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May 24 2024CASE SUMMARY: Consumer Wins 14-Year Battle Against LIC for Life Insurance Policy; LIC vs. Pittala Pochamma @ Poschamma 2024
BEFORE: NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI REVISION PETITION NO. 1058 OF 2017 NCDRC JUDGMENT DATE: 15.05.2024 RELEVANT JUDGMENT: Chairman L.I.C v. Rajiv Kumar Bhaskar (AIR 2005 SC 3087) HON'BLE JUSTICE: HON'BLE MR. JUSTICE SUDIP AHLUWALIA, PRESIDING MEMBER PETITIONER: LIFE INSURANCE CORPORATION OF INDIA RESPONDENT: PITTALA POCHAMMA @ POSCHAMMA LEGAL BATTLE BACKGROUND 1. Case file before District Commission - 2010 2. Case file (Appeal) before State Commission - 2013 3. Case file (Revision Petition) before NCDRC - 2017 FACT OF THE CASE: The essential background is that the Complainant is the wife and nominee of the late Pittala Shankar, also known as Shankariah, who was an employee of SINGARENI COLLIERIES COMPANY LIMITED (employer) and held multiples insurance policies with the LIC. During his lifetime, he acquired multiple policies from the LIC with a total assured sum of Rs. 2,55,000/-. According to the policy terms, in the event of the policyholder's death, the nominee was entitled to receive the "Sum assured along with bonus and entitled benefits". Unfortunately, the Complainant's husband was murdered on 16.03.2008. Within a month of his death, the Complainant notified the LIC and submitted all the necessary documents along with the claim form. However, despite a considerable amount of time passing, the LIC did not fulfil the claim payment. In response to this delay, the Complainant issued a Legal Notice dated 13.09.2010, urging the LIC to expedite the processing of the claim. In its reply dated 18.09.2010, the LIC claimed it had not received any intimation and requested the original policy bonds and the Death Certificate, which the Complainant perceived as a mere pretext to withhold payment. Aggrieved by the non-payment, the Complainant filed her complaint before the LD. DISTRICT FORUM, Karimnagar. STATE COMMISSION OBSERVATION: The life assured passed away on 16.03.2008, following his voluntary retirement from service on 31.05.2006. Although the policies had lapsed due to non-payment of premiums, the LIC was obligated to inform the employer of the deceased about the outstanding premiums, which it failed to do. It did not make any effort to send a letter and inform the employer to remit the premium. The deceased life assured was under the bona fide impression that the premium amount had been settled and paid. We may state that for the fault of the employer, employee should not suffer. Equally the insurance company cannot be found fault with in view of the fact that it has informed and reminded the employer to send the premium amounts. However, the Appellant (LIC) neither addressed any letters nor informed the deceased life assured that the policy stood lapsed. In the circumstances, we hold that employer (SINGARENI COLLIERIES COMPANY LIMITED) and the Appellant (LIC) are equally liable to pay the benefits that were accrued under the policies. In these circumstances, we believe that the District Forum has correctly reached the conclusion as excerpted above. We do not find any merit in the appeal. Accordingly, we answer the point framed for consideration in paragraph No.12, against the Appellant and in favor of the Respondent. As a result, the appeal fails and is dismissed, with no costs awarded. ARGUMENT BY LIC: Ld. Counsel for LIC has argued that the Life Assured had opted for voluntary retirement from his employer on 31.05.2006 and subsequently ceased making premium payments, resulting in the policy lapsing without being revived during his lifetime; That after retirement, the Life Assured no longer received a salary, making it impossible for the employer to pay premiums on his behalf and it was the responsibility of the Life Assured to maintain the premium payments after reviving the policy; That there was no evidence presented to confirm whether the Life Assured was receiving a salary from his employer. That the State Commission incorrectly held the Petitioner (LIC) responsible for informing the Life Assured about the premium payment default, especially considering that he had already chosen voluntary retirement. NCDRC OBSERVATION: In view of a decision of the Hon’ble Supreme Court in matter of Chairman L.I.C v. Rajiv Kumar Bhaskar (AIR 2005 SC 3087), it had been observed that the employer of the Life Assured in such a situation was to be regarded as an Agent of the Insurer/ Corporation. Consequently, the Life Assured/employee could not be penalised for any omission on the part of his employer in the matter of either reporting about the cessation of his employment, or otherwise regarding remission of the premium amounts to the Corporation periodically as required. From his side, Ld. Counsel for the Petitioner (LIC) has been unable to cite any case law to counter the aforesaid decision of the Hon’ble Supreme Court in “LIC of India VS. Rajiv Kumar Bhasker”. DECISION: For the aforesaid reasons, this Commission finds no grounds to interfere with the well-reasoned orders of the Ld. State Commission. Both the Revision Petitions are therefore dismissed. No orders as to costs.
Download NCDRC Judgment LIC vs. Pittala Pochamma @ Poschamma 2024 NOTE: This article is written by Adv. Alok Kumar, a practicing lawyer in the Delhi High Court & District Courts. For any complaints or suggestions, you may drop an email at advocatealok21@gmail.com.
Author
Adv. ALOK KUMAR
Advocate Serving Delhi NCR
Delhi High Court & District CourtsLL.B.▪︎Faculty of Law▪︎Delhi University
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