V.E.R.M.K Krishnan Chettiar By Agent Rama Iyengar v. Velayee Ammal

1. This appeal raises the question of what is meant by the word " policy" in Section 6 of the Married Women's Property Act, 1874. The respondent is the widow of one Sengottiah Goundan, who died on the 16th August, 1928. On the 24th August, 1927, the deceased submitted to the Bengal Insurance and Real Property Company, Ltd., a proposal for a policy of insurance on his own life. The proposal was for an endowment policy for Rs. 5,000 payable in 15 years. Clause 12 of the proposal is intended to contain the name of the person nominated to receive the sum assured and his or her relation with the proposer. In this case the words entered were, " self or wife Velayammal " (the name of the respondent). The proposal was accepted and a policy was issued on the 5th May, 1928. The policy contained inter alia the following clause:

This policy of assurance granted by the Bengal Insurance and Real Property Company, Ltd. (hereafter called "the company") witnesseth that proceeding upon the proposal and declaration subscribed by Subbaraya Goundar Sengotayya Goundar in and dated 24th August, 1927, which is hereby made a part of this contract and in consideration of the payment already made to the company of the first premium or the first instalment thereof as stated in the sub-joined schedule and of the subsequent premiums or instalments of premiums to be paid as therein provided, the company doth hereby agree that upon proof satisfactory to the directors of the happening of the event or events on which the sum assured is to become payable and/or other benefits accrue as described or referred to in the said schedule and of the title of the claimant or claimants under this policy it will pay the sum stated in the schedule as the sum assured and provide the other benefits, if any.

2. Clause. 8 of the schedule also has bearing on the question which falls for decision. It is in these words:

This policy which together with the schedule and privileges and conditions endorsed thereon, and the proposal and declaration and answers hereto constitutes the entire contract between the company and the assured shall become indisputable after two years from the date of issue of this policy provided the premiums shall have been regularly paid and the age correctly stated, and provided also that no fraud or wilful misrepresentation has been made by the assured.

3. On her husband's death the respondent demanded payment from the company of the amount of the policy. The company declined to pay on the ground that there had been a material misrepresentation with regard to the health of the assured. This resulted in the respondent filing O.S No. 134 of 1933 in the Court of the Subordinate Judge of Coimbatore against the Insurance Company and the deceased's brother Ramaswami Gounden, who had set up a claim that the amount due under the policy constituted a part of the joint family estate. The company raised the issue of material misrepresentation and also contended that the Court had no jurisdiction to try the suit. The respondent succeeded and a decree was passed on the 24th September, 1934, in her favour for the amount stated in the policy. An appeal followed to this Court, but it was dismissed. The present appellant obtained a decree against the estate of Sengottiah for a sum of Rs. 9,707-2-8 with interest and costs on the 28th February, 1931, and in execution of that decree applied to the Court of the Subordinate Judge of Coimbatore for attachment of the respondent's decree against the Insurance Company. The Subordinate Judge held that the application did not lie, and the present appeal is from that decision.

4. The appellant contends in the first place that this case does not fall within the provisions of Section 6 of the Married Women's Property Act, because there is nothing on the face of the policy itself which creates a trust in favour of the respondent. The Subordinate Judge held that the proposal must be deemed to form part of the policy. In the second place the appellant says that even if the proposal can be deemed to form part of the policy the words therein "self or Velayammal" cannot constitute a trust in her favour. The case has been placed before the Full Bench as there has been a conflict of opinion on the interpretation to be placed on Section 6 of the Married Women's Property Act. Clause (1) of that section states:

A policy of insurance effected by any married man on his own life, and expressed on the face of it to be for the benefit of his wife, or of his wife and children or any of them, shall enure and be deemed to be a trust for the benefit of his wife, or of his wife and children or any of them, according to the interest so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate.

5. When the appeal arising out of the respondent's suit against the insurance company was before this Court (Cornish and King, JJ.) the question whether the proposal and declaration could be construed as being part of the policy arose and it was held that they formed part of the policy. (The Bengal Insurance and Real Property Company, Ltd. v. Velayamma I.L.R. (1937) Mad. 990 at 998. On the other hand Venkatasubba Rao, J., in Krishnamurthy v. Anjayya (1936) 71 M.L.J. 39 and Burn and Lakshmana Rao, JJ., in Venkata-subramania Sarma v. The United Planters Association of South India (1937) 46 L.W. 904 have held that the word 'policy' means the document described as the policy and that it cannot be deemed to include any other document. Venkatasubba Rao, J., said that the words used must be plain and unambiguous and for the purposes of the section the only document that can be looked into is the policy. I would here point out that that case differed very much from the case we are now concerned with. There was there no clause making the proposal part of the policy. Burn and Lakshmana Rao, JJ., quoted with approval this decision of Venkatasubba Rao, J., but here again there was no clause incorporating the proposal in the policy. All that the policy stated was that the proposal and the declaration made by the assured should be the basis of the insurance. On the other hand, the policy contained an express provision that the money should be paid to the legal heirs of the assured. In the present case, there are no words in the document issued on the 5th May, 1928, indicating to whom the money shall be paid, but we have, as I have already indicated, a provision in the body of the policy itself and a similar provision in the schedule making the proposal part of the policy, and we have to look to the proposal to discover to whom the insurance money is payable. It seems to us that in these circumstances the Court must read the statements in the proposal as being incorporated in the policy. The parties to the contract were at liberty to make such a provision.

6. In Champsey Bhara and Company v. Jivraj Balloo Spinning and Weaving Company, Ltd (1923) 44 M.L.J. 706 : L.R. 50 I.A. 324 : I.L.R. 47 Bom. 578 (P.C.), the Privy Council had to construe, what was meanf by an error on the face of an award. The question was whether a document referred to in the award could be read as part of the award. Lord Dunedin who delivered the judgment of their Lordships observed (page 586 of the report):

An error in Law on the face of the award means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.

7. The House of Lords considered the same question in F.R. Absalom, Ltd. v. Great Western (London) Garden Village Society, Ltd (1933) A.C. 592. There the award recited the contract between the parties and referred to the provisions of condition 30 thereof. The House of Lords held that condition 30 was incorporated into and formed part of the award just as if the arbitrator had set it out verbatim and had then proceeded to state the construction which he placed upon it. The same principle applies here. The policy of insurance stated expressly that the proposal and the declaration were "made part of the contract". That being so the Court must look at them to find out the full terms of the contract. Moreover Section 2(6) of the Indian Life Assurance Companies Act, 1912, defines a "policy of assurance on human life" as meaning "any instrument by which the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life or any instrument evidencing a contract which is subject to payment of premiums for a term dependent on human life". The instruments which evidence the contract between the parties and therefore constitute the policy are the proposal, the declaration, and the document which was issued by the insurance company when the proposal was accepted. We wish it to be clearly understood that we are dealing here with a case where the policy does expressly incorporate the proposal. We have no criticism whatever to offer of the decisions in Krishnamurthy v. Anjayya (1936) 71 M.L.J. 39 and Venkatasubramania Sarma v. The United Planters Association of South India (1937) 46 L.W. 904, on the facts of those cases, but the learned Judges who decided those cases did use words which might be held to apply to a case like this. If that was their intentions we must express our dissent. The word ''policy" in Section 6 of the Married Women's Property Act means the document or documents evidencing the contract. If the document known as the policy stands alone and does not incorporate in it any other document, only that document can be looked at, but if it does expressly incorporate another document, as in this case, the document must be deemed to be part of "the policy". For the reasons indicated we consider that the learned Subordinate Judge was right in treating the proposal as part of the policy of insurance in this case.

8. This brings me to the contention of the learned Advocate for the appellant that the words used in answer to question No. 12 of the proposal, "Self or wife Velayammal" cannot be construed as constituting a trust in favour of the respondent. He would attach no meaning at all to those words. The answer to the question is certainly not as full as it might have been, but it is an answer, and the words can be construed as meaning that the policy was to be for the benefit of the assured or in the event of his death before the policy matured it was to be for the benefit of his wife. It seems to us that this is the only reasonable interpretation to be placed upon the words, and placing this interpretation upon them it means that there was a trust created in favour of the respondent in the event of the husband dying before the policy matured. That there can be a contingent trust is accepted in England, and as the Married Women's Property Act of 1874 followed similar legislation in England English decisions are directly applicable. In Fleet-wood's Policy, In re (1926) Ch. 48., Tomlin, J., had to consider a case where the terms of the policy provided that the money was to be paid to the wife of the insured if she were living at his death or in the event or her prior death, to his executors, administrators and assigns. The learned Judge observed:

A number of cases have been cited to me, and my attention has also been called to Section 11 of the Married Women's Property Act, 1882. In my view that section applies to this policy. The policy is, in the terms of the section, a policy of assurance effected by a man on his own life, and expressed to be for the benefit of his wife. It is true it is expressed to be for the benefit of his wife in a certain event only, but the fact that the benefit is of a limited or contingent character does not prevent it from being a benefit within the meaning of this Act. I think, therefore, that the policy creates a trust in favour of the wife, but only in the terms of the trust.

9. Another case which has a bearing on this question is that of Cleaver v. Mutual Reserve Fund Life Association (1892) 1 Q.B. 147. This case followed the conviction of Florence Elizabeth Maybrick for the murder of her husband. Her husband, James Maybrick, effected an insurance on his life in favour of his wife. The policy was made payable to the wife if she was living at the time of his death; otherwise the money was to go to his legal representatives. The Court of Appeal, consisting of Lord Esher, M.R., and Fry, L.J., and Lopes, L.J., held that there was here a trust created by the policy in favour of the wife under Section 11 of the Married Women's Property Act, 1882, but it became incapable of being performed by reason of her crime. No doubt was expressed as to the policy creating a trust in her favour under that section. The same view has been taken in this Court in Srinivasa Chariar v. Ranganayaki Ammal (1915) 3 L.W. 466 and Abhiramavalli Animal v. The Official Trustee of Madras (1913) 62 M.L.J. 111 : I.L.R. 55 Mad. 171. In the latter case which was decided by Madhavan Nair, J., the policy was payable to the " assured or his wife if he predeceases her " and my learned brother held that these words operated to create a trust in favour of the wife within the meaning of Section 6.

10. The learned Advocate for the appellant has placed great reliance on Dinbai v. Shet Bamanshaji Jamasji (1933) I.L.R. 58 Bom. 513 and Tibbetts v. Engelbach (1924) 2 Ch 348. In the former case a Bench of the Bombay High Court had before it an endowment policy of insurance which was payable at the death of the assured or at the age of 55 and was made payable to the wife provided she survived him. Failing her it was to be paid to the assured, his executors, administrators or assigns. The Court did not consider the English authorities and came to the decision that there was no trust created in favour of the wife within the meaning of Section 6 of the Married Women's Property Act, on the wording of the section. As 1 have already stated, the indian act follows the english act and the English cases are directly applicable. When these cases are considered there seems to be no doubt that in a case like the present a trust is created. Tibbetts v. Engelbach (1924) 2 Ch. 348 was a case in which a father had taken out an endowment policy on the life of his own daughter and for her benefit. It was held that in such circumstance, no legal estate was created in the daughter and that there was no trust for her benefit. The Court treated this case as being oatside the. Married Women's Property Act, 1882, as it was, because under that Act, as under the Indian Act, the policy must be on the life of the husband or the father. As there can be a contingent trust and as we construe the words in the proposal, which forms part of the policy, as creating a contingent trust in favour of the respondent we must also reject the second contention of the learned Advocate for the appellant.

11. For these reasons this appeal fails and must be dismissed with costs.