privity of contract between the LIC and the policy holder. It has been noted in the order of the District Forum that the arrears of premium for May and June, 90 were remitted by the employer to the LIC in February, 1991 which payment was accepted by the LIC. This action of LIC in accepting premium amount in respect of a policy stated by the LIC to have lapsed does not stand to reason. The District Forum have also drawn upon the brochure on Salary Savings Scheme containing its salient features brought out by the LIC and observed that it was, inter alia, the duty of the LIC to send a monthly statement showing the premium payable under each policy. In this connection, the District Forum have recorded a finding that LIC has neither claimed in its reply nor shown to the Forum that this part of the LIC''s obligation was performed. The State Commission have, however, not dealt with this aspect while allowing the appeal of the LIC. In so far as the respondent-LIC has not established that it has not failed in the discharge of this obligation, there has been negligence on its part leading to deficiency of service in the implementation of the contract during the currency of the policy. The policy lapsed subsequently due to non-receipt of premium in time. In the facts and circumstances of the case, we direct respondent - LIC to pay to the complainant a sum of Rs. 5,000/-ascompensation and Rs. 500/- by way of costs. The Revision Petition is allowed, the order of the State Commission set aside and the order of the District Forum modified as above.