Allahabad High Court
Smt. Jaswanti Negi vs Life Insurance Corporation Of India, ... on 22 May, 1996
Equivalent citations: AIR1997ALL152, AIR 1997 ALLAHABAD 152, 1997 ALL. L. J. 602 1997 (29) ALL LR 17, 1997 (29) ALL LR 17
Author: B.K. Sharma
Bench: B.K. Sharma
ORDER Om Prakash, J.
1. The petitioner, admittedly, has married with an employee of Life Insurance Corporation of India respondent No. 1. She was appointed as Insurance Agent by letter of March 31, 1982 (Annexure-I to the writ petition), which inter-alia, is subjected to a condition that if in future the petitioner has any relationship with any employee of the Corporation then her agency will be terminated in accordance with Rubs.
2. On account of petitioner's matrimonial relationship with an employee of the Corporation, the respondents terminated her agency by giving one month's notice dated February 17, 1986 (Annexure VII to the writ petition) under Regulation 17(1) of the Life Insurance Corporation of India (Agents) Regulations, 1972, hereinafter referred to as 'the Regulations,' which is sought to be quashed by the petitioner.
3. The impugned notice dated February 17, 1986 (Annexure-VII to the writ petition) was challenged in appeal by the petitioner but failed and, therefore, the petitioner seeks quashing of the order passed by the appellate authority also (Annexure-IX to the writ petition)
4. In para 4 of the counter affidavit filed on behalf of the corporation (respondent), it is averred that under the relevant Rules and Regulations framed by the respondent-Corporation, no employee of the Corporation is permitted to act as an Insurance Agent and moreover no employee can allow any member of his family to act as an Insurance Agent. No Regulation is specifically referred in para 4, but it appears that the respondent is referring to the proviso to Regulation 29 of the Life Insurance Corporation of India (Staff) Regulations, 1960 (Briefly the Regulations of 1060). It is further averred that the prohibition as contained in the proviso to Regulation 29 of Regulations of 1960 is specifically made one of the conditions of the petitioner's appointment letter (Annexure-I to the writ petition).
Para 4 of the counter affidavit further states:-- "..... It is obvious that if she were allowed to do the Agency business in her own right, her husband who is an employee of the Corporation would be expected to assist her and might indulge in activity which would be prejudicial to the concept of his own duty. In the present case also since the petitioner is married to an employee of the Corporation, as such her agency was liable to be terminated by the Corporation in view of the Regulations in question which is pre-eminently in public interest."
5. In short, the contention cf the respondent is that termination of the petitioner's agency is in the public interest as on account of her matrimorial relationship with an employee of the Corporation, the potentiality of the petitioner as well as of her husband to misuse their position to the detriment to the public interest cannot be ruled out.
6. The short question for consideration, therefore, is, whether petitioner's agency can be terminated under Regulation 17(1) of the Regulations. The petitioner is not under a regular employment of the Insurance Corporation. Insurance agents are appointed under Regulation 4 of the Regulations of 1972. To them regular salary is not paid but they are entitled to receive commission under Regulation 10 of the Regulations of 1972. Under Regulations 13, 14, 15 and 16 besides Regulation 17 of the Regulations of 1972 agency can be terminated under different circumstance. We are not concerned in this case with the circumstances enumerated in Regulations 13, 14, 15 and 16, because agency of the petitioner is said to have been terminated under Regulation 17(1) by giving one month's notice.
7. Regulation 17(1) confers unfettered power on the Corporation to terminate the agency of the petitioner for any reason. Regulation 17(2) confers similar power on an Insurance Agent to terminate the agency giving one month's notice. Both the Corporation and the Agent can terminate the agency, provided one month s notice is given. Therefore, Regulation 17 cannot be said to be arbitrary because that confers power to terminate the agency on both, i.e. the Corporation and the Agent.
8. Then the question is, whether terminal ion of agency of the petitioner by giving one month's notice on the ground that she had married with an employee of the Corporation is legal. The Insurance Corporation is a commercial organisation. The validity of Regulation 17(1) has not been challenged in this writ petition. Regulations of 1972 are statutory in nature, inasmuch as they have been framed in exercise of the power vested in the Corporation under S. 49 of the Life Industance Corporation Act, 1956, Regulations of 1972 have been framed by the Corporation with the previous approval of the Central Government. No reason as a matter of fact, is required to be stated in the notice of one month given under Regulation 17(1) to terminate the agency of the petitioner. However, in the counter-affidavit filed by the Corporation, it is stated that one month's notice under Regulation 17(1) was given obviously on account of the petitioner's having married with an employee of the Corporation.
9. The counsel for the petitioner submits that once a reason has been disclosed by the respondents, that should be valid in law.
10. The question, therefore, is, whether the Corporation can terminate the agency of the petitioner on the ground of her marrying with an employee of the Corporation. To test the validity of this reason, we can appropriately refer to the proviso to Regulation 29 of the Regulations of 1900, which, of course, is not applicable to the petitioner, because she is not under regular employment of the Corporation. The Regulations of 1960 arc applicable to the regular employees of the Corporation. We are not referring to Regulation 29 of the Regulations of i960 for the reason that the petitioner is governed by that Regulation, but reference is made to Regulation 29 only with a view to testing the legality of the reason given by the respondents for terminating the agency of the petitioner. Under Regulation 17(1) of the Regulations the basis is the same which underlies the proviso the Regulation 29 that is, the public interest. Earlier the counsel for the Corporation argued that several complaints had been received against employees of the Corporation who were acting as Insurance Agents and then the prohibition as contained in the proviso to Regulation 29 was enacted injuncting the employees to carry on the business as Insurance Agents or allowing any member of their family to take up that business. Nothing but the public interest is the rationale behind the proviso to Regulation 29 of the Regulations of 1960. If the parties lied up with matrimonial bonds, are permitted to continue to take up the business of insurance agency, the possibility of fraud, collusion and misuse of their position entailing bad name to the Corporation a commercial organisation cannot be ruled out and that was why the golden prohibition as envisaged by the proviso to Regulation 29 of the Regulations of 1960, was inserted to obviate the complaints from the public against the employees of the Corporation. The public interest is the paramount consideration. If that is so, we fail to understand why the same consideration cannot be inferred under Regulation 17(1) of the Regulations for terminating the agency of the spouse of the Corporation employee. We see no good ground not to keep the public interest which is served by the proviso to Regulation 29 of the Regulations of 1960, in view for giving notice of one month under Regulation 17(1).
11. The matter may be looked at from another angle also. If an employee of the Insurance Corporation despite prohibition permits his/her member of the family to take up or to continue the business of insurance agency, it will be open to the Corporation to take up action against him/her. No action can be taken under Regulations of 1960 against a member of his/her family. Action against such member of the family who continues the insurance agency in the teeth of the prohibition envisaged by the proviso to Regulation 29, can be taken only under Regulation 17(1) by cancelling his/her agency.
12. We, therefore, are of the view that the termination of the agency under Regulation 17(1) on the ground of petitioner's marriage with an employee of the Insurance corporation is a reasonable step compatible to the public interest and the rationale of the proviso to Regulation 29 of the Regulations of 1960.
13. For the reasons, the writ petition fails and is dismissed. The stay order dated 12-11-1987 is hereby discharged.
14. Petition dismissed.