Rishi (the insured) purchased two life insurance policies with premium payable quarterly from ABC Insurance Company (the insurer). When the fifth premium became due, the agent of insurer met the insured and took a bearer

The present case is similar to the case of Harshad J. Shah v. Life Insurance Corporation of India [1997(3) SCALE 423 (SC)] . In this case 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 when the LIC has been careful in making an express provision in the Regulations/Rules, which are judicial in nature. When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's authority. Therefore, in the case with facts stated in question, Rishi's (the insured) widow cannot claim any amount from insurer on the ground of apparent authority except when it may be given on humanitarian ground by the Court as was in Harshad J. Shah Case.