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2013 DIGILAW 2658 (MAD)

K. Pandian v. Chairman, L. I. C. of India

2013-07-25

S.NAGAMUTHU

body2013
ORDER The petitioner was appointed as an Agent by order dated 30.06.1992 under Rule 4 of the Life Insurance Corporation of India (Agents) Rules, 1972 (hereinafter referred to as the Rules). In terms of the appointment order, the petitioner discharged his functions to solicit and procure new insurance business. During his tenure, in the month of March 2003, the petitioner had introduced proposals for Rs.5 lakhs each under “Anmol Jeevan Plan” which were completed under policy numbers mentioned here under:- Policy No.Date of CommencementNameModePremium -------------------------------------------------------------------------------------------- 75311894028.03.2003P.MuraliQuarterlyRs.312.00 -------------------------------------------------------------------------------------------- 75311894228.03.2003P.NedunchezhiyanQuarterlyRs.312.00 -------------------------------------------------------------------------------------------- 75311894328.03.2003G.RajkumarQuarterlyRs.312.00 -------------------------------------------------------------------------------------------- 75311894428.03.2003S.PoornachandranYearlyRs.1140.00 -------------------------------------------------------------------------------------------- 75311894528.03.2003S.SenthilnathanYearlyRs.1067.00 -------------------------------------------------------------------------------------------- 75311894628.03.2003N.PaneerselvamQuarterlyRs.331.00 -------------------------------------------------------------------------------------------- 75311919928.03.2003G.BalamuruganYearlyRs.1140.00 -------------------------------------------------------------------------------------------- 75311921728.03.2003S.SellappanQuarterlyRs.312.00 -------------------------------------------------------------------------------------------- 2. While so, on 19.03.2004, Mr.Poornachandran made a complaint to the Life Insurance Corporation of India (hereinafter referred to as “the L.I.C., of India”) that neither he signed any proposal nor undertaken any medical examination to take the above Insurance policy. In effect, he disowned the policy. Thereafter, according to the respondents, the signatures in the policy records of various policies were sent for examination by a Forensic Expert and discreet enquiry was also held. It was found that the signatures in the proposal forms made in respect of the above policies were not made by the policy holders. A show cause notice was therefore issued on 16.03.2005 to the petitioner. Challenging the said show cause notice, the petitioner filed a writ petition before this Court in W.P.No.2556 of 2005. By order dated 30.03.2005, this Court while dismissing the writ petition, permitted the petitioner to submit his explanation for the said show cause notice dated 16.03.2005 within a period of 30 days. Accordingly, the petitioner submitted his explanation on 14.04.2005. Thereafter, final order terminating the petitioner’s Agency was issued by the Senior Divisional Manager/Disciplinary Authority under Rules 16(1)(a) & 16(1)(b)of the Rules. 3. Challenging the same, the petitioner preferred an appeal to the Zonal anager/Appellate Authority. Having considered the same, the Appellate Authority by order dated 27.12.2005, dismissed the appeal thereby confirming the termination of the Agency of the petitioner. Aggrieved over the same, the petitioner is before this Court with this writ petition. 4. I have heard the learned counsel for the petitioner and the learned Senior Counsel appearing for the respondents and I have also perused the records carefully. 5. Aggrieved over the same, the petitioner is before this Court with this writ petition. 4. I have heard the learned counsel for the petitioner and the learned Senior Counsel appearing for the respondents and I have also perused the records carefully. 5. As I have already pointed out, the appointment, functions, termination etc., of an Agent of the L.I.C., of India are governed by the Life Insurance Corporation of India (Agents) Rules, 1972 (hereinafter referred to as the Rules). According to Rule 16(1)(b) of the Rules, if an Agent has acted in a manner prejudicial to the interests of the Corporation or to the interests of its policy holders, then, his Agency can be terminated. But, the proviso appended to Rule 16 of the Rules says that the Agents shall be given opportunity to show cause against such termination before an order of termination is issued. The grievance of the petitioner in this case is that though, in the explanation submitted by him on 14.04.2005, he had requested for copies of all the documents sought to be used against him, they were not supplied to him. It is his further grievance that without affording any opportunity and without following the principles of natural justice, in a hurried manner, within four days of the receipt of his explanation, the order of termination came to be issued on 18.04.2005. 6. The learned counsel would further submit that out of nine policy holders, eight have given letter stating that the proposal forms were signed only by them. But, these letters have not been considered by the respondents while passing the impugned order. At any rate, absolutely there is no evidence that the petitioner has acted against the interests of L.I.C., of India. Thus, according to the learned counsel for the petitioner, the impugned order is liable to be interfered with. 7. But, the learned Senior Counsel appearing for the respondents would submit that it is true that on receipt of explanation of the petitioner dated 14.04.2005, final order terminating the Agency of the petitioner was passed on 18.04.2005. But, before passing the order, according to the learned Senior Counsel, the disciplinary authority fully applied his mind into all the documents and the materials placed and since, it was found that the petitioner had acted against the interests of L.I.C., of India, the impugned order came to be passed. But, before passing the order, according to the learned Senior Counsel, the disciplinary authority fully applied his mind into all the documents and the materials placed and since, it was found that the petitioner had acted against the interests of L.I.C., of India, the impugned order came to be passed. The learned Senior Counsel would further submit that there was no need for the respondents to hold any enquiry as it is done in the case of a disciplinary action against a regular employee of L.I.C., of India. According to the learned Senior Counsel, the relationship between the L.I.C., of India and the petitioner is after all that of a Principal and an Agent. The Agent can work under the pleasure of the Principal, so long as the Principal repossess confidence in him. The moment, according to the learned Senior Counsel, the confidence is lost by the conduct of the Agent, the Principal will be at liberty to terminate the Agency of the Agent. 8. In this case, according to the learned Senior Counsel, the opportunity to be provided as per the proviso to Rule 16 of the Rules cannot be given a wider connotation so as to say that such enquiry should include the examination of witnesses, proving of documents and then passing orders. It is his further contention that reasonable opportunity as provided in the proviso to Rule 16 of the Rules is only an opportunity to the petitioner to submit his explanation and the documents. Therefore, according to him, the opportunity as required to be given under the proviso to Rule 16 of the Rules was afforded to the petitioner in this case and thereafter only, the impugned order was passed. Therefore, according to the learned Senior Counsel, the impugned order does not require any interference at all. 9. I have considered the above submissions. 10. I am in full agreement with the contentions of the learned Senior Counsel appearing for the respondents that since, the petitioner is not a regular employee of L.I.C., of India and since, the relationship between L.I.C., of India and the petitioner is that of a Principal and Agent, neither there is any need to frame any charge nor to hold any enquiry like examination of witnesses, proving of documents, etc., to prove the allegations. An agent can continue to act as an Agent under the pleasure of the principal so long as the Principal repossess confidence in him. If by the conduct of the Agent, if the Principal is satisfied that the Agent is acting against the interests of the Principal thereby loosing confidence then, the Principal will be at liberty to terminate the Agency. But here, since, the respondents are the statutory authorities, such termination cannot be made arbitrarily. That is the reason why, the appointment, functions and termination of an Agent are all regulated by the Statutory Rules, namely, the Life Insurance Corporation of India (Agents) Rules 1972. Therefore, undoubtedly, such termination of the petitioner s Agency can be made by strictly following the procedure contemplated in the said Statutory Rules. 11. As has been pointed out herein before, the proviso to Rule 16 of the Rules states that before terminating the Agency, reasonable opportunity to the Agent to show cause as to why his Agency should not be terminated should be afforded. What is reasonable opportunity has not been, ofcourse, defined in the Rules. In this regard, the learned counsel for the petitioner would rely on a judgment of the Hon'ble Supreme Court in Natwar Singh v. Director of Enforcement and another (2010 (13 SCC 255). That was a case under the Foreign Exchange Management Act and Rules 2000. The argument before the Hon'ble Supreme Court was that the Rule did not provide for furnishing of copies of the documents to the adverse party. It was further contended before the Hon'ble Supreme Court that furnishing of copies of documents to the adverse party cannot be insisted upon for want of an enabling provision in the appropriate Rules. But, the Hon'ble Supreme Court negatived the said contention and held that the requirements of natural justice cannot be dispensed with. The Hon'ble Supreme Court has further held that though the Rules do not require the adjudicating authority to supply copies of the documents along with the show-cause notice, furnishing of copies of the documents is part of principles of natural justice and doctrine of fairness . 12. The Hon'ble Supreme Court has further held that though the Rules do not require the adjudicating authority to supply copies of the documents along with the show-cause notice, furnishing of copies of the documents is part of principles of natural justice and doctrine of fairness . 12. In the case on hand, though Rule 16 of the Rules does not make a specific provision compelling the respondents to furnish copies of the documents which were sought to be used against the petitioner, by following the principles of natural justice and the doctrine of fairness, the petitioner ought to have been furnished with copies of all the documents, more particularly, when the petitioner himself had demanded for copies of documents in his explanation itself. Thus, in my considered opinion, the Disciplinary Authority has not afforded sufficient opportunity to the petitioner as required in law. 13. Nextly, it is the contention of the learned counsel for the petitioner that reasonable opportunity to be provided under proviso to Rule 16 of the Rules would mean that holding enquiry by examining witness and affording opportunity to the petitioner to cross examine the witness on the side of L.I.C., of India. This argument does not persuade me at all. As I have already pointed out, the petitioner is not a regular employee of L.C.I of India and what is conducted is not an enquiry into the charges. The proviso to Rule 16 of the Rules only mandates that reasonable opportunity should be given. What is reasonable opportunity, though has not been described in the Rules, it can be understood in the background of the judgment of the Hon'ble Supreme Court in Menaka Gandhi v. Union of India ( AIR 1978 SC 597 ). 14. In the said case, before the Hon'ble Supreme Court, an order passed by the Passport Authority cancelling the passport of one Mrs.Menaka Gandhi was challenged. It was contended before the Hon'ble Supreme Court that such cancellation of passport unilaterally, without affording reasonable opportunity will amount to infringement of the rights guaranteed under Articles 14, 19 and 21 of the Constitution of India. But, the Union of India contended before the Hon'ble Supreme Court that the Passport Rules do not provide for such enquiry or reasonable opportunity to be afforded to the Passport Holder before impounding the passport. But, the Union of India contended before the Hon'ble Supreme Court that the Passport Rules do not provide for such enquiry or reasonable opportunity to be afforded to the Passport Holder before impounding the passport. Therefore, according to the Union of India, there was no need for holding any such enquiry or providing opportunity to the Passport Holder. It was also contended that the principles of natural justice have got no role to pay in the said matter. Thus, there was no infringement to the rights guaranteed under Articles 14 and 21 of the Constitution of India, it was contended. But, the Constitution Bench of the Hon'ble Supreme Court has negatived the said contention of the Union of India. The Hon'ble Supreme Court has categorically held that the principles of natural justice is one of the facets of the fundamental rights. It held that:- “although there are no positive words in the statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature. The principle of audi alteram partem, which mandates that no one shall be contemned unheard, is part of the rules of natural justice. Natural justice is a great humanising principle intended to invest law with fairness and to secure justice and over the years it has grown into a widely pervasive rule affecting large areas of administrative action. The inquiry must, always be: does fairness in action demand that an opportunity to be heard should be given to the person affected ? The law must now be taken to be well settled that even in an administrative proceeding, which involves civil consequences, the doctrine of natural justice must be held to be applicable.” 15. From the above law declared by the Hon'ble Supreme Court, I am unable to accept the argument of the learned Senior Counsel appearing for the respondents that there was no need for the respondents to hold any enquiry by providing personal hearing to the petitioner. As has been held by the Hon'ble Supreme Court, in Menaka Gandhi s case (cited supra), in compliance with the doctrine of principles of natural justice, it is absolutely necessary to afford an opportunity to be heard. Such opportunity to be heard is preciously the one which is enshrined in the proviso to Rule 16 of the Rules. As has been held by the Hon'ble Supreme Court, in Menaka Gandhi s case (cited supra), in compliance with the doctrine of principles of natural justice, it is absolutely necessary to afford an opportunity to be heard. Such opportunity to be heard is preciously the one which is enshrined in the proviso to Rule 16 of the Rules. At the same time, reasonable opportunity as provided in Rule 16 of the Rules cannot be stretched to say that such opportunity should include examination of witnesses, cross examination of witnesses and proving the arguments thereby converting the whole episode as a trial of the civil or criminal case before the Court of law. 16. In my considered opinion, as has been held by the Hon'ble Supreme Court in Menaha Gandhi’s case, in tune with proviso to Rule 16 of the Rules, the petitioner is entitled to be afforded only personal hearing and also to produce documents and affidavits. During personal hearing, he can only make his oral submissions or he can submit his written submissions. There is no scope for examining any witness either by L.I.C., of India or by the petitioner. After affording such personal hearing, it will be open for the Disciplinary Authority to pass a final order by applying his mind into the materials placed in support of the allegations as well as the explanation, written submissions and affidavits to be filed by the petitioner and the documents. Since, the said procedure has not been followed, in this case, I am inclined to interfere with the impugned order of termination. At the same time, I am not inclined to interfere with the direction issued under Rule 16(3) of the Rules to the petitioner not solicit or procure new life insurance business until he is permitted by the competent authority to do so, because, the allegations against the petitioner are so serious. 17. In view of all the above, the writ petition is allowed in the following terms:- (i) The impugned order passed by the Disciplinary Authority on 18.04.2005 and confirmed by the Appellate Authority on 27.12.2005 is hereby set aside and the matter is remitted back to the third respondent for passing fresh order in accordance with law after following the procedure indicated herein above. (ii) It is further directed that until this proceeding reaches finality, the petitioner shall not solicit or procure new life insurance business. (ii) It is further directed that until this proceeding reaches finality, the petitioner shall not solicit or procure new life insurance business. No costs.