SCA/1066320/2000 1/10 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 10663 of 2000 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA Sd/- ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ========================================================= VIMLABEN KESHAVLAL PATEL - Petitioner(s) Versus SENIOR DIVISIONAL MANAGER & 2 - Respondent(s) ========================================================= Appearance : MR CN TRIVEDI for Petitioner(s) : 1, MR AK CLERK for Respondent(s) : 1 - 3. ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA Date : 15/12/2008 ORAL JUDGMENT 1 The petitioner has challenged order dated 7.4.1995 made by respondent No.1-Authority terminating the Agency of the petitioner and also SCA/1066320/2000 2/10 JUDGMENT ordering forfeiture of renewal commission, as well as orders made by the Appellate Authority on 16.8.1996 and the Chairman on 10.7.2000 confirming the order made by respondent No.1-Authority. 2 The petitioner was appointed as an Agent of Life Insurance Corporation of India (the Corporation) on and from 15.12.1987 under Himmatnagar Branch of the respondent Corporation. On 31.12.1994 the petitioner was served with a charge-sheet cum Show-cause Notice under the DISCIPLINARY PROCEEDINGS UNDER L.I.C. OF INDIA (AGENTS) REGULATIONS, 1972 (the Regulations) in relation to a proposal canvassed by the petitioner on the life of Shri Laxmanbhai Galabhai Raval on 27.11.1991 for a sum of Rs.20,000/-, upon death of the assured on 26.3.1993. The principal charge was to the effect that the petitioner had failed to disclose material facts in the confidential report submitted by the petitioner to the Corporation and also in the proposal form which was witnessed by the petitioner. According to the respondent Corporation, the age of the deceased assured was 55 years at the time of proposal whereas it had been shown at 45 years; SCA/1066320/2000 3/10 JUDGMENT secondly, the deceased assured had sustained an accident on 29.10.1988 i.e. prior to the date of proposal for insurance and as a result, had been suffering from a permanent disability while walking, lifting weight due to fracture of the spinal cord. The petitioner was therefore called upon to show cause why the Agency should not be terminated with forfeiture of commission as per Regulations because the petitioner had knowingly perpetrated a fraud on the Corporation. 3 The petitioner tendered reply on 19.1.1995 and after considering the same impugned order dated 7.4.1995 came to be made by respondent No.1- Authority. The petitioner carried the matter in Appeal but did not succeed. Thereafter, the petitioner approached this Court by way of Special Civil Application No. 2414 of 2000 which came to be disposed of as withdrawn vide order dated 3.4.2000 permitting withdrawal of the petition with a liberty to approach the Chairman and directing the Chairman to consider the memorial filed by the petitioner in accordance with law and decide the same within a SCA/1066320/2000 4/10 JUDGMENT period of three months. The petitioner thereupon filed the memorial on 10.4.2000 and the Chairman rejected the memorial vide impugned order dated 10.7.2000. 4 On behalf of the petitioner the learned Advocate assailed the orders of the three Authorities on the ground that neither in the Show cause Notice nor in the order made by respondent No.1-Authority or the Appellate Authority reference was made to Regulation No.19 of the Regulations which deals with payment of commission on discontinuance of the agency. That the reference was only to Regulation No.16(1) (a) & (b) which is the Regulation for termination of Agency for certain lapses. It was therefore submitted that the renewal commission could not have been stopped in absence of any Show-cause Notice in this regard and the Chairman while rejecting the memorial had inserted the said Regulation No.19 without the same forming part of the Show-cause Notice. Secondly, it was submitted that the petitioner had explained in what circumstances the age of the deceased assured had been declared SCA/1066320/2000 5/10 JUDGMENT viz. upon self declaration as the sum insured was only Rs.20,000/- and as per Rules self declaration was permissible, the deceased assured being illiterate had no other documents to establish the age. That the proposer had been examined by the Doctor listed on the panel of the Corporation and therefore in relation to the age the petitioner could not be faulted with. That in relation to the accident it was submitted that the proposal for the life had been made nearly three years after the date of the accident and the deceased used to do manual labour after the accident which would go to show that he was not suffering from any physical disability. That the petitioner had no malafide intention. Lastly, it was submitted that if any lapse had occurred the same was an unintentional lapse, a mistake and not an act with intention to defraud the Corporation. Reliance in support of the submission was also placed on Circular dated 11.1.2000 issued by the Corporation in relation to Regulation No. 16(3) of the Regulations. 5. It was submitted that for any act to constitute SCA/1066320/2000 6/10 JUDGMENT fraud not only there had to be suppression, but such suppression had to be of material facts and with a knowledge that the suppression was material and what was projected false. That in the present case no fraud was committed as there was no suppression of facts. That the death of the policy holder took place due to heart failure and therefore the disclosure or non-disclosure of the accident would not have any bearing on the assessment or acceptance of risk. It was therefore submitted that the impugned orders were required to be quashed and set aside, and alternatively, atleast the renewal commission was required to be continued. 6. On behalf of the respondent Corporation learned Advocate submitted that the relationship between Corporation and the petitioner Agent was contractual. That there were concurrent findings of facts recorded by three authorities and merely because a different view may be possible on the same set of facts and circumstances, the High Court would not interfere with the findings of facts or reappreciate the evidence. That the petitioner had knowingly SCA/1066320/2000 7/10 JUDGMENT perpetrated the fraud upon the Corporation by proposing a bad life on the books of the Corporation and thus acted to the detriment of the Corporation. 7. That in exercise of powers under Article 226 of the Constitution of India, the High Court would not interfere with the order of termination of Agency and forfeiture of commission unless and until it was found that the penalty was shockingly disproportionate to the default. That the petitioner having committed a fraud by knowingly not disclosing (i) correct age and (ii)full facts, the Hon'ble Court should not interfere. That disputed questions of facts were involved and the Court should not interfere. Reliance was placed on decision of this Court in the case of Lalji K. Chowdhary Vs. LIC of India rendered in Special Civil Application No. 3553 of 2001 on 22.7.2002 to submit that this Court has consistently refused to interfere with the orders made by the authorities of the Corporation in similar circumstances. Referring to certain orders of this Court wherein the Court had upheld the termination of Agency but directed payment of renewal commission, it SCA/1066320/2000 8/10 JUDGMENT was submitted that the same were carried in Appeal in various matters being Letters Patent Appeal No. 1686 of 2006 etc. and the Division Bench had granted stay against operation of impugned judgment of learned Single Judge during pendency of the Appeal. The learned Advocate therefore submitted that the Court may not interfere with the orders made by the respondent Corporation leaving it open to the petitioner to file a money suit if the petitioner so desires in relation to the commission amount. 8. Having heard learned Advocates for the petitioner and the respondent, it is apparent that the petitioner was called upon to show cause both in relation to the termination of Agency and proposed forfeiture of commission and therefore, mere non- mentioning of Regulation No.19 of the Regulations in the Show cause Notice or the order of respondent No.1-Authority would not be fatal to the proceedings. The Court would not interfere with the orders made by the subordinate Forum only because on the same set of facts and circumstances and evidence on record, a different view may be possible upon reappreciation of SCA/1066320/2000 9/10 JUDGMENT facts and evidence. In the present case, admittedly the charge of having committed fraud on the Corporation was framed on the basis of two events: (i) non disclosure of correct age and (ii) non disclosure of past history of injury of the deceased assured. In this regard, the Explanation of the petitioner that the age could have been verified by reference to certain other documents would indicate that at least there was a dereliction of duty if not an intention to commit fraud. Similarly in so far as the non-disclosure of the fact about the accident is concerned, the case of the respondent Corporation is not that such non-disclosure had any direct cause or connection with the death, but the charge is that in terms of Regulation No.8 of the Regulations the petitioner was duty bound to disclose all material and relevant facts necessary for the assessment which was to be undertaken by the Corporation. That the Agent was not required to judge and decide as to what was material and relevant. Without entering into the said aspect of the matter suffice it to state that this is an area where evidence will have to be led by the parties, including Corporation, to establish what SCA/1066320/2000 10/10 JUDGMENT is relevant and material and to what extent same falls within the scope of duties delineated for an Agent. The same cannot be decided in a Writ Petition. 9. In so far as the entitlement to renewal of commission is concerned, the same would have direct nexus and would be consequential to the fact as to whether a fraud was committed or not. Fraud is always a question of fact and has to be proved and established by leading evidence. 10. In the circumstances, it will be open to the petitioner to avail of the remedy of filing suit in accordance with law seeking renewal commission. The petition is accordingly rejected. Rule discharged. There shall be no order as to costs. Sd/- (D.A. Mehta, J.) M.M.BHATT