TANJORE LIFE ASSURANCE CO LTD BY R SIVARAMA AIYAR VAKIL, LIQUIDATOR OF THE SAID COMPANY Vs. KUPPANNA RAO

JUDGEMENT

(1.) Both the junior members of the bar who appeared in the case argued it very ably. The facts are not in dispute. A Policy was effected on the life of one Nagammal on the 29th May 1906. The premia were payable monthly. The assured made 61 payments, and then discontinued the payment. She died on the 6th April 1914 and the present suit was instituted on the 11th April 1917. The District Munsif dismissed the suit, In appeal the Subordinate Judge gave a decree for the amount of the premia paid by the deceased. I agree with the conclusion of the lower appellate Court though not for the reasons given by it.

(2.) When the insurance was effected the rule of the Company stood thus: (See Exhibit E Clauses (b) and (c): "The Policy-holders mentioned above who have been making payments duly in that manner will be paid interest at the rate of Rs. 6 per annum. It is only after the death of the Policy-holder that the life assurance amount will be determined. (c) If the present Policy-holders desire, they may pay the entire amount for 60 months and stop (paying) the monthly premium." It was under this last clause that Nagammal paid for 60 months and then stopped payments. That she was justified in discontinuing payment is too clear from two exhibits (c) and (d) which were letters written by the Secretary of the Company to the assured. In these letters it is pointed out that as she has discontinued payments she is not entitled to interest. There is no suggestion that the policy has lapsed owing to the nonpayment of the premium.

(3.) In or about January 1911, the share-holders held an extraordinary meeting at which they passed resolutions to the effect that the premia should be continued to be paid till the death of the assured. Rule 70 is: Premiums shall be payable until the death of the Policy-holder." It is common ground that no notice was given to the assured about this extraordinary meeting. The contention on behalf of the company is that as under the new rules the premia ought to have been continued till the death of Nagammal, she forfeited her right even for the payment of the amount paid by her as the policy had lapsed by non-payment. The subordinate Judge has not discussed the real question for decision, apparently as the arguments in the court below were not directed to it. He has referred to Section 65 of the Contract Act and has held that as the contract has become void, the promisee is entitled to the refund of the moneys paid under it. There can be no doubt that if there has been failure to pay the stipulated premia the assured is not entitled to a refund of the sums actually paid. The principle is stated very succinctly in Crawley s book on Insurance as to when and under what circumstances the premium will be repaid. Roughly speaking in three classes of cases the assured can claim refund. Where there has been fraud on the part of the company in inducing the assured to insure in the company, or where the policy has become void ab initio or where no risk has been incurred by the insurer. Macgillivray quoted by Mr. Venkatrama Aiyar for the appellant states the law thus: "The general rule applicable to claims for the return of the premium is that if the insurers have never run the risk they have not earned the premium and are bound to return it, Thus, if a contract of insurance is set aside on the ground of misrepresentation or mistake or for some other reason the policy is held to have been void ab initio, or to have been avoided before the risk began to run, the assured is, in the absence of any express condition to the contrary, entitled to repayment of any premium which he may have paid Bermon v. Woodbridge (1781) 2 Doughl. 781. Anderson v. Fitzgerald (1853) 4 H.L.C. 484 at page 508. Goldstein v. Salvation Army Assurance Society (1917) 2 Q.B. 291 at page 296. Moses v. Pratt (1816) 4 Campbell 297. Pritchard v. The Merchants Life Assurance Society (1358) 3 C.B. (N.S.) 622 : 140 E.R. 885 all bear out this statement of the law.