1. A short but interesting question arises in this appeal at the instance of the Life Insurance Corporation of India, which was the defendant in the trial Court, as to whether a trust' under a policy of insurance effected under Section 6 of the Married Women's Property. Act, 1874, for the benefit of minor children of an assured can successfully sue the Corporation for recovery of the assured value of the Policy? The question arises In- the following circumstances:
One Hasumukhal Saubhayachand Vasa took out a life insurance policy in sum of Rs, 2 lacs on October 4, 1968, from the Rajkot Division of the Life Insurance Corporation of India. The Corporation undertook that If the assured died before the date of maturity, which was October 4, 1093, when the policy was in force, the total amount of' premiums paid would be returned to the person or persons entitled to them in terms of the policy. The sum assured was payable On the stipulated date of maturity it the life assured Was then alive. It is common ground that the policy was a single Premium policy and was issued under the provisions of the Married Women's Property Act, 1874, as endorsed on the back of the policy which is produced on the record of trial Court. The, policy was effected on the conditions And privileges which, inter alia, guaranteed that the corporation Would pay the prescribed surrender Value in cash provided the premiums have been paid for at least two years or to the extent of one-tenth of total number stipulated for in the policy provided that the total premiums paid exceed one full years premium is is also an admitted position that the assured has paid two premiums of rupees sured has paid two premiums of Rupees 5038/- each on the permissible dates. Since the policy was effected on October 4, 1968, the two years which would quality an assured to recover surrender value from the Corporation were completed on October 3, 1970. The assured, by his letter of October 5, 1070, requested the Corporation that since he desired to recover the surrender value, he was not Paying the third premium which fell due on the said date, He requested the Corporation to record the surrender of the policy and make payment of the surrender value at the rate of 9% of ,the amount of premiums paid, One Saubhagyachand Talakchand Vasa, who was appointed as trustee under the said policy, therefore, called upon the Corporation by his letter of October 10, 1970, to make payment of Rs. 9068-40 Ps. being the surrender value at the rate of the amount of the premiums paid. Since the corporation did not carnal with the demand made in the said letter, the said trustee as well as the assured filed the present suit being ,Civil Suit No. 679 of 1971 in the Court of Civil Judge (J. D.) Rajkot praying for a decree of Rs. 9068-40 ps. being the amount of surrender value and Rupees 725-42 ps, being the amount of interest from the date of the demand till the date of he suit together with, Rs. 25 by way of notice charges.
2. The suit was resisted by the Corporation, inter alia, on the ground that the plaintiffs were not entitled to surrender value as the relevant clause obliging the Corporation to pay the surrender value was superseded , by the contract between the parties that the policy was issued under Section 6 of the Married Women's Property Act, 1874 and as long as the object of the trust remained, the trust created by the policy could not be extinguished by surrendering the same. Both the Courts below rejected this contention of the Corporation with the result that the decree passed in favour of the trustee against the Corporation was confirmed in appeal by the learned Extra Assistant Judge., Rajkot, in Civil Appeal No. 78 of 1972. It is this order of the learned Extra Assistant Judge, Rajkot, in appeal which is the subject matter of this second appeal before me.
3. The principal question which arises for determination is, whether the respondent No. 1, who is the trustee under the said policy, is entitled to sue successfully the Corporation for payment of the surrender value of the policy? The other two, contentions, which were advanced in the First Appellate Court about the want of jurisdiction of Civil Judge (J.D.) to hear and try the suit, and non-joinder of necessary party, have not been pressed before me. The only contention which has been strenuously pressed is, that inasmuch as the policy in question was effected under Section 6 of the Married Women's Property Act, 1874, for the benefit of the minor son of the assured, it would ensure and be deemed to be a trust for his benefit and would not, so long as the object of the trust remained, be extinguished by surrendering the same. Before I deal with this contention, it would be advisable to shortly refer to the relevant conditions and privileges attached to the policy in question. The sum assured was payable on the stipulated date of maturity, that is, 4th October, 1993, if the life assured would be then alive, and in case of the assured dying before the date of the maturity while the policy would be in force, the total amount of the premiums was to be returned to the person or persons entitled to them under the policy. The clause pertaining to guarantee about the payment of surrender value reads as under :-
'Guaranteed Surrender Value :-- This policy can be surrendered for cash after the premiums have been paid for at least two years or to the, extent of one tenth of the total number stipulated for 'in the policy, provided that the total premiums paid exceed one full year's
The surrender value allowable under this Policy is equal to (i) 90clo of the within mentioned Single Premium, if the Policy is effected by payment of a Single Premium, or (ii) 95% of the total amount of the within-mentioned premiums paid excluding the premiums for the first year, in all other cases as mav be applicable'.
The endorsement on the back of the policy about its issuance under the provisions of the, Married Women's Property Act, 1874, reads as under:-
'Rajkot, dated: 4-10-1968: This policy is issued under the provisions of the Married Women's Property, Act, 1874, for the benefit of the proposer's son, Kr. Jayeshkumar Hasmukhlal Vasa aged 5 years and Shri 5aubhagyachand Talakchand Vasa has been appointed as trustee under the provisions of Section 6 of the said Act to receive the Policy moneys and hold the same upon the aforesaid trusts with power and authority to the said trustee to obtain any loan or loans on the security of the Policy from the Corporation alone, for the benefit of the aforesaid beneficiary, provided he is major and competent to contract and with power to the, proposer, (a~ to appoint a new trustee or new trustees in case the above named trustee declines or becomes incapable to act or cannot act for any reason whatsoever and (b). to revokes the appointment of the above named trustee and appoint other in his stead'.
It is in the context of these two clauses that I have to decide, whether respondent No; I trustee, in whose favour alone the decree has been granted by the trial Court, is entitled to the surrender value as guaranteed in the aforesaid clause. I am of the opinion that the contention advanced on behalf of the Corporation is not of much substance obviously for the following reasons: In the first place, the obligation of the Corporation to pay the. guaranteed surrender value as evidenced by the aforesaid clause is not subject to the special endorsement about the issuance of the policy under the Married Women's Property Act, 1874. If the obligation of the Corporation to pay the guaranteed surrender value was to be circumscribed as now contended by the Corporation, since it is urged , that the issuance of the policy under the Married Women?-R Property Act would supersede the clause pertaining to obligation of payment of guaranteed surrender value, the contract would have contained I an appropriate condition in that behalf. The obligation of the Corporation to pay the guaranteed surrender value cannot, therefore I be said to have been superseded. It is urged on behalf of the Corporation that in that view of the matter, the trust would be extinguished or destroyed. I am afraid that this is not the necessary corollary. The learned Advocate for the appellant-Corporation has overlooked the fact that what Section 6 prescribes is that the policy issued under the said section so long as the trust lasts would not be subject to the control of the husband or form part of his estate. In other words, the effect of Section 6 is that the policy, so long as the trust continues, ceased to be the property of husband (vide Seethalakshmi Ammal v. Controller of Estate Duty, Madras : 61ITR317(Mad) ). On the plain reading of Section 6, a policy of insurance effected by any married man on his life and ex facie taken out for the benefit of his wife or children would be deemed to be a trust for the benefit of the person concerned and would not, as long as the trust retrains, be subject to the control of the husband or form part of his estate. it does not expressly, nor by necessary implication, control the right of the trustee to deal with the trust property as he may be legally entitled to. It is no doubt true that such a policy would go out of the' control of the husband or would not form part of his estate. This does not mean that the trustee is not entitled to deal with the trust property within his legal rights. In the present case, it should be recalled, the assured is not a trustee. The learn~ ed Advocate for the Corporation, therefore, attempted to persuade me that the trustee would not have 'been able to recover the surrender value, if the policy, had not been surrendered by the assured. The decision of the assured, according to the learned Advocate for the Corporation, to surrender the policy, in the present case, which consequently entitled the trustee to recover the surrender value, was clearly beyond powers of the assured is the policy of insurance issued Under the provisions of the Married Women's Property Act goes out of the control of the husband and ceases to be his estate. In his submission, therefore, the assured here could not have surrendered the policy, because the policy is deemed to be the trust and ensures for the benefit of the beneficiaries. No doubt, the contention appears to be attractive, but if we examine it, it cannot be sustained. It is no doubt true that a policy of insurance, effected under Section 6 of the aforesaid Act, is deemed to be a trust enuring for the benefit of the beneficiaries and is not, as long as the trust remains, subject to the control of the assured. The word 'control' would mean any act by which a person having the power to control deals with an object so as to transfer its ownership or any right- or interest therein or deals with it or regulates it as if it is his property. If an assured expresses his inability or his unwillingness to pay the, premiums, and requests the Insurance Company or the Corporation, as the case may be, to record his inability or unwillingness, and consequently the surrender thereof, it cannot be, without violence to the language, said that he is trying to control the policy. If the interpretation advanced by the learned Advocate for the Corporation is accepted that nonpayment of prcr-Junis with the desire to surrender the policy is an act exercising the control in relation thereto, the result would be anomalous. Take, for instance, a case of an assured who, on account of reasons beyond his control fails to pay the premiums (as per example in case of insolvency) such a case cannot be within the purview of Section 6 of the aforesaid Act. In any case, what is prohibited is the unilateral act of an assured in relation to the policy issued under Section 6 of the Act. If the trustee of such a policy joins the assured and requests the Corporation to pay the surrender value as the policy is surrendered by the assured, I do not think that it can be successfully urged that the as gured is exercising control in that behalf. 'In the present 'case, the assured informed the Corporation that he was not desirous of paying any further premiums besides the two which he had paid on 4th October 1968 and 3rd April 1970, and, therefore, the Corporation should record the surrender of the policy. The trustee under the said policy, by his letter of October 10, 1970, requested for the payment of the surrender value as the assured had expressed W unwillingness to pay the third premium which was due and payable on October 4, 1970. In effect, the trustee ties also joined with the assured for the purpose of recording the surrender of the policy. It, therefore, cannot be said that the assured had, in the present case, exercised unilateral control over the policy. The learned Advocate for the Corporation, therefore, urged that the act of the assured as well as the trustee was virtually tantamount to destruction of the trust. I am of raid this is too broad a submission since the endorsement made on the policy clearly records that the policy was issued under the provisions of the Married Women's Property Act, for the benefit of the minor son of the assured and Saubhagyaxchand Talakchand Vasa had been appointed as the tri.4stee under the provisions of Section 6 of the said Act to receive the policy moneys and hold the said i4oney upon the aforesaid trust with power end authority to the said trustee to obtain any loan or loans on the security of the policy from the Corporation one for the benefit of the said beneficiary, It cannot be said, much less urged successfully, that a trust Rs. 2 lacs was created under the policy. The trust was A limited trust authorising the said trustee to receive the moneys payable under the policy and hold the same upon the aforesaid trust as and when paid by the corporation, The said trustee will, hold the surrender value when paid act him on trust for the benefit of the beneficiary. It cannot, therefore, be suggested that the trust is destroyed or extinguished. The mandate under the trust to the trustee was to hold the moneys paid and received under the policy on trust for the benefit of minor son pf the assured. in that state of 40airs, therefore, the alternative contention of the learned Advocate for the Corporation must fail.
4. The result is that this appeal fails and is dismissed and the judgment and decree of the trail Court are confirmed. The Corporation shall pay costs to the respondent No, 1, and respondent No. 2 and the Corporation shall bear their own costs of this appeal.
5. Appeal dismissed.