Before

THE JHARKHAND STATE CONSUMER REDRESSAL COMMISSIOM

RANCHI

UNDER SECTION 17 OF THE CONSUMER PROTECTION ACT, 1986

In The Matter of:

Mitali Das.......................................................................................................................Plaintiff

V.

Life Insurance Corporation of India...........................................................................Defendant

MEMORIAL ON THE BEHALF OF DEFENDANT

Counsel for the Defendant: Name : Kamendra Ray

Roll no. : 328
Semester : III
Section : B

1 MEMORIAL OF THE DEFENDANT

 TABLE OF CONTENTS

1. ABBREVIATIONS.........03

2. INDEX OF AUTHORITIES....................................04

3. LIST OF CASES...05

4. STATEMENT OF JURISDICTION..........................................06

5. STATEMENT OF FACTS...............07

6. STATEMENT OF ISSUES..........................................................................................08

7. SUMMARY OF ARGUMENTS...........09

8. ARGUMENTS ADVANCED...........................................10

9. PRAYER..........................................................14

2 MEMORIAL OF THE DEFENDANT

 ABBREVIATIONS

& - AND
AIR - All India Reporter
Co. - Company
Com - Commission
Del - Delhi
Edn. - Edition
LIC - Life Insurance Corporation of India
Ori - Orissa
Ors. - Others
SC - Supreme Court
SCC - Supreme Court Cases
SCW - Supreme Court Weekly
V. - Versus

3 MEMORIAL OF THE DEFENDANT

 INDEX OF AUTHORITIES

[STATUTES]

1. The Indian Contract Act, 1872.

2. The Consumer Protection Act, 1986
3. The Life Insurance Corporation of India (Agents) Regulations, 1972.

[BOOKS REFFERED]

1. B.N. BANERJEE, Law of Insurance (The Law Book Company Ltd.: Allahabad 4th edn.
1994)
2. POLLOCK AND MULLA, The Indian Contract And Specific Relief Acts (Lexis Nexis
Butterworths Wadhawa: Nagpur 14th edn.2013)
3. AVTAR SINGH, Contract and Specific Relief (Eastern Book Company: Lucknow 11th
edn.2013)
4. J. BEATSON, Ansons Law of Contract (Oxford University Press: London 28th edn.
2010)

[WEBSITES]
1. www.manupatra.com
2. scconline.com

4 MEMORIAL OF THE DEFENDANT

 [LIST OF CASES]

Chandra Prabha Dogra v. LIC.....AIR 2004 Del 291

Farquharson Bros & Co. v. King & Co.. [1902] AC 325
Harshad J Shah v. LIC..... ...AIR 1997 SC 2459
Kasinath Das v. Nisakar Rout. ...AIR 1962 Ori 164
LIC v.Consumer Education and Research Society.....1994 (1) CPR 106
LIC V. Girdharilal P. Kesarwani & Anr.....2009 CPJ 228 (NC)
State of Orissa v. United India Insurance Co. Ltd......AIR 1997 SC 2671

5 MEMORIAL OF THE DEFENDANT

 STATEMENT OF JURISDICTION
THE DEFENDANT HUMBLY SUBMITS THIS MEMORANDUM UNDER SECTION 17(1)1
OF THE CONSUMER PROTECTION ACT, 1986.

1
[(1)] Subject to the other provisions of this Act, the State Commission shall have jurisdiction

(a) To entertain

(i) Complaints where the value of the goods or services and compensation, if any,
claimed [exceeds rupees twenty lakhs but does not exceed rupees one crore; and

(ii) Appeals against the orders of any District Forum within the State; and

(b) to call for the records and pass appropriate orders in any consumer dispute which is pending
before or has been decided by any District Forum within the State, where it appears to the State
Commission that such District Forum has exercised a jurisdiction not vested in it by law, or has
failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or
with material irregularity.

6 MEMORIAL OF THE DEFENDANT

 STATEMENT OF FACTS

o On February 6, 2006, Chittaranjan Das (the insured) took four insurance policies for Rs.25,

000 /- each with double accidental benefits on February 6, 2006 through Shri Vivek Das who

was a general agent of the LIC.

o On February 6, 2007, the second half yearly premium fell due.

o On May 4, 2007, Vivek obtained a bearer cheque from the insured dated May 4, 2007 for

Rs.2, 730/-, towards the half yearly premium on all the four policies.

o On July 9, 2007 the insured met with a fatal accident and he died on the same day.

o On July 10, 2007, said amount of premium was deposited by Vivek with the LIC.

o Then, Mitali Das (wife of Chittaranjan Das) submitted a complaint before the Ranchi District

Consumer Disputes Redressal Commission at Ranchi wherein a claim was made for payment

of Rs. 4, 32,000/- to her.

7 MEMORIAL OF THE DEFENDANT

 STATEMENT OF ISSUES

1. WHETHER AGENT HAS AUTHORITY TO COLLECT PREMIUM FROM THE

INSURED ON THE BEHALF OF THE LIC?

2. WHETHER THE LIC IS LIABLE TO PAY COMPENSATION IN RESPECT OF

POLICY CLAIM?

8 MEMORIAL OF THE DEFENDANT

 SUMMARY OF PLEADINGS

1. WHETHER AGENT HAS AUTHORITY TO COLLECT PREMIUM FROM THE

INSURED ON THE BEHALF OF THE LIC?

It is humbly contended before this State Consumer Forum that the agent i.e. Vivek is not
authorized to collect premium from the insured on the behalf of the LIC because under the Life
Insurance Corporation of India (Agents) Regulation, 1972, all the agents are strictly prohibit to
collect money on the behalf of the Corporation. . There is no express authority provided neither
is there as implied authority.

2. WHETHER THE LIC IS LIABLE TO PAY COMPENSATION IN RESPECT OF

POLICY CLAIM?

It is humbly contended before this State Consumer Forum that once the agent is not authorized
to collect premium or moneys on the behalf of the Corporation then the Corporation is not
bound to pay compensation for the unauthorized and ultra-virus act of the agent. There seems
to be an apparent or ostensible authority but then again the principal, the LIC, did not induce
the third party, the insured, by its conduct to make him believe that the agent was authorized to
collect the premium amount. Hence, the LIC is not liable to pay the policy amount as claimed.

9 MEMORIAL OF THE DEFENDANT

 ARGUMENT ADVANCED

1. WHETHER AGENT HAS AUTHORITY TO COLLECT PREMIUM FROM THE

INSURED ON THE BEHALF OF THE LIC?
It is humbly submitted before this State Consumer Forum that the agent has no authority to
collect premium from the insured on the behalf of the LIC because under the Life Insurance
Corporation of India (Agents) Regulation, 1972, all the agents are strictly prohibit to collect
money on the behalf of the Corporation.

Under the Regulation 82 (4)3 of LIC of India (Agent) Regulation Act, 1972 that an agent cannot
procure the moneys from the insured on the behalf of the Corporation unless such condition
prescribed by the Corporation itself.

In the case of Harshad J Shah v. LIC of India,4 Wherein the Honble Apex Court had
concluded that as per the rules of Life Insurance Corporation Act, 1956 framed by the LIC,
Agents are prohibited from collecting money on behalf of the LIC. The Honble Apex Court in
that case had further observed that they are unable to uphold that the doctrine of Apparent
Authority falling under Section 237 of Indian Contract Act can be invoked especially when
the LIC has been careful in making an express provision in the Regulations/Rules which are
statutory in nature, indicating that the agents are not authorized to collect any moneys or
accept any risk on behalf of the LIC and they can collect so only if they are expressly
authorized to do so.

In the case of Life Insurance Corporation of India v. Consumer Education and Research
Society,5 it was held by the National Consumer Disputes Redressal Commission that
according to LICs rules of the Life Insurance Corporation the insurance agents had no
authority to collect any moneys or to accept any risk for and on the behalf of the Corporation,
also the conduct of agent of the insured cannot bind the Corporation and make the Corporation
liable under policy.

2
Under Regulation 8 of the Life Corporation of India (Agent) Regulation, 1981, Functions of the agents.
3
Nothing contained in these regulations shall be deemed to confer any authority on an agency to collect any
moneys or to accept any risk for or on behalf of the Corporation or to bind the Corporation in any manner
whatsoever:
Provided that an agent may be authorized by the Corporation to collect and remit renewal premiums under
policies on such conditions as may be specified.
4
AIR 1997 SC 2459
5
1994 (1) CPR 106

10 MEMORIAL OF THE DEFENDANT

 So, here in the present case Life Insurance Corporation of India is not liable for the act done by
his agent beyond his authority i.e. once the subject area is specified by the LICs Regulation
that the agent is not allowed to collect moneys on the behalf of the Corporation or To accept
any risk for or on the behalf of the Corporation, then it is clear violation of the regulations and
he acted on his own behalf and for this Corporation should not be held liable.

In the case of Life Insurance Corp. of India v. Girdharilal P. Kesarwani & Anr6 it was held
that as per the Rules, their Agents are not authorized to collect premium on their behalf. In the
instant case, the Agent, acted against these statutory provisions by collecting premium amounts
from the Respondents and thereafter not depositing the same with the Insurance Company.
Insurance Company, therefore, cannot be held liable for the actions of the Agent, with whom
they also do not have a principal to agent relationship.

So, in the present case the decision of the above discussed cases apply well in the present case,
where the agent act beyond his authority i.e. he was not allowed to collect premium on the
behalf of the LIC, and hence the legal representatives of the insured cannot claim under the
policy.

2. WHETHER THE LIC IS LIABLE TO PAY COMPENSATION IN RESPECT OF

POLICY CLAIM?

It is humbly contended before this State Consumer Forum that once the agent is not authorized
to collect premium or moneys on the behalf of the LIC then it is not bound to pay
compensation for the unauthorized and ultra-virus act of the agent. In this regard my
submissions are as follows-

It is provided under the Regulation 16(1) (a)7 of the Life Insurance Corporation of India
Regulations, 1972 that a competent authority may determine the appointment of an agent when
he lapses on the grounds prescribed under the Regulation 8 of the Life Insurance Corporation
of India Regulations, 1972.

6
2009 CPJ 228 (NC)
7
16. Termination of Agency on certain lapses,(1) The competent authority may, by order, determine the
appointment of an agent-
(A) if he has failed to discharge his functions, as set out in regulations 8, to the satisfaction of the competent
authority.

11 MEMORIAL OF THE DEFENDANT

In the case of Chandra Prabha Dogra v. Life insurance Corporation of India8, it was held by
the Delhi High Court that agent was negligence to discharge the function. The agency has been
terminated. In the present case the agent has function negligently and beyond the scope of the
authority so agency has been terminated. It can be easily inferred that the agent is lapsing on
plenary authority prescribed under Regulation 8 of the Life Insurance Corporation of India
Regulations, 1972 and hence he is no more an agent of the Life Insurance Corporation of India
under the Regulation 16 of the Life Insurance Corporation of India Regulations, 1972 and
hence the LIC is not liable under the said agency because the agency has been terminated.

So, in the present case the insured neither pay the said installment in time nor paid in the grace
of days, then in these circumstances the Corporation nowhere is liable to pay said
compensation of 4, 32,000 to the complainant.

Further in the case of Kasinath Das v. Nisakar Rout,9 it was observed that both general and
special agents who are authorized to act for the principal have implied authority to do what is
incidental to the ordinary conduct of such a trade or business or is within the scope of that class
of acts, and whatever is necessary for the proper and effective performance of duties. The
general agent has no authority to do anything outside the ordinary scope of his employment
and duties.

So, in the present case the act of general agent of collecting premium on the behalf of the
Corporation cannot bind the Corporation because the general agent has no authority to do
anything outside the ordinary scope of his employment and duties when the scope of
employment is already prescribed under the Regulation 8 of the Life Insurance Corporation of
India Regulations, 1972 and also extent of authority cannot capture the Corporation to be held
liable for the unauthorized act of the agent because the extent of authority or limit has been
prescribed under the said Regulations.

The act of an agent outside the scope of authority makes the principal liable when there is an
authority apparent to him.

8
AIR 2004 Del 291
9
AIR 1962 Ori 164.

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 10
In the case of State of Orissa v. United India Insurance Co. Ltd. The Supreme court held
that the act of an agent without authority is not binding on the principal, and cannot be
enforced against him by the third party. So, in the present case it is clearly concluded that that
the agent did act without authority and it should not be binding on the principal i.e.
Corporation.

In the case of Farquharson Bros & Co. v. King & Co.,11 it was held that the act outside the
authority of an agent will bound the principle if it falls within the scope apparent authority,
only if the principal has induced the third party to believe that the acts were within the scope of
authority. In this case the collection of premium is an important and necessary part for the
conduction of the business and the third party, the insured, might seem to assume that such an
important duty can be performed by the agent as agent was the one from whom the policy was
taken.

In the case of Harshad J. Shah v. LIC of India,12 with similar facts and circumstances the
Supreme Court held that there being no evidence to show that the LIC, by its conduct
induced policy holders to believe that the agents were authorised to receive payments on
behalf of the LIC, the agents had no authority to collect the premium in view of the regulations,
which were framed under the Life Insurance Corporation Act, 1956, not conferring any
authority on the agents to collect any moneys.

So, in the present case there is no application of apparent authority by the fact that the principal
was no in picture in making believe or induced the third party that the agent was discharging
his duties within the scope the principals authority. And hence in the present the LIC is
nowhere liable for making compensation to the complainant.

10
AIR 1997 SC 2671.
11
[1902] AC 325
12
Supra Note 3

13 MEMORIAL OF THE DEFENDANT

 PRAYER FOR RELIEF
Wherefore, in the light of facts of the case, arguments advanced and authorities cited,

the defendant humbly submits that the District Forum may be graciously pleased to adjudge

and declare that:

1. The agent was not authorized by the LIC to collect premium from the insured.

2. The LIC is not liable to pay the amount claimed by the plaintiff on account of lapse of
policies.

And pass any other order in favor of the defendant which may deem fit in the ends of justice,
equity, and good conscience.

For This Act of Kindness, the Defendant Shall Duty Bound Forever Pray.

Date: 05.12.2014
Place: Ranchi (Counsel for the Defendant)

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