Non-payment of premium within the stipulated time leads to the lapse of an insurance policy, and the insurance company is not liable to pay the insured amount after the policy has lapsed.

Mr. Justice A.L. Bahri, President—Vide this order, two appeal Nos. 1293 and 1296 of 1998 are being disposed of as having been filed by the opposite parties challenging order of District Forum, Gurdaspur dated November 11, 1998 passed on the complaint of Ichhya Devi. The opposite parties were L.I.C. and Punjab State Electricity Board and Additional S.E., Urban Division, P.S.E.B., Pathankot.

2. The opposite parties were directed to pay a sum of Rs. 50,000/- the insured amount alongwith 12% p.a. interest from the date of death of the deceased i.e. March 28, 1997 minus four months till payment and to pay Rs. 1,000/- as litigation expenses to the complainant Ichhya Devi widow of Lekh Raj who was an employee of Punjab State Electricity Board who had further taken life insurance policy of the deceased from the Life Insurance Corporation. Appeal No. 1293 has been filed by the Life Insurance Corporation whereas appeal No. 1296 has been filed by Punjab State Electricity Board and others.

3. An insurance policy in the sum of Rs. 50,000/- covering risk of life of Lekh Raj, Lineman of the Punjab State Electricity Board was obtained by the Board on March 28, 1997. Lekh Raj died on September 23, 1997. As per terms and conditions of the policy, the premium of the policy was to be deducted from the salary of Lekh Raj by the Electricity Board and to be remitted to the Life Insurance Corporation. On the death of Lekh Raj, claim was made with the Life Insurance Corporation which was repudiated that the District Forum was approached. Both the opposite parties denied their liability although taking of the policy and payment of the premiums on the dates alleged were not disputed. The District Forum accepted the complaint and passed the impugned order.

4. Taking up the claim of Life Insurance Corporation, it is contended that premium for the months of May and June, 1997 was required to be forwarded by the Electricity Board to Life Insurance Corporation within 14 days of deduction thereof from the salary. But the same was factually paid through a cheque dated August 11, 1997 which was consolidated premium of all the employees including Lekh Raj which was accepted by the Corporation. Likewise the premium due in July, 1997 was sent by the Electricity Board vide cheque dated September 16, 1997 which was also accepted by the Corporation. The dispute is regarding the premium due in the month of August and September, 1997 which was forwarded to the Corporation vide cheques dated October 7 and November 14, 1997 respectively. Thus, the relevant question for consideration is whether policy lapsed during the life time of Lekh Raj as premium due in the month of August, 1997 was not paid within 15 days of the deduction of the premium and as sent by a cheque dated October 7, 1997 i.e. after the death of Lekh Raj which happened on September 23, 1997. According to Counsel for the Life Insurance Corporation for non-payment of the premium relating to Lekh Raj, the policy lapsed and payment of the premium after his death will not revive the policy. In support of this, reliance has been placed on the decision of National Commission in MCD/DESU v. Basanti Devi & Anr., II (1995) CPJ 50 (NC). In that case the insured was an employee of DESU and has taken the insurance policy under the salary deduction scheme. Only two instalments initially of the premium were paid and for non-payment of the subsequent instalments, policy lapsed. The State Commission absolved the Life Insurance Corporation from the liability and fastened the liability on the DESU. This decision was upheld by the National Commission which decision was subsequently reversed by the Supreme Court in State of Orissa v. Divisional Manager, LIC & Anr., II (1996) CPJ 31 (SC), holding that the Government was excluded from the purview of the Act as providing free service of deduction of premium for forwarding the same to the L.I.C. Since the policy had lapsed for non-payment of the premium which was due in August,