Hindustan Ideal Insurance Co. Ltd. v. Life Insurance Corporation of India

Sarkar J. was by time. In the result, the Tribunal dismissed

the insurer's application.

The insurer obtained special leave from this Court to a.ppoal a~a.inst tho j111lgment of the Tribu-nal and under that leave has prrSl'nted this appeal. Aftor th<> leave was granted, tho insurer amalgama-ted with another company called the Hindustan Ideal Insurance Company Ltd. and the latter company was substituted as ~he appellant in the place of the insurer.

Now s. l6 of the Act is in these terms : S. 16 ( 1) "Where the controlled busine88 of an insurer h:ui been transferred to and vested in the Corporation under this Act, compensa-tion shall be given by the Corporation to that insurer in accordancp, with the principles contained in the First Schedule.

(2) The a.mount of the compensation to be given in accordance with t.qe aforesaid principles shall be determined by the Corpo-ration in the first insurance, and if the Amount so deformined is approved by the Central Governmc-nt it shall be offored to the insurer in full satisfaction of the compensa· tion 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 tho pur-pose 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 Tribunal can be moved by an insurer only through 195S -i the Corporation. An insurer has no right under Hindust•n I deal

the section to approach the Tribunal directly. The I nsu•ance •• of Incli• procedure contemplaten is that an insurer has to Life lnsur•nCI move the Corporation and the Corporation has C or/Jaralion oJ Int/id thereupon to refer the dispute raised by tha insurer Sarkar J. to the Tribunal. l'his 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 Aot as whole that the refer.

nee 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 appel-lant. 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 Tribu-nal: As it had no right to move the Tribunal, no question of extending any time to do so really arose.

Now r. 12 ..,f the Rule framed under the Act provides for "the time within which a reference 62 SUPltEME OOURT ltEPORTS (1963]

lllel may be ma.de to the Tribunal in respect of the de-termination of compensation pa.:r_able under the Hindudc.n .. ldul Act." The time prescribed for the present caae ln.ntrm&t C.. Ltd.

LiJ• was three months from the date on which the

/111uratte1 compensation was offered to the insurer. Within 01jwol ion of Indio

these three months the insurer had done nothing. Sark•rJ. Thie rule, however, contains a. proviso which is in

these terms :

"Provided that any such reference may be admitted by the Tribunal after thti period of limitation prescribed thereunder this rule, if the person ma.king thtJ reference satisfies the Tribunal that he had sufficient ca.use for not ma.king the reference within the ea.id period.

If it ie contended that the insurer was entitled to move the Tribune.I directly under this proviso and had in fact done so, then, I think, it must be held that the Tribune.I was right in its view·tha.t nooause had been shown by the insurer why time should be T extended. Therefore if the a.pplica.tion so far as it asked for extension of time is tr11&ted as a. com-petent 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 Tribune.I ma.de in this behalf. The appeal must in any case fa.ii.

I do not feel ca.lied upoQ to go into any ques-tion of limitation in the present case. The proceed-ing being incompetent, an inquiry as to whether it had been started of time would be wholly irrele-vant. I, therefore, think it unnecessary to express any opinion on the interpretation of r. 12 of the Rules ma.de under the Act.

The result ie that the appeal is dismissed. As to cost.B, I think that as the Corporation itself had not before the Tribune.I contended that the pro-ceeding wu incompetent nor had ra.illed any such point in its statement of case in this appeal it is 1gs2 not entitled to , any. Hindusl,. Id.a I Insurane~ •• Co. Ltd. MuDHOLKAR, J.-The Andhra Insurance Co., Ltd., (hereinafter called the Company) was a com-Lift Insur_, CO'fporati(lll ef India posite insurance company, that is, doing business in life insurance, fire insurance and general insurance. Al wlholltM .T. By virtue of the provisions of s. 7(1) of the Life Insurance Corporation Act, 1956 (31 of 1956) (here· inafter called the Act) all its assets and liabilities pertaining to the life insurance business stood trans· ferred and vested in the Life Insurance Corporotion on September 1, 1956. Under s. 16(1J 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 wro~ to the Company stating, among other things, . that the amount of' compensation payable to it under s. 16( l) of the Act as determined by the Corporation and approved by the Central Govern-ment 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 I to the life business of the Company in accordance

with s. 18 of the Life Insurance Corporation Rules, l 9/i6 (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 ofR~. 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 oomputa.tion of the a.mount of com- ~ pensation ma.de by the Corporation there was dis-

agreement between the parties over the valuation

IPlll of the &88ets of the Company which stood transferr-ed to the Corporation. The Company objected to ,,,,..,.,...c..Lti >li•lrulM ldMI the deductione of Rs. 3,76,117/. Eventually on

•• August 6, 1957 the Company preferred a petition Li/1 J,u.,race of appeal before the L..ife Insurance Tribunal, C••rtd'-t e/ I Mia Nagpur, constituted by the Central Government MuAa/htJ. under s. 17(1) of the Act, On September 21, 1957 the Company lodged its statement of olsim before the Tribunal. The Corporation resisted the claim put forward by the Company on various grounds. The Tribunal framed 27 issues but it gave its find-ings only on the first three issues and dismissed the claim. We may mention that we are not oonoemed with any of the issues except No. 3 because it is on the basis of its finding thereon that it dismissed the olaim of the Company. That issue is whether the claim of the Company is barred by time.

It does not appear from the writter statement of the Corporation that it had raised a plea of limitation. All the same the Tribunal in its order hae aaid that as the Compaay 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 tho 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 whatso-ever 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 Conetitution for grant of special leave to appeal. I Leave was granted by this Con rt on August 18, 1958. Subsequent to the grant of leave by this Court the Company in pul'lluanoe of its soheme sanctioned by the High Court of Andhra Pradesh was amalgamat- - 1961 ed with the Hindustan Ideal Insurance Co., Ltd.

By reason of this the letter has now been bstituted Hindustan Ide4l RU Ins .. ,ance Co. Ltd. as appellant under the orders of this Court dated "' April 14, 1959. L je lniuronce Corpo·atinn of ltuli• On behalf of the appell1mt Mr. B.K.B. Naidu Mudt1olka• J, contended that since the Tribunal itself waR not appointed before the expiry of the period of three months providrd in r, I 2, 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 Tribu-nal was constituted. Alt.ernatively he contended that this was a fit case in which, under the proviso tor. 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 an insurer like the Compan,v to prefer a claim directly before the Tribunal and that all that the law entitled the Company to do was to move the Corpl'ra-tion to make a reference, that this had to be done within three months and that therPupon the Corporation had to make a reference to the Tribunal within the p~1icd 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 accordanre with the aforesaid prinri-ples shall bP 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 Tri-bunal for deoieion."

1962 A plain rPading of this proviRion shows that the lliwli1R•on ftiro/ reference had to he ma.de not by the insurer but by lr.111r,,ru:e CO. Ltd. someone else. Though that someone is not expres-

v. sly specified in sub-a. :!, the context shows that Life ln11nanu Oarparation a/ Indio that someone would be none other than the Corpo-

ration. The Central Go..-ernmont has not at any Mu:f.~olka1 J. rate specifically prescribed the period within which

the insurer has to move the Corporation for referr-ing its claim to the Tribunal for decision.

According to this provision the insurer is r l entitled to have the matter referred to the Tribunal for decision "'\'•ithin such time as may be prescribed for the purpose." "Prescribed" means prescribed by l{ull'B. 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, contendij that that is not provision means. A~cording to him the provision bas to be read along with a. 48(:!)(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 mav be referred to the Tribunal for a decision under t 0he Act may be so referred. There-fore, accordini;: to learned counsel, it is the period of limitation for this purpose which the Central Government bas to prPscribe and not the p· riod within which the insurer must move the Tribunal. He, however, says that the inaurer has to move the Corporal ion before the expiry of the period within which the Corporation is to make a refe-rence to the Tribunal.

We cannot accept the contention. On the .-i plain language of sub-s. 2 of s. 16 it is obligatory upon the Central Government to prescribl' the period within which the insurer is to move the Corporation for r1:fcrring its claim to the Tribunal. No doubt, cl. (f) does not refer to the prescription of time for such a purpose. But the provisions of 1961 sub-s. I of s. 48 are wide enough to enable the Central Government to prescribe tl!.e time for this Hindus/an Ideal lnsurone~ Co. Ltd. purpose. Under that sub-seJtion the Central Go-Y. vernment is empowered to make rules to carry out Life liuurtJ11ee Cor/JoTation of fnrlia the purposes of the Act. One of the purpose of the Act is to prescribe the time within which an insurer Mud!r,olkor J. has to move the Corporation for making a reference.

While sub-s. 1 of s. 4$ 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. Des!1i then contends that, the rule actually framed by the Cdntral 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 with- ,, in 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 com-

pensation is payableunder Part A or Part B or Part C of the First Schedule to the Act, within three months from the date .1 on which the compensation determined

by the Corporation is offered to the insu-rer;

•

(ii) in the case of an insurer to whom com-

pensation 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 Corpo-ration is offered to the insurer ;

(iii) in ·the case of compensation payable to a

Chief agent or special agent under the

19G~ proviso to section 36 of the Act, within Hindu&le.n ltf1ol three months from the date on which the lnSUJ anc1 Co. L!t/. compensation determined b.v the Corpo-

v. ration is offen'd to the chief a.gent or Lift ln1Uf'linC4 Corpor .. lhn of lndi2 special a.gent, a.s the case ma:v be :

JI iulhdkar , ' . Provided that any such reference may be arlmitted by the Tribunal after the period of limitation prescribed therefor under this rule, if the person making the reference satisfies the 'fribunal that he h&d sufficient cause for not ma.king the reference within the said period."

According to Mr. Desai, under eub-r. (l) of th.is Rule the Corporation has to make a ref.,renoe to the Tribunal within three months. It would, thArefore, a.ccordin~ to him, follow that the insurer must move the Corporation before the expiry of that p!'lriorl and that, therefore, by framing this rule the Central Government has not only carried out the requirements ofol. (fl of sub-s. 2 of s. 48 but also of sub-11. 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 fo; doing & thing, that period should be clE>arly specified with specific reference to the particular purpose. The specific purpose referred to in Hub-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 C'-0rporation and not the insurer who can only move the Corporation for making the refenmce. Time is required to be prescribed for doing this act by the inaurer. Prescribing time for ma.king a. reference is not prescribin!! time for moving the ,. Corporation to make the referl"nce. It ma.y be that · when the latter period is prescribed it . would be

possible to say that before the expiry of that period the insurer must move the Corporation. But

2 s.c.R. SUPREME C'OURT REPQR,TS 69

prescribing time by implication would not be com-19112 pliance wfoh the provisions of sub-s. 2 of s. 16. For, Hindusfa11 l1hal when a period is prescribed for doing an act the lnsurJnca Co.Ltd. person who has to do that act is entitled to do it v. Life lnsuronce even on the last day. If the construction of learned· Corporatiori oj Indid counsel is accepted it would mean that the insurer M udlmlf, at J . 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 refe-rence to the Tribunal al·.o on \he same <lay ?

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 limitat.ion prescribed therefor if the "person making the reference" satis-fies the Tribunal that he had sufficient cause for not. making the reference within the prescribed period. The proviso thus indio'.l.tes 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 I considering the rule along with the proviso it would

appear that the rule was meant to govern a refe-rence by someone else and not the Corporation.

That someone could be either the insurer or a chief agent or special agent wh? also is entitled to compensation!under the proviso to s. 36.

J..earned counsel then advanced a rather novel argument. The argument is this. While the open-ing 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 Corpo-i ration, whereas the proviso applies only to an insu-

l'er or a ohief agent or special agent as the case may be. If the provision, that ie, the whole or r. 12-ii

I9RI read thus, the contention procredP, there would be n;nd.,••n Id.al no lacuna in the rnles, and the provibo lo r. 12 I"'""""' Co. Lil. would not be rendered 1·eciundant.

Y, Lift lruuran~ All that l\Ir. Desai could s1<y in support of Lis Oorporolion of Intli4 contention thut •ub-rr. (i), (ii) and (iii) of r. 12 M 11dJiolA ar J. must be eonst1 ucd to apply to the Corporation alone is that such a construction would avoid We a lacuna ill the rules. But what is the lacuna? have already pointed out that tho lacuna is in not vrescribing the time within which an insurer must move the Corporation for making a reference. That l .. mna will not be removed even if we accept the const1 uction pressed by learned counsel. That apart, upon the language of the sub·rules, they cannot be oonstrued as applying to the Corporation alone.

Learned counsel then contendl'd that if we construe the proviso in such a way us to make the substantive provisions of r. 12 applicablti to an insurer or a chief agent and not to the Corporatian we would be limiting the scope of the main enact-ing provision and that is not permissible.

There is no doubt that where the main provi-sion is clear its effect cannot be cut down by the proviso. But where it is not clear the proviso, which cannot be presumed to t,e a surplusage, can properly be looked into the ascertain the me1ming and 1;eope of the mai.n 1 roviMion. .By looking at the provii;o for this purpooe the rule of ::onitl uction refened to by learned counsel will not be infring-ed.

. In the West Derby Union v. M etrapolitJm Life A68'urance Co .. (1) Lord Watson observed:

" ......... I p.erfoctly admit the.t there may be and are many oases which the terms of e.n intelligible proviso may throw conaidera.ble (I) ( 1897) A.C. 'f I, 6~2.

·light on the ambiguous import of the statu· 1962 . tory words."

I Hindust,.,n Ideal -1 Tn the same case Lord Herschell admitted that a . 1uuronce Co. Ltd, v. proviso may be a useful guide in the selection of LiJe /nJ11rtmce one or other of two possible constructions of words Co1poru.1ion of Ltd. in the enactinen t or to show the soo pe of the latter Mudho/kar J. in a doubtful case.

Here we find that r. 12 read by itself does not show clearly whether it appeals to the Corpora-tion special agPnt. It is thernfore, permissible to look into the proviso for' ascertaining the scope of the main provisions of r. l:!. As we have stated earlier the proviso cannot, upon its proper construc-tion apply to the Corporation.· When, therefore, we read r. 12 as a whole, that is, along with the proviso we woµld not be violating any well-accept-ed 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 bold that r. 12 deals with a reference made by the Corpora-tion . only. The reason why we say that it will be rendered useless is this. Supposing an insurer I moves the Corporation beyond three months for

making a reference, would the Corporation be bound to make the reference ? Upon the terms of aub-s. 2 of s. 16 the Corporation would only be bound to make a reference if is moved by the in-surer within the prescribed period. If that is so, then no occasion would ariRe for enabling the in-surer to move the Tiibunal for condoning the delay.

According to Mr. Desai, however, the Corporation could be compelled by mandamus to make the refe-rence. The short answer to that is that there being no duty upon the Corporation to make a reference after the expiry or the period prescri'Jed by r. 12 no mandamus can issue to it.

1961 Another reason for not accepting the conten-Binli.;stan ttlul tion of learned couusal is that the proviso speak of lruur~1i.c. •• QJ. U4. the person making the reference eatisfying the Tribu-

Life Jn1uranc• nal that he has sufficient cause for not making tho Cwj>otaho11 of India reference withiu the samtl period. If the insur<r is

not the person making the reference, how can he Jlu4/wlk«' J, be said to be permitted to Hatisfy .the Tribunal

about the sufficiency of the cause for condoning the delay in making the reference ? Mr. Desai, how-ever, suggest that we should read the words "if the person making tho rtlference satisfies tho Tri-bunal. .. etc." as if they read "if the person at whoso instance the reference is made satisfies the Tri-buual. .. etc." That would be re-writing the pro vi. sion which we cannot do.

It seems to us that while framing r. 12 the rule making authority lost sight of f~ct that sub-s. 2 of s. 16 conttin:plates a reference not hy 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 ol the act. We appreciate his conten-tion but there is no esoa.pe from the result.

The proceedings before the Tribunal were mis-conceived because the only way in which they could be initiated was by a reference by the Corpo-ration and there was no such reference. No question of limitation arises because the period within which an in8urcr must move the Corporation to make a reference has not yet been prescri berl as required by sub-s. 2 of s. 16. It will be open to the Appellant to move the Corporation under a. 16(2) after such period is prescribed.

In the result we quash all the proceedings be-fore the Tribunal but in the particular circumsta-nces make no order as to costs.

Appeal Dismisse.d.