Chairman L.I.C v. Rajiv Kumar Bhaskar

Chairman L.I.C v. Rajiv Kumar Bhaskar

2003 ACJ 86

(Implied Agency)


As per L.I.C salary saving scheme the employer was to deduct the premium from the salary of the employee and deposit with L.I.C. All the related procedures were the responsibility of the employer. Upon death of the concerned employee, the heirs found the employer had defaulted in payment causing policy to lapse. L.I.C relied on a clause in the acceptance letter by the employer which said he would act not as the agent of L.I.C but as an agent of his employees.

ISSUE: Whether the employer can be treated as the agent of the L.I.C despite the express agreement to the contrary?


L.I.C: As the policy was in the name of individual employee, in the event of non-payment of premium either by employee or employer, would result in lapse of the policy.


  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.



Express Authority

Express authority is given by the Principal to the agent by express words, spoken or written.

Implied Authority

Implied authority is that which is inferred from the conduct of the parties, or from nature of the employment. Divided into four types: (i) incidental authority- authority to do that which is ordinarily or necessarily incidental to the due performance of the express authority; (ii) usual authority- authority to do whatever is done by persons occupying positions in particular trades or businesses; (iii) customary authority- authority to act in accordance with the custom and usage of the place where agent acts and (iv) authority derived from the circumstances of the case, the residuary category.

 Note: See Ss 186, 187 of Indian Contract Act

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