JUDGMENT
Pradipta Ray, J.
1. Uprendra Nath Das, the husband of the present writ petitioner was serving as a Ward Attendant in Sishu Bhavan, a State Government Hospital at Cuttack. While in service Uprndra Nath obtained a Life Insurance Policy under Salary Saving Scheme for a sum of Rs. 10,000/-. Unfortunately from June, 1993 Upendra Nath suffered from serious ailment, was admitted to the S.C.B. Medical College and Hospital as an Indoor patient and ultimately died on December 13, 1993. The writ petitioner as widow of the deceased Upendra Nath claimed the amount under the aforesaid policy. The Life Insurance Corporation (in short ‘L.I.C.’), however, declined to make any payment on the ground that no premium against the said policy was received from July, 1993 to November, 1993. According to the employer the deceased-employee remained on commuted leave from July 1. 1993 till the date of his death, i.e., December 13, 1993 and as his pay was withheld during the said period, no deduction could be made.
2. The L.I.C. has filed a counter asserting that the consequence of non-payment of premiums by the employer is to be borne by the insured in view of the employee’s undertaking in the letter of authorisation that he will be entirely responsible for any consequence on account of non-payment of his policy for reasons beyond employer’s control such as in the event of his proceeding on leave without pay or his drawing advance without deduction of premium per chance or his withdrawing the authorisation by due notice to the L.I.C. In the present case the employer did not deduct the premiums as salaries for the concerned months were withheld as the insured employee was on commuted leave.
3. The employer, Superintendent of Sishu Bhavan, has also filed a counter affidavit. In the said affidavit it has been mentioned that the deceased insured was on commuted leave from July 1993 till his death on December 13, 1993 and accordingly his salaries for the concerned months could not be drawn. As the salary of the insured was not drawn for the said period, no deduction of premium could also be made. The employer has thus admitted that the premiums for the concerned months were not deducted from the salary of the concerned employee and consequently were not paid to the L.I.C.
4. Under the Salary Saving Scheme quoted by the L.I.C. the premiums are to be remitted by the employer to the insurer after deducting the same from the concerned employee’s salary. Taking into account the terms and conditions of the said Salary Saving Scheme, the Supreme Court in Delhi Electric Supply Undertaking v. Basanti Devi and Anr. reported in AIR 2000 Supreme Court 43 has held :
“An employee is not being given any separate premium notice nor is he given any receipt for the premium received. If a condition is now placed on the employee that it is he who is to intimate the LIC if there is no remittance of the premium deducted by DESU it will be too onerous a condition to be of any validity. Considering the Scheme such a condition cannot be imposed on an employee. It is impracticable. A purposive interpretation has to be given to the endorsement and it has to be held that since payment of premium after deducting from the salary of the employees is between DESU and LIC. It will not to be for the employee to intimate the LIC about non-remittance of the premium.
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DESU is not procuring or soliciting any business for the LIC. DESU is certainly not an insurance agent within the meaning of aforesaid Insurance Act and the Regulations but DESU is certainly an agent as Section 182 of the Contract Act. Mode of collection of premium has been indicated in the scheme itself and employer has been assigned the role of collecting premium and remitting the same to LIC. As far as employee as such is concerned, employer will be agent of the LIC. It is a matter of common knowledge that Insurance Companies employ agents. When there is no insurance agent as defined in Regulations in the Regulations and the Insurance Act, general principles of the law of agency as contained in the Contract Act are to be applied.”
5. Mr. S.P.Misra, learned counsel appearing for the L.I.C. has drawn attention of this Court to the distinctive feature of this case and submitted that the view adopted by the Supreme Court in Delhi Electric Supply Undertaking case (supra) does not apply to this case inasmuch as in the said case the employer deducted the premium but did not remit it to the L.I.C. whereas in the present case the premium could not be deducted as the salaries for the concerned months were withhold.
6. As held by the Supreme Court, the position of the employer in relation to the employee is that of an agent for the L.I.C. to collect premium for the salaries of the insured. There is no system of direct correspondence between the insurer and the insured employee. The money out of which the premium is to be collected and remitted remains under the control of the employer, It is almost impossible for a semi- literate Class-IV employee like the petitioner to know whether the amount of premium has been deducted and duly remitted or not and consequence of such non-deduction. In spite of the contents in the letter of authorisation, it is not possible for a semi-literate Class-IV employee to remain aware of his exact liability and responsibility towards payment of premium in case payment of salary for any month or period is withheld by the employer for any reason. In the present case undisputedly the insured employee was never intimated either by the employer or by the insurer that the premium for a. particular month or months has/ have not been paid and that it was the employee’s responsibility to pay directly to the insurer the premium for the period during which his payment was or would be withheld. In view of the clear pronouncement of the Supreme Court that payment of premium after deducting from the salary of the employee is a matter of arrangement between the insurer and the employer, the insurer cannot get itself absolved from the liability or responsibility for any failure on the part of the employer unless either L.I.C. or its collection agent, the employer, expressly intimates the insured about non-deduction and asks him to pay directly to the L.I.C.
7. In the present case the insured employee’s salaries were withheld not for any disciplinary reason but for certain procedural requirement. It is not the case of the employer that the insured employee was not entitled to get salaries for the concerned months. All these questions have been raised only after the death of the insured employee. He was never intimated during his life time that he would have to pay premium directly to the L.I.C. for the concerned months. In such circumstances, I am unable to accept the plea that the insured was at fault for non- payment of premium of the relevant months.
8. In the circumstances, I do not find any material distinction for which the principles enunicated by the Supreme Court in Delhi Electric Supply Undertaking case should not be made applicable to the present case. I am unable to hold that the deceased insured was responsible for non-deduction and non-payment of premium for the disputed policy. However, as the premium for the concerned months was not in fact deducted from the salary of the insured employee, the L.I.C. will be entitled to deduct the said amount of premium from the amount payable to the writ petitioner under the disputed policy. In case the L.I.C. has suffered any loss for non- payment of premium in time, it will be at liberty to claim compensation for such loss, if any, from the employer through appropriate legal proceedings.
9. Accordingly, I allow this writ petition. The L.I.C. is directed to pay the amount due under the disputed policy after deducting the arrear premium within three months from the date of communication of this order. The L.I.C. is at liberty to take appropriate legal proceedings against the employer if it has suffered any loss due to non-payment of premium in time.