R. Thiagarajan vs National Insurance Company Ltd.

V.S. Sirpurkar, J.—The Petitioner herein challenges certain recoveries, which are sought to be made by his employer the Respondent-

National Insurance Company. The Petitioner is employed as Development Officer. While working as such, he seems to have collected premiums

for his company. There was a scheme in existence, which provided incentives on such premiums. That scheme is to be seen in the service scheme

and more particularly in paragraphs 14 and 15. Under those clauses the incentive is payable on the scheduled premium income collected by the

said Development Officer. ""Schedule premium income"" is defined in paragraph 16, It means the premium income secured by a person of the

Development Staff or the premium under the organisation of a Development Superintendent, excluding the premium income in respect of:

(a) Aviation Hull Insurance Business;

(b) Marine Hull Insurance Business;

(c) Credit Insurance Business;

(d) Public Sector Business; and

(e) Tied Business.

It is an admitted position that the Petitioner collected the premium from one M.R. Krishnamurthi Co-operative Sugar Mills. The Respondent

took the stand that though initially the incentive was given on the premium collected from the said M.R.K. Co-operative Sugar Mills, such incentive

was not payable to the Petitioner, and therefore, the said premium was sought to be recovered back, and recovery was ordered. (Vide order

dated 7.1.1993). This is the order, which is impugned herein.

The learned Counsel appearing on behalf of the Petitioner pointed out that it was consistent practice to award the incentive on the premiums

collected from the Co-operative Sugar Mills and that it was abruptly in 1992 alone that the first Respondent woke up for the first time and realised

that no incentive could have been drawn by and given to the Petitioner on the premiums collected from the said M.R.K. Co-operatives Sugar

Mills. The learned Counsel further contends that the Petitioner had to work and concentrate for collecting the premium from the said M.R.K. Co-

operative Sugar Mills and as such, it cannot be said that he was earning anything which he did not deserve. To buttress his argument, the learned

Counsel further submits that merely because M.R.K. Co-operative Sugar Mills is dubbed as Government undertaking or public undertaking, the

Respondent was not justified in denying the said incentives on the premiums collected from the said public undertaking also and that any effort to

deny such benefit would be contrary to Article 14 as that would be an unnecessary discrimination.

The learned Counsel appearing on behalf of the Respondent pointed out that the guidelines issued by the Central Government were binding on

the General Insurance Companies. There is a document on record in the shape of a communication dated 5.1.1984, which suggests that no credit

could be given to any inspector in respect of business of all properties and goods under the control of the Government or Government

undertakings owned wholly or mainly by it or semi-Government bodies, or a Board or Body Corporate established by the Government under any

statute or any industrial or commercial undertaking in which the Government has substantial financial interest, whether as a shareholder, lender or

guarantor. The learned Counsel has pointed out on the basis of the documents on record that the Government had 73% interest in the shareholding

of the said M.R. Krishnamurthi Co-operative Sugar Mills. The learned Counsel, therefore, says that because of such overwhelming interest of

73%, it would be clearly a public undertaking or as the case may be a Government undertaking and therefore, as per the communication dated

5.1.1984, no credit could be given for the business from such Government undertaking. It is an admitted position that the Petitioner has in fact

collected the premium from M.R.K. Co-operative Sugar Mills and was also paid the incentive on the basis of that premium. Mr. Ibrahim, learned

Counsel for the Respondent points out that this fact that the Petitioner had drawn and was paid the said incentive was objected to by the internal

audit held somewhere in the year 1992 and it was because of that, that the recovery came to be made.

It cannot be disputed that the guidelines issued by the Government of India are binding on the General Insurance Companies. The scheme, on

which the learned Counsel for the Respondent relies, clearly shows that such incentives could not be payable on the premium, which was collected

from the public sector business as Clause 16 clearly defines the scheduled premium income and the premium drawn from the public sector business

and other four categories named in Clause 16 cannot give any right to the incentives. Therefore, it has to be presumed that the decision to recover

the incentive, which was wrongly paid to the Petitioner was in pursuance of a consistent policy, which emanated as early as 1984. It is only

unfortunate that the Respondent should have woken up only in the year 1992 or 1993 to realise that incentives were wrongly paid to the Petitioner.

However, the learned Counsel justifies that by suggesting that it became apparent only on the basis of the internal audit. There is no reason to

dispute the statement made.

However, the learned Counsel Mr. V. Prakash challenges this as a grave discrimination. He suggests that an employee-has to exert to collect

the premium even from the Government undertakings and therefore, there can be no justification in excluding the premium collected from the

Government undertakings from the category of scheduled premium income. The argument cannot be entertained for the simple reason that the

scheme has been in existence right from 1976 and the employee has every reason to know about the scheme rights since then. If the employee

challenges it for the first time only after the incentives are ought to be recovered from him, it would be unfair. The learned Counsel argues that there

was no occasion for him to challenge the said scheme earlier. I am afraid the argument cannot be considered in view of the consistent policy of the

Government. In respect of the payment of incentives on the premiums, such policy could be assailed only if the said policy is gravely unjust and is

prima facie discriminatory. Seeing the scheme as it is and considering the fact that this pertains to the financial aspect of the management of the

General Insurance Companies, which are under direct control of the Central Government, there does not seem to be anything harshly

discriminatory in such a policy. In that view of the matter, there would be no defence to the said recovery. However, it is recommended that the

recoveries should be made as far as possible in a humane manner. With these observations, the Writ Petition is disposed of. No costs.