Pasayat, J.
1. The case at hand has a chequered career and has travelled the corridors of various Courts and forums mostly on the question of jurisdiction and not so much on factual aspects which are almost undisputed.
2. The background facts leading to filing of this writ application are essentially as follows:-
Petitioner is the widow of one Hrudananda Setha (hereinafter referred to as the 'deceased') who expired on July 17, 1990 while working as Mobile Unit Supervisor (Junior Engineer) under the Executive Engineer Rural Water Supply and Sanitation Division No. 1 (opposite parry No. 3). The marriage was solemnised on January 30, 1990. During service prior to the marriage, deceased Hrudananda had taken a life insurance policy issued by the Life Insurance Corporation of India (in short, 'LIC'). The proposal for the same was submitted on November 28, 1989 along with the initial premium for two months. In the proposal letter, father of the deceased, namely, Haribandhu Setha (opposite party No. 4) was the nominee. In acknowledgment of the proposal, a policy was issued on November 30, 1989 for a sum of Rs. 1 lakh, the mode of payment of the premium was provided in the Government Salary Saving Scheme (hereinafter referred to as the 'Scheme'). Accordingly the letter of authorisation was given to opposite party No. 3 on December 4, 1989 for deduction from the salary of the deceased and remittance of Rs. 110/- per month towards monthly premium from January, 1990. After expiry of the deceased, a claim was lodged by opposite party No. 4, who is nominee in the policy.
3. LIC repudiated the claim on the ground that the policy had lapsed due to non-payment of monthly premium from January, 1990. Opposite party No. 4 was asked to enquire from the Executive Engineer (opp. party No. 3) about the deduction of premium and remittances and opposite party No. 4 approached opposite party No. 3. There was hardly any information. Since no action was taken by LIC, grievance was made under the Consumer Protection Act, 1986 (in short, the 'Consumer Act'). A dispute was raised before the State Consumer Disputes Redressal Commission (in short, the 'State Commissioner') which was registered as Consumer Dispute Case No. 96 of 1991 against the LIC and the State of Orissa. It was disposed of on August 7, 1992 with the conclusion that LIC was liable to pay the amount with interest. Being aggrieved by the judgment of the State Commission, LIC preferred an appeal before the National Consumer Disputes Redressal Commission (in short, the 'National Commission') and the same was registered as First Appeal No. 510 of 1992. The National Commission disposed of the said appeal directing the State Government to pay the amount of Rs. 1 lakh payable under the lapsed policy to the legal representative of the deceased. Being aggrieved by the adjudication made by the National Commission, the State of Orissa preferred Civil Appeal No. 7692 of 1996 arising out of S.L.P. (C) No.9577 of 1996 before the Apex Court. By judgment dated March 18, 1996 it was held by the Apex Court that the dispute, does not come within purview of the Consumer Act. While disposing of the Civil Appeal, it was observed by the Apex Court that if any claim arises for the contesting respondent, it would be open to him to claim, in any other forum, but not under the Act, and this is how the present writ application has been filed by one of the legal representatives of the deceased.
4. It is to be noted here that from the salary payable to the deceased, premiums have been deducted for the periods from January, 1990 to July, 1990 on August 4, 1990 and the same were remitted to LIC as evident from Annexure 3.
5. Petitioner's stand is that under the scheme it was the duty of the employer to deduct the premium and make the remittance to LIC, and if there was any lapse or inaction, petitioner should not suffer and the State Government is liable to pay the amount which otherwise would have been paid by the LIC.
Learned counsel for State submitted that it was the duty of the employee to see that the premium is deducted and if factually no deduction has been made, the State cannot be made liable to make the payment. LIC has reiterated its stand that the policy had lapsed and therefore, even if any premium has been deducted and paid subsequently, that does not make it liable.
6. LIC as indicated above, has taken the plea that since premiums were not received by it, even after extending the permissible limit, it has no liability, as the policy had lapsed. A copy of the policy, containing the terms and conditions in respect of the Scheme was filed by it. The conditions and privileges so far as relevant are as follows:
'Conditions and Privileges within Referred to
xxxxxxxx 2. Payment of Premium: A grace period of one month but not less than 30 days will be allowed for payment of yearly, half yearly or quarterly premiums, and 15 days for monthly premiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid and the sum assured paid after deduction of the said premium as also the unpaid premium falling due before the next anniversary of the Policy. In the case of death, unpaid premium if any, falling due before the next policy anniversary shall be deducted from the claim amount.
xxxxxxxx 5. Forfeiture in certain events: In case the premium shall not be duly paid or in case any condition herein condoned or endorsed herein shall be contravened or in case it is found that any untrue or incorrect statement is contained in the proposal, personal statement declaration and connected documents or any material information is withheld, then and in every such case but subject to the provision of Section 45 of the Insurance Act, 1938, wherever applicable, this policy shall be void and all claims to any benefit in virtue hereof shall cease and determine and all moneys that have been paid in consequence hereof shall belong to the Corporation, excepting always insofar as relief is provided in terms of the privileges herein contained or may be lawfully granted by the Corporation.'
SPECIAL CONDITIONS
'This policy having been issued under the Corporation's Salary Savings Scheme, it is hereby declared that the instalment premium shall be payable at the rate shown in the Schedule of the policy so long only as the Life Insurance continues to be an employee of his present employer whose name is stated in the Proposal, and the premiums are collected by the said employer out of the salary of the employee and remitted to the Corporation without any charges. In the event of the Life Assured leaving the employment of the said employer or the premiums ceasing to be so collected and/or remitted to the Corporation, the Life Assured must intimate the fact to the Corporation and in the event of the Salary Savings Scheme being withdrawn from the said employer the Corporation shall intimate the fact to the Life Assured and all premium falling due on and after the date of his leaving the employment of the said employer or cessation of collection of the premiums and remittance thereof in the manner aforesaid or withdrawal of the Salary Savings Scheme, as the case may be, shall stand increased by the imposition of the additional charge for monthly payment that has been waived under the Salary Savings Scheme at five per cent of the premium exclusive of any premium charged for Double Accident Benefit or Extended Permanent Disability benefit and any other extra premium charged.
During the period in which the premium is remitted to the Corporation through the employer, the instalment premium will be deemed to fall due on the 20th day of each month instead of the due date after within mentioned.'
The authorisation letter, so far relevant for this case and concerning the employer is quoted below:
'I have taken out a life insurance policy with the Life Insurance Corporation of India, and I desire to pay premium by deduction from salary every month. I request you to kindly arrange to deduct and pay to the Life Insurance Corporation of India. BranchOffice ......... under ............................. Divisional Officethe premium amount stated below from my salary due for the month given below and also to continue to deduct and pay such amounts every month till further advice.
I agree that your liability will be confined to making arrangement for deduction of premium from my salary remitting the amount to the Corporation in time. I shall be entirely responsible for any consequences on account of non-payment of premium on my Policy for reasons beyond your control, such as in the event of my proceeding on leave without pay or my drawing advance salary without deduction of premium, or my cancelling this authorisation for deduction of premium or my leaving your employment in any such case or in case of withdrawal of the Salary Savings Scheme with you by the Life Insurance Corporation of India for any reason whatsoever. It will be my responsibility to make arrangements for remittance of the premium directly to the Corporation at the increased rate specified in the policy to prevent my policy from going into a lapse condition.'
(Italicisation for emphasis)
The authorisation letter as extracted above clearly shows that it is duty of employer to make the payment of premium to LIC in time. . The letter of authorisation concerning the LIC in Form No. 'A' (SSB) so far as relevant reads as follows:
'Dear Sir,
Re: Policy No. Under P.A. Code No.
SALARY SA VING SCHEMES
I have taken out a policy with the Life Insurance Corporation of India and desire to pay premium by deduction from salary every month. I request you to arrange for deduction and pay to the Life Insurance Corporation of India ....... the Premium amount stated below from my salary due for the month stated below and also continue and pay such amounts every month till further advice.
I agree that your liability will be confined to making arrangements for deduction of premiums from my salary whenever this can be made and for remitting the amount of deduction to the Corporation in time up to the month and year of last instalment stated below or till, I give you and LIC a specific Notice of withdrawal of this authorisation after a minimum period of three years from the commencement of the policy. I shall be entirely responsible for any consequences on account of non-payment of premium on my policy for reasons beyond your control such as in the event of my proceeding on leave without pay, or my drawing advance salary without deduction of premium per chance or my withdrawing this authorisation by a due notice to you and the Corporation after the initial period of 3 years as stated above or my cancelling this authorisation for deduction in case of my leaving service. In any such case, it will be my responsibility to make arrangements for remittance of premium directly to the Corporation to prevent my policy from lapsing.'
It may be noted here that the employer has no liability in such cases as enumerated in the letter of authorisation itself. The case at hand is not one of that type.
7. In view of the factual position as highlighted above, it was the duty of the employer to make the deduction and remit the same. Steps taken by it to make the deduction on August 4, 1990, after death of the deceased, to discharge the liability of remittance to the LIC, and acceptance by it is of no assistance to the State to contend that it was the liability of the LIC. Since the employer had taken the responsibility of making the deduction and remitting the same to LIC. It was the duty of the employer to do so. As this part of the responsibility which was undertaken to be done by it was not carried out by the employer, the liability to make payment has to be fastened to it. Similar view was expressed by this Court in Ms. Pranati Dash v. Chairman-cum-Managing Director, Oil and Natural Gas Corporation Limited, 1998 (II) Orissa LR 458.
8. We are, therefore of the view that the liability of Rs. 1 lakh covered by the policy is to be discharged by the employer and the legal representatives of the deceased cannot be deprived of their legitimate dues. A stance is taken by opposite party No. 4 that being the nominee the entire amount should be paid to him, A mere nomination made under Section 39 of the Insurance Act, 1938 (for short, 'Act') does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the Life Insurance Policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession governing them,
9. The summary of the relevant provisions of Section 39 establishes clearly that the policy holder continues to hold interest in the policy during his lifetime and the nominee acquires no sort of interest in the policy during the lifetime of the policy holder. If that is so on the death of the policy holder the amount payable under the policy becomes part of his estate which is governed by the law of succession applicable to him. Such succession may be testamentary or intestate. There is no warrant for the position that Section 39 of the Act operates as a third kind of succession which is styled as a statutory testament. The provision in Sub-section (6) of Section 39 which says that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees. The language of Section 39 is not capable of altering the course of succession under law (See Smt. Sarbati Devi v. Smt. Usha Devi) AIR 1984 SC 346. It was however, agreed to by learned counsel for petitioner and opposite party No. 4 that the amount is to be shared equally by them. We direct the State Government to make the deposit of Rs. 1 lakh in this Court within two months from today which shall be distributed to the petitioner and opposite party No. 4 in the aforesaid proportion on being identified by any of the learned counsel appearing for each of them in this Court.
10. The writ application is allowed to the extent indicated above. No costs.
P.C. Naik, J.
11. I agree.