SABYASACHI MUKHARJI - (1.) THIS appeal is by a certificate granted on 18/09/1970 by the High Court of Andhra Pradesh under Article 133 (1) (a) of the Constitution as it stood at the relevant time against the judgment and decree of the High Court dated 16/04/1970. By the said judgment and decree, the High Court of Andhra Pradesh had reversed the judgment of the learned Subordinate Judge, Masulipatam dated 19/11/1964 dismissing the suit of the plaintiffs-respondents against the appellant. Late Shri Raja Vasireddi Chandra Dhara Prasad was the husband of respondent No. 1 and father of the respondents Nos. 2 to 5 herein. The respondents filed a suit in the Subordinate Court of Sub-judge being Original Suit No. 2 of 1964 on 10/01/1964. The short facts leading to this case are : One late Raja Basireddi Chandra Dhara Prasad (hereinafter referred to as 'deceased') died intestate on 12/01/1961. He had filled a proposal for insurance for Rs. 50,000.00 on 27/12/1960. There was medical examination by the doctor of the life of the deceased on 27/12/1960. The deceased had issued two cheques for Rs. 300.00 and Rs. 220.00 respectively in favour of the appellant as first premium. Cheque for Rs. 300.00 was encashed by the appellant on 29/12/1960. Cheque for Rs. 220.00 was dishonoured three times and finally encashed on 11/01/1961. As mentioned hereinbefore, the deceased died on the day following i.e. on l 2/01/1961. On 16/01/1961, the widow of the deceased, respondent No. 1 herein, wrote to the appellant intimating the death of the deceased and demanded payment of Rs. 50,000.00. The Divisional Manager, Masulipatam Branch, denied liability on behalf of the appellant Corporation on 28/01/1961. Thereafter there was correspondence between the parties between 1/02/1961 to 23/12/1963 wherein the respondent plaintiffs had claimed the payment and the appellant had denied liability for the same.
(2.) ON the 10/01/1964, the plaintiffs filed the suit in the court of Subordinate Judge, Masulipatam. It was alleged in the plaint after setting out the facts which have been set out hereinbefore, that the medical examination report was submitted to the appellant corporation by Dr. Sri C. Sambasiva Rao, Approved Medical Practitioner of the appellant in regard to the medical examination of the deceased. A report described as "All the Friend's report" was duly sent to the appellant with regard to that proposal; and all the preliminaries were completed and it was further alleged that the deceased was assured and told by the local agent and the Field Officer of the Corporation that the payment of the first premium would amount to the acceptance of the proposal and advised the deceased to pay the first premium in full. It was, further, stated that the said two cheques were encashed and the appellant had duly appropriated the amount and credited in the accounts towards the premium payable by the deceased. Therefore, it was stated that the deceased had fulfilled his part of the insurance contract and the appellant-Corporation by its overt acts of encashing the cheques and crediting the amounts in its accounts, accepted the proposal of the deceased. In the premises it was said in the plaint that there was a concluded and valid insurance contract between the deceased and the appellant-Corporation and that the insurance contract commenced on 11/01/1961 being the date of the receipt of the balance towards premium by the Corporation. It was further stated in the plaint that the Office of the Divisional Manager of Masulipatam was the concerned authority to settle the claim of the plaintiffs-respondents and to pay the amount. The contention of the Corporation that the proposal was not accepted and as such there was no concluded insurance contract between the deceased and the Corporation, was untenable, according to the plaintiffs. It was alleged that with full knowledge of the completion of all the preliminaries the Corporation had encashed the cheques issued towards the first premium and therefore it was the case of the plaintiffs respondents that the encashment of the cheques amounted in those circumstances in law to an acceptance of the proposal of the deceased. It was further alleged that the appropriation of the amounts by the Corporation towards the first premium by the deceased was only consistent with the acceptance of the proposal. The case of the plaintiffs further was that in this case the first premium was not only received by the Corporation completely on 11/01/1961 but it was also appropriated by it in its accounts and the said premium amount was received by the Corporation without any demur or qualification and that in any event the Corporation must be deemed to have waived by its conduct the formality, it any, of sending communication of its acceptance of the proposal. In the premises, the plaintiffs claimed the said amount along with interest at six per cent per annum from the date of refusal of payment till the date of payment of the demand. Written statement was filed on behalf of the appellant. In the said written statement, after setting out the facts, it was denied that the payment of the first premium amounted to acceptance of the proposal and the allegation about the assurance given to the deceased as alleged in the plaint was not true nor the alleged assurances if any, valid under law. It was, further stated that the two cheques were not encashed and credited towards the premium account of the proposal but these were kept only in deposit in suspense account without any liability of the appellant. It was further stated that the averments in the plaint that the defendant Corporation cashed the above two cheques and appropriated the amounts and credited these in the account towards premium payable for the proposal were false. It was stated that on the death of the deceased, the amount covering the two cheques was lying in the deposit and in the suspense account of the Corporation and was not adjusted towards the premium since the proposal was not considered, the terms of acceptance were not fixed and the premium amount required for the proposal was not calculated. In those circumstances, the appellant Corporation claimed that there was no liability for the risk and as such the plaintiffs had no right to claim and there was no cause of action. It was categorically stated that the cheques were not credited and adjusted towards the premium accounts. During the trial before the learned Subordinate Judge, five different issues were raised. It is not necessary to set out in detail those issues but the important and main issue was whether there was a concluded valid insurance contract between the deceased and the Life Insurance Corporation of India.
(3.) BOTH documentary and oral evidence was adduced at the Trial. The respondents-plaintiffs examined Shri R. V. Bhupala Prasad, son of the deceased and the Corporation on its behalf examined Shri Jagannadhachari, the Superintendent of the Corporation branch at Guntur. He also produced Ex. B-4, the review slip, prepared by the Branch office, Guntur and sent to the Divisional Officer, Masulipatam. In his deposition, he had stated that the Divisional Manager was the competent authority for accepting the proposal for Rs. 50,000.00. Normally it took some time for the Divisional Manager to accept. There was no communication from the Divisional Office to the Branch Officer accepting the proposal. He, further, stated that the amount would be transferred into the first premium register after the proposal was accepted and the risk covered. He had produced the account books, namely, deposit account book and the first premium account book of the Branch Office at Guntur. Shri Brahmandrao Ramiah Assistant Divisional Manager of the Life Insurance Corporation office at Madras was also examined as the second witness of the defendants. He had further stated that the proposal form was sent from the office at Guntur to the Divisional Office at Masulipatam, and Exs. B-1 to B-4 and B-8 were sent in this connection. He further stated that according to the financial powers Standing Order, it was the Divisional Manager who was competent to accept a proposal for Rupees. 50,000/-. Ex. B-13 is the copy of the Standing Order. The purpose of review slip Ex. B-4 was to enable the Divisional Officer to assess the risk and take a decision according to the deponent. In this connection we may refer to Ex. B-14 which is the Life Insurance Corporation of India's Proposal Review Slip regarding proposal in the case of the deceased. The endorsement therein of the Assistant Divisional Manager read as follows : "Notes and decision with E. D. B. : May be accepted at O. R." ;