Under S. 16(2) of the Life Insurance Corporation Act, 1956, an insurer has no right to approach the Tribunal directly for deciding any dispute with the Corporation regarding the amount of the compensation but has to move the Corporation to make a reference of the dispute to the Tribunal.

Headnote:
LIFE INSURANCE CORPORATION ACT, 1956 - SECTION 16 - COMPENSATION - REFERENCE TO TRIBUNAL - TIME LIMITATION - PRESCRIPTION - INTERPRETATION OF RULES - LIMITATION PERIOD FOR INSURER TO MOVE CORPORATION FOR REFERENCE TO TRIBUNAL - EXTENSION OF TIME - SUFFICIENCY OF CAUSE - CONSTRUCTION OF PROVISO TO RULE 12 OF THE LIFE INSURANCE CORPORATION RULES, 1956.
Fact of the Case:

The Andhra Insurance Company Ltd. (the insurer) carried on life insurance and other insurance business. On September 1, 1956, the life insurance business of the insurer became vested in the Life Insurance Corporation of India (the Corporation) under the provisions of the Life Insurance Corporation Act, 1956. The insurer thereupon became entitled to compensation from the Corporation under S. 16 of the Act. On August 6, 1957, the insurer made an application to the Tribunal constituted under the Act for an order for re-assessment of the compensation payable to it. The Tribunal dismissed the insurer's application, holding that it had no right to approach the Tribunal directly and that it had not shown any cause why the time to make the reference to the Tribunal should be extended.
Finding of the Court:

The Court held that under S. 16(2) of the Act, an insurer had no right to approach the Tribunal directly for deciding any dispute with the Corporation regarding the amount of the compensation but had to move the Corporation to make a reference of the dispute to the Tribunal. The Court further held that the Tribunal was right in its view that no cause had been shown by the insurer why time should be extended for making the reference to the Tribunal.
Issues: 1. Whether an insurer has the right to approach the Tribunal directly for deciding any dispute with the Corporation regarding the amount of the compensation under S. 16(2) of the Life Insurance Corporation Act, 1956? 2. Whether the Tribunal was right in holding that no cause had been shown by the insurer why time should be extended for making the reference to the Tribunal?
Ratio Decidendi: 1. The Court interpreted S. 16(2) of the Act and held that the reference to the Tribunal had to be made by the Corporation and not the insurer. The Court reasoned that the provision imposed a duty upon the Central Government to prescribe the period within which the insurer had to move the Corporation for referring its claim to the Tribunal. 2. The Court held that the Tribunal was right in its view that no cause had been shown by the insurer why time should be extended for making the reference to the Tribunal, as the insurer had not shown any sufficient cause for not making the reference within the prescribed period.
Final Decision: The Court quashed all the proceedings before the Tribunal but made no order as to costs.

Judgment

SARKAR, J. : The Andhra Insurance Company Ltd., hereafter called the insurer, carried on life insurance and other insurance business. On September 1, 1956 the life insurance business of the insurer became vested in the Life Insurance Corporation of India under the provisions of the Life Insurance Corporation Act, 1956. The insurer thereupon became entitled to compensation from the Life Insurance Corporation under S. 16 of the Act.

2. On February, 19,1957, the Corporation having determined the amount of the compensation and obtained the Central Government s approval made an offer of it to the insurer as provided in S. 16. By the letter making the offer, the Corporation claimed various deductions. The insurer raised certain disputes. It is not necessary for the purpose of this appeal to refer to these disputes.

3. On August 6,1957 the insurer made an application to the Tribunal which had been constituted on May 25, 1957, for an order for re-assessment of the compensation payable to it. In that application it also made a prayer that the Tribunal might, if necessary, extend the time for making the application by three months from the date of its constitution. On September 21, 1957, the insurer filed in the Tribunal another statement giving the details of its claim. The Corporation in its turn filed its written statement in answer to the claim of the insurer.

4. The Tribunal by its judgment dated February 17,1958 held that under S. 16 of the Act an insurer had no right to approach the Tribunal directly for deciding any dispute with the Corporation regarding the amount of the compensation but had to move the Corporation to make a reference of the dispute to the Tribunal and this, the present insurer had not done. It also held that the insurer had not shown any cause why the time to make the reference to the Tribunal should be extended. It further held that the claim for compensation was barred by time. In the result, the Tribunal dismissed the insurer s application.

5. The insurer obtained special leave from this Court to appeal against the judgment of the Tribunal and under that leave has presented this appeal. After the leave was granted, the insurer amalgamated with another company called the Hindustan Ideal Insurance Company Ltd., and the latter company was substituted as the appellant in the place of the insurer.

6. Now S. 16 of the Act is in these terms :

S. 16(1) "Where the controlled business of an insurer has been transferred to and vested in the Corporation under this Act, compensation shall be given by the Corporation to that insurer in accordance with the principles contained in the First Schedule.

(2) The amount of the compensation to be given in accordance with the aforesaid principle shall be determined by the Corporation in the first instance, and if the amount so determined is approved by the Central Government it shall be offered to the insurer in full satisfaction of the compensation payable to him under this Act, and if, on the other hand, the amount so offered is not acceptable to the insurer he may within such time as may be prescribed for the purpose have the matter referred to the Tribunal for decision".

It is obvious from the terms of sub-s. (2) of S. 16, and it is indeed not seriously in dispute, that the Tribunal can be moved by an insurer only through the Corporation. An insurer has no right under the section to approach the Tribunal directly. The procedure contemplated is that an insurer has to move the Corporation and the Corporation has thereupon to refer the dispute raised by the insurer to the Tribunal. This inevitably follows from the words in the section, namely, "he may ....have the matter referred to the Tribunal for decision". The section no doubt does not mention the Corporation but it is clear from the Act as a whole that the reference contemplated was through the Corporation. The insurer had to move some authority to make the reference and the only authority under the Act could be the Corpora

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