R BABU RAO Vs. ORIENTAL INSURANCE CO

JUDGEMENT

(1.) The petitioner prays for a writ of prohibition restraining the respondent from proceeding further in pursuance of the order dated 31-3-1987 of the Manager, Oriental Insurance Company Ltd., Regional Office, Madras, and further directing the respondent to treat the period of suspension between 8-11-1979 and 8-3-1985 as regular and pay the salary for the period and grant such other benefits as the petitioner is entitled to.

(2.) The petitioner was appointed as Junior Inspector, Oriental Insurance Company on 5-8-1976. In 1979 he was promoted as Grade-I Inspector with effect from 5-8-1978. On 10-5-1979 newspapers reported the progress of cyclonic storm and about the possibility of heavy rainfall. On 11-5-1979 the press reported that a cyclonic storm was likely to cross coast at Nellore by Friday morning and tidal waves about 2 meters above normal were expected. While he was working as probationary Inspector Grade-I, he issued two cover notes for a total sum of Rs. 2,41,35,000/- on 11-5-1979. On the allegation that he acted in excess of his authority and in the manner prejudicial to the interests of the Insurance Company and also of negligence in the performance of his duty, disciplinary proceedings were initiated against him on 8-11-1979 and he was suspended from service on the same day. While so, a criminal case was also launched against him in C.C. No. 13 of 1981 on the file of the Court of the Principal Special Judge for S.P.E. and A.C.B. cases, Hyderabad, for offences under Sections 120 B read with Sec. 420 I.P.C. and 5 (2) read with Sec. 5 (D) of the Prevention of Corruption Act. That Criminal case ended in acquittal of the petitioner on 6-3-1984. The State preferred Criminal appeal No. 849 of 1984 which was dismissed by the High Court on 11-9-1986. It is stated that the High Court observed that there was no compelling reason to doubt the genuineness of the cover notes issued by the petitioner and further held that the evidence led by the prosecution was wholly misconceived besides not being fully established, and that the same constitutes abundle of baseless threats and rags incapable of bringing peace together belying the entire case of the prosecution, as also defects and infirmities the benefit of which must necessarily accrue to the accused. After the judgment of the Criminal Court dated 6-3-1984 acquitting the petitioner, the order of suspension dated 8-11-1979 was revoked by the Insurance Company by order dated 8-3-1985. However, by proceedings dated 31-3-1987 the Manager of the Regional Office of the Company appointed an enquiry officer under sub-rule (2) of Rule 25 of the General Insurance (Conduct, Discipline and Appeal) Rules, 1975 to enquire into the charges which were already levelled against the petitioner. In these circumstances the petitioner prays for the writ as indicated above.

(3.) The respondent filed a counter-affidavit and an additional counter-affidavit, stating that the service particulars of the petitioner are not disputed. It is stated that the head office at Delhi issues instructions from time to time to every Regional Office and the Regional Office issues instructions to its Divisional Office which are in turn passed on to the Branch Offices and its employees for implementation and control. The letter of appointment of the petitioner also states under Item-B that the employee should not accept or make any commitment for accepting, unless he is specifically authorised in writing to accept such business and will not exceed in any way the authority given to him. On 9-5-1979 the Radio authorities and mass media warned the public at large regarding impending cyclone from 9-5-1979. In view of those conditions, all the Insurance Companies including the respondent-company, instructed all its offices not to give extension to current policies or to renew any policies where there is no flood or cyclone cover during the previous year and not to accept any new commitment covering such perils of storm and flood. The offices in tum advised all the Inspectors to conform to such instructions. The petitioner extended the coverage for extraneous perils, viz.,flood and cyclone, to two companies, Anjaneya Tobacco Company, Singarayakonda and Anjaneya Tobacco Company, Pvt Ltd., Tangutur, to the tune of Rs. 2,41,25,000/- without obtaining permission of the controlling office by way of endorsement on the existing coverage. The petitioner in collusion with the above two Companies, defrauded the respondent-company. Though he received the instructions on 11-5-1979 by telegraphic message he acted prejudicially knowing fully well that he was not competent to do so and that he acted negligently in performance of his duties and caused serious financial detriment to the respondent to the tune of Rs. 2,41,2S,000/-. It is only on 17- 5-1979"that he admitted having issued cover notes when he was called for by the Branch Manager. Till that time he did not inform. The respondent came to know about the fraud played by the petitioner only when the Guntur branch office received the cover notes. When the Regional Office at Madras was informed of this, disciplinary action was taken against him immediately and he was suspended on 8-11-79. Sri E.N. Subramanyam was appointed as enquiry officer on 10-9-1981. But the departmental enquiry was kept in abeyance since the entire record was taken by the C.B.I. in connection with the criminal case. It is not disputed that the criminal case was dismissed on 6-3-1984 on the ground that the prosecution failed to prove the offence. It is also admitted that the appeal filed by the C.B.I. was dismissed by the High Court on 11-9-1986. It is stated that the respondent-company is competent to initiate departmental enquiry against the petitioner, if there is a case on the charges. It is further stated that the respondent-company released fall pay and allowances to the petitioner for the period 12-11-1979 to the date of revocation of suspension on 7-4-1985 and accordingly the arrears of pay and allowances were paid on 1-10-1987. As the departmental enquiry was initiated on 8-11-1979, it can be resumed as the petitioner acted negligently and in violation of the instructions issued by the company from time to time. It is further stated that there is no legal or constitutional bar in conducting disciplinary proceedings, as the criminal case was for of fences connected with fraud and forgery, whereas the disciplinary proceedings are based on charges of misconduct and discharging the duties negligently. It is also added that the judgment in the criminal case was on technical grounds. In the circumstances it is prayed that the writ petition may be dismissed.