Bombay High Court
Shri Pravin S/O Bhaskarrao Yenurkar vs Life Insurance Corporation Of India ... on 15 February, 2018
Author: Vasanti A Naik
Bench: Vasanti A Naik
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR
WRIT PETITION NO.2667 OF 2017
Shri Pravin s/o Bhaskarrao Yenurkar,
aged about : 40 years,
Occupation - LIC Agent,
R/o P.O. Gadisurla, Tahsil - Mul,
District - Chandrapur. ..... PETITIONER
...V E R S U S...
1. Life Insurance Corporation of India,
through its Chairman Central Office,
Yogyakshema, Jeevan Bima Marg,
Post Box No.19953, Mumbai-400021
(Maharashtra State).
2. Divisional Manager,
Life Insurance Corporation of India,
Nagpur Division, Nagpur.
3. Branch Manager,
Life Insurance Corporation of India,
Chandrapur-II,Bbranch (99V),
Chandrapur. ... RESPONDENTS
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Shri N. S. Autkar, Advocate for the petitioner.
Shri P. P. Kothari, Advocate for the respondent No.2.
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CORAM:-
SMT. VASANTI A NAIK &
ARUN D. UPADHYE, JJ.
DATED :
15/02/2018.
ORAL JUDGMENT : (PER SMT. VASANTI A NAIK
, J.) Rule. Rule made returnable forthwith. The writ petition is heard finally at the stage of admission with the consent of the learned counsel for the parties.
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2. By this writ petition, the petitioner has sought a direction against the respondent - Life Insurance Corporation to release the renewal commission for the insurance policies procured by him till the term of the policies expire.
3. Few facts giving rise to the petition are stated thus :-
In 1997, the petitioner was appointed as an Agent with the Life Insurance Corporation and was allotted Agency Code No.25599-V. His services as an Agent were confirmed by the L.I.C. The petitioner worked as a L.I.C. Agent from 1997 till 2011 when he decided to join the services of SBI Life Insurance as a Unit Manager. The petitioner tendered his resignation to the LIC on 11/05/2011 and joined the services of SBI Life Insurance as a Unit Manager. The petitioner decided to quit the services of SBI Life Insurance in 2012 and therefore asked the LIC to reinstate him as a LIC Agent. In pursuance of the request made by the petitioner, the petitioner was again appointed as a LIC Agent in the year 2013. An Agent who works for 10 years or more with the LIC or for that matter with any Insurance Company is entitled to the commission on the policies of insurance that he secures during his tenure as an Agent even after his services are terminated. However, in view of Section 44 (c) of the Insurance Act that is omitted by the Amending Act w.e.f. 22/06/2014, an Agent who has continuously and exclusively worked for a company for 10 years would be entitled to the ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 3 30-J-WP-2667-17.odt renewal commission in respect of the policies secured by him if he does not directly or indirectly solicit or procure insurance business for any other person after he ceases to act as an Agent. After the petitioner rejoined the duties as an Agent with the LIC in the year 2013, he made a request to the LIC for grant of renewal commission. The respondent -
LIC did not pay the renewal commission to the petitioner and the petitioner was informed that he would not be entitled to renewal commission in view of the provisions of Section 44 (c) of the Insurance Act. Being aggrieved by the action on the part of the LIC of refusing to grant renewal commission to the petitioner on the policies that he had secured for the LIC during his tenure as an Agent for more than 10 years is challenged by the petitioner in the instant petition.
4. Shri Autkar, the learned counsel for the petitioner submitted that the petitioner would be entitled to the renewal commission on the policies that he had secured for the LIC while working as an Agent after he rejoined his duties as an Agent with the LIC in the year 2013. It is stated that in view of Regulation 19 of the Life Insurance Corporation of India Agents Policy, an Agent is entitled to the commission even after the discontinuation of the agency if he has continuously worked as an Agent for at least 10 years. It is submitted that since the petitioner had continuously worked as an Agent for more than 10 years before he joined the services of S.B.I. Life Insurance only for a period of one year or more in the year 2011, it would be necessary ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 4 30-J-WP-2667-17.odt for the LIC to pay the renewal commission to the petitioner on the policies that he had secured, till they expire. It is submitted that Section 44(c) of the Insurance Act would not apply to the case of the petitioner inasmuch as the petitioner was appointed as a Unit Manager in SBI Life Insurance and it is not the duty of the Unit Manager to directly or indirectly solicit or procure the insurance business for SBI Life Insurance. It is submitted that in any case Section 44 was omitted by the Amending Act w.e.f. 26/12/2014 and hence the LIC cannot rely on the said provision to deny the renewal commission to the petitioner. The learned counsel relied on the judgments in the case of Manoj Kumar Mannu Vrs. The Life Insurance Corporation of India and others, reported in 2004 (3) PLJR 212 and the unreported judgment of the Hon'ble Supreme Court and the Calcutta High Court in Civil Appeal No.1553/2016 and Writ Petition No.609/2004 respectively. It is submitted that in the circumstances of the case, a direction may be issued against the LIC to release the arrears of renewal commission in favour of the petitioner and also to pay regular renewal commission to the petitioner in respect of the policies secured by him.
5. Shri Kothari, the learned counsel for the LIC has opposed the prayer made in the writ petition. It is submitted that in view of the clear provisions of Section 44(c) of the Insurance Act, the petitioner cannot seek the benefit of the L.I.C. Agents Regulations of 1972 by relying on Regulation 19 thereof. It is submitted that though the ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 5 30-J-WP-2667-17.odt petitioner was appointed as an Unit Manager in SBI Life Insurance, the appointment order of the petitioner in the said company clearly shows that the petitioner was given compensation packages for performance based sales incentives as per the company policy and he was required to promote and expand the business of the company i.e., insurance. It is submitted that the expansion and promotion of the business of the company would result in indirectly soliciting and procuring the insurance business, if not directly. It is submitted that though the provisions of Section 44 are omitted w.e.f. 26/12/2014, since the said provisions were in existence on the date on which the petitioner had resigned from the services of the LIC and rejoined the services, the petitioner would not be entitled to seek the benefit on the ground that after he rejoined the services as an Agent with the LIC, the provisions of Section 44 were omitted. It is submitted by placing reliance on the judgment in the case of Kamal Vrs. Anna and another, reported in 2015 (1) Civil Law Journal 371 that the statutory provisions creating substantive rights or taking away the substantive rights are ordinarily prospective in nature. It is submitted that since the omission of the provisions of Section 44 would operate prospectively and since on the date of omission of the said provision, the petitioner had rejoined his services with the LIC, he would not be entitled to the renewal commission. It is submitted that the contract of the petitioner as an Agent of the LIC from the year 1997 till 2011 was terminated and a ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 6 30-J-WP-2667-17.odt fresh contract of agency was brought into being in the year 2013 with a new Agency Code and hence the petitioner would not be entitled to the benefit of the renewal commission.
6. In the circumstances of the case, we are inclined to grant partial relief in favour of the petitioner. Admittedly, the petitioner had worked for more than 10 years as an Agent with the LIC viz., from 1997 till May, 2011. After his agency with the LIC was terminated in April, 2011, he had joined his duties as a Unit Manager of SBI Life Insurance. He was again appointed as an Agent by the LIC in the year 2013. Nothing would turn on whether a new contract was brought into effect when the petitioner was again appointed as a LIC Agent in the year 2013 as the provisions of Section 44 and Regulation 19 of the L.I.C. Agents Regulations provide for grant of renewal commission to an Agent who has completed 10 years of his agency with an Insurance Company even after the termination of the agency, except on the basis of fraud. Though Regulation 19 does not refer to any restriction on payment of the commission and provides for grant of renewal commission to an agent simply after he completes 10 years of his agency, some restrictions are to be found in the provisions of Section 44 of the Insurance Act, as it existed prior to its omission on 26/12/2014. The provisions of Section 44 of the Insurance Act (as omitted with effect from 26/12/2014) and specially clause (c) thereof clearly show that if an agent continuously serves a company for at least 10 years, he would ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 7 30-J-WP-2667-17.odt be entitled to receive the renewal commission in respect of his policies only if he does not directly or indirectly solicit or procure insurance business for any other person. It is necessary to consider whether the petitioner had directly or indirectly solicited or procured insurance business for the SBI Life Insurance where he was appointed after his agency was terminated by the LIC on 11/05/2011. It is the case of the petitioner that the petitioner has not directly or indirectly solicited or procured insurance business for any other person viz. S.B.I. / Life Insurance as an unit manager. The LIC has however denied the submission made on behalf of the petitioner. On a perusal of the appointment order issued by the SBI Life Insurance to the petitioner, it appears that the petitioner has surely procured or solicited insurance business for SBI Life Insurance indirectly, if not directly. It is most likely that the petitioner must have solicited or procured insurance business for the SBI Life Insurance directly as the petitioner was working as a Unit Manager and as per his job profile, he was liable to promote and expand the business of the company, the business of the company being 'insurance'. Moreover, apart from the salary that was received by the petitioner as an unit manager, the petitioner was also entitled to receive performance based sales incentive as compensation package as per the company policy. The judgment in the case of Manoj Kumar Mannu Vrs. The Life Insurance Corporation of India and others, reported in 2004 (3) PLJR 212 would not help the petitioner in proving that the ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 8 30-J-WP-2667-17.odt petitioner being a Unit Manager did not procure or solicit insurance business for SBI Life Insurance. The facts in the case before the Calcutta and Patna High Court are distinguishable and in the case before the Hon'ble Supreme Court, there was a forfeiture of renewal commission on the termination of the agency for committing fraud. Such is not the case here. It is apparent from a reading of the appointment order of the petitioner that the petitioner was entitled to certain additional benefits as performance based sales incentives. The job of the petitioner being promotion and expansion of the business of SBI Life Insurance, the petitioner would have solicited or procured insurance business, directly or indirectly for SBI Life Insurance. If that is so, in view of the clear provisions of Section 44(c) of the Insurance Act, the petitioner would have been disentitled to claim the renewal commission till the provisions of Section 44 (c) were on the Statute Book. On 26/12/2014, the provisions of Section 44 were omitted and with the omission of the said provisions, there was no hindrance in the path of the petitioner for claiming the renewal commission w.e.f. 27/12/2014. We do not appreciate the refusal on the part of the LIC to pay the renewal commission to the petitioner w.e.f. 27.12.2014 in respect of the policies secured by him from 1997 to 2011, after the omission of the provisions of Section 44 of the Act. After the omission of Section 44 of the Insurance Act, there was no provision or regulation under which the LIC could have refused to pay the renewal commission to the petitioner and ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 9 30-J-WP-2667-17.odt it was necessary to pay the same w.e.f. 27/12/2014, if not earlier. While holding so, we are not inclined to appreciate the submission that in view of the judgment, reported in 2015 (1) Civil Law Journal 371, the petitioner would never be entitled to seek the renewal commission on the policies secured by him despite the omission of the provisions of Section 44 as the omission would be prospective in operation. In fact, the judgment relied on by the learned counsel for the LIC would help the petitioner in advancing his case at least, as far as his claim for payment of commission w.e.f. 27/12/2014 is concerned. Omission of Section 44 is prospective in operation. That would mean that the said provision would not have effect from 27/12/2014. If the said provision would not have effect from the said date, it would be necessary for the LIC to pay the renewal commission to the petitioner from the said date. Hence, though the petitioner would not succeed in canvassing that the provisions of Section 44(c) would not apply to him as he did not directly or indirectly solicit or procure insurance business for SBI Life Insurance as we find that the petitioner has procured or solicited the same, the petitioner would be entitled to the renewal commission w.e.f. 27/12/2014 i.e. after the date of the omission of the said provision from the Insurance Act.
7. Hence, for the reasons aforesaid, the writ petition is partly allowed. The LIC is directed to pay the renewal commission to the petitioner w.e.f. 27/12/2014, on the policies secured by him. The ::: Uploaded on - 26/02/2018 ::: Downloaded on - 27/02/2018 00:02:56 ::: 10 30-J-WP-2667-17.odt arrears of the renewal commission should be paid to the petitioner within three months and the renewal commission payable to the petitioner in respect of the said policies in future should be paid to him regularly.
Rule is made absolute in the aforesaid terms with no order as to costs.
JUDGE JUDGE
Choulwar
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