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Puspabala Ray Vs. Life Insurance Corporation of India - Court Judgment

LegalCrystal Citation
SubjectService;Contract
CourtKolkata High Court
Decided On
Case NumberSuit No. 1603 of 1958
Judge
Reported inAIR1978Cal221
ActsContract Act, 1872 - Sections 25 and 29
AppellantPuspabala Ray
RespondentLife Insurance Corporation of India
Appellant AdvocateP.K. Roy, Adv.
Respondent AdvocateB.N. Sen, Adv.
DispositionSuit dismissed
Cases ReferredBithal Das v. Shankar Dat Dube
Excerpt:
- .....26,000/- alleged to be due from peerless life insurance co. ltd. (hereinafter referred to as the insurance company). 2. the case in the plaint is that the original plaintiff was the managing director of the said insurance company and that on account of paucity of funds he had not drawn his remuneration as managing director from jan. 1943 till dec. 1947. it is alleged that the insurance company by its resolution dated july 2, 1948 agreed and/or promised as follows: 'resolved unanimously that the sum of rs. 26,000/-, being the amount of remuneration foregone by the managing director mr. r. roy up to dec., 1947, be paid to him in a lump sum or in one or more instalments in one or more years as and when the company is in a position to do so'. 3. it is further alleged that the life.....
Judgment:
ORDER

Manjula Bose, J.

1. One Radheshyam Roy, since deceased instituted this suit on Sept. 19, 1956 against the defendant Life Insurance Corporation of India for recovery of a sum of Rs. 26,000/- alleged to be due from Peerless Life Insurance Co. Ltd. (hereinafter referred to as the Insurance Company).

2. The case in the plaint is that the original plaintiff was the Managing Director of the said Insurance Company and that on account of paucity of funds he had not drawn his remuneration as Managing Director from Jan. 1943 till Dec. 1947. It is alleged that the Insurance Company by its resolution dated July 2, 1948 agreed and/or promised as follows:

'Resolved unanimously that the sum of Rs. 26,000/-, being the amount of remuneration foregone by the Managing Director Mr. R. Roy up to Dec., 1947, be paid to him in a lump sum or in one or more instalments in one or more years as and when the company is in a position to do so'.

3. It is further alleged that the Life Insurance Corporation of India the defendant, is the successor in interest of the Insurance Company under the Life Insurance Corporation Act, 1956 and as such Is liable to pay the said sum of Rs. 26,000/- to the original plaintiff.

4. It is contended that the original plaintiff's cause of action arose upon the transfer and/or vesting of the assets and liabilities of the Insurance Company in the defendant under the Life Insurance Corporation Act, on the 18th of June 1956. It is alleged further that prior thereto the Insurance Company was not in a position to pay to the plaintiff the said sum or any part thereof.

5. On or about June 23, 1960, during the pendency of the suit, the original plaintiff died. His heirs and legal representatives viz. his widow and sons and daughters were substituted in his place and stead by an order dated Dec. 1, 1960. The widow of the original plaintiff has also died since then and her heirs are on record.

6. In the written statement filed on behalf of the defendant it is contended that the resolution and/or agreement is void for uncertainty, illegal, ultra vires and not binding on the Insurance Company. It is alleged that the plaintiff's claim of Rs. 26,000/- not being a debt or liability or an obligation appertaining to the controlled business of the Insurance Company and never shown in its Balance-sheets was neither transferred to nor vested in the defendant under Section 2 of the Life Insurance Corporation Act.

7. Formal proof of the document and correspondence disclosed by the parties were by consent dispensed with, and the brief prepared for the use of the Court was tendered as Ext. A. Other material documents tendered at the trial were six balance-sheets of the Insurance Company for the years 1950 to 1955, collectively as Exhibit 'I', the Memorandum and Articles of Association of the Insurance Company Exhibit '2', and the Resolution of the Board of Directors of the Insurance Company dated July 2, 1948 Exhibit '4'. The following issues were raised and settled at the trial.

ISSUES

1(a) Did the Company by a resolution dated July 2, 1948 agree or promise to pay the original plaintiff the sum of Rs. 26,000/- as alleged in paras 6 and 7 of the plaint

1(b) If so, is the resolution or the promise or agreement contained therein void for uncertainty, or illegal, or ultra vires or not binding on the company?

1(c) Is the defendant liable to pay to the said deceased the sum of Rs. 26,000/-as alleged in para 12 of the plaint

2. Is the claim of the original plaintiff transferred to or vested in the defendant as alleged in paragraph 15 of the plaint

3. Is the claim of the original plaintiff barred by the laws of limitation

4. Have the plaintiffs any cause of action against the defendant and does the plaint disclose any

5. To what relief, if any, is the plaintiff entitled

8. Bhudev Kanti Boy the eldest son of the original plaintiff and the substituted plaintiff No. 4 deposed in support of the claim in the plaint. He had been a zonal Officer and later an Assistant Secretary of the Insurance Company. He stated that his father as Managing Director of the Insurance Company was entitled to an allowance of Rs. 500/- per month which was subsequently increased to Rs. 1,000/- per month. After he retired in 1952, by respective letters addressed to the Insurance Company dated April 14/15, 1S53 and April 27, 1953 his father had demanded payment of the said sum of Rs. 26,000/-, which the Insurance Company had by the resolution dated July 2, 1948 promised and/or agreed to pay when able.

9. No other person was called by the plaintiffs to depose. The defendant did not adduce any oral evidence.

10. The question for determination in the instant case in short is, whether it can be imported from the resolution that there was an enforceable promise to pay by the Insurance Company to the plaintiff If so, whether the defendant is liable to pay the same

11. Mr. B. N. Sen, learned Counsel for the defendant contended that from the Resolution passed on July 2, 1948, it would appear that the original plaintiff having foregone his remuneration as Managing Director must also be held to have surrendered or remitted or dispensed with his right to claim the same. He cited Stroud's Judicial Dictionary 3rd Edition Volume 2 at page 1144 where the word 'forego' has been interpreted as meaning to 'surrender'. He submits, the relevant Balance-sheets 'Ext. I' also indicates that the said sum of Rs. 26,000/-was not treated or acknowledged as a debt by the Insurance Company.

12. Mr. Sen submits further that the resolution being without consideration is void and unenforceable. The said agreement is also void for uncertainty under Section 29 of the Indian Contract Act as neither the time nor the amounts tobe paid at a time, are certain or could be made certain. He cites in this context Keshavlal Lallubhai Patel v. Lalbhai Trikumlal Mills Ltd. reported in : [1959]1SCR213 .

13. Mr. Sen submits next, that even assuming there was an enforceable promise, the liability to pay thereon was conditional and would arise only when the Insurance Company attained a certain financial position namely the capacity to pay. It has not been pleaded nor proved that at any material time the Insurance Company was in a position to pay and therefore the plaintiff did not have a cause of action and the plaint also did not disclose any cause of action.

14. Placing reliance on Section 32 of Indian Contract Act he urges, a contingent contract cannot be enforced unless and until the contingency contemplated did occur,

15. Mr. Sen also cites the decision in Kesoram Industries and Cotton Mills Ltd. v. Commr. of Wealth Tax Calcutta reported in : [1966]59ITR767(SC) for the proposition that a debt is a present obligation to pay an ascertainable sum of money whether payable upon a contingency does not become a debt until the happening of the contingency.

16. Relying on Section 2(3), 7 and 9 of the Life Insurance Corporation Act of 1956, Mr. Sen contends that the plaintiff's claim could not be stated to be referable only to the controlled business on the date of taking over, and as such, liability of the Insurance Company if any, to the plaintiff, cannot be said to have vested in the Central Government or the defendant. The Insurance Company continues to exist in the eye of law and the plaintiffs claim if any, remains pending against the Insurance Company and not the defendant.

17. Mr. Sen lastly contends that on the evidence adduced both oral and documentary it was established that as early as April, 1953 the original plaintiff made a categoric claim or demand on the Insurance Company on the basis that it was able to pay the claim and there was an immediate refusal and/or denial by the Insurance Company of its liability. In the premises, the plaintiff's cause of action if any, arose in April, 1953 and this suit having been filed in Sept., 1956 became barred by limitation.

18. Mr. P. K. Roy, learned counsel appearing for the plaintiffs contended that the word 'foregoing' meant abstaining from enforcement for the time being. He cited New Oxford Dictionary (Vol. IV Part I P. 453) where the meaning of theword forego is given as 'to abstain or refrain'. He submits further that abstention from taking action or proceedings in respect of a claim would be a good consideration for a promise to pay in future. Even if such a promise was conditional if the plaintiff was able to prove that the condition had been fulfilled then the claim becomes enforceable. The case of Watson v. Yates reported in (1887) ILR 11 Bom 580 was cited by Mr. Roy in support of his contention. In this case a promise by a debtor 'I bear the matter in mind, and will do utmost to repay this money as soon as I possibly can' after the debt had become barred by Limitation was held to be a conditional promise to pay when he was able. But the creditor failed to prove the defendant's ability to pay and could not recover his claim. A similar principle was enunciated in the case Bindae Dasya Chutiani v. Chota reported in (1912) 16 Cal W N 636 at p. 638 where it was held that if the debtor declares that 'he will pay when he can' the creditor must prove the debtor's ability to pay before he could succeed in his claim. These last two decisions however, are of little assistance to the plaintiffs in the instant case. Even if it is held in favour of the plaintiffs that the Insurance Company had promised to pay the sum of Rs. 26,000/- when it would be able, it cannot be held on the evidence on record that the Insurance Company was at any time in a position to pay the amount. For the proposition that a foregone right can be good consideration for a promise Mr. Roy cites the decision of Bithal Das v. Shankar Dat Dube reported in (1895) ILR 17 All 264. Mr. Roy submits further that the stipulation 'payable when able' has been construed by the Courts as not vague or uncertain, and would be sustained if it could be established that there was ability to pay. Lastly, Mr. Roy contended that under Section 7 of the Life Insurance Corporation Act 1956 all debts, liabilities and obligations of the Insurance Company including the claim of the plaintiffs which pertained to its controlled business vested in the defendant which became substituted in place of the Insurance Company, This vesting Mr. Roy argues satisfied the contemplated contingency, as the defendant at the time of vesting of this liability in 1956 was able to pay the claim.

19. Upon a careful consideration of the contentions and submissions on behalf of the parties, I am unable touphold the claim of the plaintiffs. The plaintiffs in order to succeed had to prove first, that there was a debt enforceable in law, and secondly that at the date, of the filing of the suit the Insurance Company was in a position to pay which the plaintiffs have failed to do. It has not been established further that the alleged claim of the plaintiffs pertain solely to the controlled business which was taken over. It also appears to me that assuming the resolution of the Insurance Company imported a contingent promise to pay, the contingency must relate to the paying capacity of the Insurance Company. The vesting of the liability under statute cannot change the nature of the contingency.

20. I hold that the resolution of the Board of the Insurance Company dated July 2, 1948 on which the plaintiff's claim is based is uncertain and vague and without consideration and any agreement recorded thereby is void and unenforceable. In fact, the parties all along proceeded on the basis that there was no genuine debt enforceable in law, and therefore the debt was not reflected in the Insurance Company's Balance-sheets and admittedly accepted by the original plaintiff, the Managing Director who was a signatory to the balance sheets for the year ending December 31, 1950.

21. For the reasons as stated above the issues are answered as follows:

1 (a) Yes, but not enforceable for reasons given in issue 1(b).

1(b) The resolution, or the promise or agreement contained therein is void for vagueness and uncertainty and there being no consideration the same is void, unenforceable and not binding on the Insurance Company.

1(c) No.

2. No, there being no debt payable by the Insurance Company.

3. Yes, inasmuch as there was a denial of the plaintiff's claim by the Insurance Company in April 1953 and the suit admittedly filed in September 1956.

4. No; and the plaint discloses none,

5. None.

22. The suit is accordingly dismissed. In the peculiar facts of the case however, each party to pay and bear its own costs.


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