RAI DEVI Vs. MANAGING DIRECTOR

JUDGEMENT

(1.) BRIEFLY stated the facts of the case are that the husband of the petitioner late Shri Gena Ram was in the employment of Rajasthan State Electricity Board (hereinafter referred to as R.S.E.B.) who was subsequently taken over by the first respondent Jodhpur Vidyut Vitran Nigam Limited, Jodhpur. The Life Insurance Corporation of India introduced a salary saving scheme in accordance with the policy for employees under one employer. The policy provided that the employer shall collect the premium from the salary of the employee and remit the LIC and if the employer fails to deposit, then LIC shall intimate the fact to the insured employee. The petitioner's husband late Shri Gena Ram took the policy for an amount of Rs. 25,000/ -. The premium was regularly deducted from his salary. His husband died on 17.7.1994. On a claim being raised, the LIC replied that at the time of death of Shri Gena Ram the policy No. 182074833 was closed.

(2.) THUS , the petitioner approached to this court by way of a writ petition under Article 226 of the Constitution of India. The learned Single Judge rejected the writ petition on the ground that the LIC rejected the claim as back as in the year 1996, but the petition was filed in the year 2002. In the opinion of the learned Single Judge the petitioner could file a civil suit to get a liability determined. The observation of the learned Single Judge is extracted as follows : - "The petitioner could file a civil suit to get the liability determined because the question of closure of the policy in the life time of the deceased is the question which goes a wrong way."

(3.) WE have heard learned counsel for the parties. The salary scheme introduced by the LIC which is the subject matter in the instant special appeal is not in dispute. It is unfortunate that the LIC and the learned Single has denied a rightful relief to which a widow was entitled. The controversy involved is concluded by the decision of the Apex Court in Delhi Electric Supply Undertaking v. Basant Devi and another, 1999(4) SCT 417 (SC) : JT 1999(7) SC 486 followed by the Division Bench of this Court in Life Insurance Corporation of India v. Smt. Mukesh Devi, 2001(3) RLR 39. It is held therein that though the employer is not an agent within the meaning of Insurance Act but is certainly an agent under the provisions of Contract Act and, therefore, the LIC cannot repudiate the claim on account of policy lapsed due to non -payment of premium by employer. The court observed as follows : - "Considering the said scheme, the Supreme Court held that such a condition cannot be imposed on an employee. So far as the employee, in the instant case, is concerned, he was told by the management that premium will be deducted from his salary every month and the same will be remitted by the employer to the appellant -corporation as per the agreement between the appellant corporation and the respondent -RSEB (employer). Therefore, the RSEB, the employer, as an agent of the appellant corporation herein, was to collect the premium on behalf of the appellant corporation and then to pay the same to appellant corporation. The RSEB is certainly not an insurance agent within the meaning of the Insurance Act, but is certainly an agent under the provisions of the Contract Act. Mode of collection of premium has been indicated in the scheme itself and the employer has been assigned the role of collecting premium and remitted the same to LIC." As far as employee as such is concerned, employer will be agent of the LIC. When there is no insurance agent as defined in Regulations and the Insurance Act, general principles of the law of agency as contained in the Contract Act are to be applied. The employee was also made to believe that it is the duty of the employer to collect the premium by deducting from the salary of the employee covered under the agreement every month and to remit the same to the LIC. It cannot be said that the RSEB was not liable for deducting and remitting the same to the LIC.