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High Court of Kerala
K. Balakrishnan Nair, C.T. Ravikumar, JJ.
Subramania Pillai K - Appellant
Versus
Senior Divisional Manager L I C & Ors - Respondent
W.A. No. 1218 of 2007
Decided On : 09-07-2009
Moral Hazard Report - Life Insurance Corporation of India - Regulations 21, 24, 39(1) - The court discussed the subjective satisfaction of the Development Officer and the Assistant Branch Manager in assessing the income of the insured, the absence of objective norms for income assessment, and the lack of dishonesty or lack of good faith. The court found that the charges against the appellant did not disclose any misconduct warranting punishment under Regulation 39.
Fact of the Case:
The appellant, a Development Officer at the Life Insurance Corporation of India, was accused of irregularities in reporting a life insurance proposal and inducing the Corporation to accept it. The appellant's reply and objections to the enquiry report were overruled, and he was punished with a reduction in basic pay. The appellant filed an appeal and a memorial, both of which were dismissed, leading to the filing of the Original Petition.
Finding of the Court:
The court found that the charges against the appellant did not disclose any misconduct warranting punishment under Regulation 39. It held that the appellant's actions were in good faith and that the enquiry was held in violation of the principles of natural justice. The reliance on certain documents without examining their authors prejudiced the appellant, and the enquiry was vitiated by principles of natural justice.
Issues: The issues involved the alleged irregularities in reporting a life insurance proposal, the appellant's reply and objections to the enquiry report, the punishment imposed on the appellant, and the dismissal of the appeal and memorial filed by the appellant.
Ratio Decidendi: The court's decision was based on the lack of misconduct warranting punishment under Regulation 39, the good faith of the appellant's actions, and the violation of principles of natural justice in the enquiry process. The reliance on certain documents without examining their authors prejudiced the appellant, leading to the quashing of the punishment and dismissal of the appeal and memorial.
Final Decision: The writ appeal was allowed, the judgment of the learned Single Judge was reversed, and the punishment, appeal dismissal, and memorial dismissal were quashed. The appellant was entitled to all consequential benefits, and the monetary benefits payable as per the judgment were to be released within three months.
K. Balakrishnan Nair, J.
1. The appellant is the writ petitioner. The brief facts of the case are the following:
The appellant was a Development Officer of the Life Insurance Corporation of India working at Ernakulam. While so, he has been served with Ext. P1 charge-sheet dated 09/08/1994 accusing him of certain irregularities in reporting the proposal for insuring the life of one Sri. V. C. Devassy, who was working as an Assistant, at the relevant time, in Telecom Department. Sri. George Paul, the Agent, working under the appellant, came forward with a proposal for insuring the life of said Sri. V. C. Devassy for Rs.5,00,000/-. The appellant submitted a 'Confidential Report' concerning that proposal on 11/05/1988. In that report, he certified the monthly income of said Sri. Devassy as Rs.9,000/- from different sources. Without proper enquiry, it is alleged, he recommended the proposal for acceptance and induced the Corporation to accept that proposal. The said Devassy died on 12/06/1989 and the same resulted in a claim being made on the LIC for an amount of Rs.10,00,000/-. Yet another allegation raised in Ext. P1 was that he submitted a 'Confidential Report' dated 31/05/1989 in connection with another proposal for insuring the life of the aforementioned Devassy for a further amount of Rs.4,00,000/-. In that report, the appellant certified that the Devassy's monthly income was Rs.23,500/- from different sources. It was so certified without conducting a proper enquiry into his sources of income, it was alleged. But, before the said proposal matured into a policy, the said Devassy died. During the investigation of the death claim, it was found that the said Devassy had only a monthly salary of Rs. 1,900/- and therefore, the 'Confidential Reports' submitted by the appellant on 11 /05/1988 and 31/05/1989 contained false information. Therefore, the appellant committed breach of Regulations 21 and 24 read with Regulation 39(1) of Life Insurance Corporation of India (Staff) Regulations, 1960, it was alleged.
2. The appellant submitted Ext. P3 reply. He submitted that he was appointed as probationer in the post of Development Officer in July, 1987. Sri. George Paul was one of the many Agents recruited by him. The said George Paul has substantial volume of business. In April 1988, the said Agent approached the appellant and told him that he has contacted Sri. V. C. Devassy and tried to persuade him to take a policy, but he failed to convince him. The appellant immediately informed Sri. B. K. Narayanan Nair, the Assistant Branch Manager (Sales) and sought his advice. The latter suggested that all of them together would call on Sri. V. C. Devassy at his residence. All the three went to his residence. The Assistant Branch Manager (Sales) Sri. B. K. Narayanan Nair was able to persuade the said client to take an insurance policy for Rs.5,00,000/-. The said Officer made a detailed enquiry with the said client regarding his income and its sources. He also met some of the neighbours and made enquiries regarding the sources of income mentioned by the client etc. Based on the information so collected, the appellant drafted a 'Moral Hazard Report' for the above proposal. Since the sum assured was above Rs.4,00,000/-, the aforementioned Assistant Branch Manager (Sales) wrote the 'Moral Hazard Report' and this resulted in the proposal being accepted and a policy being issued. Again the aforementioned Agent during 1989 persuaded the said Devassy to take a policy for a further sum of Rs.4,00,000/-. Before writing the 'Moral Hazard Report', the appellant called on Sri. Devassy at his residence and made enquiries about his income. He also made enquiries in the neighbourhood and based on the information received, he completed and submitted the 'Moral Hazard Report'. The appellant also pointed out in his reply that for the first policy late Devassy has paid the quarterly LIC premium regularly. It was also found that he was maintaining Postal Life In
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