National Consumer Disputes Redressal
Life Insurance Corp. Of India vs Girdharilal P. Kesarwani & Anr. on 14 January, 2009
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI REVISION PETITION NO. 900 OF 2007 (From the Order dated 19.09.2006 in Appeal No. 1556 of 2001 of State Consumer Disputes Redressal Commission, Nagpur, Maharashtra) LIFE INSURANCE CORP. OF INDIA PETITIONER VERSUS GIRDHARILAL P. KESARWANI & ANR. RESPONDENTS BEFORE: - HONBLE MR. JUSTICE ASHOK BHAN, PRESIDENT HONBLE MR. B.K. TAIMNI, MEMBER FOR THE PETITIONER : MR. U.C. MITTAL, ADVOCATE. WITH MR. PRANAV K. JHA, ADVOCATE FOR THE RESPONDENT: MS. SUREKHA RAMAN, ADVOCATE AS AMICUS CURIE. PRONOUNCED ON : 14.01.2009 O R D E R
ASHOK BHAN J., PRESIDENT Present Revision Petition has been preferred by the Life Insurance Corporation of India (LIC) (hereinafter referred to as the petitioner for short) against the impugned Order dated 19.09.2006 passed by the State Consumer Disputes Redressal Commission, Nagpur, Maharashtra (hereinafter referred to as the State Commission for short) in Appeal No. 1556 of 2001. The State Commission, by the impugned Order, has upheld the Order passed by the District Consumer Disputes Redressal Forum, Nagpur (hereinafter referred to as the District Forum for short).
Shortly stated, the facts of the case are:-
Respondents son Shailesh G. Kesarwani had obtained life insurance policy with profit and accidental benefit in the sum of Rs.25,000/- on 28.03.1996. The premium of installment was Rs.324/- per quarter. Deceased-Shailesh paid the premium as agreed to in the policy. The first, second and third installments of the premium were paid in March, June and September, 1996, respectively. Complainants son-Shailesh paid the fourth installment to Smt. Kamal Sharma who was the agent of the LIC. Shailesh died on 08.03.1997. Smt. Kamal Sharma deposited the premium after the death of Shailesh on 18.03.1997. The intimation of death of Shailesh was given by the respondent-father of Shailesh to the petitioner on 11.08.1997 and requested for reimbursement of the assured amount under the policy but in vein. Respondent, thereafter, approached the District Forum with a complaint claiming the amount assured.
The District Forum allowed the complaint and directed the petitioner to pay the maturity amount of the policy worth Rs.25,000/- along with bonus and requisite interest as per the terms and conditions of policy and cost of Rs.2,000/-. The petitioner being aggrieved, filed the appeal before the State Commission, which was dismissed by the impugned Order.
The petitioner admitted the issuance of the policy in favour of deceased-Shailesh. It denied that the fourth installment of premium was paid by the deceased or on his behalf as a result of which the policy had lapsed. It was denied that Smt. Kamal Sharma had paid the premium on 18.03.1997. It was also averred that this fact had been conveyed to the respondent vide letter dated 06.01.2000. It was also averred that as per the Agents Regulations, 1972, the agent has no authority to receive the premium. The agent accepts the premium as an agent of the customer and not of insurer. On these grounds, the insurance company had prayed for dismissal of the complaint.
District Forum allowed the complaint holding that the deceased had handed over the money to Smt. Kamal Sharma who was the agent of the insurance company and even if Smt. Kamal Sharma failed to deposit the amount, the respondent was entitled to the amount insured under the policy.
Being aggrieved, petitioner filed appeal before the Sate Commission, which was dismissed. Ms. Surekha Raman, Advocate was appointed as the Amicus Curie to represent the respondent.
Counsel for the petitioner relies upon the Judgment of the Supreme Court of India, i.e., Harshad J. Shah & Anr. v. L.I.C. of India & Ors. reported in AIR 1997 Supreme Court 2459 wherein Their Lordships, after considering a similar contention arising under similar circumstances, held that an agent has no authority to accept the premium on behalf of LIC and that the deposit made by the agent after the death of the deceased would not entitle the claimant to get the amount insured under the policy. It was held as under:-
17. In the instant case, it cannot be said that respondent No. 3 had the express authority to receive the premium on behalf of the LIC because in the letter of appointment dated December 5, 1962 there was a condition expressly prohibiting him from collecting the premium on behalf of the LIC. Nor can it be said that respondent No. 3 had an implied authority to collect the premium on behalf of the LIC because in 1972 the LIC has made a regulation (Regulation 8(4), which in 1981 became a rule, prohibiting the agents from collecting premium on behalf of the LIC. This shows that collection of premium was not necessary for or ordinarily incidental to the effective execution of his express authority by an agent. In view of this express prohibition in the Regulations/Rules which were published in the Gazette it is not possible to infer an implied authority by the LIC authorising its agents to collect premium on behalf of the LIC.
18. The only question is whether the LIC can be held liable on the basis of the doctrine of apparent authority. Shri Mathur has invoked the said doctrine and has relied upon Section 237 of the Indian Contract Act. He has urged that, by its conduct in receiving the premium through it agents, the LIC had induced the policyholders to believe that acts of the agents in receiving the premium form the policyholders were within the scope of the agents' authority. Shri Mathur has laid stress on the fact that respondent No. 3 was permitted to deposit the amount of Rs. 2,730 towards premiums with the LIC on August 10, 1987 on behalf of the insured. We, however, find that in the complaint that was filed on behalf of the appellants before the State Commission no such case was set up by the appellants that the LIC, by its conduct, had induced the policyholders, including the insured, to believe that the agents (including respondent No. 3) were authorised to receive the premium on behalf of the LIC. Nor is there any material on record which may lend support to the submission urged on behalf of the appellants that by its conduct the LIC had induced the policyholders, including the insured, to believe that agents were authorised to receive premium on behalf of the LIC. The only circumstance relied upon by the learned Counsel for the appellants is the receipt of the amount of Rs. 2,730 by the LIC on August 10, 1987. In this regard, the submission of Shri Salve is that issuance of the receipt for the said amount of 2, 730 by the LIC in the name of the insured does not indicate that the amount was received through respondent No. 3 and that on the basis of the said receipt it cannot be said that the LIC had induced the insured to believe that respondent No. 3 was authorised to receive the amount of premium on behalf of the LIC. We find considerable merit in this submission. From the mere fact that respondent No. 3 had obtained bearer cheque for Rs. 2, 730 from the insured on June 4, 1987 and after encashing the same from the Bank on June 5 1987, had deposited the said amount with the LIC on August 10, 1987, it cannot be said that the LIC induced the insured to believe that respondent No. 3 had been authorised by the LIC to receive premium on behalf of the LIC. We are, therefore, unable to hold that the doctrine of apparent authority underlying Section 237 of the Indian Contract Act can be invoked in the facts of this case especially when the LIC has been careful in making an express provision in the Regulations/Rules, which are statutory in nature, indicating that the agents are not authorised to collect any moneys or accept any risk on behalf of the LIC and they can collect so only if they are expressly authorised to do so.
19. Shri Mathur has placed reliance on the observations of this Court in LIC of India and Anr. v. Consumer Education & Research center and Ors. wherein this Court has stressed that since the LIC is 'state' under Article 12 of the Constitution it has a duty to act fairly in view of the mandate contained in Article 14 of the Constitution. It is no doubt true that the LIC, being 'state' under Article 12 of the Constitution, must act within the confines of the rights guaranteed under Part III of the Constitution. But we are unable to appreciate as to how this constitutional obligation has bearing on the present case. In disclaiming its liability the LIC is acting in accordance with the provision in Regulations/Rules framed by it whereby the agents have been prohibited from collecting the moneys on behalf of the LIC. The said provision has been made in public interest in order to protect the Corporation from any fraud on the part of an agent. It cannot be said that in making such a provision in the Regulations/Rules and in acting in accordance with the same the LIC has not acted fairly or in consonance with its obligations under Part III of the Constitution.
(Emphasis supplied) The point in issue in the present case is clearly concluded against the respondent by the aforesaid Judgment.
On query being put, learned Counsel appearing for the respondent-complainant, Amicus Curie fairly conceded that the aforesaid Judgment still holds the field.
In view of the law laid down by the Supreme Court of India in Harshad J. Shahs case (supra), we have no option but to accept the Revision Petition filed by the petitioner-LIC and set aside the Orders of the State Commission as well as that of the District Forum. Ordered accordingly. Complaint is ordered to be dismissed. No costs.
(ASHOK BHAN J.) PRESIDENT ..
(B.K. TAIMNI) MEMBER