(1) The plaintiff, whose suit has been dismissed by both the Courts below, appeals from the judgment of the subordinate Judge, Elura given on 17-1-1962. The necessary facts are that the plaintiff was a chief agent of a private limited company called 'The National Star Assurance Company Limited'. One of the duties of the Chief agent was to secure life insurance business through special agents and under the terms of the appointment letter dated 20-4-1953, the plaintiff was entitled to overriding commission at varying rates specified in clause 6 (a) of the said appointment letter on the premia received for the first year on the policies secured by the plaintiff. Under the Life Insurance Corporation Act, 1956 (hereinafter referred to as the Act), all the assets and liabilities of the National Star Insurance Company Ltd., stood transferred to and vested in the Life Insurance Corporation of India on 1st September 1956.
(2) It was contended by the plaintiff that, prior to the said appointed day he submitted proposals for life insurance in respect of seven policies, the numbers of which are mentioned in the plaint. It was alleged that, in respect of these policies, the plaintiff is entitled to get first commission, but the respondent did not pay it to the plaintiff. It was contended that three conditions stipulated by the defendant in order to entitle the chief agents to their first commission are not valid in law.
(3) The principal defence set up by the corporation was that the civil Court has no jurisdiction to entertain such a suit; that no suit for account can be filed by the chief agent whose services stood terminated by force of law on the appointed day and that the corporation is not liable to pay any commission to the plaintiff. I am not concerned in this second appeal with the other contentions raised by the defendant.
(4) The trial Court, after framing appropriate issues, and recording the evidence adduced by the parties, dismissed the suit on two grounds viz., (1) that the civil Court has no jurisdiction to entertain the suit instituted by the plaintiff; and (2) that this is not a case in which a suit for account can lie.
(5) The same view was taken by the learned subordinate Judge.
(6) It was firstly contended by Mr. Rajabhushana rao, the learned counsel for the appellant, that section 36 read with the third schedule of the Act does not provide compensation for the loss, which has occasioned to the chief agents on the proposals, which were duly submitted to the Life Insurance Corporation, but not accepted on or before the appointed day. The compensation claimed by the plaintiff therefore, falls outside the purview of section 36 read with the Third Schedule. Such a suit is congnisable by the civil Court.
(7) In order to appreciate the contention, it is necessary to read Section 36 of the Act. It is in the following terms:
'Notwithstanding anything contained in the Insurance Act or in any other law for the time being in force, every contract appertaining to controlled business subsisting immediately before the appointed day ..
(a) between an insurer and his chief agent or between an insurer and a special agent; or
(b) between the chief agent of an insurer and a special agent: shall , as from the appointed day, cease to have effect and all rights accruing to the chief agent or the special agent under any such contract shall terminate on that day:
Provided that in every such case compensation shall be given by the corporation to the chief agent or the special agent, as the case may be, in accordance with the principles contained in the Third Schedule, and the provisions of sub-section (2) of section 16 shall, so far as may be, apply in every such case.'
A close and careful reading of section 36 would disclose that, it applies to contracts appertaining to controlled business subsisting immediately before the appointed day. It does not obviously apply to the proposals, which were merely sent to the Life Insurance Corporation, but were not accepted. Admittedly, there could not be any contract unless the proposals were accepted by the concerned Insurance Corporation. It is only such a subsisting contract on the appointed day between an insurer and a special agent, or between the chief agent of an insurer and a special agent that shall cease to have by effect. The section also makes it plaint that all rights accruing to the chief agent or the special agent under any such contract shall terminate on that day. It is thus plain that it is only the concluded contracts and those again, which were subsisting on the appointed day, that have been declared to cease to have any effect and it is only in regard to such subsisting contracts that all rights accruing to the Chief agent stand terminated on that day. The proviso, therefore, has provided compensation for such rights of the chief agent as indicated above.
(8) The Third schedule merely incorporates the principles in accordance with which the quantum of compensation has to be determined. The title of the Third Schedule itself makes it clear. The title is 'Principles for determining compensation payable to a chief agents.' The compensation payable to a chief agent, according to that schedule, shall consist of seventyfive per cent of the overriding commission specified in the contract relating to chief agency with the insurer on the renewal premiums received by the corporation during a period of ten years from the appointed day in respect of the business procured by the Chief agent before the appointed day and such compensation shall be determined and paid annually for the said period. It is true that the Third Schedule takes into consideration seventyfive per cent of the overriding commission specified in the contract relating to chief agency with the insurer on the renewal premiums received by the corporation during a period of ten years from the appointed day and it does not specifically mention anything about the first commission payable after the policy is accepted by the corporation. That cannot, however, lead us to the conclusion that the rights, which stand determined in accordance with section 36 of the Act have not been adequately or fully compensated. It must be remembered that Section 36 does not provide compensation separately for the first commission and the commission payable on subsequent payment of premia. It provides only compensation for the rights, which had accrued to the chief agent and which stood terminated on the appointed day. I am not called upon to consider whether the compensation provided in the Third Schedule is adequate or not. It cannot however, be argued that it does not provide any compensation for the loss of the first commission when all the rights of the chief agents are put an end to by the Act and compensation is provided for whatever loss which flowed from determining such rights. It can hardly be argued that, although compensation is provided, some right, which had accrued to the chief agent, has not been specifically taken into consideration while providing, the compensation and was thus left out. I do not, therefore, agree with the contention that, since the suit for account relates only to the first commission payable to the plaintiff, it falls outside the purview of section 36 read with the Third Schedule. I see therefore, no difficulty in rejecting that contention.
(9) Assuming therefore, that proposals sent by the plaintiff although accepted subsequent to the appointed day by the corporation, created a contractual obligation to pay the first commission, even then since such a right also stood terminated by virtue of section 36, for which the proviso provides the compensation in the manner mentioned in the third schedule, plaintiff is not entitled to any separate compensation which the civil Court can grant.
(10) Even otherwise, the plaintiff is not entitled to the first commission merely because he has submitted the proposals before the appointed day. It is conceded that the chief agent could not have claimed commission if the proposals were not accepted by the Insurance Corporation. Since no commission is payable merely on proposals the plaintiff with not be entitled to any such commission.
(11) In the view which I have taken, it is unnecessary to consider the other argument advanced before me, that is to say, that a suit for account can, in the circumstances, of this case, be instituted by an agent against the principals. Since the arguments have been advanced in deference to the arguments, I would briefly state my opinion.
(12) It is true that, broadly speaking, not agent can institute a suit for account against the principal who, normally is not held liable for account. It is not, however, an absolute rule of law. It accepts some well recognised exceptions. One such exception is that, if the facts in relation to the business can be within the exclusive knowledge of the principal, in such a case, it is recognised that a suit for account in those special circumstances, can lie against the principal. That this is the correct position of law is not disputed. What, therefore, has to be seen in this particular case is whether this case falls within the said exception. I do not find any extraordinary or special circumstances in this particular case, which would entitle the chief agent, whose rights were determined under section 36, to institute a suit against the corporation for accounts. His complaint in the plaint is that, on the appointed day he had already submitted seven proposals. Although it is stated in the plaint that there are some other proposals also, in the prayer he has specifically asked for accounts only in regard to the policies, which were mentioned in the plaint. I am unable to understand how in such a case, a suit for account can lie. The chief agent can very easily work out the first commission, which would be payable to him since the proposals, which went through him have been accepted by the corporation and file a suit for the recovery of commission, if he is entitled to it. It cannot be said in this case that there are certain facts, which are within the exclusive knowledge of the corporation. The plaintiff himself gives the list of seven policies with their numbers, which were accepted by the corporation. He is the chief agent through whom alone these policies have gone. He is the person who has been in the business for quite a long time. He must have, therefore, maintained records. It would not have been difficult for him to work out his commission payable to him on these policies and institute a suit for the same. In that case, it could be considered whether he is entitled to that commission. Since I am of opinion that this is not a case which falls within the exception mentioned above, I find no difficulty in agreeing with the conclusions of both the Courts below.
(13) The second appeal, therefore, fails and is dismissed with costs. No leave.
(14) Appeal dismissed.