MCD/DESU vs Basanti Devi

AFTER hearing both sides and perusing the records of the case we have unhesitatingly come to the conclusion that the decision rendered by the State Commission, Delhi, as per its impugned order dated 28.1.1994 is not vitiated by any illegality or error and that this appeal has only to be dismissed.

ONE Shri Bhim Singh was an employee of DESU (appellant in this appeal). He had taken out a life insurance policy for a sum of Rs. 50,000/- under the Salary Deduction Scheme, as per the proposal dated 30.11.1991 submitted by him. The proposal was forwarded by DESU to the Life Innsurance Corporation of India and it was ultimately accepted by the L.I.C. and the policy came into force with effect from 28.1.1992. An amount of Rs. 636/- representing the first two monthly premiums had been deposited by DESU with the Life Insurance Corporation on 22.1.1992. The subsequent premiums were to be paid by DESU after deducting the same every month from the salary of the employee, Shri Bhim Singh. Unfortunately, Shri Bhim Singh passed away on 17.8.1992. Thereupon, his widow informed the Insurance Company about her husband''s death and requested for payment of the amount due under the Policy. To her utter dismay, the L.I.C. disclaimed liability for payment of any amount to her on the ground that the premium due for the first two months alone had been paid in respect of the policy and thereafter default had been committed in payment of the subsequent premium and as a consequence thereof the policy had lapsed. Aggrieved by the said repudiation of liability by the insurer, the widow of the insured preferred a complaint before the State Commission, Delhi, seeking to recover a sum of Rs. 1,00,000/- as due to her under the insurance policy and also a further amount of Rs. 50,000/-as compensation for mental agony and pain as well as an additional Rs. 5,000/- for expenses of litigation etc. It was alleged by the Complainant that Shri Bhim Singh has died as a result of having been hit and knocked down by a cow and hence in addition to the sum of Rs. 50,000/- for which insurance had been taken, she was also entitled to be paid a further equal amount by way of accident benefit.

The Life Insurance Corporation and DESU were impleaded as opposite parties in the complaint petition.

IT was submitted before the State Commission by the L.I.C. in its written statement that the premium amounts which became due on and after 28.3.1992 were not remitted to it by the employer of the insured within the grace period and hence the insurance policy had become lapsed. On this basis, it was submitted that there was no deficiency in service on the part of the Life Insurance Corporation and consequently the Complainant was not entitled to seek any relief as against it. In its written statement DESU had admitted that the deceased had taken out a life insurance policy under the Salary Deduction Scheme and that amount payable as premium had been regularly deducted by DESU every month from out of his salary. The written statement of DESU went on to state that the deducted amounts were remitted to the Life Insurance Corporation by cheques dated 2.3.1993, 16.4.1993, 29.4.1993 and 4.5.1993 and hence the DESU was not liable in respect of any portion of the claim by the complainant.

THE State Commission conducted a thorough investigation into all the relevant facts. It found that under the Salary Deduction Scheme it was the duty of the employer DESU to deduct from the salary and remit the premium amounts to the Life Insurance Corporation every month. But, in spite of the fact that DESU had been regularly deducting the premium amounts every month from the salary of the deceased, in failed to deposit such amounts with the Life Insurance Corporation in time. Only the first two premiums due in respect of the policy of late Shri Bhim Singh had been paid by DESU on 22.1.1992. THE third premium became due on 28.3.1992. Despite having deducted the amount of this premium from the salary of late Shri Bhim Singh DESU remitted the amount to the Life Insurance Corporation only on 2.3.1993. THE grace period for payment of this premium had expired on 12th April, 1992, and consequent on the non-payment of the premium before the said date the policy lapsed in the month of April, 1992. After referring to the brochure titled as "Salary Saving Scheme" the State Commission has rightly observed that under the said Scheme DESU had agreed to act as an agent of its employee in the matter of remitting the premium. By reason of the default committed by it in remitting the amounts which had been deducted from the salary of the employee, the policy had got lapsed and the widow of the deceased employee has been deprived of the benefit of the insurance policy. We are unable to see any illegality or any error in the said finding recorded by the State Commission. The deficiency on the part of DESU in relation to the services which it had agreed to render to the employee has been clearly established. The State Commission was, in our opinion, perfectly justified in directing the DESU to pay to the Complainant (widow of the employee) the amount of Rs. 50,000/- (The State Commission after fully examining the evidence relating to the matter found that the case put forward by the Complainant that the deceased had suffered injuries as a result of his being attacked by a cow and his death was caused by such injuries was not proved and hence the State Commission held that there was no basis for the claim put forward by the Complainant that she was entitled to double accident benefits) with interest at 15% from 17.12.1992 till the date of payment. Hence, it directed payment of Rs. 50,000/- by way of the loss suffered by the Complainant. We confirm the order so passed by the State Commission and dismiss this appeal. The appellant shall pay a sum of Rs. 2,500/- by way of costs to the Respondent. Mr. Y. Krishan, Member The D.E.S.U. was acting as an agent of the employee, Shri Bhim Singh in deducting from his salary the insurance premium payable to the L.I.C under the Salary Savings Scheme for Group Insurance and remitting the same to the Insurer. The employee had not hired the services of D.E.S.U. fora consideration for this purpose. The employee was not buyer of a service nor the D.E.S.U., the provider of a service for a consideration. As such the failure of D.E.S.U. to remit the amount deducted from the salary of Shri Bhim Singh to the Insurer cannot be deemed to be a deficiency in service by the provider of service to a buyer or consumer under the Consumer Protection Act. A deficiency in service on the part of an Agent towards the Principal cannot be regarded as a ''dispute'' under the Consumer Protection Act. In view of this, there has been a wrongful exercise of jurisdiction by the State Commission resulting in material irregularity. The Order of the State Commission is set-aside and the complaint-petition is dismissed. There is no order as to costs. Petition dismissed.