JUSTICE SHRI. K.R. UDAYABHANU, PRESIDENT
The appellant is the opposite party/LIC in OP No. 31/2005 in the file of CDRF, Alappuzha. The appellant is under orders to pay the policy amounts with interest at the rate of 9% from 24-02-2005 and costs of Rs. 900/-
2. It is the case of the complainant that she is the nominee of the endowment assurance policy issued by the second opposite party on 03-06-2003 to her husband with the assured sum of Rs. 3,00,000/-. On payment of the annual premium of Rs. 26,428/-, the policy commenced on 22-05-2003. The second annual premium was due on 22-05-2004. The assured was employed in Kuwait. The policy was taken through the 3rd opposite party, LIC agent. In June 2004, the 3rd opposite party agent reminded the complainant with respect to the second premium and the premium amount of Rs. 26,428/- to be deposited within the grace period. The assured died in Kuwait on 12-10-2004 in a road traffic accident. The claim was repudiated as the amount collected by the agent was not deposited and the policy lapsed. It is the contention that the insurer is bound by the action of the agent.
3. The first and second opposite parties/LIC has filed version contending that the second annual premium was not paid although the same was due on 22-05-2004. It is contended that the LIC agents are expressly prohibited from collecting premium amounts from policyholders. The relevant provisions have been quoted. It is also contended that the premium notice, one month in advance was sent to the official address of the assured at Kuwait. No amount was tendered at the LIC office till 12-10-2004, the alleged date of death of the assured. The policy is lapsed. The LIC is not aware of the money transaction between the complainant and the 3rd opposite party. The agent has acted against the express provisions of the Agents Regulations.
4. The third opposite party, the agent has denied any receipt of amount from the complainant.
5. The evidence adduced consisted of the testimony of PWs 1 to 3, RW1, Exts. A1 to A7 and B1.
6. On an appraisal of the evidence adduced in the matter, the Forum has found that in fact the complainant had paid the amount due to the second annual premium to the 3rd opposite party agent. The evidence of PW1, the complainant, PW2 a witness to Ext.A4 the alleged undertaking executed by the 3rd opposite party and the evidence of PW3 an alleged witness to the transaction who is also a close relative of the complainant and the absence of the 3rtd opposite party (the 3rd opposite party apart from filing the version did not contest the matter) were taken into consideration by the Forum. Ext.A2 is dated subsequent to the death of the assured. As such we find no patent illegality in appreciation of evidence of PWs 1 to 3 and Exts.A4. The finding of the Forum that it is stands established that the 3rd opposite party/agent has received the second instalment of premium from the complainant does not call for interference.
7. The prime contention of the appellant/LIC is that the agent is not empowered or rather expressly prohibited from receiving premium amounts and hence the action of the agent in violation of the relevant statutory provisions would not bind the appellant. Although the Forum has found that as per the Life Insurance Corporation of India (Agents) Regulations 1972 framed in exercise of the powers vested u/s 49 of the Life Insurance Corporation Act did not empower any authority to collect premiums the absence of expressed prohibition in IRDA Regulation 2000 was stressed to hold that the LIC is bound in the instant case. Section 64 VB (iv) has also relied on. Hence it was held that the LIC is bound by the act of the agent. It was also noted that the LIC has not taken any action against the particular agent. The Forum has also relied on the decision of the Supreme Court in Delhi Electric Supply Undertaking Vs Basanti Devi AIR 2000 SC 43.
8. It stands admitted that the premium due has not been paid even after the lapse of the grace period. The assured died subsequently. The Counsel for the appellant has relied on the decision in Harshad J. Shah and Another Vs LIC of India and others AIR 1997 SC 2459 wherein the Supreme Court has specifically held that the terms of appointment issued under the LIC (Agents) Rules 1981 specifically provided that the agents are not authorized to collect or issue of receipt for moneys paid towards premiums. It was also held that Section 237 of the Contract Act cannot be invoked in view of the express provisions under the Rules. The agent has got only the authority vested on him and cannot act beyond the authority.
9. The decision cited by the respondent/complainant in Delhi Electric Supply Undertakings (op.cit), we find is with respect to the facts of a different situation. The above case was with respect to the salary savings scheme introduced wherein the scheme itself provided that the required premium will be deducted at source. We find that the ratio of the above decision is not applicable to the present case. In the circumstances, we find that the action of the 3rd opposite party agent in collecting the premium and not depositing the same would not bind the appellant. All the same, as noted by the Forum there is no evidence that the LIC has taken any action against the agent concerned. In the above circumstances and also considering that the first annual premium amounting to Rs. 26,428/- was paid as well as the second premium of the same amount was paid to the 3rd opposite party agent the appellants/LIC is directed to pay a sum of Rs. 1,25,000/- to the complainant. The 3rd opposite party agent would be liable to pay a sum of Rs. 2.5 lakhs as compensation towards the loss occasioned by her to the complainant. The premium if any refunded by the LIC can be deducted from the amount ordered to be paid. The complainant also would be entitled for interest at the rate of 8% from the date of the order of the Forum ie, 16-02-2006 from opposite parties 1 and 2. The 3rd opposite party would be liable to pay interest at 9% from 24-02-2005 the date of complaint on the amount ordered to be paid by her. The amounts are to be paid within 4 months from the date of receipt of a copy of this order, failing which the complainant would be entitled for interest at 12% from today.
In the result, the appeal is allowed in part as above.
The office is directed to forward the LCR to the Forum along with a copy of this order urgently.