Rameshwar Verma vs The Life Insurance Corp. Of India ...
2017 Latest Caselaw 7637 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Reserved On:- 24.11.2017
 
Delivered On:- 05.12.2017
 
A.F.R.
 
Court No. - 37
 

 
Case :- WRIT - C No. - 71275 of 2006
 

 
Petitioner :- Rameshwar Verma
 
Respondent :- The Life Insurance Corp. Of India Thru' Its Chairman & Ors.
 
Counsel for Petitioner :- Sharfuddin Ahmad,Ambuj Mishra
 
Counsel for Respondent :- V.K. Chandel,S.C.
 

 
Hon'ble Amreshwar Pratap Sahi,J.

Hon'ble Ifaqat Ali Khan,J.

This writ petition questions the validity of the orders dated 25.01.2005, 15.07.2005 and 10.08.2006 whereby in essence the agency of the petitioner as a Life Insurance Corporation Agent has been terminated with a further penalty of realisation of entire amount due from the petitioner and forfeiture thereof.

The charge against the petitioner is that he witnessed a Declaration of Good Health Form (DGH) of one Sri Girish Chandra Shukla in connection with the revival of his lapsed policy, which was deliberate with a view to extend benefit to the beneficiaries under the policy, inspite of the fact that such revival and participation of the petitioner was in violation of the LIC of India (Agents) Rules, 1972.

The termination order was passed on 25th January, 2005 against which the appeal was rejected on 15th July, 2005 and a memorial against the same has been rejected by the Chairman on 8th August, 2006.

The background of the case is that the petitioner admits that on 8th January, 2004 when he was present in the clinic of the doctor rendering services to the Life Insurance Corporation for Medical Examination, a policy holder Sri Girish Chandra Shukla co-incidentally came to the clinic of the said doctor for his medical examination, in respect of his Insurance Policy which had lapsed for non-payment of quarterly premium for more than six months. It is also admitted to the petitioner that he was not the agent in respect of the policy of the said Sri Girish Chandra Shukla. He, however, admits that he was acquainted with Sri Shukla as he was known to him and had got about twenty Insurance policies of the members of his family negotiated through the petitioner. On account of such acquaintance, the petitioner put his signatures on the doctor's diary column of introducer for the purpose of medical examination on 8th January, 2004. A copy of the abstract of the said doctor's diary form and abstract of the confidential report is Annexure No. 1 to the writ petition.

According to the admitted facts on record Sri Girish Chandra Shukla who was aged about thirty years was admitted into hospital for serious ailment on 5th February, 2004 in the Post Graduate Institute of Medical Sciences at Lucknow, where he died on 21st February, 2004. The Medical Fitness Introduction Form of the said Sri Shukla is stated to have crystallized into an order of revival of policy between this period on 13th February, 2004.

The claimants under the policy after the death of Sri Shukla were refused benefits and then they filed a claim before the consumer forum that has been decreed.

On coming to know of the aforesaid facts, the petitioner was put to a show cause notice on 14th December, 2004 to explain as to why action should not be taken against him, keeping in view the provisions of the LIC of India Agents Regulation, 1972 framed under Section 49 of the Life Insurance Corporation of India Act, 1956 for having violated Rules 16(1)(b) thereof. A copy of the said Rules has been placed before the Court. The show cause notice also refers to the said Rule. It is the case of the respondents, that the petitioner in response to the said notice submitted his reply on 05.01.2005, copy whereof is Annexure No. 3 to the writ petition. On a consideration of the said reply the impugned order terminating the agency of the petitioner was passed which is annexed as Annexure No. 4 to the writ petition.

In his reply, the petitioner has admitted his signatures on the doctor's diary, copy whereof is annexed as Annexure No. 1 to the writ petition but the defence taken is that there is an over writing and cutting in the said form and the date of 8th January, 2004 has been scored out and converted into 8th February, 2004. The petitioner, therefore demanded the original copy of the form to establish as to on which date has the medical been carried out, and it is the case of the petitioner that this could be verified only from Form No. 680 which is the document evidencing a final approval to the said formalities concluding in the revival of the policy. The contention of the learned counsel for the petitioner is that the petitioner was never given the copy of the said Form No. 680 nor any other document pertaining to the revival of the policy, as a result whereof prejudice has been caused to the petitioner in his defence. Thus, there is a violation of principles of natural justice and for which reliance has been placed by the learned counsel for the petitioner on the judgment in the case of Kanwar Natwar Singh Vs Director of Enforcement & Another 2010 (13) SCC 255 paragraph 22.

The petitioner, therefore contends that in the absence of supply of relevant documents and opportunity having been denied in this regard the impugned order is vitiated. Further, the impugned order does not contain any reasons as to why the petitioner's contention is not acceptable and so is the impugned appellate order as well as the order on the memorial, therefore suffer from the same vice of violation of principles of natural justice as indicated above.

It is also contended that the petitioner had not acted against the interest of the Insurance Company nor had he committed any act that may amount to motivatedly trying to cause harm to the business of the Corporation. The petitioner had simply acted in good faith in simply introducing Sri Girish Chandra Shukla to the doctor whereafter he has done nothing that may amount to any misconduct so as to terminate his agency.

Learned counsel for the petitioner has relied on the judgment of a learned Single Judge in the case of Sri Nivash Shashtri Vs The Senior Division Manager in Writ Petition No. 36290 of 1997 decided on 20th January, 2006 to urge that in similar circumstances a learned Single Judge of this Court has allowed the writ petition on the same grounds.

He has further relied on the appellate order of the State Consumer Forum dated 31st August, 2010 in relation to the claim of the beneficiaries under the Insurance policy, where a clear finding has been recorded to the effect, that it was the Insurance Company that was responsible for the interpolation and cutting on the doctor's diary by changing the date to 8th February, 2004. The appeal was partly allowed but the claim of the beneficiaries was upheld on the findings recorded therein. The State Consumer Forum also recorded a finding, that if the policy holder had fallen ill on 5th February, 2004 and was admitted in hospital upto 21.02.2004 when he died, then there was no occasion for him to have been introduced on 08.02.2004. It was, therefore held that the policy holder had been examined only on 8th January, 2004 when he was fit and in the circumstances the revival of the policy was held to be valid and the claim was allowed.

Replying to the aforesaid contention on behalf of the petitioner Sri V.K. Chandel for the Life Insurance Corporation has urged that the revival of the policy on 13th February, 2004 which is the period between the admission of the policy holder and his death in hospital was a clear outcome of the medical examination witnessed by the petitioner. This fraudulent act in respect of a policy which had lapsed more than one and a half year before has resulted in an adverse situation to the corporation thereby causing loss to it in business in which the petitioner's participation, is clearly established. It is urged, that if the petitioner was not the agent of that policy then he should not have filled up his agency number as an agent in the form which is Annexure No. 1 to the writ petition. This clearly, establishes that the conduct of the petitioner acting as an introducer was to help some person, and even otherwise, if the examination has taken place on 08.02.2004, then the petitioner may have presented and introduced a person other than the original policy holder, inasmuch as, the policy holder was admittedly in hospital on 8th February, 2004.

The petitioner himself has admitted the tampering on the doctor's diary but even otherwise also, it was the petitioner's duty to have examined every pros and cons including any ailment from which Sri Girish Chandra Shukla was suffering. It is also urged that the petitioner very well knew the entire family as he admits of having secured about twenty policies in the same family and, therefore the petitioner fully knowing the status of the health of the policy holder deliberately manipulated the revival of the policy with an ulterior motive after it had lapsed. The aforesaid circumstances, therefore rightly existed for the authority to conclude that the petitioner has acted clearly against the interest of the corporation and, therefore his agency deserved to be terminated. He has invited the attention of the Court to the averments made in the counter affidavit and to the orders passed by the Appellate Authority and on the memorial by the Chairman to substantiate his submissions.

We have appreciated the rival contentions raised and the pleadings on record. It is evident from the pleadings that the petitioner was confronted with a charge which is referable to Rule 16 read with Rule 8 of the 1972, Rules. Rule 16 is extracted hereinunder:-

"16. Termination of agency for certain lapses:

(1) The competent authority may, by order, determine the appointment of an agent.

(a) If he has failed to discharge his functions, as set out in regulation 8, to the satisfaction of the competent authority;

(b) If he acts in a manner prejudicial to the interests of the Corporation or to the interests of its policyholders;

(c) If evidence comes to its knowledge to show that he has been allowing or offering to allow rebate of the whole or any part of the commission payable to him;

(d) if it is found that any averment contained in his agency application or in any report furnished by him as an agent in respect of any proposal is not true;

(e) if he becomes physically or mentally incapacitated for carrying out his functions as an agent;

(f) if he being an absorbed agent, on being called upon to do so, fails to undergo the specified training or to pass the specified tests, within three years from the date on which he is so called upon:

Provided that the agent shall be given a reasonable opportunity to show cause against such termination.

(2) Every order of termination made under sub regulation (1) shall be in writing and communicated to the agent concerned.

(3) Where the competent authority proposes to take action under Sub regulation (1) it may direct the agent not to solicit or procure new life insurance business until he is permitted by the competent authority to do so."

Rule 8 which prescribes the functions of an agent is extracted hereinunder:-

"8. Functions of agents.-

(1) Every agent shall solicit and procure new life insurance business which shall not be less than the minimum prescribed in these regulations and shall endeavour to conserve the business already secured.

(2) In procuring new life insurance business, an agent shall:

(a) take into consideration the needs of the proposers for life insurance and their capacity to pay premiums;

(b) make all reasonable inquiries in regard to the lives to be insured before recommending proposals for acceptance, and bring to the notice of the Corporation any circumstances which may adversely affect the risk to be underwritten;

(c) take all reasonable steps to ensure that the age of the life assured is admitted at the commencement of the policy; and

(d) not interfere with any proposal introduced by any other agent.

3. Every agent shall, with a view to conserving the business already secured, maintain contact with all persons who have become policy-holders of the Corporation through him and shall:

(a) advise every policy-holder to effect nomination or assignment in respect of his policy and offer necessary assistance in this behalf;

(b) endeavour to ensure that every instalment of premium is remitted by the policy-holder to the Corporation within the period of grace;

(c) endeavour to prevent the lapsing of a policy or it's conversion into a paid-up policy; and

(d) render all reasonable assistance to the claimants in filling claim forms and generally in complying with the requirements laid down in relation to settlement of claims.

(e) Nothing contained in these regulations shall be deemed to confer any authority on an agent to collect any moneys or to accept any risk for or on behalf of the Corporation or to bind the Corporation in any manner whatsoever:

Provided that an agent may be authorized by the Corporation to collect and remit renewal premiums under policies on such conditions as may be specified."

A combined reading of the aforesaid provisions indicates, that the duty of an agent is to make of reasonable inquiries with regard to the lives to be insured before recommending proposals for acceptance and bring to the notice of the corporation any circumstances which may at this stage affect the risk to be under written. All reasonable steps should be taken, that the age of the life assured is admitted and he shall not interfere with any proposals introduced by any other agent. Rule 16(2)(a), (b) and (d), read with Rule 8(2)(b), (d) & (3)(c) in a composite form cast an obligation on the agent to act in a manner that in no way prejudices the business of the corporation.

The petitioner was issued the show cause notice on 14th December 2004, copy whereof has been filed as Annexure No. 2 to the writ petition. The same categorically recites, that the policy holder Sri Girish Chandra Shukla was favoured with a revival of his policy when he was suffering from a serious ailment and it was during this period that the policy was revived on 13th February, 2004. This was attempted by the petitioner on which the defence taken by the petitioner is that he had simply introduced the policy holder, that too even co-incidentally when he was present in the clinic of the doctor who is entrusted with such responsibilities to carry out medical examination of policy holders. The medical practitioner, Dr. S. Kumar is the doctor who is stated to have been introduced to Sri Girish Chandra Shukla by the petitioner. The said fact is not denied, rather is corroborated by the Declaration of Good Health form, the proposal whereof was admittedly filled up by the petitioner. A bare perusal of Annexure No. 1 to the writ petition would demonstrate that in the column against the agents name and code number, the petitioner has filled up his name and not the name of the agent who had originally negotiated the policy. The petitioner has filled in the code number allotted to him namely, Code Number-5438, thereby depicting as if he was the concerned agent responsible for the said policy, the revival whereof has been sought.

There is a tampering in the form number and according to the petitioner the date has also been tampered by interpolating the digit 2 in place of digit 1 to depict the month of medical examination. Even assuming for the sake of arguments that this tampering did exist, the beneficiary ultimately is the policy holder. This benefit has been extended with the active participation of the petitioner who does not deny his involvements in the initiation of the medical examination of the policy holder. Thus, it is not a mere coincidental introduction by the petitioner but the foundation of the process of revival of the policy holder that was consciously undertaken by the petitioner.

The learned counsel has invited the attention of the Court to the order of the Consumer Forum to establish that the date of medical examination is 8th January, 2004 whereas the ailment and the treatment of the policy holder is between 8th February, 2004 and 21st February, 2004. This is being sought to be pressed into service to demonstrate that the policy holder was medically fit as on 8th January, 2004 which is the date on which he was examined. To our mind, this date of examination has been fixed by the Consumer Forum on the assessment, that if the date is taken to be 8th February, 2004, the same would be an impossible situation as on 8th February, 2004. The policy holder was very much in hospital and he could not have been present for medical examination on that date. Taking advantage of this, the petitioner contends that this interpolation has been done by someone else in order to trap the petitioner. He submits that there is no evidence that can prove that the petitioner was present in the clinic on 8th February, 2004 alongwith the policy holder.

This takes us into the realm of probabilities but on the basis of what has been stated on record, it is admitted to the petitioner that he was well known to the family of the policy holder. The ailment of the policy holder after admission in hospital resulted in his death. It is also evident that the policy holder did not die of an accidental death and was a victim of ailment that persisted from before. The Consumer Forum, while proceeding to consider the same has noted that the policy holder was suffering from Acute Pancreatitis (alcohol). It is correct that the Medical Examination Report by the doctor was not even presented before the Consumer Forum, but the fact remains that the Consumer Forum did not examine the status of the ailment of the policy holder.

It is clear, that the responsibility of the petitioner lay as envisaged under Rule 8 in taking every care to refer a matter for medical examination and proposal for revival of a policy that had already lapsed. The petitioner's proximity with the family and his promptitude in introducing the policy holder leaves no room for doubt that the petitioner actively participated in introducing the policy holder as admitted to him on 8th January, 2004 without taking due precaution, or alternatively introduced a fake person, if the medical examination took place on 8th February, 2004. In either of the contingencies, it was the petitioner who was the responsible progenitor as he has not denied either his signature or agency code number while introducing the policy holder and depicting himself as an agent on the form which is Annexure No. 1 to the petition. This evidence was not controverted and could not be controverted by the petitioner except for the factum of the alleged interpolation in the date referred to hereinabove.

The non-production of the actual revival policy forms and Form No. 680, therefore does not cause any prejudice to the petitioner, inasmuch as, his role was to the extent of introduction only. The future action taken on such a report may be a default or an action in faith by the officials of the Life Insurance Corporation while reviving the policy of the deceased policy holder, and that may be a cause of action against them, but so far as the petitioner is concerned his participation and laying the foundation through the admitted introduction of the policy holder for medical examination in respect of a lapsed policy for revival, is clearly established. To that extent the petitioner was given full opportunity and he has failed to dislodge the said participation.

The principles of natural justice, therefore in the present case, have not been violated and further the judgment relied upon by the learned counsel for the petitioner as metioned above does not come to his aid at all. The order of the Consumer Forum which was rendered much later on, and was not in existence when the petitioner was put to show cause and gave his reply. The petitioner cannot take any advantage of the findings recorded therein as the policy claim was decided on the basis of whatever evidence was placed before the Consumer Forum and the inference drawn therein is on the strength of a reasoning adopted by the Consumer Forum. It was not an adjudication on the participation and conduct of the petitioner.

As concluded hereinabove, the fact remains that the petitioner has participated in the ushering of the policy for revival through an introduction to the doctor for the medical examination of the policy holder. This does not amount to performance of and discharge of the duties and obligations as per Rule 8 and is a violation thereof as well as Rule 16 as indicated above. The allegations, therefore were clearly established to prove them against the petitioner. The view taken by the authorities does not suffer from either any procedural or substantive infirmity so as to warrant interference.

The conduct of the petitioner was a calculated move that clearly facilitated the rejuvenation of a dead policy. His overt act of introduction and filling up the Good Health Form clearly discloses his covert intention of providing help to an ailing person declaring him fit is clearly borne out from the transaction of introduction that is admitted to the petitioner.

Consequently, we do not find any merit in the writ petition which is hereby dismissed.

Order Date :- 05.12.2017

S.Chaurasia