TaxTMI 
TaxTMI 
2016 (7) TMI 1534
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....on (2) therein the Central Government shall, as soon as may be after the commencement of the Life Insurance Corporation Act, by notification in the Official Gazette, direct that certain sections specifically mentioned therein, including Section 44, of the Insurance Act shall apply to the Corporation subject to such conditions and modifications as may be specified in the notification. Obviously, the aforementioned Government of India notification GSR 262(E) dated 24.7.1972 was issued in terms of the powers under Section 43(2) of the Life Insurance Corporation Act and even while bringing in amendments to the modifications effected earlier by GSR 734 dated 23.8.1958 and introducing clauses (a) to (bbb) to proviso to Section 44(1), clause (c) of sub-section (1) of Section 44 of the Act was kept intact and was made as such applicable to LIC. Clause (c) of proviso to Section 44 provides a condition rather, an embargo for the benefit of Section 44 to be available, seemingly, to LIC agents who have served the said insurer continually and exclusively for at least ten years and after ceasing to act as such agents. The embargo actually lies in its second limb and it is to the effect that such....
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....sed repelling the contentions of the petitioner therein in support of his claim for renewal commission and referring to the decision in W.A. No. 2712 of 2009. Evidently, the Division Bench doubted the correctness of the decision in W.A. No. 2712 of 2009 and thereafter holding that an important question of law, as mentioned above, is involved, referred the matters. 3. For understanding the real magnitude of the reference, it would only be apropos to refer to Section 44 of the Insurance Act, 1938, in its entirety. The said provision, as mentioned hereinbefore, was made applicable to LIC in terms of Government of India notification GSR 262(E) dated 24.7.1972 that, virtually amended the modification effected by GSR 734 dated 23.8.1958. For easy reference, it is only proper and profitable to extract these provisions, in a comparable tabular form, as follows:-- INSURANCE ACT 44. Prohibition of cessation of payments of commission.--(1) Notwithstanding anything to the contrary contained in any contract between any person and an insurance agent providing for the forfeiture or stoppage of payment of renewal commission to such insurance agent, no such person shall, in respect of life insur....
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....to him on renewal premium under the agreement by reason only of the termination of his agreement, except for fraud: Provided that --- (a) Such agent ceases to act for the insurer concerned after the Central Government has notified in the Official Gazette that it is satisfied that the circumstances in which the said insurer is placed are such as to justify the agent's ceasing to act for him; or (b) Such agent being an agent appointed before the 1st May 1972 has served the insurer continually in respect of life insurance business for at least five years and policies assuring a total sum of not less than fifty thousand rupees effected through him were in force on a date one year before his ceasing to act as such agent for the insurer; or (bb) such agent being an agent appointed on or after the 1st May, 1972, has served the insurer continually in respect of life insurance business for at least five years and policies assuring a total sum of not less than two lakhs of rupees effected through him for the insurer were in force on a date one year before his ceasing to act as such agent for the insurer; or (bbb) such agent, having worked as an insurance agent for the insurer contin....
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....red in the records of the insurer and it has not been varied or cancelled by notice in writing delivered to the insurer''. 4. We have heard Sri. Raju K. Mathews, the learned counsel appearing for the appellant, Sri. K. Ramakumar, the learned Senior Counsel appearing for the review petitioner as also Senior Counsel Sri. K. Jayakumar and Sri. Lal George, learned counsel appearing for the Life Insurance Corporation. 5. The appellant in W.A. No. 461 of 2013 and the deceased Baby John who originally filed W.A. No. 2712 of 2009, which is now sought to be pursued by his widow, were former LIC agents and both of them had more than the prescribed length of service as LIC agents to earn eligibility for renewal commission under clause (c) of the proviso to section 44 of the Act. It is pursuant to the interpretation of Section 44 of the Act applicable to LIC in terms of the notification of Government of India viz., GSR 262(E) dated 24.7.1972 that it was discontinued in the case of the appellant in the above writ appeal. In the case of the review petitioner's husband who resigned from the agency he was informed of his ineligibility for renewal commission, based on the very same cl....
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....e on 14.12.49 aggregated only less than the prescribed minimum value of Rs. 50,000/-. During such consideration, it was held that an insurance agent who had served the insurer exclusively for at least ten years would be under a disability as against an insurance agent who had worked only between five years and ten years in that, he could not claim the percentage on the renewal premium, if he directly or indirectly solicited or procured insurance business for any other person after he ceased to be an insurance agent for the particular company. The said decision deals with the clauses under the Insurance Act. It is to be noted that section 44 of the Act was made applicable to LIC as per GSR 734 dated 23.8.1958 published in the Gazette of India dated 23.8.1958 and the same was amended as per GSR 262(E) dated 24.7.1972 published in the Gazette of India dated 24.7.1972. The pointed question involved in this case, as mentioned hereinbefore, is as to whether the second limb of clause (c) of the proviso to Section 44(1) of the Act is one which would apply to the other different clauses thereunder viz., clauses (a), (b), (bb) and (bbb) introduced to that proviso for application to LIC so as....
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....nsure that the prohibition on cessation of payments of renewal commission to those former LIC agents who are made eligible for and entitled to renewal commission for the policies effected through them, even after cessation of such agency under all the clauses, would and should satisfy the condition enjoined under the second limb of clause (c) of the proviso, to avoid cessation of payment of such commission. In strict sense, in such circumstances, it cannot be said that it is purely a part of clause (c) alone having applicability in the cases of persons falling under the first limb prohibiting payment to them if they directly or indirectly solicited or procured insurance business for any other person. The purpose revealed from the second limb of clause (c) of the proviso to Section 44(1) of the Act applicable to LIC, cannot brook any construction other than that the said condition is intended to act as an embargo applicable to all the clauses carrying eligibility criteria for renewal commission on cessation of agency and that it is one which would disqualify the contraveners who directly or indirectly solicit or procure insurance business for any other person, from receiving renewal....
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....ght of the discussions as above, we are inclined to answer the referred question in the affirmative. In other words, according to us, the second limb of clause (c) of the proviso to Section 44(1) of the Act is one which would apply to the other different clauses thereunder applicable to LIC viz., clauses (a), (b), (bb) and (bbb) introduced to that proviso so as to import the said embargo even in respect of persons falling under clauses (a) to (bbb). 7. Having answered the question of law referred as above, the next question to be considered is whether we should finally decide the appeal as also the review petition or return them to the Division Bench. In the contextual situation, it is only worthy to refer sections 4 and 7 of the Kerala High Court Act as also the order of reference. It is to be noted that the order of reference was made by two of us (Justice Thottathil B. Radhakrishnan and Justice Babu Mathew P. Joseph). It is contended by the appellant and the review petitioner that the Full Bench shall not decide the case on merits and the appeal and the review petition may be send back to the Bench by which they were referred to Full Bench. Section 4 deals with the powers of th....
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....ll Bench but, the entire matters were also referred to Full Bench by the reference order. In such circumstances, we are proceeding to finally decide both the matters. 9. We will firstly consider the review petition filed in W.A. No. 2712 of 2009. As noticed hereinbefore, it is originally filed by one Baby John who was a former LIC agent. He was having more than ten years of service as LIC agent and on cessation of the agency, he joined the service of the Reliance Life Insurance Corporation as Channel Development Manager. Obviously, he filed W.P.(C). No. 26791/2008 when he was deprived of his renewal commission on the ground that after the termination of the agency, he became an agent of another competitor insurance company in the private sector and thereby incurred disqualification rather, became disentitled to get renewal commission. The learned Single Judge dismissed the writ petition and the Division Bench, as per judgment dated 31.7.2012, confirmed the same by dismissing the appeal holding that they are in complete agreement with the finding of the learned Single Judge. The review petition is filed by the wife of the appellant upon his death. We have carefully gone through gro....
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....es to be reheard. For the foregoing reasons, the review petition is liable to fail. 10. Evidently, W.P.(C). No. 30018 of 2009 was dismissed by the learned Single Judge. A reference of the decision in W.A. No. 2712 of 2009 was also made by the learned single Judge though it cannot be said that the writ petition was dismissed relying on the same. The fact that the appellant herein was a former LIC agent who served the first respondent continually and exclusively for more than ten years and on his cessation of agency, he joined a competitor insurance company, was not disputed before the learned Single Judge. After termination of his agency, he worked as Unit Manager, State Bank of India Insurance Company. In the counter affidavit filed in the writ petition such contention was specifically taken by the respondents along with the further averment that he was thus procuring insurance business for SBI Life Insurance Company. It is to be noted that even in this appeal the appellant had not made any contention disputing the said fact. It was virtually in the absence of any dispute on that question that the learned Single Judge considered the contention of the appellant in the light of the ....
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....ligible for commission for renewal premium in respect of the policies secured by him. It is also contended that the finding of the learned Single Judge that restriction imposed on clause (c) is only a reasonable restriction and could not be termed as illegal is not sustainable in law. From the pleadings of the appellant taken up in the writ petition as also in the appeal it is evident that he is actually the former LIC agent whose case falls under clause(c) of the proviso to section 44(1) of the Act. He was having more than ten years service continually and exclusively under the first respondent LIC. It is a fact that he had actually resigned from the agency by submitting Ext. P2 which was accepted as per Ext. P3 letter by the third respondent. Termination of his agency and his joining as Unit Manager in State Bank of India Insurance Company is not disputed, as already mentioned. It is in the said circumstances that citing the embargo under clause (c), he was denied renewal commission. The contention of the appellant is that in the light of the main provision under section 44(1), a former LIC agent would become ineligible for grant of renewal commission on termination of his agency....
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....f the proviso to Rule 44(1) of the Act as one that violates Article 14 of the Constitution of India. According to the appellant, if section 44(1)(c) is construed to mean that all former LIC agents who got more than ten years of service are prohibited from taking up service under another insurer it would lead to an anomalous situation where an agent with lesser service could take up employment under another insurer and continue to get commission payable on renewal premium, but persons with the aforesaid prescribed length of service would alone be disentitled to get it. In the light of our answer to the referred question, such a situation would not arise. Apart from the said contention, the appellant has not taken up any other contention to challenge the embargo contained under the proviso (c) to section 44(1) of the Act. It is well settled in law that he, who assails constitutional validity of a statutory provision or rule, has to specifically assert the grounds for such challenge. (See decisions: State of Uttar Pradesh v. Kartar Singh (AIR 1964 SC 1135), State of Andhra Pradesh and another v. K. Jayaraman and others [(1974) 2 SCC 738], Union of India v. E.I.D. Parry (India) Ltd. [(....