LexLIFE INSURANCE CORPORATION OF INDIA versus KOTA RAMABRAHMAM AND ORS.
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.. 683 LJFE INSURANCE CORPORATION OF !NOIA v. KOTA RAMABRAHMAM AND ORS. April 22, 1977 (M. H. BEG, C.J., A. C. GUPTA AND P. S. KAILASAM, JJJ Life Insurance Corporation Act, 1956-S. 9(1)-Madras Agriculturi'sts Relief Act, 1938 scaled down certain debts of agriculturists-Act saved debts due to a Corporation formed under special Indian Law-Loans given by Inswance Com- panies to agriculturists-If could be deemed tC# have been entered into by the Corporation after it took ol'er business of l11surance Con1panies. The respDndents, who were agriculturists, took loans fron1 two insurance companies 1n 1950 and 1952. In suits for the recovery of the debts, filed by the Life Insurance Corporation after it had taken over the insurance companies, the respondents claimed that the debts should be scaled down in accordance with s. 4(e) of the Madras Agriculturists Relief Act, 1938. Section 4(e) 'kept cer- tain debts and liabilities of agriculturists out of the reach of the Act, including any debt due to any Corporation formed in pursuance of any "Special Indian Law''. The Corporation's contention that the debts would not be affected by s. 4(e) was rejected by the trial court as well as the High Court which held that because of the genesis of the debts~ s. 4(e) was attracted. On arpeal to this Court it was contended thats. 9(1) of the Life Insurance Corporation Act created a legal fiction that contracts to which an insurer was a party shall be deemed to have been entered into or issued in favour of the Cor· poration and that being so, the debt<; in question should be taken as due to the Corporation from the beginning and, therefore, outsides. 4(e) of the 1938·Act. Dismissing the appeals, HELD: Section 9(1) of the Life Insurance Corporation Act, 1956 does not create any legal fiction. It seeks to provide that the contracts and other instru· ments subsisting immediately before the vesting may be enforced and acted upon by the Corporation after vesting. Under s. 9(2) any pending proceeding on the appointed day by or against an insurer may be continued by or against the Corporation. Section 7 ( 1 ) provides that all the assets and liabilities of the insurers relating to their 1ife insurance business vest in the Corporation. Under s. 7(2) the liabilities include obligations of whatever kind existing on the appointed day. The debl'i due to the insurers in these two cases were liable to be scaled down in accordance \vith the provisions of the 1938·Act which was a liability or obligation appertaining to the debts on the appointed day, that is, September 1, 1956. This liability or obligation annexed to the debts must be held to have been transferred to and vested in the Corporation along with the assets of the insurers under s. 7 and the Corporation in seeking to recover the debts cannot ignore the obligations of the insurers in respect of the transactions. [685 G; 686 Al CIVIL APPELLATE JURISDICTION : c. A. Noo. 1959 & 1960 of 1970 . (Appeals by Special Leave from the Judgment and Order dated the 10-10-1969 of the Andhra Pradesh High Court in LP.A. No. 165/67 and A.S. No. 233/67 respectively). A. K. Somnath Iyer, K. L. Hat/ii, P. C. Kapoor, for the appellant A B c D E F G in both the appeals. H G. Vmkatnrama Sastrr, B. Partlwsarthi. for respondents in CA 1959/70. • A • B D E F H 684 SUPREME COURT REPORTS A. Subba Rao, for respondents in CA 1969/70. The Judgment of the Court was delivered by (1977] 3 S.C.R. . GUPTA'. J .-Th~se are two appeals by the Life Insurance Corpora- tion of India (hereinafter referred to as the Corporation) with special leave obtained from this Court against a common Judgment of the Andhra Pradesh High Court disposing of two appeals preferred by the Corporation. The appeals before the High Court arose out of two suits instituted by the Corporation. For the question that arises !or determination, which we will presently state, it is not necessary to 5et out the facts in any great detail. One of the suits was brought in I% I for recovery of a sum of about Rs. 17,000/-, after giving credit to the payments made by the defendants, due on a mqrtgage executed by the defendants in 1950 in favour of the Andhra Insurance Company ot Masulipatnam. The other suit was filed in 1962 for recovery of about Rs. 45,555/- also due on a mortgage which was executed in 1952 by the defendants of this suit in favour of the N~r Pioneer Insurance Comp
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