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2000 Supreme(Pat) 151
PATNA HIGH COURT
S.K.Katriar, J.
Chameli Khatun
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 9906 of 1998 ;
Decided On : JANUARY 27, 2000
Employer's delay in premium payment justified the insurance company's refusal to pay, and the employer was directed to make the payment with interest.
Headnote:
Insurance - Group Insurance - - [Supplementary affidavit of respondent no.2 and 5, Act of the Legislature] - The court discussed the delay in payment of premiums by the employer, the liberal policy of the insurance company, and the employer's responsibility to deduct and remit the premium amount. The court held that the insurance company was justified in refusing to make payment due to the delay in premium payment by the employer. The employer was directed to make the payment with interest.
Fact of the Case:
The petitioner, a widow, sought direction for the payment of Group Insurance after her husband's death. The insurance company refused to pay the balance of the insured sum due to belated premium payments by the employer.
Finding of the Court:
The court found that the insurance company was justified in refusing to make payment due to the delay in premium payment by the employer. The employer was directed to make the payment with interest.
Issues: Delay in premium payment, Employer's responsibility, Insurance company's refusal to pay
Ratio Decidendi: The employer's delay in premium payment justified the insurance company's refusal to pay. The employer was directed to make the payment with interest.
Final Decision: The writ petition was allowed, and the employer was directed to make payment of the insured sum with interest within three months.
1. Heard Mr. Kanti Kumar Ojha for the petitioner, Mr. Umesh Prasad Singh, Sr. Advocate, for respondent Life Insurance Corporation, and Mr. Vikash Jain, GP IV, for the respondent District Board, Sahebganj.
2. A hapless widow is the petitioner before this Court for an appropriate direction to the respondents regarding payment of Group Insurance payable to her after the death of her husband. The petitioners late husband Abul Kalam, was a class IV employee of respondent no. 5 (the District Board, Sahebganj), died in harness on 8.11.94, on which date the insured sum became payable. The maximum amount payable was a sum of Rs.50,000/-. After the death of her husband, the petitioner made efforts with the respondents for payment of the insured sum. She could receive Rs.2235.62p. only from respondent no.4 (the Life Insurance Corporation), (LIC, in short) which expressed inability to pay the balance of the insured sum for the reason that the premiums were paid belatedly.
3. The LIC in its counter affidavit has given the following chart to establish that the premiums were forwarded by respondent no.5 to respondent no.4 belatedly, and was a habitual defaulter :-
Due
date Date of deposit
20.6.94
18.8.94
20.7.94
15.10.94
20.8.94
15.10.94
20.9.94
15.10.94
20.10.94
28.1.95
20.11.94
24.4.95
20.12.94
24.4.95
According to the learned counsel for the LIC, in an insurance scheme of the nature in question where the instalments are payable once every month, the Corporation has adopted a liberal policy and gives a grace period of 15 days for payment of the instalment every month.
4 Mr.Vikash Jain, learned counsel appearing for the respondent District Board, submits that it is manifest from the pleadings that the Insurance Company had accepted the premiums, never disowned the premiums sent on 28.1.95, which was really meant for the payment towards the instalment which had fallen due on 20.10.94. He further invites my attention to the aforesaid last two payments, both made on 24.4.95, which were meant for the instalments which had fallen due on 20.11.94 and 20.12.94. Having accepted the premiums, in his submission it is no longer open to the LIC to turn round and disown the premiums so accepted. Learned counsel further submits that respondent no.5 is a good deal dependent on the State Govt. for funds. Respondent no.5 has received the grants belatedly from the State Government, hence the delay in payment of the premiums. He further invites my attention to the following clause of the insurance scheme which is set out in paragraph 4 of the supplementary affidavit of respondent no.2 and 5 :-
"The contributions are paid by the employees themselves in full. The Employer acts only as a coordinator. The monthly contributions are deducted from the salaries of the employees and remitted to LIC every month."
He relies on the judgment of the Supreme Court reported in (1999) 8 SCC 229 (Delhi Electric Supply Undertaking vs. Basanti Devi).
5 Having considered the rival submissions, I am of the view that this writ petition has to be allowed. It is manifest from the aforesaid chart set out in the counter affidavit of respondent no.4, that respondent no.5 had paid the premiums to respondent no.4 belatedly. It was beyond the period of 15 days allowed by way of grace period every month for depositing the premium. In that view of the matter, I have no hesitation in holding that LIC is justified in refusing to make payment of the insured sum to the petitioner. As stated above the LIC has already paid a sum of Rs.2235.6 p. to the petitioner which was payable to her in accordance with the scheme in question.
5.1. Learned counsel for respondent no.5 has next submitted that it is a good deal dependent on the State Government for grant of funds to carry out its own duties and functions. I am unable to accede to this contention for two reasons, i.e. this is a matter between the State Govt. and respondent no.5, with which the petitioner has no concern; secondly respondent
