Life Insurance Corporation of India v. Permanent Lok Adalat and Raj Baba and Anr

ooooooINoTHEoHIGHoCOURToOFoPUNJABoANDoHARYANAo AToCHANDIGARHoo 209o o o o o o o o oooooo o o o o o o o o o oooooCWP-2232-2017o o Dateoofodecision:o20.01.2023o o LIFEoINSURANCEoCORPORATIONoOFoINDIAo o o o o o o o o o oooooooooo.......Petitionero o o o o o o o VERSUSo o PERMANENToLOKoADALAToANDoRAJoBABAoANDoANOTHERo o o o o o o o o o o oooooo.......Respondentsoo o CORAMo:oHON'BLEoMR.oJUSTICEoVINODoS.oBHARDWAJo o o o o o *****o o Present:-oo Mr.oPrateekoMahajan,oAdvocateoandoo o o Ms.oSalonioSharma,oAdvocateo o o forotheopetitioner.o o o o Dr.oSumatioJund,oAdvocateoo o o fororespondentoNo.2.oo o o o o o *****oo o VINODoS.oBHARDWAJ,oJ.o(Oral)oo o o o oTheopresentopetitionohasobeenofiledounderoArticleso226/227oofo theoConstitutionoofoIndiaoseekingoissuanceoofoaowritoinotheonatureoofoCertiorario foroquashingoofotheoawardodatedo26.10.2016opassedobyotheoPermanentoLoko Adalato (Publico Utilityo Service),o Bhiwanio (Campo Courto ato Jind)ooooooooooooooooooo (Annexureo P-1)o wherebyo theo petitioner-Insuranceo companyo hado beeno directedotoomakeoaopaymentoofoRs.o2,50,000/-oalongwithobenefitsoifoany,oando interesto@o9%operoannumofromotheodateooforepudiationoofoclaimotilloitsofinalo paymentounderoPolicyoNo.o177783164.oo

2.o o Brieflyosummarizedotheofactsoofotheopresentocaseoareothatotheo respondent-applicantoRajoBalaobeingonomineeoofodeceasedoRamoBhajohado CWP-2232-2017o o o o o o o o o -2-o o filedoanoapplicationounderoSectiono22o(C)oofotheoLegaloServiceoAuthoritieso Act,o 1987o beforeo theo Permanento Loko Adalato (Publico Utilityo Services),o Bhiwanioonotheogroundothatoherohusbandohadopurchasedoanoinsuranceopolicyo foroaosumoofoRs.2,50,000/-oissuedoono28.12.2011oobyotheobranchoofficeoato Jind.oHerohusbandodiedoono19.12.2013.oTheorespondent-applicantobeingotheo nomineeowasotheobeneficiaryoofotheosaidopolicy.ooIntimationoregardingodeatho ofooRamoBhajowasoconveyedotootheopetitioner-Insuranceocompanyooandoao claimowasolodgedoforopaymentoofotheoosumoinsuredoalongwithootherodeatho cum-maturityobenefits.oTheopetitioner-insuranceocompany,ohowever,oavoidedo toosettleotheoclaimoonooneopretextoorotheootheroandoeventually,oaoletterodatedo

16.05.2014oowasosentotootheorespondent-applicantorepudiatingotheoclaimoofotheo respondentoonotheogroundoofoconcealmentoofomaterialofactsobyoRamoBhajo regardingohisohealthooatotheotimeoofopurchasingoofotheoInsuranceopolicy.ooIto wasoaverredothatoallotheomaterialofactsohadobeenodulyodisclosedotootheoagento beforeopurchasingotheoinsuranceopolicyoandothatosaidofactsohadobeenodulyo verifiedoandoconfirmedobyotheoofficial/agentoofotheoinsurance-company.oIto wasoalsoopointedooutothatotheodeceasedoRamoBhajowasonotosufferingofromoanyo diseaseoandowasohealthy.oAolegalonoticeodatedo26.08.2015owasothereafterosento byotheorespondent-applicantotootheopetitioner-insuranceocompanyoandoasotheo sameofailedotoobringoaboutotheodesireoresult,otheoapplicationowasopreferredo beforeotheoPermanentoLokoAdalato(PublicoUtilityoService),oBhiwanio(Campo CourtoatoJind).oo

3.o o Theopetitioner-insuranceocompanyofiledoitsoresponseobeforeotheo Permanento Loko Adalato (Publico Utilityo Service),o Bhiwanio (Campo Courto ato Jind)owhereinoitowasostatedothatotheodeceasedoRamoBhajowasosufferingofromo diseaseoK/C/O-COPDosinceomanyoyearsopriorotootheocommencementoofotheo CWP-2232-2017o o o o o o o o o -3-o o riskounderotheopolicyoinoquestion.oTheoinsuranceopolicyohadobeenoobtainedo witho ao maliciouso intentiono too defraudo theo petitioner-corporation.o Ao falseo declarationohadobeenosubmittedoinotheoproposaloformodatedo20.01.2012oando thato theo insuranceo contracto hado beeno broughto abouto ono theo strengtho ofo informationo knowno too theo insuredo too beo false.o Hence,o theo principleo ofo Uberrinalofidesoi.e.outmostogoodofaithohadobeenobreached.oResultantly,otheo petitioner-insuranceocompanyowasoentitledotoorepudiateotheosame.ooo

3.oo o ProposedotermsoofosettlementoasoperotheoprocedureoofotheoLegalo ServiceoAuthorityoAct,o1987owasosetooutoatoasotheopartiesotooresolveotheoissue.o Theoparties,ohowever,ofailedotooarriveoatoanoamicableoresolutionoofotheoissue,o hence,oadjudicationoofotheolisowasodone.oAnoawardowasofinallyopassedoino favouro ofo theo respondent-claimanto againsto whicho theo presento petitiono haso beenopreferred.oo

4.o o Noticeoofomotionoinotheoinstantocaseowasoissuedoono23.03.2017o afteropassingoaodetailedoorderowhichoreadsothus:-o o Learnedo counselo foro theo petitionero submitso thato ono accountoofodeceasedohavingonotodisclosedoinotheoproposaloformo thato heo waso sufferingo fromo differento diseaseso ando remainedo admittedoinohospitalowhichoisoapparentofromoAnnexureoP-7,otheo petitioner-Corporationo hado rightlyo repudiatedo theo insuranceo claim.o o Learnedocounseloforotheopetitioneroreliesouponojudgmento inoSatwantoKauroSandhuoVs.oNewoIndiaoAssuranceoCompanyo Limited,o2009o(4)oR.C.R.o(Criminal)o546owhereoinoaocaseoofo claimo undero mediclaimo policy,o theo patiento sufferingo fromo chronicorenalofailureohadonotodisclosedotheofactumoofoailment,o theo acto ofo insuranceo companyo ino repudiatingo theo claim,o waso upheldobyotheoSupremeoCourt.oTheopleaoofotheopetitioneroisothato theocontractoofoinsuranceoisoaocontractouberrimaeofideioandotheo assuredo iso undero solemno obligationo too makeo ao trueo ando fullo CWP-2232-2017o o o o o o o o o -4-o o disclosureoofotheomaterialofactsorelevantotootakeodecisionoabouto acceptanceoofoproposal.oo o TheoclaimosubmittedobyorespondentoNo.2ounderotheopolicyo ofo insuranceo beforeo theo Permanento Loko Adalato haso beeno consideredo ino exerciseo ofo powerso undero Sectiono 22-Co ofo theo Legalo Serviceso Authoritieso Act,o 1987o therebyo directingo theo petitioner-Corporationo too payo insuranceo amounto ofo Rs.2,50,000/-oalongowithointerestoatotheorateoofo9%ofromotheodateo oforepudiationoo o Learnedo counselo foro theo petitionero haso vehementlyo contendedo thato theo deceasedo insuredo hado concealedo materialo factsoatotheotimeoofofillingoofotheoproposaloform,ocopyoofowhicho hasobeenoplacedoonorecordoasoAnnexureoP-5.oTheoreasonoforo repudiationo aso claimedo byo theo petitioner-Corporation,o iso thato theoassuredowasosufferingofromokidneyoproblemoandowasoknowno caseoofochronicoobstructiveopulmonaryodiseaseo(K/C/OoCOPD)o beforeosubmittingoproposaloforoinsuranceoandothatoheohavingonoto disclosedotheseofactsoinotheoproposaloform/personalostatement,o theo Corporationo haso rightlyo repudiatedo theo claimo undero theo policyovideoletteroAnnexureoP-4odatedo16.05.2014.oo o Io haveo heardo learnedo counselo foro theo petitionero ando consideredotheojudgmentsoinoSatwantoKauroSandhuoVs.oNewo Indiao Assuranceo Companyo Limited,o 2009o (4)o R.C.R.o (Criminal)o546oandoP.C.oChackooandoanotheroVs.oChairman,o Lifeo Insuranceo Corporationo ofo Indiao ando others,o 2008o (1)o R.C.R.o(Civil)o127olayingodownothatowhenoaopolicyoisotakenobyo insuredo givingo incorrecto informationo abouto hiso health,o theo insuranceocompanyocanorepudiateotheopolicyowithinoaoperiodoofo twooyears.oo o Iohaveocarefullyoconsideredotheofactsoandocircumstanceso ofotheocase.oTheopresentocaseoisonotoaocaseoofomediclaimopolicy.oIo amo ofo theo opiniono thato ino theo presento caseo husbando ofo respondentoNo.2ohadodiedoono19.12.2013,o9odaysopriorotootheo expiryoofo2oyearsoofoinsuranceopolicy.oTheoclaimant-respondento No.2o aftero theo deatho ofo hero husband,o producedo theo entireo CWP-2232-2017o o o o o o o o o -5-o o medicalo recordo ofo treatmento ofo deceasedo ino Posto Graduateo InstituteoofoMedicaloScience,oRohtakoshowingothatohusbandoofo respondento No.2o waso admittedo ino theo hospitalo ono 12.06.2013o andowasodischargedoono12.06.2013.oInotheodischargeoslipoonotheo secondopage,otheoaboveosaidofactothatotheopetitionerowasoknowno caseoofochronicoobstructiveopulmonaryodiseaseosinceomanyoyearso wouldoindicateothatoatotheotimeoofogettingotheoinsuranceopolicyo i.e.o 28.12.2011,o theo deceasedo waso patiento ofo chronico diseaseo whichoheodidonotodisclose.o o oIohaveoconsideredotheosaidocontentionocarefullyoandoIoamo ofotheoopinionothatotheopetitionerohadobonaofideoproducedoallotheo documentsopertainingotootheoailmentoofotheodeceased.oNoting,oino theocaseosummaryothatotheodeceasedowasosufferingofromoknowno caseo ofo chronico obstructiveo pulmonaryo diseaseo sinceo manyo years,o willo noto ipsoo factoo raiseo ao presumptiono thato heo hado concealedo materialo factso ato theo timeo ofo submissiono ofo theo proposaloformoforoinsurance.oTheonatureoandoseverenessoofotheo ailmento haso noto beeno establishedo beforeo theo Permanento Loko Adalat.oNoospecificodateocouldobeobroughtotootheonoticeoofotheo Permanento Loko Adalato indicatingo thato theo petitionero waso actuallyosufferingofromoanyoseriousoailmentoorochronicodiseaseo ono28.12.2011owhenotheopolicyocommenced.oo o Inoviewoofosaidocircumstances,otheoratiooofotheojudgmentso citedobyocounseloforotheopetitioner,oareonotoapplicableotootheo factsoofotheopresentocase.oo o Takingointooconsiderationotheoageoofotheodeceasedoando thereobeingonoomaterialoavailableoonotheorecord,oitowillonotobeo prudentotooassumeothatoatotheotimeoofofurnishingoofotheodetailsoofo insurance,otheodeceasedowasosufferingofromoanyoailment.o o oNoogroundoisomadeooutotoointerfereoinotheoorderopassedo byo respondento No.1o foro granto ofo amounto ofo Rs.2,50,000/-o aso insuredomoney.o o oLearnedo counselo foro theopetitionero hasonexto contendedo thatoorespondentoNo.2oisonotoentitledotootheointerestoasoperotheo termso ofo theo insuranceo policyo ando thato theo Permanento Loko CWP-2232-2017o o o o o o o o o -6-o o Adalatocouldonotohaveoexercisedodiscretionotoograntointerestoono accounto ofo prohibitoryo clauseo whicho iso mentionedo ino theo insuranceopolicy.oo o Learnedo counselo foro theo petitionero relieso upono theo judgmentoofothisoCourtoinoLifeoInsuranceoCorporationoofoIndiao Vs.oMamanoChandoandoothers,o2014o(4)oR.C.R.o(Civil)o454oando theoprovisionsoofotheoInterestoAct,o1978.oo o Theo writo petitiono iso dismissed,o soo faro aso theo awardo ofo insuredoamountoofoRs.2,50,000/-oisoconcernedobutocounseloforo theo petitionero appearso too haveo raisedo ano arguableo pointo regardingotheoentitlementooforespondentoNo.2oforointerest.oo o NoticeoofomotionotoorespondentoNo.2oforoonlyopertainingo tootheoquestionoofopaymentoofointerest,oforo11.07.2017.oo o TheorecoveryoofointerestoonotheosumoofoRs.2,50,000/-owillo remaino stayedo subjecto too theo conditiono thato theo petitionero depositso theo principalo amounto ofo Rs.2,50,000/-,o withino oneo monthobeforeotheoexecutingoCourt."o o

5.o o Takingointooconsiderationothatotheowritopetitionowasodismissedo insofaroasotheoquestionoofodeterminationoofotheoliabilityoandopassingoofoawardo forotheoprincipaloamountoisoconcerned,otheosaidoissueoisothusonotobeingodealto withoatothisostage.oTheocontroversyowhichosurvivesoisoonlyoasoregardsotheo grantoofointerestoonotheoprincipaloamountoofoRs.o2,50,000/-.oo

6.o o Counselo foro theo petitionero contendso thato theo insuranceo policyo documentoNo.177783164odatedoo02.02.2012ospecificallyoincorporatedothato theoinsuredo wouldonotobeo entitledo too anyo interestoono accounto ofo delayo ino releaseoofotheobenefits.ooTheorelevantoextractoofotheoclauseoreadsothus:o "Theo LIFEo INSURANCEo CORPORATIONo OFo INDIAo (hereinafterocalledoaso"theoCorporation")ohavingoreceivedo aoproposaloandodeclarationoandotheofirstopremiumofromo theoproposeroandotheolifeoassuredonamedoinotheoScheduleo ando theo saido proposalo ando declarationo witho theo CWP-2232-2017o o o o o o o o o -7-o o statementso containedo ando referredo too thereino havingo beenoagreedotoobyotheosaidoproposeroandotheoCorporationo aso theo basiso ofo assuranceo doo byo thiso Policyo agree,o ino considerationo ofo ando subjecto too theo dueo receipto ofo subsequentopremiumsoasosetooutoinotheoSchedule,otoopayo theoSumoAssuredo(togetherowithosuchofurtherosumoorosumso asomayobeoallocatedobyowayoofoBonusoinotheocaseoofowitho ProfitoPolicies),obutowithoutointerestoatotheoBranchoOfficeo ofotheoCorporationowhereothisopolicyoisoservicedotootheo personooropersonsotoowhomotheosameoisopayableoinotermso ofotheosaidoSchedule,oonoproofotootheosatisfactionoofotheo CorporationoofotheoSumoAssuredohavingobecomeopayableo asosetooutoinotheoSchedule,oofotheotitleoofotheosaidopersonooro personsoclaimingopaymentoandoofotheocorrectnessoofotheo ageo ofo theo Lifeo Assuredo statedo ino theo Proposalo ifo noto previouslyoadmitted.o o ANDoitoisoherebyodeclaredothatothisopolicyoofoassuranceo shallobeosubjectotootheoconditionsoandoprivilegesoprintedo onotheobackohereofoandotheofollowingoScheduleoandoeveryo endorsemento placedo ono theo policyo byo theo Corporationo shallobeodeemedopartoofotheopolicy".o o

7.o o Heo furthero placeso relianceo ono judgmento ofo thiso Courto ino theo mattero ofo "Lifeo Insuranceo Corporationo versuso Mamano Chando ando others"reportedoaso2014o(4)oRCRo(Civil)o454otoocontendothatowhereothereoiso aoprohibitoryoclauseooinotheopolicyoforopaymentoofointerest,oSectiono3o(3)o(a)o

(ii)oofotheoInterestoAct,o1978owillonotoapplyoandotheoCourtocannotoitsoexerciseo itsodiscretionounderoSectiono34oofotheoCiviloProcedureoCodeotoograntoointerest.o Theorelevantoextractoofotheosaidojudgmentoreadsothus:o o "11.o Onceo theo claimantso wereo entitledo foro theo Sumo Assuredobutowithoutointerest,oasoagreedobetweenotheopartiesoino theoabovesaidoClauseoofotheopolicyoEx.oP1,oplaintiffsowereonoto CWP-2232-2017o o o o o o o o o -8-o o entitledoforointerestowhichowasowronglyoawardedobyotheolearnedo courtso below.o Ino sucho ao situation,o provisionso containedo ino Sectiono3(3)(a)(ii)oofotheoInterestoAct,o1978,owouldobeoattracted,o whichoreadsoaso"anyodebtoorodamagesouponowhichopaymentoofo interestoisobarred,obyovirtueoofoanoexpressoagreement".oInotheo presento case,o thereo waso ano expresso agreemento betweeno theo partiesoinotheoformoofotheoabovesaidoclauseoofotheopolicyoEx.oP1,o becauseoofowhichotheoplaintiffsowereonotoentitledoforointerestoono theosumoassured.oHavingosaidothat,othisoCourtofeelsonoohesitationo too concludeo thato learnedo courtso belowo transgressedo theiro jurisdiction,o whileo grantingo interesto too theo plaintiffs-respondents,oevenowithoutothereobeingoanyoprayeromadeoonotheiro behalfo ando alsoo ino viewo ofo theo abovesaido expresso agreemento betweenotheoparties.o o 12.oTheoviewotakenobyothisoCourtoalsoofindsosupportofromo theoabovesaidojudgmentsoreliedouponobyotheolearnedocounseloforo theoappellant.o Theo relevanto observationso madeo byoaoDivisiono Bencho ofo thiso courto ino parao 63o ando 64o ofo theo judgmento ino Laksihmi'socaseo(supra),owhichocanobeogainfullyofollowedoinotheo presentocase,oreadoasoundero:-oo "InoaorecentodecisionoofotheoSupremeoCourtoofoIndiaoino ThawardasoPheramalov.oUnionoofoIndiao(S),oAIRo1955o SupremeoCourto468,othisomatterowasoexaminedoinosomeo detail,oandoitowasoheld,othatotheofollowing,oamongoothero conditions,o musto beo fulfilledo beforeo interesto cano beo awardedounderotheoActo:oo

(1)othereomustobeoaodebtooroaosumocertain;o

(2)oItomustobeopayableoatoaocertainotimeoorootherwise;o

(3)otheseodebtsoorosumsomustobeopayableobyovirtueoofosomeo writtenocontractoatoaocertainotime;oo

(4)othereomustohaveobeenoaodemandoinowritingostatingothato interestowillobeodemandedofromotheodateoofodemand.o o oInothisocase,otheoplaintiffodidonotomakeoanyosuchodemando fromo theo insurer.o Moreover,o thereo iso noo agreemento betweenotheoinsuredoandotheoinsureroentitlingotheoformeroVISHAL SHARMA CWP-2232-2017o o o o o o o o o -9-o o too anyo interest.o Noo questiono ofo marketo usage,o wherebyo insurerso becomeo liableo too payo interesto ono overdueo amountso ofo policyo haso beeno pleadedo oro couldo possiblyo arise.oPriorotootheocomingoinoforceoofotheoLawoReformso (Miscellaneouso Provisions)o Acto 1934o (sectiono 3),o theo interesto upono theo moneyo payableo upono ao policyo ofo insuranceo upono theo lifeo ofo theo insuredo couldo noto beo recoveredofromotheoinsurer,oevenothoughotheopaymentohado beenowrongfullyodelayedoorowhereosuchopromiseowasotoobeo impliedofromotheousageoofotradeoorootheroobligations.oo o Referenceo haso alsoo beeno madeo ino theo courseo ofo theo argumentsotooSectiono34oofotheoCodeoofoCiviloProcedureo,o whichorelatesotootheodiscretionoofotheoCourtoinoallowingo interestoafterotheodueodateoofotheosuit.oInothisocase,onoto interestoafterotheosuitohasobeenoallowedobyotheotrialocourto andotheooplaintiffoisonotoaggrievedoonothisoaccountoasonoo appealoorocross-objectionsohaveobeenofiledoinothisoCourt.o Fororeasonsostatedoabove,ointerestomustobeodenied,otootheo plaintiff,oandoissueoNo.o4oisodecidedoagainstoher.oNooothero issueohasobeenopressed,oandonoootheropointohasobeenotakeno byotheoparties.oo o Similarly,otheolawolaidodownobyotheoDelhioHighoCourtoinoSmt.o ShantaoTrivedi'socaseo(supra),owhichoaptlyoappliesotootheofactsoofo theopresentocase,oreadoasoundero:-oo o "Theo contracto ofo insuranceo aso seto outo ino theo lifeo insuranceo policieso expresslyo barso theo paymento ofo anyo interesto byo theo defendanto too theo persono entitledo too receiveo theo insuranceo amount.oTheolearnedocounseloforotheoplaintiffocontendedothatotheo plaintiffo wouldo beo entitledo too interesto undero theo interesto Act,o 1978obutohisocontentionoisoincorrectoinoviewoofoSub-Sectiono(3)o

(ii)oofotheoSectiono3oofotheosaidoActowhichoprovidesothatonothingo inoSectiono3oshalloapplyoinorelationotooanyodebtoorodamagesoupono whichopaymentoofointeresto isobarred,obyovirtueo ofoano expresso agreement.oInterestoisopayableounderoSectiono3(1)oando(2)oofothisoVISHAL SHARMA CWP-2232-2017o o o o o o o o o -10-o o ActoinotheodiscretionoofotheoCourtobutointerestocannotobeoallowedo ifo theo paymento ofo interesto iso barredo byo virtueo ofo ano expresso agreement.oThereoisonoomercantileocustomaryousageoprovedoono theorecordsoofotheocaseowherebyointerestowouldobeopayableotootheo plaintiff.oThus,otheoplaintiffoisonotoentitledotooanyoamountobyowayo ofo interesto ando thiso issueo iso decidedo accordinglyo againsto theo plaintiff."oo o

13.o Revertingo backo too theo factso ofo theo presento caseo ando respectfullyofollowingotheolawolaidodownoinotheocasesoreferredotoo hereinabove,oanswerotootheosubstantialoquestionoposedoabove,oiso andohasotoobeoinotheoaffirmative.oInotheopresentocase,oplaintiffso dido noto challengeo theo validityo ofo theo abovesaido clauseo ofo ano expressoagreementobetweenotheoparties.oItoseemsothatoplaintiffso wereofullyoawareoaboutotheoabovesaidoclauseoofotheoinsuranceo policyo becauseo ofo which,o theyo dido noto takeo anyo avermento oro madeoanyoprayeroinotheiroplaintoclaimingointerestoonotheosumo assured.oInothisoviewoofotheomatter,oitoisounhesitatinglyoheldothato learnedo courtso belowo committedo patento illegality,o whileo noto appreciatingo theo materialo aspectso ofo theo matter,o becauseo ofo whicho theo impugnedo judgmentso ando decreeso cannoto beo sustained."o o

8.o o CounseloforotheorespondentoNo.2ohasoonotheootherohandoplacedo relianceo ono judgmento ofo thiso Courto ino "Balwanto Kauro versuso Lifeo InsuranceoCorporationoofoIndia"oinoRSAoNo.o3494oofo1998odecidedoono

10.09.2004.oTheorelevantoextractoofotheosaidojudgmentoreadsothus:o o 12.oTheoSupremeoCourtoconcludedoinooneoofotheoprincipleso laidodownoinotheoaforesaidojudgmentotootheofollowingoeffect:-oo o o "Awardo ofo interesto pendenteo liteo ando post-decreeo iso o discretionaryowithotheoCourtoasoitoisoessentiallyogovernedo o byoSectiono34oofotheoCiviloProcedureoCodeodeohorsotheo o contractobetweenotheoparties.oInoaogivenocaseoifotheoCourto CWP-2232-2017o o o o o o o o o -11-o o o findsothatoinotheoprincipalosumoadjudgedoonotheodateoofotheo o suitotheocomponentoofointerestoisodisproportionateowithotheo o componento ofo theo principalo sumo actuallyo advancedo theo o Courto mayo exerciseo itso discretiono ino awardingo interesto o pendenteoliteoandopost-decreeointerestoatoaolowerorateooro o mayoevenodeclineoawardingosuchointerest.oTheodiscretiono o shallobeoexercisedofairly,ojudiciouslyoandofororeasonsoando o notoinoanoarbitraryoorofancifulomanner."oo o Ino viewo ofo theo judgmentso referredo too above,o ito cano beo safelyoconcludedothatoinotermsoofoexpressoprohibitionoofointeresto inotermsoofotheopolicy,otheoplaintiffoisonotoentitledotoointerestofromo theodateoofodeathoofotheopolicyoholderotilloinstitutionoofotheosuitoaso pre-suitointerestoisoaomatteroofosubstantiveolaw.oInosubstantiveo law,otheoplaintiffoisonotoentitledotoointerestoinotermsoofoSectiono 3(3)(ii)o ofo theo Interesto Act,o 1978.o Thus,o ino respecto ofo firsto substantiveoquestionoofolawoitoisoheldothatotheoplaintiffoisonoto entitledotoointerestoforotheoperiodopriorotootheofilingoofotheosuit.oo o o 13.o However,o onceo theo suito iso filed,o awardo ofo interesto pendenteoliteoandopost-decreeoisodiscretionaryowithotheoCourto andoisogovernedobyoSectiono34oofotheoCodeodeohorsotheocontracto betweenotheoparties.oTherefore,otheostipulationothatonoointeresto wouldobeopayableounderotheotermsoofotheopolicyowouldoceaseotoo haveoeffectoafterotheofilingoofotheosuitoandotheoplaintiffowouldobeo entitledotoointerestoinotermsoofoSectiono34oofotheoCode.o o oo 14.oItoisoneedlessotoosayothatotheorightsoofotheopartiesoareo adjudicatedo witho referenceo too theo dateo ono whicho liso iso commenced.o Therefore,o too compensateo theo delayo ino finalo adjudication,otheoCourtoisoempoweredotoograntointerestoinotermso ofoSectiono34oofotheoCodeoforotheoperiodolisoremainedopendingo beforeotheocourtoandoforotheoperiodoafterotheodecreeotooenableo theo judgmento debtoro too makeo payment.o Thus,o theo plaintiffo iso requiredotoobeocompensatedoforotheoperiodospentoinolitigationoaso well.oo o CWP-2232-2017o o o o o o o o o -12-o o o 15.o Singleo Bencho judgmento ofo thiso Courto ino Hindustano Levero Limited'so caseo (supra)o iso too theo sameo effecto whereino interesto waso claimedo ono damageso ono accounto ofo deatho ino ao railwayoaccident.oItowasoheldotootheofollowingoeffecto:-o "Thereocanobeothreeoperiodsoforowhichoinotheocaseoofoao decreeoforopaymentoofomoney,ointerestomayobeoallowed.o Theofirstoperiodoisotheooneowhichoisopriorotootheodateoofotheo suit.oTheopaymentoofointerestoforothatoperiodoisoaomatteroofo substantiveolawoandocontractualoliabilityoandoisooutsideo theoscopeoofoSectiono34oCiviloProcedureoCode.oAccordingo too Ruttanjio Ranji'so case,o AIRo 1938o Privyo Councilo 67o (supra)o ando Vithalo Dasso v.o Rupo Chand,o AIRo 1967o Supremeo Courto 188,o interesto cano beo awardedo foro thato periodo(1)owhenothereoisoanoagreementoforopaymentoofotheo same,ooro (2)o whenoito iso payableobyo theousageo ofo tradeo havingotheoforceoofolaw,ooro(3)owhenotheopaymentoofotheo sameoisocontemplatedobyotheoprovisionoofoanyosubstantiveo law,ooro(4)ounderotheoInterestoAct.oItomayoalsoosometimeso beoawardedounderotheoruleoofoequity.oTheosecondoperiodoiso theooneowhichointervenesotheodateoofosuitoandotheodateoofo decree.o Theo Courto grantingo theo moneyo decreeo haso discretiono too allowo interesto pendenteo liteo i.e.o foro theo secondo periodo upo too theo limito ofo contractualo rate.o Theo thirdo periodo iso fromo theo dateo ofo decreeo too theo dateo ofo payment.o Foro theo saido period,o theo Courto grantingo theo decreeohasodiscretionotooallowointerest,ocommonlyoknowno asofutureointerest,oonotheoamountoadjudged,osubjectotootheo limitoofo6operocent,operoannum,oasoitodeemsoreasonable.o Sectiono 34,o Civilo Procedureo Code,o provideso thato theo Courtomay,owhileoawardingodecreeoforopaymentoofomoney,o directotheopaymentoofointerestoatosuchorate,oasoitodeemso reasonable,otoobeopaidoonotheoprincipaloamountoforoanyo periodo periodo too theo institutiono ofo theo suit,o witho futureo interestoonosuchoprincipalosumoatoaorateonotoexceedingo6o perocentoperoannum......"o CWP-2232-2017o o o o o o o o o -13-o o oTheo principleso laido downo ino theo saido judgmento areo theo oneo whichohaveobeenoculledodownobyotheoSupremeoCourtoinotheolatero judgments.oo o

16.o Ino Smt.o Shantao Trivedi'so caseo (supra),o reliedo upono byo learnedocounseloforotheorespondents,ointerestohasobeenodeclinedo inoviewoofotheoprovisionsoofoSectiono3(3)(ii)oofotheoInterestoAct,o 1978.oHowever,onooargumentohasobeenoraisedoinotheosaidocaseo thatotheoclaimoofointerestoafterotheofilingoofotheosuitowouldobeo governedobyotheoprovisionsoofoSectiono34oofotheoCodeoandonotobyo contract.oTherefore,otoothatoextent,oIoamounableotoosubscribeotoo theo viewothatotheoplaintiffo isonotoentitledo toointerestoafterotheo filingoofosuitoasowell.oTheoCourtohasonotodealtowithotheoargumento nowo raisedo byo theo appellanto thato sheo wouldo beo entitledo too interestounderoSectiono34oofotheoCode.oInoSulochanioDevi'socaseo (supra),olearnedocounseloforotheoplaintiffohasoforgoneotheoclaimo ofointerestoand,otherefore,otheosaidojudgmentoisonotoapplicableotoo theofactsoofotheopresentocase.oo o

17.oInoviewoofotheoabove,otheofirstosubstantialoquestionoofolawoiso answeredotootheoeffectothatotheoplaintiffoisonotoentitledotoointeresto foro pre-suito periodo ino viewo ofo theo expresso stipulationo ino theo policy.o However,o theo plaintiffo iso entitledo too interesto foro theo periodotheosuitoremainedopendingobeforeotheoCourtoasowelloaso fromotheodateoofodecreeotillorealisation.oSinceotheolearnedotrialo Courtohasoexercisedodiscretionoinograntingointerestoatotheorateooro 6operocentoperoannumoforotheopendenteoliteoperiodoasowelloasoforo theoperiodoafterotheograntoofodecree,oIodoonotofindoanyoreasonotoo interefereowithotheosaidodiscretionoexercisedobyotheotrialoCourt.o Consequently,otheopresentoappealoisoallowedoandotheojudgmento ando decreeo passedo byo theo learnedo firsto Appellateo Courto iso modifiedo too theo effecto thato theo plaintiffo shallo beo entitledo too interestoatotheorateoofo6%operoannumoforotheoperiodofromotheo dateoofofilingoofotheosuitotillotheodateooforealisation.o Appealoallowed"o o CWP-2232-2017o o o o o o o o o -14-o o

9.o o Io haveo heardo learnedo counselo appearingo ono behalfo ofo theo respectiveopartiesoandohaveogoneothroughotheodocumentsoappendedoalongwitho theopresentopetitionoasoalsootheojudgmentocitedobyothemoinosupportoofotheiro respectiveoclaims.oo

10.o o Thereocanobeonoodisputeowithorespectotootheoprepositionoofolawo laidodownoinotheoprecednentojudgmentsoofothisoCourtowhereoitoheldothatotheo provisionsoofotheoInterestoAct,o1978oshallonotocomeotootheoaidoofoaoclaimantotoo claimo interesto whereo thereo iso ano expresso prohibitiono againsto awardingo ofo interesto ino theo agreement.o However,o theo questiono whicho ariseso foro considerationoisoasotoowhetherotheosaidoprohibitionorelatesotootheopre-litigationo periodoorotheoperiodoafteroaopartyohasoapproachedotheoCourt.ooTheosaidoaspecto waso takenointoo considerationobyo thiso Courtoino theo judgmento ofo "Balwanto KauroversusoLifeoInsuranceoCorporationoofoIndia"o(supra).oo

11.oo o InosoofaroasorelianceoonotheojudgmentoofoL.I.C.oofoIndiaoversuso MamanoChandoisoconcerned,otheosaidojudgmentodoesonotocomeotootheoaidoofo theopetitioner.oEvenoinotheosaidojudgment,othisoCourtoupheldoentitlementoofo theoclaimantotoointerestounderoSectiono34oofotheoCiviloProcedureoCode,obuto theosameowasodeclinedosinceotheointerestohadonotobeenoclaimed.oTheopoweroofo theoCourtotoograntopendenteoliteointerestowsothusoaffirmed.oTheoapplicationo submittedobyotheorespondentoshowsothatointerestoonotheosumoinsuredohadobeeno claimedobyotheorespondent.oo

12.o o Whenoaocontractocontainsoanoexpressoprohibitionoagainstoawardo ofo interest,o theo relationshipo wouldo beo governedo byo theo substantiveo lawo governingotheocontractoandotheotermsoagreedotoobetweenotheopartiesoareotoobeo givenoeffect.oHowever,oonceotheopartyoapproachedotheoCourtoandodemandso interesto foro undueo delayo ino releaseo ofo moneyo oro unjustifiedo retentiono o ofo CWP-2232-2017o o o o o o o o o -15-o o moneyo&oclaimointerestothereon,otheoproceduralocodeobecomeooperativeoando canobeoinvoked.oTheooperativeodomainoofosubstantiveolawowouldobeogovernedo byotheoCodeoofoCiviloProcedureoandoexerciseoofosuchojurisdictionowouldonoto beo ino conflicto withosubstantiveo law.o Theo awardo ofo interesto thuso iso notoino violationoofoSectiono3(3)(a)(ii)oofotheoInterestoAct,o1978oforotheoperiodoaftero institutionoofotheosuit.oTheobaroshallohoweverooperateoforotheoperiodoprioro thereto.oo

13.o o OnceotheoissueocomesobeforeotheoCourt,otheoperiododuringowhicho itohasoremainedopendingowithoCourto&othereafteroshallobeogovernedobyotheo discretionoofotheoCourt.oAoreasonableorateoofointerestothusomayobeograntedobyo theoCourtoforotheoperiodoafterotheodateoofofilingoofotheosuit.oo

14.o o Theocaseoinohandoinomyoopinion,owouldobeocloserotootheoratiooino theomatteroofo"BalwantoKumaroversusoLifeoInsuranceoCorporation"o(supra).o Theorespondent-applicantowouldothusobeoentitledotootheointerestoforotheoperiodo fromotheoinstitutionoofoclaimobeforeotheoPermanentoLokoAdalato(PublicoUtilityo Service),oBhiwanio(CampoCourtoatoJind)otilloitsoactualopaymentoi.e.owithoeffecto fromo 21.10.2015o tillo itso actualo disbursemento ono 24.04.2017.o Theo rateo ofo interestoawardedoisoreducedofromotheoawardo@o9%otoo6%operoannum.oSinceo theoprincipaloamountopursuantotootheonoticeoofomotionoorderohadoalreadyobeeno depositedobyotheopetitionerowithotheoExecutingoCourt,ointerestopostodecreeoiso notobeingoawarded.o

15.o o oTheointerestoforotheoaboveoperiodoi.e.oofromo21.10.2015ootillo

24.04.2017o @o 6%o p.a.o shallo beo depositedo byo theo petitioner-Insuranceo CompanyowithotheoExecutingoCourtowithinoaoperiodoofo06oweeksooforeceiptoofo certifiedocopyoofothisoCourt.oo o o Petitionoisoaccordinglyodisposedoofoasopartlyoallowedoinotermsoaso CWP-2232-2017o o o o o o o o o -16-o o aforesaid.oo o o oo o o o o o (VINODoS.oBHARDWAJ)oo JANUARYo20,o2023o o o o o ooJUDGEo VishaloSharmao o o o Whetherospeaking/reasonedo :o Yes/Noo o o o WhetheroReportableo o :o Yes/Noo