1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Notice of Motion No.4796 of 2007 IN Suit No.3456 of 2007 Rahul Kapildev Yadav .. .. Plaintiff v/s. Angenes Shashtri & anr. .. .. Defendants Mr.J. Shukla i/by M/s.G.H. Shukla & Co. for Plaintiff. Mr.A.S. Malvankar for Deft.No.1 . Mr.V.Y. Sanglikar with Mr.V.M. Sagare for Deft.No.2 . ------ CORAM : SMT.ROSHAN DALVI, J. Dated : 14 th November 2008 P.C. : 1. This Suit is filed for recovery of Rs.6,50,000/- constituting principal amount of Rs.5,00,000/- under a Policy for Insurance (LIC Policy) taken by the father of the Plaintiff, since deceased in the name of the Plaintiff as a beneficiary/nominee, with interest @ 18% per annum thereon. The Suit is also for a direction to Defendant No.1 to deposit the sum of Rs.5 Lakhs received by her upon the Policy in Court. This Notice of Motion is essentially for deposit of the amount. 2. The Plaintiff is a minor. He has sued through his next friend, his mother. His father has expired. His mother is the 2 legal as well as natural guardian of the person as well as the property of the Plaintiff. She has to act only in the interest of the Plaintiff. Defendant No.1 was a friend of the deceased. Defendant No.2 is the Life Insurance Corporation of India [LIC]. 3. Almost all the facts relating to the LIC Policy are admitted and are first required to be noted. (a) The deceased took a LIC Policy payable in case of his death by accident nominating the Plaintiff, his son thereunder. (b) The deceased appointed Defendant No.1 as an appointee since the nominee was a minor. -(c) The LIC Policy is for Rs.5 Lakhs. (d) The deceased expired on 18.12.2005. The Plaintiff is the beneficiary under the LIC Policy. The deceased and husband of Defendant No.1, since deceased, were good friends. The deceased and Defendant No.1 were also friends. Defendant No.1 accepted the proposal/request of the deceased to sign his LIC Policy 3 form as an appointee and guardian of the child (Plaintiff). Defendant No.1 accepted the proposal to become the appointee/guardian of the minor Plaintiff in the LIC Policy. Defendant No.1 was appointed as an appointee to receive the amount under the LIC Policy in the event of death of the deceased and to utilise the same for the benefit of the minor (Plaintiff). (e) On 16.2.2007 Defendant No.1 is sued a letter- cum- NOC to the Plaintiff's mother to enable her to encash the LIC Policy on behalf of the Plaintiff. (f) Sometimes thereafter Defendant No.1 filed her claim with Defendant No.2 and received Rs.6,12,500/- on the LIC Policy, including the sum assured, bonus and interest accrued thereon. (g) From the said amount, Defendant No.1 returned to the Plaintiff's mother Rs.1,12,500/- which represented the bonus and interest amount. (h) The mother of the Plaintiff invested Rs.1,09,600/- in two Policies for two children, the Plaintiff and his sister of two equal amounts of Rs.54,800 /- . 4 (i) The balance amount of Rs.2900/- from the said amount has remained with the Plaintiff's mother. (j) LIC has paid over the entire amount to Defendant No.1 as the appointee shown in the form as the person to receive the money secured by the Policy in the event of the death of the policy-holder during the minority of the nominee under the proviso to Section 39 of the Insurance Act, 1938. 4. It can be seen that the deceased took the Policy only for the benefit of his minor child, the Plaintiff. The nominee in such a Policy is the only true beneficiary. Since the minor cannot act himself a person has to be appointed to act on behalf of the minor during his minority. That appointed person is Defendant No.1. Defendant No.1, therefore, holds the position of trust. She holds the amount under the Policy in trust for the minor/ beneficiary (the Plaintiff). She cannot appropriate the amount under the Policy for her own use. Such appropriation would be misconduct of the trustee. 5. The mother of the Plaintiff through whom the Plaintiff has sued is also in the position of such trust. She has to act in the interest of the minor child. She has to act or take proceedings for receiving the amount on the LIC Policy only 5 on behalf of the minor/beneficiary (the Plaintiff). She also cannot utilise the amount under the Policy for her own benefit or appropriate it for her purpose. That also would constitute breach of the implied trust that she holds in her position as guardian, natural as well as legal, of the person and property of the minor child. 6. It is the case of the Plaintiff that he was represented through his mother after the death of the deceased, his father to recover the amount under the LIC Policy. Consequently, the mother obtained the NOC of Defendant No.1, who was shown as the appointee. The LIC may or may not allow the mother to withdraw the amount even upon such NOC. The LIC may be within its rights under Section 39 of the Insurance Act, 1938 to hand over the amount under the Policy being the sum assured, the bonus as well as the interest accrued thereunder to the appointee shown in the LIC Policy. However, that amount has to be held by such appointee only as a trustee for the true beneficiary, the nominee under the LIC Policy. 7. It is the case of Defendant No.1 in her Affidavit- in-reply as well as Written Statement that the amount withdrawn by her, which was credited to her account on 8.4.2006, has been adjusted against a loan which the deceased had taken 6 from her during his life time as well as towards interest and expenses incurred by her in claiming the Policy amount. It is her case that the entire amount has been settled between the Plaintiff and Defendant No.1 and nothing is due and payable to the Plaintiff's mother as the guardian on behalf of the Plaintiff or otherwise. She has averred in paragraph 5 of her Affidavit- in-reply that she has disposed of her flat on 6.1.2003, at which time the Plaintiff's father had requested her to lend him Rs.3 Lakhs. Under a certain oral transaction such amount was lent. No writing was executed to that effect. It could not be repaid during his life time. She claimed that, therefore, the Plaintiff's mother agreed to allow her to adjust the amount of the loan against the said Policy amount and to pay her the balance amount. 8. She has annexed her Bank Statement to her Affidavit- in- reply. It shows amount of Rs.5 Lakhs credited to her account on 8.4.2006. It shows certain cash of withdrawals made by self on 10.8.2006, 12.8.2006, 14.8.2006 and 18.8.2006 of Rs.49,000/- , 49,000/- , 49,000/- and 45,000/- . It is the case of Defendant No.1 that these are the amounts paid over to the Plaintiff's mother. The Plaintiff, through his mother, has denied this fact. Defendant No.1 has sought to explain that immediately after she received the amount from LIC, she was to pay over such balance amount to the 7 Plaintiff's mother but the Plaintiff's mother told her to wait until she was to go to her native place when she would collect the amount which Defendant No.1 gave her in August 2006. The total amount so stated to be given is Rs.1,92,000 /- . 9. Defendant No.1 has, therefore, explained the adjustment of Rs.3 Lakhs towards the loan amount but not shown the repayment of the remainder of Rs.2 Lakhs as per the Agreement between her and the Plaintiff's mother alleged by her. She has claimed that she deducted Rs.8,000/- on account of interest and the expenses incurred by her for obtaining the amount from the LIC. 10. The Plaintiff's Advocate has rightly contended that Rs.8,000/- cannot be the interest at even the least possible percentage on a sum of Rs.5 Lakhs which came to be due and payable to the Plaintiff upon the death of his father on 18.12.2005 or at- least from the date of the NOC given by Defendant No.1 on 16.2.2006. Since the LIC is to hand over a cheque to Defendant No.1 as the appointee shown in the form, and which has been done by the LIC despite the NOC filed by the Plaintiff's mother before Defendant No.1 was issued the cheque representing the amount payable under the Policy, Defendant No.1 could not even incur as much as 8 Rs.8,000/- towards any such expenses. It is, therefore, justifiably contended by the Plaintiff's Advocate that Defendant No.1 has received Rs.5 Lakhs upon the Insurance Policy and appropriated the entire amount to her own use. She has thereafter sought to explain away the amount of Rs.8,000/- as interest and expenses based upon the withdrawals shown in her Bank Statement. The withdrawals are made in cash and it is impossible to accept that if the Plaintiff's mother had wanted the amount under the Policy, even assuming that it was upon adjustment of the alleged loan amount, she would be paid in four installments between 10.8.2006 and 18.8.2006. 11. The Plaintiff's mother has denied the entire defence relating to the oral loan or its adjustment. She has also denied having received any amount from Defendant No.1. Her denial has to be appreciated in view of the queer and unique mode of the alleged payment being made to her of an innocuous amount of Rs.1,92,000/- from the entire amount assured of Rs.5 Lakhs. 12. It may be stated that the oral case of Defendant No.1 is completely inconsequential. Even if a loan was given by Defendant No.1 to the Plaintiffs' father that amount is a separate and distinct transaction. It has nothing to do with 9 the sum assured under the LIC Policy. That amount has to be collected by her as an appointee shown in the LIC Policy and to be paid over to the ultimate true beneficiary, the Plaintiff, on whose behalf she held the said amount admittedly as his guardian. She had no legal authority to appropriate the said amount towards any other transaction. She could recover the amount under her separate and distinct transaction only by following due legal process which is by filing an action in law and proving the transaction of loan if that was disputed by the Plaintiff and/or his mother. 13. Similarly the mother of the Plaintiff through whom the Plaintiff has sued also stood in the position of trust. She was required to collect the amount on behalf of her minor child as his natural and legal guardian under Section 6 of the Hindu Minority and Guardianship Act, 1956. She had no authority in law to adjust the amount towards any other transaction, assuming that she did it. Such transaction being without authority of law is not binding upon the Plaintiff who is a minor as that would not be in his interest and for his benefit. 14. Consequently, the controversy sought to be raised by Defendant No.1 is in law no controversy at all. Even upon 10 the assumption that the facts stated by Defendant No.1 are correct, she is not entitled to appropriate any part of the Policy amount, even with the consent of the Plaintiff's mother, for repayment of the loan alleged by her. 15. In fact, a case for judgment on admission under the provisions of Order 12 Rule 6 of the Code of Civil Procedure is made out. No case of adjustment can be allowed by the Court in this Suit. The ambit of the Suit is extremely narrow. The Plaintiff is entitled to recovery of Rs.5 Lakhs, the sum assured under the LIC Policy upon the admission of all the parties to the Suit that the LIC Policy was taken by the father of the Plaintiff, since deceased, as an accident Policy payable to the Plaintiff shown as the nominee thereunder and who was the true beneficiary. 16. Consequently, the Plaintiff has amply made out a case for deposit of the principal amount of Rs.5 Lakhs in this Court which is the sum assured under the LIC Policy taken by his father. 17. The Plaintiff's case of interest in the Suit follows as a corollary to his claim in respect of the principal amount. The Plaintiff was to be paid the Policy amount which matured due on the date of the death of his father. The Plaintiff would 11 have hoped to be paid that amount on 16.2.2006 when Defendant No.1 issued her NOC to the Plaintiff's mother on behalf of the Plaintiff. However, Defendant No.1 collected the said amount and credited it to her account on 8.4.2006 instead. The Plaintiff has, therefore, rightly claimed interest on the said amount at the rate of 18% per annum thereon. The defence, if any, available to Defendant No.1 would, at best, be upon the extent of the interest claimed. There can be no defence with regard to the principal amount legally payable to the Plaintiff by Defendant No.1 who held it in trust for the Plaintiff. 18. The Plaintiff has required Defendant No.1 to deposit only the principal amount of Rs.5 Lakhs, pending the Suit. 19. The Plaintiff's claim is, therefore, not only just and proper, but reasonable. 20. The Notice of Motion is, therefore, made absolute in terms of prayer (a). Defendant No.1 shall deposit Rs.5 Lakhs in this Court within four weeks from today. (SMT.ROSHAN DALVI, J.)