Union of India ,
Through : Deputy Chief Engineer, Southern Railway
Vs.
Smt. Rajeswari & Ors.

Branch Manager, LIC of India & Anr.
Vs.
Smt. Rajeswari & Anr.

      Both the above titled appeals arise out of the order dated 11th May, 1992 passed by the  State Consumer Disputes Redressal Commission, Tamilnadu at Madras in a complaint filed by Smt. Rajeswari, who is Respondent No.1 in the above appeals. By the impugned order the Life Insurance Corporation (for short the Corporation) and Union of India were ordered to pay a sum of Rs.75,000/- jointly and severally to the complainant being the maturity value of the policy of the insurance taken on her husband's life, with interest @ 18 % per annum from the date of his death till payment. The Opposite Parties were also directed to pay Rs.50,000/- as compensation to her for mental agony and suffering. First Appeal No.242 has been preferred by the Union of India against the said order of the State Commission while the Corporation has preferred the other appeal.

      The brief facts are that G.Nandagopal, husband of Smt.Rajeswari- Complainant, was employed in the Engineering Workshop of the Southern Railway, Arakkonam. He took his policy of Insurance on his life on 14th October, 1989. The maturity value of the policy was Rs.75,000/- and the monthly premium payble was Rs.300.60. This policy had been taken by the assured under the Salary Saving Scheme of the Corporation. The premium was deductible from his salary by the employer i.e. Union of India through Southern Railway. The Corporation vide letter dated 20th August, 1990 informed the employer of the assured and others in respect of new policies issued to the employees of the Southern Railway and months from which premia were to be deducted. Authorisation letters were also sent along with that letter. In that communication, about G. Nandagopal it was mentioned that deduction was to commence from February, 1990. Vide bill dated 22nd August, 1990 Rs.903 were deducted from the salary of G. Nandagopal on account of premium deductions for the months for February, March and April, 1990 from the salary bill for August, 1990. Further recoveries for the remaining three premia for the months of May, June, july 1990 were made from the productivity linked bonous for the year 1989-90 payble to Shri Nandagopal vide bill dated 21st September, 1990. However Shri Nandagopal had died on 10th August, 1990. The employer was informed about the death of the G. Nandagopal vide letter dated 19th August, 1990, by his widow.

      When the widow Smt.Rajeswari nominee under the policy obtained by her husband, applied for the policy amount, she was informed by the Corporation that her husbands policy had lapsed in February, 1990 for non-payment of premium. A cheque for Rs.1860/- was sent to her inrespect of premium paid under the policy. There upon Smt.Rajeswari filed the complaint before the State Commission, Tamil Nadu at Madras avering that as per agreement and as per the salary saving scheme, the premium amount was to be collected by the Insurer from the employer and  the employer was to deduct the premium from the pay of  the insured and pay to the Corporation. There was no obligation on the part of the insured to pay the monthly premium. Thus there was deficiency of service on the part of the Corporation is not  collecting the premium from the employer and the employer was also guilty of gross deficiency in rendering the service in not deducting the premioum from the salary and paying it to the Corporation. She claimed Rs.75,000/- as the policy amount plus Rs.50,000/- as compensation for mental agony and suffering as  well as  interest on the maturity value.

       Before the State Commission the Corporation and the Employer did not appear in spite of service of notice. After considering the evidence, the State Commission held that there has been gross deficiency nd negligence in the rendering of service on the part of the opposite parties. Accordingly the amounts mentioned above were ordered to be paid to the Complainant.

      The plea of the Union of India is that it was rendering free of charge the facility of deducting the premium from the salary of the assured and therefore, it is not liable to pay any dues to the widow i.e. Smt. Rajeswari. It was also pleaded that it did not have any intimation from the assured to made the arrangement for deduction of premium from his salary.

      In first Appeal No.261 of 1992, the Corporation pleaded that it has acted in terms of the policy. The policy had lapsed in February, 1990 for non-payment of premium and whatever premia were received were offered to the Complainant.

      In these appeals we need not decide if Union of India (Southern Railway) or the Corporation in guilty of negligence in the rendering of service. The fact remains that the assured had taken a policy under the Salary Savings Scheme and the premia for the policy was to be deducted by the employer from the salary and it was to be remitted to the Corporation. Similarly, the Corporation was to intimate the employer about the policy of insurance and authorisation for deducting the premium. The said intimation was conveyed by the Corporation to the employer long after the policy had been issued. As noticed  earlier the policy had been issued in October,1989. On the basis of the facts in teh present case the assured cannot be held guilty of non-payment of the due premium. The fault is either of teh Corporation fo the employer. That matter can be settled between them. As per the widow, Smt.Rajeswari is concerned she is entitled to the maturity amount under the Policy being the nominee under the policy.

      However, we are of the opinion that the amount of compensation of Rs.50,000/- ordered by the State Commission to be paid to the Complainant is on the higher side. She has been practically awarded compensation top the extent of  75 % of the Maturity value. It cannot be said the action of the Corporation or the employer was in any way malafied. The Corporation had reasonable ground in believing that it was justified in repudiating the claim of the Complainant. Ends of justice would meet if Rs.10,000/- are allowed to the complainant as damages/compensation for mental agony and suffering etc.

      Consequently we modify the order of the State Commission to the extent that the amount of damages/compensation is reduced to Rs.10,000/- from Rs.50,000/-. The remaining part of the order of the State Commission is maintained. We make it clear that Corporation and employer are left atliberty to decide or get it decide between themselves as to who is ultimately liable for this amount but this will have no effect on the rights of the widow to recover the awarded amount from either of the opposite parties (now Appellants) after the expiry of one month from the date of the receipt of this order as both will be jointly and severally liable to pay the amount. Both the appeals stand disposed of in the above terms. In the circumstances of the case we make no order as to costs in these appeals.