WP(C) 5940/2006 BEFORE THE HON’BLE MR. JUSTICE B.K. SHARMA JUDGEMENT AND ORDER (CAV) The petitioner is aggrieved by the penalty imposed on him pursua nt to a departmental proceeding. According to the petitioner, the particular cha rge levelled against him having not been established in the enquiry proceeding, the Disciplinary authority could not have imposed the penalty, disagreeing with the findings recorded by the Enquiry Officer. 2. The petitioner while was functioning as Branch Manager, Branch O ffice, Beltola, Guwahati, under the respondent Insurance Company, was served wit h the charge sheet dated 15.1.2003 along with the statement of imputation of mis conduct, list of documents and list of witnesses. The charge was issued for majo r penalty proceeding under Rule 25 of General Insurance (Conduct, Discipline and Appeal) Rules, 1975. The charge was manipulation of particular insurance covera ge to favour the claimant. According to the charge, the vehicle in question had already met with an accident, which did not have any insurance coverage, but the petitioner by way of manipulating the documents showed the vehicle to have been covered by insurance policy issued on the same date. The insurance policy trans action was shown to have taken place on the same date prior to the accident. For a ready reference, the charge is quoted below: ARTICLE OF CHARGE FRAMED AGAINST SH. S.P. DAS, BRANCH MANAGER, BO NARENGI Shri S.P. Das, while posted and functioning as Branch Manager, Branch Of fice, Beltola under CDO II Guwahati (now posted as Branch Manager, Branch Office Narengi under CDO II Guwahati) during the year 1996-97 committed the following misconduct:- He was manipulated to cover an already accidental Vehicle No. AS-01-D-5977 by cu tting made on the Covernote No. 00963, specially on the effective time and date of the Covernote and time of inspection. He cancelled the Covernote No. 00963 an d issued another Covernote No. 00964 mentioning the time of issuance as 3.45 p.m . dated 10.10.96. The time of accident was 4.00 p.m. on same day i.e. 10.10.96. This malafide act of Sh. S.P. Das resulted in unwarranted litigation for the com pany in the form of MACT Case No. 08/97 at Morigaon Assam. Further, it is mentio ned in the cancelled Covernote No. 00963 that vehicle was inspected on 05.10.96 at 4 P.M. and the Covernote was issued w.e.f. 10.10.96 which is violative of Com pany’s underwriting instructions. Thus, Shri S.P. Das, Branch Manager, Branch Office Beltola by his above acts exh ibited land of integrity, dishonesty and acted in a manner prejudicial to the in terest of the Company and committed act which is unbecoming of public servant, t hus, violated 3 (I) (i), (iii) and 4 (I) & (5) of the General Insurance (Conduct , Discipline & Appeal) Rules, 1975. Head Office New Delhi (B.K. SARKAR) ASSTT. GENL. MANAGER & DISCIPLINARY AUTHORITY 3. As stated in the writ petition, the particular car bearing regis tration No. AS-01 D-5977 met with an accident on 10.10.1996 at 4.00 PM at a plac e called Nellie through which National Highway No. 37 passes. Because of the acc ident, a girl child of aged about 8 years, who had tried to cross the road being knocked down by the car died on the spot. It is relating to this incident, the entire episode has arisen with the question of fact as to whether at the time of accident, the vehicle was insured with the respondent Insurance Company or not. According to the Insurance Company, the vehicle was shown insured by the petiti oner manipulating the documents as a result of which out of the MACT claim, the Insurance Company had to suffer financial loss. 4. Although in paragraph-5 of the writ petition, the petitioner has stated about his written statement of defence dated 24.9.2003, but the copy the reof has not been annexed to the writ petition. However, the petitioner has stat ed about the contents of the reply as follows. 5. According to the petitioner, the particular cover note bearing N o. 00963 had to be cancelled by shifting of the page as the unwanted figures and overwritings occurred. It was the stand of the petitioner that since the cover note itself was cancelled, the contents thereof could not have been placed relia nce on by the Disciplinary Authority while framing the charge. The stand of the petitioner was that because of the mistake and overwriting in the cover note, th e same was cancelled and abandoned and new cover note bearing No. 00964 which wa s the next page of the earlier cover note page was made use of. It was the furth er stand of the petitioner that the cover note No. 00964 was issued by him at 3. 45 PM of 10.10.1996 consequent upon deposition of insurance premium and that the accident took place at 4.00 PM on the same date. Since the vehicle stood insure d with the Insurance Company and the accident occurred thereafter, there was no escape for the Insurance Company to pay compensation. 6. After explaining the particular circumstances under which the ve hicle was insured with the Insurance Company, the petitioner has stated in parag raphs 6 and 7 of the writ petition that the insured one Sri Anupam Bora had fill ed in the proposal form for insuring the vehicle in question on 10.10.1996. In a cceptance of the proposal on receipt of the required insurance premium in the of fice at 3.45 PM on 10.10.1996, the policy was issued on the basis of the cover n ote No. 00964, which was also issued on 10.10.1996 at 3.45 PM. The policy date w as entered into the computer (F.O.C. system) on 14.10.1996 and it was generated on 14.10.1996. 7. According to the petitioner, one Mr. Jivanta Chetia, who had ent ered the policy records into the computer made a mistake in mentioning the effec tive time, but corrected the error using pen after finishing entry and generatin g the connected money receipt in connection with the proposal form and the polic y was at 3.45 PM of 10.10.1996. It has also been stated that since it was a late receipt premium after cash hours of the day, the money receipt was generated an d issued on 14.10.1996 as the office remained closed on 11.10.1996, 12.10.1996 a nd 13.10.1996. According to the petitioner, there was no breach of warranty whil e accepting the premium after the cash hours (cash hour closes at 3.30 P.M.) on 10.10.1996 and depositing the same on 14.10.1996 against the first money receipt duly computerised. 8. Further stand of the petitioner in the writ petition is that the vehicle in question was inspected by the petitioner at Guwahati near Beltola of fice at 10.20 AM on 10.10.1996 as the insured proposed to insure the vehicle wit h the respondent Insurance Company. It has been stated in the writ petition that the insured signed the proposal form, but the proposal did not materialise as t he premium amount was insufficient to cover the policy. Thereafter the represent ative of the insured returned to the office of the petitioner at 3.37 PM with th e required amount, but by that time, the cash hours was already over. However, t he cashier received the insurance premium of Rs. 6062/- towards insuring the veh icle at 3.45 PM on 10.10.1996 and cover note No. 00964 was issued at 3.45 PM of 10.10.1996. 9. The reply furnished by the petitioner in response to the charge being not satisfactory, the Disciplinary Authority appointed an Enquiry Officer to enquire into the charge. The Enquiry Officer conducted the enquiry by examini ng the witnesses. Various documents were also exhibited by the parties. On concl usion of the enquiry, the Enquiry Officer submitted his report dated 25.3.2004 w ith the following findings: Findings: On the basis of thorough enquiry proceedings 0 involving evidences and witnesses from both defence and prosecution sides it is found that: (a) The charged officer had no doubt prepared the cover note No. 00963 for i ssuance but subsequently cancelled it after several overwriting and re-prepared cover note No. 00964 and issued to the client. (b) The charged officer’s making overwriting on the face of cover note No. 0 0963 is true but involvement of malafide intention on his part in doing so could not be proved by any witness. (c) Since the malafide intention in respect to issuance of cover note Nos. 0 0963 and 00964 could not be proved, the aspect of manipulating to cover already accidented vehicle No. AS-01-D-5977 could not be proved. (d) The allegation that the time of inspection of vehicle No. AS-01-D-5977 a s mentioned on the cover note No. 00963 was at 4 P.M. on 05/10/1996 could not be proved. Sd/- (B. BASUMATARY) DEPUTY MANAGER & ENQUIRY OFFICER PLACE:GUWAHATI DATE: 25/03/2004 10. As per the above findings, although there was several overwritin gs on the previous cover note No. 00963 and the cover note No. 00964 was issued thereafter, but in absence of proof of malafide intention, the charge of manipul ating transaction could not be established. Being not satisfied with the finding s recorded by the Enquiry Officer, the Disciplinary Authority while disagreeing with the said finding and recording reasons thereof communicated the same to the petitioner. This aspect of the matter has not been mentioned in the writ petiti on. The stand taken in the writ petition is that since the Enquiry Officer havin g exonerated the petitioner from the charge, the Disciplinary Authority could no t have imposed the penalty. Be it stated here that after assigning the reasons f or disagreement and getting the reply thereof from the petitioner, the petitione r was imposed with the penalty of reduction in basic pay by three stages in the time scale of pay besides recovery of 50% of the financial loss (Rs. 1,17,225/-) caused to the Insurance Company. For a ready reference, the impugned order of p enalty dated 21.9.2005 as was communicated to the petitioner vide letter dated 2 7.9.2005 is quoted below: ORDER WHEREAS Major penalty Proceeding in terms of Rule 25 of General Insurance (Condu ct, Discipline & Appeal) Rules, 1975 were initiated against Sri S P Das, AO, CDO 2 Guwahati on the following charges: Shri S P Das, while posted and functioning as Branch Manager, BO Beltola, under CDO II Guwahati during the year 1996-97 committed the following misconduct:- He was manipulated to cover an already accidental Vehicle No. AS-01-D-5977 by cu tting made on the Covernote No. 00963, specially on the effective time and date of the Covernote and time of inspection. He cancelled the Covernote No. 00963 an d issued another Covernote No. 00964 mentioning the time of issuance as 3.45 p.m . dated 10.10.96. The time of accident was 4.00 p.m. on same day i.e. 10.10.96. This malafide act of Sh. S.P. Das resulted in unwarranted litigation for the com pany in the form of MACT Case No. 08/97 at Morigaon Assam. Further, it is mentio ned in the cancelled Covernote No. 00963 that vehicle was inspected on 05.10.96 at 4 P.M. and the Covernote was issued w.e.f. 10.10.96 which is violative of Com pany’s underwriting instructions. AND WHEREAS a Departmental Enquiry was held and Shri B Basumatary, Enquiry Offic er has returned the findings that the charges were partly proved against Shri Da s. The undersigned disagreed with the findings of the Enquiry Officer on the cha rges which were not proved and conveyed the reasons for disagreement to Sri Das. Now the under signed has received his reply, who pleads that issuing the Covern ote No. 00964 is lawful and does not breach any rule of the company. He also ple ads that striking out Covernote No. 00963 due to over writing & immediately issu ing Covernote No. 00964 is neither a manipulation nor a dishonest act ad also th ere is no such rule which says that Covernote is required to be issued only afte r inspection of vehicle. AND WHEREAS the undersigned being the Assistant General Manager and Disciplinary Authority after having gone through the charge sheet, Enquiry Report, reply of Shri Das and other connected records/documents of the case observes that the ple as taken by Shri Das are not tenable. Shri Das without ascertaining previous ins urance particulars of the vehicle issued the Covernote, when there was break in insurance for several months. He also without inspecting the vehicle issued cove rnote in gross violation of underwriting norms and exposed the company to an unw arranted financial loss. Shri Das has not given satisfactory explanation for ove rwriting in the cancelled Covernote No. 00963 in respect of time. Thus his condu ct is blameworthy. THEREFORE, the following penalty is hereby imposed on Shri S P Das: Reduction in basic pay by three stages in the time scale of pay besides recover y of 50% of loss (Rs. 1,17,225/-) caused to the company . Shri S P Das be informed accordingly. (P. MAHAJAN) ASSTT. GENERAL MANAGER AND DISCIPLINARY AUTHORITY 11. Being aggrieved by the said order of penalty, the petitioner pre ferred departmental appeal, but to no favourable result. 12. The respondents have filed their counter affidavit denying the c ontentions raised in the writ petition. According to the respondents, the facts narrated in the charge exhibited lack of integrity and dishonesty on the part of the petitioner and that he had acted in a manner prejudical to the interest of the company and committed the act unbecoming of a public servant and thus violat ed Rules 3, 4 and 5 of the General Insurance (Conduct, Discipline and Appeal) Ru les, 1975. According to the respondents, the insurance cover note was obtained f raudulently by the insurer in collusion with the petitioner. 13. Dealing with the own stand of the petitioner in the writ petitio n that the vehicle met with an accident at 4.00 PM at Nellie after the insurance coverage at 3.45 PM, it is the stand of the respondents that the own stand of t he petitioner would go to show that the petitioner was involved in the fraud tow ards covering the vehicle inasmuch as Nellie at a distance of about 70 KM from G uwahati could not have covered the distance within 15 minutes from Guwahati. 14. As regards the filling of the documents of the insurance coverag e on 14.10.1996, it has been stated that the same no way corroborates the prepar ation and signing of proposal form on 10.10.1996. It has been denied that the ca sh hour of the company stood closed at 3.30 PM. According to the respondents, cl osing time was 4.30 PM. Thus, the respondent company has raised the question as to why the petitioner did not deposit the premium which he allegedly received at 3.45 PM on 10.10.1996. The Insurance Company has also questioned as to why the money receipt and the policy were issued to the insurer only on 14.10.1996 inste ad of 10.10.1996. 15. As regards the allegation of the petitioner that the Disciplinar y Authority acted in an illegal manner, it has been stated that the said authori ty passed the impugned order with due application of mind and the petitioner was given due opportunity to have his say on the note/point of disagreement to the enquiry report. In a nutshell it is the stand of the respondents that the petiti oner was guilty of misconduct inasmuch as he by manipulating the records got the insurance coverage of the vehicle issued, which had already met with an acciden t because of which the Insurance Company had to bear the compensation awarded by the MACT. 16. I have heard Mr. S.K. Borkataki, learned counsel for the petitio ner as well as Mr. S.K. Goswami, learned counsel for the Insurance Company. I ha ve also perused the entire materials on record including the records of the depa rtmental proceeding and my conclusion and findings are as follows. 17. As per the own showing of the petitioner in the writ petition th e vehicle in question was insured on 10.10.1996 at 3.45 PM immediately and there after within 15 minutes the car met with an accident at 4.00 PM and that too at a distance of about 70 KM. It was impossible on the part of the vehicle (stated to be a Fiat) to cover the distance of 70 KM within 15 minutes. Another aspect o f the matter is that the petitioner himself had admitted that the vehicle was in spected at 10.20 AM in the office premises on 10.10.1996, but could not be insur ed in absence of full premium amount. Later on, representative of the owner of t he car came to the office at 3.45 PM with full premium amount and in acceptance of the same, the cover note was issued meaning thereby that the vehicle was not inspected after 10.20 AM. The plea of the petitioner that the cash amount could not be deposited as by that time the cash counter was closed and consequently co uld be deposited only on 14.10.1996 because of the intervening holidays on 11.10 .1996, 12.10.1996 and 13.10.1996 has been stoutly rebutted by the respondents in their counter affidavit clearly stating that as per the prevailing practice fol lowed, the counter remains open upto 4.30 PM. 18. In the reply affidavit filed by the petitioner, the petitioner h as taken the plea that at the time of the accident, the driver of the vehicle wa s not in possession of the insurance cover note and after the accident could not produce the same to the police. Which will go to show that the vehicle was driv en without insurance coverage at the time of accident and it was only after the accident, the insurance cover note was produced. This position the petitioner se eks to explain by stating that since the vehicle was inspected at 10.20 AM of th e fateful day and the premium amount was deposited at 3.45 PM of the same date, the cover note was issued at 3.45 PM. However, the fact of the matter is that th e petitioner did not enquire as to whether in the meantime the vehicle had met w ith any accident. It will be pertinent to mention here that before the particula r insurance coverage issued by the petitioner, the vehicle was not covered by an y insurance coverage and thus was being run without any insurance coverage. 19. It is in the above backdrop, cancellation of the earlier cover n ote bearing No. 00963 and issuance of later cover note on the next page bearing cover note No. 00964 will have to be considered. As per the allegation in the ch arge, the effective time and date as were indicated in the earlier cover note No . 00963 were cut across the line. Thereafter the second cover note No. 00964 was issued mentioning issuance time and date as 3.45 PM of 10.10.1996 respectively. Further in the cancelled cover note, it was written that the vehicle was inspec ted on 5.10.1996 at 4.00 PM, but cover note was issued on 10.10.1996. 20. All the above aspects of the matter have been indicated in view of the fact that the petitioner has been imposed with the penalty upon a disagre ement note of the disciplinary authority with the enquiry report. In the enquiry report, the Inquiry Officer while noting that the vehicle was inspected by the petitioner at Guwahati in the office premises at Beltola at 10.20 AM of 10.10.19 96 and that the petitioner did not inspect the vehicle again at 3.45 PM and gran ted the cover note has stated that the same was on good faith. Such good faith a s indicated by the Inquiry Officer has no place in business transaction of insur ance coverage. The Inquiry Officer has also stated in the report that because of the mistake and overwriting occurred in the first cover note, the same was canc elled and thereafter later cover note was issued at 3.45 PM without discussing t he circumstances in which the second cover note was issued. The Inquiry Officer exonerated the petitioner inspite of the finding that in the first cover note, t here was double figures on effective date and time of commencing of insurance, d ate of expiry of the insurance, date of issuance, date of vehicle inspection etc . and under the said column double figures were visible and held that the subseq uent issuance of the cover note No. 00964 by putting the clod back was not possi ble. In this connection, the particular observation of the Inquiry Officer in th e enquiry report is quoted below: The important points of the cover note No. 00963 like effective date and time o f commencement of insurance, date of expiry of insurance, date of issue, date of vehicle inspection have been overwritten for which double figures are visible i n it. Only the vital information left untouched is the time of inspection i.e. 4 .00 p.m. and the period of validity of the cover note i.e. expiry date has been mentioned as 26/10/96. Since the cover note No. 00963 had been prepared with an intention to issue to the insured as per M.V. Act, 1988 for 15 days, the date of commencement of cover note No. 00963 would be probably 11/10/96 after putting b ack the dates. The vehicle inspection date has been overwritten and looking like 05,09,10,11/10/96. The time of inspection ahs been shown as 4.00 p.m. by interl inking this fact, subsequent issuance of cover note No. 00964 by putting the clo ck back to a lower time and date i.e. 10.20 a.m. of 10/10/96 is not possible. 21. Lastly the Inquiry Officer, while believing the story of the pet itioner that he had inspected the vehicle at 10.20 AM and not at the time of ins urance at 3.45 PM of 10.10.1996 believed the good faith story of the petitioner, inspite of clear finding that the vehicle in question was earlier insured with another Insurance Company and there was break in continuity for several years. T he Inquiry Officer even after holding that the petitioner did not adduce any evi dence to the effect that inspection of the vehicle was not insured at the time o f commencement of risk held the petitioner not guilty of the charge. In this con nection the relevant portion of the enquiry report is also reproduced below: The next point Mr. Das brought to record that he had inspected the vehicle at 1 0.20 a.m. when the insured came to office and the insured had filled the proposa l form by putting his signature with date and time. The insured had been summone d as defence witness but he did not turn up in the enquiry proceeding. The propo sal form marked as Ext.S-6 is found unfilled at the appropriate place of Vehicle Inspection Report. Though cover note No. 00964 had been given commencement time of insurance as 3.45 p.m. of 10/10/96, the vehicle had not been inspected by Sr i Das at that time again in the name of good faith knowing very well that the ve hicle in question was insured earlier with National Insurance and there was brea k in continuity of insurance for several years and he had stated that inspection was required for ascertaining only the roadworthiness of the vehicle. But he di d not adduce any evidence to the effect that inspection was not required by him at the time of commencement of risk. Further, Sri Das has stated that the insured Sri Anupam Bora had not brought the required premium at that time and his representative had come to the office at 3.37 p.m. of 10/10/96 with requisite premium of Rs. 6022/-. Inspite of this the charged official failed to show the premium amount in the cover note terming