1. The plaintiff has filed this appeal from the decree or the Civil Judge, Meerut, dismissing his suit with costs.
2. The facts giving rise to this appeal, shortly stated, are as follows: On the 15th January 1951 Mukhtar Singh, deceased unole of me appellant, made an application for insurance in the Crown Life Insurance Company, Toronto, Canada, with its branch office at Bombay (hereinafter referred to as the Company) for a sum of Rs. 35,000. In that application he stated his occupation as landlord and mill owner, Weaving and Spinning Mills, and his place of residence as C/o Brahma Dutta Sharma, Gujrati Well. Meerut City. On the basis of the above application the Company issued an interim policy to Mukhtar Singh on the 19th February 1951. The interim policy was approved by the Head Office of the Company which issued Insurance Policy No. 573766, dated 21st May 1951 in favour of the said Mukhtar Singh. In that policy the appellant was described as the nominee of the assured after his death. The policy was issued subject to the endorsements contained therein, Clause 4 of the endorsement reads:
'After the expiry of two years from the date on which it shall have been effected, this policy shall not be called in question by the company on the ground that a statement made in the application therefor or in any other document leading to the issue of the policy was inaccurate or false, unless the company shall show that such statement was on a material matter and fraudulently made by the insured and that the insured knew at the time of making it that the statement was false.'
Clause 4 laid down that the application for the policy and any additional statements made to the company, together with the policy and its endorsements, shall constitute the entire contract between the parties. Clause 10 provided that on the policy becoming a claim by death, proof of claim shall include such evidence under oath as may be required by the company of the death of the insured and the causes leading thereto, and of the title of the claimant and proof of age as mentioned in Clause 8 and such other information as the company may deem necessary to establish the validity of the contract.
3. The first quarterly premium on the policy was admittedly paid on the 12th February 1951 by the appellant himself. The second quarterly premium was also paid by the appellant through a draft or mail transfer on 19/21 May, 1951.
4. Mukhtar Singh Sharma died at Meerut on the night between the 19th and 20th August 1951 and notice of his death and that of the plaintiffs claim was sent to the defendant Company on the 15th September 1951 on the basis of the nomination of the policy in the appellant's favour. The Company by letter, dated the 16th October 1951 wrote to the appellant to give full names and addresses of the persons who were present at the time of the demise of the insured and stated that in accordance with endorsement No. 10 of the policy the Company was entitled to call for such other information that it considered necessary to establish the validity of the contract. Eventually the Company refused the claim of the appellant on the groundthat Mukhtar Singh assured had made false and incorrect declarations in his application Ex. A-10 as to his status and occupation, and also as to his residential and business address. Thereupon the appellant brought the suit for recovery or Rs. 35,000 out of which this appeal has arisen.
5. The suit was resisted by the Company inter alia on the ground that the statements made by the assured Mukhtar Singh Sharma in Part I and Part II of the application for policy were false and that since these statements were agreed to be the basis for contract of insurance the suit was liable to be dismissed. It was further pleaded that the insurance policy was not really effected by Mukhtar Singh Sharma deceased for his use and benefit but was got effected by the appellant for his own use and benefit and that the appellant had no insurable interest in the life of the deceased,
6. The Civil judge was of the view that the defendant Company had failed to establish that the age given by Mukhtar Singh Sharma in his application for insurance was incorrect and that there was no credible evidence to prove that the declaration made by him regarding his health was false. These findings have not been challenged by the learned counsel for the respondent. He, however, held that Mukhtar Singh assured made false and incorrect statements in Ex. A-10 as to his occupation and status, as well as his business and residential address. He also came to the conclusion that the insurance policy in question was effected and financed by the appellant for his own benefit and that the appellant had no insurable interest in the life of the deceased.
7. Before we examine the merits of the case it is necessary to dispose of a preliminary objection raised by the learned counsel for the respondent. It was contended that during the pendency of the suit in the Court below the Life Insurance Corporation Act (XXXI of 1956) was enacted by Parliament. By Section 7 of that Act all the assets and liabilities appertaining to the control business of all insurers became vested in the Life Insurance Corporation of India. Sub-section (2) of Section 9 provided that all suits and appeals pending on the date of the coming into force of the Act shall be continued against the Corporation. Mr. Jagdish Swarup, learned counsel for the respondent, argued that under Order XXII, Rule 10, C. P. C. the insurance business of the Company stood transferred to and was vested in the Life Insurance Corporation of India and, therefore, it was a case of devolution of interest during the pendency of the suit. Since the appellant failed to implead the said Life Insurance Corporation of India as a defendant in the suit no decree could be passed against it in respect of the insurance policy in question. We are unable to accede to the argument of the learned counsel.
8. Section 146, C. P. C. provides that 'save as otherwise provided by the Code any proceeding that can be taken by a person may also be taken by any person claiming under him'. The Supreme Court in Saila Bala Dassi v. Nirmala Sundari Dassi, AIR 1958 SC 394, held that the expression 'claiming under' is wideenough to include cases of devolution and assignment of interest mentioned in Order XXII, Rule10, C. P. C. The assets and liabilities of the control business of insurers devolved on the Life Insurance Corporation of India under Section 7 and, therefore, by operation of law they became the successors-in-interest of the Company in respect to matters relating to insurance business of the Company. We, therefore, overrule the objection.
9. Turning to the merits of the appeal, we may state that the main contention of the learned counsel for the appellant was that the trial Court was not justified in holding that the declarations made by Mukhtar Singh Sharma in his application for insurance as to his status and occupation, and also as to his residential and business address, were false. It cannot be disputed that the declaration made by the assured was that the statements contained in Part I and Part II of the application Ex. A-10 made by him shall form the basis of the policy. Clause 4 clearly provides that the application for the policy and statements made therein, together with endorsements, shall constitute the entire contract between the parties. It is also beyond question that the death of the insured took place before the expiry of two years from the date on which the policy was effected, and, therefore, the provisions of Section 45 of the Insurance Act are not brought into play. In other words, it was open to the Company to call in question the statements and declarations made by the insured in the proposal form Ex. A-10,
10. It will be seen that in Part 1 of the application for insurance (Ex. A-10) the residential address of the insured was given as Gujrati Well, Meerut City, and his occupation was described as landlord and mill-owner, Weaving and Spinning Mills. The appellant Brahma Dutta stated that there was a factory near Sainik Bhawan in which Mukhtar Singh manufactured khaddar. In cross-examination he stated that there was no fixed quota for cotton thread from the Supply Office for the factory of Mukhtar Singh and that cotton thread used to be purchased by the factory from Ex-Service-men Society. He pleaded ignorance about the contract between Mukhtar Singh and the Ex-Servicemen Society in respect of the quota although he asserted that he was co-owner with Mukhtar Singh in the factory. He admitted that account books and registers relating to the business of the factory used to be maintained but he pleaded his inability to produce them on the ground that they were with the Meerut Police. Even if it was so, no attempt was made by him to get them summoned from police custody. He asserted that after the death of Mukhtar Singh he sold the shop and the factory to one Kailashpati for Rs. 8,000 or Rs. 10,000. According to him it was an oral sale and there was no writing about it. He admitted that he had deposited the first quarterly premium of the policy but denied that he made the second deposit. There is, however, unimpeachable evidence on the record to show that it was Brahma Dutta appellant who made the deposit of the second instalment also. Indeed, it was admitted by him that the application Ex. A-2for issue of a draft or mail transfer of Rs. 692-14-0 towards the premium was signed by him. He tried to explain that the money was provided by Mukhtar Singh himself and that he had gone to the bank with the money and deposited it there. He sought to make out that the signature on the back of Ex. A-2 was made by him in September 1951 as the Bank Manager insisted that he should do so in order to save the Manager from harm. The explanation given for the signature of the appellant on the back of Ex. A-2 appears to be palpably false. There could be no question of the Bank Manager obtaining his signature when the premium had already been received by the Company, As a matter of fact the bank would not have prepared a transfer draft without a formal application by the appellant. After examining the application Ex. A-2 we are satisfied that the statement of Brahma Dutta that he was got to sign this application is untrue. He admitted in cross-examination that Mukhtar Singh deceased was an occupancy tenant of 1 bigha 3 biswas of pakka land in village Alipur, Mughalpura, District Meerut, which was the subject-matter of a lease (Ex. A-1), dated 28th March 1951. He further admitted that Mukhtar Singh was not the owner of any land other than the leased land.
11. From the statement of Brahma Dutta appellant it becomes crystal clear that Mukhtar Singh was not a zaminaar but was a tenant of a petty holding of 1 bigha and 3 biswas. It is also clear from his statement that no spinning or weaving mill was owned by Mukhtar Singh. The so-called khaddar factory, which according to the witness was jointly owned by him and Mukhtar Singh, is shown to have been the exclusive property of Brahma Dutta appellant, The letter Ex. A-4, dated 3-2-1934 of the District Supply Officer, Meerut, to the counsel of the Company is most revealing, it says;
After enquiry it has been revealed that no Spinning and Weaving Mill under the proprietorship of Mukhtar Singh, deceased, existed in this town for the last ten years. Only a handloom factory under the style of 'Batya Handloom Factory' was started at C. Patt Bazar, Meerut by Sri Brahma Dutta, nephew of Sri Mukhtar Singh Sharma in 1949 and that, too, has now passed to one Sri K.C. Mithal, in 1950 or so.'
12. This letter was proved by Sri V.D. Tyagi, Cloth Inspector, Supply Office, Meerut. He stated that the list relating to handloom factories in Meerut City and Meerut Cantonment was kept in the office of the Supply Officer and that the handloom factory of Brahma Dutta appellant had remained up to 1950. Thus it would appear that on the date on which the application for insurance was made by Mukhtar Singh deceased neither he nor Brahma Dutta had any kind of factory, much less a Spinning and Weaving Mill as alleged. On the other hand, the evidence called by the defendant goes to show that Mukhtar Singh deceased was a village teacher drawing a meagre salary of Rs. 20 p.m. Chandra Kishore D. W. 7 was Head Master in the Junior High School, Alipur,where Mukhtar Singh was teacher. He produced the register or payment or salaries kept in the school. The register showed that from July 1944 to September 1946 Mukhtar Singh had been working in this school as a teacher and had signed the register in lieu of having received his monthly salary.
13. Another feature which goes to discredit the appellant's case is the circumstance mat on his own showing Mukhtar Singh had two sons and a wife. Brahma Dutta stated that Mukhtar Singh was not pleased with his sons and, therefore, made him the sole beneficiary under the insurance policy. He did not state that the relationship of Mukhtar Singh with his wife was strained or that he had made provision for his wife. There is, therefore, no ostensible reason why Mukhtar Singh should have shown special favour to the appellant Brahma Dutta by making him the sole beneficiary under the insurance policy in question. The evidence in the case leads to the conclusion that Mukhtar Singh did not reside in Meerut and further that he did not own any spinning or weaving mill in that city. We endorse the finding of the Court below that the declaration given in the proposal form Ex. A-10 in respect or the residential address, status and occupation of Mukhtar Singh deceased was untrue.
14. The next point to be considered is whether the policy in question was effected by Mukhtar Singh Sharma or by the appellant for his own benefit and whether the plaintiff had an insurable interest in the life of the deceased. We have said above that two quarterly instalments towards the insurance policy were paid by the appellant himself and not by Mukhtar Singh deceased. It is also evident that even when the interim insurance policy was issued the appellant was described as beneficiary on the death of the insured. In Clause 16 of the policy that was issued on the 31st May 1951 the appellant was shown as the nominee of the assured under the policy. Thus the plaintiff was both nominee and beneficiary with the result that the heirs of the deceased could not lay any claim to it on the ground of being legal heirs of the deceased.
15. The circumstances in which the policy came to be issued and the mariner in which the instalments were paid in respect of that policy, together with the fact that Mukhtar Singh had no status or means to get himself insured for such a large amount, go to establish that the policy in question was effected by the appellant in the name of Mukhtar Singh for his own use and benefit. There is not a word in the evidence adduced on behalf of the plaintiff that Mukhtar Singh was under any obligation to effect the insurance policy in order to benefit the appellant. On the contrary, the plaintiff's own evidence would show that he had neither the means nor the capacity to effect any such policy. It further goes to show that Mukhtar Singh was a poor village teacher in occupation of 1 bigha and 3 biswas of tenancy land, A person of his status could not afford to take such a large insurance policy. We have, there-fore, no hesitation In upholding the finding of the trial Judge that there was no satisfactory explanation from the side of the plaintiff as to why Mukhtar Singh came to assign the policy In favour of the appellant, while leaving his wife and children unprovided for.
16. In Great Eastern Life Assurance Co. v. Bai Hira, AIR 1931 Bom 146, it has been held mat the falsity of the statement involving forfeiture of the policy will vitiate the policy if the statements and declarations made in the application for the policy are made a part of the contract. (See also Dawsons Ltd. v. Bonnin, (1922) 2 AC 413, and Halsbury's Laws of England, Vol. 17, p. 551).
17. On behalf of the respondent it was urged that inasmuch as the appellant had no insurable interest in the life of Mukhtar Singh deceased the contract of insurance was in the nature of a wagering contract within the meaning of Section 30 of the Contract Act and, therefore, void. Reference was made to Alamani v. Positive Govt. Security Life Assurance Co. Ltd., (1899) ILR 23 Bom 191 at p. 206, where it was held that Section 30 of the Contract Act was applicable to insurance policies.
18. In A. I. G. Insurance Co. v. S.P. Maheshwari : AIR1960Mad484 , the learned Judges were of the opinion that the declarations in the application for policy amount to warranty and if it is found that the averments contained in the application are false the contract would be vitiated and become unenforceable in law.
19. It was said on behalf of the appellant that Section 30 did not in terms apply to an insurance contract and that the reasoning adopted by the Bombay High Court in (1899) ILR 23 Bom 191, was based on English Common Law and, therefore, was inapplicable to India. We are not impressed with this argument. The learned Judges of the Bombay High Court were at pains to show that apart from the doctrine of English Common Law, Section 30 was attracted to a case where the contract was based on fraud.20. After giving our anxious thought to the facts and circumstances of the case it seems to us that the conclusion arrived at by the Court below is legally sound.
21. We find no force in this appeal andit is accordingly dismissed with costs.