Insurer has to reap the bitter harvest of employer’s negligence: NCDRC

Where the employee is led to believe that it is the responsibility of the employer to deduct premium amount from the employee’s salary and deposit the same with the life insurance company, the consequences of the failure of the employer to collect and deposit premium would be visited upon the insurer.

The National Consumer Disputes Redressal Commission (NCDRC) said so in LIC vs Krishna Devi (widow of Somnath the insured), reiterating the Supreme Court verdict in DESU vs Basanti Devi .

That in the case on hand the employer was remiss in not only depositing the premium but also in not deducting it from the employee’s salary, whereas in the case decided by the Supreme Court the employer’s guilt was more inasmuch as he was remiss in not depositing the premium after having deducted the same from the employee’s salary. This argument, adduced by LIC, did not cut any ice with the NCDRC.

Nor was it swayed by LIC’s argument that the employer, Punjab State Electricity Board, must be called upon to pay the insurance amount inasmuch as the immediate cause for lapsing of the insurance policy was the employer’s negligence.

(The author is a New Delhi-based chartered accountant.)

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