The heirs or legal representatives of the policyholder are entitled to claim the insurance amount without obtaining a succession certificate, unless there is a dispute among them.

Headnote:
LIFE INSURANCE - CLAIM - SUCCESSION CERTIFICATE - INSURANCE ACT, 1938 - SECTION 39(5) - INTERPRETATION - HEIRS OR LEGAL REPRESENTATIVES ENTITLED TO CLAIM INSURANCE AMOUNT WITHOUT SUCCESSION CERTIFICATE - INTEREST ON DELAYED PAYMENT - REASONABLE RATE.
Fact of the Case:

Plaintiff, the original policyholder, took a life insurance policy with the defendant insurance company in 1955. The policy matured in 1974, but the defendant refused to pay the claim in Indian currency in India, citing exchange control regulations of Ceylon. The plaintiff filed a suit seeking payment of the sum assured and bonus, along with interest. During the pendency of the suit, the plaintiff died, and his legal representatives were brought on record.
Finding of the Court:

The court held that the defendants were bound to make payment of the claim under the policy in India or in Indian currency. The court also held that the present plaintiffs, as the legal representatives of the deceased policyholder, were not required to obtain a succession certificate under section 214 of the Indian Succession Act before claiming a decree in the suit. The court further held that the defendants were liable to pay interest on the delayed payment at the rate of 6% per annum from September 1, 1977, till October 1, 1985, and that the plaintiffs were entitled to the subsequent interest accrued on the amount invested by the Prothonotary and Senior Master.
Issues: 1. Whether the plaint discloses no cause of action as alleged in para 1 of the written statement? 2. Whether the defendants are not bound to make payment of the claim under the policy in suit in India or in Indian currency as alleged in paras 3 and 4 of the written statement? 3. Whether the present substituted plaintiffs are required to obtain a Succession Certificate under section 214 of Indian Succession Act, before they claim a decree in suit. 4. Whether the defendants are liable to pay interest, if so at what rate and from what date? 5. What decree?
Ratio Decidendi: 1. The court interpreted section 39(5) of the Insurance Act, 1938, and held that the heirs or legal representatives of the policyholder are entitled to claim the insurance amount without obtaining a succession certificate, unless there is a dispute among them. 2. The court held that the obligation to pay the insurance claim is a statutory liability, and the insurance company cannot insist on a succession certificate as a condition for payment, where there is no dispute among the heirs or legal representatives. 3. The court held that the claim under the insurance policy is a statutory liability and not a simple debt, and therefore, section 214 of the Indian Succession Act does not apply.
Final Decision: The court decreed in favor of the plaintiffs for the sum of Rs. 1,30,360/- together with interest thereon at the rate of 6% per annum from September 1, 1977, till October 1, 1985. The plaintiffs were also entitled to costs of the suit, including professional costs, all quantified at Rs. 6,000/-. The plaintiffs were also entitled to the subsequent interest accrued on Rs. 2,00,000/- invested by the Prothonotary and Senior Master.

JUDGMENT - H. SURESH, J.:---Arumugam Chelliah Paul, the original plaintiff, took a Life Insurance Policy on February 21, 1955, with the then existing National Insurance Company Limited, having its office at Calcutta. At that time the plaintiff was having a business in Ceylon and a policy was taken in connection with his business. The sum assured under the said policy was Rs. 1,00,000/- in Indian currency. The date of commencement of the policy was October 1, 1954 and the date of maturity was October 1, 1974. On payment of the entire premium the policy had matured into a claim on October 1, 1974.

2. Under the Life Insurance Corporation Act, 1956 the assets and liabilities of the said National Insurance Company Limited was taken over by the Life Insurance Corporation of India, the defendants. On maturity of the said policy the said Paul requested the defendants to pay the sum of Rs. 1,00,000/- together with bonus, in Indian currency, in India. The defendants would not agree and raised several objections. It appears that according to them the claim under the policy was to be paid in Ceylon in Ceylonese currency and if the defendants were to pay the said amount in India that would violate the provisions of Exchange Control Regulations of Ceylon. It appears that the plaintiff had another policy in respect of which there were similar contentions and that therefore, he filed a suit being O.S. Suit No. 3896 of 1972 in the City Civil Court at Madras. However, in that suit decree was passed and the defendants paid the sum assured in Indian currency. He, therefore, tried to persuade the defendants to pay the amount involved under this policy. However, since they were not paying the amount, he was compelled to file this suit some time on or about September 29, 1977. He has claimed a sum of Rs. 30,360/- as bonus payable on the said sum of Rs. 1,00,000/-. In addition he has also claimed interest at the rate of 18% per annum on the sum of Rs. 1,30,360/- from October 1, 1974 till the date of realisation. Thus, the claim in the suit is for Rs. 2,00,000/- with a prayer for interest at the rate of 18% per annum.

3. The defendants have filed their written statement and contend that the plaint disclosed no cause of action. They also contend that the amount was payable in Ceylonese currency and not otherwise. As far as the sum of Rs. 1,00,000/ or Rs. 30,360/- being the bonus payable, there is no dispute. The defendants, however, contend that they are not liable to pay any interest as claimed by the plaintiff. During the pendency of the suit the plaintiff died on March 27, 1982. The legal representatives of the deceased-plaintiff have been brougnt on record, on or about June 24, 1982. Thereafter the defendants offered to deposit the amount in the Court but objected to the amount being given to the present plaintiffs unless they obtain a succession certificate. Accordingly an order for deposit of the said amount of Rs. 2,00,000/- was made on September 11, 1985, and the amount was deposited. It appears that since then the said amount has been invested in a Nationalised Bank as per the directions. Though the defendants have not filed any supplementary written statement, since the defendants have contended that the present plaintiffs are not entitled to claim this amount unless they obtain a suitable representation by way of a succession certificate from the competent Court. I have permitted them to raise such a contention. Thus, the following issues have been raised and settled.

ISSUES

1. Whether the plaint discloses no cause of action as alleged in para 1 of the written statement ?

2. Whether the defendants are not bound to make payment of the claim under the policy in suit in India or in Indian currency as alleged in paras 3 and 4 of the written statement ?

3. Whether the present substituted plaintiffs are required to obtain a Succession Certificate under section 214 of Indian Succession Act, before they claim a decree in suit.

4. Whether the defen

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