Ghulam Mohammad Sheikh vs Union Of India Through Secretary And Others

Sindhu Sharma, J

The petitioner obtained a Postal Life Insurance Policy No.AP-181233-B dated 23.08.2002, with sum assured of Rs. 1.00 lac on monthly premium of Rs. 875/-. As per the schedule appended to the Policy Bond, the policy was due for maturity on 23.08.2012. This Policy was obtained by the petitioner while he was working in J&K Bank, Hyderabad in the year 2002. On his transfer to District Pulwama Tehsil Tral, the policy on his request was transferred to Post Office J&K Circle where he was posted.

The submission of the petitioner is that he regularly paid premium towards the Policy in the Post Office till its maturity against the proper receipt. On completion of the period of policy i.e. ten years and at the time of maturity, the Post Master Grade-I, Tral, submitted petitioner’s maturity case in terms of the Policy to the Deputy Divisional Manager PLI, J&K Circle, Jammu, on 31.08.2012. The office of the Sr. Superintendent of Post Office, Srinagar, Postal Division, Srinagar, however, vide memo no. 97/AP-181233-B dated 31.10.2013, held that the policy had become void under Rule 56 of PLI Rules, as the premium for the period from 08/2004 to 07/2012, deposited by the petitioner, was in a void policy, therefore, the premium was held to be in suspense and under this Rule the amount deposited in void Policy would be forfeited and premium held in suspense would be refunded along with the interest.

The Petitioner aggrieved of the memo dated 31.10.2013, is seeking quashing of the same and also release of the entire maturity value of the policy in his favour along with the interest @ 8%.

The contention of the petitioner is that the entire premium amount as per the policy has been deposited by him and the same was accepted by the respondents, therefore, he is entitled to the matured value of the policy. It was incumbent upon the respondents to inform the petitioner regarding lapse of the policy due to non deposit of the premium from 08/2004 to Feb. 2005, when the petitioner deposited the amount after February, but the respondents accepted the amount and informed him only after the period of policy was over and amount become due to him. It is also submitted that the Rule 56 of PLI Rules relied by the respondents in denying him the maturity value of the Policy, is not applicable to the petitioner as the policy of the petitioner was of the year 2002 and these Rules have only come into being in the year 2012. The respondents having failed to inform the petitioner at the very outset that they were receiving the premium on a void policy from 2004 to 2012 cannot now turn around and refuse to pay the maturity value of the same.

The respondents submit that the petitioner had paid monthly premium upto July 2004, but failed to pay premium for the period from August, 2004 to February, 2005 and thus the policy had lapsed. It is submitted that as per the schedule mentioned in the policy bond the petitioner had to pay the monthly premium regularly and if he fails to deposit the same within the time, the policy would lapse. Reliance is placed on Rule 58(3) of PLI Rules, which states that any payment purported to be premium is to be paid as per the schedule in the policy. Since petitioner has failed to deposit the premium for 07 continuous months, the policy had become void in terms of Rule 56(1) and 56(3) of PLI Rules.

The petitioner had continued to deposit the premium despite the lapse of the policy without reviving his PLI policy from the competent authority in terms of the contract printed in the policy bond and therefore, the amount deposited in the void policy would not make the policy effective and same was held in a suspense account and could be refunded to him. The petitioner had deposited the amount of Rs. 84,650/- after the policy had become void and amount of Rs. 17, 702/- as the interest amount was held to be refundable in his favour.

The Postal Life Insurance is a contract between the insured and the department based on the terms of contract in the Policy Bond. Clause 5, is regarding payment of premium, which is to be paid on first day of every month, with the grace period upto last working day of the month.

The respondents have held that the policy had become void under Rule 56 PLI Rules, for non depositing of premium from the period August, 2004 to July, 2012, though thereafter, the petitioner deposited the same for the entire period of the policy i.e. till 2012, the respondents have still decided to held the petitioner entitled to refund of the amount held in suspense account which was of Rs. 84, 650/- and interest amounting to Rs.17, 702/-, which is of total amount of Rs. 1, 02,352/-. However, there is merit in the contention of the petitioner as POLI rules of 2011 cannot be applicable to the policy obtained in the year 2002. Clause 6 and 7 of the Policy being relevant reads as under:

“6. LAPSE OF POLICY: The policy shall be treated as lapsed in the case the policy holder fails to pay the premium/premia that has/have become due against his/her policy within the period of grace in accordance with Rule 39 & 40 of POLI rules as applicable.

REINSTATEMENT OF POLICIES: In the event of a policy holder of a lapsed policy desiring automatic reinstatement of his/her policy within a period not later than six months or a period not later than 12 months from the date the first unpaid premium had become due in respect of such policies that have not completed three years, or in respect of policies that have already completed three years from the date of acceptance respectively, he/she may deposit all the arrears of premium/Premia till that date of such payment along with the interest thereon at the rates prescribed by Director General of Posts in the specified Post Office and informed Chief Postmaster General, AP Circle to this effect through the said Post Office along with certificate of continued good health in the prescribed proforma to be signed by the insurant him/herself.”

The petitioner admittedly had not deposited the amount from 08/2004 to Feb. 2005 but thereafter, had regularly paid the premium which had been accepted by the respondents till 2012. As per the Clause 7 of the Policy, the Policy of the petitioner could have been reinstated as it was within the time duration. The fact that respondents accepted the payment for almost of 07 years, thereafter, supports the fact that policy of the petitioner had not lapsed.

The respondents have produced the original policy. In terms of said policy the sum assured to the petitioner was only of Rs. 1.00 lac. Even though the respondents have held the petitioner not entitled to the amount assured in terms of the policy as the same had become void on account of non-deposit of the premium, still the petitioner is entitled to the same amount by the respondents.

In view of the aforesaid facts and circumstances, this petition is allowed. The petitioner is held entitled to amount as per maturity value of the policy due to him from the date it became due to him i.e. 13.10.2013, along with the interest @ 06%, within a period of six weeks from the date copy of this order is made available.

Disposed of along with connected CM(s).