No Loss Suffered By LIC On Account Of Alleged Delinquency: Rajasthan HC Quashes Recovery Order Against Development Officer
The Rajasthan High Court was considering a Writ Petition against the Recovery Order issued against the Petitioner for dereliction of duty while working as a Development Officer.

The Rajasthan High Court while quashing a recovery order issued by LIC against its Development Officer, observed that the Insurance Company suffered no loss due to the alleged delinquency of the employee.
The Court was considering a Writ Petition against the recovery order issued against the Petitioner for dereliction of duty while working as a Development Officer with the LIC.
The bench of Justice Arun Monga held, "As regards the employee of the LIC, i.e., the petitioner herein, he was let off with the issuance of a censure. Regarding the imposition of recovery against the petitioner, I find that no grounds were made out in the absence of either any pleading or even any proof of loss suffered in LIC business on account of the petitioner’s alleged delinquency."
The Petitioner was represented by Advocate Rakesh Arora while the respondent was registered by Advocate Harish Mathur.
Facts of the Case
The Petitioner was asked via a letter as to why he did not inform the LIC about one of the agents being in government employment; and why was he allowed to work as an agent despite being a government employee. In reply, the Petitioner submitted that when the said agent was given the agency, he was unemployed. He added that he was unaware that subsequently the agent was employed with the government.
However, a penalty of censure was imposed on the Petitioner and later the impugned recovery order was issued.
The Petitioner submitted a reply to the recovery order stating that even the department itself had allowed up to date renewals of the said agent and paid commissions and even renewal commissions to him. The Petitioner further stated that since a penalty of censure had already been imposed, no further recovery should be made.
The Respondent submitted that Development Officers are obligated to act against agents engaging in illegal activities and report violations to LIC and that the administrative censure was not a punishment awarded to the petitioner for proposing LIC policy through his agent. The recovery order seeks to reclaim undue payments made on account of the agency which was operated by an unauthorized government employee. It was submitted that petitioner’s claim of ignorance regarding his agent’s employment status is unacceptable.
Reasoning By Court
The Court found that neither LIC has suffered any loss nor it took any steps against the said 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. It noted that as far as his services were 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 observed.
"Regarding the imposition of recovery against the petitioner, I find that no grounds were made out in the absence of either any pleading or even any proof of loss suffered in LIC business on account of the petitioner’s alleged delinquency," the Court further observed.
The Petition was accordingly allowed.
Cause Title: Padam Chand Prajapat vs. L.I.C. and Ors. (2024:RJ-JD:49549)
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