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2011 DIGILAW 553 (ORI)

Srikanta Mohapatra v. Life Insurance Corporation of India

2011-11-14

B.N.MAHAPATRA, V.GOPALA GOWDA

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ORDER 1. The petitioner who was a Commission Agent of opposite party No.1 at Balasore branch is before this Court seeking for issuance of a writ of mandamus to the opposite parties directing them to release the renewal commission of the premium received in respect of the business secured by him as a agent of the Corporation as per the LIC of India (Agents) Regulations, 1972 urging various facts and legal contentions. 2. The relevant facts stated by the petitioner reads thus:- The petitioner joined as a Commissioner Agent in LIC of India in its Balasore Branch under Cuttack Division in the month of December, 1988 and was allotted Agency Code No.3113-596 and Insurance License No.1498639 granted by the Insurance Regulatory Development Authority. However, after having worked tirelessly for more than 17 years, the petitioner found himself physically and mentally weakened and unable to effectively work as before for which he decided to quit the agency and accordingly, he resigned from his agency around February, 2005. Further case of the petitioner is that at the time of termination of his agency, the petitioner has rendered service to the Corporation for nearly 17 years and had procured business worth Rs.35,40,000/- out of which policies having sum assured to the tune of Rs.25,00,000/- were still in force. As such, as per Regulation 19(1)(b) of the LIC of India (Agents) Regulations, 1972, the petitioner is entitled to commission on the premiums received in respect of business secured by him. In view of the aforementioned Regulation, the petitioner is entitled to receive an amount of approximately Rs.3,00,000/- towards renewal commission from the Corporation for the period from February, 2005 to February, 2008. It is stated that the petitioner has submitted a representation to the opposite party No.1 on 8.8.2007 praying for passing necessary orders for release of the renewal commission and while doing so, the petitioner highlighted his difficulties in detail for consideration of opposite party No.1. The petitioner also submitted a representation addressed to opposite party No.3 with prayer for issuing necessary direction to the opposite party No.1 with regard to payment of Commission amount. The petitioner in his representation had categorically stated the hardship faced by him due to non-release of renewal commission. The petitioner also submitted a representation addressed to opposite party No.3 with prayer for issuing necessary direction to the opposite party No.1 with regard to payment of Commission amount. The petitioner in his representation had categorically stated the hardship faced by him due to non-release of renewal commission. Since opposite party Nos.1 to 3 did not respond to the representation despite it was brought to the notice of the opposite parties that petitioner is facing severe financial hardship, he was constrained to serve a lawyer's notice on opposite party No.2 on 12.12.2008 calling upon him to release the outstanding agent's commission within seven days failing which he would seek appropriate legal remedy for redressal of his grievance. Pursuant to the lawyer's notice under Annexure-2 having been received by opposite party No.2 on 14.2.2008, the petitioner received a reply dated 16.2.2008 addressed to his lawyer intimating him that as the petitioner had left the Corporation for procuring life insurance business for Bajaj Allianz Life Insurance Company, therefore, release of his renewal commission had been stopped in accordance with Section 44(1) (c) of the Insurance Act, 1938 since the termination of his contract with the LIC of India is at the instance of the petitioner and at the time of termination the petitioner has served the insurer continuously and exclusively for at least ten years as commission agent. Section 44(1) (c) of the Insurance Act, 1938 enables the petitioner to get premium commission during the period for which he has got secured policy to the Insurance Company towards his business. He has also placed strong reliance upon the Regulation 19(1)(b) of the LIC of India (Agents) Regulations, 1972 which provides the payment of commission on discontinuance of agency. Regulation 19(1)(b) of the Regulation specifically provides for payment of the commission if the agent has continually worked as an agent for at least 10 years since his appointment The petitioner was not paid his entitlement by the Corporation as per the statutory provision of Section 44(1)(c) of Insurance Act and Regulation 19(1)(b) of the LIC of India (Agents) Regulations, 1972. The Corporation being a Statutory Corporation which is under the control of the Government of India is amenable to the writ jurisdiction under Article 226 of the Constitution. Hence the petitioner has approached this Court by filing writ petition. 3. The Corporation being a Statutory Corporation which is under the control of the Government of India is amenable to the writ jurisdiction under Article 226 of the Constitution. Hence the petitioner has approached this Court by filing writ petition. 3. Counter affidavit has been filed on behalf of the opposite party Nos.1 and 2 denying the averments of the petition contending that the petitioner is not entitled towards the renewal commission for the period February, 2005 to February, 2008. Reliance has also been placed upon Aflnexure-3, the letter dated 16.2.2008 sent to the petitioner's counsel, wherein there is a reference that petitioner joined Bajaj Allianz Life Insurance Co. Ltd., Baripada Branch as a Sales Team Manager w.e.f. April, 2006 for procuring business for them. It is also requested therein to refund the Corporation the outstanding advances availed by the petitioner failing which interest @ 18% will be charged which he has not complied with till date. Further it is stated that since the petitioner has worked as an agent in the Corporation for more than 10 years and, left the LIC of India for procuring Life Insurance Business for Bajaj Life Insurance, the Corporation stopped releasing the commission of the petitioner in accordance with Section 44(1) (c) of the Insurance Act, 1938. Therefore, the learned Senior Counsel Mr. Das reiterated the contention stated in the reply to the petitioner's counsel in justifying the action taken by the opposite party No.2 that petitioner is not entitled to receive the renewal commission in relation to the business procured by him during the period when the petitioner has worked as an agent in the LIC of India. 4. With reference to the aforesaid legal contentions urged on behalf of the opposite parties, the learned counsel Mr. P.K. Mohanty for the petitioner has strongly rebutted the said contention by placing reliance upon a Division Bench decision of Patna High Court in the case of the Life Insurance Corporation of India through the Divisional Manager and others v. Manoj Kumar Mannu, reported in AIR 2011 Patna 139, wherein the Division Bench of the said Court has interpreted the expression 'person' occurring in Section 44(1)(c) of the Insurance Act. It has been held by the said High Court that the expression 'person' occurring in S.44 (1)(c) of Insurance Act includes juristic person but does not include an insurer i.e. Corporation. It has been held by the said High Court that the expression 'person' occurring in S.44 (1)(c) of Insurance Act includes juristic person but does not include an insurer i.e. Corporation. Therefore, the contention urged by the Corporation has been rejected in the above referred case. Hence, he submits that Section 44(1)(c) does not disentitle the petitioner to get commission from the Corporation. 5. With reference to the above said rival legal contentions urged on behalf of the parties, the point that would arise for our consideration is whether the petitioner is entitled for issuance of a writ of mandamus as prayed in the writ petition? What order? Our answer to the above contentious point would be affirmative and in favour of the petitioner for the following reasons. It is an undisputed fact that the petitioner was working as an agent of the Corporation at Balasore Branch, Balasore from the year 1988 till around February, 2005 under the provisions of the LIC of India (Agents) Regulations, 1972, which is not in dispute. From the year 1988, he has worked till 2005, as he has terminated his agency with the Corporation. It is an undisputed fact that the petitioner has procured business of 35,40,000/- securing policies for the LIC of India during his term as agent, out of which policies, having sum assured to the tune of Rs.25,00,000/- is still in force on the date of filing of the writ petition i.e. on 1.7.2008. Petitioner has sent a representation to the LIC of India demanding his legitimate dues towards the commission for the period February, 2005 to February, 2008. In this regard, it is necessary to quote Section 44(1)(c) of Insurance Act and Regulation 19(1)(b) of the Regulations, 1972. "Sec.44. Petitioner has sent a representation to the LIC of India demanding his legitimate dues towards the commission for the period February, 2005 to February, 2008. In this regard, it is necessary to quote Section 44(1)(c) of Insurance Act and Regulation 19(1)(b) of the Regulations, 1972. "Sec.44. Prohibition of cessation of payments of commission (1)-Notwithstanding anything to the contrary contained in any contract between any person and an insurance agent providing for the forfeiture or stoppage of payment of renewal commission to such insurance agent, no such person shall, in respect of life insurance business transacted in India, refuse payment to an insurance agent of commission due to him on renewal premium under the agreement by reason only of the termination of his agreement, except for fraud:- Provided that- (a) xxx xxx xxx (b) xxx xxx xxx (c) such agent has served the insurer continually and exclusively for at least ten years and after his ceasing to act as such agent he does not directly or indirectly solicit or procure insurance business for any other person. Cl.19. Payment of Commission on discontinuance of agency: 19 (1) In the event of termination of the appointment of an agent, except for fraud, the commission on the premiums received in respect of the business secured by him shall be paid to him if such agent. (a) xxx xxx xxx (b) has continually worked as an agent for at least 10 years since his appointment; or (c) xxx xxx xxx" 6. It is not in dispute that petitioner's service as agent of the Corporation is not terminated on the ground of fraud and it is not in dispute that he has worked for more than ten years i.e. 17 years continually and exclusively in favour of the Insurance Company, the insurer The stand taken by the Insurance company in its reply to the legal notice sent by the petitioner's counsel that the petitioner is not entitled to get renewal commission as per Section 44(1)(c) is not tenable in law. In view of the decision of the Division Bench of Patna High Court referred to supra, wherein the phrase 'person' occurring in S.44(1 )(c) fell for consideration and their Lordships have interpreted and examined the relevant provisions of Insurance Act, 1938, namely, Section 43, 42(2A)(3)(4)(5), 43(2) and 44 and held that the person occurring in Section 44(1)(c) is a juristic person but does not include an insurer i.e. Corporation. The similar reliefs granted in the writ petition by the learned Single Judge of Patna High Court, which was not interfered with by the Division Bench of the said Court on the Letters Patent Appeal filed by the LIC of India. The fact situation of the said case is aptly applicable to the case on hand. Therefore the stand taken by the insurance company that the petitioner is not entitled for the commission amount for the period he has claimed under Section 44(1)(c) and Regulation 19(1)(b) is not correct. Hence the petitioner has made out a case as he is entitled to get monetary benefits with interest. 7. For the reasons stated above, the petition must succeed. Accordingly, the writ petition is required to be allowed. Accordingly, we allow the writ petition. Rule nisi issued. The opposite party Nos.1 and 2 are accordingly directed to see that amount due towards commission for the period February, 2005 to February, 2008 at Rs.3,00,000/- or any such other amount for which the petitioner is entitled, the same shall be calculated and shall be paid with interest at the rate of 6%. If the amount is not paid within a period of six weeks from the date of receipt of this order, the petitioner will be entitled to get interest at the rate of 12% on the said amount. Any amount if already paid by the Corporation to the petitioner towards the arrear of Commission payable, the same shall be deducted from the amount that will be calculated towards the Commission. Petition allowed.