Ananthan v Union of India & Life Insurance Corporation of India and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **TUESDAY, THE 21ST DAY OF MAY 2019 / 31ST VAISAKHA, 1941** ## **WP(C).No. 34317 of 2018** ## **PETITIONER:** **ANANTHAN V AGED 43 YEARS** **DEVELOPMENT OFFICER, CITY BRANCH OFFICE -1, THIRUVANANTHAPURAM - 695 004, RESIDING AT CSM21, EDAPPAZHINJI, VAZHUTHACAUD, THIRUVANANTHAPURAM - 695 010.** **BY ADV. SRI.MILLU DANDAPANI** ## **RESPONDENTS:** - **1 UNION OF INDIA REPRESENTED BY ITS SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW DELHI - 110 001** - **2 THE LIFE INSURANCE CORPORATION OF INDIA REPRESENTED BY ITS MANAGING DIRECTOR YOGAKSHEMA BUILDING, JEEVAN BIMA MARG, MUMBAI - 400 021.** - **3 ZONAL MANAGER LIFE INSURANCE CORPORATION OF INDIA, SOUTHERN ZONE, LIC ZONAL OFFICE, LIC BUILDING, ANNASALAI, CHENNAI - 600 002.** - **4 THE SENIOR DIVISIONAL MANAGER LIFE INSURANCE CORPORATION OF INDIA, DIVISIONAL OFFICE, JEEVAN PRAKASH, PATTOM, THIRUVANANTHAPURAM - 695 004.** - **5 SENIOR BRANCH MANAGER LIFE INSURANCE CORPORATION OF INDIA, CITY BRANCH OFFICE -1, THIRUVANANTHAPURAM - 695 001. BY ADVS.** **SRI.S.EASWARAN SRI.K.JAYESH MOHANKUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22.03.2019, THE COURT ON 21.05.2019 DELIVERED THE FOLLOWING:** W.P.(C).No.34317/18 2 ## **JUDGMENT** ## 1.The petitioner has approached this Court with the following prayers:- (i)call for the records pertains to Ext.P11 order issued by the 4[th] respondent and quash the same by issuing writ of certiorari or any other appropriate writ, order or direction. (ii) issue a writ in the nature of declaration that the provisions regarding the expense limit, eligible premium and cost ratio as prescribed in Rules 2(e), 2(i), 2(j), 4(1), 4(2) and 6(1) in Ext.P1 Special Rules with amendment are illegal, arbitrary and set aside the same. (iii)issue a writ in the nature of declaration that the petitioner is entitled to continue with the LIC as Development Officer without break of service. (iv) Issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents 2 to 5 to instruct the competent authority to give compensatory allotment of direct agents to the petitioner before applying any provisions of the rule of the petitioner. (v)Issue a writ of mandamus or any other appropriate writ, order or direction directing the appropriate authorities to enquire into the conspiracy that took place to terminate his service during the pendency of the complaint forwarded to the Zonal Vigilance Officer of the LIC regarding habitual mis-conduct of the 5[th] respondent, Senior Branch Manager during official duty time within the office.” - 2.The petitioner, who was a permanent employee of the Life Insurance Corporation of India, challenges his termination from service by Exhibit P11 order dated 5.10.2018. W.P.(C).No.34317/18 3 3.Heard Sri.K.P.Dandapani, the learned Senior Counsel for the petitioner and Sri.S.Easwaran, the learned standing counsel appearing for the respondent Corporation as well as the learned Central Government Counsel appearing for the 1[st] respondent. 4.The petitioner joined the service of the Corporation as Apprentice Development Officer in June 2002 and was appointed as Probationary Development Officer Class II on 24.3.2003. He had worked in the Adoor branch of the Corporation till 2011 where his performance and track record were good. He was transferred to Thiruvananthapuram in 2011. Thereafter, he was informed that the cost ratio exceeded permissible limits and this had resulted in reduction of his increment and subsequently to a decrement in his pay. The petitioner approached this Court by filing W.P. (C).No.8737/2015 challenging LIC of India Development Officers (Revision of Certain Terms and Conditions of Service) Rules, 2009 and Exhibit P2 judgment dated 26.10.2015 was the result. The challenge against Rule 6(8) of Exhibit P1 Rules W.P.(C).No.34317/18 4 was repelled. The termination from service under Rule 6 was discussed in detail by this Court. It was found that the Rules mandates termination on the cost ratio exceeding 38% and it is expedient that an opportunity to explain against such drastic action be extended to the Development Officer. However, as far as Rule 6(8) is concerned, this Court found that the sub rule deals with termination when the basic pay falls below the minimum on a second occasion which happens by reason of decrement imposed. The petitioner was directed to be given a further period of three weeks to submit his objections and orders were directed to be passed. 5.Petitioner submitted Exhibit P3 objection pointing out mitigating circumstances. However, Exhibit P4 letter was issued on 9.1.2016 intimating the petitioner that since his cost ratio exceeded the permissible limits during the appraisal year which ended on 31.3.2015, the petitioner's services are liable to be terminated under Rule 6(8) read with Rule 7 of Exhibit P1 Rules. W.P.(C).No.34317/18 5 - 6.The petitioner challenged the action by filing W.P.(C).No. 2311 of 2016 and an interim order of stay was initially granted. However, by Exhibit P5 order dated 6.7.2018, the interim order was modified, clarifying that the order will not stand in the way of the respondents taking action on the basis of the petitioner's performance in the subsequent years, in accordance with law. Thereafter, Exhibit P6 show cause notice was issued to the petitioner requiring him to show cause why his services shall not be terminated under Rule 6(8). The petitioner preferred Exhibit P7 representation and approached this Court challenging the show cause notice. By Exhibit P9 judgment, the writ petition was disposed of directing consideration of the petitioner's objection. The petitioner submitted Exhibit P10 representation. However, Exhibit P11 order was passed terminating his service, which is under challenge. - 7.The petitioner alleges personal animosity and _mala fide_ against the 5[th] respondent, Senior Branch Manager and has produced Exhibit P12 series of documents to substantiate the W.P.(C).No.34317/18 6 said claim. The learned counsel for the petitioner contends that a Development Officer has no administrative or supervisory control on the insurance agents appointed by the Corporation and the role of the Development Officer is only to introduce prospective candidates for appointment as agents. It is stated that the petitioner was not granted any institutional support after his transfer to Thiruvananthapuram which had resulted in his lack of performance after such transfer. The learned counsel relies on Exhibit P17 circular to contend that Development Officers are entitled to allotment of 75% to 100% of the organization left behind at the original place of posting. It is stated that the petitioner ought to have been put on notice of the proposed action and the competent authority ought to have considered his objections in terms of Rules 6(4), 6(5), 6(6) and 6(7) of Exhibit P1 before an order of termination was issued. It is stated that Exhibit P8 letter shows that the process of appraisal is to be undertaken after the close of every appraisal year and that the appraisals have to be finalised without delay. W.P.(C).No.34317/18 7 8.The learned Senior Counsel relies on the decision of the Karnataka High Court in the **Life Insurance Corporation of India v. Sri.Kalappa M Sankad (D) Thr. Lrs & Others** (Civil Appeal No.10574 of 2018), which has been upheld by the Apex Court. It is stated that a Division Bench of the Karnataka High Court had, in W.A.No.3120 of 2014, considered an identical situation and had held the nonassignment of agents on transfer of a Development Officer to be a mitigating circumstance which justifies the fall in performance. It is therefore contended that the said issue has to be considered by the respondents before orders are passed. The learned Senior Counsel also contends that the LIC, which is an instrumentality of the State, ought to act as a model employer and should not exploit its employees nor be seen to take advantage of the helplessness and the misery of the employees. Decisions of the Apex Court in **State of Haryana and others v. Piara Singh and others** [1992 KHC 919] and **Bhupendra Nath Hazarika and another v. State of Assam** **and others** [2012 KHC 4697] are relied on by the learned Senior Counsel appearing for the petitioner in support of the W.P.(C).No.34317/18 8 said contention. 9.A detailed counter affidavit has been placed on record by the respondents 2 to 5. It is stated therein that the writ petition, which is filed without exhausting the statutory remedy of appeal to the Zonal Manager in terms of Rule 7(2) of Exhibit P1 Rules, is not maintainable on that count alone. It is stated that the disincentive of 'no increment and one decrement' was imposed on the petitioner in the year 2014 in respect of the appraisal year ended on 31.3.2014. The petitioner was put on notice of the disincentive, but could not point out any mitigating circumstance for his poor performance. It is stated that the petitioner's performance in the succeeding years was also completely unsatisfactory and that on the basis of Exhibit P5 order modifying the interim order in W.P.(C).No.2311 of 2016, a show cause notice was issued to the petitioner, which was challenged by filing W.P.(C).No.28009 of 2018. The challenge was not entertained and the writ petition was disposed of directing consideration of the petitioner's contentions/objections. It was stated that a representation W.P.(C).No.34317/18 9 had been preferred by the petitioner requesting for data of agents' recruitment and allotment and seeking consent to engage an Advocate during the personal hearing. On 19.9.2018, the relevant data of the agents was forwarded to the petitioner while the request for engaging an Advocate was rejected. The petitioner was heard on 24.9.2018 and after considering the written explanations, Exhibit P11 order was passed terminating the petitioner's service. 10.Relying on sub-rule (8) of Rule 6 of Exhibit P1 Rules, it is contended that when the cost ratio exceeds 50% in three appraisal years, the consequence of termination under Rule 7 is automatic and the requirement of show cause notice and consideration of reply is limited to the consideration of any mitigating circumstances. Since sub-rule 8 starts with a _nonobstante clause,_ sub-rules (1) to (7) of Rule 6 have no application in the case of a Development Officer whose cost ratio exceeds the maximum limit in three consecutive years and no separate show cause notices in respect of each assessment year is required in such a situation, it is W.P.(C).No.34317/18 10 contended. It is stated that Rule 6(2) refers to a situation wherein the basic pay falls to a minimum of scale applicable to Development Officers. The second situation is where the cost ratio exceeds 50% in respect of three consecutive appraisal years. It is contended that sub-rule (8) of Rule 6 provides for a show cause notice and a consideration of mitigating circumstances alone and termination is the logical consequence of the cost ratio exceeding the maximum during three consecutive appraisal years. Exhibit R4(b) transfer order and Exhibit R4(c) consequential order specifying that the petitioner will not be granted any compensatory agency allotment since his transfer to Thiruvananthapuram is as per his own request, are produced to contend that Exhibit P17 has absolutely no application to an order of transfer specifically accepting such a condition. 11.The order of appointment of the petitioner as Probationary Development Officer is produced by the respondents along with the memo to contend that the duties and obligations of the petitioner was to develop and increase the production of W.P.(C).No.34317/18 11 LIC business through the agents and to introduce suitable persons to the Corporation for appointment as new agents. He had been informed of all the requirements of minimum business and the consequences of not meeting such requirements. The amendments to Exhibit P1 Rules brought about on 22.1.2016 are also produced and it is contended that where the annual remuneration of a Development Officer in any preceeding year exceeds 50% of the eligible premium of that year and the aggregate of the annual remuneration in the relevant year and two appraisal years immediately preceding the relevant year exceeds 50% of the aggregate of the eligible premium to those three years, his service shall be liable to be terminated in accordance with Rule 7. In the instant case, it is contended that the notice issued to the petitioner was under sub-rule (8) of Rule 6, as amended, and that as such, there is no requirement for any separate show cause notices in respect of the separate years. 12.I have considered the contentions advanced. Rule 6 (8) of Exhibit P1 Special Rules as amended in 2016 W.P.(C).No.34317/18 12 ## reads as follows:- - “6. Opportunity to conform to the expense limit - (1) xxx xxx xxx - (2) xxx xxx xxx - (3) xxx xxx xxx xxx xxx xxx - (8) Notwithstanding anything contained in sub-rules (1) to (7) where the annual remuneration of a Development Officer in any preceding year (hereafter in this sub-rule referred to as the “relevant year”) exceeds 50% of the eligible premium of that year and the aggregate of the annual remuneration in the relevant year and the two appraisal years immediately preceding the relevant year exceeds 50% of the aggregate of the eligible premium in those three years, his service shall be liable to be terminated in accordance with Rule 7.” ## Rule 7(1) of Exhibit P1 Special Rules reads as follows:- “7.Termination of service in certain cases:- (1) Where a Development Officer has failed to conform to the expense limit and where no opportunity to conform to such limit could be given under the provisions of rule 6, the appointing authority may terminate his services after giving him three months notice or salary in lieu thereof. Provided that the Development Officer shall be given an opportunity to show cause against such proposed termination of his service.” - 13.It is clear from a reading of Rule 6 of Ext.P1 Rules quoted above that where the shortfall in performance is within the W.P.(C).No.34317/18 13 range as mentioned in the table appended to Rule 6, the incentives and disincentives as stated in the sub-rules can be imposed after putting the employee on notice in respect of the lack of performance in the respective years. However, where the performance falls below the benchmark for three consecutive assessment years, action is liable to be taken in terms of Rule 6(8). Rule 6(8) does not contemplate separate notices to be given in respect of individual assessment years. In a case like the present one, where the shortfall exceeds 50%, the petitioner cannot raise a contention that the order of termination is bad for non issuance of separate notice in respect of each years of assessment. The clear provisions of Rules 6(8) and 7(1) would make it clear that when the performance falls below the permissible limits in respect of three consecutive years, what is required is only a composite show cause notice as to the reason for such abysmal performance. Admittedly, such a notice has been served on the petitioner. The petitioner has shown cause and has pleaded mitigating circumstances. The said aspect of the matter had been taken note of by the respondents while passing the W.P.(C).No.34317/18 14 impugned orders also. It is contended that the transfer of the petitioner from Adoor to Thiruvananthapuram was on his own request and on the specific understanding that he would not be entitled to compensatory organisation at Thiruvananthapuram. The petitioner had accepted the said condition and joined at Thiruvananthapuram. 14.The learned counsel for the Corporation would contend that it was the petitioner to have taken appropriate steps to find persons qualified to be agents and recommend their appointments to the Corporation. In the absence of any steps taken by the petitioner, it is contended that the mitigating circumstances pleaded by the petitioner are not liable to be considered by the respondents. 15.The petitioner is admittedly governed by Exhibit P1 Rules as amended in 2016. The petitioner had been issued with the show cause notice in terms of Rule 6(8) pointing out his lack of performance in respect of three consecutive appraisal years. While I am in full agreement with the proposition put forth by W.P.(C).No.34317/18 15 the learned Senior Counsel for the petitioner that the LIC is expected to function as a model employer and cannot function in an arbitrary manner, it is also true that the Corporation is a commercial enterprise which has to balance its economic interest with the well being of its work force. Ext.P1 rules specify that a Development Officer shall face disincentives and termination if his performance and participation is not maintained as required by the rules. The petitioner's only answer is that he was not provided with the organisational support that he is entitled to, on his transfer to Thiruvananthapuram. However the respondents contend that his transfer was specifically on his request and on accepting the condition that such support would not be provided to him. In the said circumstances, this Court would not be justified in embarking on fact finding mission. - 16.It is true that the petitioner has pleaded mitigating circumstances. The said pleadings have been taken note of while passing the impugned orders as well. I am of the opinion that it is not for this Court to embark on an enquiry as to W.P.(C).No.34317/18 16 whether the mitigating circumstances as pleaded by the petitioner were actually in existence or not. All that is required is an examination as to whether the mitigating circumstances as pleaded by the petitioner have been considered by the respondents. On a reading of Exhibit P11, the answer would be in the affirmative and a further examination is not expected of this Court. Though _mala fides_ have been pleaded by the petitioner, I am unable to accept the contention that the pleadings and materials produced would substantiate any case of _mala fides_ vitiating the order of termination. In case the petitioner has any factual contentions with regard to the consideration of the mitigating circumstances, I am of the opinion that it is for the petitioner to take up the matter before the appellate authority. Leaving open the contentions of the parties to be decided in the properly constituted appeal, if so advised, the writ petition is dismissed. Sd/- **Anu Sivaraman, Judge** sj W.P.(C).No.34317/18 17 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF THE LIC OF INDIA (REVISION OF CERTAIN TERMS AND CONDITIONS OF SERVICE) RULES, 2009 AS AMENDED IN 2016.** - **EXHIBIT P2** **TRUE COPY OF THE JUDGMENT IN W.P.(C) NO. 8737 OF 2015 DTD. 26.10.2015.** - **EXHIBIT P3** **TRUE COPY OF THE OBJECTION SUBMITTED B Y THE PETITIONER BEFORE THE 4TH RESPONDENT DTD. 15.12.2015.** - **EXHIBIT P4 TRUE COPY OF THE LETTER ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER DTD. 09.01.2016.** **EXHIBIT P5 TRUE COPY OF THE INTERIM ORDER PASSED BY THIS HON'BLE COURT IN W.P.(C) NO. 2311 OF 2016 DTD. 06.07.2018.** - **EXHIBIT P6 TRUE COPY OF THE SHOW CAUSE NOTICE ISSUED BY THE 2ND RESP0NDENT TO THE PETITIONER DTD. 30.07.2018.** - **EXHIBIT P7 TRUE COPY OF THE EXPLANATION SUBMITTED BY THE PETITIONER BEFORE THE 4TH RESPONDENT DTD. 22.08.2018.** - **EXHIBIT P8 TRUE COPY OF THE CIRCULAR NO. MKTG/ZD/08/2016 DTD. 23.04.2016 ISSUED BY THE EXECUTIVE DIRECTOR (MARKETING (PD) ALONG WITH THE DRAFT FROM ANNEXURES 11, 11A, III, III-B AND III -C APPLICABLE FOR THOSE DEVELOPMENT OFFICERS WHO EXCEEDS COST RATIO OR THOSE WHO ATTRACT TERMINATION OF SERVICE.** **EXHIBIT P9 TRUE COPY OF THE JUDGMENT IN W.P.(C) NO.28009 OF 2018 DTD. 30.08.2018.** W.P.(C).No.34317/18 18 - **EXHIBIT P10 TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER BEFORE COMPETENT AUTHORITY DTD. 24.09.2018.** - **EXHIBIT P11 TRUE COPY OF THE ORDER PASSED BY THE 4TH RESPONDENT DTD. 05.10.2018 TERMINATING THE SERVICES OF THE PETITIONER AS DEVELOPMENT OFFICER.** - **EXHIBIT P12 TRUE COPY OF THE LETTER DTD. 06.03.2018 ADDRESSED TO THE 4TH RESPONDENT SR. DIVISIONAL MANAGER BY CERTAIN DEVELOPMENT OFFICERS INCLUDING THE PETITIONER IN THE CITY BRANCH 1, TAKING UP WITH 4TH RESPONDENT SR. DIVISIONAL MANAGER A HABITUAL PERSONAL MISCONDUCT ON THE PART OF 5TH RESPONDENT SR. BRANCH MANAGER.** - **EXHIBIT P12 A TRUE COPY OF THE COMPLAINT GIVEN BY THE PETITIONER TO THE ZONAL VIGILANCE DEPARTMENT OF SOUTH ZONE OF LIC DTD. 16.08.2018.** - **EXHIBIT P12 B TRUE COPY OF THE LETTER GIVEN BY THE PETITIONER TO THE ZONAL VIGILANCE OFFICER DTD. 12.09.2018.** - **EXHIBIT P13 TRUE COPY OF THE LIC OF INDIA NOTIFICATION NO. GSR 8 (E) DATED 02.02.2017 MAKING REGULATIONS REGULATING THE METHOD OF RECRUITMENT OF AGENTS AND THE TERMS AND CONDITIONS.** - **EXHIBIT P14 TRUE COPY OF THE REPLY TO THE RTI APPLICATION BEARING NO. LICSZ/R/2017/00434 DTD. 21.08.2017.** W.P.(C).No.34317/18 19 |**EXHIBIT P15**||**TRUE COPY OF THE RELEVANT PAGES OF THE**<br>**CIRCULAR MKTG/ZG/13/2010 DTD 23.3.2010**<br>**ISSUED BY OFFICE OF THE 2ND RESPONDENT**| |---|---|---| |||| |**EXHIBIT P16**||**TRUE COPY OF THE COMPLAINT DATED**<br>**10.3.2018 SUBMITTED BEFORE THE**<br>**TRIVANDRUM DIVISIONAL ASSOCIATION OF**<br>**INSURANCE FILED BY THE NATIONAL**<br>**FEDERATION OF INSURANCE FIELD WORKERS**<br>**OF INDIA.**| |**EXHIBIT P17**||**TRUE COPY OF THE CIRCULAR NUMBER**<br>**DD/ZD/43/80 DATED 30.7.1980 ISSUED BY**<br>**THE OFFICE OF THE 2ND RESPONDENT**| |||| ||**RESPONDENT'S/S EXHIBITS:**|| |**EXHIBIT R4(A)**||**TRUE COPY OF THE ENTIRE TEXT OF EXT P8**<br>**CIRCULAR DATED 23.4.2016**| |**EXHIBIT R4 (B)**||**TRUE COPY OF THE OFFICE ORDER DATED**<br>**18.7.2011**| |**EXHIBIT R4(C)**||**COPY OF THE CONSEQUENTIAL ORDER DATED**<br>**28.7.2011**| |||| True copy PS to Judge