IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN THURSDAY, THE 27TH MAY 2010 / 6TH JYAISHTA 1932 AS.No. 726 of 2000(C) ------------------------------- (OS.NO.1331/1994 OF I ADDL.SUB COURT,THIRUVANANTHAPURAM) .................... APPELLANT/PLAINTIFF: ----------------------------------- K.V. SREEDHARAN, S/O. VASUDEVAN, RESIDING AT T.C. 2/393, LAKSHMI NIVAS, PARAKUDI LANE, ULLOOR, MEDICAL COLLEGE P.O., THIRUVANANTHAPURAM. BY ADVS. SRI.G.SASIDHARAN CHEMPAZHANTHIYIL, SRI.S.VISHNU RESPONDENTS/DEFENDANTS: --------------------------------------------- 1. THE DIVISIONAL MANAGER, LIFE INSURANCE CORPORATION, DIVISIONAL OFFICE, NEEVAN PRAKASH, PATTOM, THIRUVANANTHAPURAM. 2. SENIOR BRANCH MANAGER, BRANCH NO. II L.I.C. OF INDIA, OPP. S.M.V. HIGH SCHOOL, THIRUVANANTHAPURAM. R1 & R2 BY ADV. SRI.S. EASWARAN, S.C, L.I.C. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 27/05/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. M.N. KRISHNAN, J. ........................................... A.S.NO.726 OF 2000 ............................................. Dated this the 27th day of May, 2010. J U D G M E N T This appeal is preferred against the judgment and decree of the 1st Additional Sub Judge, Thiruvananthapuram in O.S.No.1331/1994. The suit is one for realisation of the money. It is the case of the plaintiff that he was appointed as the agent of the Life Insurance Corporation of India and his first agency year commenced on 3.6.1992 and ended on 30.6.1993. According to him, during the said period he had completed 12 different proposals of life to an amount of Rs.2,05,000/=. It is submitted that due to the reasons unknown, the plaintiff's agency was terminated which was quite illegal. In between 1.7.1993 and 17.8.1993 he had canvassed business for Rs.2,13,000/= and he is entitled to Rs.32,677/= by way of commission and for mental agony etc. 2. On the other hand, the defendants would contend that the plaintiff has not satisfied the conditions stipulated under the Life Insurance Corporation of India (Agents) : 2 : A.S.NO.726 OF 2000 Rules, 1972 and therefore it has resulted in his termination as per Rule 13 of the said rules and in view of Rule 19 read with Rule 10(6) of the Rules, the plaintiff is not entitled to claim any commission. The trial court on an appreciation of the materials agreed with the Insurance Corporation and dismissed the suit. It is against that decision, the present appeal is filed. 3. Heard the learned counsel for the appellant as well as the respondents. It has to be stated that the plaintiff was appointed as an agent for the period 3.6.1992 to 30.06.1993 which can be qualified as the first agency year. According to the plaintiff, he had canvassed business of 12 different proposals for a sum of Rs.2,05,000/= and so he is entitled to continue and termination effected by the LIC is incorrect. The Corporation on the other hand would contend that the plaintiff has not completed the requirements envisaged under Rule 9 and therefore he has been terminated under Rule 13. It is desirable to understand the Rules before proceeding to analyse the facts. Under Rule 9 (1) of the Life Insurance Corporation of India (Agents) Rules, 1972 : 3 : A.S.NO.726 OF 2000 (herein after referred to as the Rules) an agent other than an absorbed agent, shall bring in the following business in his first agency year: (a) If he is working in a City, Urban agglomeration or Town with an ascertained population of five lakhs or above - proposals resulting in policies for not less than Rs.75,000/= sum assured on at least twelve different lives. So the Rule mandates 12 different proposals resulting in policies. Under Rule 13, if an agent fails to bring in the business required of him under regulation 9 in an agency year, his appointment shall stand terminated at the end of such agency year. Now the factual analysis would reveal that 12 proposals had been made by the plaintiff, out of which 11 had been converted into policies and a proposal of one Girija Kumari was made on 30.4.1993 and premium was deposited on 3.5.1993 and the proposal was registered on 26.5.1993 and policy issued on 5.8.1993. So it is the issuance of the policy that is the main criteria and as the first year of agency terminated on 30.6.1993 one cannot hold that he has acquired 12 different proposals resulting in policies. The : 4 : A.S.NO.726 OF 2000 learned counsel for the plaintiff would urge that so far as his party is concerned, he has submitted the proposal, paid the premium and therefore his part of the work was over and the delay caused by the LIC to issue policy shall not militate against him so as to terminate his agency. Now being an insurance contract, it is desirable to understand the terms and conditions. Whenever a person is appointed as a new agent, the rigour is more and that the clauses incorporated are rigorous terms. What is contemplated under the Rule within the first agency year is to have 12 different proposals resulting in policies or in other words there should be 12 different policies issued within the first agency year. Now it has been stated before me that there was some incompletion in the proposal form by virtue of non submission of the health card which was necessary to issue a policy. The necessary particulars for issuance of a policy was completed and submitted on 5.8.1993 and the policy was issued on 5.8.1993. It is revealed that LIC had not sat over the proposal made without any reason but could do something only on completion of supply of the : 5 : A.S.NO.726 OF 2000 materials necessary and relevant for the purpose of assigning the policy. Being a first year agency, it was obligatory on the part of the plaintiff to see whether he had complied with the requirements under the regulations, i.e. by resulting in the issuance of 12 policies within the period of first year agency. It has not been done in this case and I also find that as per Rule 9 the necessity is to have 12 proposals resulting in policies and not otherwise. So it has to be stated from the materials available that the plaintiff has not complied with the mandatory requirement provided under Rule 9(1)(a) of the regulation. 4. When there is non compliance of Rule 9(1)(a) Rule 13 comes into play and it is stated therein that if an agent fails to bring in the business required to him under regulation 9 in an agency year, his appointment shall stand terminated at the end of such agency year. So it is by operation of Rule 13 there is an automatic termination of the agency for non-compliance of the mandate required under Rule 9(1)(a). 5. The learned counsel for the appellant then strongly : 6 : A.S.NO.726 OF 2000 contends before me that there is an obligation on the insurance company to issue a notice under Rule 16 of the Rules. Rule 16(1) clauses (a) to (f) deal with different situations. When termination is sought to be effected under Rule (1) (a) to (f) or in all the clauses therein, the rule mandates that in such cases the agent shall be given a reasonable opportunity to show cause against such termination. Rule 9 does not come within the ambit of Rule 16 which means no notice is contemplated as per the rules and therefore non issuance of notice is not applicable for termination of the agency during the first year especially for non fulfillment of the conditions therein. The learned counsel then would contend that here is an agent who had canvassed business for Rs.2,05,000/= and without any commission during the first year and subsequently, he has collected proposal for Rs.2,30,000/= and so he is entitled to the commission. Rule 10(6) states that save as provided by regulation 19, no commission shall be payable to an agent after he has ceased to be such agent. In order to entitle a person for commission on discontinuance of agency Rule : 7 : A.S.NO.726 OF 2000 19 stipulates a minimum period of continuous work for at least 5 years etc. Here is a case where the person has worked only for one year and had failed on account of non compliance of Rule 9 (1)(a). Therefore Section 19 does not enable him to get commission and there is also taboo under Section 10(6) of the Rules. It is true that it is very hard to deprive a person from getting a reward for what he has done. But these are all contracts which are entered into between the parties with their eyes open and therefore bound by the rules and regulations and even the statutory body does not have the power to waive such rules. Therefore the insurance company cannot be blamed for the same. So from these discussions, I find that the court below has arrived at the decision in the correct perspective. Therefore the appeal fails but the same is dismissed under circumstances without any order as to costs. M.N. KRISHNAN, JUDGE. cl : 8 : A.S.NO.726 OF 2000 M.N. KRISHNAN, J. ........................................... A.S.NO.726 OF 2000 ............................................. 27th day of May, 2010. J U D G M E N T