Implied agency in salary savings schemes preserves insurer liability despite employer default in premium deduction and remittance.

Under the Salary Savings Scheme, the employer was treated as the insurer's implied agent for collecting and remitting premiums because the arrangement was tripartite, the insurer invited employers to handle deductions and consolidated remittances, and employees were led to rely on that mechanism. Applying settled agency principles under the Contract Act, the Court held that agency may arise by conduct and necessary implication, and the employer's own correspondence was not decisive. The insurer could not avoid liability on the basis of the employer's failure to deduct or remit premium without first informing the employee and discharging its obligations under the Scheme. Liability under the policy therefore continued despite the employer's default.

---

---

Issues: Whether, under the Salary Savings Scheme, the employer acted as the insurer's implied agent for collection and remittance of premium, and whether the insurer could avoid liability on the ground of default by the employer in deducting and remitting the premium from salary.

Analysis: The Scheme was a tripartite arrangement in which the Corporation invited employers to collect premiums from employees, remit them in a consolidated manner, and inform the Corporation of cessations, transfers, and other changes. The employees were not privy to the internal understanding between the Corporation and the employer, and the Scheme itself represented to them that premium would be deducted through the employer. On those facts, the employer was held to have implied authority to act on behalf of the Corporation for the limited purpose of collection and remittance of premium. The Court applied settled principles of agency under the Contract Act and held that the nomenclature used by the employer in the correspondence was not decisive, because agency may arise by conduct and by necessary implication. The Corporation, having created and operated the Scheme through the employer, could not shift the consequences of the employer's default onto the employee without first informing the employee and without discharging its own obligations under the Scheme.

Conclusion: The employer was treated as the implied agent of the insurer for purposes of the Scheme, and the insurer remained liable under the policy notwithstanding the employer's default.

---