SMT. CHANDRAMMA G vs THE CHAIRMAN LIFE INSURANCE CORPORATION OF INDIA

The petitioner is before this Court assailing the order dated 04.09.2008 at Annexure ''E'' and the order dated 15.05.2009 at Annexure ''G'' to

the petition. The petitioner is further assailing the order dated 03.05.2010 at Annexure ''L'' insofar as the confirmation of the Termination of the

Agency.

The petitioner was appointed as an agent with Code No.2217618 attached to the Branch of respondent No.4. The petitioner was accordingly

canvassing for the policies issued by the respondent - Life Insurance Company and in the said process a policy was also issued in favour of one

Sri.H.B.Manchegowda. In respect of the policy which was issued with effect from 28.03.2004, the same came up for claim due to the death of the

policy holder/assured on 17.11.2005. In that view, the respondents were of the opinion that the policy Nos. 722944661 and 722944662, as

issued were contrary to the Regulations governing, inasmuch as the petitioner had not exercised due care in respect of the illness suffered by the

assured. In that regard having noticed that the appellant was suffering from Septoplasty, Tubinectomy during 3/97 and for absess of clavicle

DM+IITM and Herpes Zostler, the respondents were of the opinion that the agency of the petitioner is to be terminated. Accordingly, the show

cause notice as at Annexure ''C'' was issued and the final order dated 04.09.2008 as at Annexure ''E'' was passed.

The petitioner claiming to be aggrieved had filed an appeal which came to be disposed of through the order dated 03.05.2010. Though through

the final order, the agency was terminated and forfeiture of the renewal commission was also ordered, the Appellate Authority had through the

order dated 03.05.2010 modified, limiting the same only to Termination of Agency but the forfeiture of the renewal commission was allowed to be

paid. The petitioner claiming to be aggrieved by the termination of agency is before this Court.

The respondents have filed their objection statement. The very reasons as assigned in the final order as also the order of the Appellate Authority

is adverted to in the objection statement seeking to justify the action initiated and conclusion reached against the petitioner. In that view the illness

as referred to above has been referred in the objection statement and it is contended that the policy issued to Late H.B.Manchegowda, being

payable on 17.11.2005 is due to the action of the petitioner in not exercising due care. In that view it is contended that the termination of forfeiture

of the renewal Commission is in accordance with the Rules 16(1)(a)(b) & (d) and 19(1) of the LIC of India (Agents) Rules, 1972. In that view,

the respondents seek to sustain the action taken against the petitioner.

In the above background, having heard the learned counsel for the parties, I have perused the petition papers. At the outset, it is necessary to

take note that in the appeal in any event the respondents themselves have taken a decision to modify the order insofar as the forfeiture of the

renewal commission and therefore to that extent there is no grievance for the petitioner. The only issue for consideration is as to whether the orders

impugned would be sufficient to arrive at the conclusion that the termination of the agency of the petitioner was also done in accordance with law

and as to whether the reasons as assigned in the orders impugned is sufficient. To that extent the issuance of the show cause notice dated

11.06.2008 to the petitioner would indicate that the early claim of the policy due to the death on 17.11.2005 was alleged to be due to suppression

of material facts. It was further indicated in the show cause notice that the petitioner who is the primary underwriter has not mentioned the facts in

the confidential report and recommended for acceptance of the proposal which resulted into a wrong policy being issued. It is in that view, action

was proposed against the petitioner.

In that background a perusal of the final order dated 04.09.2008 would indicate that except for stating therein that the respondents have

indisputable evidence to show that the deceased life cover had pre-insurance illness, the conclusion reached does not indicate that it is determined

to the effect that the petitioner had knowledge of such illness. Though the policy holder was suffering from the illness, whether the petitioner despite

having knowledge of the same had suppressed and recommended the issue of policy is not forthcoming in the order impugned. In this regard the

appropriate consideration was required to be made by the respondents and only based on the evidence referred to therein and on disclosing the

nature of the illness to conclusively prove this aspect of the matter, a further conclusion could have been arrived at by the respondents. On the

other hand except for stating so, the respondents have not indicated that the petitioner in fact was responsible for issue of such policy which

resulted in early claim as such conclusion has not been arrived at based on evidence. Against such order when the petitioner had preferred the

appeal, this aspect of the matter has not been adverted to in detail. Yet the Appellate Authority has also confirmed the action insofar as the

termination of the agency, though forfeiture of the renewal commission has been set-aside only by indicating that a lenient view is taken. The

decision taken insofar as the termination of the agency would however not be sustainable. However keeping in view the fact that the policy was

issued in the year 2004 and was claimed in the year 2005 and the respondents have also referred to in the order about the evidence being

available, the matter would require reconsideration by the competent authority.

To enable the same, the order dated 03.05.2010 insofar as confirming the termination of agency and the order dated 04.09.2008 are set-aside.

The matter is remitted to the respondent No.3 to provide opportunity to the petitioner take into consideration all aspects of the matter and take a

fresh decision which shall in any event be taken as expeditiously as possible but not later than two months from the date on which a copy of this

order is furnished.

Petition is accordingly disposed of.