Delhi High Court
Harmeetpal Singh Bindra & Ors vs Citibank & Anr on 16 July, 2018
$~OS-7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision 16.07.2018
+ CS(COMM) 604/2017
HARMEETPAL SINGH BINDRA & ORS..... Plaintiff
Through Mr.Dheeraj Gupta and Ms.Sonam
Siddhiqui, Advs.
versus
CITIBANK & ANR ..... Defendant
Through Ms.Suruchi Suri and Ms.Aasia Hasan,
Advs. for D-1
Mr.Shantanu Malik, Mr.Sukrit Kapoor, Ms.Nanki
Arora and Ms.Shruti Shiv Kumar, Advs. for D-2
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J. (ORAL)
1. Present suit is filed by the plaintiff seeking a decree of declaration that
the revocation/surrender of the insurance policy as has been done by the
plaintiff is valid. A direction is also sought to the defendant to jointly and
severally liquidate the insurance policy and release the liquidation amount of
Rs.1,25,25,993/- alongwith interest @ 12% per annum. Other connected
reliefs are also sought. The case of the plaintiff is that the plaintiff No.1
secured a life insurance policy with defendant No.1 for and on behalf of
defendant No.2 on an annual premium of Rs.20,57,200/-. An addendum to
the policy was also signed which converted the policy to a policy under
section 6 of the Married Women's Property Act, 1874 (hereinafter referred
to as MWP Act) Plaintiff No.2 the wife of plaintiff No.1 was appointed as a
Special Trustee under the policy and the two children of plaintiff Nos.1 and
CS(COMM.)604/2017 Page 1
2, namely, Snehal Bindra and Master Dhruv Bindra(minor) were made the
beneficiary,
2. Plaintiff No.1 has paid the premium for the policy for five years from
2007 to 2011. In August 2013 plaintiff No.1 made a request for surrender of
the policy for the benefit of the beneficiary. On 9.8.2011 defendant No.1
declined to accept the request for surrender of the policy stating that the
policy can only be surrendered once the beneficiary attains majority as it is
under the MWP Act. Hence, the present suit.
3. Learned counsel appearing for the defendant No.2 insurance company
has taken me through the letter dated 9.8.2011 (Ex.P2) wherein the
defendant No.2 has noted that the surrender form needs to be signed by the
Special Trustee and in case the beneficiaries are minor the surrender form
has to be accompanied with the order of the Court of competent jurisdiction.
4. Learned counsel stresses that the plaintiff was only required to take
the consent of the Special Trustee and to also take appropriate orders from
the court whereafter defendant No.2 would have no objection to release the
money. He relies upon section 6 of the Married Women's Property Act and
also Section 11 of the Indian Trust Act.
5. Learned counsel appearing for the plaintiff relies upon judgment of
the Gujarat High Court in The Life Insurance Corporation of India vs.
Saubhagyachand T.Vasa and another, AIR 1981 Gujarat 36 to submit that
the trust created was a limited trust authorising the trustee under the policy.
Hence, the defendant No.2 ought to have released the money on the consent
of the Special Trustee, namely, plaintiff No.2.
6. I may first look at the statutory position. Section 6 of the MWP Act
reads as follows:-
CS(COMM.)604/2017 Page 2
"6. Insurance by husband for benefit of wife:
1 [(1) A policy of insurance effected by any married man on his
own life, and expressed on the face of it to be for the benefit of his
wife, or of his wife and children, or any of them, shall ensure and
be deemed to be a trust for the benefit of his wife, or of his wife
and children, or any of them, according to the interest so
expressed, and shall not, so long any object of the trust remains, be
subject to the control of the husbands or to his creditors, or form
part of his estate.
When the sum secured by the policy becomes payable, it shall,
unless special trustees are duly appointed to receive and hold the
same, be paid to the Official Trustee of the 2 [State] in which the
office at which the insurance was effected is situated, and shall be
received and held by him upon the trusts expressed in the policy,
or such of them as are then existing.
And in reference to such sum he shall stand in the same position in
all respects as if he had been duly appointed trustee thereof by a
High Court, under Act No. XVII of 1864 3 [to constitute an Office
of Official Trustee], Sec. 10.
Nothing herein contained shall operate to destroy or impede the
right of any creditor to be paid out of the proceeds of any policy of
assurance which may have been effected with intent to defraud
creditors.
7. Section 11 of the Indian Trust Act reads as follows:-
"Section 11- Trustee to execute trust
The trustees is bound to fulfil the purpose of the trust, and to obey
the directions of the author of the trust given at the time of its
creation, except as modified by the consent of all the beneficiaries
being competent to contract.
Where the beneficiary is incompetent to contract, his consent may,
for the purposes of this section, be given by a principal civil court
CS(COMM.)604/2017 Page 3
of original jurisdiction.
Nothing in this section shall be deemed to require a trustee to obey
any direction when to do so would be impracticable, illegal or
manifestly injurious to the beneficiaries.
Explanation- Unless a contrary intention be expressed, the purpose
of a trust for the payment of debts shall be deemed to be (a) to pay
only the debts of the author of the trust existing and recoverable at
the date of the instrument of trust, or, when such instrument is a
will, at the date of his death, and (b) in the case of debts not
bearing interest, to make such payment without interest."
8. The judgment of the Gujarat High Court in the case of The Life
Insurance Corporation of India vs. Saubhagayahand T.Vasa (supra) deals
with the above aspects. Relevant portion of the judgment reads as follows:-
1. A short but interesting question arises in this appeal at the
instance of the Life Insurance Corporation of India, which was
the defendant in the trial Court, as to whether a trustee under a
policy of insurance effected under Section 6 of the Married
Women's Property Act, 1874, for the benefit of minor children
of an assured can successfully sue the Corporation for recovery
of the assured value of the Policy? The question arises in the
following circumstances Section 6 of the MWP Act reads as
follows:-
...................
3............The learned Advocate for the Corporation, therefore,
attempted to persuade me that the trustee would not have been
able to recover the surrender value, if the policy had not been
surrendered by the assured; The decision of the assured,
according to the learned Advocate for the Corporation, to
surrender the policy, in the present case, which consequently
entitled the trustee to recover the surrender value, was clearly
beyond powers of the assured as the policy of insurance issued
under the provisions of the Married Women's Property Act
goes out of the control of the husband and ceases to be his
estate. In his submission, therefore, the assured here could not
CS(COMM.)604/2017 Page 4
have surrendered the policy, because the policy is deemed to
be the trust and enures for the benefit of the beneficiaries. No
doubt, the contention appears to be attractive, but if we
examine it, it cannot be sustained. It is no doubt true that a
policy of insurance, effected under Section 6 of the aforesaid
Act, is deemed to be a trust enuring for the benefit of the
beneficiaries and is not, as long as the trust remains, subject to
the control of the assured. The word "control" would mean any
act by which a person having the power to control deals with
an object so as to transfer its ownership or any right or interest
therein or deals with it or regulates it as if it is his property. If
an assured expresses his inability or his unwillingness to pay
the premiums, and requests the Insurance Company or the
Corporation, as the case may be, to record his inability or
unwillingness, and consequently the surrender thereof, it
cannot be, without violence to the language, said that he is
trying to control the policy. If the interpretation advanced by
the learned Advocate for the Corporation is accepted that non-
payment of premiums with the desire to surrender the policy is
an act exercising the control in relation thereto, the result
would be anomalous. Take, for instance, a case of an assured
who, on account of reasons beyond his control fails to pay the
premiums (as per example in case of insolvency) such a case
cannot be within the purview of Section 6 of the aforesaid Act.
In any case what is prohibited is the unilateral act of an
assured in relation to the policy issued under Section 6 of the
Act. If the trustee of such a policy joins the assured and
requests the Corporation to pay the surrender value as the
policy is surrendered by the assured, I do not think it can be
successfully urged that the assured is exercising control in that
behalf. In the present case, the assured informed the
Corporation that he was not desirous of paying any further
premiums besides the two which he had paid on 4th October
1968 and 3rd April 1970, and, therefore, the Corporation
should record the surrender of the policy. The trustee under the
said policy, by his letter of October 10, 1970, requested for the
payment of the surrender value as the assured had expressed
his unwillingness to pay the third premium which was due and
CS(COMM.)604/2017 Page 5
payable on October 4, 1970. In effect, the trustee has also
joined with the assured for the purpose of recording the
surrender of the policy. It, therefore, cannot be said that the
assured had in the present case, exercised unilateral control
over the policy. The learned Advocate for the Corporation,
therefore, urged that the act of the assured as well as the
trustee was virtually tantamount to destruction of the trust. I
am afraid this is too broad a submission since the endorsement
made on the policy clearly records that the policy was issued
under the provisions of the Married Women's Property Act, for
the benefit of the minor son of the assured and
Saubhagyachand Talakchand Vasa had been appointed as the
trustee under the provisions of Section 6 of the said Act to
receive the policy moneys and hold the said money upon the
aforesaid trust with power and authority to the said trustee to
obtain any loan or loans on the security of the policy from the
Corporation alone for the benefit of the said beneficiary. It
cannot be said, much less urged successfully, that a trust of Rs.
2 lacs was created under the policy. The trust was a limited
trust authorising the said trustee to receive the moneys payable
under the policy and hold the same upon the aforesaid trust as
and when paid by the Corporation. The said trustee will hold
the surrender value when paid to him on trust for the benefit of
the beneficiary. It cannot, therefore, be suggested that the trust
is destroyed or extinguished. The mandate under the trust to
the trustee was to hold the moneys paid and received under the
policy on trust for the benefit of minor son of the assured. In
that state of affairs, therefore, the alternative contention of the
learned Advocate for the Corporation must fail.
9. It is manifest from a reading of the above that in the present case
plaintiff No.2 mother has been appointed as a Special Trustee and was
entitled to receive the money from defendant No.2 for the benefit of the
minors. It is noteworthy that in the present case plaintiff No.3 who is a
beneficiary has now become a major.
CS(COMM.)604/2017 Page 6
10. In my opinion there is nothing on record to show that the acts being
done by plaintiff No. 2 is not for the benefit of the minor. There are no
circumstances shown to the court to show that plaintiffs No.1 and 2 are not
acting for the benefit of the minor/plaintiff No.3. I may note that under
section 8 of the Hindu Minority and Guardianship Act, 1956, the natural
guardian of a Hindu minor has power to do all acts which are necessary or
reasonable and proper for the benefit of the minor or for the realization,
protection or benefit of the minor's estate. Accordingly, in my opinion, this
is a fit case to grant permission, if so required, under section 11 of the Indian
Trust Act. The suit is accordingly decreed. A decree is to be passed in
favour of the plaintiff and against the defendant No.2 for the units which
have been valued as of date. I may only note that as per the statement that
was issued to the plaintiff the units valued as on 26.6.2018 was shown as of
1,27,22,368/-. Accordingly, I pass a decree in favour of the plaintiff and
against the defendant for a sum of Rs.1,27,22,368/-. Plaintiff shall also be
entitled to actual costs of the suit. Defendant No.2 shall pay the necessary
money within six weeks from today failing which the plaintiff shall be
entitled to simple interest @ 10% per annum w.e.f. today i.e. 16.7.2018 till
date of payment.
11. No case is made out against defendant No.1 The suit stands disposed
of.
JAYANT NATH, J
JULY 16, 2018
N
Corrected and released on 23.7.2018.
CS(COMM.)604/2017 Page 7
