Case: Life Insurnce Corporation Of India Vs. Vishwanath Verma

issued by the Life Insurance Corporation of India may be cited as an example, where agreement to pay specified amount if death occurs before expiration of one year and to renew and extend the insurance during successive years if required premiums were paid was held to be a contract of insurance for the term of one year only, with provisions for renewal for successive years (vi) Advance insurance, i. e., insurance providing for the payment to insured of a lump sum immediately for consideration of his agreeing to make certain periodical payments to insurer for a specified period or for the life of insured if his life should terminate before the end of that period. Examples of this kind of insurance may be found in contracts to furnish funds for the building of a house, to be repaid by monthly or quarterly instalments. which shall cases on death (vii) Joint-life insurance i. e., insurance on the joint-life of husband and wife, insurance money payable if death should occur to either of them (viii) Annuity insurance, i. e., insurance whereby insurer agrees to pay certain fixed sum as annuity by monthly payment either at the expiration of the specified period or earlier if death should occur to the insured 17. The Life Insurance Corporation of India undertakes various kinds of life insurance, of which mention may be made of - (1) Limited payment life insurance; (2) Endowment insurance; (3) Joint-life insurance; (4) Multi-purpose insurance;(5) Childrens deferred insurance; (6) Two-year temporary insurance; (7) Whole life insurance; (8) Double endowment insurance; (9) Triple benefit insurance; (10) Anticipated endowment insurance; (11) Convertible whole life insurance; (12) Special whole life insurance; (13) Annuity insurance including single premium to immediate or deferred annuity insurance and including single premium to immediate or deferred annuity insurance and educational annuity insurance; (14) Fixed-term marriage endowment insurance 18. We are unable to support the finding of the High Court. This scheme run by the Jabalpur Municipal Corporation is against the interest of the employees themselves since the payments under the scheme, whether on retirement or death, are not guaranteed either by the Jabalpur Municipal Corporation or by the Madhya Pradesh State Government19. Section 44 makes Life Insurance Corporation Act inapplicable in certain cases. Clause (f) of the said section will also not come to the rescue of the Jabalpur Municipal Corporation. That is evident from the following " (f) any scheme in existence on the appointed day or any scheme framed after the appointed day with the approval of the Central Government whereby, in consideration of certain compulsory deductions made by the Government from the salaries of its employees as part of the conditions of service, the payment of money is assured by Government on the death of the employee concerned or on the happening of any contingency dependent on his life;" * This is not a scheme run with the approval of the Central Government 20. The scheme may be similar to the one run by the Government of Madhya Pradesh but what requires to be carefully noted, is the scheme of the State Government will be eligible to exemption under Section 44(f) of the Act. Such an exemption is not available to the scheme of the Jabalpur Municipal Corporation 21. What remains now to be considered is whether the State Government could exercise its jurisdiction under Section 421 of the Madhya Pradesh Municipal Corporation Act, 1956. That section runs as follows "421. Power of Government to suspend any resolution or order. - (1) If, the Government is of opinion that the execution of any resolution or order of the Corporation or of any other authority or officer subordinate thereto or the doing of any act which is about to be done or is being done by or on behalf of the Corporation, is not in conformity with law or with the rules or bye-laws made thereunder, or is likely to lead to a breach of the peace or to cause injury or annoyance to public or to any class or body of persons or is likely to cause waste of or damage to Municipal funds, the Government may, by order in writing, suspend the execution of such resolution or order or prohibit the doing of any such act (2) A copy of such order of the Government shall be sent to the Corporation by the Government (3) On receipt of copy of the order as aforesaid, the Corporation may, if it is of opinion that the resolution, order or act is not in contravention or excess of the powers conferred by any law for the time being in force, or the execution of the resolution or the doing of the act is not likely to cause waste of or damage to the Municipal funds, make a representation to the Government against the said order (4) The Government may, after considering the said representation, either cancel, modify or confirm the order passed by it under Section 1 or take such other action in respect of the matter as may in the opinion of the Government be just or expedient having regard to all the circumstances of the case." * 22. The High Court is of the view that the scheme does not fall within the ambit of the above section. No question of municipal funds arises in this case as the scheme is wholly run on contributions made by the employees and not on the funds of the Jabalpur Municipal Corporation. Therefore, the State Government has no jurisdiction to cancel the Resolution23. A careful reading of sub-section (1) of Section 421 shows that if the doing an act which is not in conformity with law, certainly it could prohibit the doing of such an act. We have already found that the scheme is in violation of the Life Insurance Corporation Act, particularly Section 30. Therefore, the State Government is well empowered to invoke the power under Section 421. The exercise of such a power cannot be found fault with

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It is clear the life insurance business in the country was run by a large number of private insurance companies. They were not managing the affairs honestly. As a result, the savings of a large number of policyholders were neither safe nor secure. It was in this background, with a view to provide security to policyholders and insurers the savings were employed inactivities and the life insurance business was nationalised in 1956 by establishing the Life Insurance Corporation of India16. As the Statement of Objects and Reasons clearly points out all the contracts for assurance executed by the Corporation are guaranteed by the Central Government. That is also evident from Section 37 of the Act. If, therefore, under Section 30 Life Insurance Corporation is to have the exclusive privilege of carrying on life insurance business in India, certainly it will be illegal on the part of the Jabalpur Municipal Corporation to run the said scheme. Unfortunately, the High Court has taken a narrow view as to the scope of life insurance. The High Court failed to note that there is a large variation of life insurance contracts built up by a combination in various ways of contracts. There may be insurance contracts providing for the payment of premium in the event of death or again there may be endowment contracts providing for payment in the event of survival of the assured for a particular term. Therefore, life insurance has a wide concept in modern days. Life insurance is designated by various names according to the nature of the terms and conditions of the different forms of contracts or policies. They may be(i) Endowment insurance, i. e., a contract to pay a fixed sum to insured if he survives for a specified period, or, if he dies within such period, to some other person nominated or indicated. Under this head includes childs endowment or deferred life insurance. Considerable difficulties have arisen with regard to the latter type of insurance as normally a person has no insurable interest in the life of his child and such a policy would, therefore, be illegal but when the policy is in the form now commonly current, the proposer will be regarded as holding the policy in trust for theWe are unable to support the finding of the High Court. This scheme run by the Jabalpur Municipal Corporation is against the interest of the employees themselves since the payments under the scheme, whether on retirement or death, are not guaranteed either by the Jabalpur Municipal Corporation or by the Madhya Pradesh State Government19. Section 44 makes Life Insurance Corporation Act inapplicable in certain cases. Clause (f) of the said section will also not come to the rescue of the Jabalpur Municipal Corporation.The scheme may be similar to the one run by the Government of Madhya Pradesh but what requires to be carefully noted, is the scheme of the State Government will be eligible to exemption under Section 44(f) of the Act. Such an exemption is not available to the scheme of the Jabalpur MunicipalThe High Court is of the view that the scheme does not fall within the ambit of the above section. No question of municipal funds arises in this case as the scheme is wholly run on contributions made by the employees and not on the funds of the Jabalpur Municipal Corporation. Therefore, the State Government has no jurisdiction to cancel the Resolution23. A careful reading of(1) of Section 421 shows that if the doing an act which is not in conformity with law, certainly it could prohibit the doing of such an act. We have already found that the scheme is in violation of the Life Insurance Corporation Act, particularly Section 30. Therefore, the State Government is well empowered to invoke the power under Section 421. The exercise of such a power cannot be found fault with