In matters of insurance, time is the essence. Central Coalfields, Dharbanga, obviously was unaware of this crucial aspect of insurance and thought that time was on its side when it took its own time to remit the premium collected from its employees towards a group insurance policy. But for D.C. Mishra’s widow, it meant a long wait of five years and a bitter legal battle to get what was her due immediately after her husband’s death — his insurance money. This case should make employers who take group insurance schemes on behalf of their employees, more conscious of the time factor and their responsibilities vis-à-vis the employees.

Central Coalfields entered into an MOU with Oriental Insurance for a group insurance scheme covering all its employees. As per the scheme, the employer deducted Rs 156 from the salary of its employees, but instead of remitting it on or before March 31 as required, it sent the cheque to the insurer only on May 29, 2001.

Meanwhile, Mishra, a superintendent engineer at the Coalfields met with a road accident and died on April 20, 2001. When the insurance company repudiated his widow’s claim on the ground that the premium was not even paid at the time of his death, she sought the help of the consumer court, which directed Central Coalfields and its officers — responsible for the delay — to jointly and severally pay Rs 5 lakh along with interest. Coalfields contested this. Quoting the Supreme Court in the case of DESU vs Basanti Devi and Chairman, LIC Rajiv Kumar Bhasker, Coalfields said it was only acting as the agent of the insurance company in so far as payment of premium was concerned and so for any delay on its part, the principal or the insurance company was liable.

Dismissing such an argument, the apex consumer court pointed out that those cases pertained to salary savings scheme, where each employee owned the policy individually and the employer undertook to collect the premium and remit it to the insurer. But this was a group insurance scheme taken by an employer on behalf of his employees, where the employer is the insured and not the agent. So Supreme Court’s decision in those cases had no applicability in this case. Considering that these days, most employees are covered under group insurance schemes taken by employers, this is an important order that holds the employer liable for delaying payment of premium deducted from employees’ salaries (Central Coalfields vs Bandana Mishra, RP no 702 of 2005).