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2004 (3) CPR (NC) 165
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
S.N. Kapoor, Presiding Member and B.K. Taimni, Member
Central Bank of India & Anr.—Petitioners
versus
Smt. Heera Soni & Ors.—Respondents
Revision Petition No. 2189 of 2003
Decided on 4-11-2004
For the Petitioner:Sh. Vijay Gupta and Sh. J. Das, Advocates.
For the Respondent: None.
IMPORTANT POINT
In a Group Insurance Scheme where employer deducted premium from salary of employee and remitted to Insurance Com-pany, employer would act as agent of Insurance Company and Insurance Com-pany could not avoid its liability for non-receipt of premium for default on part of employer.
Headnote:Consumer Protection Act, 1986 — Sections 12 and 17 — Insurance claim under Group Insurance Policy — Decea-sed was an employee of Bank covered under Group Insurance Policy — Claim was not settled by LIC on ground that policy lapsed due to non-payment of premium — District Forum held LIC liable and directed to pay amount under policy — State Commission allowed appeal of LIC and held Bank liable — Revision — Clause in policy provided that policy would not lapse as any
other life policy of an individual lapsed automatically in case of non-payment of premium — Clause reserved right to terminate the policy and termination of policy had not taken place — Bank was acting as an agent having implied authority of LIC for collecting insurance premium — Failure on part of agent could not lead to lapse of policy — Impugned order of State Commission was liable to be set aside and LIC was liable to pay policy amount — Interest at 9% also awarded.
Result : Revision allowed.
S.N. Kapoor, Presiding Member — Heard the Ld. Counsel for the parties.
2. In this case, a Group Insurance Master Policy No. GSLI/601073 was issued in favour of employees of the Central Bank of India, Regional Office, Chhindwara (MP) on 20.11.1990. It is claimed by the Insurance Co. that Nand Kishore Soni, an employee of the Central Bank expired. His legal heir pressed the claim for Rs. 1,20,000/-. That claim was not settled despite notice to the LIC as well as to the Central Bank of India. The legal heir of the Nand Kishore filed a complaint.
3. The LIC contested the matter amongst other grounds on the ground that since the Central Bank of India has not paid the premium, the policy lapsed and as such, the LIC was not liable to pay the amount. The Central Bank took the plea that they were not charging any fee from the employee and the claim regarding payment payable after the death of an employee was not maintainable.
4. The District Forum after hea-ring the matter directed the Insurance Company to pay the amount of the Insurance Policy in terms of Master Policy No. GSLI/601073 along with interest thereon at the rate of 12% from 17.2.1999 till the date of payment. Defendant Nos. 1 & 2 were supposed to pay Rs. 1,000/- to the applicant as cost of the suit.
5. LIC filed an appeal and the State Commission took the view that the policy had lapsed and LIC was not liable to pay any amount since the deficiency was found on the part of the Central Bank. They were directed to pay the amount of Rs. 1,20,000/- with interest @ 6% from the date of filing of the complaint i.e. from 12.1.2000 along with cost of Rs.1,000/- within a period of two months from the date of receipt of the order..
6. The Central Bank has come up in revision challenging the order of the Ld. District Forum.
7. Having heard the parties Coun-sel, a short question arises in this matter as to whether policy could have been said to have been lapsed, to hold the LIC is not liable. In this regard, it would be appropriate to refer to the terms and conditions of the policy in regard to liability and payment of premium.
8. There is no dispute about one aspect that Nand Kishore, the deceased, employee of the Central Bank was eligible to get benefits on the date of commence-ment of the said policy. It is not the case that he was permitted to withdraw or retired. As such, he was eligible.
9. It would be useful to reproduce provisions of Clauses 2 and 4 of Part II of the Master Group Insurance Policy. They read as under:
2. The Grantees shall pay the pre-miums in respect of all the members in one lump sum.
4. If the premium is not paid in respect of all members for a particular month or if the premium is not paid on the due date, the Grantees shall be deemed to have discontinued payment of premium in respect of this policy as whole and the Corporation. Reserves the right to terminate the policy forth-with, The Grantees shall not, there-after, be entitled to resume payment except with the consent of Corporation and on such terms and conditions as the Corporation may prescribe in this regard.
10. As regards the payment of premium, in terms of Clause 2 of Part II of the Policy. the Grantees (the Central Bank) was supposed to pay the premium in respect of all members in one lump-sum. Clause 4 of the Policy provides for different kind of beneficial insurance cover in respect of members of a Group Insurance Policy like the present one for it does not say in so many words that if the premium is not paid in respect of all members for a particular month or if the premium is not paid on the due date by the bank like the Grantees though they should be deemed to have discontinued payment of premium, in the policy as a whole, yet it would not lead to automatic lapse of the policy. This is one part, which appears to be slightly in favour LIC. But, this is subject to another clause, which reads, “The Corporation reserves the right to terminate the policy forthwith”. The Grantees shall not thereafter
