Assignee of a policy holder would be liable for deficiency in service if an insurance policy lapses as a result of non-payment of premium in time, the National Consumer Commission has held.
The apex consumer body held the Employment Provident Fund Commissioner (EPFC) responsible for deficient service for failing to deposit the premium of a policy holder to the LIC in time, which led to repudiation of claim by the company.
"When the liability was on the EPFC (under statute) to pay the premium in respect of the policy which they had undertaken, being an assignee of the insured, and if they failed to do so, it is they, who would be liable to compensate the insured for deficiency," the Commission, comprising President Justice Ashok Bhan and Member B K Taimni said.
It passed the order on a plea of the LIC seeking to set aside the Karnataka State Consumer Commission direction to pay Rs one lakh to Mangai, the wife of the deceased, for deficiency in service in not settling the claim.
The said policy was assigned in favour of Employees Provident Fund Scheme and the EPFC was to pay the premiums on behalf of the employees such as the deceased when they became due.
Admittedly, the premium was not paid by EPFC due in January 2002. In fact, it was paid only in May 15, 2002, thus, it was clear that when the policy holder died on April 19, 2002, the policy was in lapsed condition, the Commission noted.
"This is a clear case of deficiency in service on the part of the EPFC, to not have remitted the premiums resulting in lapsing of the policy for no fault of the insured deceased, " the Commission said while directing it to pay Rs one lakh to the wife of the deceased.
The deceased, Vishwanath, was working with Manmul Products which had its dairy in Mandya district in Karnataka.
