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Ramapal Mandada Vs. Life Insurance Corporation and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAndhra Pradesh High Court
Decided On
Reported in(1976)IILLJ341AP
AppellantRamapal Mandada
RespondentLife Insurance Corporation and anr.
- maximssections 2(xv) & 3(1) & (3): [v.v.s. rao, n.v. ramana & p.s. narayana, jj] ghee as a live stock product held, [per v.v.s. rao & n.v. ramana, jj - majority] since ages, milk is preserved by souring with aid of lactic cultures. the first of such resultant products developed is curd or yogurt (dahi) obtained by fermenting milk. dahi when subjected to churning yields butter (makkhan) and buttermilk as by product. the shelf life of dahi is two days whereas that of butter is a week. by simmering unsalted butter in a pot until all water is boiled, ghee is obtained which has shelf life of more than a year in controlled conditions. ghee at least as of now is most synthesized, ghee is a natural product derived ultimately from milk. so to say, milk is converted to dahi, then butter......venkatrama sastry, j.1. plaintiff is the appellant in this appeal which arises out of the suit 0.s. no. 10 of 1966 on the file of 2nd additional chief judge, city civil court, hyderabad, filed for recovery of compensation for wrongful dismissal and other reliefs.2. the case of plaintiff is as follows: he was originally working as an agent of the oriental government security life assurance company since 1948. he procured very good business to the said - company till 1959 to the tune of more than twenty lakhs. in the year 1956 the life insurance business was nationalised and the life insurance corporation act was passed. the plaintiff was absorbed as an agent of the life insurance corporation (hereinafter referred to as the l.i.c.) in the branch office at warangal and he worked as such.....

Venkatrama Sastry, J.

1. Plaintiff is the appellant in this appeal which arises out of the suit 0.S. No. 10 of 1966 on the file of 2nd Additional Chief Judge, City Civil Court, Hyderabad, filed for recovery of compensation for wrongful dismissal and other reliefs.

2. The case of plaintiff is as follows: He was originally working as an Agent of the Oriental Government Security Life Assurance Company since 1948. He procured very good business to the said - company till 1959 to the tune of more than twenty lakhs. In the year 1956 the Life Insurance Business was nationalised and the Life Insurance Corporation Act was passed. The plaintiff was absorbed as an agent of the Life Insurance Corporation (hereinafter referred to as the L.I.C.) in the branch office at Warangal and he worked as such agent till 30th June, 1959 from 1956. On 1-7-1959 he was appointed as field officer of the L.I.C. of Taluk Siricilla, District Karimnagar, and in such capacity he transacted good business. In 1960 he had also undergone training of Field Officer. On 9-4-1959 a proposal on the joint life of Mr. and Mrs. Narla Narayana, resident of Karimnagar was submitted by the plaintiff, who did not know that Mrs. Narayana was pregnant. Anyhow, there was an objection by the department, even though the plaintiff acted bona fide. The said case was closed by the Corporation, which gave a warning to the plaintiff on 16-3-1960.

3. On 2-2-1961 the L.I.C. wrongfully terminated the plaintiff's services as field officer and also that of an agent. The Divisional Manager, who is the appointing authority under the staff regulations of 1960, had no disciplinary powers for terminating the services of field officer. It was only the Zonal Manager of the L.I.C. who was competent to take such action against Class II Officers of the type of the plaintiff. The order in question having issued by the Divisional Manager was, therefore, without jurisdiction and in excess of his powers.

4. Moreover no opportunity was given to the plaintiff to explain or place any facts before the L.I.C. The order is, therefore, illegal, arbitrary and contrary to law and principles of natural justice and also the provisions of the staff regulations of 1960.

4A. Plaintiff suffered severe mental torture due to this wrongful termination of his services by the Divisional Manager from middle of March, 1961 till the end of December, 1964, when he had severe set-backs in life, in that his wife, father and his youngest daughter passed away. He had to leave Sircilla in November, 1961 and he came over to Karimnagar proper. Though he preferred an appeal against the order of dismissal he did not receive any intimation from the L.I.C. about its result for four years. He also made several representations to the Managing Director regarding his appeal in 1959, 1961, etc. On 11-2-1965 he also sent a reminder to him which was followed up by two more reminders on 16-3-1965 and 28-4-1965 to which finally a reply was sent to him on 22-4-1965 (sic). By that reply he came to know for the first time that his appeal was rejected and his request for reinstatement was also negatived.

5. Plaintiff based his claim for compensation for wrongful termination of his services as field officer and that of an agent on the following grounds:

(1) Assuming that he would survive upto 60 years of age and that he would have given to the L.I.C. for 25 years from the date of termination, a business roughly between 50 lakhs and one crore, which is based upon the average of 11 years business given by him to the L.I.C. the expected premium thereon would be Rs. 3,80,359.50.

(2) Secondly, he is deprived of the renewal commission of Rs. 95,499.08 on the policies or business given by him from 1948 to 1959 to the L.I.C. Rs. 95,499.08.

(3) Thirdly, the expected income-cum-salary under the normal rules, if he had continued in service as a field officer is Rs. 1,28,88000.

Thus a total amount of Rs. 6,04,738.58 was due to him on the principle of restitutio in integrum.

6. Plaintiff gave a notice on 14-6-1965 to the defendant prior to the suit. His suit is within limitation, because the cause of action arose only on 22-4-1965 when he was informed about the dismissal of his appeal. The court-fee payable on the plaint is Rs. 8,526. But the plaintiff has filed this suit as a pauper.

7. The first defendant filed a written statement contending as follows:

The plaintiff was no doubt an agent in 1948. The figures of completed business by him from 1956 to 1959, as stated by him in his own application for appointment, are Rs. 74,000, Rs. 2,78,000, Rs. 1,39,000 and Rs. 30,000. Before appointment as a field officer in the L.I.C. he served as a probationary inspector for about ten months in the Oriental Fire and General Assurance Company Ltd. upto November. 1958, but he had to resign from that service, because he could not complete a quota of business fixed for inspectors in that company. Thus the figures given in paragraph 2 of the plaint about the turnover of his business for nearly a decade is an exaggeration. In any event the business standing to his credit, after deducting the lapsed business, on which he could earn the renewal commission was far less than the figure mentioned in paragraph 2 of the plaint.

8. Till the 30th June, 1959 the plaintiff acted as an agent of the L.I.C. and he was appointed as a field officer, incharge, Sircilla Taluk on 1-7-1959. It is not true that he has done good business and made the people of the taluk Sircilla Insurance conscious. His performance as a probationary field officer was consistently below par both in quantity and quality. He failed to achieve the expectations in regard to the business procurement as also in appointment and training of agents in his area. The L.I.C. had to draw his attention to the unsatisfactory results turned out by him. The quality of his business was also poor because not even 50% age fructified into policies. He could only appoint 15 agents in 1959 and has not achieved the target in that year or in the next. He was very irregular in his business habits, and was frequently away from his jurisdiction without obtaining permission and was paying visits to Karimnagar contrary to specific instructions. He committed defaults in promptly remitting premia collected by him to the credit of the Corporation. The training given to him in 1960 as a field officer does not signify anything, but only a routine work arranged by the L.I.C.

9. In regard to the policy on the joint life of Mr. and Mrs. Narayana, he failed to exercise due diligence and caution. The enquiry by the Corporation revealed that there was apparently no medical examination conducted in the prescribed manner and the plaintiff had been a party to the omission. A good health declaration of the proponent was obtained on 27-8-1959, about 9 days after Mrs. Narayana had given birth to a child, without any mention of a delivery of a child a week prior to that, by the plaintiff in spite of his knowledge that the lady had a delivery about a week earlier. It also came to light that the plaintiff gave rebate contrary to the provisions of the Insurance Act, 1938 to the same parties and received a cheque for Rs. 252 from them as against the premium of Rs. 441 and odd that was payable. Obviously the balance was made good by deposit made by the plaintiff on 25-8-1959. On 16-3-1960 when a warning was issued to him by the Divisional Manager, accepting the version of the plaintiff, all the above facts have not come to light. But later investigations established all the data bearing on the culpability of the plaintiff in no uncertain manner. It is not true that the plaintiff acted bona fide or in an honesty manner in that transaction; or that he was ignorant of the pregnancy of the proponent because it was obvious that, if he had taken any usual and necessary precaution and acted in a diligent manner, the suppression would not have been possible.

10. There was no wrongful termination of the services of the plaintiff as a field officer or as an agent, by the Divisional Manager. The plaintiff's appointment as field officer was only on probation and after expiry of one year period of probation, it was necessary to consider whether he had to be confirmed in that post and is entitle to be taken into the services of the Corporation. The Divisional Manager considered various aspects about the plaintiff and sent detailed note reviewing his work to the Zonal Manager. On consideration of the performance of the plaintiff as against the target and expectations set for his work, the Zonal Manager directed on 19-1-1961 the termination of his service and agency. It was only pursuant to the said direction of the Zonal Manager that the Divisional Manager addressed the letters on 2-2-1961 and 3-2-1961 to the plaintiff, thus giving effect to the Zonal Manager's directions. It is, therefore, evident that the orders were not due to any decision of the Divisional Manager nor were they taken all of a sudden nor were they wrongful, because in terms of the order of appointment the plaintiff's services as probationary field officer, could be terminated by notice with immediate effect.

11. The plaintiff's contention that the Divisional Manager had no power to terminate his services is also untenable. Under Staff Regulation No. 14, an employee on probation could be discharged from service without any notice by the appointing authority. The termination in this case was in fact by the decision taken by the Zonal Manager, though it was communicated by the letter of the Divisional Manager. The order, therefore, complies with the provisions of the regulations and is not arbitrary or wrongful or in excess of jurisdiction. There was no violation of principles of natural justice or the staff regulations. There is no question of framing of any charge or of any opportunity as to defence, being given to the plaintiff. Regulation 39 is inapplicable to the action taken against the plaintiff.

12. There is misjoinder of causes of action by the plaintiff in this suit., viz., the termination of his employment and the termination of agency, which were made, under different powers of the authority and by different communications. The causes of action are also different and not identical. The suit is, therefore, not maintainable also on this ground.

13. The termination of the plaintiff's appointment as an agent was lawful and justified by the facts and circumstances of the case. After the appointment as a field officer, the plaintiff ceased to be an agent. According to the terms of appointment he was precluded from concurrently acting as an agent. He was only given permission to complete some proposals introduced by him as an agent before his appointment within two months, which was as extension, and further extension was rejected. It is, therefore, clear that his appointment as an agent stood already cancelled when he had taken up the whole time employment as a probationary field officer. It was only by way of abundant caution and to avoid possible mischief of plaintiff's unauthorised functioning as an agent that the agency was terminated. The said termination cannot give rise to any legal action, because he voluntarily ceased to be an agent, when he took up another office. It is not true that he did not receive any intimation in respect of his appeal. There were letters addressed to the plaintiff by the Central Office of the L.I.C., Bombay, in November and December, 1961. The Managing Director intimated the plaintiff on 28-11 -1961, his inability to give favourable consideration to his appeal. In spite of it, the plaintiff renewed the application on 11-1-1962 for reinstatement as an agent. That was also rejected by the zonal office on 13-2-1962 which was communicated by the divisional office to him on 20-2-1962. ignoring these letters the plaintiff is making an untrue assertion that he was obliged to send reminders even in 1965. It is, therefore, submitted that the rejection of the appeals was intimated to the plaintiff in November and December, 1961 itself. Hence the suit is barred by limitation, as the orders were issued on 2-2-1961 and 3-2-1961 and the claim for damages in respect of the two orders has been filed more than three years after the cause of action arose.

14. Plaintiff is not entitled to the award of any damages or compensation, as the termination of his employment as probationary field officer and also as an agent were lawful, proper and justified. In any event the claim made is fantastic and out of all proportions to any proper assessment of the compensation. The measure of damages has not been correctly stated. The renewal commission of all the business secured by the plaintiff as an agent, was explicitly made available to him. The plaintiff is bound to have mitigated the damages by seeking an alternative employment or occupation. He cannot seek damages on the basis of his choosing not to do any work or seek any employment. Actually he employed himself in a business as a gram merchant at Kaman Road, Karimnagar and that was how he gave his address in a letter addressed to the Divisional Manager on 26-5-1962. If the Court is under the impression that the plaintiff is entitled to any damages, it can at best be normal damages. The plaintiff has to be directed to furnish the particulars of the business and quantum under either head of the damages claimed by him in order to enable the defendant to answer the claim by a further pleading.

15. The defendant submits that the services of even the employees whose services were confirmed, can be terminated on notice or by payment of salary in lieu of notice, and in case of class II officers only one month's notice or pay in lieu of one month's salary are required to be given. That furnishes as the measure of damages. Hence even if the plaintiff is entitled to the award thereof, it can in no event be fixed at more than the payment he would be entitled to in lieu of notice.

16. As regards the claim for damages for termination of agency, it is based on the assumption that the plaintiff would be able to procure business yielding a premium income of Rupees 3,80,059 and odd. This is not a correct measure of basis of assessment. Actually the plaintiff procured business as an agent on an average at Rs. 1,50,000 per year. Hence the claim made by him is not based upon the previous record. Further it is not right to assume that he could have procured the same business at that rate continuously. The defendant, therefore, prayed for the dismissal of the suit.

17. On the above pleadings the lower Court framed appropriate issues. The plaintiff examined himself as P.W. 1 and four more witnesses as P.Ws. 2 to 5. On behalf of the defendant three witnesses were examined, including the Divisional Manager of the L.I.C. Exts. A1 to A78 were marked for the plaintiff, while Ext. B1 to B38 were exhibited for the defendant.

18. On a consideration of the above evidence the lower Court held that the order of dismissal by the Divisional Manager was perfectly within his rights and jurisdiction that the plaintiff had no right to claim that he must be deemed to have bee confirmed after expiry of the period of probation, that the order of dismissal Ext. A12 did not, in reality cast a stigma on the services of the plaintiff, that the termination of the services of the plaintiff as field officer or as an agent was neither wrongful nor invalid, that the plaintiff was in fact given an opportunity, as in a case under Article 311 that there was no mis-joinder of causes of action, that the plaintiff was not entitled to a declaration, that the suit was barred by limitation and that the plaintiff is not entitled to any damages claimed by him. In that view the suit of the plaintiff was dismissed with costs, and he was directed to pay the court-fee leviable on the plaint. It is the aforesaid judgment which is now challenged in this appeal.

19. Mr. Sahagal, learned Counsel for the appellant argued that the order of dismissal passed by the Divisional Manager was without jurisdiction. According to him, as his client was class II officer of the L.I.C. disciplinary action can be taken against him, only by the Zonal Officer and not by the Divisional Officer. The contention was covered by issues 1 and 6 in the Judgment of the lower Court. The Corporation contended that the order passed by the Divisional Manager was under the instructions and directions of the Zonal Manager himself and hence it was a valid order. Mr. Sahagal contended that there is nothing to show that the Zonal Manager passed the order as such in this case. We have, therefore, to examine whether his contention is in any way tenable.

20. Exhibit A31 is the order of appointment of the plaintiff as a field officer dated 5-6-1959. Under the said order the plaintiff was directed to secure a minimum life business of six lakhs, to recruit and train twenty new agents, to supervise and mitigate the agents, allotted to him and see that the business of these agents, allotted to him is increased progressively from year to year and they also expect that the plaintiff would exceed these targets and they expressed the view that his actual categorisation to be made after the expiry of the probationary period would depend upon the fulfilment of those targets, his record of past services rendered to the Corporation's policy-holders, etc. The Corporation reserved its right to review the results of his efforts at any time, to take such action as may be called for in the circumstances.

21. According to the defendants the plaintiff did not fulfil the targets and the Corporation had to review his work for taking a decision, whether to confirm him or not. The Divisional Manager who reviewed his work sent up a report to the Zonal Manager. The Zonal Manager oh consideration of the report of the Divisional Manager decided to terminate the services of the plaintiff.

22. Exhibit B33 is the report about the review of the work of the plaintiff sent by the Divisional Manager some time in January, 1961. In paragraph 27 of that report the Divisional Manager stated that he could not recommend the plaintiff for confirmation and that he had no hesitation to recommend for his termination. On this report, we find an endorsement written in ink by the Zonal Manager to the following effect:

I agree with Divisional Manager. He may be asked to take action for termination, (sd.) 19-1-1961.

This endorsement has been separately marked as Ext. B33 (a). There is also a separate letter from the Zonal Office addressed to the Divisional Office dated 20-1-1961, which is marked as Ex. A35. In that letter also we find the observations that the Divisional Manager may terminate his appointment immediately. It was also stated that the plaintiff's agency also may be terminated. After receipt of this letter, the Divisional Manager sent a letter Ext. A12 on 2-2-1961 terminating the appointment of the plaintiff as a field officer. The said letter is in the following terms:

Dear Sir,

You were appointed as a Probationary Field Officer on 1-7-1959. As per the terms of the appointment letter, you have to recruit and train 20 new agents and secure through such agents and the agents allotted to you, a minimum business of six lakhs rupees yielding a first year's scheduled premium income of not less than Rs. 18,000 during the probationary period.

As against the said expectation, you had recruited and trained only 9 agents and had completed business of only Rs. 3,48,500 yielding a first year scheduled premium income of Rs. 8,147-49. During 1960 also you had completed a business of Rs. 3,20,500 out of an introduced business of Rs. 5,86,500 as against a quota of Rs. 8 lakhs. You will, therefore, agree with us that you failed to complete the quota fixed for you during the probationary period as well as in 1960. The Warangal branch office had written you several letters reviewing your business position, drawing your attention in particular to your poor performance and irregular work habits (vide their letters dated 3-8-1959, 28-8-1959, 5-9-1959, 28-9-1959, 15-10-1959, 24-11-1959, 2-5-1960, 18-7-1960, 19-8-1960, 28-10-1960 and 15-12-1960). We had also pointed out to you to improve your work habits and to stabilise your business vide our letters dated 2-5-1960, 2-6-1960; 3-6-1960, 2-7-1960; 27-10-1960 and 7-11-1960. We regret to find that in spite of our repeated reminders to step up your business you had not come to our expectations.

Apart from that you were warned for securing a proposal on the life of Smt. Narla Narayana, who was pregnant at the time she proposed her life for insurance, vide our letter Dev/Copl/4781 /dated 16-3-1960. You were also warned for keeping with you an amount of Rs. 10 collected from Sri Balaiah towards a proposal on his life for nearly two months without remitting the same to our branch office. These serious lapses on your part are contrary to the established rules of the Corporation and discipline.

In view of your unsatisfactory business performance, irregular work habits and the warning letters issued to you for your misconduct, we are terminating your service with immediate effect.

Sd. Divisional Manager.

23. The argument of Mr. Sahagal is that Ext. B33 does not contain any date of despatch and, therefore, it was a subsequent concoction. But the defendant has filed Ext. 34, which is the covering letter sent by the Divisional Manager to the Zonal Office. The Divisional Manager, who has sent this report also has been examined as D.W. 3. He has proved these Exts. B33 to 35 and the fact of his having issued the order of dismissal Ext. A12. He has been subjected to a lengthy cross-examination, but we do not find anything coming out of the effort. We do not see any reason why his evidence should not be believed. In the above circumstances we have to take it that the plaintiff's services were terminated by the Divisional Manager under the specific instructions of and under the actual directions of the Zonal Manager and Ext. A 12 is only the result of such a direction.

24. It is no doubt true that in the actual order of termination of plaintiff's services the order does not say that it was being passed as per the directions of the Zonal Manager, but that would not make any difference in our opinion. The said order when read along with Exts. B33 to B35 amply supports the case of the defendant viz., that the order of termination in this case was one passed by the Zonal Manager himself. We do not, therefore, see any substance in the argument of the learned Counsel that the order passed by the Divisional Manager is either without jurisdiction or excess of his powers. We have, therefore, to negative that contention.

25. The next argument of Mr. Sahagal is that his client has been placed under probation for one year and after expiry of that period he must be deemed to have been confirmed and he has, therefore, become a regular employee of the Corporation. Hence his services cannot be dispensed with unless a notice in writing mentioning the charges for his dismissal had been issued to him and an enquiry had been conducted by the Corporation. This argument depends upon the applicability of the appropriate regulation made by the LLC. to this case. We would, therefore, examine this aspect first, before considering the question whether the Corporation should have issued a notice and conducted an enquiry in that behalf.

26. Exhibit A31, which is the order appointing the plaintiff as the field officer, clearly shows in the preamble itself as follows: .. .. ..

Dear Sir,

With reference to your application for the post of a salaried Field Officer and the subsequent interview you had with us, we have pleasure in advising you that you are appointed as a Field Officer and posted to our Branch No. 651. You will please note that your employment with the Corporation begins only from 1si July, 1959 and that it is not in continuation of any previous employment held by you in the Corporation or with any insured in any capacity.

The terms of your appointment se-forth herein below are provisional and will be finalised after the expiry of you probationary period provided you have complied with all the terms and conditions of your appointment when a frest letter of appointment confirming you as a Field Officer of the Corporation will be issued to you.

(Emphasis is ours).

1. Probationary Period.-Your appointment will be on probation till 30th June 1960 and during the probationary period the appointment can be terminated by the Corporation by notice with immediate effect.'

2. (a) . ... . .

.. .. .. ..

27. It may be stated here that the appointment under the above condition has been accepted by the plaintiff, who joined the services of the LIC. His appointment was, therefore, only on probation for a period of one year and during the period of probation itself the appointment can be terminated by the Corporation by notice with immediate effect. Moreover after the period of probation the appointment will have to be finalised, if the plaintiff had complied with all the terms and conditions of his appointment. On such finalisation the Corporation would issue a fresh letter of appointment confirming him as a field officer of the Corporation. It is, therefore, obvious that the very order of appointment contemplates the issue of a fresh letter of appointment confirming the petitioner as a field officer, after the period of probation. It was not the intention, therefore, of the parties that soon after the expiry of the probationary period the plaintiff must be deemed to have been confirmed in his post. It is also admitted that the regulations governing this appointment, viz., regulations of 1956 framed by the Corporation which are applicable to this case, also contain a provision for extension of the period of probation upto a maximum of three years. In this case the service of the plaintiff who was appointed as field officer, commencing from 1-7-1959, have been terminated with effect from 2-2-1961. It means that though the period of one year originally contemplated by the order of appointment, i.e., the period of probation has expired he was still continuing on probation till the date of termination of his services. The plaintiff in his evidence as P.W. 1 admits even in chief examination that his probation was not extended by any order though he has completed the probation. He has 'also admitted in cross-examination that he has not received any orders confirming him as a field officer. This is, therefore, a case where the plaintiff Was only on probation even after expiry of the probation period originally fixed for promotion and that his appointment has not been finalised or confirmed. In such cases there was no right to an incumbent of an office to claim that he has become a permanent employee or that his appointment has been confirmed. This position in relation to Government service, which principle equally applies to the cases of all others, has been well-settled by the decision of the Supreme Court. In Sukhbans Singh v. State of Punjab 1963-I.L.L.J. 671 : A.I.R. 1962 S.C. 1711, Mudholkar, J., speaking for the Court in the case of a probationary appointment under the Punjab Civil Services (Executive Branch) Rules, 1930 held as follows:

A probationer cannot, as rightly pointed out by the Division Bench automatically acquire the status of a permanent member of a service. Unless of course the rules under which he is appointed expressly provided for such a result. The rules governing the Provincial Civil Services of Panjab do not contain any provision whereby a probationer at the end of the probationary period is automatically absorbed as a permanent member of the Civil Service. What happens to such a person is clearly set out in Rule 24. Under the aforesaid rule such a probationer is merely qualified for substantive permanent appointment. Reading Rules 23 and 24 together it would appear that where a probationer is not reverted by the Government before the termination of his period of probation he continues to be a probationer but acquires the qualification for substantive permanent appointment.

Rules 23 and 24 which are mentioned in that passage have also been quoted by the learned Judges, in another portion of the judgment. Rule 23 contemplates a reversion of an employee to his former post, if in the opinion of the Governor his work and conduct are unsatisfactory and Rule 24 states that on the completion of the period of probation a member of the service shall be qualified for a substantive permanent appointment. Interpreting the aforesaid rules the learned Judges have made the above observations. It is, therefore, clear that the completion of probationary period does not automatically amount to confirming the services of the incumbent, though it may have an effect of vesting in the officer, a qualification for substantive permanent appointment. The aforesaid view has also been reiterated in Civil Appeal No. 548 of 1962, dated 23-1-1964 and Civil Appeal No. 259 of 1963 dated 24-2-1965. These two decisions have been followed by their Lordships of the Supreme Court. In State of U.P. v Akbar Ali 1967-I.L.L.J. 708 : A.I.R. 1966 S.C. 1842, Shah, J., speaking for the Court observed at page 1845 that according to the scheme of the Rules in question, viz., in the case of Subordinate Revenue Executive Service (Tahsildars Rule, 1944) it was clear that confirmation in the post, which a probationer was holding does not result merely from the expiry of the period of probation, and so long as the order of confirmation was not made, the holder of the post remains a probationer. If the probationer is allowed to continue in the post after the expiry of the said period without any specific order of confirmation he continues as a probationer only and acquires no substantive right to hold a post. If the order of appointment states that at the end of the period of probation the appointee will stand confirmed in the absence of any order to the contrary, the appointee will acquire a substantive right to the post even without an order of confirmation. In all other cases, in the absence of such an order or in the absence of such a service rule, an express order of confirmation was necessary to give him such a right. There is, therefore, no question of an employee in that case deemed to have been confirmed from the mere fact that he was allowed to continue after the expiry of the probation period.

28. From the order of the appointment in this case as extracted (supra) there is no provision that at the end of the period of probation the appointee will stand confirmed in the absence of any order to the contrary. Hence in this case, the question that he has become a permanent employee even without any order of confirmation does not arise. Ray, C. J., has also laid down the same principle in Hari Singh Mann v. State of Punjab 1974 - II L.L.J. 4387 (1974) 2 SCWR 362, (1974) Lab. I.C 1427.

29. It is no doubt true that where the service rules or regulations provide a maximum period of probation and contain a bar for further extension, the Supreme Court has had an occasion to express the view that at the expiry of that period the employee must be deemed to have been confirmed, for instance State of Punjab v. Dharma Singh AIR 1968 SC 1210, (1968) L.I.C. 1409, was a case wherein their Lordships considered the effect of Punjab Educational Service (Provincialised Cadre) Class III Rules, 1961. There was a proviso to Rule 6(3) which prohibits extension of period of probation beyond three years. A probationer in that case officiated in a permanent post, after expiry of the period of three years without any express order of confirmation. In those circumtances it was held by their Lordships that he must be deemed to have been confirmed in that post and subsequent removal from service without following the procedure prescribed in the Punjab Civil Services (Punishment and Appeal) Rules, 1952 or conforming to constitutional requirements of Article 311 was held to be invalid. Rule 6(3) and the proviso was to the following effect:

6. (1 and 2) xx xx 3. On the completion of the period of probation the authority competent to make appointment may confirm the member in his appointment or if his work or conduct during the period of probation has been in his opinion unsatisfactory he may dispense with his services or may extend his period of probation by such period as he may deem fit or revert him to his former post if he was promoted from some lower post; provided that the total period of probation including extensions, if any, shall not exceed three years.

Dealing with the above provision Bachawat, J., speaking for the Bench observed at page 1212 as follows:

In the present case. Rule 6(3) forbids, extension of the period of probation beyond three years. Whereas in the present case, the service rules fix a certain period of time beyond which the probationary period cannot be extended, and an employee appointed or promoted to a post on probation is allowed to continue in that post after completion of the maximum period of probation without an express order of confirmation, he cannot be deemed to continue in that post as a probationer by implication, the reason is that such an implication is negatived by the service rule forbidding extension of the probationary period beyond the maximum period fixed by it. In such a case, it is permissible to draw the inference that the employee allowed to continue in that post on completion of the maximum period of probation has been confirmed in the post by implication.

In this case the staff regulations of 1956 also contain a provision relating to the bar to extend the probationary period as follows:

1 to 17. xx xx xx

18. Appointing authority's power to extend probationary period: An employee may have his period of probation extended at the discretion of the appointing authority but in no case this period exceed:

(a) in the case of officers two years.

(b) in the case of employees belonging to classes III and IV one year.

(c) in the case of persons belonging to classes II and IV three years.

It is admitted that plaintiff is a class II officer. As per Regulation 7, his probation cannot, therefore, be extended beyond the period of three years as contemplated by Regulation 18(c). The rational of the decision in State of Punjab v. Dharam Singh A.I.R. 1968 S.C. 1210, would come to the rescue of the plaintiff herein, only if the plaintiff had continued in his job for more than three years, when alone by implication he can be deemed to have been confirmed in the post, because of the probation contained in the regulations that the period of probation cannot be extended beyond the period of three years. But on the facts of this case, it is clear that the plaintiff had been in service only from 1-7-1959 to 2-2-1961 that means, for a period of about one year and seven months from the date of his joining service. He has not, therefore, been continued in service for a continuous probationary period of three years in order to invoke to his aid the principle of the abovesaid decision.

30. Hence following the above rulings, it has to be held that the petitioner, who merely, continued in the job after completion of the period of one year's probation, must be deemed to have been only on probation without the issue of a fresh appointment or order of confirmation and, therefore, he cannot claim that he must be deemed to have been confirmed. We have, therefore, to reject the argument of the learned Counsel on this part of the case.

31. The lower Court has also considered the facts of the case and held that the plaintiff has failed to comply with the terms and conditions of the order of appointments as field officer and, therefore, he was not entitled to be confirmed as such. In any event it is not necessary for us to consider that aspect of the case, since we are of the view that his continuance in office after the period of probation does not vest in him any right to claim that he has become a permanent member in the service of the Corporation.

32. The next argument of Mr. Sahagal is that the order of termination of service amounts to a penalty as it casts a stigma on him. Whenever any such stigma is cast, he pleads that it amounts to a punishment and, therefore, Article 311 is attracted and, therefore, there should have been a notice of enquiry before any such termination is effected. The lower Court has negatived this plea saying that the order does not cast any stigma and that Article 311 is not attracted. Exhibit A12 by which the services of the appellant have been terminated, which has already been extracted supra, does not, in our opinion., cast any stigma on the plaintiff. As stated already a person, who has completed the period of probation and has not been confirmed in that post, still continues to be on probation. In the case of such an employee, if an order of termination is passed on account of unsatisfactory nature of his service, or on account of his being unfit for that post it does not amount to casting a stigma on him. The law in this respect has been clearly laid down by their Lordships of the Supreme Court in State of Bombay v. F.A. Abraham. 1963-II L.L.J. 4227 : A.I.R. 1962 S.C. 7941, Sarkar. J., speaking for the Bench held at page 796 as follows:

A person officiating in a post has no right to hold it for all times. He may have been given the officiating post because the permanent incumbent was not available, having gone on leave or being away for some other reasons. When the permanent incumbent comes back, the person officiating is naturally reverted to his original post. This is no reduction in rank for it was the very term on which he had been given the officiating post. Again, sometimes a person is given an officiating post to test his suitability to be made permanent in it later. Here again, it is an implied term of the officiating appointment that if he is found unsuitable, he would have to go back. If, therefore, the appropriate authorities find him unsuitable for the higher rank and then revert him back to his original lower rank, the action taken is in accordance with the terms on which the officiating post had been given. It is in no way a punishment and is not, therefore, a reduction in rank.

33. In Champaklal v. Union of India 1964-I L.L.J. 752 : A.I.R. 1964 S.C. 1854, their Lordhips of the Supreme Court have laid down two tests to be applied in considering the effect of termination order as follows:

(1) Whether the servant had a right to the post or the rank or (2) whether he has been visited with evil consequences; and if either of the tests is satisfied it must be held that the servant has been punished. Further even though misconduct, negligence, inefficiency or Other disqualifications may be the motive or the inducing factor which influences the Government to take action under the terms of the contract of employment or the specific service rule, nevertheless, if a right exists, under the contract or rules, to terminate the service the motive operating on the mind of the Government is wholly irrelevant.

34. We will now consider if a right exists to terminate the services of the plaintiff, if so, the motive operating on the mind of the employer is wholly irrelevant, even though misconduct may be an inducing factor, which influenced them to terminate his services.

35. In Union of India v. R.S. Dhaba. (1969) 3 S.C.C. 603, it was held by Ramaswamy, J., on behalf of the Bench, that the termination on the ground of unsuitability for the post would not amount to a stigma.

36. In T.C.M. Pillay v. Technology Institute, Guindy AIR 1971 S.C. 1811 Grover, J., also laid down the same principle. Ray, Chief Justice also held the same view in Harisingh Mann v. State of Punjab, (supra).

37. It was also well-established that reversion from officiating post to a substantive post does not attract Article 311 of the Constitution unless the order casts a stigma or punitive in action. (Vide Parshotam Lal Dhingra v. Union of India 1958-I. L L J. 5447 (1958) S.C.R. 828) A.I.R. 1958 S.C. 36: State of Bombay v. F.A. Abraham, (supra) D.P.O.S. Railway v. Raghavendrachar (1966) 3 S.C.R. 106 A.I.R. 1966 S.C. 1529; Union of India v. Gajendra Singh (1972) 3 S.C.R. 660 (1972) L.I.C. 665; Union of India v. M. L Capoor A.I.R. 1974 S.C, 87 at p. 103 and C. A. No. 1098 of 1970 dated 30-3-1974 (SC) per Mathew, J.. In view of the above authorities we cannot hold that merely because the order used the expression unsatisfactory business performance and irregular work habits and misconduct, it amounts in any way, to a stigma on the appellant.

38. In the case of an employee of a corporation, the next question that arises, is whether Article 311 is applicable or not. It is now settled by the Full Bench in W. P. No. 5554 of 1971, D/-29-3-1973 (1973 Andhra Pradesh High Court Notes 113) (1973 Lab IC 1310) (FB) that the L.I.C. is a State within the meaning of Article 12, we were also told that in a recent decision their Lordships of the Supreme Court have also laid down that L.I.C. is a State tinder Article 12 of the Constitution. If the L.I.C. is a State within the meaning of Article 12 any member of the Civil Service of the State, no doubt, is entitled to invoke the provisions of Article 311. But before that provision applies, it is to be seen the termination of the services of a civil servant amounts to a dismissal or removal or reduction in rank. We have already held that in the case of a person serving on probation the termination of his services do not attract Article 311 at all, since it does not amount to punishment. Moreover, we have already held that the L.I.C. regulations, under which the termination order was passed have no statutory force. If so the Court is not invested with power to declare invalid, the act of L.I.C. because it is not an act done in breach of a mandatory obligation imposed by upon the statute. Thus the case also does not come under the third exception recognised by their Lordships of the Supreme Court in S.R. Tiwari v. Dist. Board Agra 1964-I L.L.J. 17 : A.I.R. 1964 S.C. 1680 at p.1682.

39. We will now consider whether, the termination of the services of the appellant is under the provisions of L.I.C. Act or the rules framed thereunder or under the new provisions contained in the regulations. It is clear that the LLC. has exercised the powers vested in it under the regulations framed in 1956. It has been held by the Full Bench of this Court in M. A.V. Prasada Rao v. Union of India (1973) 2 A.P.L.J. 68, (1973) L.I.C. 1310, (FB), that the regulations have got no statutory force. If so they are not justiciable. In the case of termination of service under the regulations the principle that is applicable is that of master and servant. Under the common law the Courts will not ordinarily force an employer to retain the services of an employee, whom he no longer wishes to employ. But this rule is subject to certain well-recognised exceptions as held by their Lordships in S.R. Tiwari v. District Board, Agra (supra).

It is open to the Courts in an appropriate case to declare that a public servant who is dismissed from service in contravention of Article 311 continues to remain in service, even though by so doing the State is in effect forced to continue to employ the servant whom it does not desire to employ, Similarly, under the industrial law jurisdiction of the labour and Industrial Tribunal to compel the employer to employ a worker, whom he does not desire to employ, is recognised. The Courts are also invested with the power to declare invalid the act of a statutory body, if by doing the act the body has acted in breach of a mandatory obligation imposed by statute even if by making the declaration the body is compelled to do something which it does not desire to do

40. In view of the above observations though the L.I.C. is a State and the plaintiff is deemed to be in the Civil Service of a State within the meaning of Article 311 there can be a remedy only if it acted in breach of a mandatory obligation imposed by statute and the order amounts to punishment. We have already held the regulations do not have the statutory force and, therefore, there is no question of any mandatory obligation imposed by the regulations the breach of which can be enforced or the act of L.I.C. being declared invalid.

41. These three exceptions have also been recognised in the subsequent cases by their Lordships of the Supreme Court in Mafatlal Barot v. Divisional Controller, State Transport, Mehsana 1966-I L.L.J. 437 : A.I.R. 1966 S.C. 1364; U.P. W. Corporation v. C.K. Tyagi, 1970-I.L.L.J.32 : A.I.R. 1970 S.C. 1244 and Sirsi Municipality v. C.K.F. Tellis 1973-I. L.L.J. 226 : A.I.R. 1973 S.C. 855, (1973) LLC. 453.

42. We have, therefore, now to see the relevant regulations, which give power to the L.I.C. to terminate the sevices of the appellant. The L.I.C. of India Staff Regulations, 1956 framed under Section 49(2), Clause (b) of the LLC. Act, 1956 contemplate termination of services in three cases:

1, Regulation 17 speaks of discharge during probation. It is as follows:

(1) During the probationary period an employee shall be liable to be discharged without any notice.

(2) Nothing in Sub-regulation (1) shall apply to a Junior Officer or an Assistant Branch Manager or an Inspector recruited from the Corporation's staff who, if he fails to show satisfactory promise during the period of his probation, shall be liable to be reverted to his previous grade without notice or salary in lieu thereof.

2. Sub-regulation (2) of Regulation 20 speaks of the determination of service by notice after the expiry of the period of probation. It is as follows:

20. (1) xx xx xx

(2) The Corporation may determine the service of any employee at any time after the expiry of the period of his probation, on giving him.

(a) three months' notice or pay in lieu thereof if he is an employee in Class 1; and

(b) one month's notice or salary in lieu thereof if he is an employee in any other class.

Provided, however, that the period of notice will be doubled in the case of employees who have served for ten years or more.

The power to determine the service of an employee shall be exercised by the authorities empowered under regulation No. 9.

(3) Regulation 41 speaks of penalities, one of the penalties being dismissal for misconduct.

43. In the case on hand, even though the original period of probation for one year had elapsed the plaintiff must be deemed to have been continued on probation, according to the decisions above referred to. The discharge during probation or the termination of the services of the appellant, therefore, comes clearly under Regulation 17(1). Regulation 17(2) does not apply to the appellant herein.

44. It is the contention of Mr. Sahagal that either Regulation 20(2) or Regulation 41 applies to this case and he is entitled to a one month's notice and enquiry into the charges of misconduct. We are not satisfied that Regulation 20(2) applies to this case. Regulation 41 only applies to penalties and the termination of service on any of the grounds mentioned therein for misconduct, which applies in the case of permanent employees of the Corporation. The action now taken by the L.I.C. is not one that arises under Regulation 41 at all. There is, therefore, no necessity for an enquiry into the charges of misconduct, etc. The Corporation had a right to discharge the services of the appellant, who was still on probation, even without notice. Exhibit A12 is, therefore, valid and does not amount to wrongful termination of his service.

45. It was also laid down by Rajagopala Ayyangar, J., (as he then was) in Menon v. Divisional Manager. L.I.C. 1960-II L.L.J 424 : (1960)1 Mad. LJ.284. A.I.R. 1960 Mad. 333, that where both Regulations 20(2) and 41 apply, it was not incumbent upon the Corporation to proceed under Regulation 41 and they could have proceeded under Regulation 20(2) itself.

46. Mr. Sahagal placed great reliance upon the decision in L.I.C. v. Sunil Kumar 1964-I L.L.J. 4427 : A.I.R. 1964 S.C. 847. It may be noted that in that case the discharge was not under the regulations, but under an order made under Section 11(2) of the L.I.C. Act, which had a statutory force. It was, therefore, held by their Lordships that the order of termination was not in accordance with Clauses 10(a) and 10(b) of the said order and hence it must be declared to be invalid. Dealing with the argument under Article 311 Gajendragadkar, J., speaking for the Bench held at page 855 as follows:

It is true that in the present proceedings the respondents had claimed relief under Article 311(2) of the Constitution and had in their writ petitions challenged the validity of the order and the regulations. That, however, does not disentitle the respondents from claiming the same relief on the alternative basis that though the order and the regulations may be valid, the impugned orders whereby their services have been terminated are invalid for the reason that they do not comply with Clause 10 of the order.

The principle laid down in the aforesaid decision cannot come to the rescue of the appellant in this case, where the termination of the services was by an exercise of power vested in the Corporation under the regulations which have no statutory force. We are, therefore, satisfied that the findings of the lower Court that Ext. A12 casts no stigma on the appellant, that the termination of his service is in accordance with the terms and conditions of his employment, as evidenced by Ext. A31 that it is not necessary for the Corporation to give any notice or an opportunity to the plaintiff to defend himself and that the Corporation is within its rights to terminate the services of the plaintiff are all correct and have to be upheld.

47. Regarding the agency of the plaintiff, it was terminated by the order passed under Ext. A27 dated 3-2-1961. The plaintiff was appointed as an agent by the order marked as Ext. A26 dated 12-11-1957. Clause 6 of Ext. A26 contains the following provisions:

1 to 5 xx xx xx

6. The Corporation shall also have the right by written notice to you to forthwith terminate your appointment in any of the following events:

(i) If in its opinion your conduct becomes such as to render you unfit to act as its agent.

(ii) If in its opinion you act in a manner prejudicial to the interests of the Corporation or to the interests of its policy holders.

(iii) If evidence comes to the knowledge of the Corporation which in its opinion is sufficient to show that you have been allowing and/or offering to allow rebate of the whole or any part of the commission paid to you.

Clause 16 also is relevant in this connection and may be extracted here:

This appointment can be terminated by either party by giving one month's notice in writing to that effect to the other party, subject to what is stated in para, (6) above.

48. Extibit A27, whereby the agency of the plaintiff has been terminated is in the following terms:

As per rules we expect an agent to make thorough enquiries about the prospect's health, etc., but you did not conduct the enquiries properly while securing the above joint life proposals. Therefore, we had warned you in our letter Ref. Development/Complaints 4781 dated 16th March, 1960 to exercise proper care in the selection of lives. On a further investigation if was found that Smt. Narla Narayana gave birth to a male child on 21-8-1959, only 6 days prior to the date of your attesting the declaration of good health on her life. Therefore, we have to take it that you obtained the signature of Smt. Narla Narayana on a declaration of good health form during the first week of her maternity period, mentioning the last date of menstruation as 24-8-59, thus committing a serious lapse. Since you have committed a grave lapse, which is prejudicial to the interests of the Corporation, we are herewith terminating your agency with immediate effect. However, you will be eligible to draw renewal commission on your past buiness.

49. It is clear from this order that on account of grave lapses committed by the plaintiff which were prejudicial to the interests of the Corporation they terminated his agency with immediate effect. But the Corporation did not deprive him of his right to draw the renewal commission on his past business as mentioned in the said order.

50. The appointment of an agent is purely within the discretion of the Corporation. The order of appointment contains clearly provisions for the termination, even without a notice. In the case of any breach of contractual obligations of that nature there is no right in the plaintiff to ask for reinstatement, but he could only claim damages, if he is so entitled to. After the agency was terminated the plaintiff appealed to the Divisional Manager under Ext. B12 to consider his case with a sympathetic view, and reinstate him as an agent. He has expressed satisfaction in that letter for allowing him to draw his renewal commission. The Corporation in its reply dated 7-4-1961 rejected his representation. The plaintiff appears to have sent a reminder on 29-5-1961 and again appealed to the Zonal Manager on 11-6-1961. The Zonal Manager in his reply to the plaintiff of 28-6-1961 intimated him that he deserved even forfeiture of his commission but since the divisional office has taken a lenient view and allowed him the renewal commission, the zonal office would not interfere with that order. But they rejected his request to reinstate him as agent and gave him a clear indication that there should be no scope for further correspondence on the subject. The plaintiff thereupon preferred an appeal to the Chairman, on 20-9-1961 (Ext. A-75). The Managing Director also rejected the said appeal on 20-11-1961 vide Ext. A29 (1). This was intimated to the plaintiff by Ext. A29 dated 22-4-1965.

51. In the meanwhile by Ext. B15 dated 11-1-1962 the plaintiff appealed to the Zonal Manager again requesting him to reinstate him in the agency and promising to act with more prudence and care without giving scope for any complaints against him in future. The Divisional Manager in his reply dated 20-2-1962 Ext. B36 regretted to consider his request. Thus it is clear that all the efforts made by the plaintiff to persuade his employers to reconsider their decision to cancel his agency and to reinstate him as an agent have failed. It was held by the lower Court that the satisfaction of the Corporation about the capacity of the plaintiff to function as an agent, is a subjective one and is not justiciable. We also agree with that view. It may also be noted that after the plaintiff was appointed as a field officer, he ceased to function as an Agent because once he was absorbed as a field officer in full time employment of the Corporation he could not have acted as an agent. Thus it has to be held that the termination of the agency of the plaintiff was proper and is not open to question. There is no provision which requires an enquiry before such termination order is passed.

52. On the question of limitation, the lower Court has held that there is nothing to show that the order passed by the Managing Director. On 20-11-1961 (vide Ext. A29/1) has been served upon the plaintiff. It was only sent along with the letter dated 22-4-1965 vide Ext. A29. The suit was filed on 26-8-1965 It cannot, therefore, be held that the suit is barred by time. We cannot, therefore, uphold the finding of the lower Court in the face of its earlier finding that the decision in the appeal was not served upon the plaintiff.

53. The next question is about the quantum of damages which the plaintiff is entitled to, assuming that the termination of his services as a field officer and his agency are improper. We have already held that there is neither wrongful termination of his services as a field officer nor as an agent. On that finding the plaintiff would not be entitled to any damages. Moreover the claim made by the plaintiff under the three heads seems to us to be without any basis and fantastic.

54. As regards the loss of commission, which he would have received on policies or business to be done by him, if he had been allowed to continue as an agent, this is rather a far-fetched claim. The appointment of an agent as we have already stated is in the discretion of the Corporation and it can be terminated at any time when the agent's conduct is prejudicial to the interests of the Corporation and an agent, who has been so terminated cannot claim damages on the basis that he would be entitled to a sum representing the commission, if he had been allowed to function as an Agent. There is no basis for such a claim when the order of termination itself is proper. Moreover, there is no data furnished by the plaintiff as to how he has arrived at the huge figure of Rs. 3,86,000 under this head. The plaintiff relied upon P.W. 5 who prepared some statements, which are not placed before the Court. He appears to have relied upon the quantum of the earlier business done by the plaintiff from 1948-59. The mere fact that the plaintiff, as an agent was able to secure some business at some point of time, would not establish that he would have procured similar quantum of business if he had been allowed to continue as an agent. Procuring of business depends upon various factors. During the period when the plaintiff was acting as an agent of the Oriental Assurance Co. and that of the Corporation, he was never able to reach the targets and the average of his previous business from 1948 to 1959 works out only at Rs. 1,25,000 per year. On this basis he cannot claim that he would have secured fifty lakhs to one crore business during the next 25 years to come. The claim of the plaintiff is only exaggerated but also fanciful and baseless. We have, therefore, no hesitation to reject it.

55. The next item of claim is towards loss of commission which he would have received on the policies or the business done by him from 1948-1959 and the claim is for Rs. 95,000 and odd under this head. The plaintiff admits in his evidence that he was being paid renewal commission. It is also submitted on behalf of the Corporation that he would be entitled to the commission of the renewals so long as the policies do not lapse or are not surrendered. The plaintiff has let in evidence of P. Ws. 2 and 4 that many of the policies effected through him became surrendered or discontinued after the plaintiff ceased to be an agent. He cannot, therefore, expect to get any renewal commission on those policies.

56. We have got no doubt that the Corporation would have any objection to pay whatever commission is due to the plaintiff on the policies effected through him, so long as the policies are in force. We also direct them to do so. Beyond this direction, we do not find any justification in granting any amount to the plaintiff in this case.

57. Coming to the third head of claim made by the plaintiff it is for a sum of Rs. 1,28,809 towards salary under normal rules, if the plaintiff had continued in service. According to our findings the termination of plaintiff's services as a field officer was proper and justified. In that view the plaintiff will not be entitled to any sum towards salary. Even this claim is exorbitant and the plaintiff has not provided any data.

58. Mr. Sahagal relied upon several decisions having a bearing on the ascertainment OT damages, in suits where there is a finding of wrongful termination of the services. He has also relied upon certain passages from Halsbury's Laws of England and 2 or 3 English cases on the question of assessment of damages. As in our view there is no wrongful termination of the services of the plaintiff, we do not want to elaborately deal with those decisions or discuss the subject any further. We have already held that if the termination order is one under Regulation 17, the plaintiff is not entitled even to one month's notice or pay in lieu of one month's salary.

59. In the above view, we do not consider that the appellant has made out any case for interference with the decision of the lower Court dismissing his suit. The appeal fails and is, therefore, dismissed but without costs in the circumstances. The appellant, however, will pay the court-fee due to the Government.

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