LexDELHI ELECTRIC SUPPLY UNDERTAKING versus BASANTI DEVI AND ANR.
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-;?' DELHI ELECTRIC SUPPLY UNDERTAKING A v. BASANTI DEVI AND ANR. SEPTEMBER 28, 1999 [S. SAGHIR AHMAD AND D.P. WADHWA, JJ.] B Life Insurance Corporation A_ct, 1956 : Section 49. Insurance Act, 1938 : Section 42. Life Insurance Corporation of India (Agents) Regulation, 1972 C Regulation 3( 6), 4 and 5. Consumer Protection Act, 1986 : Section 18. Contract Act, 1872 : Sections 182 and 18~Agent-Scope of power. · Life Insurance Corporation-'Salary Savings Scheme'-Employee of DESU-Policy taken under the Scheme-Premium deducted by DESU but D not remitted to LIC"-Death of employee-Widow's claim under the policy-Repudiation by LIC-<:omplaint before State Consumer Forum- Direction by Forum to DESU to make payment to the widow and LIC · absolved of the liability-Order of State Forum affirmed by National Con- E sumer Forum-Appeal before Supreme Court-Held, L1C was wrongly dis- charged of its liability under the policy-Held DESU was agent of LIC not under the Insurance Regulations but under Section 182 of the Contract Act-Direction to LIC to make payment under the policyCosts imposed on ~u F Constitution of India, 1950 : Article 142-Supreme Court of India-Doing complete justice to the parties-Order passed for Code of Civil Procedure, 1908: Order 41-Rule 33-Applicability of G Life Insurance Corporation (LIC) floated a "Salary Savings Scheme". The Scheme provided that the employer was to deduct premium from the salary of the employee and remit the same to the LIC. No individual premium notice was to be given by the LIC to any employee H 219 220 SUPREME COURT REPORTS [1999) SUPP. 3 S.C.R. A and no receipt was to be given to the employee for the premium received. It was also provided that in case any employee leaves the employment or if there was any change in the staff, the employer would inform the LIC. In case any employee had discontinued with the Scheme or had been terminated the employer was to notify this fact to the LIC and thereafter B employer was not responsible for collecting the premiums. An employee in the Scheme was kept ignorant of the happenings between the LIC and DESU except that he was to be made aware of deduction of premium from his salary every month. In all the transactions the employer was to act as agent of the employees and not as agent of the LIC. C An employee of Delhi Electric Supply Undertaking (DESU), the husband of the respondent, took an Insurance Policy under the aforesaid Scheme on January 28, 1992 for a sum of Rs. 50,000 and paid premiums for two months to the LIC. Premium for the third month was deducted by DESU from the salary of the employee and remitted to the LIC. D However, premium deducted for subsequent two months by DESU was not re.mitted by it to the LIC. In the meantime, the employee died on August 17, 1992 and the widow's claim under the policy was repudiated by the LIC on the ground that the policy has lapsed since default had been committed in payment of premium. The employee's widow filed a complaint under Section 18 of the Consumer Protection Act, 1986 before E the State Commission which directed DESU to pay a sum of Rs. 50,000 and interest at the rate of 15% per annum from December 17, 1992 till the date of payment. However, it absolved the insurer, LIC, of any liability. On appeal, the National Commission affirmed the order passed by the State Commission. In appeal to this Court by DESU, a Circular titled F "Salary Savings Scheme Endorsement" was brought to the notice of this Court the provisions whereof were in conflict with the terms of the scheme. It provided that when an employee leaves the employment of the employer or his premium ceased to be collected and/or remitted to the LIC this fact should be intimated by the employer to the LIC. In such a case premium was payable with an extra charge. G Disposing the appeal, this Court HELD : 1. In the circumstances of the case Life Insurance Corpora- tion was wrongly discharged of its liability under the insurance policy H taken out by the employee. [230-E] '· - DELHI ELECTRIC SUPPLY UNDERTAKING v. BASANTI DEVI 221 2. The Salary Savings Scheme Endorsement is in conflict with the terms of the Scheme. Considering the conditions as to how premium is to be deducted from the salaries of the employees and remitted to the LIC by DESU by one cheque for all the employees with the reconciliation statement it is not possible for any employee to know if the amount
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