Arun Madan, J.
1. This first appeal has been preferred by the plaintiffs against the judgment and decree dated 8-4-93 passed by the learned Addl. District Judge, Jhalawar by which he had decreed the suit of the plaintiffs for their claims of payment of assured sum to the tune of Rs. 64,332/- plus bonus accrued on three policies in question, but declined to grant interest on the decretal amount. Hence, this first appeal is confined only to the question of liability of the respondent, Life Insurance Corporation Branch, Jhalawar (for short 'LIC') to pay interest for the period after the death of policy-holder and upon repudiation of their claim having been held illegally and upon holding the nominees (plaintiffs) of the deceased policy-holder entitled to the assured sum under the Impugned judgment by the trial Court.
2. The facts leading to this appeal, briefly stated, are that Pannalal took three policies on his own life from the respondent-LIC as per following details :--
Policy No.
Date ofCommencement
Table& Term
AssuredSum
Date ofMaturity
1) 25862437
1-7-76
24-15
Rs.12,500/-
1-7-1991
2) 25862438
1-7-76
24-15
Rs.12,500/-
1-7-1991
3) 48898109
2-7-82
75-20
Rs.41,000/-
2-7-2002
3. Shri Pannalal (policy-holder) since deceased declared his wife Smt. Kamla Bai (plaintiff No. 2) in second policy, ibid, and his son Santosh Kumar (plaintiff No. 1) in first and third policy, ibid, as his nominees. First two policies (supra) are alleged to have lapsed on account of default in payment of the requisite premiums for the period in between 1-7-80 to 1-7-81, but first policy was got renewed by making payment of premium with interest on 14-8-81 while in second policy on 24-8-82.
4. However, the policy-holder (whose nominees are the present appellants) Pannalal died on 21 -6-83 intimation whereof was given on 8-7-83 to the LIC, whereupon the LIC asked the nominees to furnish original policies, receipt of last premiums paid so as to scrutinise the claims. On 10-9-84 the LIC under two different letters communicated rejection and repudiation of the claims of the present appellants under the aforesaid three policies on the grounds inter alia that the policy-holder deliberately had not only disclosed false and inaccurate statement but also suppressed material facts about his ailment i.e. Chronic renal failure and hypertension at the time of his proposal of taking aforesaid three policies during his own life as well as at the time of getting his two of policies renewed on 14-8-81 and 28-4-82 (sic).
5. Hence, being dissatisfied with the repudiation on the part of the LIC, the plaintiffs instituted a civil suit on 30-6-86 claim-Ing Rs. 66.000/- towards assured sum be-sldesbonus on aforesaid three policies. Upon notice the LIC contested the suit reiterating the grounds of repudiation of the claims. On the pleadings of the parties, following two issues were framed :--
(1) Whether deceased Pannalal did not renew the suit policies within time, and whether he got renewed the suit policies by suppressing facts and by falsely disclosing personal statement as to his ailment and health? if yes, what is its effect?
(2) To what relief are the plaintiffs entitled?
6. The plaintiffs produced Dr. Jagdish Arora (PW-1) and examined himself as PW-2 (Santosh Kumar) whereas the defendant produced Dr. Achal Sipah (DW-1) and Mohd. Hussain (DW-2) in support of their respective pleas. After hearing both the parties the learned trial Court by Its Impugned judgment decided issue No. 1 against the defendant-LIC holding the plaintiffs as entitled to the assured sum and bonus thereon but declined to grant any interest on the decretal amount. Hence, this appeal.
7. Relying upon the decisions in (1) Sovintorg (India) Ltd. v. State Bank of India, (1999) 6 SCC 406 : (AIR 1999 SC 2963); (2) LIC v. Gangadhar Viswanath Ranade, AIR 1990 SC 185; (3) Vaid Mahesh Chandra Sastri Rampuri v. LIC. (1968) 38 Com Cas 767 (All) and (4) Vijaya Bank v. Art Trend Exports 1999 (2) Bank CLR 468 (Cal), Shri N. K. Maloo, learned Counsel for the appellants contended that once the trial Court held the plaintiffs entitled to their claims of payment which accrued due as a result of the death of the policy-holder under aforesaid three policies in question including bonus, then it ought not to have declined to the claim of interest on the amount decreed under the Impugned judgment and. therefore, the trial Court failed to exercise its jurisdiction under the law for awarding the interest because as per the conclusions drawn by the trial Court, the repudiation on the part of the LIC to the claims of the plaintiffs was totally misconceived and against the canons of law thereby causing delay in due payment and putting under financial crunch to the plaintiffs after the death of policy-holder.
8. Shri R. K. Soni, learned Counsel for the LIC (respondent) contended at the bar that the claim of the appellants with regard to the payment of interest on the assured sum and bonus, is not admissible in view of the fact that it is possible only when the award of interest is a part of the agreement under the policies in question even though settlement of the claim was delayed for unavoidable reasons, yet the respondent-LIC is not liable to pay any interest.
9. In rejoinder. Shri Maloo controverted the contention of Shri Soni on the ground that the interest even otherwise is admissible but the limited question which has arisen in this appeal is as to the admissibility of the interest to the appellants claims on account of the delayed payment, for which the appellants suffered adversely since they could not get monetary compensation having arisen out of the policies on account of the death of the assured by settlement within time and there was no justifiable reasons to withhold or repudiate the same hence as per Section 34, CPC so also under the. Interest Act, 1978 they are entitled to claim interest.
10. Shri Maloo, learned Counsel for the appellant added that the trial Court failed to appreciate that the policies in question are contracts for payment of sum assured and other benefits accrued Immediately upon death of assured/policy-holder, and if such payment is not made when accrued, the amount becomes a debt with effect from the date of death of assured and, therefore, the LIC is liable to make payment of interest on the accrued amount.
11. To fortify the conclusions of the trial Court as to limited question of award of Interest. Shri R. K. Soni, learned Counsel for the respondents vehemently contended by challenging the findings on Issue No. 1 also that the trial Court itself has concluded that it cannot be denied that the LIC had reasonable cause and justification to cast doubt on the conduct of the policy-holder for suppression of facts as to his health and ailment, so as to repudiate their claims and so, the Interest was rightly declined by the trial Court.
12. Having heard the learned Counsel for the parties at length, considered the contentions advanced at the bar, and carefully perused the relevant record besides the citations with reference to the controversy raised, prima facie, I am of the view that only dispute arises is as to whether the plaintiffs were entitled to award of Interest on the sums decreed by the trial Court against the claims of three policies in question which were not honoured despite their maturity on the death of the assured.
13. Before dealing with It. it would be appropriate to examine as to what were those sparing reasons for the LIC for withholding or repudiating the claims particularly when very purpose of taking of the aforesaid policies for own life of the assured so as to safeguard risk, stood defeated by virtue of lapse or repudiation on the part of the LIC for not having honoured the claims when presented, thereby causinggreat mental agony and apart from financial loss to the claimants, since admittedly sums assured under the policies were not paid to the plaintiffs.
14. However, at the very outset, I must hasten to add that the respondent-LIC, with-out having filed any appeal or cross-objection as against the conclusions of the trial Court drawn under Issue No. 1, onus of which was laid on the respondent-LIC but which the LIC failed to prove as found by the trial Court, in my considered opinion, cannot be allowed to challenge such findings on Issue No. 1 in this appeal which raises only limited question of interest, nor such findings can be scanned and analysed so as to upset or uphold. But, since the question Involved in this appeal is limited and relates to the principal claim. I deem it proper to refer conclusions drawn on Issue No. 1, i.e. principal issue without analysing its validity or sustainability before dwelling upon the controversy raised herein.
15. Before the trial Court it has not been disputed and rather it stood admitted by both the parties that two of the aforesaid policies upon having lapsed for want of payment of premiums for interval periods, referred to above, had been renewed and revived by the respondent-LIC on payment of premiums of default period with interest, at least much before the death of assured policy-holder. The trial Court after appreciation of evidence of the LIC, had discarded the testimony of Dr. Achal Sipah (DW-1) holding it to be inadmissible being not primary evidence. It, therefore, disbelieved defendant's evidence (DW-1) and concluded that three years prior to the admission in Chothmal Hospital, Indore, Pannalal had been suffering from high blood pressure and failure of renal. Defendant's another witness Mohd. Hussain (DW-2) deposed that when third policy of sum assured Rs. 41,000/- was issued upon medical report of LIC's doctor, and from his evidence it has been proved that his predecessor-in-office Branch Manager had recommended the claims in favour of the plaintiffs being perfect and valid.
16. It is not in dispute that burden to prove Issue No. 1 on which fate of the plaintiffs' suit hinged, was entirely on the defendant LIC. The LIC as per conclusions of the trial Court failed to prove issue No. 1. Moreover, considering aspect of the application of Section 45 of the Insurance Act, 1938 duty adopted by Section 43(1) of the Life Insurance Act, 1938 (sic), the trial Court concluded that in the case of Pannalal policy-holder of aforesaid three policies in dispute, second part of Section 45 of the Insurance Act is applied, and that the LIC had right to repudiate claim only under circumstances expressly stated in Section 45 and for application of the second part of Section 45, following three conditions as crystallised by the Apex Court in Mithoolal Nayak v. LIC, AIR 1962 SC 814, are proved by the defendant LIC which it failed to do so :--
(a) the statement must be on a material/or suppressed facts while it was incumbent upon him (the policy-holder) to disclose the same;
(b) the suppression must be fraudulently made by the policy-holder; and
(c) the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.
17. Relying upon decision in Mithoolal's case (AIR 1962 SC 814) (supra) the Division Bench of the Allahabad High Court in Vaid MC Shastri Rampuri's case (1968 (38) Comp Cas 767) (supra) held that all these three elements quoted above have to be proved cumulatively and if one or more of them is not proved, the challenge will fail. It was also held that the LIC cannot take the benefit of Section 45 as It did not call in question the policy within two years from the date on which it was effected.
18. Section 45 oftheInsurance Act reads as under:--
'45. Policy not to be called in question on ground of misstatement after two years.--No policy of life insurance effected before the commencement of this Act shall, after the expiry of two years from the date of commencement of this Act and no policy of life Insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected be called in question by an insurer on the ground that statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was Inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making the statement was false or that it suppressed facts which it was material to disclose: Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.'
19. Thus, according to Section 45, policy, cannot be called in question by the Insurer, viz. the LIC on the ground of misstatement after the lapse of two years from the date on which it was effected, and that apart under first part to Section 45, even if there were Inaccurate or misstatements about several particulars furnished in the proposal form, an insurer namely LIC cannot repudiate the policy after the expiry of two years from the commencement of the policy. According to the principles laid down in Mithoolal's case (AIR 1962 SC 814) (supra) by the Apex Court and in LIC v. Vesasi Bharati. AIR 1989 Andh Pra 39, if the policy stands renewed and revived, then period of two years would be counted from the date the policy becomes effective and commences. In other words, in case of revival of the policy also the date effective for the purpose of two years used in Section 45, would be the date of acceptance of the original proposal from which the risk on the life of the proposer is covered under the policy, i.e. original date of commencement of policy in question.
20. It is trite law that a contract of insurance is uberrimae fidei (a term which is convenient though not strictly accurate). The policy-holder and its proposer owes a duty to disclose every material fact which he knows or ought to know, in the proposal to the policy. If a material fact is not so disclosed, the insurers have the right to avoid the contract. No strait-jacket formula can be laid as to what a particular thing is material in every contract. It depends upon and varies from case to case and it has to be ascertained Judicially on the basis of each case. Only second part of Section 45 confers on the insurer a right to repudiate Its obligation only on proof and by establishing three necessary conditions expressly stated in it and adumbrated by the Apex Court in Mithoolal Nayak's case (AIR 1962 SC 814) (supra). Keeping in view the principles of law, discussed above, the trial Court in the Instant case after appreciating the evidence on record, concluded that the defendant failed to establish three conditions and circumstances expressly stated in second part of Section 45 of the Insurance Act which are necessary to justify the repudiation of the claim of the plaintiffs.
21. Thus, without expressing any opinion on the merits of the conclusions of the trial Court on Issue No. 1, as they are neither challenged nor its validity is questioned by way of any appeal or cross-objection at the end of the LIC, as yet, but in my opinion it stands affirmed that in the facts and circumstances of this case and the principles of law discussed above that the defendant-LIC failed to satisfy three conditions necessary to be fulfilled and established so as to attract second part of Section 45 of the Insurance Act and hence it was not open to the LIC to repudiate the contract and to avoid its responsibility to honour the claim for the policies in question after expiry of two years of the date of commencement thereof.
22. Once, It stands proved undlsputedly and inevitably that the basis of the LIC for repudiating the plaintiffs' claim was held unjustified and unreasonable being contrary to law by the trial Court, then consequence thereof must follow entitling the plaintiffs, because the claim does not suffer from suppressio veri and suggestio falsi.
23. Hence, I may advert to the only dispute raised in this appeal as to the award of interest on the amount of claim of the plaintiffs decreed. To decide this limited question Involved, I am prone to refer the circumstances and the principles of law laid down by the Apex Court and other High Courts in which interest can be awarded.
24. In Sovintorg India Ltd. v. SBI (AIR 1999 SC 2963) (supra), the Apex Court observed that the interest cannot be claimed under Section 34, IPC as its provisions have not been specifically made applicable to the proceedings under the Consumer Protection Act 1986. However, the Apex Court held that the general provision of Section 34 being based upon justice, equity and good conscience would authorise the Redressal Forums and Commissions to also grant Interest appropriately under the circumstances of each case. The interest may also be awarded in lieu of compensation or damages in appropriate cases. The interest can also be awarded on equitable grounds as was held by the Apex Court in Satinder Singh v. Umrao Singh, AIR 1961 SC 908.
25. It was a case where the State Commission as well as later the National Commission both rejecting claim for compensation on reasoning that there was no proof of negligence or wrongful retention. It, however, directed the Bank to pay 12% interest on the amount deposited by the Company but not credited to its account for seven years. The Apex Court, therefore, held as under:--
The State Commission as well as the National Commission were, therefore, justified in awarding the interest to the appellant but in the circumstances of the case, we feel that grant of interest (c) 12% was inadequate as admittedly the appellant was deprived of the use of a sum of Rs. One lakh for over a period of seven years.'
26. In LIC v. G.V. Ranade (AIR 1990 SC 185) (supra), the question before the Apex Court was as to whether the Insured was entitled to any interest on delayed payment after maturity of the insurance policy. It was a case where the delay was caused due to compliance of statutory obligation regarding making of requisite statement under Section 226(3)(vi) of the Income-tax Act. The Apex Court observed : (1) that obviously the assignee of the policies who had become entitled to receive the amounts due thereunder on the dates of their maturity must be compensated by the LIC for its failure to perform its statutory obligation; and (2) that performance of the statutory obligation by the LIC being after Inordinate delay, award of Interest to the assignee of the policies is. therefore, clearly justified. The Apex Court did not Interfere with rate of Interest @ 15% p.a. as was awarded and found to be reasonable by the High Court for the delay in policy payment.
27. Next case is Vijaya Bank v. Art Trend Exports (1990 (2) Bank CLR 468) (supra), wherein Division Bench of the Calcutta High Court dealing with question of interest under Section 34, IPC and considering the provisions of the Interest Acts of 1839 and 1978, observed that in regard to award of interest for the period prior to Institution of the suit, the Court has power to grant interest on the basis of Implied agreement or on equitable grounds; and that under Section 34, IPC question of interim interest is a matter of discretion of the Court and appellate Court can Interfere with the discretion exercised by the trial Court only if the trial Court has committed error either in fact or law.
28. Last case is of Vaid Maheshchandra Shastri Rampuri v. LIC (1968 (38) Comp Cas 767) (supra) wherein Division Bench of the Allahabad High Court held : (1) Section 45 of the Insurance Act does not cease to apply merely because the assured died within two years of the date of policy; (2) money payable under a life insurance policy becomes a 'debt' on the death of the assured, and the Court can order payment of interest on the sum assured under the Interest Act from the date of the death of the assured. Notwithstanding the delay in Instituting the suit as it is relevant to damages but not to Interest payable under the Interest Act.
29. Applying the ratio of aforesaid decisions (supra) and adopting the principles laid down by Division Bench of the Allahabad High Court to the facts of the instant case, in my view, there is absolutely no bar to the award of the interest under Section 1 of the Interest Act and 34, CPC if it is held that the amount payable under the policies is a debt or a sum certain payable at a certain time by virtue of a written Instrument or is payable otherwise. I may add that the interest under Section 34, CPC can be awarded for a period after the institution of the suit and that it may be awarded for a period before the Institution of the suit if it is payable under contract between the parties or under some usage having the force of contract or under the Insurance Act or under the Interest Act.
30. In the instant case, in my considered view, having regard to the fact that admittedly the delay has occasioned failure of justice on the part of the LIC for having not settled the claims of the plaintiffs in spite of having presented the same within time immediately after the death of the policy-holder and assured, and further having repudiated the claims contrary to the law in an arbitrary manner, there was no justification or reason for the LIC to withholding the payment of the amount under the policies in dispute payable at a certain time, i.e. upon death of the assured.
31. Be that as it may, it stands affirmed that the amount was payable to the plaintiffs under aforesaid policies upon death of the assured and since such payable amount stands unpaid, the same is a debt due to the appellants by the respondent. Nothing was paid to the appellant since the death of the assured. The very purpose and object of the assured in taking policies from the LIC is with a view to safeguard interest of his dependants, viz., wife and children, as the case may be, in the event of premature death of the assured as a result of the happening of any contingency. Thus, in that event, in my considered view, the assignees or nominees and the dependants of the assured may not be deprived of the dues payable under the policies to them, otherwise very legislative and beneficial object for taking such policies would stand lost and defeated. Once the trial Court held that the plaintiffs are entitled to the amount due under the policies in dispute. and on the death of Pannalal such amount became at once payable to them and the . same is debt and the Interest ought to have been awarded to them upon the amount which became payable and till It is paid it is debt. Thus, the trial Court erred in law in not awarding interest on the amount under the aforesaid policies from the date it became payable, i.e. the date of death of Pannalal. as has been held in Vaid Mahesh Sashtri's case [1968 (38) Comp Cas 767) (supra). Since recently the Apex Court in Sovintorg India's case (AIR 1999 SC 2963), as discussed above, enhanced the interest @ 12% to 15% p.a. and held 12% interest as inadequate, inasmuch as in similar case of LIC v. G. V. Ranade (AIR 1990 SC 185) which was decided on 8-9-1989, the Apex Court found interest (c) 15% p.a. awarded by the trial Court and high Court, as reasonable, thus keeping in view aforesaid ratio of decisions, I deem it appropriate to award interest @ 15% p.a. with effect from the date of death of Pannalal (assured) on amount due under aforesaid three policies which has been decreed/allowed by the trial Court.
32. As a result of above discussion, this first appeal is allowed with costs throughout. The impugned judgment and decree dated 8-4-93 whereby the learned trial Court declined to grant interest are set aside with the direction that the appellants are entitled to award of interest. Accordingly, besides the decree of the trial Court for the amount due under aforesaid policies in dispute, for which no appeal has been filed by the LIC the decree be also Issued for interest @ 15% per annum on the entire amount decreed under the Impugned judgment dated 8-4-1993 in Civil Suit No. 8/87, w.e.f. the date of death of policy-holder i.e. 21-6-1983 till the realisation of the decretal amount.