The central legal point established in the judgment is the importance of consulting the policy-holders and considering a reduction of policy amounts in the context of an insolvent insurance company.

JUDGMENT

Derbyshire, C.J. - This is a very difficult matter for us to deal with. The original petition for winding up of this company was presented as far back as 1938 and the order for winding up was made in 1941 but suspended pending the formulation and approval of a scheme. That was the result of Panckridge J.'s order dated 24th November 1941. He therein said :

The Official Liquidator does not advertise his appointment or take any further steps in the winding up for a period of two months from the data hereof within which time it will be open to the company or any other policy-holder to present any further application for the reduction of the policy contracts and that in the meantime no transfer of shares be allowed.

2. Consequent upon that the present applicant Gopesh Chandra Pal formulated a scheme for dealing with the position of the company and its policy-holders. McNair J. has rejected that scheme and directed the winding up to go on. The position of the company is that it is certainly insolvent; all its capital has been lost and more besides. It has, however, two assets of value--one of them a deposit with the Government pursuant to the Insurance Act and the other some land on the outskirts of Calcutta, which may be valuable and may be increasing in value though its actual value and its rate of increase are somewhat problematical. On the other hand there are the policy-holders who have paid their premiums and are looking forward to the fruition of their policies no doubt as a stand by in their later years. The company itself seems to have been acquired, that is its shares have been acquired, by the Overland Bank of which the applicant Gopesh Chandra Pal is a director and is without any question acting on their behalf.

3. McNair J. considered the scheme that Gopesh Chandra Pal put forward. The learned Judge thought--and I think with a considerable amount of reason--that Gopesh Chandra Pal is not simply acting in the interests of the policy-holders or even in the interests of the company. It is the interest of the Overland Bank that he had at heart, and I have no doubt that, that heart inclines towards the land on the outskirts of Calcutta. McNair J thought that the scheme proposed was not in the interests of the policy-holders and refused to sanction it. During the argument before him, and at a very late stage of it, it was suggested that the company should be treated as a closed concern, that is, it should take in no more policies. I have no doubt that was done with a view to placating the Superintendent of Insurance who is, by reason of his statutory position, appointed to watch these matters. He is concerned with seeing that insurance companies are able to meet their contracts. I am not optimistic about what may happen to these policies. I cannot think that the Overland Bank is disinterested. When an insurance company over a number of years loses money then unless very highly skilled and efficient management is brought in there is very little prospect of it becoming successful again. There is no evidence here that fresh management is to be put in. On the other hand if there is a winding up in the ordinary sense of the word, the policy-holders may get very little. That is the position. There was a somewhat similar position, perhaps a little more rosy, in In re Great Britain Mutual Life Assurance Society (1881) 16 Ch. D. 246. After reciting the circumstances, Sir George Jessel M.R. said :

Under these circumstances, what ought the Court to do ? It appears to me, considering the enormous loss that will be inflicted upon these unfortunate policy-holders if we were to wind up the company, giving them each only a small fraction of the estimated value of their policies; that persons, many of whom from advancing age or infirmity may not be able to effect fresh policies in other societies will, if the company is allowed to go on with a reduction of contracts, eventually, receive the full amount of the reduced values of their po