CWP No. 4302 of 2010 1 IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH CWP No. 4302 of 2010 Date of decision November 23, 2011 Kuldip Singh Sandhu ....... Petitioner Versus Life Insurance Corporation of India and another ........Respondents CORAM: HON'BLE MR. JUSTICE K. KANNAN Present:- Mr. Sunil Chadha, Advocate for the petitioner. Mr. B. R. Mahajan, Advocate for the respondents. **** 1. Whether reporters of local papers may be allowed to see the judgment ?No 2. To be referred to the reporters or not? No 3. Whether the judgment should be reported in the digest?No K. Kannan, J (oral). 1. The petitioner challenges the order passed by the authority, which is the LIC, denying the renewal of agent's commission to the agent, whose agency was terminated. The termination of agency and the consequences flowing from thereon were subject of three rounds of litigation before this Court namely in CWP Nos. 18516 of 2002, 18448 of 2004 and 20776 of 2006. It may not be necessary to state all the facts that are contained in respective petitions but the only relevant fact is that the petitioner's agency was sought to be cancelled on an allegation of fraud attributed to the agent in attesting to the renewal of a lapsed policy without knowing the state of health of the insured and allowing for the assured to CWP No. 4302 of 2010 2 collect the surviving benefits after deducting the value of the premiums payable. As it turned out, the petitioner convased for yet another policy for the same assured subsequently and the Medical Officer authorized by LIC had also found him fit and the policy appears to have continued further on. 2. The allegation against the petitioner was that the assured had had an accident and was in a prolonged treatment during the time when the policy had lapsed and the agent ought to have been known about this ailment. The petitioner was denying this knowledge attributed to him and was pointing out to the situation of how the doctor had actually found him fit when a policy was taken two years later namely on 28.1.1997 when his own affirmation to the petitioner's fitness at the time of revival of earlier policy was on 15.1.1995. At the second round of litigation when the authorities persisted with the termination of agency, the petitioner obtained an earlier exit on his own submission through counsel that he had known of another agent who had been visited with punishment of termination of agency on allegations of fraud but he had been favoured with restoration of the renewal commission and therefore he could be allowed to make a plea before the LIC for the similar relief. When such a relief was sought before the authority it was rejected by a cryptic order that a treatment of yet another agent cannot be compared. On a fresh challenge made in CWP No. 20776 of 2006, the Court observed that the circumstances were comparable and there was no justification for an Officer below the rank of Zonal Manager to CWP No. 4302 of 2010 3 take such a decision when the Authority's own decision was allowed to be reappraised by an Appellate Authority who was a higher official when the matter went back to the Zonal Manager, he passed the impugned order, holding that the agency performance of the other agent H.R.Gupta and petitioner was not comparable and hence the same treatment could be made. 3. The challenge to the order essentially rests on the discriminatory treatment and a particular understanding to the Rule which was purported to be applicable. In the case of Sh. H. R. Gupta, a person who had a heart ailment was admitted to a policy without the agent actually sharing the information with the Corporation. In the petitioner's case his contention was that he had no fraudulent role to play and his own affirmation that the insured was fit was vindicated by a certification that came even two years later by a medical officer that the insured was fit and it appears that the policy was still current. 4. Learned counsel for the Corporation would contend that Rule 19 provides that in the event of termination of appointment of an agent, the commission shall be paid on the premiums received in respect of the premiums secured by him except where the termination arises by fraud. According to him, if in a given case the Corporation had allowed for payment of commission on the premiums to one agent, the same cannot be cited in all instances as justifying such entitlement. There cannot be a compulsion to make such payments against the tenor of Rule 19 of the regulations. CWP No. 4302 of 2010 4 5. I have no difficulty in applying the precept that there cannot be an issue of applicability of Article 14 to illegal actions or actions which would be violative of any statutory provision. It is not as if that the Corporation is prepared to admit that there was any illegality committed or that wrong application of Rule 19 had been made to the case of H. R. Gupta, when they were releasing the commission for the premiums received. On the other hand, the reading of the situation was that H. R. Gupta had done substantial business and his conduct could not be treated to be so serious to constitute a fraud, then the payment to him was not a case of indiscretion. The same yardstick must prevail to the petitioner also. At no point of time, if ever, any attempt was made by the authorities to squarely face the responses given to the allegations of fraud was made. In the first order passed by the authority after a show cause notice, the Zonal Manager did no more than saying that the petitioner had been given an opportunity to show cause and without discussing further went on to hold that the charge had been established. At the first appellate authority again, there was mere reproduction in a few lines that the agent had been given an opportunity to explain and therefore the decision taken to terminate was good enough. The Chairman did no better but affirmed the decision without further discussion. At every level it is seen that the authorities were not prepared to examine the contentions raised by the petitioner and went on to a definite conclusion that there was a case of fraud. I have no material to suspect that there was even an issue of fraud that CWP No. 4302 of 2010 5 the Corporation could have taken against the petitioner. When the petitioner was not pursuing further in writ petition No.18448 of 2004, all that he was pleading was for a parity in treatment. With surely no materials available for a serious attribution of a fraudulent conduct, there was no justification for treating the petitioner's case differently. 6. The Corporation need not harbor under any apprehension that the view taken by the Court would amount to going soft on fraudulent act and directing authorities to make payment of premiums in violation of Rule 19. It reads as follows:- “Payment of commission on discontiunance of agency: (1) In the event of termination of the appointment of an agent, except for fraud, the Commission on the premiums received in respect of the business secured by him shall be paid to him if such agency; XX XX XX” 7. I make no attempt to interpret Rule 19, I follow the interpretation which the Corporation itself had adopted for there was a ground for treating the situation as an extenuating circumstance for a person who has done good business for the Corporation and there was nothing very serious brought about that had caused any financial loss to the Corporation. The petitioner's case was even better than H.R.Gupta's case. Here in about two years time assured obtained a fresh policy and the doctor had certified that he CWP No. 4302 of 2010 6 was fit. The charge against the petitioner was that he had not satisfied himself fully that the assured whose policy he had convassed was not fit. There was not even a ground to suspect the same and for a statement of fraud the Corporation's attempt was to say that the assured had an accident before revival of the lapsed policy. Every accident victim does not become crippled, life moves on after recovery. The assured had secured a treatment and was obtaining a fresh policy by certification of fitness. The petitioner's allegations of wellness for the assured became vindicated under the circumstances, I uphold the petitioner's claim and set aside the order of Corporation to deny the renewal premiums of agent's commission. The Corporation should release all the accumulations of arrears of commission that he ought to have earned for the premium remitted through persons whose business the petitioner had convased and he shall continue to earn the same for future as well. The arrears shall be paid with interest at the rate of 6% per annum from the date when the respective amounts fell due. 8. The writ petition is allowed. (K. KANNAN) JUDGE November 23 , 2011 archana