Life Insurance Corpn. of India vs HEERA SONI

THIS appeal is directed against the order dated 29th January, 2001 passed in Case No. 6/2000 by the District Consumer Disputes Redressal Forum, Chhindwara (for short the ''District Forum'') whereby the complaint for deficiency in service in not making the payment of the claim on the death of the life assured-Nandkishore Soni, employee of the Bank, insured under the Group Savings Link Insurance Scheme obtained by the Central Bank of India for covering the risk of the employees of the Bank, placing reliance on the decision of the Supreme Court in Delhi Electric Supply Undertaking v. Basanti Devi, III (1999) CPJ 15 (SC)=VIII (1999) SLT 279=1999 CTJ 713, was allowed with an order to the Life Insurance Corporation of India (for short the ''LIC'') to pay the amount of Rs. 1,20,000/- with interest thereon at the rate of 12 per cent per annum from 17.2.1999 along with Rs. 1,000/- as costs of the proceedings.

ADMITTEDLY, the LIC issued a Master Policy No. GSLI/601073 dated 20.11.1990 under the Group Insurance Savings Link Scheme for insuring the employees of the Bank. The life assured-Nandkishore Soni was also insured, whose premium Bank used to deduct from the salary and after collecting the premium of all the employees of the Bank, the Bank used to remit the yearly premium on 20th day of every calender month. However, the Bank defaulted in remitting the premium under the Master Policy so issued covering the risk under the scheme of the employees in the name of the grantee, the Central Bank of India on the terms and conditions of the policy. The premium due of Rs. 18,363/- on or before 20th May, 1997, was deposited on 8.7.1997 which was returned by the LIC as the policy has lapsed on 20.5.1997. The life assured died on 29.5.1997. The respondent Nos. 1 to 3 made a claim which was not paid by the LIC for the reasons assigned in the letter dated 15.2.1999 stating therein that as the premium was not deposited till the death of the life assured, therefore, the claim was not payable. After hearing learned Counsel for the parties and on reappraisal of evidence on record, we are of the opinion that it being not a case under small saving scheme, the LIC in our opinion for non-payment of the claim cannot be made liable. This Commission considered the question of the Master Policy under the Scheme of Group Savings Linked Insurance Scheme in Appeal No. 991/2002 decided on 19.12.2002, Ayukt, Nagar Palika Nigam v. Bhartiya Jeevan Bima Nigam, wherein this Commission after referring Part-I of the Scheme of the policy which dealt with the "Eligibility" and Part-II deals with the payment of "Premiums" and also the relevant Condition Nos. 2, 3, 4 and 5 contained in Part II of the Schedule in paras 4 and 5 observed thus : "4. A bare look to the Condition No. 2 of Part-II of the Schedule, it is evident that it is the liability of the grantee to pay the premiums in respect of all the members in one lump sum. Condition No. 3 lays down that if the premium is not paid within time then no grace period will be allowed for payment of premium. In case of default in payment of premium on the due date, the LIC has reserved the right to terminate the policy forthwith. Thereafter the grantee shall not be entitled to resume payment except with the consent of the LIC. Condition No. 1 of Part III of the Schedule relates to the benefits payable on the death before a terminal date. Condition No. 2 deals with benefits payable on terminal date or cessation of membership other than death before terminal date. 5. From the facts which have come on record, it being not a case under the Salary Saving Scheme, therefore, the submission of the learned Counsel for the appellant that in view of the decision of the Supreme Court in case of Delhi Electric Supply Undertaking v. Basanti Devi, AIR 2000 SC 43, followed by this Commission in Life Insurance Corporation of India through Branch Manager v. Smt. Mulema Singh, 2001 (2) CPR 148, the LIC was liable to pay the amount, cannot be accepted as the employer in this case was not acting as an agent under the scheme."

In such circumstances, the submission of the learned Counsel for the respondent Nos. 4 and 5 that the LIC was deficient in service in not making the payment cannot be accepted. In view of this, it is the employer-Central Bank of India, who was deficient in service in not remitting the premium in time on or before the due date, therefore, the employer - Bank is liable to pay the amount for Rs. 1,20,000/-.

HOWEVER, the award of interest at the rate of 12 per cent per annum is excessive in view of the change in economic policy by the Reserve Bank of India wherein the Bank has lowered down the rate of interest on fixed deposit and now the Nationalised Banks are granting interest on the fixed deposit at the rate of 6 to 7 per cent per annum. In the facts of this case, the ends of justice would meet if the respondent Nos. 4 and 5 are directed to pay the amount of Rs. 1,20,000/- with interest thereon at the rate of 6 per cent per annum from the date of filing of the complaint i.e., 12.1.2000 along with costs of Rs. 1,000/- within a period of two months from the date of receipt of certified copy of this order, failing which the amount of Rs. 1,20,000/- shall carry interest at the rate of 9 per cent per annum.

IN the result, the appeal is allowed. The order of the District Forum so far it is against the LIC is set aside, which shall stand substituted as indicated hereinabove. Appeal allowed.