IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE FOURTH DAY OF JUNE TWO THOUSAND AND NINE PRESENT HON'BLE Mr. JUSTICE R.SUBHASH REDDY WRIT PETITION No.26393 of 2005 Between: Bollapragada Rama Devi, W/o. late B.M.S.V Gopal Rao R/o.H.No.23-4-1, Kakaraparthi Vari Street, Opp: CPWD Office, Satyanarayanapuram, Vijayawada. ... PETITIONER AND 1 The Andhra Pradesh, Heavy Machinery Engineering Ltd, rep. by its Managing Director, Ibrahimpatnam, Viajaywada. 2 Life Insurance corporation of India, rep. by its Branch Manager C.B.IV (67.J) Mangal Deep Building, IInd floor, Eluru Road, Vijayawada-520002 ...RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue a Writ of Mandamus or any other suitable writ or direction more particularly one the nature of writ of mandamus declaring the action of the 2nd respondent in repudiating petitioner claim as illegal, arbitrary and unconstitutional and violative of principles of naturals justice and further direct the settle the claims by paying Rs.91,500/- + Interest @ 12%p.a. from the date of death of petitioner’s husband. Counsel for the petitioner: Mr. Ch. Shashi Bhushan Counsel for respondent No.1: Mr. K. Srinivasa Murthy (NA) Counsel for respondent No.2: Mr. Singam Srinivasa Rao The Court made the following Order: The petitioner seeks a Writ of Mandamus declaring the action of the second respondent, Life Insurance Corporation of India, in repudiating her claim on the policies obtained by her husband during his lifetime as arbitrary and illegal and a direction to pay the assured sum along with interest @ 12% p.a. from the date of the death of her husband. 2. The husband of the petitioner, late Sri BMSV Gopal Rao, joined the service of the first respondent-company in the year 1987 and was working as unskilled workman. He died while he was in service on 10-01-2000 due to sickness. During his lifetime, the husband of the petitioner obtained three life insurance policies bearing Nos.6735156050 dated 23-10-1997, 673465013 dated 28-10-1995 and 670478217 dated 28- 03-1988 for Rs.15,000/-, Rs.10,000/- and Rs.25,000/- respectively from the second respondent-Life Insurance Corporation of India. The said policies were issued under salary savings scheme. As per the conditions of the said scheme, the premium on the policies was to be paid by the first respondent- employer and the first respondent has nominated the petitioner as the person to receive the amounts as contemplated under Section 39 of the Insurance Act, 1938. After the death of the husband of the petitioner, when she was not paid the assured sum on the aforementioned policies, she got issued legal notice to the respondents, for which reply letter dated 12-09-2003 was addressed by the respondents stating that as they have not received the monthly premium from December, 1997, the petitioner is not entitled for any sum assured as the policies had lapsed, but asked the petitioner to collect paid-up amount of Rs.14,761/-, with reference to policy No.670478217. 3. This writ petition is filed mainly on the ground that as much as the policies were under salary savings scheme and the insurer was collecting premium on the said policies directly from the employer, the petitioner cannot be deprived of the assured sum on the ground that the employer has defaulted in paying the premium. Learned counsel for the petitioner has placed reliance on a judgment of the Hon’ble Supreme Court in the case of Chairman, Life Insurance Corpn., and others v. Rajiv Kumar Bhasker[1] in support of the case of the petitioner. 4. The second respondent, L.I.C., has filed counter affidavit. While admitting that the aforementioned policies were obtained by the late husband of the petitioner while he was in the service of the first respondent-company, it is stated that policy No.670478217 was obtained on 28-03-1988 and the corporation received premium upto the month of November, 1997 and from December, 1997 premium was not received. It is further stated that the life assured had taken a loan of Rs.10,960/- on the said policy and, as such, the petitioner is entitled for refund of paid-up value of the said value after deducting the loan amount. It is stated that in spite of the request made by them, the petitioner did not submit the claim form. With regard to policy No.673465013, it is stated that it had commenced on 28-10-1995 and they have received premiums for two months, i.e. October and November, 1995 and thereafter as no premium was received from December, 1995, the policy was lapsed. Similarly, with regard to policy bearing No.673515605, it is stated that it commenced with effect from 23-10-1997 and they have received premium for two months, i.e. October and November, 1997, and thereafter no premium was received from December, 1997. Even with reference to the said policy, it is stated that as premium was not paid from December, 1997, it was lapsed. It is further stated that though policies bearing Nos.673465013 and 673515605 were repudiated and communication was sent to the petitioner on 10-05-2000, this writ petition was filed in the year 2005. 5. There is no representation on behalf of the first respondent-company and no counter is also filed. 6. I have heard the learned counsel for the petitioner and the learned standing counsel appearing on behalf of the second respondent-LIC. 7. In the present writ petition, it is not in dispute that the husband of the petitioner obtained life insurance policies under salary savings scheme from the second respondent-LIC. Under the said scheme, premium amount was being deducted from the salary payable to the husband of the petitioner directly and the same was being transmitted to the second respondent-LIC. As per the said scheme, no individual premium notice was required to be sent to any employee. In identical circumstances as that of in this writ petition, the Hon’ble Supreme Court, in the case of Chairman, Life Insurance Corpn (1 supra), on which reliance is placed upon by the learned counsel for the petitioner, has held that having regard to the nature and conditions of the scheme, the employer is implied authority to act as an agent of the Life Insurance Corporation in view of the provisions under Section 186 of the Indian Contract Act, 1872. In the said case, when there was failure on the part of the employer in paying the premium, the Hon’ble Supreme Court has held that Life Insurance Corporation is liable to pay the sum assured. In the instant case, as it is not in dispute that policies were obtained under salary savings scheme and at no point of time default in payment of premium was intimated to the insured, the judgment relied upon by the learned counsel for the petitioner referred hereinabove can be applied to the present case on all fours. Though it is stated in the counter affidavit that the petitioner was informed about repudiation of the claim in the year 2000 and the writ petition is filed only in the year 2005, it is to be noted that the petitioner has stated in the affidavit filed in support of the writ petition that, in the meantime, she was pursuing her claim by filing an application under Section 33-C(2) of the Industrial Disputes Act, 1947, which was ultimately rejected by order dated 14-07-2005 by recording a finding that the claim cannot be adjudicated in a petition filed under Section 33-C(2) of the said Act. Thereafter this writ petition was filed on 03-12-2005. Though there was some delay on the part of the petitioner in approaching this court, in view of the explanation offered by the petitioner, it is not a case to reject this petition only on the ground of delay and laches. As much as it is stated all the three policies were under salary savings scheme and in view of the judgment of the Hon’ble Supreme Court referred to hereinabove, the petitioner is entitled for assured sum as per the conditions of the policies, after deduction of the loan obtained by the late husband of the petitioner on policy bearing No.670478217 8. For the foregoing reasons, the action of the second respondent-LIC in repudiating the claim of the petitioner for payment of the assured sum on the aforementioned policies is declared as illegal. Consequently, there shall be a direction to the respondents to pay the assured sum to the petitioner as per the conditions of the policies bearing Nos.6735156050 dated 23-10-1997, 673465013 dated 28-10-1995 and 670478217 dated 28-03-1988, after deducting the amount towards loan obtained by her deceased husband. The respondents are directed to pay interest at the rate of 9% per annum to the petitioner from the date of filing of the writ petition, i.e. from 09-12-2005 till payment of arrears of assured sum, on the policies in question. 9. The writ petition is allowed to the extent indicated above. No order as to costs. _____________________ R. SUBHASH REDDY, J. June 8, 2009 MRR ... REGISTRAR // TRUE COPY // SECTION OFFICER To 1) 2 CD copies Form-NIC-OGS/WP{TRK} [1] AIR 2005 SC 3087