JUDGMENT

VERMA, J.:- This appeal by special leave is against the judgment dated January 7, 1981 in Writ Petition No. 1248 of 1977 of the Nagpur Bench of the Bombay High Court. The special leave has been confined only to the question of liability of the appellant, Life Insurance Corporation, to pay interest for the period after date of maturity of insurance policy, in case of delay in payment. Accordingly, this is the only question arising for decision in this appeal.

2. The writ petition in the High Court was filed by Smt. Kamalabai G. Ranade, the wife of Gangadhar . Vishwanath Ranade of Nagpur. The said G. V. Ranade took four policies on his own life from the Life Insurance Corporation of India (hereinafter referred to as "the L.I.C."G.) during the period 1958 to 1960. These policies were paid up and the particulars thereof including their paid up value payable on the date of maturity are as under:

Policy Number Sum assured Paid up value Date of Maturity

19620636 10,000.00 3415.70 14-9-72

13932229 3,500.00 1118.65 28-12-73

13969144 5,000.00 892.20 9-11-75

13972300 2,000.00 557.70 21-12-75

3. In April 1969 G. V. Ranade assigned absolutely all these four insurance policies in favour of his wife Smt. Kamalabai G. Ranade and the assignment so made was duly registered by the L.I.C. as under:

"In registering this Assignment the Corporation makes no admission as to its validity.

Nagpur:

Dt. 8-4-69.

Sd/-

P. Divisional Manager"

4. It appears that there were some income-tax dues against the said G.V. Ranade for recovery of which Income-tax Officer had commenced recovery proceedings. Prior to the date of maturity of these policies the Income-tax Officer on 27-1-1971 issued a notice under S. 226(3) of the Income-tax Act, 1961 to the Manager of the L.I.C. at Nagpur directing the L.I.C. to pay to the I.T.0 , forthwith any amount due from the L.I.C. to or, held by the L.I.C. for or on account of the said G. V. Ranade to meet the amount due from G. V. Ranade as arrears of income-tax, This notice further mentioned the consequences envisaged by S. 226(3) of the Income-tax Act, 1961. The Divisional Manager of the L.I.C. at Nagpur intimated the fact of receipt of the notice under S. 226(3) of the Income-tax Act, 1961 to the assignee of these policies, Smt. Kamalabai G. Ranade, suggesting that she take steps to get the notice vacated in order to safeguard her interest in the policies. The further correspondence in this behalf between Income-tax Officer, the L.I.C. and the assignee shows that the Income-tax Officer required the L.I.C. to deposit the amount of Rs.3415.70 payable against the first policy which was to mature on 14-9-1972 and the L. I. C. kept the assignee informed of this demand by the I.T.O. adding in its letter dated 27-7-1972 to the assignee that the moneys due under the policies will be paid to her "only after your getting the notice served on us by the I.T.O. vacated". This was reiterated by the L.I.C. in its letter dated 11-8-1972 to the assignee.

5. The assignee sent a notice dated 21-8-1972 to the L.I.C. reiterating that the policies had been absolutely assigned to her as admitted by the L.I. C. as a result of which the amount payable against the same had to be paid only to her since the amount was not held by the L.I.C. for or on account of G. V. Ranade. The L.I.C. was also required by this notice to take the necessary steps for revocation of the I.T.O. s notice and to make the payment due in respect of all these policies to the assignee. The assignee sent a similar notice to the I.T.O. asserting her claim as the assignee to get the moneys payable under the policies. The I.T.O. in a letter dated 28-7-1972 addressed to the L.I.C. had added that the alleged transfer of policies by G. V. Ranade to his wife are void with an intention to defraud the revenue and the case falls within the mischief of S. 281 of the Income-tax Act, 1961; and the L.I.C. was requested to withhold any payment to Smt. Kamalabai G . Ranade till further communicati