IMPORTANT POINT
Question of lapse of insurance policy arises only when premium remains unpaid for 6 months.

D.K. Jain, J. President—Challenge in this Revision Petition by the Life Insurance Corporation of India, (for short “the Insurance Company”) is to order dated 02.08.2007 passed by the Rajasthan State Consumer Disputes Redressal Commission, Circuit Bench at Jaipur (for short “the State Commission”) in Appeal No. 1499 of 2006. By the impugned order, the State Commission has reversed the order dated 13.07.2006, passed by the District Consumer Disputes Redressal Forum, Bharatpur (for short “the District Forum”) in Complaint No. 294/2003, whereby the complaint filed by Respondent No. 1 against the Insurance Company, the Government of Rajasthan and the Chief Medical and Health Officer, Government of Rajasthan, Respondents No. 2 & 3 herein, was dismissed.

2. The material facts, giving rise to the present Petition are as follows:-

Late Sh. Mahaveer Singh, husband of Respondent No. 1, was an employee of Respondent No. 3 as male nurse. He had obtained an insurance policy from the Insurance Company under the “Salary Saving Scheme.” Under the said Scheme, the premium was to be deducted from the salary of all the insured employees by the employer and was to be remitted to the Insurance Company through one cheque. Unfortunately, Mahaveer Singh passed away on 30.08.1996. On his death, Respondent No. 1 preferred claim under the said Scheme with the Insurance Company. However, the claim was repudiated on the ground that since the premium for the months of July and August, 1996 in respect of the deceased had not been received from the employer on time, the policy had lapsed. In fact the premium was remitted by the employer to the Insurance Company on 24.12.2002 i.e. after a lapse of six and a half years.

3. Being aggrieved by the decision of the Insurance Company, Respondent No. 1 filed a complaint before the District Forum, inter alia, praying for a direction to the Insurance Company to pay the amount due under the policy along with a compensation of Rs.25,000/-. As stated above, the District Forum dismissed the complaint on the grounds that it was barred by limitation as also there was no deficiency on the part of the Insurance Company in repudiating the claim as the deceased was aware that, being on leave, premium was not deducted from his salary and remitted to the Insurance Company.

4. The first Respondent carried the matter in Appeal to the State Commission. As noted above, the State Commission has overturned the decision of the District Forum and has held that the complaint was not barred by limitation. It has also been held that on non-receipt of the premium, the Insurance Company was duty bound to give a notice to the employer as well as to the employee regarding default in payment of premium and its failure to do so could not deprive the insured of the benefits under the policy. Consequently, the State Commission allowed the complaint with a direction to the Insurance Company to pay to the first Respondent the assured sum with all other benefits under the policy along with interest @ 9% p.a. from 19.04.2003 till realization. Hence, the present Revision Petition.

5. The Revision Petition was heard by a Bench comprising Mr. Justice K.S. Chaudhari (Judicial Member) and Dr. B.C. Gupta (non-Judicial Member). The Learned Judicial Member came to the conclusion that since the claim preferred was repudiated by the Insurance Company vide their letter dated 28.10.1997, the complaint filed on 03.07.2003, i.e. after 5 years 8 months of repudiation of the claim, was clearly barred by limitation. On merits, the Learned Member held that since the employer had admittedly deducted the premium for the months of July and August 1996 on 24.12.2002 and remitted it to the Insurance Company, which was not accepted, the Insurance Company was not responsible to make payment under the policy as it had lapsed. Accordingly, the Learned Member allowed the Revision Petition filed by the Insurance Company. However, the Learned non-Judicial Member, disagreeing