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Judgment
THE final hearing was held on the 28th October, 1993 when nobody appeared on behalf of the respondents/ applicants i.e. Consumer Eduction & Research Society & Ors. So a final order was passed by this Commission on 16th December, 1993. Subsequently, through an affidavit dated 24.11.1993, Counsel for the respondents/applicants Shri Naresh Mathur submitted that he was down with viral fever on the 28th of October, 1993 and was therefore, unable to appear before the Commission on appointed date. The fact of his in disposition had been arranged to be conveyed to this Commission through another Advocate on his behalf namely, Shri V. Akshaya Babu but Shri Babu could not do so because his child suddenly developed high fever and had to be taken immediately to a Paediatrician. In the circumstances, on the request made before us by Mr. Mathur, learned Advocate on 9th February, 1994 we recalled the order of 16th December, 1993 and heard the appeals de novo. The matter was finally heard on 23rd March, 1994 when the oral arguments were closed and the Counsel were permitted to file written submissions also. The parties have done so.
THE short issue for consideration is the nature and scope of the authority of the LIC agents in the matter of receiving the premium from the insured on behalf of the insurer Life Insurance Corporation of India? According to Consumer Education and Research Society and Shri Harshada J. Shah, the insurance agent, in collecting the premium acts on behalf of the insurer the Life Insurance Corporation of India as its agent. Since the premium was collected by the agent and paid to the LIC in the account of the insured, it has to be presumed that the principal received the premium in time and as such the insurance policy remain alive on the date of the death of the insured. The fact that there was delay on the part of the insurance agent in depositing the insurance premium with the LIC does not affect or abrogate the contract of insurance.
THE Life Insurance Corporation of India, on the other hand, have submitted that as a rule, the insurance agents are prohibited from collecting insurance premium from the insured and to accept the risk for or behalf of the Corporation. The Corporation has laid down that it is a function of the agent to ensure that every installment of premium is remitted by the policy holder to the Corporation within the period of grace and that "in respect of any unauthorised collection, you (the insurance agent) will be acting as an agent of the party concerned, and not as an agent of the Corporation, and you alone will be answerable to the party for consequence of such unauthorised action". The Corporation has particularly stressed that when the person deposits the premium on behalf of the life assured, he acts on behalf of the life assured and does not act as an agent of the Corporation. The onus to deposit the premium is on the life assured and as such, even if it is assumed that the agent, after receiving the premium from the assured, deposited the same with the LIC in this case, the agent was acting on behalf of the insured and not on behalf of the Corporation.
THE LIC has also further brought out that "The Agents Rules framed under the LIC Act are statutory rules and are binding on the Corporation and the policy-holders who are deemed to have knowledge of the said Rules which are admittedly gazetted." In the light of the above submissions by the LIC which we find are fully substantiated by the express provisions of the "Agents rules", it is not necessary to labour the matter further. The insurance Agent in receiving a bearer cheque from the insured towards payment of the insurance premium was not acting as the Agent of the insurer LIC nor can it be deemed that the insurer LIC had received the premium on the date the bearer cheques towards the premium was received by the insurance Agent viz,, the 4th June, 1987 even though he deposited the same with the insurer LIC on the 10th August, 1987, one day after the death of the insured. We, therefore, see no merit in the contentions raised by the Consumer Education and Research Society. First Appeal No. 280 of 1992 filed by the Life Insurance Corporation of India is allowed and First Appeal No. 323 of 1992 is dismissed. The parties will bear their respective costs in both the appeals.