USHA Vs. LIC

JUDGEMENT

(1.) Brief facts of the case are that one Rajinder, deceased, who was employed as a loader in Indian Airlines, became a member of a Group Life Insurance Scheme and obtained 20 years money-back policy with profits (with accident benefit) dated 13.8.1980 from Life Insurance Corporation, hereinafter referred to as opposite party 1. The said insured remained absent from duty from November, 1991 to August, 1992. It appears that his salary was not drawn during the period of his absence. He, however, reported on duty in September, 1992 and in the salary-slip for September prepared in October, 1992, inter alia 2,400.20 were deducted from the arrears bill due on account of monthly LIC premium. On 25.10.1992 the said insured was murdered. A claim under the policy was made by his widow Smt. Usha, who was nominee of the insured under the policy. The claim was repudiated by LIC letter dated 27.3.1993 on the ground that the policy had lapsed on account of non-receipt of premium for the period November, 1991 to October, 1992. The amount worked out under the lapse policy had, however, been paid. The complainant approached District Forum impleading both LIC as opposite party 1 and Indian Airlines Corporation as opposite party 2. Her case was that employer had, admittedly, deducted the premium one month before the death of the insured. Her case was that under a tripatite arrangement the monthly insurance premium was required to be deducted from the salary of the insured by the employer and the same was required to be forwarded to LIC and, in fact, for the period upto October, 1992. The said premium had been deducted from the salary of the deceased and in these circumstances she could not be deprived of the benefits of the policy. She, however, claimed payment of amount due under the policy along with interest @ 24% p. a. from the date of the insured's death till date of payment. The relief was expressly claimed only against LIC.

(2.) The stand of LIC before the District Forum was the policy issued in favour of the insured was an individual insurance policy under the Salary Saving Scheme. Admittedly, LIC failed to receive the premium w. e. f.4.11.1991 till date of death of the deceased or within the grace period of 15 days allowed from the date of death and, accordingly, the policy stood lapsed. It was further stated by LIC that in the month of October, 1992 the said employer deducted 12 months' premium due in November, 1991 to October, 1992 @ Rs.218.20 from the Salary bill pertaining to the month of November, 1992 in lumpsum. The said amount was, however, remitted to the LIC by the said employer only on January, 1993 i. e. after three months of the death of the deceased policy holder. It was further pointed out that the salary bill itself was prepared on 30.10.1992 i. e.5 days after death of the deceased on 25.10.1992. As the policy stood lapsed the Insurance Company was not liable to pay the amount under the policy.

(3.) The plea of the employer, opposite party 2 was that the insured was absent for 11 months from November, 1991 to September, 1992 and his salary was charged in the month of October, 1992 when a sum of Rs.2,400.20 being arrears for 11 months was deducted and sent to LIC. It was further stated that there was a practice of LIC accepting what is described is "gap premium" for a period upto 12 months. In support of such a practice reliance was placed on Minutes of the Meeting dated 18.11.1993 between the representatives of IAC and LIC, vide copy Annexure R-2 filed with the written version dated 22.12.1993. As the arrears did not exceed the said period of 12 months, LIC was bound to accept the same and that being so the policy had not lapsed and the LIC was bound to pay the money in accordance with the terms of the policy.