The insurance company's assumption of responsibility for premium recovery from the employer established a direct relationship between the insurance company and the employer, leading to the insurance company's liability for the lapsed policy.

ORDER

S.N. Aggarwal, President - Shanti Devi purchased the Life Insurance Policy from the appellants under the Jeevan Sanchay Plan on 28.12.1999 for an amount of Rs. 60,000 through their approved agent Darshan. The premium was to be paid @ Rs. 529 per month. Shanti Devi got it converted under the Salary Saving Scheme. Shanti Devi was an employee of Municipal Council, Bathinda, respondent No. 2. The assured and the appellants had given in writing to respondent No. 2 for making the payment of premium by deducting the same from the salary of assured. Shanti Devi died on 14.10.2002 on which respondent No. l, being the husband and nominee of Shanti Devi lodged the claim with the appellants. It was repudiated by the appellants vide letter dated 11.12.2002 on which respondent No. 1 filed a complaint against the appellants and respondent No. 2 for claiming the insurance amount with compensation, interest and costs.

2. The appellants filed the written reply. It was admitted that Shanti Devi had purchased the Life Insurance Policy for an amount of Rs. 60,000 in December, 1999 and she was to pay instalments of premium to the tune of Rs. 529 per month. However, no premium was paid by the assured since February, 2000, therefore, the policy stood lapsed. It was admitted that on the request of Shanti Devi, the policy was issued under the Salary Saving Scheme. However, she had given a written undertaking for the payment of premium of the policy from her salary every month through her employer and on the failure of the employer to make the payment of premium, she was to make arrangements herself for the remittance of premium every month. It was duly intimated to her employer, respondent No. 2. It was admitted that respondent No. l was the nominee and husband of Shanti Devi. It was pleaded that since the policy stood lapsed at the time of death of the assured, therefore, respondent No. 1 was not entitled to any insurance claim. Hence dismissal of the complaint was prayed.

3. Respondent No. 2 i.e. Municipal Council, Bathinda also filed the written reply. It was admitted that Shanti Devi was the employee of respondent No. 2. It was, however, pleaded that Shanti Devi had never asked respondent No. 2 to deduct the amount of premium from her salary and to remit the same to the Life Insurance Corporation of India i.e. the appellants. It was also pleaded that Shanti Devi was being paid full salary and no amount of premium was ever deducted from the salary of Shanti Devi. It was also pleaded that respondent No. 2 had written a letter to the appellants on 14.9.2000 by which the appellants were requested to secure a report of respondent No. 2 before issuing the life insurance policy to any of their employees. It was pleaded that even the appellants had never asked respondent No. 2 to deduct the amount of premium from the salary of Shanti Devi, assured. Therefore, respondent No. 2 had no concern with the payment of premium on behalf of Shanti Devi, assured to the appellants. Hence dismissal of the complaint was prayed.

4. Respondent No. 1 produced his affidavit, Ex. C-1 and also proved documents Exs. C-2 to C-6. On the other hand, respondent No. 2 produced affidavit of Kamal Kant, Executive Officer of respondent No. 2 as Ex. R-1 and also proved copy of letter dated 14.9.2000 as Ex. R2. The appellants also produced affidavit of N.K. Garg, Senior Branch Manager as Ex. R-3 and proved documents Exs. R-4 to R-8.

5. The learned District Forum considered the pleadings of the parties and the documents/affidavits placed on file by them and accepted the complaint with cost of Rs. 1,000. The appellants were directed to make the payment of Rs. 60,000 along with interest @ 9% p.a. from 1.3.2003 till the date of payment.

6. Hence the appeal.

7. The submission of the learned Counsel for the appellants was that the judgment of the Hon'ble Supreme Court reported as Delhi Electric Supply Undertaking v. Basanti Devi and Anr., IV (1999) CLT 36 (SC), on the basis of which this judgm