Hindustan Ideal Insurance Co. Ltd. Vs.
Life Insurance Corporation of India [1962] INSC 140 (12 April 1962)
12/04/1962 SARKAR, A.K.
SARKAR, A.K.
SUBBARAO, K.
MUDHOLKAR, J.R.
CITATION: 1963 AIR 1083 1963 SCR Supl. (2) 56
ACT:
Insurance--"Person making the
reference"--Meaning of--No period prescribed for moving the
Corporation--Effect--Life insurance Corporation Act, 1956 (31 of 1956), ss.
16(2) 48 (2) (f)--Life Insurance Corporation Rules, 1956, r. 12 Sub rr. (i),
(ii), (iii).
HEADNOTE:
The Life Insurance business of the insurer.
The Andhra insurance Company Ltd., vested in the Life Insurance Corporation of India
and it became entitled in compensation under s. 16 of the Life Insurance Corporation
Act. The Corporation made and offer of it and claimed various deductions. The 57
insurer raised certain disputes and on August 6, 1957, made an application to the
tribunal constituted on May 25, 1937 for re-assessment of the compensation and also
for extension of time for making the application by three months from the date of
its constitution. On September 21, 1937, the insurer filed another statement giving
details of its claim.
In answer to the claim the Corporation filed its
written statement. The tribunal held that the claim for compensation was time-barred
under r. 12 of the Rules framed under the Act and dismissed the application. It
also held that under s. 16(2) of the Act the insurer had no right to move directly
the tribunal regarding the amount of compensation, but could move corporation for
making a reference of the dispute to the tribunal and that it did not show any cause
for extending time to make the reference to the tribunal. Against the judgment of
the tribunal, the insurer obtained special leave to add and thereafter amalgamated
with Hindustan Ideal Insurance Company Ltd.
which was substituted as appellant in place of
the insurer.
Held, (Per Subba Rao and Mudholkar, JJ.) That
while sub-s. '(1) of s. 48 confers a power on the Central Government, sub-s. (2)
of s. 16 imposes a duly upon it and therefore, it is obligatory upon the Central
Government to prescribe the period within which the insurer is to move the Corporation
for referring the claim to the Tribunal. When the law requires a period to be prescribed
for doing a thing, that period should be clearly specified with specific reference
to the particular purpose. The specific purpose referred to in Sub. s. (2) of s.
16 is, to have the matter referred to the tribunal for decision. "Making of
the reference is thus in the hands of the corporation and not in these of insurer
who can only move the corporation for making the reference. Time has to be prescribed
for enabling the insurer to move the Corporation. Prescribing time for making a
reference is not prescribing time for moving the corporation to make the reference.
Prescribing time by implication would not be compliance with the provisions of Sub-s.
(2) of 16.
West Durby Union v. Metropolitan Life Assurance
Co. [1897] A. C. 647, referred to.
While framing r. 12 the Rule making authority
lost sight of the fact that Sub-s. (2) of s. 16 contemplates a reference not by
the insurer but by the corporation. The proceeding taken before the tribunal were
therefore misconceived. No question of limitation arises because the period within
58 which an insurer must move the corporation to make a reference has not yet been
prescribed as required by Sub s.(2) of s. 16. It would be open to the appellant
to move the corporation under s. 16(2) after such period is prescribed. It was urged
by the insurer that the claim cannot treated as barred by time and this was a fit
case for extension of time under the proviso to r. 12.
Held, As r. 12, read by itself does not show clearly
whether it applies to the corporation or it applies to an insurer or a chief agent
or a special agent, it is permissible to look into the proviso for ascertaining
the scope of the main provisions of that rule. Reading it along with the proviso
would not violate any well accepted rule of construction.
Held (per Sarkar, J.), that the insurer had no
right to move the tribunal directly and the proceedings commenced by it before the
tribunal were therefore wholly misconceived and no relief could be granted by the
tribunal to the insurer.
As the insurer had no right to move the tribunal,
no question of extending time for it to do so really arose. If the application for
extension of time to move the tribunal is treated as competent under the proviso
of r. 12 of the rules, then also, the appellant is not entitled to any relief, for
there is no justification on the merits to interfere with the tribunal's order refusing
to extend time.
The proceedings being incompetent, an enquiry
as to whether it had been started out of time would be wholly irrelevant and it
is therefore unnecessary to express any opinion on the correct interpretation of
r. 12 of the Rules. The proceeding being incompetent from the beginning it is not
possible for this Court to grant any relief and, therefore, the appeal must fail
in any case.
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
82 of 1960.
Appeal by special leave from judgment and order
dated February 17, 1958, of the Court of Life Insurance Tribunal, Nagpur, in case
No. 16/ XVIA of 1957.
B. K. B. Naidu, for the appellant.
S. T. Desai, S. J. Banaji and V. L. Hathi, for
the respondent, 59 1962. April 12. The following Judgments were delivered.
The Judgment of Subba Rao and Mudholkar, JJ ;
was delivered by Mudholkar, J.
SARKAR J.-The Andhra Insurance Company Ltd., hereafter
called the insurer, carried on life insurance and other insurance business. On September
1, 1956, the life insurance business of the insurer became vested in the Life Insurance
Corporation of India under the provisions of the Life Insurance Corporation
Act, 1956. The insurer thereupon became entitled to compensation from the Life Insurance
Corporation under s. 16 of the Act.
On February 19, 1957, the Corporation having determined
the amount of the compensation and obtained the Central Government's approval made
an offer of it to the insurer as provided in s. 16. By the letter making the offer,
the Corporation claimed various deductions. The insurer raised certain disputes.
It is not necessary for the purpose of this appeal to refer to these disputes.
On August 6, 1957, the insurer made an application
to the Tribunal which had been constituted on May 25, 1957 for an order for re-assessment
of the compensation payable to it.
In that application it also made a prayer that
the Tribunal might, if necessary, extend the time for making the application by
three months from the date of its constitution. On September 21, 1957, the insurer
filed in the Tribunal another statement giving the details of its claim. The Corporation
in its turn filed its written statement in answer to the claim of the insurer.
The Tribunal by its judgment dated February 17,
1958 held that under s. 16 of the Act an Insurer bad no right to approach the Tribunal
directly for deciding any dispute with the Corporation regarding the amount of the
compensation but had 60 to move the Corporation to make a reference of the dispute
to the Tribunal and this, the present insurer had not done.
It also held that the insurer had not shown any
cause why the time to make the reference to the Tribunal should be extended. It
further held that the claim for compensation was by time. In the result, the Tribunal
dismissed the insurer's application.
The insurer obtained special leave 'from this
Court to appeal against the judgment of the Tribunal and under that leave has presented
this appeal. After the leave was granted, the insurer amalgamated with another company
called the Hindustan Ideal insurance Company Ltd. and the latter company was substituted
as the appellant in the place of the insurer.
Now s. 16 of the Act is in these terms S. 16 (1)
"Where the controlled business of an insurer has been transferred to and vested
in the Corporation under this Act, compensation shall be given by the Corporation
to that insurer in accordance with the principles contained in the First Schedule.
(2) The amount of the compensation to be given
in accordance with the aforesaid principles shall be determined by the Corporation
in the first insurance, and if the amount so determined is approved by the Central
Government it shall be offered to the insurer in full satisfaction of the compensation
payable to him under this Act, and if, on the other hand, the amount so offered
is not acceptable to the insurer he may within such time as may be prescribed for
the purpose have the matter reference to the Tribunal for decision." It is
obvious from the terms of sub-sec. (2) of s. 16, and it is indeed not seriously
in dispute, that the 61 Tribunal can be, moved by an insurer only through the Corporation.
An insurer has no right under the section to approach the Tribunal directly. The
procedure contemplated is that an insurer has to move the Corporation and the Corporation
has thereupon to refer the dispute raised by the insurer to the Tribunal. This inevitably
follows from the words in section, namely, "he may...... have the matter referred
to the Tribunal for decision." The section no doubt does not mention the Corporation
but it is clear from the Act as whole that the reference contemplated was through
the Corporation. The insurer had to move some authority to make the reference and
the only authority under the Act could be the Corporation. On this part of the case
I am in agreement with the view expressed in the judgment of my brother Mudholkar.
In the present case however the insurer had directly
moved the Tribunal. This it had no right to do. The proceedings commenced by it
were therefore wholly misconceived. That being so, the insurer could not have obtained
any relief from the Tribunal nor could the Tribunal have granted it any relief.
In this appeal, therefore, it is not possible for the Court either to grant any
relief to the insurer or its successor-in-interest, the appellant. The proceeding
being incompetent from the beginning, the appellant cannot ask for anything in it.
It would have been noticed that the insurer had
asked the Tribunal to extend the time to enable it to make the application to the
Tribunal. As it had no right to move the Tribunal, no question of extending any
time to do so really arose.
Now r. 12 of the Rule framed under the Act provides
for the time within which a reference 62 may be made to the Tribunal in respect
of the determination of compensation payable under the Act." The time prescribed
for the present case was three months from the date on which the compensation was
offered to the insurer. Within these three months the insurer bad done nothing.
This rule, however, contains a proviso which is in these terms :
"Provided that any such reference may be
admitted by the Tribunal after the period of limitation prescribed thereunder this
rule, if the person making the reference satisfies the Tribunal that he bad sufficient
cause for not making the reference within the said period.
If it is contended that the insurer was entitled
to move the Tribunal directly under this proviso and had in fact done so, then,
I think, it must be held that the Tribunal was right in its view that no cause had
been shown by the insurer why time should be extended. Therefore if the application
so far as it asked for extension of time is treated as a competent one under this
proviso, then also on the merits, the appellant is not entitled to any relief, for
there is no justification to interfere with the order that the Tribunal made in
this behalf The appeal must in any case fail.
I do not feel called upon to go into any question
of limitation in the present case. The proceeding being incompetent, an inquiry
as to whether it had been started of time would be wholly irrelevant. L therefore,
think it unnecessary to express any opinion on the interpretation of r. 12 of the
Rules made under the Act.
The result is that the appeal is dismissed. As
to costs, I think that as the Corporation itself had not before the Tribunal contended
that the proceeding was incompetent nor had raised an.* such 63 point in its statement
of case in this appeal it is not entitled to any.
MUDHOLKAR, J.-The Andhra Insurance Co... Ltd.,
(hereinafter called the Company) was a composite insurance company, that is, doing
business in life insurance, fire insurance and general insurance. By virtue of the
Provisions of s. 7(1) of the Life Insurance Corporation Act, 1956 (31 of 1956) (hereinafter
called the Act) all its assets and liabilities pertaining to the life insurance
business stood transferred and vested in the Life Insurance Corporation on September
1, 1956. Under s. 16(1) of the Act the Company was entitled to receive Compensation
from the Corporation determined in accordance with the principles contained in First
Schedule to the Act. On February 14, 1957, the Corporation wrote to the Company
stating, among other things, that the amount of compensation payable to it under
s. 16(1) of the Act as determined by the Corporation and approved by the Central
Government comes to Rs. 6,14,636. The Corporation made an offer of this amount to
the Company in full satisfaction of the compensation payable to it. The Corporation
further stated in its letter that the part of the paid up capital of the Company
and assets representing such part which have been allocated to the life business
of the Company in accordance with s. 18 of the Life Insurance Corporation Rules,
1956 (hereinafter called the Rules) amounts to Rs. 3,76,117/ and that as the aforesaid
assests have not been transferred to the corporation the said amount of Rs.
3,76,117/ will be set off against and deducted
from the amount of compensation payable to the Company. Certain correspondence then
ensued between the Company and the Corporation and it would appear from it that
while the Company accepted the computation of the amount of compensation made by
the Corporation there was disagreement between the parties over the valuation 64
of the assets of the Company which stood transferred to the Corporation. The Company
objected to the deductions of Rs.
3,76,117/. Eventually on August 6, 1957 the Company
preferred a petition of appeal before the Life Insurance Tribunal, Nagpur, constituted
by the Central Government under s. 17(1) of the Act. On September 21, 1957 the Company
lodged its statement of claim before the Tribunal.
The Corporation resisted the claim out forward
by the Company on various grounds. the Tribunal framed 27 issues but it gave its
findings only on the first three issues and dismissed the claim. We may mention
that we are not concerned with any of the issues except No. 3 because it is on the
basis of its finding thereon that it dismissed the claim of the Company. That issue
is whether the claim of the Company is barred by time.
It does not appear from the written statement
of the Corporation that it had raised a plea of limitation. All the same the Tribunal
in its order has said that as the Company did not lodge a claim before it within
three months of February 14, 1957, which was the date on which compensation was
offered by the Corporation to the Company it was barred by r. 12 of the Rules framed
under the Act.
The Tribunal further observed that the Company.
had to move the Corporation under s. 16(2) of the Act to make a reference to the
Tribunal, it failed to do so and that it did not show any cause whatsoever for its
failure to do so,.
but instead submitted its claim direct to the
Tribunal on August 12, 1957. No question, therefore, excusing delay under the proviso
to r. 12 arose.
Aggrieved by the decision of the Tribunal the
Company moved this Court under Art. 136 of the Constitution for grant of special
leave to appeal. Leave was granted by this Court on August 18, 1958. Subsequent
to the grant of leave by this Court the Company in pursuance of its scheme sanctioned
by 65 the High Court of Andhra Pradesh was amalgamated with the Hindustan Ideal
Insurance Co., Ltd. By reason of this the letter has now been substituted as appellant
under the orders of this Court dated April 14, 1959.
On behalf of the appellant Mr. B.K.B. Naidu contended
that since the Tribunal itself wag not appointed before the expiry of the period
of three months provided in r. 12, the claim made by the Company cannot be treated,
as barred by time because in his submission limitation would not commence to run
till the date on which the Tribunal was constituted.
Alternatively he contended that this was a fit
case in which, under the proviso to r. 12, time should have been extended.
On behalf of the Corporation Mr. S. T. Desai contended
that under sub-s.2 of s. 16 it was not open to ,in insurer like the Company to prefer
a claim directly before the Tribunal and that all that the law entitled the Company
to do was to move the Corporation to make a reference, that this had to be done
within three months and that thereupon the Corporation had to make a reference to
the Tribunal within the period of three months prescribed by r. 12. Since this procedure
was not adopted the proceedings before the Tribunal were incompetent.
Sub-section 2 of s. 16 reads thus :
"The amount of the compensation to be given
in accordance with the aforesaid principles shall be determined by the Corporation
in first instance, and if the amount so determined is approved by the Central Government
it shall be offered to the insurer in full satisfaction of the compensation payable
to him under this Act, and if, on the other hand, the amount so offered is not acceptable
to the insurer he may within such time as may be prescribed for the purpose have
the matter referred to the Tribunal for decisions" 66 A plain reading of this
provision shows that the reference had to be made not by the insurer but by someone
else.
Though that someone is not expressly specified
in sub-s. 2, the context shows that that someone would be none other than the Corporation.
The Central Government has not at any rate specifically prescribed the period within
which the insurer has to move the Corporation for referring its claim to the Tribunal
for decision.
According to this provision the insurer is entitled
to have the matter referred to the Tribunal for decision "within such time
as may be prescribed for the purpose." "Prescribed" means prescribed
by Rules. It would, therefore,, follow that the Central Government has to make a
rule prescribing the period within which the insurer must move the Corporation for
making the reference. Mr. Desai, however, contends that that is not provision means.
A cording to him the provision has to be read along with s.
4812)(f of the Act. Section 48 is the provision
which confers power on the Central Government to make rules.
Clause (f) of sub.s. 2 enable it to prescribe
the time within which any matter which may be referred to the Tribunal for a decision
under the Act may be so referred.
Therefore, according to learned counsel, it is
the period of limitation for this purpose which the Central Government has to prescribe
and not the period within which the insurer must move the Tribunal. He, however,
says that the insurer has to move the Corporation before the expiry of the. period
within which the Corporation is to make a reference to the Tribunal.
We cannot accept the contention. On the plain
language of sub-s. 2 of S. 16 it is obligatory upon the 'Central Government to prescribe
the period within which the insurer is to move the Corporation 'for referring its
claim to the Tribunal. No doubt, cl. (f) does not refer to the prescription 67 of
time for such a purpose. But the provisions of sub.s. 1 of s. 48 are wide enough
to enable the Central Government to prescribe the time for this purpose. Under that
subsection the Central Government is empowered to make rules to carry out the purposes
of the Act. One of the purpose of the Act is to prescribe the time within which
an insurer has to move the Corporation for making a reference. While sub-s. 1 of
s. 48 confers a power on the Central Government, sub-s. 2 of s. 16 imposes a duty
upon it and, therefore, it is obligatory upon the Central Government to make a rule
in this behalf by exercising the power under s. 48 (1).
Mr. Desai then contends that the rule actually
framed by the Central Government that is, r. 12 must be deemed to be sufficient
for his purpose. That rule is in following terms :
"Reference to Tribunal.-The time within which
a reference may be made to the Tribunal in respect of the determination of compensation
payable-under the Act, shall be as follows, namely : (i) in the case of an insurer
to whom compensation is payable under Part A or Part B or Part C of the First Schedule
to the Act, within three months from the date on which the compensation determined
by the Corporation is offered to the insurer (ii) in the case of an insurer to whom
compensation is payable under Part B of the First Schedule to the Act, within six
months from the date on which the compensation determined by the Corporation is
offered to the insurer (iii) in the case of compensation payable to a Chief agent
or special agent under the 68 proviso to section 36 of the Act, within three months
from the date on which the compensation determined by the Corporation is offered
to the chief agent or special agent, as the case may be :
Provided that any such reference may be admitted
by the Tribunal after the period of limitation prescribed therefor under this rule,
if the person making the reference satisfies the Tribunal that he had sufficient
cause for not making the reference within the said period." According to Mr.
Desai, under sub-r. (1) of this Rule the Corporation has to make a reference to
the Tribunal within three months. It would, therefore, according to him, follow
that the insurer must move the Corporation before the expiry of that period and
that, therefore, by framing this rule the Central Government has not only carried
out the requirements of ol. (f) of sub-s. 2 of s. 48 but also of sub-s. 2 of s.
16.
It is difficult to appreciate this argument for
two reasons.
The first one is that when the law requires a
period to be prescribed for doing a thing, that period should be clearly specified
w ith specific reference to the particular purpose. The specific purpose referred
to in sub-s. 2 of s.
16 is "to have the matter referred to the
Tribunal for decision." Making of the reference is thus in the hands of the
Corporation and not the insurer who can only move the Corporation for making the,
reference. Time is required to be prescribed for doing this act by the insurer.
Prescribing time for making a reference is not
prescribing time for Moving the Corporation to make the reference. It may be that
when the latter period is prescribed it would be possible to sty that before the
expiry of that period the insurer must move the Corporation. But 69 prescribing
time by implication would not be compliance with the provisions of sub-s. 2 of s.
16. For, when a period is prescribed for doing an act the person who has to do that
act is entitled to do it even on the last day. If the construction of learned counsel
is accepted it would mean that the insurer would be within time under r. 12 if he
moves the Corporation on the date on which the period of three months expires. If
he does that how would it be possible for the Corporation to make a reference to
the Tribunal also on the same day ? The second reason for not accepting the construction
placed by learned counsel is that the proviso to r. 12 empowers the Tribunal to
admit a reference after the period of limitation prescribed therefor if the "person
making the reference" satisfies the Tribunal that he had sufficient clause
for not making the reference within the prescribed period. The proviso thus indicates
that the reference to the Tribunal contemplated by r. 12 is to be made by the insurer
and not by the Corporation. This appears to be so from the language of the proviso
itself. No doubt r. 12, considered without the proviso, may well be construed as
applying to reference to be made by the Corporation. But considering the rule along
with the proviso it would appear that the rule was meant to govern a reference by
someone' else and not the Corporation. That someone could be either the insurer
or a chief agent or special agent who also is entitled to compensation under the
proviso to s. 36.
Learned counsel then advanced a rather novel argument.
The argument is this. While the opening words of r. 12 may apply to the Corporation
as to an insurer, a chief agent or a special agent sub-rr. (i), (ii) and (iii) thereof
apply only to the Corporation, whereas the proviso applies only to an insurer or
a chief agent or special agent as the case may be. If the provision, that is, the
whole or r. 12 is 70 read thus, the contention proceeds, there would be no lacuna
in the rules, and the proviso to r. 12 would not be rendered redundant.
All that Mr. Desai could say in support of his
contention that sub-rr. (i), (ii) and (iii) of r. 12 must be construed to apply
to the Corporation alone is that such a construction would avoid a lacuna in the
rules. But what is the lacuna ? We have already pointed out that the lacuna is in
not prescribing the time within which an insurer must move the Corporation for making
a reference. That lacuna will not be removed even if we accept the construction
pressed by learned counsel. That apart, upon the language of the sub-rules, they
cannot be construed as applying to the Corporation alone.
"earned counsel then contended that if we
construe the proviso in such a way as to make the substantive provisions of r. 12
applicable to an insurer or a chief agent and not to the Corporation we would be
limiting the scope of the main enacting provision and that is not permissible.
There is no doubt that where the main provision
is clear its effect cannot be cut down by the proviso. But where it is not clear
the proviso, which cannot be presumed to be a surplusage, can properly be looked
into the ascertain the meaning and scope of the main provision. By 'looking at the
proviso for this purpose the rule of Constiuction referred to by learned counsel
will not be infringed.' In the West Derby Union v. Metropolitn Life Assurance Co..
(1) Lord Watson observed :
"......... I perfectly admit that there may
be and are any oases which the terms of ail intelligible proviso may throw considerable
(1) (1897) A.C. 641, 652.
71 light on the ambiguous import of the statutory
words." In the same case Lord Herschell admitted that a proviso may be a useful
guide in the selection of one or other of two possible constructions of words in
the enactment or to show the scope of the latter in a doubtful case.
Here we find that r. 12 read by itself does not
show clearly whether it appeals to the Corporation special agent. It is therefore,
permissible to look into the proviso for ascertaining the scope of the main provisions
of r.'12. As we have stated earlier the proviso cannot, upon its proper construction
apply to the Corporation. When, therefore, we read r. 12 as a whole, that is, along
with the proviso we would not be violating any well-accepted rule of construction
though by so reading it we came to the conclusion that r. 12 applies only to an
insurer or a chief agent or a special agent but not to the Corporation.
We may further point out that the proviso would
be rendered useless if we are to hold that r. 12 deals with a reference made by
the Corporation only. The reason why we say that it will be rendered useless is
this, Supposing an insurer moves the Corporation beyond three months for making
a reference, would the Corporation be bound to make the reference ? Upon the terms
of sub-s. 2 of s. 16 the Corporation would only be bound to make a reference if
is moved by the insurer within the prescribed period. If that is so, then no occasion
would arise for enabling the insurer to move the Tribunal for condoning the delay.
According to Mr. Desai, however, the Corporation could be compelled by mandamus
to make the reference. The short answer to that is that there being no duty upon
the Corporation to make a reference after the expiry or the period prescribed by
r. 12 no mandamus can issue to it.
72 Another reason for not accepting the contention
of learned counsel is that the proviso speaks of the person making the reference
satisfying the Tribunal that he has sufficient cause for not making the reference,
within the same period.
If the insurer is not the person making the reference,
how can be said to be permitted to satisfy the Tribunal about the sufficiency of
the cause for condoning the delay in making the reference? Mr. Desai, however, suggest
that we should read the words "if the person making the reference satisfies
the Tribunal ... etc." as if they read "if the person at whose instance
the reference is made satisfies the Tribunal ... etc."'That would be rewriting
the provision which we cannot do.
It seems to us that while framing r. 12 the rule
making authority lost sight of fact that subs. 2 of s. 16 contemplates a reference
not by the insurer but by the Corporation. Learned counsel urged that we should
not place an interpretation upon the rule which will leave a serious lacuna in the
working of the act. We-appreciate his conten tion but there is no escape from the
result.
The proceedings before the Tribunal were misconceived
because the only way in which they could be initiated was by a reference by the
Corporation and there was no such reference. No question of limitation arises because
the period within which an insurer Must move the Corporation to make a reference
has not yet been prescribed as required by sub-s. 2 of s. 16. It will be open to
the Appellant to move the Corporation under s. 16(2) after such period is prescribed.
In the result we quash all the proceedings
before the Tribu
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