The main legal point established in the judgment is that the forfeiture of the renewal commission under Rule 19(1) of the Life Insurance Corporation of India (Agents) Rules, 1972, requires a finding of fraud in a judicial proceeding as specified in Rule 15(c) of the Rules.

Petitioner, who was an agent of the Life Insurance Corporation, from 1980 onwards, challenges the termination of his agency coupled with forfeiture of the renewal commission, as ordered originally by the first respondent and affirmed by the Appellate Authority and Chairman. The appointment of a person as agent of the Life Insurance Corporation and consequently the termination of his agency, with or without the forfeiture of the renewal commission that the agent is entitled to is effected under Statutory Regulations called as "Life Insurance Corporation of India (Agents) Rules, 1972 (hereinafter referred to as "the Rules"). The said Rules are framed by the Central Government m exercise of the powers conferred by Section 49 of the Life Insurance Corporation of India Act, 1956. An interesting question as regards the scope of Rule 19 of the Rules in the context of forfeiture of the renewal commission that is due to the agent has come up for consideration in this writ petition.

2. Petitioner, who claims to have been appointed as agent of the Corporation in the year 1980, claims that he was doing well as an agent and had unblemished record of service for more than 20 years. The first respondent–Branch Manager issued Ext.P-1 notice to him requiring his explanation in the wake of the fact that as many as seven cheques were issued by the petitioner in favour of the Corporation. Apparently, the cheques were issued by the petitioner towards payment of renewal premium, in relation to different policies held by different policy holders. It is further seen that the petitioner as an agent had canvassed the business in relation to the said policy and therefore considered it appropriate to collect renewal premium from the policy holders and deposit the same with the Corporation. The cheques were dishonoured for insufficiency of funds and Ext.P-1 came to be issued in the wake of the said fact. Petitioner in Ext.P-2, accepted his mistake. In Ext.P-2, he has essentially pleaded for condonation of the lapses on his part. The fact relating to the issuance of the cheques towards payment of premium by different policy holders is admitted by the petitioner.

3. The Corporation decided that the matter merited an enquiry. Ext.P-3 was issued under Rule 16 of the Rules. The second respondent-competent authority noted that the petitioner had admitted in Ext.P-2 that he had collected premium by cash from the policy holders, premium so collected was remitted at the branch counter by cheques issued by the petitioner and that some of the cheques were dishonoured. The following allegation forming part of Ext.P-3 is significant:

"By your willful misconduct, you have acted in a manner prejudicial to the interest of the Corporation and detrimental to the interest of the policy holders. You have tarnished the image of the Corporation by misappropriating the amount and have committed fraud."

The second respondent then intimated that it is proposed to terminate the petitioner's agency under Rule 16 (1) with forfeiture of the commission under Rule 19(1) of the Rules. Petitioner was given an opportunity to show cause against the proposal. Ext.P-4 explanation submitted by the petitioner also admitted a mistake on his part. Apparently, petitioner undertook the task of issuing his cheques for payment of premium due from different policy holders. According to him, the cheques were later cleared. He assured that he will not repeat the mistake committed by him.

4. The explanation was found to be inadequate and vide Ext.P-5 order, the second respondent proceeded to terminate the agency of the petitioner. The order further directed forfeiture of renewal commission under Rule 19 of the Rules.

5. An appeal before the Zonal Manager and a memorial before the Chairman also met with the same fate, vide Ext.P-7 and Ext.P-9 orders. The termination of the agency was coupled with forfeiture of the renewal commission. Petitioner therefore challenges Exts.P-5, P-7 and P-9 orders. Pet