Rakesh Kumar Gupta vs Life Insurance Corporation Of India & Ors.

KULDEEP TIWARI, J. (ORAL)

The instant writ petition stands engendered by the order dated 14.09.2018 (Annexure P-16) passed by respondent No.1; the order dated 23.09.2017 (Annexure P-14) passed by respondent No.2; and the order dated 06.11.2004 (Annexure P-11) passed by respondent No.3. The petitioner, accordingly, seeks quashing of the said orders.

Before adverting to the submissions pitched by learned counsel for the contesting litigants, it is deemed apposite to concisely recapitulate the factual matrix germane to the adjudication of the controversy at hand.

The Office of the Controller of Insurance, Government of India, vide letter dated 12.05.1992 (Annexure P-2), authorized the petitioner to act as an insurance agent for a period of three years, with effect from 12.05.1992 to 11.05.1995. Pursuant thereto, upon satisfactory completion of the probationary period of six months, the respondent- Life Insurance Corporation of India (hereinafter referred to as “LIC”), vide letter dated 30.09.1992, confirmed the petitioner’s appointment as an agent. Thereafter, the petitioner’s agency was extended from time to time by LIC, until the same came to be terminated by respondent No.3-Senior Divisional Manager, LIC, Divisional Office, Dugri, Ludhiana, vide the impugned order dated 06.11.2004.

The bedrock for termination of the petitioner’s agency was constituted by the registration of FIR No.188 dated 27.08.2003 under Sections 419, 420 and 170 of the IPC at Police Station Jaisalmer against the petitioner and his co-accused, inter alia, on allegations of shoplifting. Following registration of the FIR, respondent No.3 issued a show-cause notice dated 27.08.2004 to the petitioner, to which the latter responded vide letter dated 15.10.2004, requesting supply of all documents/complaints/ letters forming the basis of the show-cause notice, thereby enabling him to submit a proper and detailed reply.

It is not in dispute that the documents sought by the petitioner were never supplied to him. Instead, vide the impugned order dated 06.11.2004, respondent No.3, while invoking Regulations 16(1)(b) and 19(1) read with Regulation 10(6) of the Life Insurance Corporation of India (Agents) Regulations, 1972 (hereinafter referred to as the “Agents Regulations”), imposed upon the petitioner the penalty of termination of his agency with immediate effect, coupled with forfeiture of renewal commission. Aggrieved thereby, the petitioner preferred an appeal before respondent No.2-Zonal Manager, LIC, New Delhi. However, the same did not find favour and was dismissed vide the impugned order dated 23.09.2017. Notably, while dismissing the appeal, respondent No.2 also recorded an observation regarding an additional alleged misconduct on the part of the petitioner. Thereafter, availing the further remedy of a memorial provided by LIC, the petitioner preferred a memorial before respondent No.1-Chairman, LIC, assailing the order dated 23.09.2017, however, the same was also rejected vide the impugned order dated 14.09.2018.

It is also apposite to record that, in the interregnum, the petitioner instituted a civil suit seeking declaration and recovery of damages before the Civil Judge, Junior Division, Ludhiana, which was dismissed vide judgment and decree dated 28.03.2014. Aggrieved thereby, the petitioner preferred a civil appeal, which was partly allowed, and the impugned judgment and decree were set aside vide judgment and decree dated 19.07.2017. While allowing the appeal, the Appellate Court also held that the order of termination of petitioner’s agency is bad in the eyes of law as it was passed without deciding appeal of the petitioner, which he preferred. Accordingly, respondent- LIC was directed to decide the petitioner’s appeal.

Assailing the impugned orders, learned senior counsel appearing for the petitioner contends that neither a proper inquiry was conducted, nor any opportunity of hearing was afforded to the petitioner before imposition of the penalty of termination of his agency. It is further submitted that, although a show-cause notice was issued to the petitioner, his response thereto was never considered by the competent authority and, despite his specific request, the documents sought by him were also not supplied. Instead, in a wholly perfunctory manner, the penalty of termination of the petitioner’s agency was imposed without affording him an opportunity of hearing.

Further, placing reliance upon the order dated 31.10.2003 (Annexure P-8), whereby the Trial Court, on the basis of the compromise arrived at between the petitioner and the complainant in the FIR (supra), permitted compounding of the offence and acquitted the petitioner, learned senior counsel submits that, since the petitioner had already earned an acquittal, the same ought to have been duly considered by the competent authority before imposing the impugned penalty. It is contended that the said material aspect was not considered in its correct perspective.

Lastly, inviting the attention of the Court to the order dated 23.09.2017 passed by respondent No.2/appellate authority, learned senior counsel submits that, insofar as one of the observations recorded therein pertaining to an alleged additional misconduct on the part of the petitioner is concerned, which also constituted one of the bases for dismissal of the appeal, no show-cause notice was ever issued to the petitioner, nor was any explanation sought from him as to whether he was, in fact, involved in the alleged additional misconduct. It is, therefore, contended that the entire proceedings stand vitiated in law and the impugned orders are liable to be set aside.

Conversely, learned counsel appearing for the respondents, while defending the legality and validity of the impugned orders, has drawn the attention of this Court to the allegations enclosed in the FIR (supra). It is submitted that the petitioner, who had been called to Jaisalmer to attend a conference organized by respondent- LIC, indulged in an act of shoplifting, thereby committing misconduct of a serious nature and bringing disrepute to, and tarnishing the reputation of, LIC. It is further contended that the petitioner was acquitted in the aforesaid criminal proceedings only on account of the offences having been compounded pursuant to a compromise and, therefore, the same cannot be construed as an honourable acquittal. Thus, it is submitted that the competent authority was justified in imposing the penalty of termination of the petitioner’s agency.

Learned counsel for the respondents further submits that, prior to passing the impugned order terminating the petitioner’s agency, a show-cause notice was duly served upon him. It is, therefore, contended that the principles of natural justice stood complied with. Lastly, it is submitted that the issues raised by the petitioner had already been adjudicated upon by the Civil Court concerned, which, vide judgment and decree dated 28.03.2014, upheld the legality of the impugned penalty. It is further contended that, even in the civil appeal preferred against the said judgment and decree, the Appellate Court merely directed the respondent- LIC to decide the petitioner’s appeal.

The respondent No.3/competent authority, by invoking the provisions of Regulations 16(1)(b) and 19(1), read with Regulation 10(6) of the Agents Regulations, imposed upon the petitioner the impugned penalty of termination of his agency, coupled with forfeiture of renewal commission. In view of the nature of the controversy involved, Regulations 10, 13, 16 and 19 assume significance and, therefore, relevant portions thereof are extracted hereinbelow:-

There is no dispute that the genesis of the show-cause notice dated 27.08.2004 issued to the petitioner, as well as the consequential penalty order dated 06.11.2004, was FIR No.188 dated 27.08.2003 registered against the petitioner, inter alia, alleging his involvement in an incident of shoplifting. It is also evident from the order dated 31.10.2003 (Annexure P-8) passed by the Trial Court that the petitioner came to be acquitted in the aforesaid criminal proceedings on account of the offences being compoundable in nature and having been compounded between the parties.

Having perused the impugned orders, this Court finds that the order of acquittal dated 31.10.2003, which had been passed nearly one year prior to the imposition of the impugned penalty, was not taken into consideration by respondent No.3/competent authority at all. The impugned penalty order further reveals that, apart from issuance of the show-cause notice, no opportunity of hearing was afforded to the petitioner, and that the petitioner’s reply dated 15.10.2004 to the show-cause notice was also not considered before imposing the penalty. In these circumstances, this Court has no hesitation in holding that the aforesaid procedural infirmities have rendered the entire disciplinary proceeding ex parte and violative of the principles of natural justice.

The respondent No.2/Appellate Authority also, instead of addressing the aforesaid material aspects and curing the procedural infirmities and illegality committed by respondent No.3, perpetuated the same and compounded the error by relying, in its appellate order dated 23.09.2017 dismissing the petitioner’s appeal, upon an additional alleged misconduct on the part of the petitioner. The petitioner was neither issued any show-cause notice nor called upon to furnish any explanation in respect of such additional alleged misconduct. Moreover, the additional alleged misconduct cited in the appellate order, which is extracted hereinafter, does not correlate with the duties and obligations of the petitioner as an LIC agent, rendering the impugned appellate order legally unsustainable.

Not only this, when the petitioner availed the further remedy of memorial provided by LIC against the appellate order dated 23.09.2017, the competent authority/respondent No.1 also failed to examine the aforesaid aspects, viz. non-compliance with the principles of natural justice by not affording the petitioner any opportunity of hearing and the illegality committed by the appellate authority in relying upon an additional alleged misconduct, and dismissed the memorial vide order dated 14.09.2018. Consequently, the said order is also vitiated.

As an upshot of the discussion made hereinabove, the instant writ petition is allowed and the impugned orders are set aside. Further, respondent No.3 is directed to reconsider the petitioner’s claim for restoration of his agency, in accordance with law, and to take a decision thereon within a period of one month from the date of receipt of a certified copy of this order.