SNEHALATA VERMA vs Life Insurance Corporation of India

HEARD. 1. By the order impugned the Forum below has dismissed complaint of appellant claiming sum assured mainly on the ground of limitation.

ADMITTEDLY, late Shambhu Sharan, the husband of appellant had on 28. 4. 1996 obtained two life insurance policies of Rs. 1,00,000 each from respondent-LIC under a salary saving scheme. He was an employee of respondent No. 2 Bank of India, Sneh Nagar Branch, Indore. The premium was to be paid monthly. Admittedly, premium for the first two months i. e. , April and May, 1996 was paid in advance to respondent-LIC. Deceased insured also gave letter of authorization to respondent No. 2- Bank to deduct the premium from his salary and remit the same to the LIC. It appears that the Bank did not deduct the premium and remit the same in time to the LIC for next two months i. e. June and July, 1996. The premium for these two months was deducted later on and remitted to the LIC on 2. 8. 1996. It was on the same night (i. e. 2. 8. 1996) that the deceased insured died, he was murdered. The claim of appellant was repudiated by respondent-LIC on 3. 8. 2000 on the ground that since no timely premium was received by the LIC, the policy had lapsed even before the death of the insured. The same ground was set up by the respondent before the District Forum and plea of limitation was also raised. The Forum below did not advert on the merits or de-merits of the said repudiation, but dismissed the complaint as time-barred. It is true that the complaint was filed as late as on 17. 4. 2006, but there is evidence on record to show that even after repudiation of her claim the appellant-complainant has been representing to the respondent-LIC to reconsider her claim. In the letter of repudiation, the appellant was given an opportunity to represent to the higher authorities i. e. Regional Manager, Bhopal. Respondent-LIC itself has filed documents showing that after the said repudiation letter appellant wrote to the LIC to reconsider its claim. Under the circumstance, it was incumbent on the concerning officer of the respondent-LIC to forward the appellant''s claim to the Regional Office, but no action seems to have been taken by the respondent in the matter and we are, therefore, inclined to hold that cause of action continued to exist as there was no final decision in the matter by the respondent-LIC. Even otherwise, the respondent-LIC being a public undertaking owned by Government of India was not expected to set up plea of limitation and defeat the claim on such a technical ground. The respondent-Corporation which is a ''state'' within the meaning of Article 12 of the Constitution ought to have followed the mandate of the Apex Court and the High Court of M. P. as laid down in the case of Madras Port Trust v. Hymanshu Internations, (1979) 4 SCC 176 and Mahavir Kishore and Ors. v. State of M. P. , AIR 1990 SC 313 and State of M. P. v. Ramrao Krishnarao Palsikar, 1990 JLJ 315. It will be, thus, seen that claim of appellant could not be defeated on the ground of limitation and the Forum below ought to have ignored or rejected the plea of limitation as set up by the respondent.

Coming to the merits of the case, we may straightaway refer to the Supreme Court decision in the case of Delhi Electric Supply Undertaking v. Basanti Devi and Anr. , III (1999) CPJ 15 (SC)=viii (1999) SLT 279=1999 CTJ 713 (SC) (CP) followed by the High Court of Madhya Pradesh in the case of Naseem Bano, 2006 ACJ 174. In these cases it is held that the employer having been given authority by the LIC as its agent to collect premium of their employees on their behalf and forward the same to it, the employer would act as LIC''s agent not under the Insurance Act or Regulations, but in the Contract Act and the LIC would be liable for the fault if any of its agents in not remitting the premium amount in time. In all these cases the LIC has been held responsible for payment of sum assured even when the amount of premium could not be remitted to it in time by the employer. In the instant case also, therefore, the respondent-LIC was liable to pay the sum assured to the appellant.

SINCE there has been delay on the part of appellant-complainant in approaching the District Forum, we deem it just and proper to award interest from the date of complaint till payment. As regards the cost, following the ratio of the decision in the case of Basant Devi (supra), we hold respondent-Bank liable to pay cost of litigation to the appellant. We accordingly allow the appeal, set aside the impugned order and direct the respondent No. 1 LIC to pay to appellant-complainant the sum assured i. e. Rs. 2,00,000 (Rs. 1,00,000 each under the said two policies) with interest at the rate of 8% p. a. from the date of complaint till payment.

RESPONDENT No. 2-Bank is directed to bear appellant''s cost of this litigation and the same is quantified at Rs. 2,000. Appeal allowed.