Employer and insurer are jointly liable for insurance benefits despite policy laps due to failure in premium communication.

ORDER

1. This Revision Petition No.1392 of 2012 challenges the impugned order of Andhra Pradesh State Consumer Disputes Redressal Commission, Hyderabad (‘State Commission’, hereafter) dated 09.11.2011. Vide this order, the learned State Commission modified the order dated 18.12.2008 of the East Godavari District Consumer Disputes Redressal Forum, Kakinada (‘District Forum’, hereafter) and allowed in part the Appeal No.463 of 2009 by fixing jointly and severally liability of the Petitioner/OP2 (‘OP2’, hereafter) and Respondent No.1/OP1 (‘OP1’, hereafter) to pay the sum insured to the Respondent No.2/Complainant (‘Complainant’, hereafter).

2. As per Report of the Registry, there is a delay of 6 days in filing of the Revision Petition. However, as per the Application seeking condonation of delay, there is a delay of 5 days. For the reasons stated in the Application, the delay is condoned.

3. Briefly, the facts of the case, as per the Complainant, are that she is the wife of late Shri RV Subrahmanyam who worked as General Secretary, Kandregula Primary Agricultural Co-operative Society. He died on 14.11.2002. During his lifetime, he had taken Jeevan Mitra Double Cover Endowment + Profits+ Accident Benefit policy for Rs.35,000 for 15 years, commencing from 28.10.1998. The policy was linked with Employees Provident Fund Organization (OP-1) wherein it had paid the yearly premium of Rs.2,800 to LIC (OP-2) on his behalf. He would be entitled to payment of Rs.70,000 besides, other benefits from the insurance company. When she preferred the claim, OP-1 sent discharge voucher along with policy bond to OP-2, which in turn informed her that she was not entitled to death benefit, as the premium due for 10/2000 was not paid by OP-1. It is for the PF authorities to pay the premium and it ought to have informed the policyholder if for any reason the amount is not paid. OP-1 ought to have informed the nominee that the policy was in a lapsed state instead of sending discharge voucher etc. Equally, the insurance company ought to have informed OP-1 to revive the policy directing it to pay the amount. As PF authorities failed to issue notice to the assured to pay the premium amount and the OP-2 failed collect the amount from OP-1 even after agreeing collect the same, they cannot now deny the benefits covered under the policy to the nominee. Therefore, she filed a Consumer Complaint before the District Forum claiming Rs.70,000 covered under the policy + bonus with other accident benefits, with interest and costs.

4. The OP1 resisted the case. While admitting that assured had taken the LIC policy and it had agreed to collect the premium from out of the provident fund, they paid yearly premium for 10/1998 and 10/1999. Since there was no sufficient amount in the account of the assured for 10/2000 it could not send any premium. As per para 62(3) of EPF Act, the premium should be made out of member's own share of provident fund. It has no power to pay the premium from out of the employer's share of provident fund. The assured had taken several non-refundable advances/withdrawals from out of his own share of provident fund leaving no amount payable towards LIC premium. His transfer to another co-operative society was not informed till submission of application for transfer of his account. Its responsibility to pay the premium to the insurance company was subject to availability of the amount in member's own share of PF. The assured ought to have kept minimum balance in order to deduct LIC premium. He being Secretary, was aware of the consequences. He did not remit the PF amounts collected by him from the salaries and failed to submit the returns