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Judgment
BEING aggrieved by the order of the West Bengal State Consumer Disputes Redressal Commission, both the parties have filed separate appeals. FA/126/2009 has been filed by LIC of India (herein referred to as appellant) , which had partly allowed the complaint of Shri Radhey Shayam Kedia & Ors. Respondents herein and original complainants before the State Commission. FA/190/2009 has been filed by Shri Radhey Shayam Kedia & Ors./original complainants seeking interest on the awarded amount.
SINCE the parties, as also the facts are common and arise out of the same complaint, it is proposed to dispose of these appeals through a single order by taking the facts from FA No. 126/2009. In their complaint before the State Commission, Shri Radhey Shayam Kedia and Ors./Original Complainants had contended that they are policy holders in respect of a number of policies that they had taken from the LIC of India (appellants no. 1-5 herein), which had been obtained through the licensed agent of appellant insurance company namely OP-6 (Sri Smarjit Nandy). It was contended that the value of the policies was for a total assured sum of Rs.12 lakhs and the respondents regularly paid the premium in respect of these policies through OP-6(Agent). However, OP-6 in collusion with OP-1 did not deposit the premium amounting to Rs.3,44,000/-. Besides this, three demand drafts sent by the respondents/complainants in favor of OP-1/Insurance Company for Rs.14,958/-, Rs.9,653 and Rs.9,547/- towards premium in respect of three policies through registered post, were also not encashed for reasons best known to the Appellant/insurance company. They instead handed over these over to OP-6 (i.e. the Agent), which were returned to the respondents/complainant asking for cash payments. According to the Respondents, such transactions between them and the insurance company through an insurance agent of appellant/Insurance Company was the usual practice prevailing in the field of insurance business, and therefore, the respondents were shocked when they came to know that the premium were never deposited by OP-6 (Agent). Respondents also came to know at that time, that most of the life policies taken by them were lying in a lapsed condition because of non-deposit of premium and the appellant/insurance company was not ready to acknowledge their complaint against their Agent and revive the policies. Alleging deficiency in service on the part of the appellant/insurance company, who was responsible for the illegal actions of their authorized agent with whom they had a relationship of Principal and Agent, respondents filed the complaint before the State Commission on grounds of deficiency in service and requested that the appellant/insurance company be directed to refund all premiums with prevailing interests, which are still deposited with appellant/insurance company amounting to Rs.1,40,674/- and also refund Rs.2,94,014/- which appellant/insurance company ''s agent used for his personal use without paying premium to the appellant insurance company with 18% interest p.a. and Rs.5,000/- as costs.
APPELLANTS /Insurance Company on being served filed a written rejoinder. It was specifically stated therein that an LIC agent is not authorized to collect premium on behalf of the insurance company and when he collects premium from the policy holder to deposit the same with the insurance company, he acts as an agent of the policy holder - in this case the respondents and not the LIC/ Insurance Company. This has been clearly stated in Section 8 Sub-Section 4 of the Agents Regulations, 1972. It was further contended that so far as the three demand drafts were concerned, these contained only one yearly premium payment for each of the policy, whereas for all the three policies, two yearly premiums were due. It was the respondents, in fact, who vide their letter dated 10-04-1997, had requested appellant/insurance Company to return their respective demand drafts to enable them to pay the premium by cash and it was under these circumstances that the drafts were returned. However, appellants/insurance Company had no knowledge regarding the payment of cash by the respondents to OP-6(Agent), as contended by them. It was further denied that respondents had sent any application for revival of the policies and in any case, policies cannot be revived on adhoc basis, particularly since some of the policies had lapsed for more than five years because of non-payment of premium and as per the rules; these could not be revived. In view of these facts, there was no deficiency in service.
THE State Commission after hearing the parties and on the basis of evidence produced before it, partly allowed the complaint by observing as follows:- "It is it was a smooth sailing so far as payment of insurance premium was concerned through OP No. 6, who is an admitted position that the complainants opened several Insurance Policies with the Insurance Corpn. And that initially authorized agent of the Insurance Corpn. But subsequently it transpires that the OP No. 6 did not deposit the insurance premiums so received from the complainants. In this aspect we find that from the materials on record there can be a legal presumption that the OP No. 6, who happens to be an authorized agent of the Insurance Corpn., did accept insurance premiums from the complainants, but for reasons best known to the OP No. 6 he did not deposit those premiums with the Insurance Corpn. We are also not unmindful to the subsequent agreement between the complainants and the OP no. 6 though this Commission is not the appropriate forum for detailed enquiry or investigation as regards the evidentiary value of the agreement entered into between the complainants and the OP no. 6. But for the purpose of proper adjudication of the present controversy, this Commission cannot ignore the existence of the said agreement and it gives rise to a legal presumption that there was some sort of understanding between the complainants and the OP No. 6 so far as it relates to deposit of insurance premiums by the complainants through the OP No. 6. Much has been agitated before us as regards the point of no-liability for the acts and omissions done or incurred at the instance of the authorized agent of the Insurance Corpn. But we find that in a decision reported in 2008 CTJ 554 (CP) (SCDRC), Page-554, wherein it has been observed by the Hon ''ble Commission that as per the principle of vicarious liability, the principal is responsible for all the acts and omissions of his agents to a third party. If that be the legal position we are of the view that in the present case there is no denial of the position that OP No. 6 is the authorized agent of the Insurance Corpn. We have already discussed that from the materials on record we find that there is no denial on the part of the Insurance Copn. that the complainants relied very much upon the authorized agent of the Insurance Corpn., i.e. OP No. 6, so far as it relates to deposit of insurance premiums. If that be the position, the lapsed condition of some of the Insurance Policies for non-payment of insurance premiums by the OP No. 6 should not and cannot exonerate the Insurance Corpn. from its vicarious liability as observed by the Hon ''ble Commission in the decision mentioned above. "
The State Commission, therefore, directed the appellant/insurance company to jointly and severally refund the premium amounting to Rs.1,40,674/- and Rs.2,94,014/- together with compensation of Rs.1,000/-. Learned counsel for the parties made oral submission.
LEARNED counsel for the Appellants/Insurance Company contended that the State Commission erred in holding the Appellants/Insurance Company jointly and severally responsible for the deficiency in service along with OP-6, who was an Insurance Agent since it is well established that the Agent has not been given the authority by the Appellants/Insurance Company to receive any premium on its behalf from an insurer. This has been well settled by a judgment of this Commission in the case of Life Insurance Corp. of India Vs. Girdharilal P. Kesarwani and Anr. [I (2009) CPJ 228 (NC)] as also by the Hon ''ble Supreme in the case of Harshad J. Shah and Anr. Vs. LIC of India and Ors. [AIR 1997 Supreme Court 2459] wherein the Hon ''ble Apex Court had concluded that as per the rules framed by LIC, Agents have been prohibited from collecting money/premium on behalf of the LIC. Therefore, the order of the State Commission directing the Appellants/Insurance Company to jointly and severally pay the Respondents the premium amount as also other reliefs should apply only to the Agent who was responsible for the deficiency in service in this case and not to the Appellants/Insurance Company.
LEARNED counsel for the Respondents reiterated the position as stated by them before the State Commission and again contended that since OP-6 was admittedly an Agent of the LIC, Respondents had no reason to doubt his bonafide when he had assured them that he was authorized to collect the premium and deposit the same with the Insurance Company. Therefore, the order of the State Commission may be upheld and appeal filed by the Insurance Company be dismissed. We have heard learned Counsels for the parties and have gone through the evidence on record. It is not in dispute that the Respondents had taken a number of insurance policies from the Appellants/Insurance Company and had been paying premiums for the same to OP-6 who was an Agent of the Appellants/Insurance Company. Appellants/Insurance Company has contended that as per their Rules, their Agents are not authorized to collect premium on their behalf. In the instant case, the Agent, therefore, acted against these statutory provisions by collecting premium amounts from the Respondents and thereafter not depositing the same with the Appellants/Insurance Company. Appellants/Insurance Company, therefore, cannot be held liable for the actions of the Agent, with whom they also do not have a principal to agent relationship. We find force in this contention of the Appellants/Insurance Company since the position stated by it is in accordance with the Regulations on the subject. Further, this issue is now settled as per the decision of the Hon ''ble Supreme Court in Harshad J. Shah (supra) wherein the Hon ''ble Apex Court had concluded that as per the Rules framed by the LIC, Agents are prohibited from collecting money on behalf of the LIC. The Hon ''ble Apex Court in that case had further observed that they are unable to uphold that the doctrine of Apparent Authority falling under Section 237 of Indian Contract Act can be invoked 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 authorized to collect any moneys or accept any risk on behalf of the LIC and they can collect so only if they are expressly authorized to do so .. ". The above judgment of the of the Hon ''ble Apex Court is squarely applicable in this case and, therefore, respectfully following the same, we are unable to uphold the order of the State Commission holding the Appellants/Insurance Company also responsible alongwith the Agent for deficiency in service and directing them to pay jointly and severally the awarded amount. We, therefore, partly modify the order of the State Commission and absolve the Appellants/Insurance Company of the liability for payment fastened upon them by the order of the State Commission and set aside this part of the order. We hold that it is only the Agent who is responsible for the deficiency in service and unfair trade practice in collecting the premium amount illegally from the Respondents and thereafter appropriating the same without depositing it with the Appellants/Insurance Company. At this stage, Counsel for the OP-6 (Agent) came forward and stated before us that out of the total amount of Rs.4,34,686/- directed to be paid to the Respondents, OP-6 had already paid back an amount of Rs.3,83,000/- which he had collected as premium. Counsel for the Respondents challenged the same and stated that so far only a sum of Rs.2,00,000/- had been paid back to the Respondents and the remaining amount is still to be paid. In view of the above submissions, Respondents are at liberty to initiate execution proceedings only against OP-6 (Agent) for payment of the actual amount due. We further note that vide order dated 13.04.2009 of this Commission a direction was issued to the Appellants/Insurance Company to deposit half of the awarded amount with the State Commission. If that be so, the State Commission is directed to release this amount alongwith accrued interest to the Appellants/Insurance Company in view of our finding that it is not guilty of deficiency in service. Respondents had filed a cross-appeal seeking interest on the awarded amount. Since the premium amount had been unauthorizedly kept by OP-6 (Agent), we direct him to pay interest @ 9% per annum on the awarded amount from the date of passing of the order by the State Commission till its payment alongwith Rs.2,000/- as costs.
BOTH the First Appeals stand disposed of in the above terms.