LIC Suffered No Loss, Gained More Business: Rajasthan HC Quashes Recovery Order Against Officer For Not Reporting Agent In Govt Service

The Jodhpur bench of Rajasthan High Court quashed Life insurance Corporation of India's order (LIC) initiating recovery proceedings against its Development Officers in connection with the money generated by the business conducted by an agent who was not authorized to work for LIC as he was in government service.Justice Arun Monga said, "Be that as it may, neither LIC has suffered any loss nor took any steps against the said Basti Ram Roj/agent, by filing an appropriate complaint before his employer that, while serving for the Government he violated his service rules by working as an agent. Not only this, it transpires that as far as Basti Ram's services as agent are concerned, he rather brought business to LIC. There is no gainsay to state that, being a commercial organization, LIC rather got more business through the agent. Therefore, it is rather intriguing as to why would LIC act against its own interest by taking action against a third party, who, if at all, was delinquent of violating service code with his employer". The Court was hearing the development officer's plea challenging LIC's order initiating recovery proceedings against the petitioner. The petitioner received a letter from LIC which revealed that one of the agents working under him was a government employee. Answer was sought from the petitioner as to why he allowed the agent to work despite being a government employeeAfter imposing a penalty of censure on the petitioner, another order was passed seeking recovery from the petitioner of incentive bonus and additional conveyance amount generated by the business conducted through the unauthorized agent. The petitioner said that when the agent started working, he was unemployed, and it was only later that he had gotten the government job about which the petitioner was unaware. And once the penalty of censure was ordered, there was no need for further recovery. The counsel for LIC submitted that censure and recovery were separate issues where the recovery order sought to reclaim undue payments made on account of the agency operated by the unauthorized agent.After hearing the contentions, the Court highlighted that the financial benefits given to the unauthorized agent for his services after he joined the government service was the sole basis for acting against the petitioners.The Court further opined that no proof was put forth by LIC of the fact that there was violation of applicable service rules by the petitioner or of any loss suffered by LIC on account of the petitioner's alleged delinquency. The Court also pointed out that a unilateral decision was passed merely by a "pen's stroke" without issuing any show cause notice or conducting any departmental inquiry against the petitioner or affording any opportunity of hearing. Accordingly, the order for recovery was set aside.Case Title: Padam Chand Prajapat v L.I.C and Ors.Citation: 2025 LiveLaw (Raj) 24Click Here To Read/Download Order

LIC Suffered No Loss, Gained More Business: Rajasthan HC Quashes Recovery Order Against Officer For Not Reporting Agent In Govt Service

Nupur Agrawal

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