- (1.) The question that falls for consideration in these appeals by special leave is whether payment of premium in respect of a life insurance policy by the insured to the general agent of the Life Insurance Corporation of India [for short 'L.I.C.'] can be regarded as payment to the insurer so as to constitute a discharge of liability of the insured. This question arises on the following facts : Jashwantrai G. Shah, the husband of appellant No. 2, (hereinafter referred to as 'the insured') took out four insurance policies for Rs. 25,000/- each with double accidental benefits on March 6, 1986 through Shri Charturbhuj H. Shah [respondent No. 3] who was a general agent of the L.I.C. [respondent No. 1]. Premium under the said policies was payable on half yearly basis. The insured deposited the first half yearly premium on March 6, 1986 and the second half yearly premium was deposited on September 6, 1986. The third half yearly premium 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 Rs. 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 No. 3 with the L.I.C. 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 L.I.C. on the basis of the said four policies but the claim was repudiated by the L.I.C. 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 Disputes Redressal Commission at Ahmedabad wherein a claim was made for payment of Rs. 4,32,000/- to appellant No. 2. The said claim comprised of Rs. 1,00,000/- payable under the four policies of Rs. 25,000/ - each, Rs. 1,00,000/- payable towards double accidental benefit, Rs. 1,32,000/-payable by way of interest @ 18% per annum on the aforementioned amount of Rs. 2,00,000/- from June 6, 1987 to March 31, 1991 and Rs. 1,00,000/- as compensation for annoyance, agony, hardship and humiliation caused to the dependents of the insured. The said complaint was transferred by the Gujarat State Consumer Disputes Redressal Commission to the Maharashtra State Consumer Disputes Redressal Commission at Bombay, (hereinafter referred to as 'the State Commission').
(2.) Before the State Commission, the case of the appellants was that the amount of premium collected by respondent No. 3 from the insured was collected by him on behalf of the L.I.C. L.I.C, on the other hand, pleaded that the amount of premium collected by the General Agent cannot be said to have been received by the L.I.C. It was stated that the agents are not authorised to collect the premium amount. The State Commission, by its judgment dated June 5, 1992, directed the L.I.C. to settle the claim in respect of the four policies within 30 days from the receipt of the order and to pay the amount of the claim to appellant No. 2 after deducting the amount of interest, if any, necessary to treat the policies as surviving. The State Commission held that in order to collect more business, the agents of the L.I.C. collect the premiums from the policy-holders either in cash or by cheque and then deposit the money so collected in the office of the L.I.C. and that this practice had been going on directly within the knowledge of the L.I.C. administration despite the departmental instructions that the agents are not authorised to collect the premiums. The State Commission was of the view that when the practice of accepting money by the L.I.C. agent from policy-holders is in existence and the money is collected by agent in his capacity and authority the reasonable inference was that the L.I.C. was negligent in its service towards the policy-holder.
(3.) Appeals were filed against the said judgment of the State Commission by the appellants as well as by respondent Nos. 1 and 2. The National Consumer Disputes Redressal Commission (hereinafter referred to as 'the National Commission') by its order dated July 26, 1994 has dismissed the appeals filed by the appellants and has allowed the appeal 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 L.I.C. nor could it be deemed that the L.I.C. 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 L.I.C. on August 10, 1987, one day after the death of the insured. Feeling aggrieved by the said decision of the National Commission, the appellants have filed these appeals.;