JUDGMENT
H. Suresh, J.
1. Armugam Chelliah Paul, the original plaintiff, took a life insurance policy on February 21, 1955, with the then existing National Insurance Co. Ltd., having its office at Calcutta. At the time, the plaintiff was having a business in Ceylon and a policy was taken in connection with his business. The sum assured under the said policy was Rs. 1,00,000 in Indian currency. The date of commencement of the policy was October 1, 1954, and the date of maturity was OCTOBER 1, 1974. On payment of the entire premium, the policy had matured into a claim on OCTOBER 1, 1954, and the date of maturity was October 1, 1974. On payment of the entire premium, the policy had matured into a claim on October 1, 1974.
Under the Life Insurance Corporation Act, 1956, the assets and liabilities of the said National Insurance Co. Ltd. were taken over by the Life Insurance Corporation of India currency in India. The defendants would not agree and raised several objections. It appears that, according to them, the claim under the policy was to be paid in Ceylon in Ceylonese currency and if the defendants were to pay the said amount in India that would violate the provisions of the Exchange Control Regulations of Ceylon. It appears that the plaintiff had another policy in respect of which there were similar contention s and that, therefore, he filed a suit being O. S. Suit No. 3896 of 1972 in the City Civil Court at Madras. However, in that suit a decree was passed and the defendants paid the sum assured in Indian currency. He, therefore, tried to persuade the defendants to pay the amount involved under this policy also. However, since they were not paying the amount, he was compelled to file this suit some time on or about September 29, 1977.He has claimed a sum of Rs. 30, 360 as bonus payable on the said sum of Rs. 1,00,000. In addition, he has also claimed interest at the rate of 18% per annum on the sum of Rs. 1,30,360 from October 1,1974, till the date of realization. Thus, the claim in the suit is for Rs. 2,00,000 with a prayer for interest at the rate of 18% per annum.
The defendants have filed their written statement an contend that the plaint disclosed no cause of action. They also contend that the amount was payable in Ceylonese currency and not otherwise. As far as the sum of Rs. 1,00,00 or Rs. 30,360 being the bonus payable is concerned, there is no dispute. The defendants, however, contend that they are not liable to pay any interest as claimed by the plaintiff. During the pendency of the suit, the plaintiff died on March 27, 1982. The legal representatives of the deceased-plaintiff have been brought on record, on or about June 24, 1982. Thereafter, the defendants offered to deposit the amount in the court but objected to the amount being given to the present plaintiff unless they obtain a succession certificate. Accordingly, an order for deposit of the said amount of Rs. 2,00,000 was made on September 11, 1985, and the amount was deposited. It appears that since then the said amount has been invested in a nationalized bank as per the directions. Though the defendants have not filed any supplementary written statment, since the defendants contend that the present plaintiffs are not entitled to claim this amount unless they obtain a suitable representation by way of a succession certificate from the competent court, I have permitted them to raise wuch a contention. Thus, the following issues have been raised and settled.
ISSUES
1. Whether the plain discloses no cause of action as alleged in para1 of the written statement ?
2. Whether the defendants are not bound to make payment of the claim under the policy in suit in India or in Indian currency as alleged in paras 3 and 4 of the written statement ?
3. Whether the present substituted plaintiffs are required to obtain a succession certificate under section 214 of the Indian Succession Act, before they claim a decree in suit ?
4. Whether the defendants are label to pay interest, if so at what rate and from what date ?
5. What decree ?
Issue Nos. 1 and 2 : Mr. Pagins made a statement that the Ceylonese Government, by their letter dated February 11, 1982, addressed to the Life Insurance Corporation of India, Madras, granted [remission to transfer the policy records to India. The advocate of the defendants received this intimation on October 16, 1983. In view of this communication Mr. Pagins rightly did not press the first two issues and they do not survive.
Issue No. 3 : The only question is whether the present plaintiffs can claim claim decree in suit without obtaining a succession certificate under section 214 of the Indian Succession Act.
Mr. Pagins submitted that the policy itself mentions the persons to whom the amount is payable viz.,”the assured’his executors, adminstrators, assigns or nominee”. In the present case, there is no nominee, there is no assignee nor is the assured alive today. He, therefore, submitted that in terms of the policy it can be paid only to the executors of the deceased or the administrators of the deceased. He submitted that the amount due under the said policy it can be paid only to the insured, is a debt within the meaning of sub-section (2) of section 214 of the Indian Succession Act. He further submitted that the said claim in respect of a debt payable to the estate of the deceased person fro payment of his debt to a person claiming on succession to be entitled to the effects of the deceased, no court could pass a decree against a debtor of a deceased person fro payment of his debt to a person claiming on succession to be entitled to the effects of the deceased person or to any part thereof unless such a person produces a prbate or letters tended that under section 214 sub-section (1)(b) it is not possible for the present plaintiffs to proceed with the suit unless they obtain a succession certificate as mentioned therein.
Mr. Pagnis relied on the case of Ashutosh Ghosh v. Pratap chandra Banerji [1937] ILR 1 Cal 433. wherein the headnote shows that where it is provides in a policy of insurance on the life of a Hindu, that the sum assured will becomes payable to him on a particular date or, in the event o this earlier death, to his executors or adminstrators, and the Hindu dies intestate before such date, the insurance company can refuse to pay the sum assured to his heirs untill they have obtained letters of admisntration, although such heirs are allowed by law to establich their right to the estate of the deceased Hindu without obtaining letters of adminstraion. However, if one goes through the facts of the case, it becomes clear that the question had arisen in an execution of a decree which provides that the heirs of one of the parties should apply with on month, for a succession certificate and if that party would have the right to apply for letters of administration of succession certificate and thereafter take steps for realization of the monies due on the policy. It appears, in respect of the said decree, neither of the parties applied for letters of adminstration or any succession certificate but they claimed the amount from the insurance company on the basis that there was no dispute that they were the heirs entitled to succeed to the estate of the assured. It was, in this context,observed that they could succeed to get the claim from the insurance company only”in terms of the policies which are contracts between themselves and the assured”. This was on the basis that the insurance company was entitled to stipulate that it would pay the money due under the policy only to the assured or to his executors or admininstrators or his assigns and that”limitation thereby imposed is good as against the person claiming title under the assured.” In my view, this authority may not be of any help to us inasmuch as the relations of the parties and the claim of the policies are all governed by the provisions of the Insurance Act, 1938, and cannot be considered as a mere matter of contract.
Mr. Pagins then cited the case of Raichand Dhanji v. Jivraj Bhavanji [1930] 33 Bom LR 1372. This is for the purpose of showing that the practice followed in the Bombay High Court according to which the court used to pass a decree in a suit by an exactor or legatee with a direction that the decree is not to be executed untill probate was granted or representation was taken out,is not correct. In my view, this has no application as far as the question involved in this suit is concerned. Similarly, the case of Sankaran Nair Ramakrishnan Nair v. Madhavi Amma Easwari Amma, AIR 1979 Ker 231, will have no application to the same proposition that the legal representative of the deceased- creditor has produce a succession certificate for obtaining a decree for realization of a debt due to the latter, and that this would apply even with regard to an execution petition filed by the deceased decree-holder and the same is to be prosecuted further on his death by his legal representative. This authority again does not deal with the nature of the claim arising under a policy particularly under the provisions of the Insurance Act,1938, and as to how the same should be treated when the same is claimed in a court of law. The other case cited by Mr. Pagins is the case of K. Laxminarayan v. V. Gopalaswnmi, . He relied on this authority for the purpose of showing that section 214 applies even if the suit was started by a creditor who died pending the suit, and his legal representatives were brought on record under Order 22 of the Civil Procedure Code . In this connection, the court referred to the case of Abdul Masjid v. Shamsherali Fakruddin, AIR 1940 Bom 285, wherin the Above dictum is found.
Mr. Pagins then drew my attention to the case of Mrs. Hem Nolini Judah v. Isolyne Sarojibashni Bose (Mrs.), , for the purpose of showing that the bar contemplated under section 214 includes even establishing a right of heir and legal representative unless he obtains a succession certificate or suitable representation. That was a case under section 213 of the Indian Succession Act. However, the contentions appear to be the same same.
As against this, Mr. Kotwal submitted that a claim under the insurance policy today cannot be considered as a simple debt or a debt within the meaning of section 214. He submitted that a claim under the policy is a statutory liablility and the amount has to be paid in terms of the said statute. In this connection, he relied on section 39 of sub-section (5) is as follows :
“39(5). Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policy-holder or his heirs or legal representatives or the holder of succession certificate, as the case may be.”
Mr, Kotwal submitted that this provision clearly sets out as to whom the money shuld be paid. Firstly, if the policy matures during the lifetime of the person whose life is insured, to the policy-holder. Secondly, if there is a nominee or nominees then to the nominee/s, and if the nominee/s die before the policy matures for payment, the amount shall be payable to the policy-holder or “his heirs or legal representatives or the holder of a succession certificate” as the case may be. He, therefore, submitted that it is not necessary that for the purpose of receiving the amount form the Insurance Corporation the heirs or legal representatives much obtain a succession certificate. If that was the language of the law, then, in that event, the statute itself would have provided that the amount secured by the policy should be paid to the heiress or legal representatives who obtain a succession certificate in that behalf.
It is true that,in the policy, which is still in the age-old form, it is stated that the amount is payable to “The assured, his executors, adminstratiors, assigns or nominee”. But, certainly if there is a statutory obligation that should to any contract as such. Therefore, if in the policy, the category of persons to whom the amount should be paid has been restrict, it is not open to the Insurance Corporation to say that they would only pay to the persons as are mentioned in the policy and not to anybody else, mentioned under the statute. In such a situation, the statute prevails over the contract. It is in this ease that the Calcutta case, Ashutosh Ghosh v. Praatap Chandra Banerji [1937] ILR 1 Cal 433, will not apply inasmuch as that case came to be decided much before the provisions of the Act came into force. What was considered by the Calcutta High Court was only the term of the contract whereas, here, we have a statute and that will have to be inerpretaed and construed.
Mr. Pagins laid emphasis on the expression “as the case may be” and submitted that it can be the assured, it can be the nominee, or it can be the heirs and legal representatives of the assured, but on their obtaining a succession certificate. I am afraid, that that cannot be th correct interpretation of the said provision. As far as assignees are concerned, section 38 mainly deals with their rights and sets out as to how the amount should be paid to them. Similarly with regard to nomination there are various provisions in section 39. In the case of a nominee, no further representation is required. The nomination itself is sufficient. But it is well-settled that the nominee does not take the amount for himself. He takes it for and on behalf of the heirs or legal representatives of the deceased person whose life is insurer. The corporation is not concerned how the nominee, in turn disburses the amount amongst the real benefificiaries . But, if there is nominee, and if all the heirs or legal repressentatives come for and claim the amount, I cannot understand how the corporation can insist on any representation to be had. It is true that the object of sub-section (5) of section 39 is to see that the corporation gets a proper discharge. The statute has taken car of all the categories of persons who are entitled to claim this amount. It does not mean that even though there is nodispute as to who are the heirs and legal representatives, they must still obtain a succession certificate to et a propels discharge as far as the corporation is concern. It is only where there is a dispute amongst the heirs and legal representatives, the corporation would be justified in insisting on their, or any of them, getting a suitable representation, and pay the amount to such a person.
Mr. Pagnis emphasised that under section 214(2) the word “debt”as defined would include every amount of debt making thereby any amount due and payble by one to the other. He submitted that it could be said, in the present case, since the corporation has not paid the amount to the policy-holder during his lifetime, that the amount could be considered as a debt due and payable by the corporation to the estate of the deceased. He, therefore, submitted that in that sense it becomes necessary to have a succession certificate.
Precisely to meet this contention, Mr. Kotwal drew my attention to the cases of Smt. Asha Govel v. LIC of Indian, decided by Kantharia J. In that the learned judge has expressly held that the Life Insuancr Corporation which is a statutory corporation and which carried on the business of insurance in the public interest, is an “authority ” or an “insturmentality” of the State within the meaning of article 12 of the Constitution. The business activities of the Life Insuarnce Corporation are not of commercial nature but are for the welfare and benefit of the society. It is in this sense he observed, that a claim arising under a policy can be the subject-matter of a writ petition under article 226 of the Constitution of India, and the liability to pay is a statutory liability. It is true that in that case what was required to be considered was the scope of section 45 of the Insuance Act and as to whether the Life Insurance Corporation could repudiate the policy. I am not concerned with that part of the case. But it is clear from this authority that the obligation is a statutory obligation and the relevant portion in that behalf is an follows (at page 716 of 65 Comp Cas) :
“It is true that the relationship of insurer and insured is created under a contract of insurance, but the obligation arising out of such a contract are to be discharged by the insurer under a statute, viz., section 45 of the Insurance Act. It is by and under a sanction of this provision of law that the insurer has to discharge its legal obligation o the happening of a certain contingency mentioned in the contract. Hence, the conclusion is inevitable that under a policy of life insurance, the liability which Life Insurance Corporation incur is a statutory liability”.
I am in respectful agreement with these observations made in this case.
Mr. kotwal further submittted that a Division Bench of the Karnataka High Court in the case of LIC of India v. U. K. Vasappa [1989] 66 Comp Cas 375 has applied the ratio of the above case and has concurred with the said view. Therefore, if the claim is a statutory liability arising under the Act and if there is no dispute as to the heirs and legal representatives of the policy-holder, I cannot understand as to how the corporation can even insist that the party must necessarily obtain a succession certificate.
I may further observe that to obtain succession certificate is not an easy thing these days. It means money and considerable delay, the only beneficiary very often being the legal fraternity. These days when large number of peopele isure their lives, and participatory when many of them belong to a class, not so affluent,m insistnece on such ana otherwise unnecessary representation would be an additional burden which they may find it difficult to bear. In answer, Mr. Pagnis stated that in all such cases where the amount is not large, the corporation gives the amount without a secession certificate. This is strange ! It means that the corporation can pick and choose and there is no principle in what it does. While a policy covers the rosl pf deatj, very often that is the only solatium for the family. The corportion need not be so very apologetic when it can legistimatley pay to the heirs and legal representatives without any succession certificat, excepting, of course, where there is controversy as to representation of the estate of the deceased.
I am also inclined to think that it is possible for us to take a different view wiht regardto the scope of order 22 of Civil Procedure Code. I cannot understand as to why in a suit filed by the deceased- plaintiff if the heirs have to be substituted, the heir should obtain a succession certificate as such. It is true that I am bound by th earlier decision of this High Court and, therefore, I do not propose to decide this aspect as such. But I want to make it clear that when an heir is brought on record he is only substituted in the policy of the deceased- plaintiff. The deceased-plaintiff filed this suit for a certain relief and the substituted heirs are given a chance to prosecute the same cause of action and to get the relief as claimed by him. There is no question of the heirs or legal representatives claiming separate reliefs. in all such cases the subsititued heir has no separate cause of action. In such cases the substituted heir has no seperate causes of action. In such circumstances, to my mind, section 214 will have no applicaiton whatsoever, It is by virtue of th e enabling provision provided under Order 22, Civil Procedure Code that the heirs comes on record and prosectues the suit further. This cannot be considered as if the substituted heir is claiming a debt on the basis of a separate cause of action for which a succession certificate may be required. If one looks at the matter from this angle, it becomes clear, as far as this suit is concerned, the contention of the defendants as raised at present will be without any justification whatsoever.
Issue No. 4 : Mr. Pagnis submitted that there is no provision for payment of interest either in the policy or under the statute and, therefore ,there should be no decree for payment of interest. He also submitted that the claim of the plaintiff to the extent it relates to the claim of intereest should not be allowed. He also submitted that even if interest is to be granted, it cannot be granted at a such an exorbitant rate as 18% per annum as claimed by the plaintiff.
It is true that the policy is silent, so also the statue. But i cannot forget the fact that the amount which should have come to the plaintiff remained with the defendant-corporation. By its very nature, the corporation does business and, therefore, this money of course, as it remained with the defendants, has enured to the benefit of the corporation. This amount ought to have come to the policy-holder much before his death. In any case by February 11, 1982, the defendants had come to know that there was no objection whatsoever for payment of this amount to the deceased. I wish he had received this amounts before his death, and he would have had a peaceful death. It is unfortunate that dispute this communication from the Ceylonese Government, the corporation took nearly three years to communicate this decision to their own advocates and they took nearly another five months for bringing the amount to the court. Thereafter again the amount could not go to the plaintiff inasmuch as that the corporation thought that the succession certificate was a must and that is how the amount remained in this court. Mr. Pagnis submitted that on a number of occasions the matter was adjourned at the instance of the plaintiff. But the plaintiffs were wondering whether they should apply should apply for a succession certificate and they needed advice. Thereafter, in fact, the plaintiffs also applied for the succession certificate. Therefore, I cannot say as to who is responsible for this delay in the matter as such. But I think on principle that since the money due to the plaintiff remained with the defendants, some interest will have to be paid. Ordinarily, in a matter of this type I would consider interest at the rate of 12% as a reasonable rate of interest from the date when the amount becomes due till it is paid. However, in the present case, interest at the rate of 6% from September 1, 1977, till October, 1985, when the amount was deposited in court wouldbe a reasonable amount of interest which the plaintiffs should get. For the subsequent period, the defendants need not pay any interest inasmuch as the amount has been invested by the Prothonotary and Senior Master, and the plaintiffs should get all such get all such interest as accrued thereon.I, therefore, answer th issues as follows :
Issues Nos. 1 and 2 : Not pressed and, therefore, answered in the negative.
Issue No. 3 : Present plaintiffs are not required to obtain a succession certificate and there are entitle to claim decree in the suit.
Issue No. 4 : The defendant are liable to pay interest at the rate of 6% per annum from September 1, 1977, till October 1, 1985. Further interest as accrued on investment by the Prothonotary and Senior Master.
Issue No. 5 : See below :
ORDER
Decree as against the defendants in the sum of Rs. 1,30,360 together with interest thereon at the rate of 6% per annum from September 1, 1977, till October 1, 1985.
The plaintiffs are also entitled to costs of theses suite, including professional costs, all quantified at Rs. 6,000.
The plaintiffs are also entitled tot he subsequent interest as accrued on Rs. 2,00,000 invested by the Prothonotary and Senior Master.
Mr. Oak has produced before me a certificate issued by the Prothonotary and Senior Master dated October 6, 1989, whichi shows th total amount at Rs. 2,60,000.
At the request of Mr, Oak, I give a further direction that the prothodnotary and Senior Master recall the fixed deposit amount together with interest accrued thereon and pay the said sum of Rs. 2, 60,000 together with such interest as might have been accrued thereon from October 6, 1989, till payment to the plaintiffs.
The Phothonotary and Senior master to act on a certified copy of the minutes of the order without waiting for the decree to be drawn up and sealed.
At the request of Mr. Pagins, the order with regard topayment has been stayed for period of three weeks from today.