The Life Insurance Corporation of India, Jullundur vs Smt. Susheela Khanna and Others

S.S. Sodhi, J.—This appeal makes sad reading. The facts relevant to this matter are that B M. Khanna took up two policies of Insurance on his life, each for Rs. 40,000/- one being No. 22470134 commencing from April 28, 1971 and the other No. 22519429, from April 20, 1972. The premiums payable in respect of these policies were regularly paid until February 12, 1974, when the insured B.M. Khanna died. Susheela Khanna the widow of B.M. Khanna deceased, who was also the nominee under the two policies, then lodged a claim with the Life Insurance Corporation with regard to the two policies of her deceased husband. This she did on March 7, 1974. Protracted correspondence thereafter ensued between the widow Smt. Susheela Khanna and the Life Insurance Corporation which continued for almost three years and ultimately culminated in the Life Insurance Corporation repudiating her claim. This happened in March, 1977. The claim was repudiated on the ground that B.M. Khanna deceased had been suffering from heart trouble and had falsely suppressed this fact from his personal statement as contained in the proposal form on the basis of which the two policies of insurance had been issued Mrs. Susheela Khanna was then constrained to file a civil suit to recover the sum insured. In this suit, she also claimed interest on the amount due. A number of pleas were raised by the Life Insurance Corporation in seeking to resist the claim put forth by Susheela Khanna in her suit. They were, however, negatived and the trial Court decreed the suit of Susheela Khanna whereby she was held entitled to a sum of Rs 80,000/- unde the two policies, along with interest, including future interest thereon at the rate of 12 per cent per annum The decree passed being for Rs. 1,08,800/-. The judgment and decree of the trial Court was upheld in appeal by the District Judge, Amritsar.

Now in second appeal, the challenge was to the award of interest on the sum assured and in particular on the costs of the suit as allowed to the Plaintiff Susheela Khanna

The award of interest on costs of the suit can indeed not be sustained but no exception can be taken to the interest allowed on the other amount that is the sum assured under the two policies. It deserves note here that no such point was raised before the lower Appellate Court. It is at any rate a contention wholly lacking merit Susheela Khanna had lodged her claim with promptitude. It was the Life Insurance Corporation that had caused all the delay here, first in indulging in protracted correspondence and then in ultimately repudiating the claim, that too on grounds which have been found to be untenable by both the Courts. Money payable under a Life Insurance Policy becomes a debt, as was observed by a Division Bench of the High Court at Allahabad in Vaid Mahesh Chandra Shastri Rampuri v. Life Insurance Corporation of India (1968) 38 Comp. Cas. 767. It was accordingly held that the Court could order payment of interest under the Interest Act from the date of the death of the assured on the sum assured.

Similarly, in Western India Life Insurance Co Ltd. Mt. Sitabai AIR 1964 Nag. 122 award of interest on the amount due under a policy of insurance was held justified where money payable there under were not paid on the due date and the delay had taken place due to no fault of insurer.

This appeal has thus to be allowed only to the extent that the Plaintiff shall be entitled to costs. Having regard, however, to the circumstances of the case, though the appeal is to be allowed to this extent, it is the Plaintiff-respondents who shall be entitled to the costs of this appeal

The manner in which the Life Insurance Corporation raised objections and sought to resist payment of the sum assured to the nominee and widow of the assured, cannot but invite adverse comment. It ill-behaves a Corporation set up to serve such an important public Interest to subject a widow to the harassment, delay and expense of lengthy litigation and that too in three Courts, in order to recover what she has been found to be clearly entitled to. Payment of interest for the delay in such a matter provides scant recompense to the person concerned. It is indeed to be hoped therefore that this instance was only an isolated one not truly indicative of the usual manner of functioning of the life Insurance Corporation of India.

Appeal partly allowed.