Page 54 - The Insurance Times October 2024

policy did not stand in Singh's name. The District Commis- ued at Rs 5 lakh, with a monthly premium of Rs 2,062,
sion upheld the insurer's stand and dismissed the complaint. automatically deducted from his salary.

Singh appealed against the order. The Chandigarh State Singh passed away on June 18, 2014, due to illness. When
Commission set aside the order of the District Commission his widow, Jagdeep Kaur, and children Lovepreet, Manpreet,
and directed the insurer to collect the wreckage of the and Sukhpreet claimed the policy benefits, they were
vehicle and pay Rs 737,134 towards total loss, along with 9 stunned to find the policies had lapsed because premiums
per cent interest from the date of repudiation of the claim. had not been paid since November 2012. This was perplex-
It also awarded Rs 30,000 towards compensation and Rs ing since premiums were being deducted from Singh's sal-
15,000 as litigation costs. A period of 30 days was given for ary. Seeking answers, the family filed an RTI request and
compliance, after which the interest rate would stand discovered that while the premiums for all three policies
raised to 12 per cent for the period of delay. had been deducted from November 2012 to January 2014,
their remittance was intentionally discontinued.
The insurer filed a revision petition against the order, con-
tending that the law was well settled that upon sale of a The family filed a consumer dispute with the Fatehgarh
vehicle, the coverage would be restricted to only third-party Sahib District Consumer Commission, alleging service defi-
risk, and would not extend to own damage unless the policy ciency by both the police and LIC. However, the complaint
is transferred. The insurer argued that since the policy was was dismissed, as the police department was deemed not
not transferred and the loss was for own damage, the claim to have provided any service, making the consumer com-
would not be payable. plaint non-maintainable. Learn more about consumer dis-
putes here.
Singh's lawyer, Dhruv Dwivedi, argued that the interpreta-
tion of the law had changed after the 1994 amendment to The family then appealed to the Punjab State Commission.
the Motor Vehicles Act of 1988. He contended that upon The police department reiterated its stance, arguing the
registration of the vehicle by the RTO in favour of the pur- claim was not maintainable under the Consumer Protection
chaser, there would be a deemed transfer of the compre- Act. They also asserted that premium collection had ceased
hensive insurance policy in favour of the purchaser under based on Singh's verbal instructions and that he was aware
the amended Section 157, without any bifurcation of third- the policies had lapsed, as his salary was issued without
party risk and own damage. premium deductions.
The National Commission observed that the amended pro- On behalf of the claimants, it was contended that Singh had
vision provides for deemed transfer of the policy from the given written authorization for premium deductions. Sal-
time the registering authority registers the ownership of ary statements confirmed premiums were deducted from
the vehicle in favour of the purchaser. Hence, the Commis- November 2012 to January 2014 but not deposited with LIC.
sion concluded that the earlier interpretation of the law by The arbitrary cessation of deductions from February 2014
the Supreme Court would no longer be applicable after the onwards, without notifying Singh, prevented him from pay-
1994 amendment to Section 157 of the new Motor Vehicles ing the premiums directly.
Act, 1988.
LIC argued that since the policies lapsed before the comple-
Accordingly, by its order of July 12, 2024, delivered by J tion of three years, even the surrender value was not pay-
Rajendra, the National Commission dismissed the insurer's able, and the policy could not be revived after Singh's death.
revision, holding that a purchaser is not required to get the
insurance policy transferred to his name as it would be The State Commission ruled that LIC was not liable for the
deemed to be automatically transferred when the vehicle police department's failure to remit the premiums. It or-
dered the police department to settle the claims.
is registered in the name of the purchaser.
The police department challenged this order through a
Police department held liable for lapsed revision petition. The National Commission observed that
as the employer, the police department had a duty to de-
policies duct and remit the premiums, except in situations beyond
Sakinder Singh of the Punjab police acquired three Jeevan its control, such as insufficient salary to cover the premium
Saral with profit policies from the Life Insurance Corpora- instalment due to the employee taking a loan or being on
tion (LIC) of India on August 31, 2012. Each policy was val- leave without pay.

The Insurance Times October 2024 49