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Mrs. Maniluxmi Patel and anr. Vs. Hindusthan Co-operative Insurance Society, Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtKolkata High Court
Decided On
Case NumberSuit No. 1073 of 1956
Judge
Reported inAIR1962Cal625,66CWN774
ActsCode of Civil Procedure (CPC) , 1908 - Section 80 - Order 1, Rule 10; ;Limitation Act - Section 19 - Article 86; ;Life Insurance (Emergency Provisions) Act, 1956 - Sections 3 and 4; ;Life Insurance Corporation Act, 1956 - Section 7(1); ;Contract Act, 1872 - Section 229
AppellantMrs. Maniluxmi Patel and anr.
RespondentHindusthan Co-operative Insurance Society, Ltd. and anr.
Appellant AdvocateC. Tondon and ;S. Banerjee, Advs.
Respondent AdvocateB.N. Sen and ;M. Banerji, Advs.
DispositionSuit dismissed
Cases ReferredV. K. Srinivasa v. Premier Life and General Insurance Co. Ltd.
Excerpt:
- s.p. mitra, j.1. this is a suit for the recovery of a sum of rs. 10,000/- and for other reliefs. the plaintiffs' case is that the defendant no. 1 namely, the hindusthan co-operative insurance society limited at all material times carried on business, inter alia, of life insurance, at no. 4, chittaranjan avenue in calcutta. by the life insurance (emergency provisions) ordinance no. 1 of 1956 the entire management and administration of the affairs and business of the life department of the defendant no. 1 had vested in and come under the direct control of the union of india with effect from the 19th january, 1956.2. on the 22nd november, 1952 a local agent of the defendant no. 1 approached the husband of the plaintiff no. 1 shantilal chhotalal patel for having insurance on his life and on.....
Judgment:

S.P. Mitra, J.

1. This is a suit for the recovery of a sum of Rs. 10,000/- and for other reliefs. The plaintiffs' case is that the defendant No. 1 namely, the Hindusthan Co-operative Insurance Society Limited at all material times carried on business, inter alia, of life insurance, at No. 4, Chittaranjan Avenue in Calcutta. By the Life Insurance (Emergency Provisions) Ordinance No. 1 of 1956 the entire management and administration of the affairs and business of the life department of the defendant No. 1 had vested in and come under the direct control of the Union of India with effect from the 19th January, 1956.

2. On the 22nd November, 1952 a local agent of the defendant No. 1 approached the husband of the plaintiff No. 1 Shantilal Chhotalal Patel for having insurance on his life and on the persuasion of the agent Shantilal agreed to have his life insured with the defendant No. 1 for the sum of Rs. 10,000/-. The local agent asked Shantilal to put his signature on the proposal form whichhe took away saying that he would do the rest himself and that on satisfactory report of the Company's Doctor and upon payment of the premium Shantilal would get the policy. The company's doctor thereafter examined Shantilal and after the premium was paid, the defendant No. 1 issued in his favour its Policy No. 787133. The assured could only sign his name in English and had no knowledge of the language at all.

3. Shantilal died on the 20th February, 1953 leaving his wife the plaintiff No. 1 and his son Vinnobhai, the plaintiff No. 2 as his heirs. All the premiums that fell due before his death had been paid by the insured.

4. By letter dated the 27th February, 1953the plaintiffs informed the defendant No. 1 of thedeath of Shantilal. Then by letter dated May 26,1953, the plaintiffs preferred their claim enclosingthe relevant documents.

5. After repeated enquiries the defendant No. 1 informed the plaintiffs by letter dated the 6th January, 1954 that the matter was under enquiry and was being expedited and on completion of the enquiry the decision of the defendant No. 1 would be communicated to the plaintiff.

6. The plaintiffs were contemplating the institution of a suit against the defendant No. 1 when the Ordinance was promulgated. The plaintiffs were advised to serve a notice on the Union of India under Section 80 of the Code of Civil Procedure. Accordingly, a notice dated the 13th/17th February, 1956 was served.

7. In reply to the plaintiffs' solicitor's letter of demand to the defendant No. 1 dated the 15th December, 1955 and the notice under Section 80, the defendant No. 1 by letter dated the 12th March, 1956, wrongfully repudiated the claim by alleging that the assured had suppressed various information at the time of taking out the policy.

8. The Union of India is the defendant No. 2. It is stated in paragraph 13 of the plaint that the Union has been added as pro forma defendant inasmuch as in pursuance of the said ordinance the entire control, management, administration and assets of the defendant No. 1 had vested in or been taken over by the Union. The plaintiffs claim no relief against the defendant No. 2.

9. By an amendment of the plaint the Life Insurance Corporation of India has been added as the defendant No. 3 in view of the provisions of the Life Insurance (Emergency Provisions) Act, 1956.

10. It is alleged in paragraph 15 of the plaint that the plaintiffs' claim is not barred by limitation inasmuch as the assured died on the 20th February, 1953 and the defendant No. 1, by letter dated the 6th January, 1954 assured the plaintiffs that the said claim was under enquiry and by letter dated the 12th March, 1956 repudiated the claim for the first time. Moreover, notice under Section 80 of the Code of Civil Procedure was necessary in the instant case.

11. The defence of the defendant No. 1, inter alia, is that by virtue of the provisions of the Life Insurance (Emergency Provisions) Ordinance 1956 and the Life Insurance (Emergency Provisions)Act, 1956, on and from the appointed date that is the 19th January, 1956 the management of the controlled business of insurers including the defendant No. 1 vested in the Central Government pending the appointment of a custodian for the controlled business of each of the insurers. Shri Dhirendra Nath Mitra was appointed custodian on the 20th January, 1956, when he took over the management of the controlled business of the defendant No. 1.

12. On the 23rd November, 1552 a proposal was received by the defendant No. 1 for a policy of insurance on the life of Shantilal C. Patel for the sum of Rs. 10,000/-. The medical examination of Shantilal was held on the 25th November, 1952 and a letter of acceptance was issued on the 6th December, 1952. The risk commenced on the 23rd November, 1952.

13. The Policy of Insurance, inter alia, provided that the same was subject to conditions endorsed on the policy. It was one of the conditions of the policy that if the proposal, declaration and statement on the basis of which the policy was to be effected contained any untrue statement the Policy would be treated as void. The proposal, declarations and statements made by the deceased to the defendant No. 1 and certain personal statements of the deceased to the Medical Examiner contained untrue statements. The particulars of such statements given in paragraph 4 of the Written Statement are as follows:

(a) The assured suppressed the fact that his proposal bearing No. 38805 of 1939, made to The Oriental Government Security Life Assurance Company Ltd. was declined by the said Company.

(b) On the 24th January, 1947 the assured made a proposal to the United India Life Assurance Company Ltd. for Rs. 10,000/-which was accepted with an extra premium of Rs. 4/- per thousand.

(c) The assured gave untrue replies to questions Nos. 11(a) and (b) of the proposal form signed by him. Both the questions were answered by the assured in the negative.

(d) The assured failed to disclose that he had received medical advice after the date of the proposal but before full compliance with the terms of its acceptance. The assured failed to disclose that he consulted Dr. Nripati Ranjan Sarkar on the 22nd December, 1952 that is before the payment of the first premium on the 23rd December, 1952 when he suffered a deterioration in the state of his health.

14. The defendant No. I admits that it was informed of the death of Shantilal but has no knowledge as to who his heirs are. The plaintiffs' claim is also barred by the law of Limitation.

15. The following issues were raised:

1. Is the suit barred by limitation?

2. Are the plaintiffs the only heirs and legal representatives of Shantilal Patel?

3. Did Shantilal Patel sign a blank proposal form which was later filled in as alleged in paragraphs 3 and 5 of the plaint?

4. Is the policy void on grounds stated in paragraph 4 of the written statement?

5. To what relief, if any, are the plaintiffs entitled?

ISSUE NO. 1 :

16. It is common case that the relevant article of the Limitation Act is Article 86(a). This is a suit on a policy of Insurance when the sum insured is payable after proof of the death has been given to or received by the insurers. The period is 3 years from the date of the death of the deceased. Shantilal died on the 20th February, 1953, but this suit was instituted on the 20th April, 1956.

17. Mr. Tondon appearing on behalf of the plaintiffs contended that the suit was not barred as it was necessary to serve a notice under section 80 of the Code of Civil Procedure. He relied on the decision in Banku Behari v. Harendranath, 15 Cal WN 54 for the proposition that where property in the hands of a Receiver is intended to be affected by the result of the litigation, the Receiver is a proper and necessary party. According to him under Section 3(1) of the Ordinance on and from the appointed date the management of the controlled business of all insurers vested in the Central Government. Under Section 3(3) no insurer could without the previous approval of the person specified by the Central Government in this behalf in respect of that insurer make any payment. Under Section 3(5) every insurer was to deposit all securities and documents of title appertaining to the controlled business in banks specified therein and no security or document was to be withdrawn from the bank except with the permission of the authorised person. Under Section 3(6) every insurer was to deliver at the place and to the person specified in this behalf by the Central Government the minutes book or any other book, the current cheque books, all registers or other books and all brokers' notes or certificates.

18. From all these provisions, Mr. Tondon has argued, it is clear that the Central Government was in the position of a Receiver. The assets of the controlled business were completely in the hands of the Central Government . The Union of India therefore was a necessary party to the suit and notice under section 80 had to be served.

19. It is true that in paragraph 13 of the plaint it has been stated that the defendant No. 2 namely, the Union of India, has been added as pro forma defendant and the plaintiffs claim no relief against this defendant. Even then, according to Mr. Tondon, notice under Section 80 had to be served. He relies on the judgment of the Patna High Court in Secretary of State v. Amar Nath AIR 1936 Pat 339. In this case it has been held that Section 80 deals with two classes of suits, (a) Suits against the Secretary of State for India-in-Council and (b) suits against a public Officer in respect of any Act purporting to be done by such Public Officer in his official capacity. With regard to both these classes of suits the Section is clear and peremptory and notice must be served on the Secretary of State or on the Public Officer, as the case may be, as a condition precedent to the institution of the suit. One cannot read into the section an interpretation that in a suit against the Secretaryof State notice is not required where no relief is sought as against him. I am unable, with great respect, to agree with this view. Section 80 specifically provides that, the person giving notice must state, inter alia, his cause of action and the relief which he claims. If the plaintiff has no cause of action against a particular defendant and claims no relief against that defendant I do not see why notice under section 80 should be served. The Patna High Court has placed reliance on two, judgments of the Privy Council. The first case referred to is that of Revati Mohan Das v. Jatindra Mohan Ghose . The Patna High Court quotes the observations of Sir George Lowndes that, 'the learned Subordinate Judge held that the Section had no application to suits in contract, and this dictum was rightly repelled by Mukerji, J., who delivered the judgment of the High Court. Having regard to the decision of this Board in Bhaychand Dagdusa v. Secy. of State their Lordships think that no such distinction is possible.' No one disputes the proposition that Section 80 applies to suits in contract. But that does not support the view taken by the Patna High Court in AIR 1936 Pat 339. Incidentally it may be observed that the Privy Council in Revati Mohan's case said that in the case of a suit against a Public Officer it was only where the plaintiff complained of some Act purporting to have been done by him in his Official capacity that notice was enjoined.

20. The second case to which the Patna High Court has referred is the case of : In this action 48 plaintiffs joined in suing the Secretary of State for India and the Collector and District Magistrate of Nasik for two kinds of reliefs; (a) a declaration that certain Official notices and Orders were ultra vires and invalid, and (b) an injunction permanently restraining all executive action thereunder. Viscount Sumner observes:

'Section 80 is express, explicit and mandatory and it admits of no implications or exceptions. A suit in which, inter alia, an injunction is prayed is still 'a suit' within the words of the Section, and to read any qualification into it is an encroachment on the function of legislation.'

21. These observations indicate that when the relief claimed is an injunction a notice under Section 80 is necessary. To my mind Bhagchand's case is no authority for the proposition that where there is no cause of action and no relief is claimed a notice under Section 80 has to be served. This decision of the Patna High Court was followed in Madras Province v. Vikrama Deo Varma,' AIR 1943 Mad 284, This was a case of suits brought against the Province of Madras under Section 14 of the Madras Survey and Boundaries Act. But I find in the judgment of Happell, J. that although the lower court had proceeded on the footing that the Government was not a necessary party, the Government itself had not conceded the position.

22. I may, in passing, refer to the judgment of this Court in Bhubanmohini v. Biraj Mohan : AIR1940Cal1 it has been observed as follows:

'I think...............when no relief is claimedagainst the Receiver personally, and the suit is really against the estate which does not vest in the Receiver, but which is held by him under orders of the Court which made the appointment, the suit cannot be said to be one against the Receiver within the meaning of Section 80, C. P. Code. In other words Section 80, C. P. Code, contemplates in my opinion a suit against the Receiver which seeks to make him personally liable for acts, done or purporting to be done by him in his Official capacity, and it does not contemplate a case where a suit for possession is brought against the owner of the estate in respect of which he has been appointed a Receiver, and which suit he has got to defend under powers conferred on him by the Court. In such cases it is undoubtedly necessary to take the leave of the Court which appointed the Receiver, before the latter can be made a party to the proceeding, and that is on the principle that interference with the possession of the Receiver, without leave, would amount to contempt of the Court, whose officer the Receiver is. But there is in my opinion no necessity to serve upon him a notice under Section 80 and there can be no meaning in sending such notice.'

23. In the instant case no wrongful act of the union of India is complained of in the plaint. No cause of action against the defendant No. 2 has been alleged. No relief has also been claimed against the defendant No. 2. In these circumstances it seems to me there was no scope for service of notice under Section 80 of the Code of Civil Procedure.

24. There is another aspect of this matter. When this suit was instituted the Life Insurance (Emergency Provisions) Act, 1956, had come into force. Its predecessor was the Ordinance. Section 3(1) of the Act provides that on and from the appointed date the management of the controlled business of all insurers shall vest in the Central Government. Then came the Life Insurance Corporation Act of 1956. Section 7(1) of this Act prescribes that on the appointed day, that is, on the day of the establishment of the Life Insurance Corporation under the provisions of the Act, there shall be transferred to and vested in the Corporation all the assets and liabilities appertaining to the controlled business of all insurers. The Life Insurance Corporation has been made a party to the suit by an amendment and is now the defendant No. 3.

25. The effects of these provisions have been considered by the Allahabad High Court in Madan Mohan v. Omprakash : AIR1957All384 . An application under article 226 of the Constitution was made to the Allahabad High Court for a writ of quo warranto against a member of a Municipal Board to show the authority by which he was holding the office of the member. The person concerned was originally an employee of the BharatLife Insurance Company Limited. The management of the Company was taken over by me Central Government on me 19th January, 1956 when the Life insurance (Emergency Provisions) Ordinance, 1106 came into force which was followed on the 21st March, 1956 by Act, 9 of 1956. The main contention ot the, petitioner was that by reason of the Ordinance the management of the insurance Company vested in the Central Government and the member concerned became an employee of the Central Government and ceased to be a member of the Municipal Board by reason of the provisions of Section 13-D(f) of the Municipalities Act. It was contended further that in any view of the matter on the 1st of September, 1956, when the Life Insurance Corporation came into existence he became an employee of the Central Government through the Corporation and became disqualified to be a member of the Municipal Board. Mehrotra, J. has analysed the provisions of the Ordinance, of Act 9 of 1956 and the Life Insurance Corporation Act of 1956. His Lordship came to the conclusion that under the provisions of Act, 9 of 1956 the Insurance Company as such did not vest in the Central Government. It was only the management which vested in the Central Government. The employees of the Insurance Company continued to be the employees of the Insurer Company. It might be that the control over the employees after the coming into force of the Act could be exercised by the Central Government through the custodian appointed by it, but the employees continued to be in the service of the Insurer Company. The Insurer Company as such did not lose its legal entity and the relationship of employer and employees continued between the Insurer Company and its employees. It could not be said that the employees of the Insurer Company became the employees of the Central Government which did not become a substitute of the Insurer Company by the coming into force of this Act. Analysing Section 11 of the Life Insurance Corporation Act His Lordship has said that the appointing authority or it may even be called the creator of the Corporation is the Central Government. But every employee of the Insurer Company becomes an employee of the Corporation with effect from 1st September, 1956. Great powers have been given under the provisions of the Life Insurance Corporation Act to the Central Government to regulate the constitution and the powers of the Corporation and even it may Be assumed that the Central Government created this Corporation to carry on certain business activity, but that does not lay down that the Corporation is a department of the Central Government. From the examination of the provisions of the Life Insurance Corporation Act it is clear that the Corporation is a distinct legal entity created by statute and has perpetual succession with a right to hold and acquire property.

26. With respect I agree with these observations. Mr. Tondon, however, contended that the Allahabad High Court did not decide whether the Central. Government was a proper party to an action against the Insurer Company or the Corporation. He has urged that as the Central Government had taken over the control of assets of theInsurer Company as also its management it was a necessary and proper party and that is why his clients bad served in the instant case a notice under Section 80.

27. A similar question arose before the Patna High Court in A. F. Fergeson and Co. v. Lalit Mohan, AIR 1954 Pat 596. In this case by a notification under Rule 113A, of the Defence of India Rules, the Central Government handed over the management of an enemy Insurance Company to a firm of Chartered Accountants which was asked to manage the business of the Company, subject to the superintendence, direction and control of the Central Government and the firm of Chartered Accountants in their management of the Company was to be accountable to the Central Government. In a suit by the insured against the firm of Chartered Accountants as representing the company, the Governor-General-in-Council, it was held by the Patna High Court, against whom no relief was claimed and who had no interest in the subject-matter of the suit, was not a necessary party. As the Governor-General-in-Council was not a necessary party no notice under Section 80 was also required.

28. It is true that the provisions of Rule 113A of the Defence of India Rules and those of the Ordinance of 1956 and the subsequent Act 9 of 1956 are not the same. Rule 113A for instance specifically mentions that the person authorised to carry on the business of an enemy firm would be deemed to be acting as an agent of the firm. In the instant case the management of the controlled business of all insurers vested in the Central Government, and pending the appointment of a custodian for the controlled business the persons in charge of the management of such business were to be in charge of the management of the business for and on behalf of the Central Government: vide Section 3(1) of Act 9 of 1956. Then Section 4 prescribes as follows:

'(1) The Central Government may, as soon it is convenient administratively so to do, appoint any person as custodian for the purpose of taking over the management of the controlled business of an insurer.

(2) On the appointment of a custodian under Sub-section (1) all persons in-charge of the management of the controlled business of the insurer for and on behalf of the Central Government immediately before such appointment shall cease to be in-charge of such management and shall be bound to deliver to the custodian all books of accounts, registers or other documents in their custody relating to the controlled business of the insurer.

(3) Nothing contained in Sub-sections (3), (5) and (6) of Section 3 shall apply to any insurer the management of whose controlled business has been taken over by the custodian, but the Central Government may issue such directions to the custodian as to his powers and duties as it deems desirable in the circumstances of the case and the custodian may apply to the Central Government at any time for instruction as to the manner in which he shall conduct the management of the controlled business of the insurer or in relation to any matter arising in the course of such management.

(4) The custodian shall receive such remuneration as the Central Government may fix; and the Central Government may at any time cancel the appointment of any person as custodian and appoint some other person in his stead.'

29. Sub-sections (3), (5) and (6) of Section 3 of Act 9 of 1956 relate to the period of management by the employees of the Insurer Company for and on behalf of the Central Government.

30. In the case before me it appears from paragraph 2 of the Written Statements of the Hindusthan Co-operative Insurance Society Limited (the defendant No. 1) and the Life Insurance Corporation of India (the defendant No. 3) that on the 19th January, 1956 the management of the defendant No. 1 vested in the Central Government. On the following day namely the 20-1-56 Sri Dhirendra Nath Mitra was appointed the custodian, of the defendant No. 1 and he took over the management of its business. These facts are not disputed.

31. Now, in view of what I have stated above especially the provisions of Sections 3 and 4 of Act, 9 of 1956 I do not see how the Union of India was interested in the subject-matter of this suit, which was instituted on the 20th April, 1956. The Union of India to my mind was not a necessary party and as such notice under Section 80 of the Code for the purpose of suing the Union was not required.

32. Having regard to the conclusions I have arrived at the notice in my opinion does not save limitation.

33. The next argument of Mr. Tondon was that assuming that the notice under Section 80 was not necessary in the instant case it has also been alleged in paragraph 15 of the plaint that the assured died on the 20th February 1953, and the defendant No. 1 by its letter dated the 6th January, 1954 assured the plaintiffs that the said claim was under enquiry and by letter dated the 12th March, 1956 repudiated the claim for the first time. In other words, Mr. Tondon submits, limitation has been saved by 'acknowledgment' within the meaning of Section 19 of the Indian Limitation Act. By letter dated the 12th March, 1953 (Ex. A page 16) the defendant No. 1 sent to the plaintiff No. 2 the requisite claim forms for completion. The defendant No. 1 states that the completed forms along with a certified extract from the official Death Register should be returned to the defendant No. 1 'to enable us to consider the claim'. By letter dated the 26th May 1953. (Ex. A page 18) the plaintiff No. 2 sends to the defendant No. 1 the claim form duly completed and other documents. Then on the 30th May 1953, (Ex. A page 22) the defendant No. 1 writes to the plaintiff No. 2 that 'the matter is having our attention and you will hear from us in due course'. On the 6th/7th January 1954, in one of the letters relied on in paragraph 15 of the plaint, the defendant No. 1 writes to the plaintiff No. 2 as follows:

'As you are aware, this is an early claim and the matter is under enquiry. The enquiry is not yet complete. The matter is being expedited. Oncompletion of the enquiry the decision will be intimated to you thereafter.'

34. A copy of this letter is at page 25 of Exhibit 'A'. According to Mr. Tondon the basis of the plaintiffs' claim is admitted in this letter but the defendant No. 1 informs the plaintiff No. 2that it was making enquiries as to whether it wouldpay or not Then there was the notice under Section 80 of the Code of Civil Procedure dated the9th February 1956, addressed by the plaintiffs'solicitor to the 'Union of India, through theSecretary to the Ministry of Finance:' (Ex. 'A'page 31). Lastly, comes the letter of March 9,1956 (Ex. A page 33) wrongly stated as the letterof the 12th March 1956, in paragraph 45 of theplaint. In this letter the defendant No. 1 has refused to meet the claim. The letter runs thus:

'It appears that the deceased assured had been suffering from various ailments at the time when the first premium was paid. This fact was not disclosed to the society in terms of the acceptance letter.

Besides he suppressed the information regarding the declinature and acceptance at extra rate of his previous proposals to other companies. In view of the above no claim arises under the policy.'

35. Mr. Tondon has referred to Explanation I in Section 19 of the Limitation Act. The explanation is as follows:

'For the purposes of this section an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come, or is accompanied by a refusal to pay, deliver, perform or permit toenjoy, or is coupled with a claim to set off, or is addressed to a person other than the personentitled to the property or right.'

36. Learned Advocate's contention is that the letter of the 6th/7th January 1954, (Exhibit 'A' page 25) comes within the scope of the Explanation. This letter is a reply to the letter of the plaintiff No. 2 dated the 29th December 1953, (Ex. A page 24). The plaintiff No. 2 wrote to the defendant No. 1 as follows:

'I have already submitted all required papers by you regarding the death ......

Many verbal reminders have been noted by your officers and also written reminder has been sent to you but not a single acknowledgment has been sent to me by your office.

By this I give you a third reminder in writing and hope you will please let me know what steps you have adopted to pay me the said claim.

Kindly let me know by return where and how far the claim has been considered by you. At least please show me the courtesy to acknowledge my letters and reminders. If nothing is heard from you I am sorry I shall have to entrust this matter to my legal advisers. Hope you will please do the needful in the matter and will not drag me to the legal steps .....'

37. The defendant No. 1, Mr. Tondon has urged, being confronted with this letter wrote to the plaintiff No. 2 on the 6th/7th January, 1954 thatas this was an early claim the matter was still under enquiry. The claim was not denied but the time for enjoyment, according to the defendant No. 1, had not yet arrived.

38. My attention was drawn to the case of Jainarain v. Governor General of India : AIR1951Cal462 . This was an action for damages for loss of goods handed over to the Railway for carriage, in course of a letter the Railway informed the plaintiff as follows:

'With reference to your letter No. nil dated 2-8-44 I beg to inform you that one bundle of cloth belonging to the above consignment is lying undelivered at destination at your sole risk and responsibility and incurring wharfage daily. Will you please arrange to take delivery of the same at an early date?

If delivery is not taken of instruction received as to its disposal within 15 days from the date of this letter the bundle will be disposed of under Sections 55 and 56, Railways Act 9 of 1819 to defray the charges due to the Railway.'

39. Construing this letter Chakravartti, J. (as His Lordship then was) observes as follows:

'The Railway admits that the bundle of cloth was received for carriage; it admits that it was under an obligation to carry the bundle and to deliver it; it admits further that it has not yet delivered the bundle and I may add, admits that it is still liable to make delivery. In these circumstances, it seems to me, the receipt of the bundle for carriage and its non-delivery being both admitted, the liability for compensation on account of non-delivery was, under the wide meaning attributed by the Privy Council to Section 19, Limitation Act, acknowledged by the Railway.'

40. Chakravertti, J. has observed further that the substance of judicial decisions appears to be that it is not necessary that there should be a specific and direct acknowledgment of the particular liability which is sought to be enforced, but if there is an admission of facts of which the liability in question is a necessary consequence, there would be an acknowledgment within the meaning of Section 19.

41. Mr. Tondon has argued that in the letter of the 6th/7th January, 1954 the defendant No. 1 admits the existence of the policy; it admits also a liability under the policy.

42. It is obvious that the letter which came up for construction before Chakravartti, J. was in stronger and clearer terms. As has been pointed out by Renupada Mukherjee, J. in Balchand v. Union of India : AIR1957Cal666 Chakravartti, J. held upon construction of this letter written by a responsible Railway Officer that all the elements constituting the liability of the Railway had been admitted in this letter. In the instant case it has to be seen whether the letter of the 6th/7th January, 1954 contains admission of facts of which the liability in question is a necessary consequence.

43. The next case relied on was the judgment of Bose, J. (as His Lordship then was) in Hindusthan Housing and Development Trust Ltd. v. State of West Bengal, 59 Cal WN 405 -- This was acase for recovery of compensation for requisitioned properties. His Lordship was of opinion that Article 120 was applicable to the case. As it was argued that Article 115 was attracted His Lordship observed as follows:

'Now assuming that Ariticle 115 of the Limitation Act is attracted to this case, the next question is whether the acknowledgments of liability pleaded in the plaint are sufficient acknowledgments in law for the purpose of saving the claim from being barred by limitation.

The first letter relied on at the hearing is dated 20th April, 1949 (P. D. 9). This letter is addressed to M/S Talbot and Co. the agents of the plaintiffs, and is written by an officer of the Land Acquisition Collector's Department. A request is made in this letter to send bills in quadruplicate for the period from 29-6-46 to 18-8-47..................for submission before the application Committee. As regards the compensation for the subsequent period......... it is stated that the dues wouldbe paid upon Government's sanction being obtained. In the next letter dated the 15th June, 1949 (P. W. 7), Special Officer of the Finance Department (application committee records the fact that the pre-partition claim was awaiting scrutiny by the East Bengal (Audit) Wing of the Application Committee. The clear implication of these two letters is that if the application Committee decides that the sum claimed is payable by the Government of West Bengal the latter would pay it.

By their letter of the 27th February, 1950 the Collector's office requested the plaintiff to submit paid up bill of Municipal taxes before the Executive Engineer, Suburban Division, for the period 29-6-46 to 31-3-47 for his verification and for payment. These letters clearly show that the Collector's Office was acknowledging that there was claim for compensation outstanding for a certain period at a certain rate and that the Government was also liable to pay Municipal taxes as part of the compensation payable in respect of the lands'.

44. I have set out the above quotation from the judgment of Bose, J. just to show that the nature of acknowledgments in the letters relied on In that case was entirely different. Those letters cannot be compared with the letter of the 6th/7th January, 1954 in the instant case.

45. The Supreme Court dealing with acknowledgments under Section 19 has recently pointed out in S. F. Mazda v. Durga Prosad : [1962]1SCR140 that the effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document, and so unless words used in a given document are identical with words used in a document judicially .considered it would not serve any useful purpose to refer to Judicial precedents in the matter.

46. This was also the view of Maclean, C. J. in Jogeshwar Roy v. Rajnarain Mitter, ILR 31 Cal 195 at p. 200. Some assistance may be derived, however, from the facts of this case. In reply to a letter enclosing a bill for work done the defendant wrote: 'the bill glanced over is incorrect; large amounts have been wrongly introduced. I willfirst have the work examined, although I know that the whole of the work is not yet finished; then I would examine the estimate and after deducting what has to be deducted I will see what is due.'

47. Maclean, C. J. in construing this letter observes as follows:

'It will be noticed that in the letter in reply whereto the alleged acknowledgment was sent, the builder said that the works were finished, which is challenged by the defendant, who says that the whole of the work was not yet finished. Does the socalled acknowledgment, If paraphrased, amount to anything more than this : 'I have received your bill; I think it is incorrect; there are many errors in it; the work is not finished. I will look at the estimates and have the work examined, and I will see if anything is due;' or it might be put: 'I have received your bill. I do not think it is correct. I will look into the matter and see if anything is due.' I do not see how we can say that if a man says he will see if anything is due, that is an acknowledgment of liability that anything is due.'

48 Another case cited before me was the decision in Bhairo Prosad v. Gajadhar Prasad, 19 Cal WN 170: (AIR 1914 Cal 487). Here it was held that a letter which merely said that the writer after looking into the account would sign it was not an acknowledgment of liability on an account stated.

49. In the instant case the letter of the defendant No. 1 dated the 6th/7th January, 1954 is a reply to the letter of the plaintiff No. 2 dated the 29th December, 1953. The plaintiff No. 2 wrote about repeated demands made for payment of the claim, and was giving a further reminder. The plaintiff No. 2 wanted to know to what extent the claim had been considered by the defendant No. 1. The plaintiff No. 2 invited an acknowledgment of his letters and reminders and stated further that if nothing was heard from the defendant No. 1 the matter would be entrusted to legal advisers. In reply to this the defendant No. 1 states that the plaintiff No. 2 is aware that this is an early claim. In other words the claim has been made or the death of the assured has occurred, soon after the policy was taken out. The Insurance Society was not in a position to make payment as the premature death of the assured necessitated enquiries or investigations. Until those enquiries or investigations were completed the defendant No. 1 was not inclined to make any commitments. The defendant No. 1 specifically states that upon completion of the enquiry its decision would be communicated to the claimants.

50. In these circumstances, as in the case before Maclean, C. J., I am unable to come to the conclusion that the letter of the 6th/7th January, 1954 can be treated as an acknowledgment of liability within the meaning of Section 19, Limitation Act It appears further that Vinoobhai Shantilal Patel the addressee of this letter did not think that there was on this occasion or on any other occasion any acknowledgment of liability on the part of the defendant No. 1: vide questions 362 and 363.

51. In the case reported in : [1962]1SCR140 I have already referred to, a mortgaged propertywas put to sale by the first mortgagee; the mortgagor rushed to the second mortgagee to stop the sale and the latter stopped it by making certain payments. Subsequently, when it was again advertised for sale, the mortgagor wrote to the second mortgagee 'as you are interested why do you not take the whole. There is only about Rs. 70,000/- due to the mortgagee. A payment of Rs. 10,000/- will stop the sale.' It was held that the tenor of the letter showed that it was addressed by the mortgagor to the respondent No. 1 as puisne mortgagee, it reminded him of his interest as such mortgagee in the property which would be put up for sale by the first mortgagee, and appealed to him to assist the avoidance of sale, and thus acquire the whole of the first mortgagee's interest. As no other relationship existed between the parties at the date of this letter, and the only subsisting relationship was' that of puisne mortgagee and mortgagor, the letter acknowledged the existence of the said jural relationship, and amounted to a clear acknowledgment under Section 19 of the Limitation Act.

52. At page 1238 it is observed as follows: 'It is thus clear that acknowledgment as prescribed by Section 19 merely renews the debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character pf the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be expressed but must be made in circumstances and in words from which the Court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in Section 19..............'

53. In the case before me when the defendant No. 1 wrote to the plaintiff No. 2 that as this was an early claim the matter was under enquiry and on completion of the enquiry the decision of the defendant No. 1 would be communicated no jural relationship was admitted either expressly or by implication. I hold therefore that the present suit is barred by limitation.

ISSUE No. 2.

54. On behalf of the plaintiffs the succession certificate granted in their favour on the 13th March, 1961 marked Ex. 'C' has been produced. In view of this document Mr. B. N. Sen, learned, counsel for the defendants has not pressed this issue.

ISSUE No. 3.

55-59. (After discussion of evidence on this issue 'His Lordship answered the issue in the negative.)

ISSUE No. 4.

60-61. As I have indicated above four several grounds have been advanced in paragraph 4 of the written statement of the defendant No. 1 in support of the contention that the policy of Insurance is void. After conclusion of the oral evidence Mr. B.N. Sen, learned counsel for the defendants agreed with me that the evidence on record does not justify consideration of grounds (a) and (d). I have therefore to express my views on grounds (b) and (c). These grounds are that on the 24th January, 1947 the assured made a proposal to the United India Life Insurance Company Limited for the sum of Rs. 10,000/- which was accepted with an extra premium of Rs. 4/- per one thousand. And the assured gave untrue replies to questions Nos. 11(a) and 11(b) of the proposal forms signed by him. Questions 11(a) and 11(b) of the proposal form marked Ex. 4 were as follows:

'11(a).-- Was any proposal accepted with extra and/or lien or with any other modification?

11 (b) -- Was any proposal on your life postponed or not entertained or rejected or any lapsed policy not revived by this society or any other Company?'

Both the questions were answered by the assured in the negative. (After discussion of evidence His Lordship held that there was no evidence to prove that the answer to question No. 11(b) was incorrect but that the answer to question No. 11(a) was incorrect. The judgment then proceeds as follows:)

62. I have now to consider the effect of this incorrect answer to question No. 11(a) in Ex. 4. In London Assurance v. Mansel, (1879) 11 Ch. D. 363 in a proposal by M to an assurance office for an assurance on his life, in answer to the question, 'Has a proposal ever been made on your life at any other office or offices? If so, where? Was it accepted at the ordinary premium, or at an increased premium, or declined?' His answer was, 'Insured now in two offices for 16,000/- at ordinary rates. Policies effected last year.' The proposal was accepted, but the office having subsequently, ascertained that the life of M had been declined by several offices, it was held that, there had been a material concealment, and that the office was entitled to have the contract set aside. At the end of the questionnaire of the assurance office it was stated, 'That this proposal and declaration shall be the basis of the contract between the assured and the company'. In the instant case also the proposal form which was signed by Shantilal onthe 23rd November 1952, (Ex. 4) contains the following declaration:

'I, ...., do hereby declare that the above statements are true and correct and that these statements together with any statements made or to be made by me to the Medical Examiner or to the society shall form the basis of the contract between me and the Hindusthan Co-operative Insurance Society, Ltd., and that if any untrue statement be contained therein, all moneys which shallhave been paid on account of the contract shallbe forfeited and the assurance shall become null and void. . . . .'

63. In Kesava Seethamma v. Bombay Life Insurance Co. Ltd., AIR 1954 Mys 134 in answer to a query in the proposal form the insured had stated that he had been insured in another company at ordinary rates without any extra premium being charged or lien or condition being imposed. The insured had made a formal declaration at the end of the proposal form that particulars given by him in the proposal form were true and he agreed that the proposal and any declaration to be made before the Medical Examiner should be the basis of thecontract between him and the defendant company. The statement made in the proposal was found tobe false to the knowledge of the deceased insured. It was held that there was fraudulent suppression of material facts on the part of the insured whichvitiated the contract and that Section 45 of the Insurance Act could not help the plaintiff.

64. Mr. Tondon's submission on the case reported in AIR 1954 Mys. 134 was that on the finding that the deceased had made a false declaration in the proposal form knowing it to be false the Mysore High Court proceeded to consider whether the same vitiated the contract of insurance. In the instant case it has not been proved that the assured made a false declaration knowing it to be false. On the contrary the facts go to prove that the assured disclosed everything and, as such, if there was any omission, suppression or misstatement it was bythe agent.

65. I have already discussed above the evidence of Sudhir Kumar Roy Chowdhury who says that he got the answers to the printed questions in Ex. 4 from Shantilal Patel. He had correctly recorded those, answers and had explained to Shantilal what he had written out in the proposal form. The name of the United India Life Assurance Co. Ltd. was never supplied to him by Shantilal (Qs. 7 to 17). As I have no reason to reject thetestimony of Sudhir Kumar Roy Chowdhury it appears that the contents of the proposal form including the writings of Sudhir were read out and explained to the assured and he had adopted them to be correct. It was the duty of the assured to tell Sudhir that he had a policy issued by the United India Life Assurance Co. Ltd. and that thisproposal was not accepted on the usual terms and conditions. It was also his duty to disclose to Sudhir the nature of alterations that were made. 'I do not agree with Mr. Tondon that this case on the facts can be distinguished from the otherdecisions cited above.

66. The only other point argued before me is that Shantilal had disclosed all the facts to theagent of the defendant No. 1 and had placed before him the policy of the United India Life Assurance Co. Ltd. and the omission or suppression or misstatement was that of the agent, could the policy be now assailed by the defendant? Numerous decisions have been relied on by learned counsel for the parties. I do not propose to refer to all these decisions in this judgment. Upon consideration of the authorities cited I am inclined to agree with the observations in Macgillivray on Insurance Law, 4th Edition, Article 935. It is necessary to set out this article fully as the summaries of all the main decisions referred to by Mr. B. N. Sen and Mr. Tondon appear therein.

67. Article 935 in Macgillivray's Book is as follows:

'Where knowledge can be properly imputed to the Company the fact that there is warranty may become immaterial because, if the company issued the policy with knowledge that the facts were not as warranted, the breach of warranty would be waived.

'It was upon a mis-application of that principle that the case of Bawden v. London, Edinburgh and Glasgow Insurance Co. Ltd., (1892) 2 QB 534 was decided in favour of the assured. The assured, who was illiterate and almost unable to read or write beyond signing his name, had, at the time of his application for an accident policy, lost the sight of one eye. The proposal form was filled up by the Company's agent in accordance with the answers dictated to him by the assured and was signed by the assured. The proposal contained a declaration that the assured was in good health and had no physical infirmity and that the statements contained in the proposal would be the basis of the contract. In the margin opposite the declaration there was a note: 'If not strictly applicable any deviation must be given at the back'. The proposal contained no mention of the fact that the assured had only one eye. During the currency of the policy the assured met with an accident through which he lost the sight of his other eye. The Court held that he was entitled to receive the sum assured in the event of loss of sight of both eyes. The agent knew that the assured had only one eye and that he was negotiating with a one eyed man and in that sense his knowledge was the knowledge of the Company. His duty was to communicate the fact to the Company by inserting it in the proposal as a deviation from the declaration. The breach of warranty was waived by the issue of the policy with the agent's knowledge which must be imputed to the Company, that the assured had only one eye. That case was much criticised by the Court of Appeal in the case of Newsholme Brothers v. Road Transport & General Insurance Co. Ltd., (1929) 2 KB 356, and cannot now be regarded as a reliable authority. It is probably explicable only by reference to the fact that the assured was illiterate and could not read, and to the special duty which the agent owed to the Company in such circumstances to complete the proposal in accordance with the information given to him by the proposer and with such facts as were obvious to him, and therefore to inform the Company of the fact that the proposer had only one eye byinserting a statement to that effect on the back of the proposal form as a deviation from the absolute warranty that the proposer had no physical infirmity. The Mewsholme case came before the Court on a case stated by the arbitration to whom the dispute was referred. The claimants (appellants) made a proposal to the respondent Insurance Company for a motor car insurance on their motor bus. The proposal was signed by a partner in the appellant firm but the answers were filled in by an agent of the Company. The answers were declared to be true and to be the basis of the contract. A policy was issued and the premium paid. An accident having occurred whereby the motor bus was damaged and some passengers were injured, the appellants claims to be indemnified under the policy and the Company repudiated liability on the ground of mis-statement in the proposal and non-disclosure. The arbitrator found that the answers to three of the questions in the proposal form were untrue, that the agent was told the true facts and that it did not appear why he did not write them down correctly. He also found that the duties of the agent were to canvass for insurance and to obtain duly filled in and signed proposals and to receive premiums, but he had no authority to fill in the proposal form himself. Rowlatt, J., held that there was a breach of warranty and the Company was not liable to pay the claim. The Court of Appeal ............... affirmed the decision of Rowlatt, J. Scrutton, L. J. said, that on the findings of the arbitrator the agent must havewritten, down wrong answers, unintentionally because (a) he misunderstood what was said or (b) forgot or (c) misunderstood the questions; or else intentionally. On any of these suppositions he was acting as agent of the proposer and not of the Company. On the conflict between Bawden's case, (1892) 2 QB 534 and Biggar v. Rock Life Assurance Co., (1902) 1 KB 516 his Lordship observed that the latter was based on a decision of the Supreme Court of the United States (New York Life v. Fletcher (1886) 117 US 519), and had been preferred to the former in Scotland and Ireland and concluded that the principle of the Bawden's case was not applicable where the agent himself, at the request of the proposer, filled up the answers, in supposed conformity with the information supplied by the proposer: for if he knew that the answers were untrue he was committing a fraud on the company which prevented his knowledge being imputed to the Company and if he did not know the answers to be untrue there was no knowledge to be imputed. Greer, L. J. came to substantially the same conclusion and distinguished Ayrey v. British Legal and United Providend Assurance Co., (1918) 1 KB 136 on the ground that in that case the true facts were disclosed to the district manager in person, who had the requisite authority and who by receiving the premiums after notice of the irregularity waived the breach of warranty. 'In a case before the Industrial Commissioner for Northern Ireland a policy was effected by the assured on the life of his wife, and by the declaration in the proposal the assured warranted that his wife was in good health, whereas to his knowledge she was at the date of the proposal suffering from 'sleepy sickness'. The agent who negotiated the proposal knew that the file assured was in ill health, in an action to recover the insurance money on her death the Society pleaded breach of warranty and the assured replied that the warranty was waived because of the agent's knowledge of the true facts. The Commissioner disallowed the claim. He says that the doctrine that the knowledge of the agent is the knowledge of the Company and that the issue of a policy with that imputed knowledge constitutes a waiver of any breach of warranty that the facts are otherwise, may apply where the proposer is illiterate and free from any blame in allowing the misrepresentation to reach the agent's principal but does not apply to a case where the proposer is a man of at least average intelligence and is guilty at any rate of negligence in allowing a document under his hand containing a statement which, if he read it, he would know was both false and contrary to the agent's knowledge to be placed before the Insurers as the basis of his application for a policy'.

68. In the instant case there is no evidence that Sudhir Kumar Roy Chowdhury or any other agent of the defendant No. 1 who had visited Shantilal had any authority to fill in the proposal form himself. Moreover, it is admitted by the assured's son Vinoobhai who is the plaintiff No. 2 that the answers to the questions in the proposal form written down by the agent had been read out and explained to the assured and were accepted by assured. There is Ho doubt therefore that the agent while filling in the proposal form was acting as the agent of the proposer and not of the Company. Assuming therefore that Shantilal disclosed to the, agent that he had a policy of the United India Life Assurance Company Limited and his proposal to this Company was not accepted on the usual terms and the agent did not mention these facts in the proposal form of the defendant No. 1 marked Ex. 4 I do not see how the agent's knowledge could be imputed to the defendant No. 1. I may refer in support of this view also to the decision of the Mysore High Court in V. K. Srinivasa v. Premier Life and General Insurance Co. Ltd., AIR (1958) Mys 53.

69. I hold, therefore, that the policy in suit, is void on the ground that the assured gave an untrue reply to question No. 11(a) in the proposal form signed by him.

70. In the result this suit is dismissed with costs. Certified for two Counsel.


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