1. The respondent, G.Vasantha approached this Court, so as to assail the order passed by the appellants herein, terminating her agency. Simultaneously, an order was passed forfeiting the renewal commission earned by her. Writ Petition No. 5786/2010 filed by the respondent was partly allowed, inasmuch as, the forfeiture of renewal of commission was ordered to be set aside by a learned Single Judge of this Court, while disposing of Writ Petition.2010. It is the No.5786/2010. by an order dated 10.112 instant part of the order, which has been assailed by the appellants herein, through the present writ appeal.
2. In order to contend, that the respondent has been wrongfully granted the right to the commission earned by her. reliance has been placed on Life Insurance Corporation of India (Agents) Regulations. 1972 (hereinafter referred to as the 1972 Regulations'). Our attention was drawn to Regulation 19, which is being extracted hereunder:
"19. Payment of commission on discontinuance of agency:
(1) In the event of termination of the appointment of an agent, except for fraud, the commission on the premiums received in respect of the business secured by him shall be paid to him if such an agent:
(b) (c) (a) has continually worked for at least 5 years since his appointment and policies assuring a total sum of not less than Rs.2 lakhs effected through him were in full force on a date one year before his ceasing to act as such an agent: or has continually worked as an agent for at least 10 years since his appointment: or being an agent whose appointment has been terminated under clause (e) of sub-regulation (1) of regulation 16 has continually worked as an agent for at least two years from the date of his appointment and policies assuring a total sum of not less than Rs.1 lakh effected through him were in full force on the date immediately prior to such termination:
Provided that in respect of an absorbed agent the provisions of clause (a) shall apply as if for the letters, figures and word. "Rs.2 laksh", the letters and figures "Rs.50.000"had been substituted.
Any commission payable to an agent under sub-regulation (1) shall, notwithstanding his death, be payable to his nominee or nominees or, if no nomination is made or is subsisting to his heirs, so long as such commission would have been payable had the agent been alive. (3) (4) In the event of the death of the agent while his agency subsists, any commission payable to him had he been alive, shall be paid to his nominee, or. if no nomination is made of if subsisting, to his heirs, so long as such commission would have been payable had the agent been alive, provided he had continually worked as an agent for not less than 2 years from the date of his appointment and policies assuring a total sum of not less than Rs.1 lakh effected through him were in full force on the date immediately prior to his death.
If the renewal commission payable under sub-regulation (1) or sub-regulation (2) or sub-regulatJon (3) falls below Rs. 100/- in any financial year (hereinafter referred to as the said financial year), the competent authority may. notwithstanding anything contained in the said sub-regulation, commute all commission payable in subsequent financial years for a lump sum which shall be three times the amount of renewal commission paid in the said financial year and on the payment of such lump sum to the agent or his nominees or heirs, as the case may be, no commission on the business effected through the agent shall be payable in the financial years subsequent to the said financial year."
Based on sub-regulation (1), it was the vehement contention of the learned counsel for the appellants, that where an agency is terminated on account of fraud. Regulation 19 forfeits renewal commission earned by an agent. It was also submitted by the learned counsel for the appellants, that the respondent had committed fraud by indicating, that she had qualified the matriculation examination, whereas she had merely qualified the seventh class. It was asserted, that the respondent had even admitted the aforesaid fraud, which was committed by her It was also sought to be asserted that the learned Single Judge, in the ultimate analysis had also recorded, that the respondent had "practically" committed a fraud. That being so, it is the assertion of the learned counsel for the appellants, that in tonus of Regulation 19 of the 1972 Regulations, the learned Single Judge was not justified in allowing the respondent to earn renewal commission.
3. Having perused the 1972 Regulations (a copy whereof was handed over to us during the course of hearing of the instant writ appeal) we found that termination of agency under the 1972 Regulations could be ordered under a series of provisions, including Regulations 13 to 16 of the 1972 Regulations. Regulations 13 to 16 are being extracted hereunder:-
"13. examination of agency:
(1) If an agent fails to bring in the business required of him under regulation 9 in an agency year. his appointment shall stand terminated at the end of such agency year:
Provided that nothing contained herein shall apply to an agent who has been exempted under sub-regulation (4) of regulation 9 from bringing in the minimum business required under the said regulation.
(2) An agency which stands terminated under the sub-regulation (1) may be reinstated by the compliant authority if it is satisfied that the failure of the agent to bring in the business required of him was due to reasons beyond his control.
(3) Where an agency is reinstated under sub-regulation (2). It shall be treated as continuous for all purposes.
14. Termination of agency on cancellation of. or failure to renew, licence:
If the licence of an agent is cancelled or is not renewed in accordance with the provisions of section 42 of the Insurance Act. his appointment as agent shall stand terminated from the date the licence is cancelled or, as the case may be, from the date the licence ceases to be valid:
Provided that if the licence of the agent is restored or renewed, the competent authority shall, without prejudice to the provisions of regulation 16, reinstate I tie agency.
15. Termination of agency on account of certain disqualification:
If an agent:
(a) is found to be of unsound mind by a court of competent jurisdiction;
(b) is found to be guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence by a court of competent jurisdiction; (c) in any judicial proceedings, has been found to have knowingly participated in or connived at any fraud, dishonesty or misrepresentation against the Corporation or any of its subsidiaries or against any person having official dealings with the Corporation or any of its subsidiaries. his appointment shall be liable to be terminated without notice and the competent authority shall forthwith terminate his appointment.
16. Termination of agency for certain lapses:
(1) The competent authority may. by order, determine the appointment of an agent, (e) (0)
(a) if he has failed to discharge his functions, as set out in regulation 8, to the satisfaction of the co in pete ntauth oil ty;
(b) if he acts in a manner prejudicial to the interests of the Corporation or to the interests of its policy holders:
(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;
if he becomes physically or mentally incapacitated for carrying out his functions as an agent; 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."
4. It is not a matter of dispute, that the agency of the respondent herein, came to be terminated under Regulation 16(l)(d) of the 1972 Regulations. The question which requires adjudication at our hands is, whether or not. termination of an agency under Regulation 16(l)(d) could invoke forfeiture of renewal of commission earned bv an agent. A perns:'] of Regulation 16(l)(dJ does not lead to any such inference. Oui of the termination regulations (extracted above) only Regulation 15(c) is the one, where termination is based on account of a "fraud" committed by an agent. Whiie interpreting Regulation 19(1). wherein the term "fraud" has been expressly used, the said termination which disentitles an agent to renewal commission, would be a termination order under Regulation 15(c). Since the termination of agency of the respondent, was not under Regulation 15(c). but was under Regulation 16(l)(d). we are Qi the view, that Regulation 15(c) of the 1972 Regulations. could not be the basis tor denial of renewal commission to the respondent.
5. For the reasons recorded hereinabove, we find no merit in the instant writ appeal and the same is accordingly dismissed.
6. In view of the disposal of the main writ appeal. Misc.W,Nos.740/2011 and 741/20,11 do not survive for consideration.