CHAIRPERSON LIC V. RAJIV KUMAR BHASKAR

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Published On: 8th September, 2024

Authored By: Mimansa Joshi

Rajiv Gandhi National University of Law , Punjab

  1. INTRODUCTION

 The chapter X of the Indian Contract Act, 1872, defines the appointment and authority of agents. 

 Section 182 of the Indian Contract Act, 1872, defines “An ‘agent’ as a person employed to do any act for another in dealings with third person. The person for whom such act is done or who is so represented, is called the ‘principal’.

Section 186. Agent’s authority may be expressed or implied.—The authority of an agent may be expressed or implied

Section 187. Definitions of express and implied authority.—An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.[1]

In this case:-

The employer was considered an agent of L.I.C. to collect and remit premiums, and the employee cannot be made to suffer for any default on the part of the agent[2]

  1. DECIPHERING THE CASE OF CHAIRPERSON LIC V. RAJIV KUMAR BHASKAR

Citation : 2001 4 PLJR 180 ; 2001 0 Supreme(Pat) 752

Date of Judgement : AUGUST 17, 2001

Name of the Judges (Author)- Chandramauli Kumar Prasad

Bench – Chandramauli Kumar Prasad

  • Facts of the case

With this writ petition, the petitioner requests that the Respondents pay him the full amount of his father’s death claim, interest and costs included. His father passed away on 9.7.1996, while he was employed as a lecturer in the geography department at Ram Lakhan Singh Yadav College in Aurangabad.

In short, the petitioner’s case is that his late father, Upendra Sharma, was employed by Ram Lakhan Singh Yadav College, Aurangabad, as a lecturer in the geography department. In 1992, he insured his life under the Salary Saving Scheme for a sum of one lac rupees, for which the college withdrew the required monthly premium from the petitioner’s father’s salary each month, which was then deposited with the Life Insurance Corporation’s Aurangabad branch.

The petitioner’s father passed away on 9.7.1996, following a massive heart attack. On 10.9.1996 the petitioner filed the necessary paperwork at the Corporation’s Aurangabad Branch office to file for his father’s death. The petitioner deposited the so-called arrear premium, totaling Rs. 6040/-, through the College on November 5, 1996, for the period of December 1995 to July 1996, even though the premium was supposed to be deducted from the deceased’s salary. The Patna Division of the Corporation issued a receipt for the payment (Annexure-7/1). Along with a letter dated 24.1.2000, the petitioner also served the respondents with a legal notice on 26.4.1998. After that, the petitioner was given the assurance that the issue had been brought up with the Aurangabad Divisional office by the Corporation’s Additional Executive Director (Marketing) in a letter dated February 2, 2000 (Annexure 11). The petitioner has submitted the current writ action since his father’s death claim has not yet been resolved.

Major issues before the Court?

  • Whether the employer can be treated as the agent of the L.I.C despite the express agreement to the contrary?[3]
  • The basis for this Letters Patent Appeal is the ruling and order of a learned single judge of this Court that granted the sole respondent’s writ petition and directed Life Insurance Corporation of India (L.I.C.), the appellant in this case, to pay the amount assured under the insurance policy, along with costs of Rs. 5,000 and interest at the rate of 12 percent per year from the date of death.
  • After the Apex Court’s decision, which allowed the learned single judge to grant the respondent’s claim, the question that needs to be addressed is whether the learned judge applied the principle established in that case incorrectly given the facts and circumstances.[4]
    • Arguments of Plaintiff

The appellants’ learned counsel, Mr. Umesh Prasad Singh, contended that the learned single judge erred when he relied on the outcome of Delhi Electric Supply Undertaking v. Basanti Devi 1999 CCJ 1465 (SC)—or, to put it succinctly, Basanti Devi—because the facts of that case differed. Whereas in the current case the respondent’s father did not receive his salary, there was no question of any deduction from the salary and deposit with L.I.C. In the previous case, the Delhi Electric Supply Undertaking (D.E.S.U.) had made deductions from the employee’s salary but had neglected to deposit premium.

In Basanti Devi’s case, there was no reason for him to suspect that the premium was not being deposited because the employee had received his salary; however, in the current case, since Upendra Sharma did not receive his salary, he should have known that no deduction was being made and, as a result, premiums were not being deposited because deductions could only be made when a salary was received; when salary was not received, there was no reason to make any deductions or deposits.

According to Mr. Singh, there are many businesses and organizations, including universities in the state of Bihar, where employees do not receive their salaries on a regular basis. In such cases, applying the principle established in Basanti Devi’s case would run counter to the goals and objectives of the Salary Savings Scheme. In actuality, L.I.C. was really thinking of removing the scheme from the relevant businesses, organizations, etc. Second, Mr. Singh argued that the writ petition could not be maintained since the respondent had already filed a complaint under the Consumer Protection Act before the District Forum, which was still pending. In Basanti Devi’s case as well, the Supreme Court rendered a decision after the parties provided papers in response to an earlier complaint filed under the Consumer Protection Act. Since no such material has been presented in this case, the Court is being requested to proceed based only on assumptions regarding the details of the Salary Savings Plan. It is unknown what the provisions of the Salary Savings Scheme were under which the respondent’s father purchased the insurance policy because a copy of the Scheme has not been brought to our attention. Finally, it was argued that a different ruling from a single judge in the Chameli Khatoon case (CWJC No. 9906 of 1998, if the learned single Judge wanted to differ, he should have referred the case to a larger Bench.[5]

2.4 Arguments of Defendant

The knowledgeable attorney for the respondent maintained that the Chameli Khatoon case—CWJC No. 9906 of 1998—had a separate foundation. Under the rules of the group insurance plan, the employees were in charge of paying the premiums in that case; the employer’s responsibility was restricted to arranging the payment. Additionally, they stated that the Salary Savings Plan is the same across India.[6]

2.5 Legal Provisions used

For deriving at the judgment there were three sections used with respect to the case

  1. Section 182 of the Indian Contract Act 1872
  2. Section 186 of the Indian Contract Act 1872
  3. Section 187 of the Indian Contract Act 1872

 2.6 Judgement and Reasoning

In this instance, the term “agent” may not refer to a person as defined by the LIC of India (Agents) Regulation, 1972, but rather to an agent in the common understanding of the word. The legal character of the relationship cannot be definitively determined by the presence or absence of the word “agent.”

The employees were to treat their employers as “agents” of the Corporation, and the employer had a crucial role to play in this whole situation, given that the Corporation made no offers to them and would not communicate with them directly regarding the payment or non-payment of the premium or any other matter related thereto, and the employees were unable to approach the insurer directly. Moreover, only the employer was authorized to carry out the policy’s terms and conditions. This merely emphasizes the idea that the employers would function as the insurer’s agents.

Whether or not one party gave another’s express or implied consent to the creation of the agency, the court is entitled to conclude that the agency relationship was in place for the relevant purpose when its existence would aid in resolving a particular issue and the evidence allows the court to reach that conclusion at a material time.[7]

  1. ANALYSIS OF JUDGEMENT

In Chairman L.I.C. v. Rajiv Kumar Bhaskar, the employer was required, as part of the salary saving scheme, to take the premium out of the employee’s paycheck and deposit it with L.I.C. When the worker died, his heirs learned that the employer’s carelessness had rendered the insurance void. The employer will represent the employee rather than the L.I.C.s, according to a section of the acceptance letter. The employer was found to be acting as the firm’s agent as a result of the Agent’s infringement, making the company (L.I.C.) accountable as a Principal (the employer). In this instance, L.I.C. is the primary because they choose to hire an agency to carry out their program.

  1. CASE COMMENT

The Patna High Court heard the matter of Rajiv Kumar Bhaskar v. Chairperson LIC. The Supreme Court’s ruling in Chairman, LIC v…. Rajiv Kumar Bhasker resolves this dispute. 1. Salary savings plans were taken into consideration when this decision was made. Therefore, the DESU has the exclusive duty to collect premiums from each employee and submit them in the form of a single check.[8]

In this case, a “agent” in the sense that the word is commonly used instead of a person as defined by the LIC of India (Agents) Regulation, 1972. Whether the word “agent” is used or not does not necessarily indicate the legal nature of the relationship.

It is clear that the employees were expected to treat their employers as “agents” of the Corporation, with the employer having a significant role to play in this affair, given that the employees were unable to contact the insurer directly and that the Corporation made no offers to them or would communicate with them directly regarding the payment or non-payment of the premium or any other related matter. Furthermore, the employer alone had the authority to enforce the terms and circumstances of the policy. This serves to underscore the notion that the employers would serve as the insurer’s agents.

The court may determine that an agency relationship was established for a specific purpose at a given time, regardless of whether one party provided explicit or implicit consent for the establishment of the relationship. This determination can be made if the evidence supports the court’s conclusion that the agency relationship was necessary to resolve a particular issue.[9]Therefore, the judgment conformed to recognized legal principles relating to agent and principal liability for contracts.

BIBLIOGRAPHY

[1] Indian Contract Act, 1872 § 182,186,187  

[2] (Supreme today ai) <https://app.supremetoday.ai/judgement/00800014135> accessed 25 March 2024

[3] Verma VK, Authority #Express and authority #Implied, ‘Chairman L.I.C v. Rajiv Kumar Bhaskar’ (Indian Case Law, 15 January 2012) <https://indiancaselaw.in/chairman-l-i-c-v-rajiv-kumar-bhaskar/> accessed 25 March 2024

[4] (Chairman, L.I.C. of India and Ors. vs Rajeev Kumar Bhaskar on 12 October, 2001) <https://indiankanoon.org/doc/243525/> accessed 25 March 2024

[5] (Chairman, L.I.C. of India and Ors. vs Rajeev Kumar Bhaskar on 12 October, 2001) <https://indiankanoon.org/doc/243525/> accessed 25 March 2024

[6]. Admin, ‘Chairman, Life Insurance Corporation vs. Rajiv Bhasker – Legal Vidhiya’ (Legal Vidhiya -, 13 January 2024) <https://legalvidhiya.com/chairman-life-insurance-corporation-vs-rajiv-bhasker/#:~:text=Respondent%20contention,of%20the%20group%20insurance%20plan.> accessed 25 March 2024

[7] Verma VK, Authority #Express and authority #Implied, ‘Chairman L.I.C v. Rajiv Kumar Bhaskar’ (Indian Case Law, 15 January 2012) <https://indiancaselaw.in/chairman-l-i-c-v-rajiv-kumar-bhaskar/> accessed 25 March 2024

[8] (Supreme today ai) <https://app.supremetoday.ai/judgement/00800014135> accessed 25 March 2024

[9] Admin, ‘Chairman, Life Insurance Corporation vs. Rajiv Bhasker – Legal Vidhiya’ (Legal Vidhiya -, 13 January 2024) <https://legalvidhiya.com/chairman-life-insurance-corporation-vs-rajiv-bhasker/#:~:text=Respondent%20contention,of%20the%20group%20insurance%20plan.> accessed 25 March 2024

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