Removal From Service On Account Of Non-Collection Of Insurance Premium Disproportionate - SC Directs For Lesser Punishment

The Supreme Court recently observed that the punishment of removal from service given to a Branch Manager of an Insurance Company for issuing insurance cover note without collecting premium was disproportionate to the charge and misconduct.

"…we are of the opinion that the order of removal passed by the disciplinary authority against the appellant who had rendered approximately over twenty years of service and the fact that the appellant had an unblemished service record throughout, we are of the opinion that the punishment of removal from service is disproportionate to the charge and the misconduct held to be proved.", the Bench of Justices MR Shah and BV Nagarathna observed.

The Court also held, "The petitioner relied upon the assurance given by the insured that he will send the money and on that assurance the appellant issued the first cover note. However, at the same time when the second cover was issued with respect to the very vehicle, the appellant was required to cancel the earlier cover note which the appellant did not cancel, which has resulted in loss to the insurance company. However, at the same time it cannot be said that the appellant failed to maintain integrity. Therefore, this is a fit case to impose any other punishment lesser/other than the removal from service."

In this case, the Branch Manager of the United Insurance Company issued an Insurance Cover Note with respect to the vehicle belonging to one Chander Singh. On the same day, he issued another cover note.

It was found that for the first cover note, he had not taken any premium and for the second Cover Note a cheque given by the insured had bounced.

The vehicle insured met with an accident relating to which a claim was filed on the basis of the first insurance Cover Note. An award of Rs.3,24,400/­ came to be passed by the Motor Vehicle Accident Tribunal. The insurance company accepted it.

However, the disciplinary authority issued a charge­sheet to the appellant-Branch Manager alleging that the appellant had issued a Cover Note without collecting any premium. It was alleged that he had thus caused a financial loss to the insurance company. It was further alleged that the appellant had failed to maintain integrity, and devotion to duty and acted in a manner prejudicial to the interest of the company.

In response to the charges the appellant stated that at the time when the cover note was issued, he had relied upon the assurance given by the insured that he will send the amount through his person, but he did not send the premium amount. Instead, the insured applied for another insurance policy for which a cheque was given, however, the cheque bounced.

The charge leveled against the appellant-Branch Manager came to be proved and he was removed from service however without any disqualification of future employment.

Writ Petition against the order of removal was dismissed by the Single Judge which was later confirmed by the Allahabad High Court. Aggrieved the appellant moved Supreme Court.

Advocate Vishnu Sharma appeared for the appellant whereas Advocate Mohit Paul appeared for respondents-Union of India and others.

The Court observed that the appellant-delinquent officer had rendered over twenty years of service and that he had an unblemished service record throughout. The Court held that the punishment of removal from service was disproportionate to the charge and the misconduct held to be proved.

"The petitioner relied upon the assurance given by the insured that he will send the money and on that assurance the appellant issued the first cover note. However, at the same time when the second cover was issued with respect to the very vehicle, the appellant was required to cancel the earlier cover note which the appellant did not cancel, which has resulted in loss to the insurance company. However, at the same time it cannot be said that the appellant failed to maintain integrity.", the Court observed.

Therefore the Court quashed and set aside the impugned judgment and order of the High Court. The Court set aside the order of punishment imposed by the disciplinary authority removing the appellant from service and remitted the matter back to the disciplinary authority directing it to impose any other appropriate punishment lesser/other than the order of removal from service.

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