Skip to content


Navajiban Insurance Co. Vs. Superintendent of Insurance, Government of India - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtKolkata
Decided On
Reported inAIR1943Cal209
AppellantNavajiban Insurance Co.
RespondentSuperintendent of Insurance, Government of India
Excerpt:
- .....company registered under the insurance act of 1938 and, at present, it carries on the business of life insurance only. for some years after it was started it had been doing in addition to this, business of miscellaneous insurance, which being based on the dividing principle came within the prohibition contained in section 52, insurance act, and was discontinued from november 1940. under section 7(1)(a), insurance act, the total amount that has got to be deposited by an insurer who carries on a combined business of this sort is three hundred thousand rupees out of which two hundred thousand rupees are regarded as deposit for the life insurance business. under sub-section (3) of that section the insurer is given the liberty of making the deposit in seven instalments; of these the first.....
Judgment:

B.K. Mukherjea, J.

1. The facts giving rise to this appeal may be shortly stated as follows: The appellant is an insurance company registered under the Insurance Act of 1938 and, at present, it carries on the business of life insurance only. For some years after it was started it had been doing in addition to this, business of miscellaneous insurance, which being based on the dividing principle came within the prohibition contained in Section 52, Insurance Act, and was discontinued from November 1940. Under Section 7(1)(a), Insurance Act, the total amount that has got to be deposited by an insurer who carries on a combined business of this sort is three hundred thousand rupees out of which two hundred thousand rupees are regarded as deposit for the life insurance business. Under Sub-section (3) of that section the insurer is given the liberty of making the deposit in seven instalments; of these the first instalment which must not be less than one-fourth of the total deposit, has got to be paid before registration, and the second instalment which shall not be less than one-sixth of the balance due is payable before the expiry of four months from the commencement of the Act. The subsequent instalments shall not be less than the minimum required as the second instalment and are to be paid before the 1st day of January of each succeeding year. Upon this provision an exception has been engrafted by way of a proviso, which lays down that in the case of insurers carrying on life insurance business only, the deposit could be made in ten instalments instead of seven. The first instalment shall not be less than one-fourth of the total deposit as provided for, in other cases, but the second and subsequent instalments could be each for a sum not less than one-ninth of the balance. The appellant company at the time of its registration under the Insurance Act paid a sum of Rs. 75,000 which was the initial deposit prescribed by Section 7(1)(e) of the Act. It paid one-sixth of the balance that is to say Rs. 37,500 as the second instalment and the same amount was also paid as the third instalment on 1st January 1940.

2. In November 1940, as stated above, the appellant stopped the miscellaneous business and began carrying on the life insurance business only. On 2nd July 1941, it made an application before the District Judge of Jalpaiguri under Section 9, Insurance Act, praying for refund of a sum of Rs. 50,000, which was said to be the deposit made in respect of the miscellaneous business up to January 1940. The application was rejected by the District Judge but it was allowed on revision by this Court. This Court held that when the business carried on by the insurer is a combined business as contemplated by Section 7(1)(e), Insurance Act, the instalments provided for by Sub-section (8) are susceptible of division in the same way as the total amount, and the two-thirds of the instalments should be allotted to the life insurance business and one-third to the insurance business of the other class. It was accordingly held that the company was entitled to a refund to the extent of one-third of the instalments already deposited, namely Rs. 50,000, which related to this discontinued business. Out of this amount a sum of Rs. 25,000 was allowed to be retained by the Superintendent of Insurance as the deposit for January 1941 and a further sum of BS. 10,000 was kept for the purpose of satisfying the liabilities of the discontinued miscellaneous business; the balance amounting to Rs. 15,000 was actually refunded to the appellant.

3. In January 1942, however, when the next instalment fell due the company paid a sum of Rs. 16,000 odd and not Rs. 25,000 as it paid in previous years. The position taken up by it was that it was entitled to the privilege e contained in the proviso to Sub-section (3) of Section 7 mentioned above and had the right to pay the money in ten instead of seven instalments. The Superintendent of Insurance refused to accept the deposit and cancelled the registration of the company with effect from 12th March 1942. The insurer paid the money under protest and then came up before the District Judge with an application which was apparently one for refund of the excess money which he had to pay under protest. It was conceded at the time of hearing that this prayer was not maintainable under Section 9, Insurance Act, and the application was treated as an appeal against the order of the Superintendent of Insurance canceling the registration under Section 110(1)(a), Insurance Act. The District Judge dismissed the appeal and it is against this decision that the present appeal has been preferred by the company.

4. It seems to us on hearing the learned advocates on both sides that the view taken by the learned District Judge is right. Section 7(1), Insurance Act, prescribes the maximum deposit that has to be made for different classes of insurance. Sub-section (3) gives the insurer the option of making the deposit in seven instalments. This sub-section further lays down the time for payment of these instalments and the minimum amounts that are payable. The proviso attached to the sub-section makes an exception in favour of insurers who carry on life insurance business exclusively and they are allowed to make the deposit in ten instalments instead of seven. Whatever the reason might be which led the Legislature to make this concession in favour of the life insurance business it seems to us, on a plain reading of the language of the proviso, that it could not have been meant to apply to a case like this where the insurer did not carry on life insurance business exclusively at the time when it was registered, but carried on a business of another class along with life insurance work although it discontinued the other business later on Section 3(1), Insurance Act, lays down that no person shall after the commencement of this Act begin to carry on any class of insurance business, and no insurer already carrying on such business shall continue to do so after the period of three months from the commencement of this Act, unless he has obtained a certificate of registration from the Superintendent of insurance. Under Section 3(2)(c) the application for registration must be accompanied, amongst other things, by a statement of the class or classes of business done or to be done by the applicant.

5. The proviso to Section 7 (3) lays down that in the case of insurers carrying on life insurance business only, the deposit may be made in not more than ten instalments, of which the first shall be not less than one-fourth of the total amount of the deposit, and shall be paid before the application for registration is made. This clearly contemplates that the insurer must deal in life insurance business exclusively at the time when the application for registration is made. Thus it is the character of the business that he is carrying on at that time that determines the amount of deposit and also the number of instalments in which the deposit can be made. As the insurer in the present case carried on a combined business the maximum deposit was Rs. 3,00,000 which could be paid in seven instalments according to Section 7(3), Insurance Act. As was already held by this Court, the instalments of the deposit were susceptible of division and two-thirds of the same should be deemed to relate to the life insurance business and the remaining one-third to the miscellaneous work which the appellant subsequently discontinued. The position, therefore, is that as soon as the appellant stopped the miscellaneous business it was entitled to get a refund to the extent of one-third of the instalments already deposited and it was further exempted from payment of this one-third in all the future instalments. But the question is whether the company is entitled to say that the instalments should be readjusted on the footing that the appellant was a life insurance company pure and simple from the beginning and that with regard to future instalments it was entitled to the benefit of the proviso to Sub-section (3).

6. We concede that there may be nothing per se objectionable in such a prayer, but the difficulty that we find is that the proviso being an exception engrafted upon the main provision of the section, we cannot under any canon of construction, carry it beyond what its wording expressly lays down. The Legislature, it seems, had not in mind a case of this description at all, and this is clearly indicated by the concluding portion of the proviso which says that the subsequent instalments must not be less than the minimum amount required as the second instalment. Here the minimum amount payable by the company as the second instalment in respect of the life insurance business was Rs. 25,000. We cannot interpret the word 'required' to mean not what wag actually required under law at the time when the second instalment became payable but what would have been payable if the company at that time dealt exclusively with life insurance business.

7. In our opinion, therefore, the view taken by the Court below was right, and this appeal must be dismissed. We make no order as to costs in this appeal. We further observe that as the amount required under Section 7(3) was deposited by the company before 12th March 1942, the cancellation order made by the superintendent of insurance would be vacated. The rule stands discharged. No order is made as to costs.

Blank, J.

8. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //