Dismissed

Sr. Divisional Manager L.I.C. of India and Another v. Employees Provident Fund Organisation and Others

Allahabad HC19 Sept 2019WRIC/53355/2008

Case brief

AI extract

What is this about?

The Delhi High Court dismissed an EPFO notice under Section 7-A of the EPFO Act against the Life Insurance Corporation. The Court held that the EPFO Act applies only to general insurance business, not life insurance, and quashed the order.

What did the court decide?

Impugned order dated 26 June 2008 and notice dated 23 September 2008 are quashed; declaration entered that petitioner is not covered under the 1952 Act.

Sr. Divisional Manager L.I.C. of India and Another Vs… — Banking and Recovery | Allahabad HC (2019)

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Court No. - 6

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Case :- WRIT - C No. - 53355 of 2008

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Petitioner :- Sr. Divisional Manager L.I.C. Of India And Another Respondent :- Employees Provident Fund Organisation And Others Counsel for Petitioner :- Manish Goyal,Rajiv Sharma Counsel for Respondent :- D. Awasthi,Brijesh Kumar Singh,Rajeev Sharma,S.C.

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Hon'ble Yashwant Varma,J.

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Heard Sri Manish Goyal learned Senior Counsel in support of this petition and Sri Brijesh Kumar Singh who has appeared for the respondents.

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The Life Insurance Corporation [hereinafter for the sake of brevity to be referred to as “LIC” ] has impugned the order dated 26 June 2008 as also the notice of 23 September 2008 issued by the respondents under Section 7-A of the Employees Provident Fund And Miscellaneous Provisions Act, 1952 [“the 1952 Act”] . A jurisdictional challenge is raised to the initiation of action under the 1952 Act on the ground that LIC shall not stand covered under the notification issued under Section 1(3)(b) of the 1952 Act. This submission is addressed in light of the notification itself extending the coverage of the 1952 Act to companies engaged in “general insurance” business. The notification extending the applicability of the 1952 Act to establishments engaged in insurance business reads thus: -

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“As respects establishments which are exclusively or principally engaged in general insurance business come into force on the 31^st day of January 1970”

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According to Sri Goyal since LIC is not engaged in the general insurance business, it cannot be subjected to proceedings initiated by the respondents under the 1952 Act.

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It becomes pertinent to note that under Section 2 (6-B) of the Insurance Act 1938 , the expression “general insurance business” has been defined as under: -

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“ 2 (6-B) “general insurance business” means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them;] ”

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“Life insurance business” is defined in Section 2 (11) of that Act in the following terms:-

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“2 (11) “life insurance business" means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include-

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(a) the granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance;

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(b) the granting of annuities upon human life ; and

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(c) the granting of superannuation allowances and [benefit payable out of any fund] applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependants of such persons;]”

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In terms of the provisions made in the Life Insurance Corporation Act 1956 and to which the petitioner owes its genesis, LIC came to be constituted in terms of the provisions made therein to carry on the business of life insurance. Sri Goyal learned Senior Counsel points out that LIC stood conferred with the exclusive privilege of carrying on life insurance business in India in terms of Section 30 of that Act till such time as the Insurance Regulatory and Development Authority Act 1999 came into force and Section 30A came to be inserted in the Life Insurance Corporation Act 1956 by virtue of Act No. 41 of 1999.

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Referring to the Regulations framed under the IRDA Act 1999, Sri Goyal refers to the legal requirement of separate permissions being obtained for the purposes of carrying on general insurance and life insurance business by an insurance company. He submits that till date

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the petitioner has not obtained any permission or registrations for the purposes of carrying on general insurance business. In view thereof it was his submission that both prior to the promulgation of the IRDA Act 1999 and even thereafter the position remains unaltered and that LIC cannot be viewed as an insurance company engaged in general insurance business.

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Sri Singh learned counsel appearing for the respondents contended that since only a notice has been issued under Section 7-A of the 1952 Act, the petitioner should be relegated to raise these objections before the competent authority and that all contentions in that respect should be left open for its consideration.

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This Court however finds itself unable to sustain this submission in light of the fact that this petition itself was entertained by the Court as far back as 2008 and the notice itself is challenged on a jurisdictional ground.

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Insofar as the submissions on merits are concerned, Sri Singh learned counsel was unable to counter the submissions addressed nor was he able to draw the attention of the Court to any material which may have established that the petitioner was engaged in general insurance business. That both general insurance and life insurance are treated as separate genres of the insurance business is evident from the provisions made in the Insurance Act 1938 referred to above. Even after the promulgation of the IRDA Act, 1999 and in the absence of a challenge or denial to the submission that LIC is not engaged in the general insurance business, it is manifest that the provisions of the 1952 Act would not apply. In view of the aforesaid, the Court finds itself unable to sustain the order and the notice impugned.

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The writ petition is accordingly allowed . The impugned order and notice dated 26 June 2008 and 23 September 2008 are consequently set aside. A declaration is hereby entered that the petitioner does not stand covered under the ambit of the 1952 Act since

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the notification issued under Section 1(3)(b) thereof stands restricted to insurance companies engaged in the general insurance business. Order Date: - 19.9.2019 faraz

Sr. Divisional Manager L.I.C. of India and Another v. Employees Provident Fund Organisation and Others

Case brief

What is this about?

What did the court decide?

Sr. Divisional Manager L.I.C. of India and Another v. Employees Provident Fund Organisation and Others

Case brief

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What did the court decide?

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