1. This is said to be a test case to get a ruling on a point not covered by rulings so far. This is a petition originally filed by the Oriental Government Security Life Assurance Co. Ltd, whose place has been taken now by the Life Insurance Corporation of India on nationalisation.-for revising and setting aside the decree and judgment of the Additional Subordinate Judge, Tiruchirapalli, in S. C. S. No. 420 of 1953, granting a decree for Rs. 385 alleged to be the percentage commission due to the plaintiff Krishnamurthi, an insurance agent, from the petitioner in respect of the renewal premia on policies effected through his agency between 21st April 1944 and 14th December 1950, under S, 44 (1) (b) of the Indian Insurance Act.
2. The facts are briefly these : The plaintiff Krishnamurthi was an insurance agent under the Oriental Government Security Life Assurance Co., for more than five years and less than ten years and , ceased to be such agent on 14th December 1950. According to him, he had secured policies for Rs. 54500 which were in force within two years before his ceasing to be agent. One policy for Rs. 5000 out of the above policies lapsed for non-payment of premia on 21st May 1949, that is, more than one year before he ceased to be agent but within two years before he ceased to be agent. In other words this policy lapsed after this agent bad received (when -he was in service) the percentage on the re-newal premia for the previous year.
The question for determination before the lower Court was whether under Section 44(1)(b) of the Indian Insurance Act, as amended, he could claim the 4 per cent, on the premia (on the policies in force on 14th December 1949) allowed thereunder, though the policies in force then aggregated only to Rs. 49500. Section 44(1)(b) of the Indian Insurance Act, as amended, runs as follows :
"Such agent has served the insurer continually and exclusively in respect of life insurance business for at least five years and the policies assuring a total sum of not less than Rs. 50,000 effected through him for the insurer were in force on a date one year before his ceasing to act as such agent for the insurer, and that the commission on renewal premiums due to him does not exceed four per cent, in any case."
It may also be useful to extract Section 44(1)(c), as amended, in this connection. It runs as follows :
"Such agent has served the insurer continually and exclusively for at least ten years, and after his ceasing to act as such agent he does not directly or indirectly solicit or procure insurance business for any other person."
It will be noticed that Section 44(1)(c) differs from Section 44(1)(b) in three respects. Firstly, an insurance agent who has served exclusively for at least ten years is entitled to the percentage on the renewal premium, irrespective of whether or not policies assuring a total sum of not less than Rs. 50,000 were effected through him for the insurer. Secondly, he is entitled to such percentage on the renewal premium irrespective of the fact whether they were in force on a date one year before his ceasing to act as agent for the insurer.
Thirdly, he is under a disability, as against an insurance agent who had worked only between five years and ten years, in that he could not claim the percentage on the renewal premium, if be directly or indirectly solicited or procured insurance business for any other person after he ceased to be an insurance agent for the particular company. Of course, these provisions, even as amended, were enacted before the nationalisation of the insurance companies, and at a time when a former agent of one insurance company could work for a rival company and ruin the prospects of the former insurance company.
3. I cannot agree with Mr. Narasimhachari, the learned counsel for the petitioner, that Section 44(1)(c) contemplates persons considered to he retiring after a service of ten years. In no civilised country in the world does any person retire in less than 25 years of service, and, in some countries, he does not retire till he has completed 35 years of service. I take it that the legislature simply made an arbitrary distinction between people who had served for at least five years and not more than ten years, and people who had served for at least ten years, something like the distinction between first and second class passes in examinations, each University fixing a percentage, according to its own will and pleasure for first class and second class.
4. It was urged for the plaintiff-respondent in the lower Court that the clause "were in force on a date one year before his ceasing to act as such agent for the insurer" should not be construed literally, as policies in force on 14th December 1949 in this case, but should be given a liberal interpretation and held to mean policies which were in force after the payment of the percentage on the renewal commission for the previous year. The lower Court accepted that contention, and rejected the contention of the petitioner's counsel that the clause should be strictly construed and, only policies in force on 14th December 1949 should be considered, and that if they fell below the value of Rs. 50,000 the plaintiff would not be entitled to any percentage on the renewal premia. It mentioned an anomaly and a hardship, if the petitioner's construction were accepted, namely, that if the total value of the insurance policies effected through the plaintiff amounted to more than Rs. 50,000 on 14th December 1949, the plaintiff could go on drawing the percentage on the renewal premia on subsisting policies for years, in spite of the fact that shortly thereafter (say, even a day thereafter) policies of the value of Rs. 5000 or even more ceased to be in force. It considered that the plaintiff-respondent should not be punished for no fault of his, and that it was not proved that, in this case, the policy for Rs. 5000 had lapsed for non-payment of premium due to the plaintiff's fault, or even absence of effort.
It considerd that Rs. 385 claimed by the plaintiff as his 4 per cent, on the renewal premium paid for the policies in force on 14th December 1949 (Rs. 49500) should be paid to the plaintiff. It also rejected the contention raised by the petitioner's counsel before it that Rs. 57-6-0, out of Rs. 385 claimed by the plaintiff, should be disallowed, as the plaintiff's licence as insurance agent had expired on 24th March 1951 and as a man having no licence in force should not be allowed to draw the percentage on the renewal premiums. In the end, it decreed the suit with costs.
5. I have perused the entire records, and heard the learned counsel on both sides. Mr. Narasimhachari, learned counsel for the petitioner, pointed out, that, under the old law, an agent, who had retired was not given any percentage on the renewal premium since the raison detre for paying him the percentage is servicing of the policies and keeping them alive by contacting the policy holders, and making them pay up in time, and that it is only by the amendment that insurance agents who have retired are given a percentage in the renewal premium, subject to the conditions imposed by Section 44(1)(a), (b), and (c).
It is interesting as ancient history, (of the law in the past) but I do not think that that it is material for the purpose of deciding our case. In India, after independence new laws have sometimes little connection with the old laws (take the Estates Land Act for instance) and amendments are made without caring over much for continuity, probably because the old laws are not supposed to be so good as to deserve such continuity.
6. But I agree with Mr. Narasimhachari regarding the construction he puts on the clause "in force on a date one year before his ceasing to act as such agent for the insurer", namely, that unless policies secured by the plaintiff to the tune of more than Rs. 50000 were in force on 14th December 1949, he would not be entitled to any percentage on the renewal premium, and that the lower Court went wrong in its refusing to accept this interpretation and putting the extended (and so-called liberal) interpretation mentioned above,
Mr. Srinivasa Aiyangar, for the plaintiff-respondent, merely urged that the interpretation sought to be put on it by Mr. Narasimhachari was harsh and would lead to hardship to poor people, like the plaintiff, with small means. I do not think that hardship can be considered at all under our law, in justice or in equity, when there is no legal basis for relieving a person from that hardship. Law prevails over equity where they conflict The natural interpretation of the clause can only be that policies more than Rs. 50000 in value effected by the insurance agent should have been in force on a date one year before he ceased to be agent, in this case on 14th December 1949.
Mr, Srinivasa Ayyangar asked whether it could not be urged that it would be intolerable hardship, if, just one day before 14th December 1949, the policies fell below the fixed mark of Rs. 50000 by even Rs. 50 or Rs. 100, Rut that is not a point which the law can relieve against. A man getting only 39 per cent., instead of the fixed 40 per cent for a pass in examination, cannot complain of intolerable hardship if he is failed for the sake of one mark. That is based also on sound reason. If one mark can be relieved, against, the next man who got one mark less than the man relieved should also be passed, and then the next, and then the next, and finally the man who got zero should be passed.
Some arbitrary rule-of-thumb figure is fixed in cases of examinations, commissions etc., and cannot be avoided, if the affairs of men are to be conducted speedily and sensibly. Mr. Srinivasa Ayyangar urged that the lower Court took the date of the previous payment of the percentage on the new premium and that there was some reasonableness in it. But, when the law is clear, mere reasonable ness has little force when urged against it, unless the terms of me section support alternative interpretation sought for. The officer paying a percentage not due will be surcharged.
Here, the section does not support the lower Court's interpretation. Nor can the fact that an insurance agent with less than ten years or more than five years of service draws commission on the policies in force for years on end, if only policies of the value of more than Rs. 60000 were in force on a date one year before he ceased to be agent through it fails below that figure one day later be urged as a ground for relaxing the interpretation and making ft broader. The law must prevail. It follows that the lower Court's judgment and decree were wrong, and that the plaintiff was not entitled to anything whatever as percentage on the renewal premia in view of the provisions of Section 44(1)(b) as amended.
7. I cannot, however, agree with Mr. Narasimhachari that the lower Court went wrong in rejecting the defendant's contention under Section
40. In my opinion, it is against sense and commonsense alike that an insurance agent who has ceased to do insurance work should keep his insurance licence in force year after year by paying the insurance! fee, in order to earn the percentage on the renewal premia,even if he is entitled to it under Section 44(1)(b), (c).
It will be something like asking a pensioned driver of a motor vehicle to keep his driving licence in force, if he wishes to draw the pension, though he does not drive any car or vehicle or has anything to do with it. Such a proposition will only keep the Government or other authorities in getting licence fees for no purpose at all, and cannot be countenanced by Courts. So, I agree with the lower Court's finding on this point. But, in view of my finding in favour of Mr. Narasimhachari's contention on the first point, I set aside the judgment and decree of the lower Court and dismiss the suit. In the circumstances, I direct all the parties to bear their own costs throughout.