CWP No.22746 of 2010 (O&M) [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.22746 of 2010 (O&M) Date of Decision: 02.09.2011 Jarnail Singh Lamba S/o Sh. Kartar Singh, aged about 62 years, R/o Modern Complex, Barara, District Ambala. ... Petitioner Versus Life Insurance Corporation of India through its Chairman, Yogakshema, Jeevan Beema Marg, Mumbai-21 and others. ... Respondents CORAM: HON'BLE MR. JUSTICE K. KANNAN Present: Mr. Sanjay Jain, Advocate, for the petitioner. Mr. B.R. Mahajan, Advocate and Mr. V.K. Kaushal, 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? YES 3. Whether the judgment should be reported in the digest? YES K. KANNAN, J. (Oral) 1. The writ petition challenges the decision taken by the Life Insurance Corporation on 26.10.2010 terminating the agency of the petitioner. His status as an agent with Code No.3092-161 is admitted, he having been granted the agency in the year 1971. He had later become a whole time agent and his work came under cloud when he was suspected to have committed some defalcation by collecting the premia of several policy holders but not remitting the same. A charge sheet -cum-show cause notice was served on him on 18.12.1995 and after taking a reply from the petitioner on 05.01.1996, CWP No.22746 of 2010 (O&M) [2] they proceeded to terminate the agency. The order involved forfeiture of commission as well. This termination effected on 29.11.1997 was the subject of challenge in the writ petition in CWP No.14834 of 1999. The order of termination was set aside by this Court by decision dated 03.02.2010 finding that there was a fundamental flaw in terminating the agency without joining the petitioner in any form of inquiry. An opportunity was, however, given to the respondent-Corporation to hold a proper inquiry within a period of 12 weeks and take an appropriate decision. After the direction, the Inquiry Officer had been appointed and the petitioner had been served with notice of inquiry. 2. The inquiry related principally to two charges, which had been made in the show cause notice dated 18.12.1995; One, the petitioner made false premium postings in the Ledger sheets of 255 policy holders to derive undue financial benefits; Two, the petitioner had forged the signatures of the Staff members and unauthorizedly tampered with the official records. At the inquiry after a direction from this Court, all the Ledger pages referring to 255 policy holders had been marked as evidence and the petitioner had reportedly admitted that Ledger pages contained references to names of policy holders whom he had enlisted as customers but he had denied that those Ledger pages ever contained his signatures. The confidential reports of the policy holders had been confronted to him as containing his handwriting, of all which had been admitted. 3. Having regard to the fact that the petitioner denied the signatures found in the Ledger pages that contained references to remittances as having been made on particular dates, the Corporation relied on a handwriting CWP No.22746 of 2010 (O&M) [3] expert's report to state that the writing of numbers and the signatures found in the Ledger pages were on comparison with the handwriting found in the confidential reports in the handwriting of the petitioner himself. It must be immediately noticed that the handwriting expert himself was not examined but the Management merely relied on the report of the handwriting expert to find that the Ledger postings contained the writings of the petitioner. 4. The Inquiry Officer, therefore, held that these postings making references to amounts as having been remitted were falsely done when no cash had been received on the respective dates, which the Ledger pages made references to. The Inquiry Officer found the charge of forgery of some of the signatures of the staff as having not been established but held that the petitioner had been guilty of making false entries in the Ledger pages of policy holders and this finding was approved by the disciplinary authority and the termination order was affirmed. 5. The contention urged on behalf of the petitioner in this writ petition is that even after the matter was remanded to the authorities for proper consideration of the charges by involving the petitioner in the inquiry, the Inquiry Officer had relied on documents, which had not been established at all. In a case where the charge was whether the petitioner had been guilty of making false entries in Ledger pages to make it appear as though various amounts as entered had been remitted on various dates, there had been no attempt on the part of the Corporation to prove those entries. It is also contended that the reliance on the report of an Expert even without examining the Expert that entries in the Ledger had been made by the petitioner was clearly wrong. The petitioner's further contention is that admittedly there had CWP No.22746 of 2010 (O&M) [4] been no complaints brought on record at the instance of any of the policy holders that the amounts entered as having been paid had not been actually received by the Corporation. According to learned counsel appearing on behalf of the petitioner, any discrepancy in the entries found in the Ledger showing remittances as having been made on a particular day, could not be asserted as false without verifying the corresponding entries in the cash book of whether the amounts had been received on that day or not. There was also no audit objection or report of any inspection that brought out the discrepancy. 6. The learned counsel appearing on behalf of the Corporation would contend that the petitioner himself had immediately admitted that he had made false entries and it was only in a situation where he was confronted with the false entries that he immediately tendered his resignation. The learned counsel would also contend that in that departmental proceeding, it was not necessary to call the Expert to prove his report and even a mere production of report definitely lent credence to the contention that the petitioner had made false entries in the Ledger sheets. Responding to the contention that there was no audit objection, the learned counsel for the Corporation would state that it shall not be necessary to compare every Ledger page with the cash book and the mistake came to surface, when several policy holders came to make subsequent installments of premia. They were made aware to the fact that there still remained unpaid installments and when they spoke about the premium as having been collected by the petitioner on their behalf, the petitioner admitted to his guilt. While some amounts had been collected from the policy holders, a large portion remain uncollected and that was the CWP No.22746 of 2010 (O&M) [5] financial loss, which the petitioner's act had resulted. 7. It is further contended by the Corporation that inquiry itself is not necessary, since as per the terms of engagement as an Agent, the agency could be terminated without any notice. The writ petition could not have been instituted when there was a statutory remedy available for an appeal and review. 8. To take the last contention firstly, it is a case that went to the respondents for a fresh inquiry on a direction from this Court. When the inquiry had yielded to the same result and when the petitioner was complaining that the Corporation was flouting all principles of natural justice and relied on evidence, which were inadmissible, there was no necessity to exhaust the alternative remedy by means of an appeal. I find in this case adequate grounds to interfere, which I will enumerate as errors on substantive matters of procedure and justice and it would not avail to the Corporation to contend that the petitioner could not have resorted to the writ remedy. I will, therefore, discard the objection regarding the maintainability of the writ petition and proceed to examine the correctness of the decision taken by the respondent-Corporation. 9. It hardly requires an emphasis that in a case where serious charges of forgery, false entries and defalcation are made against the petitioner, there has to be cogent and appropriate evidence to support such charges. While the issue of forgery was favourably concluded to find that no such forgery had been committed, on the issue of fabrication of entries, there was literally no evidence that was placed before the Inquiry Officer. The Ledger sheets contained merely a very minimal part of the story. The charge was that CWP No.22746 of 2010 (O&M) [6] entries in the Ledger sheets, had been fabricated. In the first place, if payments had been falsely recorded as having been made for 255 policy holders, there was not even one complaint from any of the policy holders brought before the Inquiry Officer to state that he had made the payment to the petitioner but it had not actually been shown to have been remitted to the Corporation. The other method of establishing the case of false entry in the Ledger, especially when the petitioner was denying the signatures found in the Ledger sheets would be to produce any cash book entry for the relevant date to bring a discrepancy between what was stated in the Ledger sheet and what was contained in the cash book on that particular date. I cannot again accept a contention that such a serious lapse of the shortfall of over `3,00,000/- within a period of two years could have been left unnoticed in any audit inspection. The shortfall could not have been merely a chance finding of a person sitting in the cash counter and collecting a premium of a policy holder when he could have been told by a policy holder that he had made the payment for the previous installment as well when the cashier had noticed that no such amount had been received. We are not deciding the issue of one lapse. It is a case of receipts from 255 policy holders whose monies had not been brought into the Corporation but falsely entered in the Ledger pages. While I would accede to a plea that strict rules of evidence need not be followed in departmental proceedings, there should be some modicum of evidence that would be available to sustain the charges. In this case, the Corporation's proof anchors on the expert's view that the signatures found in the Ledger pages contained the petitioner's signatures. It is a fragile piece of evidence to support a serious charge of defalcation and forging of CWP No.22746 of 2010 (O&M) [7] entries in the books retained in the custody of the Corporation. The Corporation ought to have acted with greater alacrity, especially when the matter was remitted giving an opportunity to the Corporation to bring appropriate evidence to prove the charge against the petitioner. The manner in which the proceedings have gone before the Corporation leave much to be derived to find the serious imputations against the petitioner. 10. The counsel appearing on behalf of the Corporation relies on two decisions of Hon'ble the Supreme Court to bring the point that the Corporation is at liberty to terminate the agency after giving three month's notice. The decision in “Life Insurance Corporation of India v. Lalitha Devi, AIR 1991 SC 1734” cited by the counsel for the Corporation, was a case of termination of agency, who had married an employee of the Corporation and who had, therefore, become ineligible as per their Regulations. A breach to Regulation resulting in termination can always be seen to be justified and this case does not deal with the situation of termination of agency on a charge, which was not established. Again the Supreme Court case was no authority that agency could be terminated at any time at the whims of the Corporation. In “B.K. Vadiraja and another v. Managing Director, LIC of India and others, AIR 2002 Karnataka 113”, another case cited by him, ruled that termination of agency, after serving a month's notice, would satisfy the principles of natural justice. This case refers to the Supreme Court ruling in Lalitha Devi's case (supra) and it also dealt with the case of marriage of an agent with an employee of the Corporation that resulted in the breach of the Regulation. The termination was found to be justified by the fact that there was a month's notice. I am not examining the case where any notice has been CWP No.22746 of 2010 (O&M) [8] issued to see whether the period was sufficient or not. On the other hand, I am examining the case of termination that result from an alleged commission of a misconduct, which I find, has not been established in the inquiry constituted against the petitioner. I find, therefore, no valid objections for the points envisaged in this petition through the petitioner. 11. The learned counsel appearing on behalf of the Corporation states that there are ample documentary evidence showing the communications received from several of the policy holders giving details of the amounts said to have been paid to the petitioner. I cannot allow for any arguments to be advanced on matters, which are not brought before the Inquiry Officer or referred to in the order of the disciplinary authority. The finding of guilt against the petitioner was wholly unsubstantiated and the findings rendered by the disciplinary authority are required to be quashed and accordingly, are quashed. Consequently the order of termination of agency shall also stands vacated. 12. The writ petition is, therefore, allowed with costs assessed at `10,000/- against the respondents. ( K. KANNAN ) SEPTEMBER 02, 2011 JUDGE Rajan