Kerala High Court
Vincen Mathew vs Life Insurance Corporation Of India on 15 January, 2013
Author: Babu Mathew P. Joseph
Bench: Thottathil B.Radhakrishnan, C.T.Ravikumar, Babu Mathew P.Joseph
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN, ACJ,
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR,
&
THE HONOURABLE MR. JUSTICE BABU MATHEW P.JOSEPH
THURSDAY, THE 28TH DAY OF JULY 2016/6TH SRAVANA, 1938
WA.No. 461 of 2013 () IN WP(C).30018/2009
-------------------------------------------
AGAINST JUDGMENT IN WP(C)NO.30018/2009 DATED 15.01.2013
APPELLANT(S)/PETITIONER:
-----------------------
VINCEN MATHEW
AGED 42 YEARS,
S/O. MATHAI, AGENCY CODE 05078795,
ELLICKAL HOUSE, PAINGOTTUR P.O., PIN -686 671.
BY ADV. SRI.RAJU K.MATHEWS
RESPONDENT(S)/RESPONDENTS:
--------------------------
1. LIFE INSURANCE CORPORATION OF INDIA
REPRESENTED BY CHAIRMAN, CENTRAL OFFICE,
BOMBAY- 400 001.
2. DIVISIONAL MANAGER
LIFE INSURANCE CORPORATION OF INDIA,
DIVISIONAL OFFICE, KOTTAYAM - 686 001.
3. BRANCH MANAGER
LIFE INSURANCE CORPORATION OF INDIA,
THODUPUZHA - 685 584.
R1-R3 BY ADV. SRI.K.JAYAKUMAR (SR.)
R1-R3 BY ADV. SRI.LAL GEORGE
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 30-05-2016 ALONG WITH
R.P.NO.1211/2012, THE COURT ON 28-07-2016, DELIVERED THE FOLLOWING:
W.A.461/2013
APPENDIX
PETITIONER'S EXHIBITS:
ANNEXURE-I: A TRUE COPY OF THE JUDGMENT DATED 31.7.2012 IN
W.A.NO.2712/2009.
RESPONDENTS' EXHIBITS:NIL
//TRUE COPY//
P.A.TO JUDGE
"C.R"
THOTTATHIL B. RADHAKRISHNAN, ACJ
C.T.RAVIKUMAR &
BABU MATHEW P. JOSEPH, JJ.
-------------------------------------------------
W.A.No.461 OF 2013 &
R.P.No.1211 OF 2012
in
W.A.No.2712 OF 2009
--------------------------------------------------
Dated 28th July, 2016
JUDGMENT
Ravikumar, J.
The captioned appeal filed against the judgment of a learned Single Judge in W.P.(C)No.30018 of 2009 and the review petition in W.A.No.2712 of 2009 came up for consideration before us on a reference made by a Division Bench of this court as per order dated 28.10.2014. Section 44 of the Insurance Act,1938 (for short 'the Act') was made applicable to Life Insurance Corporation of India (LIC) in terms of Government of India notification GSR 262(E) dated 24.7.1972 which virtually amended the modification effected earlier by GSR 734 dated 23.8.1958. Section 43 of the Life Insurance Corporation Act deals with the application of the Insurance Act and as per sub-section (2) therein the Central Government shall, as soon as may be after the commencement of the Life Insurance Corporation Act, by notification in the Official Gazette, direct that certain sections specifically mentioned therein, including Section 44, of the Insurance Act shall apply to the W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 2 Corporation subject to such conditions and modifications as may be specified in the notification. Obviously, the aforementioned Government of India notification GSR 262(E) dated 24.7.1972 was issued in terms of the powers under Section 43(2) of the Life Insurance Corporation Act and evenwhile bringing in amendments to the modifications effected earlier by GSR 734 dated 23.8.1958 and introducing clauses (a) to (bbb) to proviso to Section 44(1), clause (c) of sub-section (1) of Section 44 of the Act was kept intact and was made as such applicable to LIC. Clause (c) of proviso to Section 44 provides a condition rather, an embargo for the benefit of Section 44 to be available, seemingly, to LIC agents who have served the said insurer continually and exclusively for at least ten years and after ceasing to act as such agents. The embargo actually lies in its second limb and it is to the effect that such a former agent shall not directly or indirectly solicit or procure insurance business for any other person. The question of law posed for consideration, according to the order of reference, is whether the second limb of clause (c) of the proviso to Section 44(1) of the Act is one which would also apply to the other different clauses thereunder viz., clauses (a), (b), (bb) and (bbb) introduced to that proviso for application to LIC so as to import the said embargo even in respect of persons falling under clauses (a) to (bbb).
W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 3
2.Essentially, the bone of contention in these matters is regarding the entitlement of a former agent of LIC to get renewal commission viz., commission on the renewal premium on the policies effected through him. Evidently, the said question of entitlement came up for consideration in W.P.(C)No.26791 of 2008 when the petitioner therein, a former LIC agent, was deprived of his renewal commission on the ground that after the termination of agency of the LIC, he became an agent of another competitor insurance company in the private sector. Virtually, the renewal commission was denied to him, on the aforesaid ground, in the light of Section 44(c) of the Act which is applicable to the LIC. The learned Single Judge upheld the action of the LIC and consequently, dismissed the writ petition which led to the filing of W.A.No.2712 of 2009. The Division Bench as per judgment dated 31.7.2012 held that clause (c) of the proviso to Section 44(1) of the Act which is applicable to LIC carries an embargo in its second limb which essentially is a condition for eligibility for entitlement to renewal commission, as aforesaid, and it applies to all the clauses under the proviso to Section 44(1) of the Act. In fact, the Division Bench held that the last part of proviso (c) to Section 44(1) of the Act is a condition for eligibility for renewal commission for a person who ceased to be an LIC Agent and going by the same, if he wants to get renewal commission for the business canvassed during his service as an Agent with the LIC, he should not join with a competitor W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 4 and procure insurance business for them. In that view of the matter, the said appeal was dismissed. As noticed hereinbefore, the review petition is filed seeking review of the said judgment. W.A.No.461 of 2013 has been filed against the judgment in W.P.(C). No.30018 of 2009 which was dismissed repelling the contentions of the petitioner therein in support of his claim for renewal commission and referring to the decision in W.A.No.2712 of 2009. Evidently, the Division Bench doubted the correctness of the decision in W.A.No.2712 of 2009 and thereafter holding that an important question of law, as mentioned above, is involved, referred the matters.
3.For understanding the real magnitude of the reference, it would only be apropos to refer to Section 44 of the Insurance Act, 1938, in its entirety. The said provision, as mentioned hereinbefore, was made applicable to LIC in terms of Government of India notification GSR 262(E) dated 24.7.1972 that, virtually amended the modification effected by GSR 734 dated 23.8.1958. For easy reference, it is only proper and profitable to extract these provisions, in a comparable tabular form, as follows:-
W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 5 SECTION 44 OF THE INSURANCE ACT AS MODIFIED BY GSR 734 DATED 23.8.1958 PUBLISHED IN INSURANCE ACT THE GAZETTE OF INDIA DATED 23.8.1958 PART II, SEC. 3(i) EXT.PAGE 367 PARA.3 AS AMENDED BY GSR 262(E) DATED 24.7.1972 PUBLISHED IN THE GAZETTEE OF INDIA DATED 24.7.1972 PART II-S.3
44. Prohibition of cessation of(i) EXT. PAGE 651. PARA2.
payments of commission.- (1) Notwithstanding anything to the44. Prohibition of cessation of contrary contained in any contract payments of commission.- (1) between any person and an Notwithstanding anything to the insurance agent providing for the contrary contained in any contract forfeiture or stoppage of payment of between any person and an renewal commission to suchinsurance agent providing for the insurance agent, no such person forfeiture or stoppage of payment of shall, in respect of life insurance renewal commission to such business transacted in India, refuse insurance agent, no such person payment to an insurance agent of shall, in respect of life insurance commission due to him on renewal business transacted in India, refuse premium under the agreement by payment to an insurance agent of reason only of the termination of his commission due to him on renewal agreement, except for fraud: premium under the agreement by reason only of the termination of his Provided that --- agreement, except for fraud:
(a) Such agent ceases to act for the Provided that ---
insurer concerned after the Central Government has notified in the (a) Such agent ceases to act for the Official Gazette that it is satisfied insurer concerned after the Central that the circumstances in which the Government has notified in the said insurer is placed are such as to Official Gazette that it is satisfied justify the agent's ceasing to act for that the circumstances in which the him; or said insurer is placed are such as to justify the agent's ceasing to act for
(b) Such agent has served the him; or insurer continually and exclusively in respect of life insurance business for (b) Such agent being an agent at least five years and policies appointed before the 1st May 1972 assuring a total sum of not less than has served the insurer continually in fifty thousand rupees effectedrespect of life insurance business for through him for the insurer were in at least five years and policies force on a date one year before his assuring a total sum of not less than ceasing to act as such agent for the fifty thousand rupees effected insurer, and that the commission on through him were in force on a date renewal premiums due to him does one year before his ceasing to act as not exceed four per cent in any case; such agent for the insurer; or or W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 6
(c) Such agent has served the (bb) such agent being an agent insurer continually and exclusively appointed on or after the 1st May, for at least ten years and after his 1972, has served the insurer ceasing to act as such agent he continually in respect of life does not directly or indirectly insurance business for at least solicit or procure insurance five years and policies assuring a business for any other person. total sum of not less than two lakhs of rupees effected through him for the insurer were in force Explanation.- For the on a date one year before his purposes of this sub-section, ceasing to act as such agent for service of an insurance agent the insurer; or under a chief agent of the insurer, whether before or after the (bbb) such agent, having worked commencement of the Insurance as an insurance agent for the (Amendment) Act, 1950, shall be insurer continually for at least two deemed to be service under the years from the date of his insurer. appointment, ceases to act for the insurer by reason of the termination of his appointment by the insurer solely on the ground of his having been physically or mentally incapacitated and policies assuring a total sum of not less than one lakh of rupees effected through him were in force on the date immediately prior to such termination; or
(c) Such agent has served the insurer continually and exclusively for at least ten years and after his ceasing to act as such an agent he does not directly or indirectly solicit or procure insurance business for any other person.
Explanation.- For the purpose of this sub-section.-
(i) "termination of his
agreement", in relation to an
insurance agent, includes
termination by reason of his
death; and
W.A.No.461/2013 &
R.P.No.1211/2012 in W.A.No.2712/2009 7
(2) Any commission payable to an (ii) service of an insurance agent insurance agent under the under a chief agent of, or under, provisions of clauses (b) and (c) an insurer whose life insurance of the proviso to sub-section (1) business has been transferred to shall, notwithstanding the death and vested in the Life Insurance of the agent, continue to be Corporation of India shall be payable to his heirs for so long as deemed to be service under the such commission would have Corporation.
been payable had such insurance agent been alive. (2) Any commission payable to an insurance agent under the provisions of [clause (b), (bb), (bbb) and (c)] of the proviso to sub-section (1) shall notwithstanding the death of the agent, continue to be payable to his heirs for so long as such commission would have been payable had such insurance agent been alive.
(3) In the event of the death of an insurance agent who at the time of his death was working as an insurance agent and was holding a valid licence issued to him under section 42, any commission payable to him had he been alive shall be paid to his heirs, so long as such commission would have been payable had the agent been alive:
Provided that such insurance agent had continually worked as an insurance agent for not less than two years and policies assuring a total sum of not less than one lakh of rupees effected through him were in force on the date immediately prior to his death.
W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 8
4) An insurance agent may nominate in writing any person including a social or charitable institution to receive after his death the commission payable under sub-section (2) or sub-
section (3) and to receive, in the event of his death, any moneys found to be due on, or payable at, his death, in respect of his agency, and were such nomination has been made the moneys shall be paid by the insurer to the nominee.
Provided that the nomination is registered in the records of the insurer and it has not been varied or cancelled by notice in writing delivered to the insurer''.
4.We have heard Sri.Raju K. Mathews, the learned counsel appearing for the appellant, Sri.K.Ramakumar, the learned Senior Counsel appearing for the review petitioner as also Senior Counsel Sri.K.Jayakumar and Sri. Lal George, learned counsel appearing for the Life Insurance Corporation.
5. The appellant in W.A.No.461 of 2013 and the deceased Baby John who originally filed W.A.No.2712 of 2009, which is now sought to be pursued by his widow, were former LIC agents and both of them had more than the prescribed length of service as LIC agents to earn eligibility for renewal commission under clause (c) of the proviso to W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 9 section 44 of the Act. It is pursuant to the interpretation of Section 44 of the Act applicable to LIC in terms of the notification of Government of India viz., GSR 262(E) dated 24.7.1972 that it was discontinued in the case of the appellant in the above writ appeal. In the case of the review petitioner's husband who resigned from the agency he was informed of his ineligibility for renewal commission, based on the very same clause, when he raised a claim for the same besides being asked to pay back the advance received. The common contention raised on behalf of the appellant and the review petitioner, in regard to the aforesaid question of law is that the embargo under clause (c) of the proviso to section 44 of the Act in respect of persons who cease to act as LIC agents to the effect that they shall not directly or indirectly solicit or procure insurance business for any other person, is confined only to the category of former LIC agents falling under clause (c) and it is absolutely inapplicable to persons eligible for renewal commission under clauses (a), (b), (bb) and (bbb) of the proviso to Section 44(1). It is contended that all such clauses which prescribe eligibility for getting renewal commission are mutually exclusive and are given as alternative eligibilities. Per contra, the learned Counsel appearing for the LIC contended that the said contentions are bereft of any basis and merit and such contentions, if accepted, would defeat the very soul of the proviso to Section 44 of the Act. It is their contention that clauses (a) to (bbb) and the first limb of clause (c) of the proviso to W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 10 Section 44(1) of the Act are all carry eligiblity criteria or, in otherwords, they are the five eligibility conditions for getting renewal commission on cessation of being an agent of the LIC and the condition under the second limb of clause (c) to the aforesaid proviso, which is correctly contrued as an embargo by the Division Bench in the judgment in W.A.No.2712 of 2009, applies to all persons falling under clauses (a) to (bbb) and the first limb of clause (c), of Section 44(1) of the Act.
6.At the first blush it would appear that there is dichotomy between clauses (a) to (c) to the proviso to S.44(1) of the Act. It would also appear that clause (c) is an exclusive one and its second limb is not segregable. To support the contention that all those clauses are mutually exclusive and independent of each other, the appellant relied on the decision of the High Court of Madras in Oriental Government Security Life Assurance Co.Ltd., v. B.S.Krishnamurthi [AIR 1957 Madras 449]. Evidently, how S.44(1)(c) differs from S.44(1)(b) was looked into while considering the question the respondent therein, an insurance agent could claim 4% on the premia under S.44(1)(b) though the policies in force on 14.12.49 aggregated only less than the prescribed minimum value of `50,000/-. During such consideration, it was held that an insurance agent who had served the insurer exclusively for at least ten years would be under a disability as against an insurance agent who had worked only between five years and ten years in that, he could not claim the W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 11 percentage on the renewal premium, if he directly or indirectly solicited or procured insurance business for any other person after he ceased to be an insurance agent for the particular company. The said decision deals with the clauses under the Insurance Act. It is to be noted that section 44 of the Act was made applicable to LIC as per GSR 734 dated 23.8.1958 published in the Gazette of India dated 23.8.1958 and the same was amended as per GSR 262(E) dated 24.7.1972 published in the Gazette of India dated 24.7.1972. The pointed question involved in this case, as mentioned hereinbefore, is as to whether the second limb of clause (c) of the proviso to Section 44(1) of the Act is one which would apply to the other different clauses thereunder viz., clauses (a), (b), (bb) and (bbb) introduced to that proviso for application to LIC so as to import the said embargo even in respect of persons falling under clauses (a) to (bbb). Therefore, we are of the considered view that the issue requires a deeper probe to answer the question under consideration. A careful scanning of clauses
(a) to (bbb) and clause (c), of Section 44(1) of the Act, as extracted above, would leave no room for any doubt regarding the position that they carry different eligiblity criteria for renewal commission on cessation of being an LIC agent. A bare perusal of Section 44(1) and (2) of the Act would reveal that clauses (a) to (c) of the proviso to sub-section (1) deal with renewal commission. In fact, section 44 deals with prohibition of cessation of payments of commission. An W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 12 analytical approach would undoubtedly reveal that the second limb of clause (c) is a condition partaking the character of an embargo on the entitlement to receive renewal commission. Obviously, the conjunction 'and' joins its first limb with the second limb. But, what is more relevant and crucial for the purpose of deciding the issue is that each of the earlier clauses viz., (a) to (bbb) ends up with semicolon. It is to be noted that semicolon (;) is a punctuation mark indicating a greater degree of separation than the 'comma' and it is being used to separate parts of a sentence. It is also worthy to note that in addition to semicolon, the conjunction 'or' is also used immediately after semicolon. Thus, the very syntax of the proviso to Rule 44(1) of the Act carrying different clauses would reveal that the punctuation 'semicolon' and the conjunction 'or' are used in between the clauses carrying different eligibility criteria for renewal commission, not without any purpose. In fact, they would indicate that in troth, they form a single sentence carrying different clauses and in the end such clauses carrying eligibility criteria is connected to its last part with the conjunction 'and'. There can be no doubt that no sentence can end with a semicolon and above all it is to be noted that only at the end of clause (c) of the said proviso the punctuation mark 'full stop' (.) is given. Indisputably, the punctuation 'full stop' (.) is used only at the end of a sentence that is not a question or an exclamation. In fact, it can only be taken that such unusual approach was made with a W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 13 purpose to ensure that the prohibition on cessation of payments of renewal commission to those former LIC agents who are made eligible for and entitled to renewal commission for the policies effected through them, even after cessation of such agency under all the clauses, would and should satisfy the condition enjoined under the second limb of clause (c) of the proviso, to avoid cessation of payment of such commission. In strict sense, in such circumstances, it cannot be said that it is purely a part of clause (c) alone having applicablity in the cases of persons falling under the first limb prohibiting payment to them if they directly or indirectly solicited or procured insurance business for any other person. The purpose revealed from the second limb of clause (c) of the proviso to Section 44(1) of the Act applicable to LIC, cannot brook any construction other than that the said condition is intended to act as an embargo applicable to all the clauses carrying eligibility criteria for renewal commission on cessation of agency and that it is one which would disqualify the contravenors who directly or indirectly solicit or procure insurance business for any other person, from receiving renewal commission. If clause (c) as such is taken as independant clause and the embargo lies in the second limb as one applicable only to those former LIC agents falling under its first limb it would be an arbitrary, hostile discrimination against those former agents who toiled and moiled for LIC much more years than those who fall under the other clauses viz., (a) to (bbb). At the same W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 14 time, if it is taken as an embargo applicable to all former LIC agents otherwise eligible for renewal commission in terms of the clauses to the proviso to section 44 (1) of the Act, it would act as a condition applicable to all similar persons under similar circumstances, embracing the salutory principles of equality before law and equal protection of law. Yet another danger is hidden in the contra contention and that cannot go unnoticed while constructing the said provision. If clause (c) is treated as an independant clause, former LIC agents who satisfy all the eligibility criteria under the first limb of clause (c) and became disqualified solely due to the embargo under the second limb, could shed their disquaification if they could successfully contend that despite such disqualification they are still eligible to get renewal commission on satisfying the eligibility criteria under any other clause. Certainly, that cannot be the intention of the legislature. If such a contention is accepted, it would undoubtedly make clause (c) meaningless and inoperative as persons who may be ineligible to get renewal commission may still claim the same raising the contention that they satisfy the criteria under one or other of the remaining clauses. It is only befitting to keep reminded of the maxim 'Semper inobscuris quod minimum est sequimur' which means 'In obscure contructions were always adopt that which is least obscure' even if it is taken that some obscurity lies in the proviso. Even in such circumstances, the one which would eliminate hostile W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 15 discrimination has to be adopted. At any rate, a purposive construction of the proviso to Section 44(1) of the Act applicable to LIC on the question of applicabilty of the second limb of clause (c), would always acknowledge and accept the construction that it applies to all categories of former LIC agents falling under clauses (a) to first limb of Clause (c) of the proviso to Section 44(1) of the Act as applicable to LIC. In the light of the discussions as above, we are inclined to answer the referred question in the affirmative. In otherwords, according to us, the second limb of clause (c) of the proviso to Section 44(1) of the Act is one which would apply to the other different clauses thereunder applicable to LIC viz., clauses (a), (b), (bb) and (bbb) introduced to that proviso so as to import the said embargo even in respect of persons falling under clauses (a) to (bbb).
7.Having answered the question of law referred as above, the next question to be considered is whether we should finally decide the appeal as also the review petition or return them to the Division Bench. In the contextual situation, it is only worthy to refer sections 4 and 7 of the Kerala High Court Act as also the order of reference. It is to be noted that the order of reference was made by two of us (Justice Thottathil B.Radhakrishnan and Justice Babu Mathew P.Joseph). It is contended by the appellant and the review petitioner that the Full Bench shall not decide the case on merits and the appeal and the W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 16 review petition may be send back to the Bench by which they were referred to Full Bench. Section 4 deals with the powers of the Bench of two Judges. If in the opinion of both the Judges, the decisions involve a question of law, they may order that the matter or question of law be referred to a Full Bench. Such matters also include an appeal from any original judgment, order or decree passed by a Single Judge and all matters not expressly provided in the High Court Act or in any other law for the time being in force. Section 7 deals with the procedures on reference to Full Bench. Going by the same, when a question of law is referred to a Full Bench, the Full Bench may finally decide the case or return it with an expression of its opinion upon the question referred for final adjudication by the Bench which referred the question or, in the absence of either or both of the referring Judges, by another Bench. Thus, in the light of the specific provision under section 7, the Full Bench could finally decide the case or it could be returned. We will now look into the order of reference. As noticed hereinbefore, a common order of reference was passed by the Division Bench on 28.10.2014 in W.A.No.461 of 2013 and R.P. No.1211 of 2012 in W.A.No.2712 of 2009.The operative portion of the order of reference reads thus:-
Having regard to the disagreement and the requirement to resolve the issue, this matter is adjourned for being considered by a Full W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 17 Bench. The Office will place the matter before the Honourable the Chief Justice, for further orders.
8.The meaning of the expression 'adjourned for being considered' was interpreted to mean 'reference to another forum of two Judges for being heard and determined by them', by a Larger Bench of this Court consisting of seven Honourable Judges in Babu Premarajan v. Supdt. of Police (2000(3) KLT 1771). True that it was so interpreted with reference to Section 3 of the High Court Act that deals with the powers of a Single Judge. We are of the considered view that the said expression is to be construed in the same manner to have the same meaning when a Division Bench adjourn a matter for being heard by a Full Bench. Thus, it is obvious that invoking the power under section 4 of the Kerala High Court Act, the Division Bench ordered the matter to be referred to a Full Bench for being heard and decided. In other words, it is evident from the order of reference itself that it is not only the question of law that was referred to a Full Bench but, the entire matters were also referred to Full Bench by the reference order. In such circumstances, we are proceeding to finally decide both the matters.
W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 18
9.We will firstly consider the review petition filed in W.A.No.2712 of 2009. As noticed hereinbefore, it is originally filed by one Baby John who was a former LIC agent. He was having more than ten years of service as LIC agent and on cessation of the agency, he joined the service of the Reliance Life Insurance Corporation as Channel Development Manager. Obviously, he filed W.P.(C). No.26791/2008 when he was deprived of his renewal commission on the ground that after the termination of the agency, he became an agent of another competitor insurance company in the private sector and thereby incurred disqualification rather, became disentitled to get renewal commission. The learned Single Judge dismissed the writ petition and the Division Bench, as per judgment dated 31.7.2012, confirmed the same by dismissing the appeal holding that they are in complete agreement with the finding of the learned Single Judge. The review petition is filed by the wife of the appellant upon his death. We have carefully gone through grounds 1 to 6 raised in the appeal. Though in ground 1, it is stated that there is an error apparent on the face of the judgment, a careful scanning of grounds 1 to 6 would reveal that it is nothing but an appeal in disguise. Virtually, the appellant is assailing the correctness of the findings of the Division Bench in the appeal. Mainly it is contended that the Division Bench had wrongly recorded that the appellant had admitted that he was doing business for the Reliance Insurance Company. It is contended W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 19 that the original appellant viz., Baby John had not admitted that he was working with Reliance Insurance Company. But, paragraph 9 of the appeal memorandum itself would reveal that Baby John had specifically admitted the fact that he had joined Reliance Insurance Company Ltd., as Channel Development Agent. True that it is stated therein that subsequently he resigned the same. The Division Bench held that his action in joining a competitor insurance company in the private sector would incur disquaification in terms of proviso (c) to section 44(1) of the Act. There is no case and in fact, not established that functions as CDA had not involved soliciting or procuring of insurance business. It is too late for the petitioner to raise the contention that the term 'any other person' does not include any other competitor insurance company in the private sector as according to us, the purposive interpretation could not brook and acknowledge any such narrow meaning. It was also held by the Division Bench that the embargo under the second limb of clause (c) of the proviso to section 44(1) is applicable as an embargo in respect of all the clauses under the proviso to section 44 (1) of the Act as applicable to LIC. We have already answered the reference also on the same line. In the light of the fact that the review petitioner has failed to bring out any error apparent on the face of the judgment in W.A.No.2712 of 2009 and virtually, the challenge is against the correctness of the decision we are of the considered view that there is absolutely no question of W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 20 invocation of the review jurisdiction. It is to be noted that the contention that the said case was not correctly decided is not a contention available in a review petition filed in the said appeal. In the light of the aforesaid position, the petitioner cannot be permitted to contend that the matter requires to be reheard. For the foregoing reasons, the review petition is liable to fail.
10. Evidently, W.P.(C).No.30018 of 2009 was dismissed by the learned Single Judge. A reference of the decision in W.A.No.2712 of 2009 was also made by the learned single Judge though it cannot be said that the writ petition was dismissed relying on the same. The fact that the appellant herein was a former LIC agent who served the first respondent continually and exclusively for more than ten years and on his cessation of agency, he joined a competitor insurance company, was not disputed before the learned Single Judge. After termination of his agency, he worked as Unit Manager, State Bank of India Insurance Company. In the counter affidavit filed in the writ petition such contention was speciifically taken by the respondents along with the further averment that he was thus procuring insurance business for SBI Life Insurance Company. It is to be noted that even in this appeal the appellant had not made any contention disputing the said fact. It was virtually in the absence of any dispute on that question that the learned Single Judge considered the contention W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 21 of the appellant in the light of the position under the proviso (c) to section 44(1) of the Act and found that liability to pay commission is a statutory contract and it itself fixes condition for payment viz., the condition in proviso (c) to section 44(1) of the Act. The learned Single Judge further found that the liability to pay compensation statutorily recognised under section 44(1) of the Act is in the realm of a contract between the parties or in other words, it is a statutory contract. It was held that when a statutory contract fixes an obligation to pay renewal commission and also stipulates the condition under which it is to be paid, non fulfilment of the condition or its violation would make such a person disentitled to any future commission. In such circumstances, it cannot be treated as unconstitutional or in any way, one which is affecting the fundamental rights of the persons involved, it is held. It is also held that even under normal circumstances, when an agency is terminated, an agent is not entitled to any future commission. In short, it was held that the restriction imposed by the statute by virtue of proviso (c) referred hereinbefore is only reasonable and could not be termed as illegal. Consequently, the writ petition has been dismissed.
11.In the appeal, the appellant has taken up certain contentions which were not specifically raised in the writ petition. The contention W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 22 that the five conditions stipulated virtually as eligibility to get renewal commission in the proviso to section 44(1) of the Act are alternative conditions and they are independent of each other, was not specifically raised in the writ petition. That apart, it is the contention of the appellant that the second part of clause (c) of the proviso applies only to its first part and at any rate, it is not applicable to the other clauses to the proviso. We have already considered the said contentions of the appellant while considering the referred question. In the light of the answer which we made to the referred question, those contentions cannot be sustained. In such circumstances, what survives for consideration in the appeal is the alternative contention taken up by the appellant that since he being a person who secured Rs.225 crores worth insurance business under 595 policies as on December, 2007, he would satisfy the requirements under clause (bb) of proviso to section 44(1) of the Act and therefore eligible for commission for renewal premium in respect of the policies secured by him. It is also contended that the finding of the learned Single Judge that restriction imposed on clause (c) is only a reasonable restriction and could not be termed as illegal is not sustainable in law. From the pleadings of the appellant taken up in the writ petition as also in the appeal it is evident that he is actually the former LIC agent whose case falls under clause(c) of the proviso to section 44(1) of the Act. He was having more than ten years service continually and exclusively under W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 23 the first respondent LIC. It is a fact that he had actually resigned from the agency by submitting Ext.P2 which was accepted as per Ext.P3 letter by the third respondent. Termination of his agency and his joining as Unit Manager in State Bank of India Insurance Company is not disputed, as already mentioned. It is in the said circumstances that citing the embargo under clause (c), he was denied renewal commission. The contention of the appellant is that in the light of the main provision under section 44(1), a former LIC agent would become ineligible for grant of renewal commission on termination of his agency only on the ground of fraud. The said contention is bereft of any basis. A bare perusal of section 44(1) and its proviso carrying different clauses would reveal that the entitlement to renewal commission depends upon the satisfaction of the eligibility criteria under each clause thereunder. Since in the light of the answer which we gave to the referred question, the contentions that all the five alternative conditions carrying the eligibility are independent of each other and the second limb of clause (c) is inapplicable to all the other clauses under the proviso to section 44(1) are devoid of merit. When by virtue of the position that the case of the appellant falls under clause (c) and owing to his violation of the second limb of clause (c), by joining in a competitor insurance company, he became ineligible to get renewal commission the contention of the appellant to get over the same is that even if by virtue of the said W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 24 provision he is ineligible to get renewal commission as he satisfies the eligibility criteria under clause (bb) of the proviso, he is entitled to get renewal commission. We are afraid the said contention cannot be countenanced. Being a person who falls squarely under clause (c) but disentitled to get renewal commission by virtue of violation of second limb of clause (c) carrying the embargo which is applicable to all other clauses the appellant cannot be heard to contend that the said embargo and the consequential violation of it, would not disentitle him to get renewal commission under clause (bb) or under any other head. True that the appellant has also sought an alternative relief to declare section 44(1)(c) of the Insurance Act to the extent it prohibits an agent from soliciting or procuring insurance business directly or indirectly for any other person, as unconstitutional, illegal and void. The learned Single Judge held that the restriction imposed by the statute by virtue of proviso (c) is only reasonable and it could not be termed as illegal. Despite the rejection of the prayer for such a declaration, the appellant has not specifically raised any ground to challenge the same in the appeal. We have carefully gone through the pleadings in the appeal and also in the writ petition. A careful scanning of the pleadings in writ petition would reveal that the appellant sought to challenge the embargo under the second limb of clause (c) of the proviso to Rule 44(1) of the Act as one that violates Article 14 of the Constitution of India. According to the appellant, if W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 25 section 44(1)(c) is construed to mean that all former LIC agents who got more than ten years of service are prohibited from taking up service under another insurer it would lead to an anomalous situation where an agent with lesser service could take up employment under another insurer and continue to get commission payable on renewal premium, but persons with the aforesaid prescribed length of service would alone be disentitled to get it. In the light of our answer to the referred question, such a situation would not arise. Apart from the said contention, the appellant has not taken up any other contention to challenge the embargo contained under the proviso (c) to section 44(1) of the Act. It is well settled in law that he, who assails constitutional validity of a statutory provision or rule, has to specifically assert the grounds for such challenge. (See decisions:
State of Uttar Pradesh v. Kartar Singh (AIR 1964 SC 1135), State of Andhra Pradesh and another v. K.Jayaraman and others [(1974) 2 SCC 738], Union of India v. E.I.D. Parry (India) Ltd. [(2002) 2 SCC 223], State of Haryana v. State of Punjab and another [(2004) 12 SCC 673)]. No other contentions have been taken up by the appellant to challenge the proviso and therefore, we see no reason to grant the declaration as sought for. In such circumstances, the finding of the learned Single Judge that restriction imposed on clause (c) is only a reasonable restriction could not be termed as illegal. In the light of our finding since the embargo under second limb of clause (c) is applicable W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 26 to all clauses the appellant who joined another competitive insurance company and thereby violated the condition contained in the second limb of clause (c) is disentitled to renewal commission even if he satisfies eligibility criteria under any other clause. If it is held that the embargo under clause (c) is applicable to first part of clause (c) alone and therefore anyone who satisfies the eligibility criteria under any other clause would become eligible to get renewal commission, clause
(c), more particularly its second limb would become absolutely meaningless and inoperative. What cannot be done directly cannot be achieved by indirect method. As held by the learned Single Judge since the appellant is a person who falls under clause (c) of the proviso to section 44(1) and became disentitled to renewal commission owing to the violation of the condition therein it has to act as a disqualification disentitling him from claiming renewal commission under any of the heads, going by the way we answered the referred question. In short, we do not find any illegality or error in the judgment of the learned Single Judge warranting an appellate interference especially in view of the manner in which we answered the reference and also taking note of the fact that we have dismissed the review petition filed against W.A.No.2712 of 2009. In short, the writ appeal is also liable to fail.
W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 27 In the result, R.P.No.1211 of 2012 in W.A.No.2712 of 2009 and W.A.No.461 of 2013 are dismissed.
Sd/-
THOTTATHIL B. RADHAKRISHNAN Acting Chief Justice Sd/-
C.T.RAVIKUMAR Judge Sd/-
BABU MATHEW P. JOSEPH Judge TKS W.A.No.461/2013 & R.P.No.1211/2012 in W.A.No.2712/2009 28