Page 266 - DMGT306_MERCANTILE_LAWS_II

Unit 13: Consumer Protection Act

A person shall be disqualified for appointment if he: Notes
(a) has been convicted and sentenced to imprisonment for an offence, which, in the opinion of
the Central Government involves moral turpitude; or

(b) is an undischarged insolvent; or
(c) is of unsound mind and stands so declared by a competent court; or
(d) has been removed or dismissed from the service of the Government or a body corporate
owned or controlled by the Government; or
(e) has in the opinion of the Central Government such financial or other interest as is likely to
affect prejudicially the discharge by him of his functions as a member; or

(f) has such other disqualification as may be prescribed by the Central Government.
Every appointment by the Central Government is required to be made on the recommendation
of a Selection Committee consisting of a Judge of the Supreme Court to be nominated by the
Chief Justice of India, the Secretary in the Department of Legal Affairs and the Secretary in
charge of Consumer Affairs in the Government of India. Section 20(2) empowers the Central
Government to fix the salary/honorarium and other allowances payable to the members as
well as the other terms and conditions of their service. Every member of the National
Commission shall hold office for a term of five years or upto seventy years of age, whichever is
earlier and shall be eligible for reappointment for another term of five years or upto the age of
seventy years, whichever is earlier, subject to the condition that he fulfills the qualifications and
other conditions for appointment mentioned in Section 20(1)(b) and such reappointment is
made on the basis of the recommendation of the Selection Committee.



Caselet No Deficiency of Service on the Part of the LIC

P remium paid to the agent of the LIC but the agent did not deposit the premium,
death of the insured is a case of No deficiency of service on the part of the LIC.

In Harshad J. Shah v. Life Insurance Corporation of India [1997(3) SCALE 423 (SC)] the insured
(since deceased) took out four life policies with double accident benefits, premium payable
half-yearly. When the third premium fell due, the general agent of the Corporation met
the person and took a bearer cheque towards the premium payable by him in respect of
the policies. Although the cheque was encashed immediately thereafter, it was not deposited
with the corporation for another three months. In the meantime, the insured met with a
fatal accident and died. The corporation rejected the widow’s claim for payment of the
sum assured on the ground that the policies had lapsed for non-payment of premium
within the grace period.

In the widows complaint to the State Commission under the Consumer Protection Act the
Corporation pleaded that the amount of premium allegedly collected by the general
agent could not be said to have been received by the Corporation, that the agent was not
authorised to collect the premium amount. The State Commission held that in order to
collect more business, agents of the Corporation collected premiums from policyholders
either in cash or by cheque and then deposited the money so collected with the Corporation
and that this practice had been going on directly within the knowledge of the Corporations
administration, notwithstanding the departmental instructions that the agent was not

Contd....

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