Venkatasubba Rao, J.@mdashA question of some interest has been raised in this appeal. The Lower Courts have held that no forfeiture was
incurred and in my opinion rightly.
2. It is unnecessary to quote the relevant clauses of the policy, which have been set forth in the careful and well-considered judgment of the learned
District Munsif. The short point in the case is, what is the true construction of the words ""sufficient to pay at least one year''s premium""? Before
attempting to construe these words, I shall briefly state the facts. The year with which we are concerned, is 2nd April, 1920 to 1st April, 1921.
The annual premium was Rs. 150-12-0, payable in four quarterly instalments. Three instalments amounting to Rs. 113-1-0 were duly paid, and the
fourth instalment, which amounts to Rs. 37-11-0, became payable on 2nd January, 1921. The default that occurred was in respect of that
instalment. The point to decide is, whether that default led to a forfeiture of the policy. The material portion of the clause runs as follows:
A policy which has acquired a surrender value sufficient to pay at least one year''s premium is not forfeited immediately by non-payment of the
premium within the days of grace; such surrender value being automatically applied in payment of instalments of premium and interest thereon to
keep the policy in force for so long a term as such surrender value will cover.
3. What is the intention to be gathered from this clause? The surrender value is treated as the money belonging to the assured and so long as the
company has in its hands a sum sufficient to pay at least a year''s premium, the parties stipulate that the policy shall not lapse. This is a provision
distinctly intended for the benefit of the assured and bearing that in mind, can the construction suggested for the insurance company be accepted?
As I have said, the balance due against the annual premium was only Rs. 37-11-0, but the surrender value of the policy on the date of default was
admittedly Rs. 86-3-0. Was that amount sufficient or not to pay the year''s premium? What then was the year''s premium? Out of the premium
payable for the year in question, Rs. 113-1-0 had already been paid; thus a balance of Rs. 37-11-0 only was left. In considering whether the
surrender value was sufficient to pay the year''s premium or not, we cannot overlook that a portion of the year''s premium had already been paid.
To ignore this circumstance would be not only unreasonable but be opposed to the clear intention of the parties. This is the view taken by the
Lower Courts, and in my opinion it is both reasonable and sound. Mr. Rajamanickam, the learned Counsel for the Company, has referred me to
Haughton v. Empire Marine Insurance Co. (1866) L.R. 1 Exch. 206 where Channell, B., observes:
A policy of insurance is to be construed by the same rules as other contracts, the duty of the Court being to collect the meaning of the parties by
taking the language employed in a plain and ordinary sense and not to speculate on some supposed meaning which they have not expressed.
4. Surely, I am not departing from this well-known rule of construction, but what is more to the point is, that it is equally well settled that the Courts
will, far from favouring a forfeiture, lean against it. See Porter''s Law of Insurance, VII Edition, pp. 79 and 80 and Wood fall on Landlord and
Tenant, 22nd Edition, p. 397. What the Company suggests is, that a year''s premium means a calendar year''s premium; in other words, a full
year''s premium in the abstract, without reference to the amount actually due for any particular year. This could not have been the intention of the
parties. The words ""such surrender value being automatically applied in payment of instalments of premium...for so long a term as such surrender
value will cover"" clearly negative the contention put forward for the insurance company. I underline the two words in that clause, namely,
automatically"" and ""instalments"".
5. In the result, the second appeal fails and is dismissed with costs.
