TaxTMI 
TaxTMI 
TaxTMI 
2005 (7) TMI 659
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....which falls for our determination. The Corporation issued a brochure in relation to the said Scheme wherein it was stated: "It is a simple, economical plan whereby your employees may obtain life insurance protection for their families and retirement income for themselves under advantageous conditions which might not be available to them otherwise. This it accomplishes by savings automatically deducted from their pay and remitted to us once a month. This is not a group insurance. Each employee owns his policy individually, is entitled to all its benefits and can continue the policy in the event of any change in employment. Under this plan, you as an employer give facilities to the representatives of LIC to contact your employees to offer life insurance cover to them. Premium amounts, if an employee agrees to insure under this plan, are to be deducted every month from the employee's salary, in the same manner as the employee's provident fund. All the amounts so collected are paid to the Corporation by one cheque by the employer. This ensures for the employee regular payment, monthly, of his premiums at concessional rates. Deduction of premium from the salary or wages of an....
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....ll not be responsible for collecting his premiums. 5. * * * 6. * * * 7. In all transactions made by us pertaining to this Scheme and any policies issued by you thereunder, we shall act as the agent of our employees and not as your agent for any purpose. Yours truly sd/- Signature of employer" [Emphasis supplied] The acceptance letter issued by the concerned Branch Manager of the Corporation envisaged that it was for the employer to deduct premium from the salary of the employee and to remit the same to the Corporation. In other words, the responsibility for collection of the premium by deducting the same from the salary of the employee and making over the same to the Corporation was of the employer. Some of the clauses of the letter of acceptance are as under: "(a) The employer will receive list of premiums to be deducted called as demand invoice in duplicate each month on the specified date. (b) One copy of the invoice is to be returned along with the remittance. The second copy is to be retained by the employer for his record. (c) It is necessary to inform LIC when an employee leaves the service or is transferred from one department to another. (d) Reconciliation statem....
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....rescribed by the Corporation and no individual premium notice was required to be sent to any employee and, furthermore, no receipt was to be given therefor. It was also for the employer to inform the Corporation about the changes in the staff as soon as they occured including the factum of cessation of employment. The concerned employee was never made aware of the correspondence between the Corporation and the employer. A circular titled "Salary Savings Scheme Endorsement" was also issued which is in the following terms: "This policy having been issued under the Corporation's Salary Savings Scheme, it is hereby declared that the instalment premium shall be payable at the rate shown in the schedule of the policy so long only as the life assured continues to be an employee of his present employer, whose name is stated in proposal and premiums are collected by the said employer out of the salary of the employee and remitted to the Corporation without any charge. In the event of the life assured leaving the employment of the said employer or the premium ceasing to be so collected and/or remitted to the Corporation, the life assured must intimate the fact to the Corporation and in....
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....t being the agent of the Corporation, Basanti Devi (supra) requires reconsideration. (ii) As the policy was issued in the name of the individual employees, in the event of non-payment of the requisite premium either by the employee or the employer, the same would result in lapse of the policy. The claimants Respondents were, therefore, not entitled to the sum assured. (iii) The Corporation being only a commercial undertaking and as in pursuance thereof, it had merely extended the facility of collection of premium payable by the employees through the employer, the same would not make it liable to pay the assured sum in terms of the policy having regard to the default in making payment of the amount of premium. (iv) The employer acted only as the agent of the employees and not that of the Corporation for any purpose and, in that view of the matter, the Corporation would not be liable to pay the assured amount. Mr. L. Nageshwar Rao, learned senior counsel appearing on behalf of the Appellant in Civil Appeal No. 2357 of 2003, would contend that having regard to the decision of this Court in Basanti Devi (supra), the National Commission must be held to have committed an ....
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....ny communication with them regarding payment or non-payment of the premium or any other matter in relation thereto or connected therewith including the lapse of the policy, if any, it cannot be said that the employer had no role to play on behalf of the Corporation. In a plain and simple contract of insurance either the Corporation or the agent, on the one hand, and the insured, on the other, is liable to comply with their respective obligations thereunder. In other words, when a contract of insurance is entered into by and between the insurer and the insured no third party would have any role to play, but the said principle would not apply in a case of this nature. In a scheme of this nature, the employers were to make all endeavours to improve the service conditions of the employees and discharge its social obligations towards them. So far as the employees are concerned, they could not approach the insurer directly, and, thus, for all intent and purport they were to treat their employers as 'agents' of the Corporation. The Scheme clearly and unequivocally demonstrates that not only the contract of insurance was entered into by and between the employee and the insurer thr....
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....f DESU. Scheme has been introduced by LIC purely on business considerations and not for any particular benefit of insurance conferred on the employee working in an organisation. Though in the pro forma letter written by DESU to LIC it is mentioned that DESU would be an agent of its employee and not that of LIC but this understanding between LIC and DESU was not communicated or made known to the employee. As far as the employee is concerned he is told that premium will be deducted from his salary every month and remitted by DESU to LIC under an agreement between LIC and DESU. For the employee of DESU, therefore, DESU had implied authority as an agent of LIC to collect premium on its behalf and then pay to LIC. There is nothing on the record to show that Bhim Singh was ever made aware of the fact that DESU was not acting as an agent of LIC. Rather in the nature of the Scheme, the employee was made to believe that it is the duty of the employer though gratuitously cast on him by LIC to collect premium by deducting from the salary of each employee covered under the Scheme every month and to remit the same to LIC by means of one consolidated cheque. Now it could be said that DESU would ....
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....its solemn obligations. Such obligations having been undertaken to be performed by the employer at the behest of the Corporation as its agent having the implied authority therefor, the Corporation cannot be permitted to take advantage of its own wrong as also the wrong of its agent. In any event, the employer was obligated to inform the employee that for some reason, he is not in a position to perform his obligation whereupon the latter could have paid the premium directly to the Appellant herein. In South Sydney District Rugby League Football Club Ltd. vs. News Ltd. and Others [177 ALR 611], a similar question came up for consideration. In that case there existed an exclusionary provision contained in clause 2.2 in the agreement entered into by the parties thereto to the following effect : "NRL will act solely as an independent contractor. Nothing in this agreement will constitute, or be construed to be or create, the relationship of employer and employee, principal and agent, trustee and beneficiary, joint venturers or partnership between the partners and NRL." Construing the said clause it was held that by conduct of the parties a relationship was designed in which, at the le....
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....ent need not necessarily be to the relationship of principal and agent itself (indeed the existence of it may be denied) but may be to a state of fact upon which the law imposes the consequences which result from agency. It is consensual, not contractual. So interpreted, this formulation allows the establishment of an agency relationship in such cases as the present." Yet again in Armagas Ltd. vs. Mundogas S.A. [(1986) AC 717], the House of Lords pointed out that even in absence of any express contract of agency in relation to the transaction made with the third party, ostensible authority may be presumed, stating : " Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to entered....