{"id":31743,"date":"1989-09-08T00:00:00","date_gmt":"1989-09-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/life-insurance-corporation-of-vs-gangadhar-vishwanath-ranade-on-8-september-1989"},"modified":"2015-11-24T21:58:07","modified_gmt":"2015-11-24T16:28:07","slug":"life-insurance-corporation-of-vs-gangadhar-vishwanath-ranade-on-8-september-1989","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/life-insurance-corporation-of-vs-gangadhar-vishwanath-ranade-on-8-september-1989","title":{"rendered":"Life Insurance Corporation Of … vs Gangadhar Vishwanath Ranade … on 8 September, 1989"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Life Insurance Corporation Of … vs Gangadhar Vishwanath Ranade … on 8 September, 1989<\/div>\n
Equivalent citations: 1990 AIR 185, \t\t 1989 SCR Supl. (1) 97<\/div>\n
Author: J S Verma<\/div>\n
Bench: Verma, Jagdish Saran (J)<\/div>\n
           PETITIONER:\nLIFE INSURANCE CORPORATION OF INDIA & ANR.\n\n\tVs.\n\nRESPONDENT:\nGANGADHAR VISHWANATH RANADE (DEAD) BY LRS.\n\nDATE OF JUDGMENT08\/09\/1989\n\nBENCH:\nVERMA, JAGDISH SARAN (J)\nBENCH:\nVERMA, JAGDISH SARAN (J)\nOJHA, N.D. (J)\n\nCITATION:\n 1990 AIR  185\t\t  1989 SCR  Supl. (1)  97\n 1989 SCC  (4) 297\t  JT 1989 (3)\t637\n 1989 SCALE  (2)499\n\n\nACT:\n    Income  Tax\t Act,  1961--Sections 226(3)  (vi)  and\t 281\n--Assignment of policies by insurer  Assignment accepted  by\nLIC--ITO  of opinion that transfer of policy with intent  to\ndefraud Revenue--Inordinate delay by LIC in making statement\non  oath  before ITO--Liability of LIC to  pay\tinterest  to\nassignee  of  policies\tfor delay  in  fulfilling  statutory\nobligation.\n\n\n\nHEADNOTE:\n    One\t Sh. G.V. Ranade took four policies on his own\tlife\nfrom the LIC during the period. 1958 to 1960. In April\t1969\nG.V.  Ranade assigned absolutely all these four policies  in\nfavour of his wife Smt. Kamalabai G. Ranade and the  assign-\nment  was  duly registered by the LIC. These  policies\twere\npaid  up  and the date of maturity of  these  were  14.9.72,\n28.12.73, 9.11.75 and 21.12.75.\n    There  were some income tax dues against the  said\tG.V.\nRanade\tfor recovery of which income tax officer  'commenced\nrecovery  proceedings.\tThe Income Tax\tOfficer\t on  27.1.71\nissued a notice under Section 226(3) of the Income Tax\tAct,\n1961  to the Manager of the LIC at Nagpur directing the\t LIC\nto  pay to I.T.O. forthwith any amount due from the  LIC  to\nor, held by the LIC for or on account of the said Ranade  to\nmeet  the amount due from Ranade as arrears of\tincome\ttax.\nThe  Divisional Manager of the LIC at Nagpur intimated\tthis\nfact  of receipt of the notice under section 226(3)  of\t the\nIncome\tTax Act 1961 to the assignee of these policies\tSmt.\nKamalabai  G. Ranade, suggesting that she take steps to\t get\nthe notice vacated in order to safeguard her interest in the\npolicies. By further correspondence the ITO required the LIC\nto  deposit  the amount of Rs.3415.70  payable\tagainst\t the\nfirst  policy  which was to mature on 14.9.72  and  the\t LIC\ninformed the assignee that the moneys due under the policies\nwill be paid to her only after her getting the notice served\non LIC by the ITO vacated.\n    On 5.9.72 Smt. kamalabai G. Ranade flied a Writ Petition\nin  the\t High  Court of Bombay impleading LIC  and  the\t ITO\nclaiming  several reliefs including a direction to  the\t LIC\nfor payment of Rs.3415.70 and also to make a statement\tthat\nno part of the said amount is due to G.V.\n98\nRanade\tnor does the LIC hold any part of the sum for or  on\naccount\t of  Ranade.  This Writ Petition  was  dismissed  in\nlimine. Smt. Kamalabai G. Ranade filed an appeal by  special\nleave in this court and this court disposed of the appeal on\nthe  counsel  for  the LIC stating that he  would  file\t the\nnecessary statement on oath in accordance with S. 226(3)(vi)\nof the Income Tax Act, 1961 stating that no sum of money  is\ndue  to the Assessee, insured person, before the ITO  except\none  policy in respect of which the LIC having already\tpaid\nthe money to ITO no statement need be made and\tconsequently\nno  order  can\tbe made u\/s 226(3)(vi) and  the\t appeal\t was\ndisposed of accordingly.\n    It\tappears\t that the ITO did not revoke  the  order  of\nattachment inspite of the LIC making the requisite statement\non  oath under section 226(3)(vi) of the Income Tax  Act  on\n5.12.75. This led to the filing of another Writ Petition  in\nthe Bombay High Court by Smt. Kamalabai praying for a direc-\ntion  to the ITO to revoke all notices issued under  section\n226(3)\tto the LIC and to the LIC to pay her the amount\t due\nagainst the policies which had matured. On 4.4.1977  counsel\nfor  the  ITO produced before the High Court a copy  of\t the\norder dated 1.4.77 passed by the ITO withdrawing the  notice\nu\/s  226(3) of the Income Tax Act and the Writ Petition\t was\ndismissed as withdrawn.\n    Smt.  Kamalabai  then sent notice to the  LIC  demanding\npayment\t of the total amount due against the  four  policies\ntogether with interest @ 15% since the delay in payment\t had\nbeen  occasioned  by the default of the LIC.  LIC  made\t the\npayment\t of these amounts to her but disputed its  liability\nto  pay\t interest thereon for the period subsequent  to\t the\ndate of maturity on the ground that the delay was occasioned\nby  the ITOs notice u\/s 226(3). This dispute  regarding\t the\nLIC's  liability to pay interest led to the filing  of\tWrit\nPetition  No. 1248 of 1977 decided on January 7, 1981  which\ngives rise to this appeal.\n     The impugned judgment holds that the last two  policies\nhaving matured on 9.11.75 and 21.12.75 a few days before  or\nafter  5.12.75 when the statement on oath u\/s 226(3) of\t the\nIncome Tax Act was made by the LIC did not qualify for award\nof  such interest which was payable in respect of the  first\ntwo which had matured earlier on 14.9.72 and 28.12.73.\tThis\nview  of  the High Court on which the award of\tinterest  is\nbased is assailed on behalf of the appellant.\n     The  dispute  in this appeal is only  about  the  LIC's\nliability  for payment of interest on the  principal  amount\nfrom  the  date\t of maturity of the first  two\tpolicies  to\n31.12.75  and  the rate of 15% p.a. which is alleged  to  be\nexcessive.\n99\nDismissing the appeal with costs this Court,\n    HELD: In the instant case, admittedly assignment of\t the\npolicies  was made by the insured G.V. Ranade and  the\tsame\nwas  duly accepted and registered by the LIC in April  1969.\nIt  is, therefore, obvious that the LIC was bound to act  on\nthat assignment in favour of Smt. Kamalabai G. Ranade unless\nthe assignment was held to be invalid by a competent author-\nity on a proper proceeding taken for this purpose [111B]\n    Mere  issuance  of notice under section  226(3)  of\t the\nIncome Tax Act, 1961 did not have the effect of invalidating\nthe assignment nor did the casual mention of section 281  of\nthe  Income  Tax Act, 1961 by the ITO in  his  letter  dated\n28.8.72 result in this consequence. Any further step towards\nformation  of  the final opinion by the ITO could  be  taken\nonly after the LIC had made the requisite statement on\toath\nunder section 226(3)(vi) of the Income Tax Act, 1961 on\t the\nbasis of the registered assignment of policies. [111C-D]\n    The\t question of revocation of the notice  under  clause\n(vii)  of  subsection (3) of Section 226 of the\t Income\t Tax\nAct, 1961 arose in the present case only after the LIC\tmade\nthe requisite statement on oath under section 226(3)(vi)  of\nthe Act in view of its consistent stand throughout that\t the\nmoneys\tdue  under the policies were held by it for  and  on\nbehalf of the assignee and not the defaulter. Mere  informa-\ntion  of the assignment to the ITO and keeping the  assignee\ninformed of the ITO's action did not amount to discharge  of\nthe statutory obligation under section 226(3)(vi) of the Act\nby the LIC. Sub-section (3) of Section 226 of the Income Tax\nAct,  1961 clearly shows that on a notice  thereunder  being\nissued\tby  the ITO to the LIC in the present case,  it\t was\nincumbent on the LIC to make the requisite statement on oath\nunder clause (vi) thereof raising an objection on the  basis\nof  the\t registered assignment. It was then for the  ITO  to\nproceed\t further and form his final opinion and\t revoke\t the\nnotice under clause (vii). [112D-E; 113G-H]\n    The inordinate delay in making the statement on oath  by\nthe LIC under section 226(3)(vi) of the Income Tax Act, 1961\nwas  the  result of misconstruction of\tthe  provisions\t and\nmisappreciation of its liability thereunder. [114B]\n    Obviously  the assignee of the policies who\t had  become\nentitled  to receive the amount due thereunder on the  dates\nof  their  maturity must be compensated by the LIC  for\t its\nfailure to perform its statutory\n100\nobligation  under section 226(3)(vi) of the Income Tax\tAct,\n1961 within a reasonable time. Performance of this statutory\nobligation by the LIC in the present case being after  inor-\ndinate delay award of interest to the assignee of the  poli-\ncies  to  whom the payment thereunder had to  be  made\teven\naccording  to  the stand of the LIC is,\t therefore,  clearly\njustified. [114C-D]\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1979  of
\n1981.\n<\/p>\n
    From  the Judgment and Order dated 7.1.81 of the  Bombay
\nHigh Court in Civil Writ Petition No. 1248 of 1977.
\nP.P.  Rao,  Kailash Vasdev and S. Murlidhar for\t the  Appel-
\nlants.\n<\/p>\n
A.K. Sanghi for the Respondent.\n<\/p>\n
The Judgment of the Court was delivered by
\n    VERMA,  J. This appeal by special leave is\tagainst\t the
\njudgment dated January 7, 1981 in Writ Petition No. 1248  of
\n1977  of  the  Nagput Bench of the Bombay  High\t Court.\t The
\nspecial\t leave\thas been confined only to  the\tquestion  of
\nliability  of the appellant, Life Insurance Corporation,  to
\npay interest for the period after date of maturity of insur-
\nance policy, in case of delay in payment. Accordingly,\tthis
\nis the only question arising for decision in this appeal.
\n    The\t writ petition in the High Court was filed  by\tSmt.
\nKamalabai G. Ranade, the wife of Gangadhar Vishwanath Ranade
\nof  Nagput. The said G.V. Ranade took four policies  on\t his
\nown  life  from\t the Life  Insurance  Corporation  of  India
\n(hereinafter  referred\tto as “the LIC”) during\t the  period
\n1958  to 1960. These policies were paid up and the  particu-
\nlars  thereof including their paid up value payable  on\t the
\ndate of maturity are as under:\n<\/p>\n
  Policy\t Sum\t      Paid up\t  Date of\n  Number\t Assured      Value\t  Maturity.\n  19620636\t 10,000.00    3415.70\t  14.9.72\n  13932229\t 3,500.00     1118.65\t  28.12.73\n  13969 144\t 5,000.00     892.20\t  9.11.75\n  13972300\t 2,000.00     557.70\t  21.12.75\n<\/pre>\n
In April 1969 G.V. Ranade assigned absolutely all these four
\n101<\/span>
\ninsurance  policies in favour of his wife Smt. Kamalabai  G.
\nRanade and the assignment so madewas duly registered by\t the
\nLIC as under:\n<\/p>\n
\t       “In registering this Assignment the  Corpora-
\n\t      tion makes no admission as to its validity.
\n\t\t    Nagpur\t\t sd\/-\n<\/p><\/blockquote>\n
\t\t    Dt. 8.4.69\t       P. Divisional  Manag-\n\t      er\"\n<\/pre>\n
    It appears that there were some income tax dues  against
\nthe said G.V. Ranade for recovery of which Income-tax  Offi-\n<\/p><\/blockquote>\n
cer had commenced recovery proceedings. Prior to the date of
\nmaturity  of  these  policies  the  Income-tax\tOfficer\t  on
\n27.1.1971 issued a notice under section 226(3) of the Income
\nTax Act, 1961 to the Manager of the LIC at Nagpur  directing
\nthe LIC to pay to the ITO forthwith any amount due from\t the
\nLIC  to\t or, held by the LIC for or on account of  the\tsaid
\nG.V.  Ranadeto meet the amount due from G.V. Ranade  as\t ar-
\nrears  of  income  tax. This notice  further  mentioned\t the
\nconsequences  envisaged by section 226(3) of the Income\t Tax
\nAct,  1961.  The  Divisional Manager of the  LIC  at  Nagput
\nintimated  the fact of receipt of the notice  under  section
\n226(3) of the Income Tax Act, 1961 to the assignee of  these
\npolicies, Smt. Kamalabai G. Ranade, suggesting that she take
\nsteps  to get the notice vacated in order to  safeguard\t her
\ninterest in the policies. The further correspondence in this
\nbehalf between Income-tax Officer, the LIC and the  assignee
\nshows that the Income-tax Officer required the LIC to depos-
\nit the amount of Rs.3415.70 payable against the first policy
\nwhich was to mature on 14.9.72 and the LIC kept the assignee
\ninformed  of  this demand by the ITO adding  in\t its  letter
\ndated  27.7.1972 to the assignee that the moneys  due  under
\nthe  policies will be paid to her “only after  your  getting
\nthe notice served on us by the ITO vacated”. This was  reit-
\nerated by the LIC in its letter dated 11.8.72 to the assign-
\nee.\n<\/p>\n
    The\t assignee  sent a notice dated 21.8.72\tto  the\t LIC
\nreiterating  that the policies had been absolutely  assigned
\nto  her\t as  admitted by the LIC as a result  of  which\t the
\namount\tpayable against the same had to be paid only to\t her
\nsince  the amount was not held by the LIC for or on  account
\nof G.V. Ranade. The LIC was also required by this notice  to
\ntake the necessary steps for revocation of the ITO’s  notice
\nand to make the payment due in respect of all these policies
\nto  the assignee. The assignee sent a similar notice to\t the
\nITO  asserting her claim as the assignee to get\t the  moneys
\npayable\t under\tthe  policies. The ITO\tin  a  letter  dated
\n28.7.72 addressed to the LIC had added that the alleged
\n102<\/span>
\ntransfer  of  policies by G.V. Ranade to his wife  are\tvoid
\nwith an intention to defraud the revenue and the case  falls
\nwithin\tthe mischief of section 281 of the Income  Tax\tAct,
\n1961;  and the LIC was requested to withhold any payment  to
\nSmt. Kamalabai G. Ranade till further communication from the
\nITO.\n<\/p>\n
    On 5.9.1972 Smt. Kamalubai G. Ranade filed a writ  peti-
\ntion, (S.C.A. No. 861 of 1972), in the High Court of  Bombay
\nimpleading the LIC and the ITO as respondents therein claim-
\ning several reliefs which are mentioned at pages 33 to 35 of
\nthe paper-book. The reliefs included a direction to the\t LIC
\nfor payment of Rs.3415.70 due on 14.9.72 on maturity of\t the
\nfirst policy to Smt. Kamalabai G. Ranade and also to make  a
\nstatement  on oath as contemplated by section 226(3) of\t the
\nIncome Tax Act, 1961 that no part of the said amount is\t due
\nto G.V. Ranade nor does the LIC hold any part of the sum for
\nor  on account of G.V. Ranade. This writ petition  was\tdis-
\nmissed in limine by the High Court on 14.9.72. The amount of
\nRs.3415.70 payable against the first policy which matured on
\n14.9.72\t was paid by the LIC to the ITO. Smt.  Kamalabai  G.
\nRanade\tfiled  an appeal (C.A. No. 373.of 1973)\t by  special
\nleave  in this Court against dismissal of her writ  petition
\nby  the\t Bombay High Court. That appeal was disposed  of  by
\nthis Court on October 6, 1975 as under:\n<\/p>\n
\t\t\t“On  behalf  of the  Life  Insurance
\n\t      Corporation of India Mr. Rathi stated that  he
\n\t      would file the necessary statement on oath  in
\n\t      accordance with sub-cl. (vi) of CI. (3) of  S.
\n\t      226 of the Income Tax Act, 1961 and file it in
\n\t      Court  within  two months from  today  stating
\n\t      that  no sum of money is due to the  Assessee,
\n\t      insured person, before the Incometax  Officer.
\n\t      It  will thereafter be open to the  Income-tax
\n\t      Officer  to take such other proceedings as  he
\n\t      might  consider necessary in order to  realise
\n\t      the  amounts  due from the  assessee.  It\t is,
\n\t      however, stated that in respect of one policy,
\n\t      the  Life\t Insurance Corporation\thas  already
\n\t      paid  the money to the Income-tax Officer.  In
\n\t      respect  of it no statement need be  made\t and
\n\t      consequently  no\torder can be made  under  S.
\n\t      226(3)(vi). The appeal is disposed of  accord-
\n\t      ingly. There will be no order as to costs”.<\/p><\/blockquote>\n
    In\tpursuance of the above order of this Court, the\t LIC
\nfiled  on December 5, 1975 the requisite statement  on\toath
\nunder  section\t226(3)(vi) of the Income Tax  Act,  L961  in
\nrespect of the remaining three policies.\n<\/p>\n
103<\/span><\/p>\n
    It\tappears\t that the ITO did not revoke  the  order  of
\nattachment  in spite of the LIC making the requisite  state-
\nment  on  oath under section 226(3)(vi) of Income  Tax\tAct,
\n1961  on 5.12.75. This led to another writ petition  (S.C.A.
\n302 of 1977) filed in the Bombay High Court by Smt.  Kamala-
\nbai  G. Ranade praying for a direction to the ITO to  revoke
\nall  notices issued under section 226(3) to the LIC  and  to
\nthe  LIC to pay to her the amount due against  the  policies
\nwhich  had matured. On 4.4.71 counsel for the  ITO  produced
\nbefore\tthe  High  Court a copy of the\torder  dated  1.4.77
\npassed\tby  the Income-tax Officer  withdrawing\t the  notice
\nunder  section 226(3) of the Income Tax Act, 196 1  and\t the
\nwrit petition was dismissed as withdrawn.
\n    Smt. Kamalabai G. Ranade then promptly sent a notice  to
\nthe  LIC demanding payment of the total amount\tdue  against
\nthese  four policies together with interest @ 15% since\t the
\ndelay  in payment had been occasioned by the default of\t the
\nLIC.  Admittedly  the  LIC had made  the  payment  of  these
\namounts to Smt. Kamalabai G. Ranade in these circumstances.
\nThe  L.I.C. has not disputed at any stage its  liability  to
\npay to Smt. Kamalabai G. Ranade the amounts due under  these
\npolicies.  However,  it has disputed its  liability  to\t pay
\ninterest  thereon for any period after the date of  maturity
\non the ground that the delay was Occasioned by the  I.T.O.’s
\nnotice under section 226(3). On the other hand, Smt. Kamala-
\nbai G. Ranade claimed that the L.I.C. nad wrongfully refused
\nto   make  the\tstatement  as  contemplated  under   section
\n226(3)(vi) of the Income Tax Act, 1961 resulting in delay in
\npayment\t of the moneys after maturity of the policies.\tThis
\ndispute regarding the L.I.C.’s liability to pay interest led
\nto the filing of the Writ Petition No. 1248 of 1977  decided
\non January 7, 1981 which gives rise to this appeal.
\n    The\t impugned judgment of the Bombay High Court in\tWrit
\nPetition  No. 1248 of 1977 holds that the last two  policies
\nhaving\tmatured\t on 9.11. 1975 and 21.12.1975, i.e.,  a\t few
\ndays  before  or after 5.12.75 when the\t statement  on\toath
\nunder section 226(3) of the Income Tax Act, 1961 was made by
\nthe L.I.C. did not qualify for award of such interest  which
\nwas  payable in respect of the first two which\thad  matured
\nmuch  earlier on 14.9.72 and 28.12.73. For the\tperiod\tcom-
\nmencing from the date of maturity of the policy ending\twith
\nperformance of the L.I.C.’s obligation to make the statement
\nunder  section\t226(3)(vi) of the Income Tax  Act,  1961  on
\n5.12.75\t the L.I.C. has been held liable to pay interest  on
\nthe basis of its failure to perform
\n104<\/span>
\nits  statutory\tobligation. This view of the High  Court  on
\nwhich the award of interest is based, is assailed on  behalf
\nof the appellant.\n<\/p>\n
    The surviving dispute in this appeal is now only  .about
\nthe L.I.C.’s liability for payment of interest on the  prin-
\ncipal  amount  from the date of maturity of  the  first\t two
\npolicies  to 31.12.75, and the rate of 15 % per annum  which
\nis alleged to be excessive.\n<\/p>\n
    Broadly stated, the contention of the appellant is\tthat
\nthe  appellant\twas not liable to pay any interest  for\t the
\nperiod\tduring which it was restrained from making the\tpay-
\nment on account of the I.T.O.’s notice under section  226(3)
\nof the Income tax Act, 1961 and the I.T.O. also adding\tthat
\nthe  matter fell within the ambit of S. 281 of the  Act.  On
\nthis basis it was urged on behalf of the appellant that\t the
\naward of interest on the first two policies from the date of
\ntheir  maturity\t till 31.12.1975 (statement on oath  by\t the
\nL.I.C. being made only. on 5.12.1975) is contrary to law.
\n    To support the main contention of the appellant, that it
\nis  not\t liable for payment of any interest for\t any  period
\nafter  maturity\t of  the policies, Shri\t P.P.  Rao,  learned
\ncounsel\t for the appellant advanced several  arguments.\t His
\nfirst  argument is that the Income-tax Officer was a  neces-
\nsary  party in the writ petition giving rise to this  appeal
\nand in his absence no effective adjudication of this dispute
\ncan be made. The second argument is that the High Court\t has
\nmisconstrued section 226(3) of the Income Tax Act, 1961\t and
\nthereby wrongly fastened the liability for payment of inter-
\nest  upto 31.12.75 on the appellant. The third\targument  is
\nthat  the principle of res judicata or atleast\tconstructive
\nres  judicata,\tas a result of the earlier  writ  petitions,
\nbars  the claim for payment of interest in this\t writ  peti-
\ntion. The fourth argument is that the writ petition  (S.C.A.
\nNo.  302  of 1977) being withdrawn  unconditionally  without
\nliberty\t to file a fresh petition, this writ petition  (W.P.
\nNo. 1248 of 1977) is not maintainable. The fifth argument is
\nthat the rate of 15% p.a. at which interest has been awarded
\nis  excessive. The sixth and the last argument is  that\t the
\nappellant  has\tbeen  required to  make\t double\t payment  of
\nRs.3415.70 due against the policy which matured on 14.9.1972
\ninasmuch  as  the L.I.C. had already deposited\tthat  amount
\nearlier\t in September 1972 with the I.T.O. in  pursuance  to
\nthe I.T.O. ‘s demand.\n<\/p>\n
    In\treply,\tShri A.K. Sanghi, learned  counsel  for\t the
\nrespondent  contended  that  the liability  for\t payment  of
\ninterest  has been correctly fastened on the  appellant\t be-
\ncause of its failure to discharge the statu-\n<\/p>\n
105<\/span><\/p>\n
tory  obligation of making the requisite statement  on\toath
\nunder  section 226(3)(vi) of the Income Tax Act,  1961\ttill
\n5.12.1975.  He\targued that the L.I.C. having  accepted\t and
\nregistered the absolute assignment made by the insured\tG.V.
\nRanade\tin favour of his wife Smt. Kamalabai G.\t Ranade,  it
\nwas  the duty of the L.I.C. to promptly make  the  requisite
\nstatement on oath under section 226(3)(vi) of the Income Tax
\nAct,  1961 which it made much later on 5.12.75 in  pursuance
\nto  the\t Court’s order to enable the I.T.O.  to\t revoke\t the
\nnotice issued by him under section 226(3) of the Income\t Tax
\nAct,  1961. Shri Sanghi stated that even though the  special
\nleave granted by this Court is confined only to the question
\nof  interest and therefore, does not extend to the  question
\nof  alleged double payment of Rs.3415.70 by the\t L.I.C.\t yet
\nthe respondent concedes that the amount of Rs.3415.70 depos-
\nited  by the L.I.C. with the I.T.O. may be refunded  by\t the
\nI.T.O. to the L.I.C. together with interest, if any, payable
\non  refund of that amount; and that the respondent does\t not
\nlay any claim to that amount from the I.T.O. having obtained
\nthat amount from the L.I.C.\n<\/p>\n
    We\tshall  first dispose of the last point\trelating  to
\ndouble payment by the L.I.C. of the amount of Rs.3415.70  in
\nview of the express concession made by Shri Sanghi,  learned
\ncounsel for the respondent that the respondent does not\t lay
\nany  claim to it and that the L.I.C. may obtain\t its  refund
\nfrom the I.T.O. In view of this statement of learned counsel
\nfor the respondent, Shri Sanghi, it is sufficient to observe
\nthat it would be open to the L.I.C. to obtain refund of\t the
\namount of Rs.3415.70 deposited by it with the I.T.O. togeth-
\ner  with  interest,  if any, payable on the  refund  by\t the
\nIncome\tTax Department, since it has been conceded that\t the
\nrespondent  does  not claim that amount from the  I.T.O.  We
\nshall  now  deal with the remaining arguments of  Shri\tRao,
\nlearned counsel for the appellant.\n<\/p>\n
    The first argument of the learned counsel for the appel-
\nlant  is that the I.T.O. was a necessary party in  the\twrit
\npetition  giving  rise\tto this appeal.. We  are  unable  to
\naccept this contention. The only claim made in Writ Petition
\nNo.  1248  of 1977 decided on 7.1.1981 giving rise  to\tthis
\nappeal\tis for payment of interest by the appellant, and  no
\nrelief has been sought against the I.T.O. This being so, for
\neffective adjudication of the L.I.C.’s liability towards the
\nrespondent, the presence of the I.T.O. is not necessary. The
\nrespondent’s  claim is only against the L.I.C.\twithout\t any
\nclaim being made in the alternative or otherwise against the
\nI.T.O. The respondent’s claim has, therefore, to succeed  or
\nfail  only on the basis of the L.I.C.’s liability  vis-a-vis
\nthe  respondent without involving the I.T.O. or anyone\telse
\nin that process. Merely
\n106<\/span>
\nbecause the defence of the L.I.C. was based on an act of the
\nI.T.O.,\t it was not incumbent for the respondent to  implead
\nthe  I.T.O. in this proceeding when neither any\t relief\t was
\nclaimed against the I.T.O. nor was any suggestion of  I.T.O.
\n‘s liability for payment of interest made in the writ  peti-
\ntion. This argument is, therefore, rejected.
\n    The second argument relating to construction of  section
\n226(3)\tof  the\t Income Tax Act, 1961 is in  fact  the\tmain
\nargument  of Shri Rao and, therefore, we shall consider\t the
\nsame  after disposing of the remaining arguments  which\t are
\nshorter points.\n<\/p>\n
    The\t third\targument is based on the  principle  of\t res
\njudicata  and constructive res judicata on the basis of\t two
\nearlier\t writ petitions filed by Smt. Kamalabai\t G.  Ranade.
\nThe first writ petition was S.C.A. No. 861 of 1972 filed  in
\nthe Bombay High Court on 5.9.72 prior to the date of maturi-
\nty  of the first policy claim against,which was required  to
\nbe  paid  by  the L.I.C. to the assignee,  Smt.\t Kamalaba  G
\nRanade. This was after issuance of the notice under  section
\n226(3)\tof  the Income Tax Act, 1961 by the  I.T.O.  to\t the
\nL.I.C. One of the reliefs claimed therein was a direction to
\nthe  L.I.C. to make a statement on oath as required by\tsec-
\ntion 226(3)(vi) of the Income Tax Act, 1961 that no part  of
\nthe  amount due against the policy maturing on\t14.9.72\t was
\ndue  to the insured G.V. Ranade nor did the L.I.C. hold\t any
\npart of that sum for or on account of the alleged defaulter.
\nNo  doubt  some other reliefs including\t revocation  of\t the
\nnotice\tunder  section 226(3) of the Income  Tax  Act,\t1961
\nwere. also claimed including payment 01′ the amount together
\nwith  the accretions thereto. This writ petition being\tdis-
\nmissed,\t Smt.  Kamalabai  G. Ranade came to  this  Court  by
\nspecial leave and Civil Appeal No. 373 of 1973 was  disposed
\nof  by\tthis  Court’s order dated  6.10.1975  requiting\t the
\nL.I.C. to make the necessary statement on oath in accordance
\nwith  section 226(3)(vi) of the Income Tax Act, 1961  within
\ntwo months. It is obvious that with this direction requiring
\nthe  L.I.C.  to make the requisite statement on\t oath  under
\nsection\t 226(3)(vi) of the Income Tax Act, 1961, no  further
\nquestion  survived in that writ petition and the  consequent
\ncivil  appeal  in  this Court since  the  further  questions
\nincluding  payment of interest on the principal amount\twere
\nto  arise only at a subsequent stage. Asking for  any  other
\nrelief\twas obviously premature at that stage. It is  appar-
\nently for this reason that this Court did not at that  stage
\ngo into the other questions relating to the further  reliefs
\nspecified  in  that  writ petition.  That  decision  cannot,
\ntherefore,  preclude agitation of the question\tof  interest
\nsubsequently.\n<\/p>\n
107<\/span><\/p>\n
    The next writ petition filed by Smt. Kamalabai G. Ranade
\nwas  S.C.A.  No. 302 of 1977 in the Bombay High\t Court.\t The
\nprayer made therein was for a direction to the L.I.C. to pay
\nthe principal amount together with interest thereon. In this
\nwrit petition also the I.T.O. was impleaded as a party. This
\nwrit petition had to be filed because in spite of the L.I.C.
\nhaving made the requisite statement under section 226(3)(vi)
\nof  the\t Income\t Tax Act, 1961 on  5.12.75,  the  Income-tax
\nOfficer had not withdrawn the notice under section 226(3) of
\nthe  Income Tax Act, 1961 issued to the L.I.C.\tand,  there-
\nfore, the L.I.C. was not making the payment to the  respond-
\nent. On 4.4.77 that writ petition was dismissed as withdrawn
\nas  a result of the I.T.O .’s counsel filing a copy  of\t the
\norder  dated 1.4.1977 withdrawing the I.T.O.’s notice  under
\nsection\t 226(3)\t of the Income Tax Act,\t 1961  enabling\t the
\nL.I.C.\tto make the payment due against the policies to\t the
\nrespondent. The operation of the notice under section 226(3)
\nof  the\t income Tax Act, 1961 by the I.T.O. being  the\tonly
\nreason\tgiven  by the L.I.C. to support its action  of\tnon-
\npayment to the respondent, it was unnecessary to persue that
\nwrit petition when the I.T.O. had made the order withdrawing
\nthe  notice under section 226(3) of the Act. Admittedly,  it
\nwas in consequence of the withdrawal of the I.T.O.’s  notice
\nby order dated 1.4.77 that payment was actually made by\t the
\nL.I.C.\tto  the respondent. It is, therefore,  difficult  to
\nappreciate how the withdrawal of that writ petition can,  in
\nany  manner, preclude the respondent from raising the  ques-
\ntion  of  the L.I.C.’s liability to pay\t interest  when\t the
\nprincipal amount alone was paid later.\n<\/p>\n
    The\t L.I.C.\t having refused to pay the interest  on\t the
\nprincipal  amount in spite of the inordinate delay  in\tpay-
\nment,  the  Writ Petition No. 1248 of 1977 had to  be  filed
\ngiving\trise  to this appeal raising only  the\tquestion  of
\nL.I.C.’s  liability to pay interest on the principal  amount
\ndue  against  the policies. The same is\t therefore,  clearly
\nmaintainable  and the earlier writ petitions cannot, in\t any
\nmanner,\t bar the adjudication of this point her,’in for\t the
\nreasons\t already given. This contention of  learned  counsel
\nfor the appellant is also, therefore, rejected.
\n    The fourth contention based on withdrawal of writ  peti-
\ntion  (S.C.A. No. 302 of 1977) being covered by the  discus-
\nsion relating to the third contention, the same is rejected.
\n    The fifth argument relates to the rate of interest. Shri
\nRao contended that the award of interest @15% p.a. is exces-
\nsive even if the L.I.C. is held liable for payment of inter-
\nest. Reference was made by
\n108<\/span>
\nShri Rao to Section 244 of the Income Tax Act, 1961  provid-
\ning  for payment of interest on refund which prescribed\t the
\nrate of 12% p.a. from 1.7.1972 to 1.10.1984, the increase to
\n15%  p.a. being made therein only from 1.10.84 by  amendment
\nof that section. It was urged that the period in question in
\nthe present case being prior to 1.10.84 the rate of 15% p.a.
\nin excess of the statutory provision of 12% p.a. in  Section
\n244 of the Income Tax Act, 1961 is unjustified.\t Admittedly,
\nthe  award of interest, in the present case, for payment  by
\nthe L.I.C. is not governed by Section 244 of the Income\t Tax
\nAct, 1961. Apparently, for this reason, learned counsel\t for
\nthe  appellant relied on Section 244 of the Income Tax\tAct,
\n1961  as of persuasive value. We are not impressed  by\tthis
\nargument. The High Court has relied on the fact that  inter-
\nest @ 15% p.a. is reasonable, in the present case,  particu-
\nlarly  in  view of the fact that the L.I.C.  itself  charges
\ninterest at that rate. It is sufficient for us to state that
\nthere  is  no  material produced, in the  present  case,  to
\nsuggest\t that award of interest @ 15% p.a. is  excessive  to
\npermit interference with the rate in this appeal particular-
\nly when the High Court has come to the conclusion that\tthis
\nis  the reasonable rate. This argument also  is,  therefore,
\nrejected.\n<\/p>\n
    The\t only point remaining for consideration now  is\t the
\nconstruction  of Section 226(3) of the Income Tax Act,\t1961
\nthe relevant portion of which, reads as under:\n<\/p>\n
\t      “Other  modes  of recovery:  226.(1)  Notwith-
\n\t      standing the issue of a certificate to the Tax
\n\t      Recovery\tOfficer under section 222,  the\t In-
\n\t      come-tax\tOfficer may recover the tax  by\t any
\n\t      one  or  more of the modes  provided  in\tthis
\n\t      section.\n<\/p><\/blockquote>\n
…………\n<\/p>\n
\t      (3)(i) The Income-tax Officer may, at any time
\n\t      or  from\ttime to time, by notice\t in  writing
\n\t      require  any person from whom money is due  or
\n\t      may  become due to the assessee or any  person
\n\t      who  holds or may subsequently hold money\t for
\n\t      or  on account of the assessee, to pay to\t the
\n\t      Income-tax  Officer either forthwith upon\t the
\n\t      money  becoming  due or being held  or  at  or
\n\t      within  the time specified in the notice\t(not
\n\t      being before the money becomes due or is held)
\n\t      so  much of the money as is sufficient to\t pay
\n\t      the  amount due by the assessee in respect  of
\n\t      arrears  or the whole of the money when it  is
\n\t      equal to or less than that amount.\n<\/p>\n
\t      109<\/span><\/p>\n
\t\t\t(ii) A notice under this sub-section
\n\t      may  be issued to any person who holds or\t may
\n\t      subsequently hold any money for or on  account
\n\t      of the assessee jointly with any other  person
\n\t      and for the purposes of this sub-section,\t the
\n\t      shares  of the joint-holders in  such  account
\n\t      shall  be\t presumed,  until  the\tcontrary  is
\n\t      proved to be equal.\n<\/p>\n
\t\t\t(iii) A copy of the notice shall  be
\n\t      forwarded to the assessee at his last  address
\n\t      known  to the Income-tax Officer, and  in\t the
\n\t      case  of\ta joint account to  all\t the  joint-\n<\/p>\n
\t      holders  at their last addresses known to\t the
\n\t      Income-tax Officer.\n<\/p>\n
\t\t\t(iv)  Save as otherwise provided  in
\n\t      this  sub-section,  every\t person\t to  whom  a
\n\t      notice is issued under this subsection.  shall
\n\t      be  bound to comply with such notice, and,  in
\n\t      particular, where any such notice is issued to
\n\t      a post office, banking company or an  insurer,
\n\t      it  shall not be necessary for any pass  book,
\n\t      deposit receipt, policy or any other  document
\n\t      to  be produced for the purpose of any  entry,
\n\t      endorsement  or  the like\t being\tmade  before
\n\t      payment  is  made, notwithstanding  any  rule,
\n\t      practice or requirement to the contrary.\n<\/p>\n
\t\t\t(v) Any claim respecting any proper-\n<\/p>\n
\t      ty  in relation to which a notice\t under\tthis
\n\t      sub-section has been issued arising after\t the
\n\t      date  of the notice shall be void\t as  against
\n\t      any demand contained in the notice.\n<\/p>\n
\t\t\t  (vi)\tWhere  a person\t to  whom  a
\n\t      notice  under this subsection is sent  objects
\n\t      to  it  by a statement on oath  that  the\t sum
\n\t      demanded or any part thereof is not due to the
\n\t      assessee\tor that he does not hold  any  money
\n\t      for  or  on  account of  the  assessee,  then,
\n\t      nothing contained in this sub-section shall be
\n\t      deemed to require such person to pay any\tsuch
\n\t      sum  or part thereof, as the case may be,\t but
\n\t      if  it is discovered that such  statement\t was
\n\t      false in any material particular, such  person
\n\t      shall  be personally liable to the  Income-tax
\n\t      Officer to the extent of his own liability  to
\n\t      the assessee on the date of the notice, or  to
\n\t      the extent of the assessee’s liability for any
\n\t      sum due under this Act, whichever is less.\n<\/p>\n
\t      (vii) The Income-tax Officer may, at any\ttime
\n\t      or
\n\t      110<\/span>
\n\t      from time to time, amend or revoke any  notice
\n\t      issued  under this sub-section or\t extend\t the
\n\t      time  for making any payment in  pursuance  of
\n\t      such notice.\n<\/p>\n
\t\t\t(viii) The Income-tax Officer  shall
\n\t      grant a receipt for any amount paid in compli-
\n\t      ance  with  a notice issued  under  this\tsub-\n<\/p>\n
\t      section,\tand  the person so paying  shall  be
\n\t      fully  discharged\t from his liability  to\t the
\n\t      assessee to the extent of the amount so paid.\n<\/p>\n
\t\t\t(ix)  Any  person  discharging\t any
\n\t      liability\t to the assessee after receipt of  a
\n\t      notice under this sub-section shall be person-
\n\t      ally  liable to the Income-tax Officer to\t the
\n\t      extent of his own liability to the assessee so
\n\t      discharged or to the extent of the  assessee’s
\n\t      liability\t for  any sum due  under  this\tAct,
\n\t      whichever is less.\n<\/p>\n
\t\t\t(x)  If the person to whom a  notice
\n\t      under  this subsection is sent fails  to\tmake
\n\t      payment in pursuance thereof to the Income-tax
\n\t      Officer, he shall be deemed to be an  assessee
\n\t      in default in respect of the amount  specified
\n\t      in  the notice and further proceedings may  be
\n\t      taken  against him for the realisation of\t the
\n\t      amount as if it were an arrear of tax due from
\n\t      him, in the manner provided in sections 222 to
\n\t      225 and the notice shall have the same  effect
\n\t      as an attachment of a debt by the Tax Recovery
\n\t      Officer  in exercise of his powers under\tsec-
\n\t      tion 222.”\n<\/p>\n
\t\t\t\t\t  ………….”\n<\/p>\n
     The  argument of the learned counsel for the  appellant
\nis  that  on receipt of the I.T.O.’s  notice  under  section
\n226(3) of the Income Tax Act, 1961, the L.I.C. was not\tleft
\nwith  the  option  to make the payment to  assignee  of\t the
\npolicies  since the L.I.C. or its officer making the  state-
\nment  on  oath under section 226(3)(vi) would  thereby\thave
\nbeen  exposed to personal liability as the defaulter of\t the
\nincome\ttax dues. It was argued that in these  circumstances
\nthe L.I.C. could make the payment only aftter revocation  of
\nthe  notice by the I.T.O.’s Order dated 1.4.77\tand,  there-
\nfore, the L.I.C. cannot be held liable for payment of inter-
\nest  for any period prior to revocation of the\tnotice.\t The
\nperiod\tfor  which the L.I.C. has been held  liable  to\t pay
\ninterest  being\t prior to revocation of the  notice  by\t the
\nI.T.O., it was urged that the same was unjustified.\n<\/p>\n
111<\/span><\/p>\n
    Having  given our anxious consideration to the  argument
\nwe cannot persuade ourselves to accept the same. On a  close
\nscrutiny  of the provision we find that the benefit  claimed
\nby  the L.I.C. is not available to it, in the facts  of\t the
\npresent case.\n<\/p>\n
    Admittedly\tassignment of the policies was made  by\t the
\ninsured\t G.V.  Ranade  and the same was\t duly  accepted\t and
\nregistered  by the L.I.C. in April 1969. It  is,  therefore,
\nobvious that the L.I.C. was bound to act on that  assignment
\nin favour of Smt. Kamalabai G. Ranade unless the  assignment
\nwas held to be invalid by a competent authority in a  proper
\nproceeding  taken for this purpose. It is  significant\tthat
\nthe L.I.C. never disputed the validity of the assignment and
\nwas throughout prepared to act on it. It is undisputed\tthat
\nthe  assignment\t was not declared invalid by  any  competent
\nauthority.  Mere issuance of notice under section 226(3)  of
\nthe Income Tax Act, 1961 did not have the effect of  invali-
\ndating the assignment nor did the casual mention of  Section
\n281 of the Income Tax Act, 1961 by the I.T.O. in his  letter
\ndated  28.8.72 result in this consequence. Any further\tstep
\ntowards\t formation of the final opinion by the I.T.O.  could
\nbe taken only after the L.I.C. had made the requisite state-
\nment on oath under section 226(3)(vi) of the Income Tax Act,
\n1961 on the basis of the registered assignment of  policies.
\nThis  act was performed by the L.I.C. only on 5.12.75  which
\nled to revocation of the notice under section 226(3) of\t the
\nAct,  by the I.T.O. The question is of the liability of\t the
\nL.I.C. in these circumstances.\n<\/p>\n
    Section  226 consists of several Sub-sections  of  which
\nsub-sections (1) and (3) alone are relevant for our purpose.
\nSub-section  (1)  enables the I.T.O. to recover the  tax  by
\nanyone\tor more of the further modes provided in  this\tsec-
\ntion.  Sub-section  (3) deals with one such mode  where\t the
\ndefaulter’s  money is held by another person. Clause (i)  of
\nsub-section  (3) enables the I.T.O. by notice in writing  to
\nrequire any person from whom money is due or may become\t due
\nto the assessee or any person who holds or may\tsubsequently
\nhold  money  for or on account of the assessee\tto  pay\t the
\nIncome-tax Officer that money or so much of it as is  suffi-
\ncient  t6  pay the dues of the assessee in  respect  of\t the
\narrears\t of  tax. It is in exercise of this power  that\t the
\nI.T.O.\thad issued the notice to the L.I.C. in\tthe  present
\ncase.  Obviously,  the\tI.T.O. had assumed  that  the  money
\npayable\t on maturity of these policies belonged to  the\t in-
\nsured\/assessee\/defaulter  G.V. Ranade overlooking  the\tduly
\nregistered  assignment\tmade much earlier in favour  of\t the
\nassessee’s  wife in April 1969. The further clauses (ii)  to\n<\/p>\n
(v) of sub-section (3) deal with ancillary matters and\talso
\nprovide that any
\n112<\/span>
\nclaim in respect of property covered by the notice shall  be
\nvoid  after  the date of the notice as\tagainst\t the  demand
\ncontained in the notice.\n<\/p>\n
    Clause  (vi)  is relevant for the  present\tpurpose\t and
\nspeaks\tof the obligation of a person to whom such a  notice
\nhas  been  sent. Clause (vi) relieves the  person  receiving
\nsuch  a\t notice\t from the liability to pay any\tsum  to\t the
\nI.T.O. in obedience to the notice if he “objects to it by  a
\nstatement on oath that the sum demanded or any part  thereof
\nis  not\t due to the assessee or that he does  not  hold\t any
\nmoney  for or on account of the assessee”. This clause\tfur-
\nther provides that “if it is discovered that such  statement
\nwas  false in any material particular” such person shall  be
\npersonally liable to the I.T.O. to the extent of the  asses-
\nsee’s  liability  on the date of notice. Clause\t (vii)\tthen
\nprovides,  inter  alia, for amendment or revocation  of\t the
\nnotice\tissued\tunder this sub-section by  the\tI.T.O.\tThis
\nstage of amendment or revocation of the notice under  clause\n<\/p>\n
(vii)  is  reached only after the stage provided  in  clause\n<\/p>\n
(vi),  in a case where the notice objects that he  does\t not
\nhold  the  money for or on behalf of the  defaulter  of\t tax
\ndues.\n<\/p>\n
    It\tis, therefore, obvious that the question of  revoca-
\ntion of the notice under clause (vii) of sub-section (3)  of
\nsection 226 of the Income Tax Act, 1961 arose in the present
\ncase  only after the L.I.C. made the requisite statement  on
\noath  under  section 226(3)(vi) of the Act in  view  of\t its
\nconsistent  stand throughout that the moneys due  under\t the
\npolicies  were held by it for and on behalf of the  assignee
\nand not the defaulter. Mere information of the assignment to
\nthe I.T.O. and keeping the assignee informed of the I.T.O.’s
\naction did not amount to discharge of the statutory  obliga-
\ntion under section 226(3)(vi) of the Act, by the L.I.C.\t The
\nstatute\t having expressly provided the mode of raising\tsuch
\nan objection in the form of a statement on oath specified in
\nclause\t(vi), performance of that obligation by\t the  notice
\nhad  to be made only in that manner. This statutory  obliga-
\ntion was performed by the L.I.C. only on 5.12.1975 as stated
\nearlier.  The  personal liability arising after\t making\t the
\nrequisite  statement on oath as envisaged by clause (vi)  is
\nonly  “if it is discovered that such statement was false  in
\nany material particular and not otherwise.\n<\/p>\n
     Learned  counsel  for  the appellant  argued  that\t the
\nrequisite  statement under section 226(3)(vi) of the  Income
\nTax  Act,  1961\t could not be made by the  L.I.C.  since  it
\ninvolved  the  risk of exposing the L.I.C.  or\tits  officer
\nmaking\tthe statement on oath to personal liability for\t the
\nincome\ttax dues of the assessee\/defaulter G.V.\t Ranade.  In
\nthe  first place, such a statement was in fact made  without
\nhesitation by the
\n113<\/span>
\nL.I.C. on 5.12.75 after the assignee was compelled to obtain
\nsuch a direction in a writ petition filed by her. That apart
\nthe  risk  visualised on behalf of the L.I.C.,\tin  ultimate
\nanalysis,  is entirely imaginary and not real. The  risk  of
\npersonal liability envisaged in clause (vi) arises only\t “if
\nit is discovered that such statement was false in any  mate-
\nrial particular”. Thus, there is no risk of personal liabil-
\nity  of the person making the statement on oath\t unless\t any
\nmaterial particular mentioned in the statement is false. The
\nstatement on oath required to be made by clause (vi) is only
\n“that the sum demanded or any part thereof is not due to the
\nassessee  or that he does not hold any money for or  on\t ac-
\ncount  of  the assessee”. The L.I.C. itself  has  taken\t the
\nstand throughout that the sum demanded by the notice  issued
\nunder  section\t226(3) of the Income Tax Act,  1961  by\t the
\nI.T.O.\tdid  not belong to the assessee inasmuch as  it\t was
\npayable\t only to the assignee, Smt. Kamalabai G.  Ranade  by
\nvirtue\tof the assignment made, accepted and  registered  in
\nApril  1969  much earlier to the date of  the  notice.\tThis
\nbeing  so  the\tmaking\tof this statement  on  oath  of\t the
\nL.I.C.’s own stand which in fact was so made on 5.12.75\t did
\nnot  involve  even remotely the possibility of any  risk  of
\npersonal liability.\n<\/p>\n
    On\tthe contrary, real risk of the L.I.C. being  treated
\ndeemed\tdefaulter assessee under clause (x)  of\t sub-section
\n(3)  of section 226 of the Act lay in its failure to pay  to
\nthe I.T.O. after receipt of notice under section 226(3), the
\namounts of the matured policies within the time given by the
\nI.T.O. or a reasonable time, without objecting to the demand
\nby  denying  its  liability to the assessee  in\t the  manner
\nprescribed  in clause (vi) thereof, instead of in doing\t so.
\nPrudence  also required the L.I.C. in its own  interest,  to
\nobject\tto  the demand according to clause (vi)\t instead  of
\nrefusing or delaying the objection. The argument that such a
\nstatement  was not made since it involved the likelihood  of
\nexposing  the  L.I.C.  or any of its  officers\tto  personal
\nliability  has,\t therefore, no merit. This  being  the\tonly
\nreason\tgiven by the L.I.C. to justify the inordinate  delay
\nin  making the requisite statement under section  226(3)(vi)
\nof the Income Tax Act, 1961, it is obvious that this defence
\nis untenable.\n<\/p>\n
    Sub-section\t (3) of section 226 of the Income  Tax\tAct,
\n1961 clearly shows that on a notice thereunder being  issued
\nby  the\t I.T.O. to the L.I.C., in the present case,  it\t was
\nincumbent  on the L.I.C. to make the requisite statement  on
\noath  under clause (vi) thereof raising an objection on\t the
\nbasis  of  the registered assignment. It was  then  for\t the
\nI.T.O.\tto  proceed further and form his final\topinion\t and
\nrevoke\tthe notice under clause (vii). It was  not  possible
\nfor the assignee of the
\n114<\/span>
\npolicies  to obtain revocation of the notice by\t the  I.T.O.
\nwithout\t the requisite statement on oath being made  by\t the
\nL.I.C.\tas  envisaged in clause (vi) of sub-section  (3)  of
\nsection\t 226 of the Income Tax Act. It is obvious  that\t the
\ninordinate  delay  in making the statement on  oath  by\t the
\nL.I.C. under section 226(3)(vi) of the Income Tax Act,\t1961
\nwas  the  result  of misconstruction of\t the  provision\t and
\nmisappreciation of its liability thereunder.
\n    Obviously  the assignee of the policies who\t had  become
\nentitled to receive the amounts due thereunder on the  dates
\nof their maturity must be compensated by the L.I.C. for\t its
\nfailure\t to perform its statutory obligation  under  section
\n226(3)(vi)  of the Income Tax Act, 1961 within a  reasonable
\ntime. We have no doubt that this is the proper\tconstruction
\nof section 226(3) of the Income Tax Act, 1961 and the conse-
\nquential liability resulting from the failure of the  notice
\nto raise the objection in the prescribed manner under clause\n<\/p>\n
(vi)  thereof within a reasonable time. Performance of\tthis
\nstatutory  obligation  by the L.I.C., in the  present  case,
\nbeing  after  inordinate  delay, award of  interest  to\t the
\nassignee of the policies to whom the payment thereunder\t had
\nto  be\tmade even according to the stand of the\t L.1.C.\t is,
\ntherefore,  clearly  justified.\t This  contention  which  is
\nreally the main contention urged on behalf of the appellant,
\ntherefore, fails and is rejected.\n<\/p>\n
    Consequently,  the appeal is dismissed with\t costs.\t The
\ncosts are quantified at Rs.2,000.\n<\/p>\n
R.N.J.\t\t\t\t\t\tAppeal\tdis-\nmissed.\n115<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Life Insurance Corporation Of … vs Gangadhar Vishwanath Ranade … on 8 September, 1989 Equivalent citations: 1990 AIR 185, 1989 SCR Supl. (1) 97 Author: J S Verma Bench: Verma, Jagdish Saran (J) PETITIONER: LIFE INSURANCE CORPORATION OF INDIA & ANR. Vs. RESPONDENT: GANGADHAR VISHWANATH RANADE (DEAD) BY LRS. DATE OF […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-31743","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nLife Insurance Corporation Of ... vs Gangadhar Vishwanath Ranade ... on 8 September, 1989 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/life-insurance-corporation-of-vs-gangadhar-vishwanath-ranade-on-8-september-1989\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Life Insurance Corporation Of ... vs Gangadhar Vishwanath Ranade ... on 8 September, 1989 - 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