The District Consumer Dispute Redressal Commission (DCDRC) recently ordered the Life Insurance Corporation (LIC) and Municipal Corporation of Delhi (MCD) to pay ₹40,000 as compensation to the family of a deceased sweeper over the rejection of two insurance claims that were collectively worth ₹5 lakhs.
President Jeet Singh and member Rashmi Bansal observed that both MCD and LIC were jointly responsible for failing to ensure the deposit of monthly premium instalments that were to be deducted from the sweeper's salary, which had been cited by LIC as a reason for the claims lapsing.
The district consumer forum passed the order on a complaint filed by the deceased MCD employee's wife and daughter, who had challenged the rejection of two life insurance claims - one worth ₹1.6 lakhs and another worth ₹3.2 lakhs.
The forum allowed the plea and ordered that these claims be paid along with interest of 9 per cent per annum from October 13, 2016 (when the employee passed away) till the amount is actually paid.
Additionally, the consumer forum also ordered the payment of ₹40,000 as compensation for the trouble, inconvenience, financial loss, harassment, and mental agony the claimants suffered due to the rejection of the insurance claims.
Further, the forum ordered both LIC and MCD to jointly pay ₹20,000 as litigation expenses.
The consumer complaint was filed by the wife and daughter of late Joginder Kumar, who had been working as a Safai Karamchari/ sweeper with the MCD in the Karol Bagh Zone.
During his employment, he opted for three Salary-Saving Scheme (SSS) policies offered by LIC, which were available to MCD employees.
To opt for these schemes, Kumar was told that he was only required to give his consent and fill out a form, the complainants submitted.
The premium instalments were then to be deducted directly from his salary by the employer (MCD) and remitted to the insurer (LIC). This included the premium for the "Accidental Death and Disability Benefit Rider Installment."
The complainants further submitted that the maturity amount was to be paid either after the policy period or upon the death of the insured, whichever came first.
Kumar passed away in 2016. His family then applied to receive the amount insured under the three LIC schemes he availed. However, only one of their two claims was allowed. LIC rejected the two remaining claims on grounds that they had lapsed due to non-payment of premium.
The complainants argued that LIC was responsible for raising the demand for the premium payment from MCD each month. After receiving this demand, MCD was supposed to deposit the premium with LIC. The insured employee had no role in this process.
LIC countered it was the duty of the insured or his employer to ensure that premiums were regularly paid.
The consumer court relied on several Supreme Court judgments - including Delhi Electric Supply Undertaking (DESU) v. Basanti Devi and Chairman, Life Insurance Corporation v. Rajiv Kumar Bhasker - which held that under the Salary Savings Scheme (SSS), it is the employer’s responsibility to deduct and remit premiums to the insurer and that if premiums are not paid, the insurer must inform the employee.
The consumer forum pointed out that the Supreme Court has also held that an employee should not suffer due to the employer's failure to remit premiums or the insurer's failure to notify the employee.
The forum proceeded to conclude that the primary duty to deduct and remit premiums lay with MCD and that the LIC was responsible for informing the insured if there was any default.
The failure of MCD to deduct premiums and LIC's failure to notify the insured were seen as lapses by the consumer forum.
This supported the complainants' case that their claims should not have been rejected as any lapses found were beyond their control, the consumer forum noted while allowing their plea.
[Read Order]