DISTRICT TRANSPORT MANAGER Vs. SUPRAVA HOTA

JUDGEMENT

(1.) The present appeal relates to the payment of the sum assured under a salary savings scheme. By the impugned order dated 17.10.1995 the District Forum, Cuttack directed the opposite party No.1 the Branch Manager, Branch-I, Life Insurance Corporation of India, Berhampur to pay a sum of Rs.7,312/- towards the premiums which was paid after the policy lapsed. It further directed to opposite party No.2 to pay a sum of Rs.5,000/- towards compensation and Rs.1,000/- as cost of the litigation for deficiency in service in not remitting the premiums to the L. I. C. of India.

(2.) Biswanath Hota the deceased husband of the complainant while was an employee under the Orissa State Road Transport Corporation Ltd. , Cuttack Zone-II, Cuttack had taken up a Life Insurance policy of Rs.10,000/- under the Salary Savings Scheme. His employer District Transport Manager (Administration-II) used to deduct the monthly premium from his salary and was remitting regularly up to June, 1993. The said Biswanath Hota died on 4.7.1993. The complainant being the legal heir of the deceased lodged a claim with opposite party No.1 the L. I. C. of India for settlement of the insurance claim. Though she claimed an amount of Rs.22,000/- the L. I. C. I. gave a discharge voucher of Rs.8,630/- on 1.9.1993. This she did not accept, and hence the case. It is the case of the L. I. C. I. that premiums in respect of the policy was received regularly from the opposite party No.2, the employer only up to June, 1991 but premiums from July, 1991 to December, 1992 i. e. for 18 months were received late after the policy lapsed. Premiums for January, 1993 to July, 1993 were received but being not acceptable are liable to be refunded. Since the amount so received by it become the money payable under a paid up policy, discharge voucher for Rs.8,630/- was issued to the complainant.

(3.) The Forum in para-4 of the judgment held that the opposite party No.2 had 'badly' defaulted in remitting the premium deducted from the salary of the deceased for which the policy lapsed. In the written version the Insurance Company took the plea that after June, 1993 there was no remittance from the opposite party No.2 and thereafter the policy lapsed. But subsequently the premium for the period from January, 1993 to July, 1993 was received but could not be adjusted against the policy as it was already became paid- up for non-payment of 8 instalments. We have already held in the case of Life Insurance Corporation of India V/s. Prafulla Kumar Behera, in C. D. Appeal No.489 of 1999, that once the employer deducts even one monthly instalment of the premium and remits it to the Life Insurance Corporation but thereafter fails to either deduct or fails to remit after deduction the amount of premium then on the basis of the law laid down by the Supreme Court in the case of Delhi Electricity Supply Undertaking V/s. Basanti Devi and Anr., 1999 8 SCC 229, the L. I. C will be liable for payment of the sum assured. The relationship between the L. I. C. I. and the employer is that of the principal and agent respectively and in such a case L. I. C. I. will be liable for the wrongful act of its agent i. e. the employer. In the present case the lower Court judgment found to be against the law laid down as stated above. It is an error on the part of the Forum below to saddle the liability on the employer while the L. I. C. I. should have been held responsible for the whole of the sum assured. Mr. Samantray however is very critical, that a lapsed policy cannot be revived even if the premium is received afterwards. We do not accept this contention, since, the L. I. C. did not return the premium so received late, stating this reason, now advanced. Having retained the money, they cannot plead now that they are not liable to pay the sum assured. It is immaterial whether the policy lapsed or not. L. I. C. I. is liable to pay the whole of the amount and this should be done within a period of eight weeks from the date of communication of the order along with interest at the rate of 12% per annum as has been held by the District Forum. Hence, the appeal is dismissed. No cost.