Renewal Commission Of LIC Agent Is Hereditary: Jharkhand High Court Affirms Compensation Of ₹1.14 Crores To Widow

The Jharkhand High Court has recently ruled that the renewal commission earned by a deceased LIC agent is hereditary and payable to the widow irrespective of whether the death is natural, homicidal, or accidental.

The court held that this commission cannot be deducted from the loss of dependency amount in compensation claims.

Justice Subhash Chand, presiding over the case, observed, “The renewal commission is the hereditary commission and the same is also payable to the widow of deceased even after the death is otherwise. As such, this renewal commission is hereditary commission and the same comes under the pecuniary advantage, which is payable after the death of her husband in very case where the death is natural, homicidal or accidental.”

The above ruling was delivered in a Miscellaneous Appeal filed by Shriram General Insurance Company Limited, challenging the award passed by the Motor Accident Claims Tribunals in a Title (M.V.) Suit. The MACT had directed the appellant to pay compensation of ₹1,14,52,460 to the claimants with simple interest at 7% per annum from the date of filing the claim application until realization. The Tribunal further directed the payment of compensation within 60 days, failing which the interest rate would increase to 9% per annum.

The Tribunal also mandated that 75% of the awarded amount be kept in a fixed deposit for five years in a nationalized bank in the joint name of the claimants, with the remaining 25% deposited in a savings account in their joint name.

The case arose from a fatal road accident whereby a truck, driven rashly and negligently, collided with a stationary motorcycle ridden by one Balaram Mahato and his son, Animesh Kumar, causing severe injuries. While Mahato succumbed to his injuries, his son was treated at a nursing home. An FIR was registered against the truck driver, and a charge sheet was filed against him.

The deceased, a 50-year-old LIC agent and member of the Million Dollar Round Table (MDRT), had an annual income of ₹15,58,434.45. The claimants sought compensation, arguing that the accident caused the loss of dependency income.

The Tribunal, after considering the evidence and arguments, awarded compensation to the claimants, prompting the Insurance Company to file the present Miscellaneous Appeal challenging the quantum of compensation.

For disposal of this Miscellaneous Appeal, the High Court considered two key points in the appeal:

(i) Whether the appeal was maintainable at the instance of the Misc. Appeal of the Insurance Company challenging the quantum of compensation without permission of the Tribunal under Section 170(b) of the Motor Vehicles Act, 1988.

(ii) Whether the claimants were entitled or not to the compensation on account of death of the deceased because of no loss of income for dependency.

Regarding the first point of determination, the Court held that since the appellant had obtained permission under Section 170(b) of the Motor Vehicles Act, 1988, to contest the quantum of compensation, the appeal was maintainable.

“Since the appellant Insurance Company had moved the application under Section 170 of the Motor Vehicles Act, 1988 and the very application was allowed by the learned Tribunal, this appeal is very much maintainable which has been assailed on behalf of the appellant on the point of quantum as well. Accordingly, this point of determination is disposed of in favour of the appellant and against the respondent-claimant,” the Court said.

On the second issue, the Court observed, “From the meticulous analysis of the oral as well as documentary evidence on record, admittedly the deceased was LIC Agent and he had been paying premium Rs.33 lakhs per year to the LIC Company, therefore, he was made member of MDRT. In view of the testimony of P.W.-3, Samant Kumar Patra, Development Officer, LIC of India Branch-4, Dhanbad the income of the LIC vary every year and he has also deposed that from the financial year in comparison to 2012-13, the income of deceased in financial year 2013-14, in which, his death was caused on account of accident increased to the tune of Rs.2,38,965/-.”

“The bone of contention between the appellant and respondent is that the renewal commission, which the wife is still getting after the death of husband, the same could have been deducted from the income of the deceased or not,” the court added.

From the materials available on record, the court said to rebut the evidence adduced on behalf of the claimants, no contrary evidence oral as well as documentary was adduced on behalf of the Insurance Company-appellant herein.

As such, the Court held that the findings recorded by the Tribunal on this very issue were based on proper appreciation of evidence on record and the same needed no interference.

Accordingly, the second point of determination was disposed of against the appellant-Insurance Company and in favour of the respondents-claimants.

“The renewal commission is hereditary commission and the same is not deductible while fixing the income of deceased LIC Agent,” the Court said.

In view of the appraisal of the oral as well as documentary evidence on record, the Court concluded that the impugned award passed by the Tribunal needed no interference and thus, the Miscellaneous Appeal was dismissed.

Case Title: Shriram General Insurance Co. Ltd vs Kavita and Ors

LL Citation: 2024 LiveLaw (Jha) 188

Click Here To Read Judgement