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Life Insurance Corporation of India Vs. Tada Tirupathayya - Court Judgment

LegalCrystal Citation
SubjectCivil;Insurance
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 118 of 1959 and Memo of Cross Objections
Judge
Reported inAIR1963AP353
ActsCode of Civil Procedure (CPC) , 1908 - Sections 21, 34 and 107; Succession Act, 1925 - Sections 214
AppellantLife Insurance Corporation of India
RespondentTada Tirupathayya
Appellant AdvocateV. Parthasarathy and ;Y.V. Ramanamurthy, Advs.
Respondent AdvocateN. Subba Reddy, Adv.
DispositionAppeal dismissed
Excerpt:
.....decision of lower court - evidence proved respondent and his brother are members of joint family - premium paid out of joint family funds - respondent entitled to succeed to amount of policy by survivorship - no need to produce succession certificate - renewal of policy by acceptance of premium in arrear with good health certificate - policy in force on death of brother of respondent - held, policy did not lapse and respondent can get amount of policy. - - 10,000/-if the death of the assured should take place before the expiration of the period, and the like sum to the assured himself if he should survive the period. it is, however, admitted that the assured paid the premium amount with interest subsequently and that he also furnished a good health declaration on july 2, 1951. 3. on..........in the event of his death. we shall presently refer to the material terms of the policy. 2. the assured paid the first yearly premium. the second yearly premium on the policy fell due on may 20. 1951. the case of the plaintiff is that the assured actually paid the premium on may 21. 1951, to the agent of the insurer, but this fact is disputed. it is, however, admitted that the assured paid the premium amount with interest subsequently and that he also furnished a good health declaration on july 2, 1951. 3. on july, 22, 1951 the assured and his wife met with their death in' a drowning accident in the river stream paleru while they were both traveling by a passenger bus. claiming that himself and his brother (the assured) were members of a joint family and that he became entitled to the.....
Judgment:

Satyanarayana Raju, J.

1. By a policy of insurance, dated June 29, 1950, the plaintiff's brother, Viswanadham (hereinafter referred to as 'the assured'), insured his life for a sum of Rs. 10,000/- with the Warden Assurance Company Limited, the 1st defendant (hereinafter referred to as the insurer). The policy was, what is generally known as, an endowment policy. Under the terms of the policy, in return for the payment of an annual premium of Rs. 292-8-0 on May 20th of every year, for 40 years, the insurer agreed to pay the assured's heirs the sum of Rs. 10,000/-if the death of the assured should take place before the expiration of the period, and the like sum to the assured himself if he should survive the period. There is also a special term in the policy which provided that in case the assured died in an accident, an additional sum equal to the sum assured would be paid. It is common ground that the assured nominated his wife, Anasuya, as the person to whom the money secured by the policy should be paid in the event of his death. We shall presently refer to the material terms of the policy.

2. The assured paid the first yearly premium. The second yearly premium on the policy fell due on May 20. 1951. The case of the plaintiff is that the assured actually paid the premium on May 21. 1951, to the agent of the insurer, but this fact is disputed. It is, however, admitted that the assured paid the premium amount with interest subsequently and that he also furnished a good health declaration on July 2, 1951.

3. On July, 22, 1951 the assured and his wife met with their death in' a drowning accident in the river stream Paleru while they were both traveling by a passenger bus. Claiming that himself and his brother (the assured) were members of a joint family and that he became entitled to the benefits of the policy by right of survivorship, the plaintiff called upon the insurer by a registered notice, to pay the sum of Rs. 10,000, the sum assured under the policy, plus an additional sum equal to the sum assured, by reason of the fact that his brother died in an accident.

4. In its reply notice, the insurer intimated the plaintiff that the policy had lapsed owing to nonpayment of the yearly premium before the expiration of the days of grace. While not denying that the assured paid the premium and furnished proof of continued good health subsequently, the insurer contended that the signature on the good health declaration form was in Telugu while in the proposal and the medical report the signatures of the assured were in English and that while the insurer was making the necessary enquiries about the genuineness of the signature of the assured, the assured died and therefore the policy could not be revived.

5. The plaintiff instituted the suit, out of which this appeal arises, on July 22, 1954 for recovery of the sum of Rs. 20,000/- as the amount due on the policy.

6. The case of the plaintiff is that the policy had not lapsed as the premium was paid in accordance with the terms of the policy to the agent of the insurer; that the assured, acting on the advice of the agent, furnished to the insurer the declaration of good health; that on the date of the death of the assured, the policy was in force; and that by right of survivorship, he being the undivided brother of the assured, is entitled to the amount claimed.

7. The Warden Assurance Company Limited was impleaded as the 1st defendant; and the Life Insurance Corporation of India in whom the assets of the 1st defendant have been statutorily vested, was impleaded as the 2nd defendant in the action.

8. No separate written statement of defense was filed by the 2nd defendant.

9. The insurer contested the suit on three-fold grounds:

(1) that the Court in which the suit was instituted, viz., the Court of the Subordinate Judge, Vijayavada, had no jurisdiction to entertain the suit;

(2) that the assured died first, and his wife the nominee under the policy, died later, and that therefore the plaintiff was not entitled to claim the amount as the heir of the assured; and

(3) that the policy had lapsed owing to nonpayment of the premium within the period specified in the policy.

10. The Court below found that it had jurisdiction to entertain the suit; that the wife of the assured, the nominee under the policy, died first in the drowning accident and that the assured succumbed shortly afterwards, and that the policy was in force, the same having been duly revived before the date of the death of the assured. On these findings, the lower Court granted a decree in favour of the plaintiff for the sum of Rs. 20,000/-with interest thereon at 6 per cent per annum from the date of the decree. Against the said decree, the defendants have preferred this appeal; and before us, the appellants have canvassed the correctness of the findings reached by the lower Court.

11. The first of the questions which arises for decision in the appeal is whether the Court below had jurisdiction to entertain the suit. The assured was a resident of Nadigudem in the District of Krishna. The agent of the insurer P. V. 3 obtained the proposal Ex. B.1 from the assured. The first premium was paid by the assured to the agent, who passed the receipt, Ex. A.2, dated April 26, 1950. The insurer had a branch office at Vijayavada. P. W. 3 forwarded the proposal. Ex. B.1, to the branch office. The branch office acknowledged the receipt of the proposal by its letter (Ex. A.10) dated April 29. 1950. The insurer by its letter, Ex. A.5, dated May 23, 1950 intimated the assured that his proposal for insurance had been duly considered by the Directors and that they were prepared to issue a policy to him on the terms noted therein. On May 31, 1950, the Head Office of the insurer at Bombay sent the first premium receipt (Ex. A.29) to the assured. After acknowledging the receipt of the amount of the first premium, the insurer intimated the assured that the Company's risk would commence from May 20 1950. The policy (Ex. A.28) was actually issued on June 29, 1950.

12. The preamble to the policy contains the following terms:

'......It is expressly agreed and understood that a suit in respect of the policy shall lie in no Court other than that having jurisdiction over the city of Bombay. The company may, however, at its option make the payment at any other place to suit the convenience of the claimant'

13. On the basis of the above term, it is argued that the Lower Court had no jurisdiction to entertain the suit. It may be mentioned that this term is not found in the letter of acceptance (Ex. A.5) issued by the insurer on May 23, 1950, wherein it was stated as follows:

'You are requested to note that the company's liability on your life will commence only after first premium in lull has been paid to and accepted as such by this office and that until then the Directors retain the right of declining to complete the transaction if found necessary.'

14. Ex. A.29, the receipt dated May 31, 1950, acknowledged the payment of the first premium and made specific mention of the fact that the Company's risk commenced from May 20, 1950. The premium receipt also stated that the policy would be sent to the assured when it was ready.

15. It is, no doubt, true that the acceptance of a proposal does not necessarily result in a binding contract. It may be merely an intimation by the insurer that it is willing to enter into the contract by the issue of a policy against cash, and in life assurance the prima facie assumption is that no binding contract is intended to be concluded before the first premium is paid. But as pointed out by a Division Bench of the Madras High Court, consisting of Rajamannar, C. J. and Vcnkatarama Ayyar, J. In Abdul Azeez and Co. v. New India Assurance Co. Ltd.. : AIR1954Mad520 the law is well settled that:

'A contract of insurance, like other contracts, is concluded by offer and acceptance. If there is a stipulation that the liability will attach itself under the contract only if premium is paid that will be a condition precedent to the policy taking effect.'

16. It is, however, argued by the learned counsel for the appellants that there was no binding contract between the assured arid the insurer until the policy was issued. True it is, in life insurance there is a presumption that all communications before the issue of a policy arc preliminary only but if appropriate words are used, 2 binding contract may be made even before the issue of a policy. The letter of acceptance, Ex. A.5 issued by the insurer specifically mentioned that its liability would commence after the first premium was paid in full and accepted by the insurer. That acceptance was communicated by the insurer in and by Ex. A.29 dated May 31, 1950, which not only acknowledged the receipt of the premium but clearly stated that the Company's risk commenced from May 20, 1950.

17. It may be mentioned that none of the communications sent by the insurer before the issue of the policy made mention of the fact that ''a suit in respect of the policy shall lie in no Court other than that having jurisdiction over the city of Bombay'. It is, however, contended that it was on the basis of the policy that the suit was laid and that the plaintiff cannot be heard to say that the terms regarding jurisdiction contained in the policy would not bind him. Assuming that to be so, the question still remains as to whether this Court should allow an objection on the ground of want of jurisdiction of the Court of first instance.

18. Section 21 of the Code of Civil Procedure enacts that

'no objection as to place of suing shall be allowed by an appellate or revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there was a consequent failure of justice.'

In a recent decision rendered by their Lordships of the Supreme Court in Kiran Singh v. Chaman Paswan, : [1955]1SCR117 , it was pointed out:

'The policy underlying Sections 21 and 99, C. P. C. and Section 11 of the Suits Valuation Act is the same, namely, that when a case had been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds, unless it bad resulted in failure of justice, and the policy of the Legislature has been to treat objections to jurisdiction, both territorial and pecuniary, as technical and not open to consideration by an appellate Court, unless there has been a prejudice on the merits.'

19. This means that before an appellate Court could interfere on the ground of the lower Court's want of jurisdiction, the appellants must show that they had been prejudiced by the trial of the suit being held within a particular jurisdiction and that the disposal of the suit had been prejudicially affected on the merits. The appellants have not been able to show that they have been prejudiced or handicapped by the trial having been taken place in the Vijayavada Court. This conclusion would dispose of the first of the questions raised in the appeal.

20. It is then contended that the lower Court erred in its finding that the assured died earlier than his wife. On this aspect of the case, we have the evidence of P. W. 1, P. W. 2 and P. W. 4. All of them have narrated the details of the accident. On July 22, 1951 the assured and his wife were traveling by the bus, M.D.K. 1664 from Nadigudem to Jaggayyapeta, along with other passengers. Before they could reach the destination, they had to cross the Paleru stream By about 8-30 or 9 a.m. the bus had negotiated three fourths of the cause-way when it suddenly stopped by reason of water entering the engine. Attempts were then made in vain to push the bus to the store. At this juncture, the flood level rose rapidly and flood water entered the body of the bus With a view to avoid panic, the four women passengers in the bus were made to climb to its top. Due to the sudden on rush of the water, the women passengers on the top fell down into the stream. After about 11/2 hours, the bus with all the rest of the passengers was washed away by the

21. P. W. 1 is a native of Nadigudem. On the date of the accident, he was employed as a cleaner of the lorry M.D.K. 748. He knew the assured and his wife, Anasuya. As the petrol in his lorry got exhausted, he boarded the ill-fated bus while it was 11/2 furlongs from the Paleru stream in order to get petrol from Jaggayyapeta. He deposed that out of the passengers ten died in the accident and that the assured's wife was one of the two women passengers that were first drowned in the stream. After the accident, he swam shore and reached Jaggayyapeta. The police and some Government Officers were actually witnessing from the shore, the predicament in which the passengers were but nobody could help them or pull out the bus. In all six of the passengers saved their lives. He was one of the survivors, and the driver and the cleaner of the bus were two others. It was elicited from him that he did not make a report to the police. He also admitted that he had no documentary evidence to prove that he had traveled by the bus. As explained by P. W. 1 it is unreasonable to expect him to produce documentary evidence in proof of his having traveled by the unfortunate bus after the lapse of nearly eight (SIC). flood.

22. P.W. 2 was employed as the cleaner of the bus, MDK 1664. On the fateful day, he saw the assured and his wife traveling by the bus. He was one of the survivors. He was washed ashore in an unconscious state and he was taken to the Jaggayyapeta hospital. He corroborated the evidence of P.W. 1 that the police themselves witnessed accident from the shore on the Jaggayyapeta side. He was positive that there was an interval of one hour and a half between the time when the women passengers were drowned and the bus with the rest of the passengers was washed away by the current.

23. P.W. 4 who was employed as the organiser of the insurer from the year 1950, stated that (SIC) went to the scene of the accident at about 8 or 8.30 a.m. He deposed that the women passengers (SIC) and that the wife of the assured was one of them. This was at about 10-30 a.m. At about mid-day, the bus was washed away into the stream and the assured, who was in the bus. was also washed away. Immediately after the accident, he sent telegrams to the Vijayavada Branch Office and (SIC) Bombay Head Office, of the insurer, about the death of the assured and his wife. He received a condolence letter from the insurer which he was asked to convey to the family of the assured.

24. Nothing has been suggested against these witnesses. Their evidence, which is clear and (SIC), was accepted by the trial Judge and we are in entire agreement with him that the testimony of these witnesses is entitled to weight. There was therefore, acceptable evidence that the assured died earlier than his wife. As has been already Indicated, the assured nominated his wife as the person to whom the money secured by the policy should in the event of his death. As a result of the conclusion reached by us that his wife died earlier than the assured, the heirs of the assured would be entitled to the amount of the policy.

25. It is, however, argued that the amount of the policy was the separate property of the assured and was not part of the assets of the joint family even if it is established that the plaintiff and his brother constituted a joint family. The plaintiff, who gave evidence as P. W. 5 deposed that himself and the assured were members of a joint family, that the assured had no separate property of his own and that the premiums on the policy were paid from the assets of the joint family. There was no attempt on the part of the appellants to controvert the evidence of the plaintiff in this behalf. Even so, it is contended by the appellants that Section 214 of the Succession Act would be applicable to the case and that the Court below should not have granted the decree in favour of the plaintiff in the absence of a succession certificate.

26. Under the Hindu law, there is a clear distinction between succession and the devolution of property by survivorship. The Succession Act, as is indicated in the preamble, covers cases of succession only and cases of survivorship are not within the ambit of that Act. Where a family is a joint Mitakshara family and the amount sought to be recovered is an asset of the joint family, the plaintiff, who claims by survivorship, cannot be compelled to take out a succession certificate to enable him to recover the amount. In Venkatramanna v. Venkayya, ILR 14 Mad 377, it was held that a Hindu was not entitled to sue on a bond executed in favour of his undivided father, deceased, without the production of a succession certificate unless it appeared on the face of the bond that the debt was due to the joint family consisting of the father and son. This decision Was subsequently overruled in Subramanian Chetti v. Rakku Servai. ILR 20 Mad 232 and Pallamraju v. Bapanna. ILR 22 Mad 380, and it was held that in a suit by the members of a joint Hindu family for a debt due on a document, which was executed in favour of a deceased member of the family but on the face of it, it did not appear that the debt was a joint debt, the plaintiff need not produce a certificate under the Succession Act if he could prove otherwise that the debt was due to the family jointly, and that where the family was admittedly undivided and the plaintiff claimed by survivorship, no succession certificate was necessary. In the later Madras cases, the view that a succession certificate is not necessary in case the plaintiff is a member of the joint family, was held to be correct.

27. On the evidence adduced by the plaintiff, the conclusion must be that himself and the assured were members of a joint family; that the insurance premiums were paid from the joint family assets; and that the plaintiff is entitled to succeed by survivorship to the benefits of the policy without the production of a succession certificate.

28. The main point in the case, however, is whether the policy had lapsed. The learned counsel for the appellants has contended that the policy had lapsed for the reason that the premium, due in May 1951 was not paid in time and that the view taken by the lower Court that the transmission of the good health declaration along with the overdue premium ipso facto brought about the revival, was untenable.

29.-40. For a proper appreciation of the issue as to whether the policy had lapsed, it is necessary to recapitulate the material facts. (After briefly recapitulating the facts his Lordship considered the evidence and concluded:) On the evidence on record, we find that the insurer accepted the premium in arrear along with the good-health declaration, that the insurer in fact made no demur. On the basis of the conduct of the insurer, the conclusion must only be that on the acceptance of the premium with the good-health declaration, the policy was revived and it was in force on the date of the death of the assured.

41. For all the above reasons, we affirm the decree passed by the lower Court.

42. There remains the Memorandum of Cross-objections with respect to the disallowance of interest from the date of the suit till the date of the decree. The plaintiff included a prayer in the plaint for subsequent interest at 6 per cent per annum. The lower Court granted interest on the amount claimed from the date of the decree. Under Section 34 of the Code of Civil Procedure, the award of interest after the date of suit is in the discretion of the Court. The discretion under the section, must however be exercised on sound judicial principles and when so exercised, it will not be interfered with in appeal. Ordinarily interest pendente lite should not be refused except for sufficient reasons. The Court below has not given any reasons for the disallowance of the interest from the date of suit. We do not find any valid reasons for refusing interest to the plaintiff from the date of suit. We, therefore, direct that the plaintiff shall get interest at 6 per cent per annum on the sum of Rs. 20,000 from the date of suit till the date of payment. The decree of the lower Court shall be accordingly modified.

43. In the result, the appeal is dismissed and the Memorandum of cross-objections is allowed. The plaintiff will be entitled to his costs both in the appeal and the cross-objections.


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