Judgment
As delivered
PETITIONER:HINDUSTAN IDEAL INSURANCE CO. LTD.
Vs.
RESPONDENT:LIFE INSURANCE CORPORATION OF INDIA
DATE OF JUDGMENT:12/04/1962
BENCH:SARKAR, A.K.BENCH: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--Noperiod prescribed for moving the Corporation--Effect--Lifeinsurance 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 Andhrainsurance Company Ltd., vested in the Life Insurance Cor-poration of India and it became entitled in compensationunder s. 16 of the Life Insurance Corporation Act. TheCorporation made and offer of it and claimed variousdeductions. The57insurer raised certain disputes and on August 6, 1957, madean application to the tribunal constituted on May 25, 1937for re-assessment of the compensation and also for extensionof time for making the application by three months from thedate of its constitution. On September 21, 1937, theinsurer filed another statement giving details of its claim.In answer to the claim the Corporation filed its writtenstatement. The tribunal held that the claim forcompensation was time-barred under r. 12 of the Rules framedunder the Act and dismissed the application. It also heldthat under s. 16(2) of the Act the insurer had no right tomove directly the tribunal regarding the amount ofcompensation, but could move corporation for making areference of the dispute to the tribunal and that it did notshow any cause for extending time to make the reference tothe tribunal. Against the judgment of the tribunal, theinsurer obtained special leave to add and thereafteramalgamated 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 thercfore, itis obligatory upon the Central Government to prescribe theperiod within which the insurer is to move the Corporationfor referring the claim to the Tribunal. When the lawrequires aperiod to be prescribed for doing a thing, thatperiod should be clearly specified with specific referenceto the particular purpose. The specific purpose referred toin Sub.s. (2) of s. 16 is, to have the matter referred tothe tribunal for decision. "Making of the refer. ence isthus in the hands of the corporation and not in these ofinsurer who can only move the corporation for making thereference. Time has to be prescribed for enabling theinsurer to move the Corporation. Prescribing time formaking a reference is not prescribing time for moving thecorporation to make the reference. Prescribing time byimplication would not be compliance with the provisions ofSub-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 ofthe fact that Sub-s. (2) of s. 16 contemplates a referencenot by the insurer but by the corporation. The pro. ceedingtaken before the tribunal were therefore misconceived. Noquestion of limitation arises because the period within58which an insurer must move the corporation to make areference has not yet been prescribed as required by Sub-s.(2) of s. 16. It would be open to the appellant to movethe corporation under s. 16(2) after such period isprescribed. It was urged by the insurer that the claimcannot treated as barred by time and this was a fit casefor extension of time under the proviso to r. 12.Held, As r. 12, read by itself does not show clearly whetherit applies to the corporation or it applies to an insurer ora chief agent or a special agent, it is permissible to lookinto the proviso for ascertaining the scope of the mainprovisions of that rule. Reading it along with the provisowould not violate any well accepted rule of construction.Held (per Sarkar, J.), that the insurer had no right to movethe tribunal directly and the proceedings commenced by itbefore the tribunal were therefore wholly misconceived andno relief could be granted by the tribunal to the insurer.As the insurer had no right to move the tribunal, noquestion of extending time for it to do so really arose. Ifthe application for extension of time to move the tribunalis treated as competent under the proviso of r. 12 of therules, then also, the appellant is not entitled to anyrelief, for there is no justification on the merits tointerfere with the tribunal's order refusing to extend time.The proceedings being incompetent, an enquiry as to whetherit had been started out of time would be wholly irrelevantand it is therefore unneces. sary to express any opinion onthe correct interpretation of r. 12 of the Rules. Theproceeding being incompetent from the beginning it is notpossible for this Court to grant any relief and, therefore,the appeal must fail in any case.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 82 of 1960.Appeal by special leave from judgment and order datedFebruary 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 therespondent,591962. April 12. The following Judgments were delivered.The Judgment of Subba Rao and Mudholkar, JJ ; was deliveredby Mudholkar, J.
SARKAR J.-The Andhra Insurance Company Ltd., hereaftercalled the insurer, carried on life insurance and otherinsurance business. On September 1, 1956, the lifeinsurance business of the insurer became vested in the LifeInsurance Corporation of India under the provisions of theLife Insurance Corporation Act, 1956. The insurer thereuponbecame entitled to compensation from the Life InsuranceCorporation under s. 16 of the Act.
On February 19, 1957, the Corporation having determined theamount of the compensation and obtained the CentralGovernment's approval made an offer of it to the insurer asprovided in s. 16. By the letter making the offer, theCorporation claimed various deductions. The insurer raisedcertain disputes. It is not necessary for the purpose ofthis appeal to refer to these disputes.
On August 6, 1957, the insurer made an application to theTribunal which had been constituted on May 25, 1957 for anorder for re-assessment of the compensation payable to it.In that application it also made a prayer that the Tribunalmight, if necessary, extend the time for making the applica-tion by three months from the date of its constitution. OnSeptember 21, 1957, the insurer filed in the Tribunalanother statement giving the details of its claim. TheCorporation in its turn filed its written statement inanswer to the claim of the insurer.
The Tribunal by its judgment dated February 17, 1958 heldthat under s. 16 of the Act an Insurer bad no right toapproach the Tribunal directly for deciding any dispute withthe Corporation regarding the amount of the compensation buthad60to move the Corporation to make a reference of the disputeto the Tribunal and this, the present insurer had not done.It also held that the insurer had not shown any cause whythe time to make the reference to the Tribunal should beextended. It further held that the claim for compensationwas by time. In the result, the Tribunal dismissed theinsurer's application.
The insurer obtained special leave 'from this Court toappeal against the judgment of the Tribunal and under thatleave has presented this appeal. After the leave wasgranted, the insurer amalgamated with another company calledthe Hindustan Ideal insurance Company Ltd. and the lattercompany was substituted as the appellant in the place of theinsurer.
Now s. 16 of the Act is in these termsS. 16 (1) "Where the controlled business of aninsurer has been transferred to and vested inthe Corporation under this Act, compensationshall be given by the Corporation to thatinsurer in accordance with the principlescontained in the First Schedule.
(2) The amount of the compensation to begiven in accordance with the aforesaidprinciples shall be determined by theCorporation in the first insurance, and if theamount so determined is approved by theCentral Government it shall be offered to theinsurer in full satisfaction of thecompensation payable to him under this Act,and if, on the other hand, the amount sooffered is not acceptable to the insurer hemay within such time as may be prescribed forthe purpose have the matter reference to theTribunal for decision."
It is obvious from the terms of sub-sec. (2) of s. 16, andit is indeed not seriously in dispute, that the61Tribunal can be, moved by an insurer only through theCorporation. An insurer has no right under the section toapproach the Tribunal directly. The procedure contemplatedis that an insurer has to move the Corporation and theCorporation has thereupon to refer the dispute raised by theinsurer to the Tribunal. This inevitably follows from thewords in section, namely, "he may...... have the matterreferred to the Tribunal for decision." The section no doubtdoes not mention the Corporation but it is clear from theAct as whole that the reference contemplated was through theCorporation. The insurer had to move some authority to makethe reference and the only authority under the Act could bethe Corporation. On this part of the case I am in agreementwith the view expressed in the judgment of my brotherMudholkar.
In the present case however the insurer had directly movedthe Tribunal. This it had no right to do. The proceedingscommenced by it were therefore wholly misconceived. Thatbeing so, the insurer could not have obtained any relieffrom the Tribunal nor could the Tribunal have granted it anyrelief. In this appeal, therefore, it is not possible forthe Court either to grant any relief to the insurer or itssuccessor-in-interest, the appellant. The proceeding beingincompetent from the beginning, the appellant cannot ask foranything in it.
It would have been noticed that the insurer had asked theTribunal to extend the time to enable it to make theapplication to the Tribunal. As it had no right to move theTribunal, no question of extending any time to do so reallyarose.
Now r. 12 of the Rule framed under the Act provides for thetime within which a reference62may be made to the Tribunal in respect of the determinationof compensation payable under the Act." The time prescribedfor the present case was three months from the date on whichthe compensation was offered to the insurer. Within thesethree months the insurer bad done nothing. This rule,however, contains a proviso which is in these terms :
"Provided that any such reference may beadmitted by the Tribunal after the period oflimitation prescribed thereunder this rule, ifthe person making the reference satisfies theTribunal that he bad sufficient cause for notmaking the reference within the said period.If it is contended that the insurer was entitled to move theTribunal directly under this proviso and had in fact doneso, then, I think, it must be held that the Tribunal wasright in its view that no cause had been shown by theinsurer why time should be extended. Therefore if theapplication so far as it asked for extension of time istreated as a competent one under this proviso, then also onthe merits, the appellant is not entitled to any relief, forthere is no justification to interfere with the order thatthe Tribunal made in this behalf The appeal must in any casefail.
I do not feel called upon to go into any question oflimitation in the present case. The proceeding beingincompetent, an inquiry as to whether it had been started oftime would be wholly irrelevant. L therefore, think itunnecessary to express any opinion on the interpretation ofr. 12 of the Rules made under the Act.
The result is that the appeal is dismissed. As to costs, Ithink that as the Corporation itself had not before theTribunal contended that the proceeding was incompetent norhad raised an.* such63point in its statement of case in this appeal it is notentitled to any.
MUDHOLKAR, J.-The Andhra Insurance Co... Ltd., (hereinaftercalled the Company) was a composite insurance company, thatis, doing business in life insurance, fire insurance andgeneral 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 liabilitiespertaining to the life insurance business stood transferredand vested in the Life Insurance Corporation on September 1,1956. Under s. 16(1) of the Act the Company was entitled toreceive Compensation from the Corporation determined inaccordance with the principles contained in First Scheduleto the Act. On February 14, 1957, the Corporation wrote tothe Company stating, among other things, that the amount ofcompensation payable to it under s. 16(1) of the Act asdetermined by the Corporation and approved by the CentralGovernment comes to Rs. 6,14,636. The Corporation made anoffer of this amount to the Company in full satisfaction ofthe compensation payable to it. The Corporation furtherstated in its letter that the part of the paid up capital ofthe Company and assets representing such part which havebeen allocated to the life business of the Company inaccordance with s. 18 of the Life Insurance CorporationRules, 1956 (hereinafter called the Rules) amounts to Rs.3,76,117/- and that as the aforesaid assests have not beentransferred to the corporation the said amount of Rs.3,76,117/- will be set off against and deducted from theamount of compensation payable to the Company. Certaincorrespondence then ensued between the Company and theCorporation and it would appear from it that while theCompany accepted the computation of the amount ofcompensation made by the Corporation there was disagreementbetween the parties over the valuation64of the assets of the Company which stood transferred to theCorporation. The Company objected to the deductions of Rs.3,76,117/. Eventually on August 6, 1957 the Companypreferred a petition of appeal before the Life InsuranceTribunal, Nagpur, constituted by the Central Governmentunder s. 17(1) of the Act. On September 21, 1957 theCompany lodged its statement of claim before the Tribunal.The Corporation resisted the claim out forward by theCompany on various grounds. the Tribunal framed 27 issuesbut it gave its findings only on the first three issues anddismissed the claim. We may mention that we are notconcerned with any of the issues except No. 3 because it ison the basis of its finding thereon that it dismissed theclaim of the Company. That issue is whether the claim ofthe Company is barred by time.
It does not appear from the written statement of theCorporation that it had raised a plea of limitation. Allthe same the Tribunal in its order has said that as theCompany did not lodge a claim before it within three monthsof February 14, 1957, which was the date on whichcompensation was offered by the Corporation to the Companyit was barred by r. 12 of the Rules framed under the Act.The Tribunal further observed that the Company. had to movethe Corporation under s. 16(2) of the Act to make areference to the Tribunal, it failed to do so and that itdid not show any cause whatsoever for its failure to do so,.but instead submitted its claim direct to the Tribunal onAugust 12, 1957. No question, therefore, excusing delayunder the proviso to r. 12 arose.
Aggrieved by the decision of the Tribunal the Company movedthis Court under Art. 136 of the Constitution for grant ofspecial leave to appeal. Leave was granted by this Court onAugust 18, 1958. Subsequent to the grant of leave by thisCourt the Company in pursuance of its scheme sanctioned by65the High Court of Andhra Pradesh was amalgamated with theHindustan Ideal Insurance Co., Ltd. By reason of this theletter has now been substituted as appellant under theorders of this Court dated April 14, 1959.
On behalf of the appellant Mr. B.K.B. Naidu contended thatsince the Tribunal itself wag not appointed before theexpiry of the period of three months provided in r. 12, theclaim made by the Company cannot be treated, as barred bytime because in his submission limitation would not commenceto run till the date on which the Tribunal was constituted.Alternatively he contended that this was a fit case inwhich, under the proviso to r. 12, time should have beenextended.
On behalf of the Corporation Mr. S. T. Desai contended thatunder sub-s.2 of s. 16 it was not open to ,in insurer likethe Company to prefer a claim directly before the Tribunaland that all that the law entitled the Company to do was tomove the Corporation to make a reference, that this had tobe done within three months and that thereupon theCorporation had to make a reference to the Tribunal withinthe period of three months prescribed by r. 12. Since thisprocedure was not adopted the proceedings before theTribunal were incompetent.
Sub-section 2 of s. 16 reads thus :
"The amount of the compensation to be given inaccordance with the aforesaid principles shallbe determined by the Corporation in firstinstance, and if the amount so determined isapproved by the Central Government it shall beoffered to the insurer in full satisfaction ofthe compensation payable to him under thisAct, and if, on the other hand, the amount sooffered is not acceptable to the insurer hemay within such time as may be prescribed forthe purpose have the matter referred to theTribunal for decisions"
66A plain reading of this provision shows that the referencehad 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 thanthe Corporation. The Central Government has not at any ratespecifically prescribed the period within which the insurerhas to move the Corporation for referring its claim to theTribunal for decision.
According to this provision the insurer is entitled to havethe matter referred to the Tribunal for decision "withinsuch time as may be prescribed for the purpose."
"Prescribed" means prescribed by Rules. It would,therefore,, follow that the Central Government has to make arule prescribing the period within which the insurer mustmove 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 whichconfers power on the Central Government to make rules.
Clause (f) of sub.s. 2 enable it to prescribe the timewithin which any matter which may be referred to theTribunal for a decision under the Act may be so referred.Therefore, according to learned counsel, it is the period oflimitation for this purpose which the Central Government hasto prescribe and not the period within which the insurermust move the Tribunal. He, however, says that the insurerhas to move the Corporation before the expiry of the. periodwithin which the Corporation is to make a reference to theTribunal.
We cannot accept the contention. On the plain language ofsub-s. 2 of S. 16 it is obligatory upon the 'CentralGovernment to prescribe the period within which the insureris to move the Corporation 'for referring its claim to theTribunal. No doubt, cl. (f) does not refer to theprescription67of time for such a purpose. But the provisions of sub.s. 1of s. 48 are wide enough to enable the Central Government toprescribe the time for this purpose. Under that subsectionthe Central Government is empowered to make rules to carryout the purposes of the Act. One of the purpose of the Actis to prescribe the time within which an insurer has to movethe Corporation for making a reference. While sub-s. 1 ofs. 48 confers a power on the Central Government, sub-s. 2 ofs. 16 imposes a duty upon it and, therefore, it isobligatory upon the Central Government to make a rule inthis behalf by exercising the power under s. 48 (1).Mr. Desai then contends that the rule actually framed by theCentral Government that is, r. 12 must be deemed to besufficient for his purpose. That rule is in following terms:
"Reference to Tribunal.-The time within whicha reference may be made to the Tribunal inrespect of the determination of compensationpayable-under the Act, shall be as follows,namely :-
(i) in the case of an insurer to whom com-
pensation is payable under Part A or Part B orPart C of the First Schedule to the Act,within three months from the date on which thecompensation determined by the Corporation isoffered to the insurer
(ii) in the case of an insurer to whom com-
pensation is payable under Part B of the FirstSchedule to the Act, within six months fromthe date on which the compensation determinedby the Corporation is offered to the insurer
(iii) in the case of compensation payable to aChief agent or special agent under the68proviso to section 36 of the Act, within threemonths from the date on which the compensationdetermined by the Corporation is offered tothe chief agent or special agent, as the casemay be :
Provided that any such reference may beadmitted by the Tribunal after the period oflimitation prescribed therefor under thisrule, if the person making the referencesatisfies the Tribunal that he had sufficientcause for not making the reference withinthe said period."
According to Mr. Desai, under sub-r. (1) of this Rule theCorporation has to make a reference to the Tribunal withinthree months. It would, therefore, according to him, followthat the insurer must move the Corporation before the expiryof that period and that, therefore, by framing this rule theCentral Government has not only carried out the requirementsof 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 speak 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 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 Tribunal but in the particular circumstances make no order as to costs.
