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2022 DIGILAW 2707 (MAD)

V. S. Balasubramania Pillai & v. L. I. C, Zonal Manager, Chennai

2022-08-16

R.VIJAYAKUMAR

body2022
JUDGMENT (Prayer: This Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus, to call for the records of the impugned order of the first respondent dated 28.06.2012 and consequential impugned order passed by the third respondent dated 01.12.2014 and quash the same and further direct the respondents to pay all the renewal commissions along with arrears in respect of the policies proposed during the agency period within the time fixed by this Court.) 1. The present writ petition has been filed challenging an order passed by the first respondent herein under which the request of the petitioner for payment of renewal commission along with arrears in respect of policies proposed during the agency period was rejected. 2. According to the petitioner, he served as L.I.C agent from the year 1987 and he was terminated by an order dated 08.09.2009 by the second respondent herein. During the said period, he has solicited 900 policies and he was honoured with privileges of L.I.C Divisional Manager's Club Member. Throughout his entire career span over 22 years, he has maintained unblemished record. According to the petitioner, he had proposed a policy in favour of one Manikandan on 15.02.2002 in which the date of the Manikandan was mentioned as 01.02.1984 and accordingly, the said Manikandan was aged 18 years on the date of proposal. The petitioner had attested the signature of the policy holder and the petitioner had relied upon horoscope of the said Manikandan for fixing the date of birth of policy holder. The policy holder had died on 29.05.2006. When the claim application was made, it was found that the date of birth of the life assured was 01.08.1985 as per the School record. As per the policy, it was shown as 01.12.1984. In view of the said discrepancy, the petitioner was issued a show cause notice on 29.06.2009 as to why his agency could not be terminated with forfeiture of renewal commission on the ground that the petitioner has deliberately misinformed Corporation about the age of the life assured. The petitioner has submitted a reply on 23.07.2009 contending that he had relied upon the horoscope of the life assured and based upon the same, he had entered the date of birth as 01.12.1984. 3. The petitioner has submitted a reply on 23.07.2009 contending that he had relied upon the horoscope of the life assured and based upon the same, he had entered the date of birth as 01.12.1984. 3. The said explanation submitted by the writ petitioner was not accepted by the second respondent herein and he proceeded to pass an order on 08.08.2009 holding that the petitioner is guilty of charges of perpetrated fraud upon the Corporation and proceeded to terminate the agency with forfeiture of renewal commission. The petitioner had preferred an appeal to the first respondent herein on 03.04.2010. The first respondent had dismissed the appeal on 22.07.2010 confirming the order of the second respondent herein. Thereafter, the petitioner had filed W.P.No.1 of 2011 challenging the said impugned order. The said writ petition was disposed of on 21.03.2012 granting liberty to the petitioner to apply for restoration of commission and the first respondent was directed to consider the same and pass appropriate order on merits and in accordance with law within a period of 30 days from the date of receipt of application. 4. Pursuant to the order passed by this Court, the first respondent herein has reheared the petitioner and arrived at a finding that the petitioner ought to have been more cautious in undertaking a proposal especially when the proponent is none other than the son of the L.I.C Penal Medical Examiner. Hence, according to the first respondent, the action of the petitioner is prejudicial to the interest of the Corporation. Based upon the said finding, the first respondent had rejected the request of the petitioner for restoration of renewal commission. The said order is under challenge in the present writ petition. 5. The learned counsel for the petitioner had contended that he had an unblemished service of a L.I.C agent for nearly 22 years and he has proposed more than 900 policies during the said period without any allegation of misconduct or fraud. The petitioner had proposed a policy for one Manikandan who is none other than the son of L.I.C. Panel Doctor. He had provided horoscope of the said Manikandan to fix the age. Accordingly, the age of the proponent was mentioned as 01.02.1984. The petitioner has not committed any fraud and he has simply relied upon the age of the proponent based upon the horoscope supplied by the family of the proponent. He had provided horoscope of the said Manikandan to fix the age. Accordingly, the age of the proponent was mentioned as 01.02.1984. The petitioner has not committed any fraud and he has simply relied upon the age of the proponent based upon the horoscope supplied by the family of the proponent. He had further contended that there is no finding either by the original authority or by the appellate authority that the petitioner has committed a fraud by proposing the name of Manikandan for life insurance policy. Hence, he contended that the writ petition may be allowed restoring the renewal commission. 6. Per contra, the learned counsel appearing for the respondents had contended that the petitioner having acquaintance with L.I.C Panel Doctor and he was very well aware of the age of the proponent. By mentioning the date of birth as 01.02.1984 instead of 01.08.1985, the proponent was shown as a major at the time of proposal and the said Manikandan has signed the document by himself. If the date of birth was correctly mentioned as 01.08.1985, he would have been minor and his father would be entitled to sign his document and can take a policy in the name of his minor son. He had further contended that within four years from the date of taking of policy, the proponent had died at an young age which would indicate that there was some inherent disease even at the time of taking the policy. The petitioner being a primary underwriter has failed to elicit the correct material information and had to be vigilant in procuring a proposal of a minor who is not eligible for the said policy during his minority. The petitioner cannot disown his responsibility as he is in the first line of contact with the proposer and the Corporation places utmost good faith in the Agent in selecting lives for providing the Life Insurance Coverage. 7. The age of the proposer being a material aspect and the proponent was a minor, resulting in a contract being declared as a void one. In view of the above said facts, the petitioner had not been vigilant enough and his action has been prejudicial to the interest of the Corporation and he has tried to perpetrate fraud on the Corporation. In view of the above said facts, the petitioner had not been vigilant enough and his action has been prejudicial to the interest of the Corporation and he has tried to perpetrate fraud on the Corporation. He had further contended that the original authority as well as the appellate authority have passed the order of termination with forfeiture of renewal commission only after considering the Regulations 16(1)(b) of the LIC of India (Agents) Rules 1972. Hence, he prayed for dismissal of the writ petition. 8. I have considered the submissions made on either side and perused the materials available on record. 9. Admittedly, the petitioner was functioning as an L.I.C agent between 1987 and 2009 for a period of 22 years. He was terminated with forfeiture of commission on 08.08.2009 on the allegation that he tried to perpetrate a fraud on the Corporation. Let us consider the relevant regulations under Life Insurance Corporation of India (Agents) Rules 1972. As per regulation No. 8(2)(c), the agent should take all reasonable steps to ensure that the age of the life assured is admitted at the commencement of the policy. Hence, it is clear that the entire burden is upon the LIC agent to verify and incorporate the correct date of birth at the time of commencement of policy. 10. As per Regulation No.16, the competent authority is entitled to determine the appointment of an agent. Regulation No.16 (1) (b) empowers the competent authority to terminate the appointment if the agent acts in a manner prejudicial to the interest of the Corporation or to the interest of its policy holder. Regulation No.19, deals the payment of commission on discontinuance of agency. As per the said regulation, if the agency is terminated, except on the ground of fraud, the commission on the premium received in respect of the business secured by the agency, shall be paid to him if such agent has continuously worked as an agent for at least 10 years since his appointment. 11. A combined perusal of the above said regulations will clearly indicate that the respondents have jurisdiction to terminate the agency of the writ petitioner as an agent of LIC. But as per grounds specified in Regulation No.16, the competent authority is also entitled to terminate the agency with forfeiture of renewal commission in case where the termination is based upon an allegation of fraud. But as per grounds specified in Regulation No.16, the competent authority is also entitled to terminate the agency with forfeiture of renewal commission in case where the termination is based upon an allegation of fraud. In the present case, the show cause notice dated 29.06.2009 discloses that the respondent Corporation intends to terminate the agency with forfeiture of renewal commission. The petitioner has submitted a reply that he believed the date of birth given by the father of proponent who is none other than the Doctor of LIC Corporation. However, the said explanation has not been accepted by the Corporation and they have proceeded to terminate his agency with forfeiture of renewal commission. 12. In the first round of litigation, the petitioner has challenged the order passed by the appellate authority namely the first respondent herein in W.P.No.1 of 2011. The learned counsel for the petitioner had not pressed the prayer seeking to quash the order of termination and sought liberty to approach the first respondent again for restoration of the renewal commission. Granting such liberty to the writ petitioner, the writ petition was disposed of on 21.03.2012. Thereafter, the present impugned order has been passed by the first respondent herein again confirming the forfeiture of renewal commission. Hence, the issue that requires to be adjudicated in the present writ petition is to whether the petitioner would be entitled to renew the commission or not after his termination. 13. A perusal of the Regulation No.19 indicates that only when the termination is on the ground of fraud, the renewal commission can be forfeited. If termination is on any other grounds, the concerned agent would be entitled to receive commission on premium in respect of the business secured by him while he was an agent. 14. The order passed by the original authority on 08.08.2009 indicates that the termination has been effected with forfeiture of renewal commission for the allegation under Regulation No.16(1)(b) of Life Insurance Corporation of India (Agents) Regulations, 1972. Regulation 16(1)(b) is extracted as follows: “16(1)(b): If he acts in a manner prejudicial to the interests of the Corporation or to the interests of its policy holders” 15. A perusal of the above said regulation would clearly indicate that the termination of the petitioner has been effected on the ground that the petitioner has acted in a manner prejudicial to the interest of the Corporation. A perusal of the above said regulation would clearly indicate that the termination of the petitioner has been effected on the ground that the petitioner has acted in a manner prejudicial to the interest of the Corporation. The termination on the ground of fraud is not mentioned in the Regulation No.16. However, in the show cause notice dated 28.06.2009, it has been stated that the petitioner had attempted to perpetrate a fraud on the Corporation. The said allegation has been accepted by the original authority and confirmed by the appellate authority. It is not the case of the authority that the petitioner has in fact committed a fraud. 16. The word “fraud” has been defined in Section 17 of the Contract Act 1872 as follows: “Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract: (1). the suggestion, as a fact, of that which is not true, by one who does not believe it to be true; (2) the active concealment of a fact by one having knowledge or belief or the fact; (3) a promise made without any intention or performing it; (4) any other act fitted to deceive; (5) any such act or omission as the law specially declares to be fraudulent Explanation: Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech” 17. It is not the case of the Corporation that with full knowledge, the petitioner has given a wrong information about the date of birth of the proposer or he had actively concealed the date of birth of proposer after having knowledge about the same. The proposer is none other than the son of a Panel Doctor of the respondents Corporation. The petitioner in his explanation has submitted that he believed the Panel Doctor of the respondents Corporation and accepted the date of birth of the son of the said Doctor. The proposer is none other than the son of a Panel Doctor of the respondents Corporation. The petitioner in his explanation has submitted that he believed the Panel Doctor of the respondents Corporation and accepted the date of birth of the son of the said Doctor. It is quite natural that an LIC agent believes the Panel Doctor of the same Corporation for which he was functioning as an agent. The respondents Corporation had at no point of time made any allegation as against their own Panel Doctor. In such an event, the allegation of the fraud against the petitioner has not been legally substantiated. Of course, the petitioner is under a statutory obligation to verify the date of birth of the proponent. For the said negligence, he has already suffered an order of termination and lost his career. Without proving fraud just by chanting the word 'fraud' in the show cause notice and incorporation the same in the termination order would not prove that the petitioner has committed fraud in proposing the policy of the said Manikandan. Therefore, the respondent Corporation has utterly failed to prove that the petitioner has committed fraud. 18. When the element of fraud has not been proved, the termination of the petitioner is only on the ground that he has acted prejudicial to the interest of the Corporation as pointed out in the order of the original authority by invoking Regulation No.16(1)(b) of the Life Insurance Corporation of India (Agents) Regulations, 1972. When the termination is on the ground other than the fraud, as per Regulation No. 19(1), the petitioner is entitled to the commission on the premium received in respect of the business secured by him while he was an agent. In the instant case, there is no dispute that the petitioner is continually working as an agent for more than 10 year since his appointment. Hence, the order of the respondents herein forfeiting renewal commission of the writ petitioner is not legally sustainable and the same is set aside. 19. The writ petition is allowed to the extent that the petitioner shall be entitled to the renewal commission on the premium received in respect of business secured by him while he was an agent. No costs. Consequently, connected miscellaneous petition is closed.