Rajeev Kumar Garg v. Life Insurance Corporation of India

1. This hearing has been done through hybrid mode.

2. The present Writ Petition has been filed by the Petitioner - Mr. Rajeev Kumar Garg, under Articles 226 and 227 of the Constitution of India seeking directions for reinstatement as an Insurance Agent with the Respondent - Life Insurance Corporation of India (hereinafter ‘LIC’). The Petitioner is also seeking quashing of a circular dated 30th May, 2018 issued by the Respondent on the subject, Review of the Rules of Reinstatement of Terminated Agents subsequent to the LIC of India (Agents) Regulations, 2017 and Board Policy on Agency Matters 2018-19 (hereinafter ‘impugned circular').

3. The Petitioner was working as an insurance agent with the LIC since

1988. Between 1988 to 1996 he was working in the town of Alwar, Rajasthan and thereafter, shifted to Delhi. It is not in dispute that till 2019, the Petitioner was on the panel of the LIC. His last renewal as insurance agent by allotment of code, lapsed in 2019.

4. The petitioner claims that in the year 2019, he went back to Alwar to take care of his mother as she was undergoing treatment for paralysis. The Petitioner’s case is that due to illness of his mother in 2019 to 2021 as also the COVID-19 pandemic, he could not apply for reinstatement of his agency with LIC within 24 months. He finally applied for renewal of his code on 15th December, 2021. The same was rejected on the ground that it was filed beyond the period of 24 months. Even the gratuity amount was not paid. The LIC had relied upon a Circular of 30th May 2018.

5. Mr. Aggarwal, ld. Counsel appearing for the Petitioner submits that the impugned circular has also been challenged by the Petitioner as the same was not within the knowledge of the LIC agents and was also not publicised so as to give information to the agents to apply for the reinstatement of their agency with LIC within 24 months. According to him, the said circular is ultra vires to the Life Insurance Corporation of India (Agents) Regulations,

2017.

6. Mr. Kamal Mehta, ld. Counsel appearing for the Respondent submits that this circular is well within the knowledge of the entire insurance community as lakhs of LIC agents across the country are well aware that once the agent becomes eligible for renewal, an application for reinstatement of the Agency Code has to be made within 24 months. The impugned circular is relied upon by Mr. Mehta to argue that it has been communicated to all Zonal Managers, Regional Managers (Marketing), Sr. Divisional Managers In-charge of Divisions, and ZTCs, MDC, STCs & Inspection and Audit Centres of LIC and the Petitioner cannot be ignorant of the same.

7. A perusal of the record shows that in response to the application dated 15th December, 2021 made by the petitioner for reinstatement of the agency code with LIC, the order dated 28th April 2022 was passed by LIC which reads as under: “To Dt: 28.04.2022 Mr. Rajeev Kumar Garg Plot no 26A. Scheme No 2 Vijay Mandir Rood, Alwar Rajisthan, Pin Code 301001 Sir, Re: Reinstatement of Agency Code 95418311 Fvg Yourself. With Reference to your letter Dt: 15.12.2021. In this regard we would like to inform you that according to L.I.C. guideline mentioned through Ref. CO/MKY/A/ZD/10/2018 Dated 30.05.2018 reinstatement of agency after 24 months is not allowed. Further to add regarding Gratuity it is found that you have not completed the Minimum Business required for the payment of Gratuity which 12 Lives and 1 lac premium per year for 15 years.”

8. A perusal of the same would show that the primary ground, on which the Petitioner’s application has not been accepted, is that the same was not filed within 24 months as required by the impugned circular.

9. The impugned circular dated 30th May, 2018 clearly stipulates the conditions that need to be fulfilled to qualify for reinstatement of agency with LIC. The relevant extract of the said circular is extracted as under: “Re: Review of the Rules of Reinstatement of Terminated Agents subsequent to the LIC of India (Agents) Regulations, 2017 and Board Policy on Agency Matters 2018-19. Pursuant to the issuance of IRDAI (Appointment of Insurance Agents), 2016, LIC of India (Agents) Regulations, 2017 which came into effect from 02.02.2017 and Board Policy on Agency Matters which came into effect from 01.04.2018, the prevailing rules for Reinstatement of Agency of Terminated Agents as per CO Circular Ref: Mktg/ZD/26/2009 dated 04.09.2009 have been reviewed and the following instructions are issued:- (A) Who can be reinstated: • Agent's whose Agency has been terminated for failure to bring in minimum business to be secured by an agent. Care should be taken to ensure that the agency of those agents terminated on account of a vigilance enquiry, disciplinary action, early claim etc. or for any reason whatsoever under Rule 16 of Agents (Rules) 1972 or Regulations 15 and 16 of Agents (Regulations) 2017 should not be considered for reinstatement. (B) No. of occasions on which the agency can be reinstated:

1) Reinstatement can be done on Four (4) occasions (Maximum) from date of appointment, till the Agent becomes eligible for Renewal Commission.

2) Once an Agent becomes eligible for renewal Commission, he/she can be reinstated any number of time provided the reinstatement is done within 24 months from the date of termination.”

10. The case of the Petitioner would fall under clause (B)(2) above. As per the said circular, clearly, if an agent wishes to apply for reinstatement, the same has to be done within 24 months of the date of termination of the code.

11. In the present case, it is not in dispute that the application was not filed within the prescribed time of 24 months. However, this Court also takes notes of the fact that the substantial portion of 24 months falls during the COVID-19 pandemic. The Supreme Court in its order dated 10th January, 2022 in In re: Cognizance for Extension of Limitation, (2022) 3 SCC 117 observed as under: “Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions: