The main legal point established is that the termination of agency can be based on acts prejudicial to the interests of the corporation, but the payment of commission can only be discontinued in cases of proven fraud.

ORDER :

Leave granted.

2. We have heard the learned counsel for the parties finally at this stage itself with their consent.

3. The appellant in this appeal challenges the orders dated 04.10.2012 passed by the High Court of Kerala whereby the appeal of the appellant had been dismissed thereby confirming the order of the learned Single Judge dismissing the writ petition of the appellant herein.

4. The brief facts are that the appellant was appointed as a Career Agent Trainee in the year 1987 by Respondent No.1. After completion of his training, he was appointed as the Career Agent. After serving in that capacity for nearly 11 years and keeping in view his satisfactory performance, the appellant was given Membership to the Divisional Managers' Club in the year 1998. The appellant states that he has been performing his duties as Member of the Divisional Managers' Club to the satisfaction of Respondent No.1 and was even awarded certificates because of his outstanding achievements. He was also given Award of Excellence for the period 2000-2001 in recognition of his distinguished and dedicated performance.

5. On 19.04.2004, the appellant was given a show cause notice alleging therein that he had mis-conducted himself in respect of two insurance policies which were given to two persons viz., Smt. Ruby Mathew and Shri Sanal Kumar S. by suppressing the facts about their earlier policies. Had those facts been disclosed, these persons were not entitled to take another policy which was given to them. It was, thus, proposed to terminate the agency of the appellant under Rule 16(1)(b) with forfeiture of renewal commission under Rule 19(1) of Agents Regulations 1972 for "committing fraud by suppressing the existence of previous policy details of Smt. Ruby Mathew a/s Ruby Scaria and Shri Sanal Kumar S. and thereby acting in a manner prejudicial to the interests of the Corporation. After giving opportunity of hearing and reply to the said show cause notice and considering the same, final order dated 21.04.2004 was passed stating that reply received was not satisfactory and the facts of the aforesaid cases showed that the appellant had "tried to defraud the Corporation, thereby acting in a manner prejudicial to the interest of the Corporation". On that basis, the agency of the appellant was terminated and the renewal commission was also forfeited. The appellant took the departmental remedy by filing appeals and petitions, which were dismissed. Challenging these actions of the respondents, the appellant approached the High Court of Kerala by filing a writ petition. Learned Single Judge dismissed the writ petition, which order of the Single Judge, as mentioned above, has been upheld by the Division Bench also in intra-court appeal preferred by the appellant resulting into dismissal of the said appeal as well.

6. From the aforesaid factual matrix, it is clear that two-fold action was taken against the appellant, viz.:-

(1) Termination of his agency.

(2) Forfeiture of commission.

7. Insofar as action of termination of agency of the appellant is concerned, we find that as far as the two instances of suppression of certain facts while issuing policies to the aforesaid persons are concerned, they were adequately proved and it can be discerned that the authorities concerned rightly came to the conclusion that the said acts were prejudicial to the interest of the Corporation. Therefore, as far as termination of the agency of the appellant is concerned, this action was legal and justified.

8. We may point out at this stage that even while issuing notice in the special leave petition filed by the appellant, this Court made it clear that notice was being issued only to examine the limited question as to the monetary consequences of the termination of the agency.

9. It is, thus, clear that this notice was limited to Issue No.2 above, viz., whether the action of forfeiture of commission taken by Respondent No.1 was justified in law.

10. It is obvious that the action was