CASE ANALYSIS

Chairman, L.I.C. of India & Others v Rajeev Kumar Bhaskar

Appellant: Chairman, L.I.C. of India & Others

Respondent: Rajeev Kumar Bhaskar

Citation: 2003 ACJ 86

Date of Judgement: 12 October 2001

Bench: S Jha, C K Prasad

FACTS:

The life insurance company began offering a 'Salary Saving Scheme,' which was a life insurance
policy for employees that would help them guarantee their family's future and provide them with
retirement income in exchange for a monthly deduction from their pay. This plan was suggested
to the employer rather than the employees. Under this arrangement, the employer was required to
withdraw the premium amount from the employees' pay and send the entire amount collected to
the business in one check. The coverage lapsed because the company failed to deduct the
premium from the concerned employee for some reason. The employee's heirs and legal
representatives filed a writ petition in the high court or filed applications with the District
Consumer Forum under the Consumer Protection Act of 1986 after the employee died. Both the
forum and the high court declared the corporation and the employer liable to pay the employee
for inefficiency in their service. The corporation filed a special leave petition for cross-
examination at the Supreme Court after being dissatisfied with the decree.
 ARGUMENTS:

BY PETITIONERS

The petitioners hold certain contentions against the respondents:

 The petitioner contends that the employer is not the corporation's agent.
 The policy was not issued in the name of individual employees and non-payment resulted
in the lapse of the policy and thus the corporation is not liable to pay.
 Because the employer was acting on behalf of the employees rather than the corporation,
it could not be held accountable for the promised funds.

BY RESPONDENTS

The respondents display the following arguments:

 According to the responses, there was a three-part contract in which the business
approached the employer with a proposal for a salary saving system for his employees,
and it was the employer who consented first, before the scheme was introduced to the
employees. Employers deducted the charge from employees' salaries, and there was no
direct connection between employees and the company.
 Indeed, the employer designated himself as the employees' agent, and the employer owed
no duty to the corporation, but when the corporation was notified, it did not directly offer
to the employees, and there was no direct communication between the corporation and
the employees regarding premium payment or non-payment, or policy lapse. It cannot be
stated that the employer had nothing to do with the corporation because it was the
employer who collected premiums and sent them to the corporation.

ISSUES:

1. Will the employer be considered as the agent of the corporation even though he wrote
explicitly that he will act as employees’ agent?
2. Is the corporation liable to pay the assured amount?
 JUDGEMENT:

1. The expression “agent” in this case may not mean to be one within the meaning of the LIC of
India (Agents) Regulation, 1972; but would mean an agent in ordinary sense of the term. The use
or omission of the word “agent” is not conclusive to determine the legal nature of the
relationship.
2. Keeping in view the fact that the Corporation did not make any offer to the employees nor would
directly make any communication with them regarding payment or non-payment of the premium
or any other matter in relation thereto and the inability of the employee to approach the insurer
directly, show that they were to treat their employers as ‘agents’ of the Corporation and the
employer had a key role to play in this whole affair. Furthermore, even the terms and conditions
of the policy were to be performed only through the employer. This only points to the fact that
the employers would be the agents of the insurer.
3. When the existence of an agency relationship would help to decide an individual problem and
the fact permits a court to conclude that such a relationship existed at a material time, then
whether or not any express or implied consent to the creation of an agency may have been given
by one party to another, the court is entitled to conclude that such relationship was in existence
at that time for the purpose in question.

ANALYSIS:
According to the Indian Contract Act of 1872, the agency can be established not only through
written/express means, but also by implied consent and action. In this case, the employer stated
expressly that he is the agent of the employees, but it was clear from his actions that he behaved
as the agent of the corporation. The company did not communicate with its employees. The
system was promoted in front of the employees by the employer, who collected all of the
premiums and sent them to the business as a group. Such behavior implies that the employer
behaved as the corporation's agent.
Section 226 states that Contracts entered into through agent, and obligations arising from acts
done by an agent, may be enforced in the same manner and will have the same legal
consequences as if the contracts had been entered into and the acts done by the principal in
person. According to Section 227, as long as the agent is acting within his power, the principal is
liable for the agent's actions. The employee in this case did not get the promised amount of the
plan due to the employer's payment default.
Because the employer is the corporation's representative and his actions are well within his
authority, the corporation will be found vicariously liable for the employer's actions and will be
required to pay the promised amount to the affected employee.

CONCLUSION:
The case of Chairman, Life Insurance Corporation vs. Rajiv Kumar Bhaskar is significant in
demonstrating that the term "agent" isn't required to determine the legal connection between the
principal and the agent. The person's actions are sufficient to decide if he is the concerned
person's agent. The principal and the agent will both be held accountable for the agent's actions.