High Court of KeralaSingle Judge2020-12-18Writ petition allowed; relief granted; release ...

Narayanan K.V. and others v. State of Kerala and others

Case / Petition Number:WP(C) No.23351/2019

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: N.NAGARESH
Judgment Date: 2020-12-18
Court Decision / Holding: The writ petition is allowed. Respondents 1 to 3 are directed to release the SLI policy ID KSID/LI/041296658 and Group Insurance ID 120131300236 to the petitioners. Respondent 4 (LIC) is directed to release LIC Policy No. 79961996 to the petitioners/nominees. The petitioners’ prayer for compassionate appointment may be pursued with respondents 1 and 2.
Final Disposition: Writ petition allowed; relief granted; release of policy benefits to petitioners/nominees; compassionate appointment to be pursued separately.

Parties to the Case

Appellants / Petitioners

Narayanan K.V.
Vijayam Narayanan
Vijeesh K.N.

Respondents

State of Kerala represented by the Secretary to Government, Department of Animal Husbandry, Thiruvananthapuram-695001
Director, Directorate of Animal Husbandry, Thiruvananthapuram-695001
Veterinary Surgeon, Veterinary Dispensary Irikkur, Kannur-670593
Branch Manager, Life Insurance Co-operation of India Office, Thalipparamba, Kannur-670141

Legal Representation & Advocates

Counsels for Petitioners

• Sri Bonny Benny
• Shri Bejoy Joseph P.J.
• Sajeesh M.C.

Counsels for Respondents

• Sri Lal George
• Sri Rashmi K.M

Case Synopsis & Summary

The petitioners, legal heirs of Vineesh K.N., sought release of life and group insurance benefits under a salary-saving scheme, after Vineesh, a Livestock Inspector, died on 18.08.2018. The policies—State Level Insurance (SLI) ID KSID/L1/041296658 and Group Insurance ID 120131300236, plus LIC policy No. 79961996—were premium-deducted from Vineesh’s salary, but the premiums were not timely paid; a belated remittance was made by the employer in August 2019, over a year after the life assured’s death. The insurer LIC contends that the policy lapsed due to non-payment within the grace period, and that delayed remittance cannot revive it. The petition argues that under salary-saving schemes the employer acts as an agent for the insurer and is responsible for timely remittance; hence the life insured and his legal representatives should not be disadvantaged by employer lapses. The learned Government Pleader for respondents 1–3, and the LIC’s counter-arguments rely on traditional interpretations of policy terms. The Court emphasizes that the employer’s failure to deduct/remit is a significant factor and, following various precedents, holds that the policy should not be denied due to employer’s default. Consequently, it allows the writ petition and directs release of the SLI, Group Insurance, and LIC policy benefits to the petitioners/nominees, with a note to pursue compassionate appointment separately.

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contended that the insurance policies were linked to the employees’ salaries under a salary-saving scheme, with employers responsible for deducting and remitting premiums. Vineesh K.N.’s death exposed a gap created by the employer’s failure to remit on time; the belated remittance in August 2019 was beyond the grace period and could not justify denying benefits to the legal heirs. The Supreme Court and various High Courts have recognized that if the employer acts as an agent for premium collection and remittance, lapses attributable to the employer cannot penalize the insured or his legal heirs. Therefore, the petitioners sought immediate release of the SLI, Group Insurance, and LIC policies and asked for consideration of compassionate appointment claims.

Contentions of Respondents

The respondents urged strict adherence to policy terms, noting that premium non-payment within the due dates (with grace period) leads to lapse, and late remittance cannot revive a lapsed policy. They relied on Garg Sons and Sumitra Devi to argue strict construction of insurance terms and non-compliance consequences. They also cited Mani Ram to emphasize considering all policy terms; the employer’s failure to remit timely was their responsibility, not the insured’s.

Cited Precedents (6)

Case Name	Citation	Treatment	Explanation
Export Credit Guarantee Corporation of India Ltd. v. M/s Garg Sons International	(2014) 1 SCC 686	Distinguished	Cited for the proposition of strict construction of policy terms; however, the Kerala High Court distinguishes it on the ground that, under a salary-saving scheme, the employer acts as an intermediary/agent and delays by the employer should not prejudice the insured or his heirs.
Sumitra Devi v. Life Insurance Corporation of India and others	AIR 2014 Gau. 71	Distinguished	Gauhati High Court held non-compliance in premium payment leads to lapse; court distinguishes this as not applicable in the salary-saving scheme context with employer’s role as agent.
Life Insurance Corporation of India v. Mani Ram	(2005) 6 SCC 274	Positive	Emphasizes keeping all terms and conditions in mind and given effect to when computing policy operation; used to underline careful consideration of policy terms.
Chairman, Life Insurance Corporation and others v. Rajiv Kumar Bhasker	(2005) 6 SCC 188	Positive	Affirms that when employers deduct premiums, they act as agents for the insurer, and lapses attributable to the employer must be addressed in favor of the insured.
Dheeraj Kumar Varma and others v. The State of Bihar and others	(2006) ACJ 1988	Positive	Supports the agency view of employer in salary-saving schemes and that employer’s failure to remit premium should not penalize the insured.
Chakreswar Duarah v. State of Assam	(2006) 3 GLR 95	Positive	Presents the view that employer acts as the informant/agent in salary-saving insurance, protecting the insured from employer’s non-remittance.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **FRIDAY, THE 18TH DAY OF DECEMBER 2020/27TH AGRAHAYANA, 1942** ## **WP(C).No.23351 OF 2019(T)** ## **PETITIONERS:** |**1**|**NARAYANAN.K.V.,**| |---|---| ||**AGED 60 YEARS,**| ||**KAKKATTU VEEDU, MALAYATTOOR P.O,**| ||**CHAMMINY-683587, ERNAKULAM DISTRICT.**| |**2**|**VIJAYAM NARAYANAN,**| ||**AGED 58 YEARS,**| ||**KAKKATTU VEEDU, MALAYATTOOR P.O,**| ||**CHAMMINY-683587, ERNAKULAM DISTRICT.**| |**3**|**VIJEESH K.N,**| ||**AGED 24 YEARS,**| ||**KAKKATTU VEEDU, MALAYATTOOR P.O,**| ||**CHAMMINY-683 587, ERNAKULAM DISTRICT.**| ||**BY ADVS.**| ||**SRI.BONNY BENNY**| ||**SHRI. BEJOY JOSEPH P.J.**| ||**SAJEESH M.C.**| ## **RESPONDENTS:** |**1**|**STATE OF KERALA,**| |---|---| ||**REPRESENTED BY THE SECRETARY TO GOVERNMENT,**| ||**DEPARTMENT OF ANIMAL HUSBANDRY,**| ||**SECRETARIAT, THIRUVANANTHAPURAM-695001.**| |**2**|**THE DIRECTOR,**| ||**DIRECTORATE OF ANIMAL HUSBANDRY,**| ||**THIRUVANANTHAPURAM-695001.**| |**3**|**VETERINARY SURGEON,**| ||**VETERINARY DISPENSARY IRIKKUR,**| ||**KANNUR-670593.**| WP(C) No.23351/2019 : 2 : **4 THE BRANCH MANAGER, LIFE INSURANCE CO-OPERATION OF INDIA OFFICE, THALIPARAMBA, KANNUR-670141.** **R4 BY ADV. SRI.LAL GEORGE** **R1-3 GOVERNMENT PLEADER SMT. RASHMI K.M** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C) No.23351/2019 : 3 : ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ ## _**Dated this the 18[th] day of December, 2020**_ The petitioners are before this Court seeking to compel respondents 1 to 3 to release the policy under State Level Insurance (SLI) bearing ID No.KSID/L1/041296658 and Group Insurance bearing ID No.120131300236 to the petitioners. The petitioners further seek to direct the 4[th] respondent to release the policy under LIC from Taliparamba Branch with the Policy No.79961996 to the petitioners/ nominees. The petitioners also seek to compel the respondents 1 to 3 to grant benefit of compassionate vacancy to the 3[rd] petitioner. 2. The petitioners state that the 1[st] and 2[nd] petitioners are parents of Vineesh K.N. and the 3[rd] petitioner is his brother. The said Vineesh was appointed as Livestock Inspector Grade-II on 11.04.2011. While in service, the said WP(C) No.23351/2019 : 4 : Vineesh K.N. took various insurance policies including SLI bearing ID No.KSID/L1/041296658, Group Insurance bearing ID No.120131300236 and LIC policy from Taliparamba branch bearing No.79961996. The policy premiums were deducted from the petitioner’s salary account regularly. 3. On 18.08.2018, the said Vineesh K.N. was found dead at his quarters. The petitioners being the legal representatives of the deceased, requested for payment of insurance benefits to them. The petitioners were informed that the insurance policies of Vineesh K.N. were lapsed. The petitioners would contend that the insurance policies in question were linked to the salary of the deceased and it was the duty of the employer to deduct insurance premium and remit the same to insurance companies. If there is any lapse on the part of the employer to make prompt remittances, that cannot put late Vineesh K.N. or his legal representatives to any disadvantageous position. 4. The 4[th] respondent LIC of India filed a counter affidavit. The 4[th] respondent admitted that late Vineesh K.N. WP(C) No.23351/2019 : 5 : had taken a Life Insurance Policy No.799619967 for a sum of `5 lakhs with the date of commencement from 14.10.2017. The premium payable was `1,944/- per month. The policy was taken under salary saving scheme. The premium due on the policy on 14.06.2018 was not paid. The policy had 15 days grace period from unpaid premium due date, as per policy conditions. The premium should have been paid before 29.06.2018. However, it was not paid. Therefore the policy lapsed with effect from 30.06.2018 due to non-payment of premium. 5. When the life assured died on 19.08.2018, the policy was in lapsed condition. The employer later remitted `6,108/- towards the defaulted premium for the months of June, July and August, 2018, on 16.08.2019, which was after one year from the date of death of the life assured. The belated payment of premium cannot revive the lapsed policy. Therefore no claim is subsisting in favour of the petitioners under the policy disputed, contended the 4[th] respondent. WP(C) No.23351/2019 : 6 : 6. The learned Government Pleader representing respondents 1 to 3, filed a statement in the writ petition. The statement reveals that late Vineesh K.M. was unauthorisedly absent from duty from 12.06.2018 to 22.06.2018, 27.06.2018 to 01.07.2018, 08.08.2018 to 09.08.2018 and 13.08.2018 to 19.08.2018. However, the unauthorised absence was regularised as eligible leave as per order dated 13.06.2019 of the District Animal Husbandry Officer. Subsequently, the withheld salary and the last pay in respect of the diseased, were processed as manual bill, with necessary deductions towards GIS, SLI, GPF and LIC subscriptions. 7. I have heard learned counsel for the petitioners, learned Government Pleader appearing for respondents 1 to 3 and learned Standing Counsel appearing for the 4[th] respondent. 8. From the pleadings and arguments, it is evident that late Vineesh K.N., while working as Livestock Inspector died on 18.08.2018. It appears that the deceased Vineesh K.N. was unauthorisedly absent from duty since 12.06.2018. WP(C) No.23351/2019 : 7 : The respondents, however, regularised the unauthorised absence by treating the said period as eligible leave. 9. Be that as it may, the reason for denial of insurance amounts to the petitioners is that the premium amounts due were though deducted from the salary of the deceased, were not paid by due dates or even during grace period. When the insurance policies were taken under salary saving scheme, whether the failure of the employer to deduct insurance premium from salary of the employee and remit the same by due dates, can be a reason for denying insurance benefits to the policy holder or to his legal representatives, is the question arising. 10. The learned Standing Counsel appearing for the 4[th] respondent relied on the judgment of the Apex Court in _**Export Credit Guarantee Corporation of India Ltd. v. M/s.Garg Sons International** [(2014) 1 SCC 686]_ to contend that terms of insurance policy have to be strictly construed in order to determine the extent of the liability of the insurer and it is not permissible for the court to substitute terms of the WP(C) No.23351/2019 : 8 : contract itself, under the garb of construing terms incorporated in the agreement of insurance. Placing reliance on the judgment of the Hon'ble Gauhati High Court in _**Sumitra Devi v. Life Insurance Corporation of India and others** [AIR 2014 Gau. 71]_ , the learned Standing Counsel argued that non compliance of any of the essential terms of the policy by the insured within the time prescribed therein attracts the adverse consequence provided in the policy to his detriment which in turn and in such circumstances results in lapse of the policy and the legal representatives of the deceased insured in such circumstances will not be entitled to claim arising out of such policy. The learned Standing Counsel also relied on the judgment of the Apex Court in _**Life Insurance Corporation of India v. Mani Ram** [(2005) 6 SCC 274]_ in which the Apex Court held that for the purpose of computing the operation period of insurance policy, all the terms and conditions of the policy should be kept in mind and given effect to. 11. However, going through the pleadings in the writ petition, it is seen that the policies in question were issued WP(C) No.23351/2019 : 9 : under a salary saving scheme in which the employer was bound to deduct the insurance premium and remit the same to the insurer. The Hon'ble Apex Court has held in the judgment in _**Chairman, Life Insurance Corporation and others v. Rajiv Kumar Bhasker** [(2005) 6 SCC 188]_ that when employers accept responsibility of deducting premium from salaries of employees and sending the same to insurer, an agency is created expressly or by necessarily implication. The employers have clearly a role to play on behalf of LIC. For all intends and purposes, employees may treat their employers as agents of insurer. If that be so, for the failure of the employer to deduct insurance premium from the salary of the insurer and to make remittances to the insurer promptly, the insured or his legal heirs cannot be put to disadvantageous position. The insurer is bound to make good for any lapses attributable to the employer. 12. In _**Dheeraj Kumar Varma and others v. The State of Bihar and others** [2006 ACJ 1988]_ , the Hon'ble of High Court of Patna held that under the salary saving scheme, the WP(C) No.23351/2019 : 10 : employees authorise the employer to deduct the premium amount from the salary of the employee. The responsibility of remitting the premium amount is of the employer. Under both the schemes, the employer acts as an agent for collecting the premium and remitting the same to the LIC. In such cases, if the policy lapses on account of non-payment or untimely payment of the premium, it can be said to be the fault of the employer who acts as an agent of the insurer. The Hon'ble High Court of Patna held that the life assured cannot be penalised for such failure to discharge the liability of the employer. 13. In _**Chakreswar Duarah v. State of Assam** [(2006) 3 GLR 95]_ , the Hon'be High Court of Gauhati, while dealing with insurance policies under salary saving scheme, held that the employees cannot approach the insurer directly and for all intends and purposes, their employer is an agent. The nonpayment of salary to the employee for any reason casts an obligation of the employer to inform the insured. Even in case of non-payment of premium for any reason whatsoever, in WP(C) No.23351/2019 : 11 : view of the object the scheme seeks to achieve, it was the duty of the insurer to inform the employee about the consequences of non receipt of such premium from the employer. 14. In the case of the petitioners, the due date for payment of insurance premium was 14.06.2018, with grace period up to 29.06.2018. The non-payment of the premium was not informed to the life assured, who died on 19.08.2018. The employer, however, remitted the defaulted premium for the months of June, July and August, 2018, on 16.08.2019. The delay in payment of premium was attributable to the employer and not to the life assured. Therefore, going by the judgments of the Hon'ble Apex Court and of the Hon'be High Courts of Patna and Gauhati cited above, the life assured or his legal representatives cannot be denied the insurance benefits. In the circumstances, the writ petition is allowed. Respondents 1 to 3 are directed to release the policy under SLI bearing ID No.KSID/LI/041296658 and Group Insurance WP(C) No.23351/2019 : 12 : bearing ID No.120131300236 to the petitioners. The 4[th] respondent is directed to release the policy amount under LIC Policy No.79961996 of LIC, Taliparamba Branch, to the petitioners/nominees. As regards the prayer of the petitioners to grant the benefits of compassionate appointment to the 3[rd] petitioner, the petitioners are permitted to pursue their claims, if any, with respondents 1 and 2. Sd/- **N. NAGARESH, JUDGE** aks/23.12.2020 WP(C) No.23351/2019 : 13 : ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXHIBIT P1 THE PHOTOCOPY OF THE PROCEEDINGS NO. B1.6643/2010 EST DATED 28.03.2011 OF DISTRICT ANIMAL HUSBANDRY OFFICE, KANNUR. EXHIBIT P2 THE PHOTOCOPY OF THE PROCEEDINGS OF ASSISTANT PROJECT OFFICER, REGIONAL A.I CENTRE PAYYANNUR NO.B/391/2011/ESST DATED 11.04.2011. EXHIBIT P3 THE PHOTOSTAT COPY OF THE FIR NO.0360 DATED 19.08.2018 OF POLICE STATION IRIKKUR. EXHIBIT P4 THE PHOTOSTAT COPY OF THE POSTMORTEM CERTIFICATE NO.570/18 DATED 21.08.2018 BY THE DEPARTMENT OF FORENSIC MEDICINE, MEDICAL COLLEGE, PARIYARAM. EXHIBIT P5 THE CHEMICAL EXAMINERS REPORT NO.4354 DATED 29.11.2018 BY REGIONAL CHEMICAL EXAMINERS LABORATORY, KOZHIKODE. EXHIBIT P6 THE PHOTOSTAT COPY OF THE LEGAL HEIRSHIP CERTIFICATE NO. KDIS/12622/2018/H3 DATED 14.03.2019 OF TALUK OFFICE ALUVA. EXHIBIT P7 THE PHOTOSTAT COPY OF THE DEATH CERTIFICATE NO.DOO21122-1809281 DATED 15.11.2018 FROM THE IRIKKUR GRAMA PANCHAYATH. EXHIBIT P8 THE PHOTOSTAT COPY OF THE REPRESENTATION DATED 11.08.2019 TO THE 2ND RESPONDENT.** WP(C) No.23351/2019 : 14 : ## **RESPONDENTS' EXHIBITS:** **EXHIBIT R4(A)** **A TRUE PHOTOSTAT COPY OF THE PROPOSAL SUBMITTED BY LATE VINISH K.N WHILE PROPOSING FOR ASSURANCE** **EXHIBIT R4(B)** **A TRUE PHOTOSTAT COPY OF THE POLICY ISSUED IN FAVOUR OF LATE VINISH K.N** **EXHIBIT R4(C)** - **A TRUE PHOTOSTAT COPY OF THE LETTER AUTHORIZATION GIVEN BY THE DECEASED LIFE ASSURED VINISH K.N TO THE 3RD RESPONDENT EMPLOYER** **EXHIBIT R4(D)** **A TRUE PHOTOSTAT COPY OF THE LETTER DATED 8/5/2019 SENT BY THE 3RD RESPONDENT EMPLOYER** **EXHIBIT R4(E)** **A TRUE PHOTOCOPY OF THE LETTER DATED 24-9-2019 SENT TO THE 3RD RESPONDENT EMPLOYER**