Bombay High Court
Arumugam Chelliah Paul (Since Deceased ... vs Life Insurance Corporation Of India on 30 November, 1989
Equivalent citations: 1990ACJ949, AIR1990BOM255, 1990(1)BOMCR237, (1989)91BOMLR544, [1991]70COMPCAS567(BOM), AIR 1990 BOMBAY 255
JUDGMENT
1. Arumugam Chelliah Paul, the original plaintiff, took a Life Insurance Policy on February 21, 1955, with the then existing National Insurance Company Limited, having its office at Calcutta..At that time the plaintiff was having a business in Ceylone and a policy was taken in connection with this business. The sum assured under the said policy was Rs. 1,00,000/- in Indian currency. The date of commencement of the policy was October 1, 1954 and the date if maturity was October 1, 1974. On payment of the entire premium the policy had matured into a claim on October 1, 1974.
2. Under the Life Insurance Corporation Act, 1956 the assets and liabilities of the said National Insurance Company Limited was taken over by the Life Insurance Corporation of India, the defendants. On maturity of the said policy the said Paul requested the defendants to pay the sum of Rs. 1,00,000/-together with bonus, in Indian currency, in India. The defendants would not agree and raised several objections. It appears that according to them the claim under the policy was to be paid in Ceylone in Ceylonese currence and if the defendants were to pay the said amount in India that would violate the provisions of Exchange Control Regulations of Ceylone. It appears that the plaintiff had another policy in respect of which there were similar contentions and that, therefore, he filed a suit being O.S. Suit No. 3896 of 1972 in the City Civil Court at Madras. However, in that suit decree was passed and the defendants paid the sum assured in Indian currency. He, therefore, tried to persuade the defendants to pay the amount involved under this policy. However, since they were not paying the amount, he was compelled to file this suit sometime on or about September 29, 1977. He has claimed a sum of Rs. 30,360/- as bonus payable on the said sum of Rupees 1,00,000/-. In addition he has also claimed interest at the rate of 18% per annum on the sum of Rs. 1,30,360/- from October 1, 1974 till the date of realisation. Thus, the claim in the suit is for Rs. 2,00,000/- with a prayer for interest at the rate of 18% per annum.
3. The defendants have filed their written statement and contend that the plaint disclosed no cause of action. They also contend that the amount was payable in Ceylonese currency and not otherwise. As far as the sum of Rs. 1,00,000/- or Rs. 30,360/- being the bonus payable, there is no dispute. The defendants, however, contend that they are not liable to pay an interest as claimed by the plaintiff. During the pendency of the suit the plaintiff died on March 27, 1982. The legal representatives of the deceased-plaintiff have been brought on record, on or about June 24, 1982. Thereafter the defendants offered to deposit the amount in the Court but objected to the amount being given to the present plaintiffs unless they obtain a succession certificate. Accordingly an order for deposit of the said amount of Rs.2,00,000/- was made on September 11, 1985, and the amount was deposited. It appears that since then the said amount has been invested in a Nationalised Bank as per the directions. Though the defendants have not filed any supplementary written statement, since the defendants have contended that the present plaintiffs are not entitled to claim this amount unless they obtain a suitable representation by way of a succession certificate from the competent Court, I have permitted them to raise such a contention. Thus, the following issues have been raised and settled.
ISSUES
1. Whether the plaint discloses no cause of action as alleged in para 1 of the written statement?
2. Whether the Defendants are not bound to make payment of the claim under the policy in suit in India or in Indian currency as alleged in paras 3 and 4 of the written statement?
3. Whether the present substituted plaintiffs are required to obtain a Succession Certificate under Section 214 of Indian Succession Act, before they claim a decree in suit?
4. Whether the defendants are liable to pay interest, if so at what rate and from what date?
5. What decree?
Issues Nos, 1 and 2:
4. Mr. Pagnis made a statement that the Ceylonese Government by their letter dated February 11, 1982, addressed to the Life Insurance Corporation of India, Madras, granted permission to transfer the policy records to India. The advocate of the defendants received this intimation on Oct. 16, 1985. In view of this communication Mr. Pagnis rightly did not press the first two issues and they do not survive.
Issue No. 3:
5. The only question is whether the present plaintiffs can claim a decree in suit without obtaining a succession certificate under S. 214 of the Indian Succession Act.
6. Mr. Pagnis submitted that the policy itself mentions the persons to whom the amount is payable viz. "The Assured, his Executors, Administrators, Assigns or Nominee". In the present case, there is no Nominee, there is no assign nor is the assured alive today. He, therefore, submitted that in terms of the policy it can be paid only to the Executors of the deceased or the Administrators of the deceased. He submitted that the amount due under the said policy having not been paid to the insured, is a debt within the meaning of sub-section (2) of S. 214 of the Indian Succession Act. He further submitted that the said claim being a claim in respect of a debt payable to the estate of the deceased, no Court could pass a decree against a debtor of a deceased person for payment of his debt to a person claiming on succession to be entitled to the effects of the deceased person or to any part thereof unless such a person produces a probate or letters of administration or a certificate of grant under the Act. He further contended that under Section 214, sub-section (1)(b) it is not possible for the present plaintiffs to proceed with the suit unless they obtain a succession certificate as mentioned therein.
7. Mr. Pagnis relied on the case of Ashutosh Ghosh v. Pratap Chandra Banerji, ILR (193.7) 1 Cal 433, wherein the Head-Note" shows that where it is provided, in a policy of insurance on the life of a Hindu, that the sum assured will become payable to him on a particular date or, in the event of his earlier death, to his executors or administrators, and the Hindu dies intestate before such date, the insurance company can refuse to pay the sum assured to his heirs until they have obtained letters of administration, although such heirs are allowed by law to establish their right to the estate of the deceased Hindu without obtaining letters of administration. However, if one goes through the facts of the case, it becomes clear that the question had arisen in , an execution of a decree which provides that the heirs of one of the parties should apply-within one month, for a succession certificate and if that party failed the other party would have the right to apply for letters of administration or succession certificate and thereafter take steps for realisation of the monies due on the policy. It appears, in respect of the said decree, neither of the parties applied for letters of administration or any succession certificate but they claimed the amount from the insurance company on the basis that there was no dispute that they were the heirs entitled to succeed to the estate of the assured. It was, in this context, observed that they could succeed to get the claim from the insurance company only "in terms of the policies which are the contracts between themselves and the assured". This was on the basis that the insurance company was entitled to stipulate that it would pay the money due under the policy only to the assured or to his executors or administrators or his assigns and that "limitation thereby imposed is good as against the persons claiming title under the assured". In my view this authority may not be of any help to us inasmuch as the relations of the parties and the claim of the policies are all governed by the provisions of the Insurance Act, 1938, and cannot be considered as a mere matter of contract.
8. Mr. Pagnis then cited the case of Raichand Dhanji v. Jivraj Bhavanji . This is for the purpose of showing that the practice followed in the Bombay High Court according to which the Court used to pass a decree in a suit by an executor or legatee with a direction that the decree be not sealed until probate was granted or representation was taken out, is not correct. In my view, this has no application as far as the question involved in this suit. Similarly the case of Sankaran Nair v. Madhyi Amma, , will have no application to the question that is before me. Mr. Pagnis relied on this authority again for the same proposition that legal representative of the deceased-creditor has to produce a succession certificate for obtaining a decree for realisation of a debt due to the latter, and that this would apply even with regard to an execution petition filed by the deceased decree-holder and the same is 10 be prosecuted further on his death by his legal representative. This authority again does not deal with the nature of the claim arising under a policy particularly under the provisions of the Insurance Act, 1938 and as to how the same should be treated when the same is claimed in a Court of Law. The other case cited by Mr. Pagnis is the case of K. Laxminarayan v. V. Gopalaswami . He relied on this authority for the purpose of showing that Section 214 applies even if the suit was started by a creditor who died pending the suit, and his legal representatives were brought on record under O. 22 of the C.P.C. In this connection the Court referred to the case of Abdul Majid v. Shamsherali Fakruddin AIR 1940 Bom 285 wherein the above dictum is found.
9. Mr. Pagnis then drew my attention to the case of Hem Nolini y. Isolyine Saroj-bashini, , for the purpose of showing that the bar contemplated under S. 214 includes even establishing a right of heir and legal representative unless he obtains succession certificate or suitable representation. That was a case under Sec. 213 of the Indian Succession Act. However, the contentions appear to be the same.
10. As against this, Mr. Kotwal submitted that a claim under the insurance policy today cannot be considered as a simple debt or a debt within the meaning of Sec. 214. He submitted that a claim under the policy is a statutory liability and the amount has to be paid in terms of the said statute. In this connection he relied on S. 39, sub-section (5) of the Insurance Act, 1938. Section 39(5) is as follows :
"Section 39(5) : Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policy-holder or his heirs or legal representatives of the holder of a succession certificate, as the case may be."
Mr. Kotwal submitted that this provision clearly sets out as to whom the money should be paid. Firstly if the policy matures during the lifetime of the person whose life is insured, to the policy-holder. Secondly if there is a Nominee or nominees then to the Nominee ' s, and if the Nominee s die before the policy matures for payment, the amount shall be payable to the policy-holder or "his heirs or legal representatives or the holder of a succession certificate" as the case may be. He, therefore, submitted that it is not necessary that for the purpose of receiving the amount from the Insurance Corporation the heirs or legal representatives must obtain a succession certificate. If that was the language of the law, then, in that event, the statute itself would have provided that the amount secured by the policy should be paid to the heirs or legal representatives who obtain a succession certificate in that behalf.
11. It is true that, in the policy, which is still having the age-old form, it is stated that the amount is payable to "The assured, his executors, administrators, assigns or nominee". Rut. certainly if there is a statutory obligation that should prevail over the contractual obligation. No contract can override the provisions of the statute. These provisions in the statute are not made subject to any Contract as such. Therefore, If, in the policy, the category of persons to whom the amount should be paid has been restricted, it is not I open to the Insurance Corporation to say that they would only pay to the persons as are mentioned in the policy and not to anybody else, mentioned under the statute. In such a situation, the statute prevails over the contract. It is in this sense the Calcutta case Ashutosh Ghosh v. Pratap Chandra Banerji (ILR (1937) 1 Cal 433) (supra) will not apply inasmuch as that case came to be decided much before the provisions of the Act came into force. What was considered by the Calcutta High Court was only the term of the contract, whereas, here, we have a statute and that will have to be interpreted and construed.
12. Mr. Pagnis laid emphasis on the expression "as the case may be" and submitted that it can be the assured, it can be the nominee, or it can be the hairs and legal representatives of the assured, but on their obtaining a succession certificate. I am afraid, that that cannot be the correct interpretation of the said provision. As far as the assignees are concerned, Section 38 mainly deals with their rights and sets out as to how the amount should be paid to them. Similarly with regard to nomination there are various provisions in Sec. 39. In the case of a nominee, no further representation is required. The nomination itself is sufficient. But it is well-settled that the nominee does not take the amount for himself. He takes it for and on behalf of the heirs or legal representatives of the deceased person whose life is insured. The Corporation is not concerned how the nominee, in turn, disburses the amount amongst the real beneficiaries. But if there is no nomination, or if there is no nominee, and if all the heirs or legal representatives come forward and claim the amount, I cannot understand how the Corporation can insist on any representation to be had. It is true that the object of subsection (5) of S. 39 is to see that the Corporation gets a proper discharge. The statute has] taken care of all the categories of persons who are entitled to claim this amount. It does not mean that even though there is no dispute as to who are the heirs and legal representatives, they must still obtain a succession certificate to get a proper discharge as far as the Corporation is concerned. It is only where there is a dispute amongst the heirs and legal representatives, the Corporation would be justified in insisting on their, or any of them, getting a suitable representation, and pay the amount to such a person.
13. Mr. Pagnis emphasised that under Section 214(2) the word "debt" as defined would include every amount of debt meaning thereby any amount due and payable by one to the other. He submitted that it could be said, in the present case, since the Corporation has not paid the amount to the policy-holder during his lifetime that amount could be considered as debt due and payable by the Corporation to the estate of the deceased. He, therefore, submitted that in that sense it becomes necessary to have a succession certificate.
14. Precisely, to meet this contention Mr. Kotwal drew my attention to the case of Asha Goel v. L.I.C. of India AIR 4986 Bom 412 decided by Kantharia, J. In that the learned Judge has expressly held that the L.I.C. which is a statutory Corporation, and which carried on business of insurance in the public interest, is an "authority" or an "instrumentality" of the State within the meaning of Art. 12 of the Constitution. The business activites of L.I.C. are not of commercial nature but are for the welfare and benefit of the society. It is in this sense, he observed, that a claim arising under a policy-can be the subject-matter of a writ petition under Art 226 of the Constitution of India, and the liability to pay is a statutory liability. It is true that in that case what was required to be considered was the scope of S. 45 of the Insurance Act and as to whether L.I.C. could repudiate the policy. I am not concerned with that part of the case. But it is clear from this authority that the obligation is a statutory obligation and the relevant portion in that behalf is as follows:
"It is true that the relationship of insurer and insured is created under a contract of insurance but the obligation arising out of such a contract are to be discharged by the insurer under a statute, viz., S. 45 of the Insurance Act. It is by and under a sanction of this provision of law that the insurer had to discharge its legal obligations on the happening of a certain contingency mentioned in the contract. Hence the conclusion is inevitable that under a policy of life insurance, the liability which L.I.C. incurs is a statutory liability."
I am in respectful agreement with these observations made in this case.
15. Mr. Kotwal further submitted that a Division Bench of the Karnataka High Court in the case of L.I.C. of India v. U. K. Vasappa has applied the ratio of the above case and has concurred with the said view. Therefore, if the claim is a statutory liability arising under the Act and if there is no dispute as to the heirs and legal representatives of the policy holder I cannot understand as to how the Corporation can even insist that the party must necessarily obtain a succession certificate.
16. I may further observe that to obtain succession certificate is not an easy thing these days. It means money and considerable delay, the only beneficiary very often being the legal fraternity. These days when large number of people insure their lives, and particularly when many of them belong to a class, not so affluent, insistence on such an otherwise unnecessary representation would be an additional burden which they may find it difficult to bear. In answer, Mr. Pagnis stated that in all such cases where the amount is not large, the Corporation gives the amount without a succession certificate. This is strange! It means that the Corporation can pick and choose and there is no principle in what it does. While a policy covers the risk of death, very often that is the only solatium for the family. The Corporation need not be so very apologetic when it can legitimately pay to the heirs and legal representatives without any succession certificate, excepting, of course, where there is controversy as to representation to the estate of the deceased.
17. I am also inclined to think that it is possible for us to take a different view with regard to the scope of O.22 of the C.P.C. I cannot understand as to why in a suit filed by the deceased-plaintiff if the heirs have to be substituted, the heirs should obtain a succession certificate as such. It is true that I am bound by an earlier decision of this High Court and, therefore, I do not propose to decide this aspect as such. But I want to make . it clear that when an heir is brought on record he is only substituted in the place of the deceased-plaintiff. The plaint is the original plaint of the deceased-plaintiff. The cause of action is again that of the deceased plaintiff. The deceased-plaintiff filed this suit for a certain, relief and the substituted heirs are given a chance to prosecute the said cause of action and to get the relief as claimed by him. There is no question of the heirs of legal representatives claiming separate reliefs. In all such cases the substituted heir has no separate cause of action. In such circumstances, to my mind, S. 214 will have no application whatsoever. It is by virtue of the enabling provision provided under O. 22, C.P. Code, the heir comes on record and prosecutes the suit further. This cannot be considered as if the substituted heir is claiming a debt on the basis of a separate cause of action for which a succession certificate may be required. If one looks at the matter from this angle, it becomes clear, as far as this suit is concerned, the contention of the defendants as raised at present will be without any justification whatever.
Issue No. 4:
18. Mr, Pagnis submitted that there is no provision for payment of interest either in the policy or under the statute and, therefore, there should be no decree for payment of interest. He also submitted that the claim of the plaintiff to the extent it relates to the claim of interest should not be allowed. He also submitted that even if the interest is to be granted, it cannot be granted at such an exorbitant rate as 18% per annum as claimed by the plaintiff.
19. It is true that the policy is silent, so also the statute. But I cannot forget the fact that the amount which should have come to the plaintiff remained with the defendant-Corporation. By its very nature, the Corporation does business and, therefore, this money of course, as it remained with the defendants, has enured to the benefit of the Corporation. This amount ought to have come to the policy holder much before his death. In any case by February 11, 1982, the defendants had come to know that there was no objection whatsoever for payment of this amount to the deceased. I wish he had received this amount before his death, and he would have had a peaceful death. It is unfortunate that despite this communication from the Cylonese Government, the Corporation took nearly three years 10 communicate this decision to their own advocates and they took nearly another five months for bringing the amount to the Court. Thereafter again the amount could not go to the plaintiff inasmuch as that the Corporation thought that the succession certificate was a must and that is how the amount remained in this Court. Mr. Pagnis submitted that on a number of occasions the matter was adjourned at the instance of the plaintiff. But the plaintiffs were wondering whether they should apply for a succession certificate and they needed advice. Thereafter, in fact, the plaintiffs also applied for the succession certificate. Therefore, I cannot say as to who is responsible for this delay in the matter as such. But I think on principle since the money due to the plaintiff remained with the defendants, some interest will have to be paid. Ordinarily, in a matter of this type I would consider interest at the rate of 12% as reasonable rate of interest from the date when the amount becomes due till it is paid. However, in the present case, interest at the rate of 6% from September 1, 1977 till October 1985 when the amount was deposited in Court, would be a reasonable amount of interest which the plaintiffs should get. For the subsequent period, the defendants need not pay any interest inasmuch as the amount has been invested by the Prothonotary and Senior Master, and the plaintiffs should get all such interest as accrued thereon.
20. I, therefore, answer the issues as follows:
Issue Nos. 1& : Not pressed and, therefore 2 answered in the negative.
Issue No.3 : Present plaintiffs are not
required to obtain a succes-
sion certificate and they
are entitled to claim decree
in the suit.
Issue No.4 : The defendants are liable to
pay interest at the rate of
6% per annum from Sep-
tember 1, 1977 till October
1, 1985. Further interest as
accrued on investment by
the Prothonotary and
Senior Master.
Issue No.5 : See below:
ORDER
Decree as against the defendants in the sum of Rs. 1,30,360/- together with interest thereon at the rate of 6% per annum from September 1, 1977 till October 1, 1985.
The plaintiffs are also entitled to costs of this suit, including professional costs, all quantified at Rs.6,000/-.
The plaintiffs are also entitled to the subsequent interest as accrued on Rs. 2,00,000 -invested by the Prothonotary and Senior Master.
Mr. Oak has produced before me a certificate issued by the Prothonotary and Senior Master dated October 6, 1989, which shows the total amount at Rs. 2,60,000, -.
At the request of Mr. Oak, I give further direction that the Prothonotary and Senior Master to recall the Fixed Deposit amount together with interest accrued thereon and pay the said sum of Rs. 2,60,000 - together with such interest as might have been accrued thereon from October 6, 1989 till payment, to the plaintiffs.
The Prothonotary and Senior Master to act on a certified copy of the minutes of the order without waiting for the decree to be drawn up and sealed.
At the request of Mr. Pagnis, the order with regard to payment has been stayed for a period of three weeks from today.
21. Order accordingly.