The main legal point established in the judgment is the application of Section 64-VB of the Insurance Act and the interpretation of the requirement for the insurer to receive the premium before assuming any risk.

Mr. C.P. Suresh, Member—The unsuccessful second opposite party in O.P. No. 78/1997 on the file of the District Consumer Forum, West Godavari at Eluru is the appellant before this Commission. The facts in brief are that the complainant’s husband, who was working in S.D.S. Junior College, Jangareddigudem, as a Junior Lecturer, died on 29.4.1996 in an accident. He joined the Group Insurance Scheme, which was a compulsory scheme. The claim filed by the complainant with the opposite parties for the insurance amount was delayed and not paid and, therefore, there is deficiency of service on their part. The complainant, therefore, approached the District Forum.

2. The first opposite party, the management of the college, filed written version alleging that the policy being the Group Insurance Policy linked with the salary, the premia are paid from time to time whenever the Government releases funds because the college is an aided college, and the salaries of its employees had to be paid as and when the grant is released by the Government.

3. The second opposite party filed its written version stating that there is no privity of contract between it and the complainant’s husband and as per the proceedings of the Director of Higher Education dated 20.3.1989, the premia had to be paid by 20th of each month, and in this case, the premia for the months of 1/1996, 2/1996 and 3/1996 were paid on 30.4.1996 after the death of the insured and that by that time the policy had lapsed and, therefore, there is no question of revival of the policy after the death of the complainant’s husband, and the second opposite party is not liable to pay the insured amount and there was no deficiency of service on its part.

4. Basing on these pleadings and the evidence adduced, the District Forum framed appropriate points for consideration and held that there was deficiency of service on the part of the second opposite party and directed it to pay a sum of Rs. 6,750/- towards the premia paid after the death of the insured Rs. 1,00,000/- with interest at 12% per annum from 29.4.1996 and Rs. 5,000/- together with interest at 12% per annum as compensation, besides costs of Rs. 2,000/-.

Aggrieved by the said finding and order, the second opposite party preferred this appeal.

5. The point for consideration is whether there is any deficiency of service on the part of the second opposite party.

6. The facts which are not in dispute are that the complainant’s husband C. Prabhakar Rao, who was working as a Junior Lecturer in S.D.S. Junior College, Jangareddigudem, was included in the Group Savings Linked Insurance Scheme (G.S.L.I.) which was compulsory for all the Junior Lecturers, as per the proceedings dated 20.3.1989 of the Director of Higher Education, A.P., Hyderabad. The premia had to be paid by the management of the college (first opposite party) after deducting the same from the salary of the insured. The first opposite party, the management of the college, was paying the premia accordingly. But the premia relating to 1/1996, 2/1996 and 3/1996 were paid on 30.4.1996, as per Exs. A-3 to A-5. The complainant’s husband Prabhakar Rao died in an accident on 29.4.1996. When she putforth her claim for the insurance amount, being the nominee under the policy, the appellant herein repudiated the claim through Ex. A-1 letter dated 27.5.1996 on the ground that the premia for the months 1/1996, 2/1996, 3/1996 and 4/1996 were not received before the date of the death of insured. As per Ex. A-6 the premium for the month of 4/1996 was sent on 26.7.1996. The defence of the management of the college is that the premium is paid as and when the salaries are paid to the employees. The premia were being deducted from their salaries and then sent to opposite party No. 2, and accordingly from the salaries of January to April 1996, the premia of the employees was deducted and sent to the second opposite party after receipt of the grant. As per Ex. B-1 proceedings of the Director of Higher