Court Cases

Rajasthan High Court Overturns LIC’s Recovery Order Against Development Officer


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In a significant ruling, the Jodhpur bench of the Rajasthan High Court has quashed the Life Insurance Corporation of India’s (LIC) decision to initiate recovery proceedings against one of its Development Officers. The recovery was linked to the business generated by an agent who was found to be a government employee, thus violating LIC’s policies.

Justice Arun Monga, who heard the case, pointed out that LIC had neither suffered any financial loss nor taken action against the agent, Basti Ram Roj, for violating his government service rules by working as an LIC agent. The judge emphasized that the agent’s actions had actually brought in business for LIC, making it puzzling as to why the company would penalize its own interest by acting against the agent’s business dealings.

The case arose when the Development Officer, the petitioner, was informed by LIC that one of his agents, later identified as a government employee, had been working for LIC. LIC asked the petitioner why he allowed the agent to continue his work despite his government employment status.

Initially, the petitioner faced a penalty of censure, followed by an order to recover incentive bonuses and additional conveyance amounts linked to the business generated by the unauthorized agent. The petitioner argued that the agent had been unemployed when he started working and had only later secured a government job, which the petitioner was unaware of. He further claimed that once the censure was imposed, no further recovery should be necessary.

LIC’s counsel, however, argued that the censure and the recovery were separate matters, with the recovery order aimed at reclaiming payments made for the unauthorized agent’s business.

After hearing both sides, the Court observed that LIC had failed to present any evidence showing that the petitioner violated any service rules or that the corporation suffered any loss due to his actions. The Court also criticized LIC for taking unilateral action without issuing a show-cause notice or conducting a departmental inquiry, which would have given the petitioner an opportunity to be heard.

In its final judgment, the Court quashed LIC’s recovery proceedings, stating that the actions taken against the petitioner were unjustified, as there was no proven violation of service rules or loss to LIC.

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