TMI Blog1997 (4) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... um fell due on March 6, 1987 but it was not deposited within the prescribed period. On June 4, 1987 respondent No.3 met the insured and obtained. from him a bearer cheque dated June 4, 1987 for ₹ 2,730/- drawn on Union Bank of India, Malad, Bombay, towards the half yearly premium on all the four policies. The cheque was encashed by the son of respondent No.3 on June 5, 1987. The said amount of premium was deposited by respondent N.3 with the LIC on August 10, 1987. In the meanwhile on August 9, 1987 the insured met with a fatal accident and he died on the same day. Appellant No. 2, the widow of the insured, as the nominee under the policies, submitted a claim to the LIC on the basis of the said four policies but the claim was repudiated by the LIC on the ground that the policies had lapsed on account of non-payment of the half yearly premium which fell due on March 6, 1987 within the period of grace. Appellant No.2 along with the Consumer Education Research Society [appellant No.1], a society registered under the Societies Registration Act and mainly devoted to the promotion and protection of consumer interest, submitted a complaint before the Gujarat State Consumer Dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated July 26, 1994 has dismissed the appeals filed by the appellants and has allowed the appeals filed by the respondent Nos. 1 and 2. The National Commission has held that 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 LIC nor could it be deemed that the LIC had received the premium on the date the bearer cheque towards the premium was received by the insurance Agent, namely, June 4, 1987 even though he deposited the same with the LIC on August 10, 1987, one day after the death of the insured. Feeding aggrieved by the said decision of the National Commission, the appellants have filed these appeals. It is not disputed that the third half yearly premium had become payable on the four insurance policies of the insured on March 6, 1987 and it was not paid within the grace period of one month prescribed in the insurance policies. In condition No. 2 of the conditions set out in the Insurance Policy it is stated that if the premium is not paid before the expiry of the days of grace, the Policy lapses. The case of the appellants is that since the payment was made to respondent No.3 who was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... newal premiums under policies on such conditions as may be specified. By the Life Insurance Corporation [Amendment] Act, 1981 [Act 1 of 1981], clause (cc) was inserted in sub-section (2) of Section 48 and as a result, rule-making power was conferred on the Central Government to make rules providing agents of the LIC including those who became employees and agents of the LIC on the appointed day under the Act and Corresponding provision in Section 49 of the Act which empowered the LIC to make regulations in that regard was deleted. By virtue of sub-section (2-A) of Section 48, which was also introduced by Act 1 of 1981, it was provided that the regulations and other provisions as in force immediately before the commencement of the Life Insurance Corporation [Amendment] Act, 1981, with respect to the terms and conditions of service of employees and agents of the Corporation including those who became employees and agents of the LIC on the appointed day under the Act, shall be deemed to be rules made under clause (cc) of sub-section (2) and shall, subject to the other provision, have effect accordingly, In view of the said provisions, the Regulations by legal fiction introduced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not paid before the expiry of the days of grace, the policy lapses . The grace period allowed for payment of yearly, half yearly or quarterly premiums was one month. The said grace period for payment of half yearly premium on the policies of the insured expired on April 6, 1987 the policies had lapsed. For revival of discontinued policies condition No. 3 of the Insurance Policy makes the following provision.: 3. Revival of Discontinued Policies : If the policy has lapsed, it may be revived during the life time of the Life Assured, but within a period of 5 years from the date of the first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest at such rate as may be fixed by the Corporation from time to time compounding half-yearly. The Corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the Life Assured. In view of this condition the matter of reviva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d conferred an authority on respondent No.3 to collect the premium on behalf of the LIC and, therefore, the receipt of the cheque for ₹ 2,730/- by respondent No.3 from the insured on June 4, 1987 cannot be regarded as payment received by him on behalf of the LIC. The learned counsel has, in support of the aforesaid submission, placed reliance on the law relating to agency governing the scope of authority of the agent. Under the Law of Agency, as applicable in England, the authority of an agent may be : (i) actual or (ii) apparent. Actual authority results from a manifestation of consent that he should represent or act for the principal made by the principal to the agent himself. It may be express if it is given wholly or in part by means of words or writing or it may be implied when it is regarded by the law as the principal having given him because of the interpretation put by the law on the relationship and dealings of the two parties. Implied authority may arise in the form of incidental authority, i.e., authority to do whatever is necessarily or normally incidental to the activity expressly authorised, or usual authority, i.e., authority to do whatever an agent of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority need not be an express authority; it may be implied from the circumstances. [See : Halsbury's Laws of England, Vol.25, p.254, para 460]. 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. The only question is whether the LIC can be held liable on the basis of the doctrine of apparent authority. Shri Mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 collect so only if they are expressly authorised to do so. Shri Mathur has placed reliance on the observations of this Court in LIC of India Anr. vs. Consumer Education Research Centre Ors. 1995 (5) SCC 482, where in 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 any 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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