G.C. De, J.@mdashBoth the suits were filed on 3rd August, 1973 against the Life Insurance Corporation of India prayer for a decree for recovery of money due on two separate policies of Insurance issued by Ruby General Insurance Company, along with interest and other reliefs.
2. In suit No. 354 of the 1973 Shri Naresh Kumar Rajgarhia prayed for a decree of Rs. 50,699.41p, after calculating interest @ 7% per annum from 29th July, 1970 till the filing of the suit on Rs. 41,900.41p. Similarly, in suit No. 355 of 1973 Shri Bijoy Kumar Rajgarhia prayed for a decree of Rs. 50,652.31 p. after calculating interest in the same manner indicating hereinabove on Rs. 41,861.41p.
3. In both the suits prayers were also made for pendente lite as well as post degree interest.
4. The plaint case in both the suits in brief is that policies for life were taken by Smt. B. D. Rajgarhia in the year 1956. She also took two separate loans from the defendant Corporation for Rs. 4615/- each on the basis of the said two policies on 12.5.1967. Subsequently, she assigned both the policies on 11.3.1968 in favour of her two sons--Bijoy Kumar Rajgarhia and Naresh Kumar Rajgarhia. Smt. B. D. Rajgarhia, however, died on 25.5.1970. The plaintiffs preferred claim on the LIC policies and submitted discharge vouchers as supplied by LIC. But, ultimately, the LIC intimated that the discharge vouchers were issued through oversight and that the plaintiffs were not entitled to get any amount on the policies inasmuch as the policies lapsed long before the date of the death of Smt. B. D. Rajgarhia. Accordingly, both the plaintiffs separately filed the instant suits for the reliefs indicated hereinabove.
5. Under the provisions of the Life Insurance (Emergency Provisions) Act, 1956 the management of Ruby General Insurance Company Ltd. was vested with the Life Insurance Corporation of India (in short LICI) with effect from 20th January, 1956. The LIC filed two separate written statements in both the suits denying the material allegations made in the plaint and contended that the plaintiffs were not entitled to get any amount on the basis of two policies inasmuch as both the policies lapsed for non-payment of the dues to the LICI long before the death of Smt. B. D. Rajgarhia. Accordingly, prayer was made for dismissal of both the suits.
6. It is to be mentioned that Suit No. 356 of 1973 was also filed by Raj Kumar Rajgarhia, another son of Smt. B. D. Rajgarhia in respect of another policy which was also assigned to him by his mother Smt. B. D. Rajgharia after taking a loan of Rs. 12,510/-. That suit was also contested by LICI and after hearing the learned Advocates of both sides and on perusal of the evidence adduced the suit was dismissed by the Trial Court. However, Raj Kumar Rajgarhia filed appeal being C. A. No. 256 of 1978 and the Division Bench comprising of Hon''ble Mr. Justice Murari Mohan Dutta and Hon''ble Justice Manoj Kumar Mukherjee (as Their Lordships then were) disposed of the appeal on 7.7.1982 setting aside the judgment of the Trial Court and passed a decree with costs in favour of Raj Kumar Rajgarhia. The said judgment was challenged before the Supreme Court of India by the L. I. C. I. in Civil Appeal No. 3781 of 1982, along with Civil Appeal No. 8588 of 1983 (filed by Raj Kumar Rajgarhia) praying for pendente life interest. The Apex Court by the judgment dated 23rd February, 1999 dismissed the appeal filed by the LICI as well as by Raj Kumar Rajgarhia and confirmed the judgment of the Hon''ble Division Bench of this Court. The said judgment of the Apex Court has been reported in
7. During the pendency of the present two suits along with the suit No. 356 of 1973 of Mr. Raj Kumar Rajgarhia evidence was taken and, ultimately, an order was passed for stay of the present two suits sine the during the pendency of the first appeal as well as appeal before the Apex Court mentioned hereinabove. After the disposal of the appeal by the Apex Court the learned Counsels of both sides moved this Court for further hearing of both the present suits, and, accordingly, these suits were taken up for further hearing. In course of such hearing it was detected that issues were not framed earlier and, accordingly, by an order dated 27.9.2001 the following issues were framed in Suit No. 354 of 1973:
1. Is the suit maintainable ?
2. Was the surrender value of the policy as existing on 13th January, 1968 more than sufficient to cover unpaid yearly premium for 1968 and 1969 and interest thereon and interest on advance uptill 25th May, 1970 as alleged in the plaint ?
3. Was the letter dated 29th July, 1970 admitting the claim of the plaintiff written under mistake as alleged in the written statement ?
4. Was the statement prepared by the defendant mentioned in paragraph 36 of the plaint by mistake as alleged in paragraph 25 of the written statement ?
5. Was the defendant not entitled to deduct the advance of Rs. 4615/-in ascertaining the surrender value of the policy as alleged in paragraph 39 of the plaint ?
6. Did the amount of loan of Rs. 4615/- become due and repayable without the defendant giving any notice for repayment under the terms of the loan bond ?
7. In calculating the net surrender value as on 1st August, 1968 was the defendant entitled to deduct the principal amount of loan as forming part of the indebtedness of the plaintiff as alleged in para 2(e) of the written statement ?
8. Whether according to the non-forfeiture regulation system B of the policy, LICI is not entitled to deduct all indebtedness for ascertaining the surrender value ?
9. To what relief is the plaintiff entitled ?
8. Similarly on 5.12.2001 the following issued were framed in Suit No. 355 of 1973:
1. Was the surrender value of the policy as existing on 13th January, 1968 more than sufficient to cover unpaid premium from 1968 upto 1st December, 1969 and interest thereon and interest on advance upto 25th May, 1970 as alleged in paragraph 28 of the plaint ?
2. Was the letter dated 29th July, 1970 admitting the claim of the plaintiff written under mistake as alleged in paragraph 23 of the written statement ?
3. Was the statement prepared as mentioned in paragraph 34 of the plaint by mistake as alleged in paragraph 23 of the written statement ?
4. Was the defendant entitled to deduct the advance of Rs. 4615/- for ascertainment of surrender value as alleged in paragraph 37 of the plaint ?
5. Did the amount of loan of Rs. 4615/- become due and repayable without the defendant giving any notice for repayment under the terms of the loan bond ?
6. Whether the plaintiff can take the benefit from the mistake of LICI in calculating the death claim amount of the concerned policy ?
7. Whether in terms of the Clause 6 of the loan bond of the policy relating to a loan of Rs. 4615/-, is LICI entitled to deduct the loan amount and interest thereon, without serving any prior notice to the claimant, while calculating the surrender value ?
8. Whether according to the non-forfeiture regulation system B of the policy, is LICI entitled to deduct all indebtedness for ascertaining the surrender value ?
9. Did the policy lapse prior to the death of the life assured ?
10. Did the assured duly keep the policy alive and in force as alleged in para 8 of the plaint ?
11. To what reliefs are the plaintiff entitled ?
9. Since both the suits relate to similar sets of facts, on consent of the learned Counsels of both sides hearing of both the suits were taken up analogously and this judgment is being delivered in respect of both the suits analogously by a single judgment.
10. All the issues are taken up together for convenience of discussion and also for brevity in respect of both the suits.
11. Before entering into details I deem it fit and proper to indicate that the following facts are admitted:--
1) Whole life Policy No. 112496 dated 1.8.1956 for Rs. 50,000/- was taken in the name of Smt. B. D. Rajgarhia (in respect of Suit No.
354 of 1973)
2) Whole life Policy No. 111734 dated 1.6.1956 for Rs. 50,000/- was taken in the name of Smt. B. D. Rajgarhia (in respect of Suit No.
355 of 1973)
3) Half yearly premium in respect of policy No. 112496 was paid upto 1.12.1967 and no further premium was paid on the said policy.
4) The annual premium was paid in respect of the policy No. 111734 upto 1.8.1967 and no further premium was paid on that policy,
5) Both the policies were assigned on 11.3.1968--policy No. 112496 was assigned in the name of Bijoy Kumar Rajgarhia and 111734 was assigned in the name of Naresh Kumar Rajgarhia.
6) Smt. B. D. Rajgarhia took loan of Rs. 4615/- in respect of both the policies on 12th May, 1967 after executing necessary papers including separate loan bonds dated 30.4.1967.
7) On 6.1.1968 Smt. B. D. Rajgarhia intimated LICI that the interest on the loan drawn against the policies will be paid by her separately and thereby requested to intimate the surrender value on that date.
8) Notice of assignment was duly sent to the LICI by Smt. B. D. Rajgarhia .
9) On 18th January, 1968 LICI intimated Smt. B. D. Rajgarhia about the surrender value in respect of each of the policies thereby deducting the loan and interest thereon.
10) Smt. B. D. Rajgharia died on 25.5. 1970.
11) The date of death was informed to the LIC by both the plaintiffs on 9.6.1970.
12) The plaintiffs wanted claim form on 4.7.1970.
13) The claim in respect of the policies was lodged on 3.8.1970.
14) On 29.7.1970 the LICI issued claim discharge voucher to the plaintiffs with a request to submit the same after execution.
15) By letter dated 21.8.1970 the LICI intimated to the plaintiffs that the discharge was issued by mistake and that the policy lapsed in December 1968.
12. Before entering into the merits of these two cases it is to be mentioned that the learned Counsel appearing for the both plaintiffs placed reliance on the Apex Court judgment in
13. Mr. Sen appearing on behalf of the LICI, however, contended that the decision in
14. For the purpose of assessing the exact legal position it would be proper to reproduce the relevant terms and conditions appearing in the policy of Raj Kumar Rajgharia and also in the policy of the present two plaintiffs.
15. In the policy of Raj Kumar Rajgarhia the automatic non-forfeiture clause is as follows:--
"Automatic non-forfeiture.--If during the period this policy has a surrender value, a premium becoming due be not paid within the days of grace, the amount of surrender value according to the Company''s scale of determining the same, after deducting all moneys due to the Company for loans, premiums, interest or otherwise will be applied without any request on the part of the policy holder towards premiums as they fall due, provided the clear surplus surrender value is sufficient to cover the unpaid premium. The Company will have a first charge on the policy for the premiums so advanced with interest at 6.25 per cent per annum compounded half yearly."
16. But in the policies of the present plaintiffs the said clause was withdrawn and on the face of the policy it has been indicated that "the conditions and privileges as printed on pages 2 and 3 hereof stand cancelled and are replaced by conditions and privileges printed on the annexure pasted on page-3 which ought to be deemed part of the policy". Thereafter, at page-3 the conditions and privileges are indicated and under heading non-forfeiture regulation it is written:--"Non-Forfeiture Regulations - Only one out of the Non-Forfeiture Systems ''A'' and ''B'' described below shall apply in the case of a policy and what applies to this policy is shown in the Schedule.
System ''A''.........
System ''B'' - Should payment of premiums be discontinued under this policy after it has acquired a surrender value, the Company will automatically advance the premiums as they fall due and maintain the policy in force so long as there is sufficient net surrender value (after deduction of any indebtedness to the Company with accrued interest) to cover these advances and interest thereon at 6 per cent per annum compounding half-yearly. Such advance together with interest may be repaid either in whole or in part at any time while the policy is so kept in force. In the event of the policy becoming a claim during this period the claim will be entertained subject to deduction from the policy moneys of the amount so advanced together with interest thereon. If the surrender value is exhausted by reason of such advance and no repayment of the advance with interest is made before then, the policy will lapse and all liability of the company will terminate."
17. It is also to be noted that the terms and conditions of the loan bonds in favour of Raj Kumar Rajgharia as well as in favour of the present plaintiffs are almost the same and as such for the sake of convenience of discussion the clauses 4 and 6 of the loan bonds are reproduced below:--
"4. When called upon to make repayment at the said office of the said advance with all interest which may be due thereon on being given three months'' notice to that effect.
6. That in that event of failure to repay the said advance when required as aforesaid or to pay interest in terms of these presents on the dates hereinbefore mentioned or within one calendar month after each due date respectively the said policy shall be held without the necessity of any notice being given to be forfeited to the said Corporation, their successors and assigns, the Corporation shall be entitled to apply the surrender value allowable in respect of the said policy in terras of their regulations and conditions in payment of their said advance, interest and expenses, the balance, if any, of such surrender value to be accounted for to the party entitled thereto."
18. The Apex Court in the case of Raj Kumar Rajgarhia clarified that without asking the debtor to make the repayment in terms of the Clause 4 of the loan bond it was not within the competence of the LICI to deduct all moneys due to the company for loans, interest etc. from the surrender value. But the learned Counsel for the LICI pointed out that the condition "after deducting all moneys due to the company for loans, premiums, interest or otherwise" as appearing in the automatic non-forfeiture in Raj Kumar Rajgarhia''s case was deleted and in the policy of the present two plaintiffs it is indicated that the net surrender value can be arrived at "after deduction of any indebtedness to the company with accrued interest". But after taking into consideration the change of the language and the purport thereof, and keeping in view the clauses 4 and 6 of the bond I fail to accept this part of argument advance by the learned Counsel for the LICI. In terms of the provision of Clause 4 of the loan bond it is incumbent upon the LICI to ask the party to make repayment of the advance with interest on the basis of three months'' notice. In Clause 6 of the loan bond it is also indicated "that in the event of failure to repay the said advance when required as aforesaid or to pay interest in terms of these presents on the dates hereinbefore mentioned or within one calender month after each due date respectively the said policy shall be held without the necessity of any notice being given to be forfeited to the said Corporation......................".
19. In the non-forfeiture regulation system the same terms and conditions of the loan bond were in force while the system ''B'' indicated that the surrender value is to be arrived at "after deduction of any indebtedness to the company with accrued interest". It is rightly argued by the learned Counsel for the present plaintiffs that simply a loan amount cannot be construed as indebtedness unless requisition is made for repayment of the loan. On this score the learned Counsel drew my attention to a portion of the Division Bench judgment in Raj Kumar Rajgarhia''s case where Their Lordships took into consideration the view expressed by the Apex Court in
20. From the above discussions and keeping in view the law settled by the Apex Court on this score, I fail to concur with the argument advanced by the learned Counsel for the LICI that both the policies lapsed before the death of the policy holder, Smt. B. D. Rajgarhia.
21. It is already pointed out that if the loan amount of Rs. 4615/- was not deducted from the respective policy there remained sufficient fund for realisation of the interest on loan as well as for repayment of the arrear premium for 2 (two) years and interest thereon by applying the non-forfeiture regulation. So, it is concluded that both the policies could not lapse before the death of Smt. B. D. Rajgarhia and accordingly after her death both the plaintiffs were entitled to claim and recover the amount fell due on the respective policies. Probably, the LICI was also not unaware of this fact for which the discharge vouchers were issued in due course. But subsequently by a registered letter dated 21.8.70 an attempt was made to indicate that the discharge vouchers were issued through oversight and that the policy was not protected under the automatic non-forfeiture clause. But the facts situations, specially the discussions made hereinabove, are sufficient to indicate that the letter written by the LICI were without any basis whatsoever and as such no action is required to be taken on the said letters.
22. After careful consideration of the evidence adduced it is held that the surrender value of the policy as existing on 13th January, 1968 was more than sufficient to cover unpaid premium for the rest of the years 1968 and 1969 along with interest on premium as well as interest on advance till the death of Smt. B. D. Rajgarhia on 25th May, 1970. There is no reason to consider that the letter dated 29th July, 1970 written by LICI as regards the supply of discharge form was a mistake as alleged in the written statement and the statement made in this regard in the written statement is also not a mistake as alleged. The LICI was not-entitled to deduct the advance of Rs. 4615/- in ascertaining the surrender value and said amount did not become due and payable for want of any requisition notice from the LICI. It is also be concluded that for the purpose of calculating the net surrender value as on 1st August, 1968, the LICI was not entitled to deduct the principal amount of loan as forming part of indebtedness of any of the plaintiffs. In fact the LICI was not entitled to deduct the alleged indebtedness without any notice for ascertaining the surrender value. None of the policies lapsed before the death of Smt. B. D. Rajgarhia and the policy was kept alive as well as in force as claimed by the plaintiffs. So, judging from all these aspects it is concluded that the plaintiffs in both these suits are entitled to get a decree as prayed for.
23. It is also to be mentioned that the plaintiffs in both the suits duly took into consideration the amount of loan to be paid to the LICI with interest and the calculation to this extent has been clearly given in the respective plaint. In paragraph 51 of the plaint of Naresh Kumar Rajgarhia (suit No. 354 of 1973) it is shown that a total sum of Rs. 41,900.41p. was payable on the policy after deducting the premium for 2 years with interest thereof, the loan amount of Rs. 4615/- with interests and other charges fully detailed and described in paragraph 36, It is also clarified that interest at the rate of Rs. 7% per annum from 29.7.1970 till the filing of the suit amounting to Rs. 8799/- was also charged. Accordingly, the plaintiff has prayed for a decree of Rs. 50,699. 41p. Similarly in Suit No. 355 of 1973 the plaintiff Bijay Kumar Rajgarhia calculated the dues in paragraphs 34 and 48 of the plaint and it is rightly indicated that he was entitled to get a decree for Rs. 50,652.31 p. including interest from 29th July, 1970 till the filing of the suit.
24. The amount having been claimed lawfully and logically I hold and conclude that each of the plaintiff in these two suits is entitled to get a decree for the said amount with costs. As regards the claim for pendente lite interest it is felt that the cause of delay disposal of these two suits are not to be ascribed on the LICI and as such I am not inclined to allow any pendente lite interest on the decreetal amount.
25. It is also held that both the suits are quite maintainable in present form and frame.
26. So, the issues in both the suits are answered accordingly as follows:--
In suit No. 355 of 1973--Issue No. (1) in the affirmative; Issue Nos. (2) to (9) in the negative; Issue No. (10) in the affirmative and Issue No. (11) the plaintiff Bijoy Kumar Rajgarhia is entitled to get a decree for Rs. 50,652.31p. with costs.
In suit No. 354 of 1973--Issue Nos. (1) & (2) in the affirmative; Issue Nos. (3) to (8) in the negative and Issue No. (9) the plaintiff Naresh Kumar Rajgarhia is entitled to get a decree for Rs. 50,699.41p. with costs.
27. The learned counsel of both sides drew the attention of this Court to the order dated 23rd April, 1984 passed in both the suits by Hon''ble Justice Manjula Bose (as Her Lordship then was) in which the LICI was directed to pay a sum of Rs. 82.299.39p. to the plaintiffs on account of the claim amount of Rs. 50, 699.41p. with interim interest @ 7% per annum on Rs. 41.900/- in suit No. 354 of 1973 and Rs. 82,153.76, i. e., Rs. 50,699.41 plus interest at the rate of 7% per annum or Rs. 41,900/- in suit No. 355 of 1973. The said order was complied with by the LICI and the respective plaintiffs of these suits also duly executed the bank guarantee for Rs. 1 lakh each. Since then the suits were adjourned sine die till the disposal of the case of Raj Kumar Rajgarhia before the Apex Court. It is also pointed out that the guarantees were renewed from time to time and those are effective in both the cases till 12th September, 2003. That being the position, both the bank guarantees be directed to remain in force till 12th September, 2003. There would be no necessity of renewal of the same by the plaintiffs. The defendants shall be at liberty to act in accordance with the decree in both these suits. It is also clarified that this Court has not allowed any interest at the rate of 7% per annum during the pendente lite period.
28. In the result both the suits succeed. Court fees paid on the respective plaints are sufficient. It is, accordingly, ordered that the Suit No. 354 of 1973 and Suit No. 355 of 1973 be and the same are decreed on contest with costs.
29. In Suit No. 354 of 1973 the plaintiff Naresh Kumar Rajgarhia do get a decree for Rs. 50, 699. 41p. with costs.
30. In Suit No. 355 of the 1973 the plaintiff Bijoy Kumar Rajgarhia do get a decree for Rs. 50,652.31p. with costs.
31. Both the plaintiffs shall be at liberty to pay to the LICI the balance excess amount which may be found due and payable on the respective decree by 12th August, 2003, failing which the defendant LICI shall be at liberty to encash the bank guarantee to the extent of the amount to be found due on the respective decree.
32. This judgment do govern the fate of both the suits being Suit No. 354 of 1973 and Suit No. 355 of 1973.
33. The decree be drawn up in the respective suit expeditiously.
34. The parties shall be at liberty to obtain signed copy of the operative part of the judgment on fulfillment of the formalities.
