Whether LIC is liable for misappropriation of money done by its agent?

 Now, the core question to be decided is whether OP No. 2 was liable for the acts and misappropriation of funds by OP No. 1 acting as agent of OP No. 2. Learned Counsel for the petitioner placed reliance on MANU/SC/0635/1997 : (1997) 5 SCC 64 - Harshad J. Shah and Anr. Vs. L.I.C. of India & Ors. in which after referring clause 3 & 4 of the regulations framed by LIC, it was held that until and unless complainant proves that LIC by its conduct had induced complainant to believe that OP No. 1 acting as agent was authorised to receive the premium on behalf of LIC, LIC cannot be held responsible for the amount of premium received by agent. In the case in hand, nowhere it has been pleaded by complainant that LIC by its conduct induced complainants to believe that OP No. 1 was authorised to receive premium on behalf of Respondent No. 2. In such circumstances, petitioner could not have been held liable for refund of so called premium amount received by OP No. 1 on behalf of the petitioner.

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI

Revision Petition No. 3447 of 2012

Decided On: 12.05.2014

Appellants: The Life Insurance Corporation of India, through its Senior Divisional Manager
Vs.
Respondent: Yog Raj Chauhan, Smt. Tara Devi and Sh. Thakur Dass

Hon'ble Judges/Coram:K.S. Chaudhari, J. (Presiding Member) and Dr. B.C. Gupta, Member

1. For the reasons mentioned in the application for condonation of delay, the delay of 28 days is condoned.

This revision petition has been filed by the petitioner against the order dated 14.05.2012 passed by the Himachal Pradesh State Consumer Disputes Redressal Commission, Shimla (in short, 'the State Commission') in Appeal No. 130 of 2008 - Life Insurance Corporation of India Vs. Yog Raj Chauhan & Ors. by which, while dismissing appeal, order of District Forum allowing complaint was upheld.

2. Brief facts of the case are that OP No. 1/Respondent No. 3 was agent of OP No. 2/Petitioner. OP No. 1 visited Complainant No. 1 and apprised terms and conditions of investment in LIC. On 15.6.2006, OP No. 1 was given Rs. 3,00,000/- for investment in 'Future Plus Scheme' and again on 13.7.2007, OP No. 1 was given Rs. 3,00,000/- for investment in 'Market Plus Scheme' of LIC. OP invested a sum of Rs. 50,000/- each in favour of his two daughters and obtained two policies. It was further alleged that OP No. 1 handed over premium receipt dated 24.10.2006 for Rs. 1,00,000/- paid by the complainant to LIC for Policy No. 151959219 and this amount was stated to have been invested in 'Market Plus Scheme'. OP No. 2/Petitioner did not issue policy of 'Market Plus Scheme' and later on informed Complainant No. 2 that cheque for aforesaid Policy No. 151959219 stood dishonoured; so, receipt dated 24.10.2006 may be treated as cancelled. OP no. 1 misappropriated and converted funds to his own use. It was further alleged that OP No. 1 later on refunded amount of Rs. 3,00,000/- to the complainant as OP No. 2 was bound by the act of its agent. Alleging deficiency on the part of OPs, complainant filed complaint before District Forum. OP No. 1 did not appear before District Forum. OP No. 2 resisted complaint, but admitted status of OP No. 1 as agent of LIC. OP No. 2 expressed ignorance of the entrustment of Rs. 6,00,000/- by complainant to OP No. 1 and further submitted that cheque for Rs. 1,00,000/- was dishonoured on account of insufficiency of funds and prayed for dismissal of complaint. Learned District Forum after hearing both the parties allowed complaint and directed OP Nos. 1 & 2 to pay Rs. 1,00,000/- jointly and separately with 9% p.a. interest and further allowed complaint and directed to recover Rs. 1,00,000/- from OP No. 1 with cost of Rs. 2,000/- Appeal filed by the petitioner was dismissed by learned State Commission vide impugned order against which, this revision petition has been filed.

3. None appeared for the Respondent no. 3 even after publication of notice in newspaper.

4. Heard learned Counsel for the parties finally at admission stage and perused record.

5. Learned Counsel for the petitioner submitted that; though, OP No. 1 was agent of OP No. 2; even then, OP No. 1 was not authorized to collect premium on behalf of OP No. 2 and if there was any misappropriation of amount by OP No. 1,OP No. 2 was not responsible; even then, State Commission committed error in dismissing appeal; hence, revision petition be allowed and impugned order be set aside. On the other hand, learned Counsel for the Respondent Nos. 1&2 submitted that order passed by learned State Commission is in accordance with law; hence, revision petition be dismissed.

6. It is not disputed that OP No. 1 was agent of OP No. 2. As per allegation in the complaint, complainant entrusted some money to OP No. 1 for obtaining insurance policies for the complainant and cheque issued towards premium of policy was dishonoured due to insufficiency of funds. As per allegation in the complaint, Rs. 3,00,000/- were returned by the OP No. 1 to complainant, but some money was not refunded by OP No. 1 to the complainant.

7. Now, the core question to be decided is whether OP No. 2 was liable for the acts and misappropriation of funds by OP No. 1 acting as agent of OP No. 2. Learned Counsel for the petitioner placed reliance on MANU/SC/0635/1997 : (1997) 5 SCC 64 - Harshad J. Shah and Anr. Vs. L.I.C. of India & Ors. in which after referring clause 3 & 4 of the regulations framed by LIC, it was held that until and unless complainant proves that LIC by its conduct had induced complainant to believe that OP No. 1 acting as agent was authorised to receive the premium on behalf of LIC, LIC cannot be held responsible for the amount of premium received by agent. In the case in hand, nowhere it has been pleaded by complainant that LIC by its conduct induced complainants to believe that OP No. 1 was authorised to receive premium on behalf of Respondent No. 2. In such circumstances, petitioner could not have been held liable for refund of so called premium amount received by OP No. 1 on behalf of the petitioner.

8. Learned Counsel for the respondent submitted that in good faith, this amount was entrusted to Respondent No. 3 for depositing with the LIC against the policies to be obtained. In the light of Harshad J. Shah and Anr. (Supra) judgment, no liability can be fastened on the petitioner for refund of amount received by his agent as premium for obtaining policies for complainants and learned District forum committed error in allowing complaint against the petitioner upto the extent of Rs. 1,00,000/- and learned State Commission further committed error in dismissing appeal and revision petition is to be allowed.

9. Consequently, revision petition filed by the petitioner is allowed and impugned order dated 14.05.2012 passed by the State Commission in Appeal No. 130 of 2008 - Life Insurance Corporation of India Vs. Yog Raj Chauhan & Ors. is set aside and order of District Forum dated 18.3.2008 passed in Complaint Case No. 2/2008 - Yog Raj Chauhan & Anr. Vs. Shri Thakur Dass & Ors. is partly modified and Petitioner/OP No. 2 is exonerated from making any payment to the complainant with no order as to costs.

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