Page 267 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes authorised to collect the premiums. When the practice of the agent collecting the premiums
from policyholders was in existence and the money was collected by the agent in his
capacity and authority, the reasonable inference was that the corporation was negligent in
its service towards the policyholder.
The National Commission, in appeal, was of the view that the insurance agent in receiving
a bearer cheque from the insured towards payment of insurance premium was not acting
as agent of the corporation nor could it be said that the corporation had received the
premium on the date the bearer cheque was received by the agent, even though he deposited
the sum with the corporation a day after the death of the insured.
Dismissing the appeal the Supreme Court held that the agent had no express authority to
receive the premium on behalf of the Corporation. In his letter of appointment there was
a condition expressly prohibiting him from collecting the premium. Nor could it be said
that he had an implied authority to collect the premium, as regulation 8(4) expressly
prohibited the agents from collecting premiums. Therefore, no case had been set up by the
complainant before the State Commission that the Corporation by its conduct had induced
the policyholders, including the insured, to believe that the agents were authorised to
receive premiums on behalf of the Corporation. Nor was there any material on record
that lent support to this contention. In the facts of this case there was no room to invoke the
doctrine of apparent authority underlying Section 237 of the Indian Contract Act.

In National Insurance Co. Ltd. v. Seema Malhotra [2001(2) SCALE 140] (Supreme Court) a
cheque was issued under a contract of insurance of motor car by the insured for payment
of premium to the policy. However, cheque was dishonoured for want of funds in the
account. Meanwhile, the car met an accident and badly damaged, killing the insured
owner. The claim for insured amount was repudiated by the company.
The Supreme Court held that applying the principles envisaged under Section 51, 52 and
54 of Indian Contract Act, relating to reciprocal promises, insurer need not to perform his
part of promise when the other party fails to perform his part and thus not liable to pay the
insured amount.

Source: http://www.labourguide.co. /consumer-protection-act/the-consumer-protection-act-
introduction

Jurisdiction of National Commission

Section 21 provides that the National Commission shall have jurisdiction:
(a) to entertain complaints where the value of the goods or services and the compensation, if
any, claimed exceeds rupees one crore;
(b) to entertain appeals against the orders of any State Commission. However, under second
proviso to Section 19 no appeal by a person, who is required to pay any amount in terms of an
order of the State Commission, shall be entertained by the National Commission unless the
appellant has deposited in the prescribed manner fifty percent of the amount or rupees thirty-
five thousands, whichever is less; and
(c) to call for the records and pass appropriate orders in any consumer dispute which is pending
before, or has been decided by any State Commission where it appears to the National Commission
that such State Commission has exercised a jurisdiction not vested in it by law, or has failed to
exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with
material irregularity.

262 LOVELY PROFESSIONAL UNIVERSITY