Divisional Manager, Life Insurance Corporation of India, Madurai vs R. Sivasathyamurthy

P.R. Gokulakrishnan, O.C.J.

This writ appeal is against the order in W.P. No. 4622 of 1976. The Divisional Manager, Life Insurance Corporation of India, Madurai, the

Zonal Manager, Life Insurance Corporation of India, Madras and the Chairman, Life Insurance Corporation of India, Bombay have filed the writ

appeal. The respondent by name R. Sivasathyamurthi, residing at Vikramasingapuram, Ambasamudram Taluk, Tirunelveli District was the

petitioner in W.P. No. 4622 of 1976. He prayed for a writ of certiorari calling for the records of the first appellant in the order dated 28th July,

1975, which was confirmed by the second and third appellants on 5th March, 1975 and 4th October, 1976, respectively and for quashing the

same.

The short facts are as follows. The respondent herein was the Insurance agent in the year 1976. In 1974, he procured two proposals for

insurance, each for a sum of Rs. 25,000, in respect of two individuals, M. Gopalakrishna and M. Subramanian. The respondent has stated that the

lives assured were medically examined by Dr. Sankaranarayanan on 23rd March, 1974. On 9th April, 1974, one Mahadeva Iyer, father of the

said assured wrote a letter to the Life Insurance Corporation of India that the respondent secured the proposals on the basis of misrepresentation

and fraud. According to the said Mahadeva Iyer there was absolutely no medical examination of the insured who were then students and no

medical certificates were also obtained on the date stated by the respondent. On receipt of this letter on 10th May, 1974, the Life Insurance

Corporation of India, Tenkasi (Madurai) called for explanation for the respondent. To this letter, the respondent did not reply. Then to the

reminder on 24th May, 1974, the respondent replied on 28th May, 1974, denying the allegations made in those letters. It is pertinent to note here

that the service conditions of the respondent herein are governed by the Life Insurance Corporation of India (Agents) Regulations, 1972.

Regulation 16 therein deals with termination of agency for certain lapses. It is in respect of lapses contained in Regulation 16(b) and (d), action was

taken against the respondent herein after complying with the proviso to Regulation 16. Since their Life Insurance Corporation of India was not

satisfied with the explanation of the respondent, it issued a show cause notice on 17th December, 1974, to which the respondent replied denying

the charge. Even though the respondent did not ask for personal hearing in his reply, dated 29th December, 1974, he has requested them to make

complete enquiry regarding the allegations levelled against him. The first appellant after calling for particulars from the Medical Officer, who is

alleged to have examined the insured and from the College authorities, passed orders on 28th July, 1975, terminating the agency of the respondent.

The appeal preferred by the respondent to the second appellant was rejected on 5th March, 1976, and a further memorial to the Chairman, Life

Insurance Corporation, the third appellant herein was also rejected by him on 4th October, 1976. In these circumstances the respondent filed the

writ petition as aforesaid challenging the legality of the order of termination passed on 28th July, 1975.

The learned single Judge of this Court after elaborately discussing the facts of the case observed that the Corporation seemed to have taken ex

parte statements from the two proposes and Mahadeva Iyer and relied on the same without giving an opportunity to the respondent to disprove the

allegations made against him, that the regulation required that the agent shall be given a reasonable opportunity to show cause against the

termination, that would mean that the allegations against him should be directly put to him with the evidence in support of the same and he should

be given enough opportunity to contradict such evidence, and that as the principles of natural justice have not been followed in this case he

consequently allowed the writ petition by quashing the impugned order. It is as against this, the present writ appeal has been filed.

It is seen from the records that the respondent has promptly denied the charge that there was no medical examination of the assured by Dr.

Sankaranarayanan on the date mentioned in the show cause notice, since at that time one of the assured was studying in Surakkal, South Canara,

Karnataka State, and the other was studying in Agricultural College at Dhampur in Uttar Pradesh State. He has stated that when he took the

assured to Dr. Sankaranarayanan, the father of the assured Mahadeva Iyer represented to him to postpone the proposal to March, 1974 and

when Mahadeva Iyer approached him in March, 1974, for the proposal, the respondent got them examined by the same doctor in March, 1974,

and made the proposal. He has categorically stated that when the assured were examined by the doctor on the relevant date, they were not in their

respective colleges as alleged by Mahadeva Iyer and it is only Mahadeva Iyer and it is only Mahadeva Iyer who misrepresented the fact to get

back the amount paid by him for the proposal. It is seen from the letter of the doctor dated 28th August, 1974, that the diary in which he has noted

down the details of the examination of the assured was found to be missing and, when it is found, the doctor has promised to send the same. In the

face of this reply by the doctor, it cannot be presumed that there was no examination of the assured by the doctor. Then, the records show that

one of the colleges informed that Subramaniam was not in the college on 23rd March, 1974, and the other college in which Gopalakrishnan was

studying did not send any reply to the letter sent by the Insurance Company. On the above materials, the first appellant has passed the impugned

order which was confirmed by the second and the third appellants.

Mr. Arunagiri, learned counsel for the appellants, submits that sufficient opportunity has been given in the show cause notice itself and that the

respondent has not asked for any personal enquiry in his reply statement. According to the learned counsel, the authorities of the Life Insurance

Corporation after making necessary enquiries and gathering sufficient particulars, have correctly terminated the agency of the respondent as

provided under Regulation 10(b) and (d) of the Life Insurance Corporation of India (Agents) Regulation, 1972, and a reasonable opportunity to

show cause against such termination was given to the respondent as per proviso to Regulation 16.

Regulation 16(1) is as under -

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

Regulation 16(1)(b) and (d) is as follows :

(b) if he acts in a manner prejudicial to the interests of the Corporation or to the interests of its policy holders;

(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;

The proviso to the above regulation reads as follows -

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

It is, therefore, clear that the said proviso to the Regulation specifically states that reasonable opportunity to show cause against such termination

has to be given.

Mr. Krishnamani, learned counsel for the respondent, states that the copy of the complaint by Mahadeva Iyer and the copies of the statements

obtained from the sons of Mahadeva Iyer were not given to him by the immediate superior of the respondent which would afford him reasonable

opportunity to explain away the complaints against him before the impugned order was passed.

Mr. Arunagiri, learned counsel for appellants, submits that no doubt copies of these documents were not furnished but the contents of the same

were made known to the respondent herein in the show cause notice itself. Such explanation in our view is far from satisfactory.

Fedco (P) Ltd. and Another Vs. S.N. Bilgrami and Others, , cited by the learned counsel for the appellants clearly brings out the standard of

reasonableness in affording such opportunity. The Supreme Court at page 419 observes thus -

There can be no invariable standard for ''reasonableness'' in such matters except that the Court''s conscience must be satisfied that the person

against whom an action is proposed had a fair chance of convincing the authority who proposes to take action against him that the grounds on

which the action is proposed are either non-existent or even if they exist they do not justify the proposed action. The decision of this question will

necessarily depend upon the peculiar facts and circumstances of such case, including the nature of the action proposed, the grounds on which

action is proposed, the material on which the allegations are based, the attitude of the party against whom the action is proposed in showing cause

against such proposed action, the nature of the plea raised by him in reply, the requests for further opportunity that may be made, his admissions by

conduct or otherwise of some or all the allegations and all other matters which help the mind in coming to a fair conclusion on the question.

In Union of India (UOI) Vs. H.C. Goel, , cited by the learned counsel for the respondent the Supreme Court has specifically held thus :

It may be that the technical rules which govern criminal trials in Courts may not necessarily apply to disciplinary proceedings, but nevertheless, the

principle that in punishing the guilty scrupulous care must be taken to see that the innocent are not punished applies as much to regular criminal trials

as to disciplinary enquiries held under the statutory rules.

In Nand Kishore Prasad Vs. State of Bihar and Others, the Supreme Court had occasion to deal with the principles that have to be followed in

disciplinary matters. The Supreme Court has held as follows :

Before dealing with the contentions canvassed, we may remind ourselves of the principles in point, crystallised by judicial decisions. The first of

these principles is that disciplinary proceedings before a domestic tribunal are of a quasi-judicial character. Therefore, the minimum requirement of

the rules of natural justice is that the tribunal should arrive at its conclusion on the basis of some evidence, i.e., evidential material which with some

degree of definitions points to the guilt of the delinquent in respect of the charge against him. Suspicion cannot be allowed to take the place of

proof even in domestic enquiries.

Considering the abovesaid principles laid down by the Supreme Court, it is clear from the facts placed before us for the appellants that no

conviction or action could be taken with such meagre materials. It has been held in the above decision that suspicion cannot be allowed to take the

place of proof even in domestic enquiries. It is all the more so when actions are being taken in pursuance of the statutory regulations for taking such

disciplinary proceedings. Thus the reasonable opportunity to show cause against such termination contained in the proviso to Regulation 16

definitely visualises the furnishing of various copies of documents to the respondent, which were taken behind the back of the respondent herein.

Even apart from these statements, the particulars from the college authorities and the doctor concerned which were taken for the purpose of

establishing the specific allegation against the respondent, are not definite but are vague. On the other hand, the appellants herein have presumed

certain things from such vague statements referred to above and passed the impugned order. In this context the Supreme Court has held that it

may, at best create a suspicion, but suspicion itself cannot take the place of proof and in this case on suspicion the agency of the respondent has

been terminated.

Taking all these aspects into consideration the learned Judge of this Court has correctly held that the principles of natural justice have not been

followed either by the first appellant initially or by the second and the third appellants subsequently. We are in complete agreement with the said

findings of the learned single Judge of this Court.

In the circumstances, we are of opinion that the appeal has to be dismissed, as there are no materials or ground to interfere with the findings of

the learned single Judge. However, we make it clear that it is open to the Life Insurance Corporation of India to start the enquiry, if it so desires,

from the stage of the explanation given by the respondent and complete the same after giving the respondent sufficient opportunity to prove his

case.

Accordingly, the writ appeal is dismissed but there will be no order as to costs.