Allahabad High Court
Muntazim Ali vs Zonal Manager Life Insurance ... on 3 December, 2013
Author: Narayan Shukla
Bench: Narayan Shukla
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
Reserved/AFR
Writ Petition No. 2707 (M/S) of 2006
Muntazim Ali Petitioner
Vs.
Zonal Manager ( Appellate Authority),
Life Insurance Corporation of India
Jeevan Vikas 16/98 MG Marg Kanpur
and others Respondents
***
Hon'ble Shri Narayan Shukla,J Heard Mr Vishnu Srivastava, learned counsel for the petitioner as well as Mr P.K. Khare, learned counsel for the respondents.
The petitioner has assailed the order dated 3rd August, 2004, passed by the Senior Divisional Manager, Life Insurance Corporation of India, Lucknow as also the order dated 18 th November, 2004, passed by the Zonal Manager/ Appellate Authority of the Life Insurance Corporation of India.
By means of order dated 3rd August, 2004 the Senior Divisional Manager of Life Insurance Corporation of India ( In short Corporation) terminated the petitioner's agency in exercise of power provided under Section 16 (1)(a)(b)(d) which has been upheld by the appellate authority. The petitioner claims to be an agent of the Corporation having agency code no.359393 and was attached with the branch office of Corporation at Akbarpur district Ambedkarnagar. According to him, he is working as such since 1989 to the satisfaction of the customers as well as Corporation itself without any complaint. It is further stated that he insured one Hazi Nizamuddin on policy no.213537196 for a sum of Rupee one lakh in the month of August, 2002 after having full satisfaction about his health as well as after getting him medically examined by the duly approved Medical Officer but unfortunately the policy holder succumbed to death on 12.2.2002 on account of decease' ''Acute Myocardial Infraction'.
Mr Hazi Nizamuddin earlier had two policies of the Corporation bearing nos. 75781137 and 210618164. The petitioner submits that policy holder was known to him for a period of two months. During this period he was looking healthy and cheerful by appearance and he did not mention any kind of suffering from diseases on the proposal form/ self declaration.
After the death of policy holder, the petitioner was issued a show cause notice by the Corporation on 9.1.2004 to give explanation within fifteen days to show cause why the policy was issued to Hazi Nizamuddin by the petitioner by concealing the material facts.
The petitioner submitted reply on 23 rd December, 2002. He was also issued another show cause notice on 2.6.2003 on the same subject which was replied by him on 29.1.2004.
In reply he denied charges and submitted that there is no lapse on his part nor concealment of facts rather his policy is based on the medical examination report declaring Mr Hazi Niamuddin fit for holding policy. After considering the petitioner's explanation the authority concerned passed the order impugned terminating petitioner's agency. Aggrieved petitioner filed an appeal against the order of termination of agency before opposite party no.2, who also rejected the same on 18.11.2004. The petitioner also claims that he was not given opportunity to cross-examine the Medical Officer, who examined the policy holder's physical status and thus also complains the order impugned being in violation of principles of natural justice.
The petitioner further claims the order impugned being in violation of Rule 8 of the L.I.C. Agents Rules, 1972.
Per contra, learned counsel for the respondent-Corporation submitted that the engagement and termination of agency is governed under the Life Insurance Corporation of India ( Agents) Rules 1972. Agents are engaged on payment of Commission). Thus, their engagements are purely contractual in nature. He further contends that the termination of agency is not amenable to judicial review of this Court under Article 226 of the Constitution of India. He further submits that the petitioner deliberately suppressed material facts by playing fraud to the Corporation and did not disclose the serious type of illness suffered by the Policy-holders, who had already 2, 3 times heart attack . It came out through deep and confidential inquiry that the policy-holder was at the verge of death on the date of commencement of policy. It is further stated that the authority of the Corporation has taken a decision to terminate the petitioner's agency on being satisfied with the facts stated above. Therefore, there was no occasion to provide any opportunity to the petitioner to cross-examine the Medical Officer nor is it provided under Rules.
In order to understand the controversy, I feel it appropriate to extract the provisions of Rules 8 and 16 of the Rules as under;
Rule 8-Functions of Agents:
(1)Every agent shall solicit and procure new life insurance business which shall not be less than the minimum prescribed in these rules and shall endeavour to conserve the business already secured.
(2) In procuring new life insurance business, an agent shall :
(a) take into consideration the needs of the proposers for life insurance and their capacity to pay premiums;
(b) make all reasonable inquiries in regard to the lives to be insured before recommending proposals for acceptance, and bring to the notice of the corporation any circumstances which may adversely affect the risk to be underwritten;
(C) take all reasonable steps to ensure that the age of the life assured is admitted at the commencement of the policy; and
(d) not interfere with any proposal introduced by any other agent.
(3)Every agent shall, with a view to conserving the business already secured, maintain contact with all persons who have become policy-holders of the Corporation through him and shall:
(a) advise every policy-holder to effect nomination or assignment in respect of his policy and offer necessary assistance in this behalf;
(b) endeavour to ensure that every instalment of premium is remitted by the policy-holder to the Corporation within the period of grace;
(C) endeavour to prevent the lapsing of a policy or its conversion into a paid-up policy; and
(d)render all reasonable assistance to the claimants in filling claim forms and generally in complying with the requirements laid down in relation to settlement of claims.
(4) Nothing contained in these rule shall be deemed to confer any authority on an Agent to collect any moneys or to accept any risk for or on behalf of the Corporation or to bind the Corporation in any manner whatsoever.
Provided that an agent may be authorized by the Corporation to collect and remit renewal premiums under policies on such conditions as may be specified.
Rule 16-Termination of agency for certain lapses.
(1)The competent authority may, by order, determine the appointment of an agent.
(a) if he has failed to discharge his functions as set out in rule 8, to the satisfaction of the competent authority;
(b) if he acts in a manner prejudicial to the interests of the Corporation or to the interests of its policy holders;
(C) if evidence comes to its knowledge to show that he has been allowing or offering to allow rebate of the whole or any part of the commission payable to him;
(d)if it is found that any averment contained in his agency application or in any report furnished by him as an agent in respect of any proposal is not true;
(e) if he becomes physically or mentally incapacitated for carrying out his functions as an agent;
(f) if he being an absorbed agent, on being called upon to do so, fails to undergo the specified training or to pass the specified tests, within three years from the date on which he is so called upon;
Provided that the agent shall be given a reasonable opportunity to show cause against such termination.
(2)Every order of termination made under sub-rule (1) shall be in writing and communicated to the agent concerned.
(3)Where the competent authority proposes to take action under sub-rule (1) it may direct the agent not to solicit or procure new life insurance business until he is permitted by the competent authority to do so.
Learned counsel for the parties also laid before this Court some decisions on the point which are discussed hereunder;
Gondavari Sugar Mills Ltd. V. State of Maharastra and others reported in 2011 AIR SCW 894 in support of his submission on the maintainability of the writ petition. Clauses (ii), (iii) and (iv) of paragraph 6 are extracted below:-
(ii)if a right has been infringed- whether a fundamental right or a statutory right- and the aggrieved party comes to the court for enforcement of the right, it will not be giving complete relief if the court merely declares the existence of such right or the fact that existing right has been infringed. The High Court, while enforcing fundamental or statutory rights, has the power to give consequential relief by ordering payment of money realised by the Government without the authority of law (vide State of Madhya Pradesh v. Bhailal Bhai AIR 1964 SC 1006).
(iii)A petition for issuance of writ of mandamus will not normally be entertained for the purpose of merely ordering a refund of money, to the return of which the petitioner claims a right. The aggrieved party seeking refund has to approach the civil or for claiming the amount, though the High Courts have the power to pass appropriate orders in the exercise of the power conferred under Article 226 for payment of money. ( vide Suganmal Vs. State of Madhya Pradesh AIR 1965 SC 1740.)
(iv) There is a distinction between cases where a claimant approaches the High Court seeking the relief of obtaining only refund and those where refund is sought as a consequential relief after striking down the order of assessment etc. While a petition praying for mere issue of a writ of mandamus to the State to refund the money alleged to have been illegally collected is not ordinarily maintainable, if the allegation is that the assessment was without a jurisdiction and the taxes collected was without authority of law and, therefore, the respondents had no authority to retain the money collected without any authority of law, the High Court has the power to direct refund in a writ petition ( vide Salonah Tea Co. Ltd. Superintendent of Taxes, Nangaon ( 1968) 1 SCC 401) : AIR 1990 SC 772).
The next judgment is of of Hon'ble Supreme Court of the case of Zonal Manager, Central Bank of India Vs. Devi Ispat Limited and others (2010) 11 Supreme Court Cases 186.
In the aforesaid judgment Hon'ble Supreme Court referred the judgment of LIC Vs. Escorts Ltd. ( 1986) 1 SCC 264. Relevant paragraph 13 is reproduced hereunder;
" We do not thing this Court in the above case has, in any manner, departed from the view expressed in the earlier judgments in the case cited herein above. This Court in LIC( Supra) proceeded on the facts of that case and held that a relief by way of a writ petition may not ordinarily be an appropriate remedy. This judgment does not lay down that as a rule in matters of contract the court's jurisdiction under Article 226 of the Constitution is ousted. On the contrary, the use of the words" Court may not ordinarily examine it unless the action has some public law character attached to it" itself indicates that in a given case, on the existence of the required factual matrix a remedy under Article 226 of the Constitution will be available. The learned counsel then relied on another judgment of this Court in State of U.P. Vs. Bridge and Roof Co.( India Ltd. (1996) 6 SCC 22."
On the other hand, learned counsel for the respondent placed reliance on the following decisions:-
B.K. Vadiraja and another Vs. Managing Director L.I.C. of India and others, reported in AIR 2002 Karnataka 113. Relevant paragraphs 9 and 13 are reproduced hereunder, "9. The Life Insurance Corporation of India has framed Regulations defining the method of recruitment of agents of the Life Insurance Corporation of India and the terms and conditions of their appointment and work in exercise of their powers under Section 49 of the Life Insurance Corporation Act, 1956. In the dictionary clause of the Regulations, the meaning of the expression '' agent' is defined. It means, a person, who has been appointed under Regulation 4 of the Regulations and includes an absorbed agent. The appointment of an agent is made by the Corporation for the purpose of soliciting or procuring life insurance business for the Corporation. Regulation 16 of the Regulations provides for termination of agency for certain lapses. Regulation 17 of the Regulations provides for termination of agency by notice."
"13. The Apex Court in the case of Life Insurance Corporation of India Vs. Smt. Lalithadevi, AIR 1991 SC 1734 was pleased to state:
"The respondent was an absorbed agent in the Life Insurance Corporation of India. Since, her husband was in service of the appellant, the respondent's agency was rightly terminated in accordance with Regn. 17 (1) of the Agent's Regulations 1972. Before terminating the respondent's agency, the appellant had taken care to serve notice on her. We are of the opinion that the order of termination of respondent's agency did not suffer from any legal infirmity and the High Court committed error in quashing the same. We accordingly, allow the appeal and set aside the order of the High Court."
In the case of Jai Narain Verma Vs. Life Insurance Corporation of India and another W.P.No.911 (M.B) of 1994 a Division Bench of this Court held that the relationship between Corporation and its agent was of the Principal and agent and the petitioner, who was agent of the corporation was not an employee of the Corporation. The terms and conditions of agency are regulated by statutory regulations framed by the Corporation, known as Life Insurance corporation of India ( Agents Regulation 1972 which are framed under Section 49 of the L.I.C. Act 1956."
Thus, on the proposition laid down by Hon'ble the Supreme Court as well as of this Court, as above, it is settled that the relation of respondent-Corporation as well as the petitioner was of the Master and Agent. The respondent- corporation created an agency in favour of the petitioner and the petitioner was engaged to work as an agent of the Corporation. The terms of agency are governed under the Life Insurance Corporation of India ( Agents) Rules, 1972, The rules speak that the Agents are appointed on commission basis. The nature of the engagement of the petitioner ( Agent) does not lead to prove an appointment alike to Government servant. Therefore, I am of the view that the petitioner being an Agent could not claim the benefit of service like Civil Servants, unless it is provided under the Rules. The rules do not provide so.
Upon perusal of the record, I find that the conditions for termination of agency were followed. The proviso of the Rule 16 (1) of the Rules provides that the Agent shall be given reasonable opportunity to show against such termination. He was provided so. Therefore, the order impugned cannot be held to be suffered from error.
In the result, the writ petition stands dismissed.
Order dated 3.12.2013 Tripathi