THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT No. 463 of 1991 JUDGMENT: The defendants in O.S.No.11 of 1987 on the file of the Subordinate Judge, Srikalahasti, are the appellants herein. The suit was one filed for recovery of a sum of Rs.57,377.30 paise with interest at 12% per annum on 17,503.70 paise, from the date of plaint till the date of realization. The claim of the plaintiffs is that the plaintiffs have taken three policies of Life Insurance Corporation under Estate Duty Scheme for a sum of Rs.50,000/- each on 28.11.1977. While so, the Government of India has abolished the Estate Duty Scheme and on 17.06.1986 the plaintiffs made a demand for refund of the amounts already paid and in response to the same, the 1st defendant sent a communication intimating that an amount of Rs.17,307.60 paise is payable to the 1st plaintiff under surrender value for his policy and a sum of Rs.15,938.10 paise is payable to the 2nd plaintiff towards the surrender value. The plaintiffs have received the amount under protest. The 1st plaintiff has paid a sum of Rs.20,898/- for his policy. The defendants cannot be permitted to enrich and, therefore, the entire premiums paid by the plaintiffs with interest is liable to be paid. Accordingly, for the first policy of Rs.50,000/- the plaintiff claimed the total value of 9 installments paid as Rs.22,779/- and calculated the interest till October, 1986 on each installment and claimed a sum of Rs.36,446.40 paise and after giving credit only to a sum of Rs.16,507.10 paise, claimed a sum of Rs.19,939.30 paise towards the first policy. The same amount was also claimed for the second policy. The 2nd plaintiff claimed a sum of Rs.17,498.70 paise being the amount payable under the policy. The 2nd defendant filed written statement admitting the policies and commencement of the policies and also the premium of the amounts paid and also repaid. It was contended that the policy being not one of endowment nature. The plaintiffs will be entitled only to the surrender value and not the total premiums paid with interest. The plaintiffs are given an option either to continue the policy for lifetime to cover the risk or to receive the surrender value. Merely because the plaintiffs received the amounts under protest, they are not entitled for the entire amount. There is no cause of action and no liability to pay interest and, therefore, the suit is liable to be dismissed. On the basis of the above pleadings, the following issues were framed for trial: 1. Whether the plaintiffs are entitled for the entire amount paid by them to the L.I.C. of India together with other benefits accrued thereto under policy Nos.43904014, 43904015 and 43903337 on account of the abolition of Estate Duty by the Government? 2. Is the Defendant Corporation liable to pay to the plaintiffs only a surrender value in entire cancellation of each policy? 3. Has the defendant’s corporation paid any reversionary Bonus to the plaintiffs out of the profits earned by the Corporation? 4. Whether the plaintiffs are entitled for the interest on the amount payable to them in respect of the suit policies? 5. To what relief? On behalf of the plaintiffs, P.W.1 was examined and marked Exs.A-1 to A-14 and on behalf of the defendants, D.W.1 was examined and marked Exs.B-1 to B-3. After considering the evidence on record, the lower Court has decreed the suit of the plaintiff as prayed for. Aggrieved by the said judgment and decree, the present appeal is filed. The points that arise for consideration are: 1) Whether the plaintiffs are entitled to the refund of the amount with interest? 2) Whether the judgment and decree passed by the learned Subordinate Judge is legal and sustainable? POINT NOS.1 & 2: There is no dispute about the fact that the policies taken by the plaintiffs are for the benefit of Estate Duty payable to the Government and it is also not in dispute that the Estate Duty has been abolished and consequently the purpose of the policies is lost. As per the terms of the policy and also the offer given by the defendants, an option was given to continue the policy to cover the risk of the individual. Evidently, the plaintiffs have not accepted for the same. As rightly found by the lower Court under Section 56 of the Indian Contract Act, 1872, the contract of the insurance has become impossible for performance since the purpose for which the policies were taken, has ceased consequent on the abolition of the Estate Duty. The claim of the plaintiffs is that in such circumstances, the defendants cannot be permitted to enrich by keeping the money of the plaintiffs and, therefore, all the installments received by the defendants have to be refunded with interest. Evidently, the policy did not contemplate the contingency of this nature, where the necessity of the policy is lost by virtue of the abolition of the Estate Duty. The general terms of guarantee surrender value are provided in the policy. When it is not a case of voluntary surrender of the policy, then the defendants cannot say that it is liable to pay only the surrender value. If the Estate Duty has not been abolished, the risk would have continued and the installments are liable to be paid. But, however, the special conditions of the policy show that if the policy matures before the death of the assured or is surrender, the amounts can be paid. Therefore, the enforceability of the policy has become ineffective in view of the subsequent abolition of the Estate Duty and the unwillingness of the plaintiffs to continue the policy to cover the risk. The defendants cannot say that it will pay the surrender value only. But, at the same time, the plaintiffs cannot claim interest on each installments from the date of installments till the date of abolition of the Estate Duty. It is needless to say that during this period, the risk is covered and there is nothing for the defendants being enriched with that money. At any rate, there was no contract to pay the interest and the total premiums are sought to be recovered instead of the surrender value and, therefore, in the above circumstances, as rightly contended by the learned counsel for the appellants, I find no ground in the judgment of the lower Court in granting interest at 12% per annum on installments from the date of payment till October, 1986 when the Estate Duty has been abolished. If at all any interest is payable, it can only be after the option exercised by the plaintiffs for refund of the money and the failure of the defendants to pay the same. However, in this case, the defendants have paid the surrender value and it was accepted. Therefore, in view of the above circumstances, I hold that though the plaintiffs are entitled for the total 9 installments of the premium paid by them, they are not entitled for the interest as claimed from the date of payment of installments, which was granted by the lower Court. Accordingly, the judgment and decree of the lower Court suffers from infirmity. As can be seen from the claim of the plaintiff, a sum of Rs.22,779/- was paid under 9 installments totally. Evidently, a sum of Rs.17,307.60 paise was received by the plaintiff No.1 and this amount has to be deducted. The amount that will be payable is Rs.5,471.40 paise. The same amount will be payable under the second policy. Therefore, the total amount due to the 1st plaintiff under two policies is Rs.10,942.80 paise. So far as the 2nd plaintiff is concerned, the value of the 9 installments paid by him as per the plaint is Rs.20,898/- and out of it a sum of Rs.15,938.10 paise was paid. The amount that will be payable to the 2nd plaintiff is Rs.4,960/-. Therefore, the total amount due to the plaintiffs is Rs.15,903/-. The plaintiffs will, therefore, be entitled for such amount only from the date of suit with interest at 12% per annum from the date of suit till the date of decree and with subsequent interest at 6% per annum from the decree till the realization. The claim for interest on Rs.17,503.70 paise is not well founded. Accordingly the points are answered holding that the plaintiffs will be entitled to a sum of Rs.15,903/- with interest at 12% per annum from the date of suit till the date of decree and at 6% per annum from the date of decree till the date of realization. The amounts if any, paid subsequent to the decree shall be given credit. Accordingly, the appeal suit is allowed in part. No costs. ________________________ N.R.L.NAGESWARA RAO, J DATE: 23-08-2011 MR THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT No. 463 of 1991 DATE: 23-08-2011 MR