Smt. Parbati Kuer vs Sarangdhar Sinha And Ors.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 14 September 1959

Coram: M. Hidayatullah, K.C. Das Gupta

Smt. Parbati Kuer filed two appeals before the Supreme Court of India, reported as decided on 14 September 1959. The judgment was authored by Justice M. Hidayatullah, with Justice K.C. Das Gupta sitting on the bench. Both appeals were filed by the same appellant, Smt. Parbati Kaur, after she had obtained succession certificates from the High Court of Patna under Article 133(1) of the Constitution read with Sections 109 and 110 of the Code of Civil Procedure. In each appeal she challenged the common judgment of the High Court, although the High Court had issued separate decrees in Civil Appeals No. 69 and No. 91 of 1947, dated 9 September 1953. The appellant therefore sought to set aside the findings of the High Court in both of those decrees.

The factual background began with Ramdin Sinha, who had three sons: Ram Ran Vijaya Sinha, Sarangdhar Sinha, and Ramji Sinha. The latter two were step-brothers of Ram Ran Vijaya Sinha. Ramdin Sinha died in 1903, leaving his estate in a state of jointness among his three sons, a coparcenary that continued until the death of Ram Ran Vijaya Sinha on 27 October 1936. Ramdin Sinha had founded a printing and publishing enterprise in Patna, known as Khadga Vilas Press, and he also possessed extensive movable and immovable property in the districts of Patna and Ballia. Ram Ran Vijaya Sinha left behind three daughters—one by his third wife and two by his fourth wife—who were joined as defendants with the present appellant in the original suit. When Ram Ran Vijaya Sinha died on 27 October 1936, his estate included stocks, shares, securities and three life-insurance policies issued by the Great Eastern Life Assurance Co., Ltd., which appeared as the fifth defendant in the suit. After his death, his widow, Parbati Kaur, applied to the District Court for a succession certificate and obtained an order in her favour, but she was unable to act upon the order because she could not furnish the required security. Consequently, the two step-brothers of Ram Ran Vijaya Sinha instituted a suit seeking a declaration that, as surviving coparceners, they were entitled to the amounts due under the insurance policies as well as the stocks, shares and securities, together with interest and other benefits. The defendants raised various objections, and the trial judge held that the stocks, shares and securities formed part of the coparcenary, whereas the insurance policies were the private property of Ram Ran Vijaya Sinha, to which the widow was entitled. The opposing parties appealed that decision, and the High Court, by its judgment under appeal, reversed the trial judge’s finding, holding that the insurance policies also comprised assets of the coparcenary and were therefore payable to the plaintiffs as survivors. Following that judgment, the appellant obtained two succession certificates from the High Court and filed the present two appeals.

In this matter, the appellant obtained two certificates from the High Court and subsequently filed two appeals. Regarding Appeal No. 331 of 1955, the Court noted that the appeal had not been pressed before it and therefore dismissed it. The appellant’s case concerned only the three insurance policies, each for the sum of Rs 17,000, and it was argued that the High Court’s reversal of the Subordinate Judge of Patna’s decision was erroneous. The earlier contention that a partition among the step-brothers had occurred in 1906 was abandoned by this Court because both the Subordinate Judge and the High Court had reached the same finding on that point. The appellant’s arguments concerning the insurance policies were based on several specific pleas. It was submitted that when Ram Ran Vijaya Sinha obtained the three policies in question, he simultaneously procured two additional policies on the lives of his two step-brothers, each for Rs 25,000, with the same insurance company. The appellant claimed that those policies were intended solely as a provision for the wives and children of the three coparceners and were not meant to become part of the joint-family assets. Further, it was asserted that the Press maintained an “Amanat khata” in its account books, where the sums taken by each brother were recorded separately and were to be withdrawn later. Consequently, the payment of premiums for the five policies was presented as a payment to the individual brothers, thereby constituting their separate and personal property. The appellant emphasized that the premiums were not only paid separately but were also entered separately in the Press’s account books, indicating that the amounts were effectively handed over to the three brothers. Additionally, the appellant contended that the law presumes that any money payable under a life-insurance policy to a coparcener belongs to that coparcener, and that the proceeds on the coparcener’s death pass by succession to his heirs rather than by survivorship to the remaining coparceners. In further support of this position, three specific propositions were advanced: (a) a life-insurance policy, by its very nature, can never form part of joint-family assets; (b) premiums paid toward life-insurance policies, even if drawn from joint-family funds, must be treated as money appropriated to the insured and are therefore presumed to be his separate property; and (c) the burden of proof in a case involving a life-insurance policy rests on the party who alleges that the policy amount belongs to the joint family. These points were again urged before the Court for acceptance in the appeal. It may be noted that, in the High Court, counsel for the appellant conceded that the premiums had indeed been paid out of joint-family funds, but argued that, in the absence of the relevant ledger, it could not be stated with certainty whether the amounts were treated as expenditures for the joint family or as payments attributable to the individual member in whose name the policies were issued. The respondents, accordingly, relied upon this concession in their arguments.

The Court noted that the appellant’s counsel had conceded that the insurance premiums were paid from the joint-family funds, and the Court allowed the appellant to point out any circumstances from which an inference adverse to the respondents could be drawn. After hearing the arguments, the Court was satisfied that the concession was correctly made and that no legal or factual inference could be drawn that the premiums, once paid, ceased to be assets of the joint family and became the personal income of the individual coparceners. The Court further held that there is no legal proposition that treats a life-insurance policy as the separate property of the coparcener whose life is insured, nor that the proceeds of such a policy belong to the joint family. The reasons for this conclusion were then set out in detail.

The Court examined certain entries from the Paper Book that had been extracted from the Press accounts. The appellant’s counsel argued that some entries were headed “insurance khata” while others lacked such a heading. The respondents’ counsel contended that the extracts were incomplete, that the headings had been omitted, and that this omission supported their argument. The Court observed that the extracts contained indications that portions of the entries had been omitted, and the respondents offered to produce the entire books from the Press to demonstrate their contention. However, the appellant’s counsel declined to accept this challenge and did not produce the complete account books. Because only extracts and not the full entries were placed before the Court, the Court could not accede to the respondents’ request to consider the omitted portions, especially since the appellant had not taken up the challenge to submit the complete books.

The Court then turned to the argument raised by the appellant concerning the Bank’s suit against the family. It was contended that when the Bank sued the family as a whole, the two step-brothers asserted that they were not liable for the overdraft, claiming that the advances made by the Bank to Ram Ran Vijaya Sinha were not for any legal necessity nor for the benefit of the family. The Bank had periodically advanced sums to Ram Ran Vijaya Sinha, and after his death an overdraft remained. The brothers maintained that this liability should not bind them because the borrowings were personal. The Court noted that this contention succeeded before the lower Court, resulting in a decree being passed solely against the widow. The Court expressed uncertainty as to why the coparceners could not have raised the plea that the karta’s borrowings were not for legal necessity or family purpose, and if such a plea had succeeded, how it would have precluded them from claiming other joint-family properties by survivorship. The Court observed that, irrespective of the outcome of that issue, the question of ownership of the three insurance policies remained unaffected by the decision on the bank liability.

In this case the Court observed that the two brothers had, by succeeding in their argument before the lower tribunal, shifted the liability of the Bank’s overdraft onto the widow; however, the Court held that this procedural outcome did not bear upon the merits of the present suit. The Court found that the Bank account in question was not the separate property of Ram Ran Vijaya Sinha but was intended to hold the proceeds of the Press and could properly be characterized as a joint-family account. Evidence showed that Ram Ran Vijaya Sinha received an allowance of one thousand rupees per month, which he also deposited with the Bihar Bank, and that the entire family, as well as Ram Ran himself, dealt with the Bihar Bank in the same manner. The Court stated that it was not required to determine whether any portion of the liability for the overdraft should rest upon the two brothers; nevertheless, the Court concluded that the question of liability was irrelevant to the ownership of the three insurance policies, which remained unchanged regardless of how liability was resolved. The respondents then argued, as a point of law, that an insurance policy constituted a special venture intended solely for the benefit of the assured’s immediate family and that the other coparceners possessed no interest in the policies. They referred to the proposal forms filed by Ram Ran Vijaya Sinha (Ex. 12 series), which indicated that the purpose of the insurance was to benefit the family of Ram Ran, i.e., his wife and children. While the Court acknowledged that this description might be accurate, it emphasized that the decisive issue was whether the policies were obtained without prejudice to the joint-family funds. The Court observed that if the policies were financed from the joint-family resources, the resulting benefits belonged to the joint family, a conclusion supported by its finding that the joint family, not Ram Ran individually, had paid the premiums. The respondents further contended that the joint family was entitled only to recover the sum paid for the purchase of the policies and not any additional proceeds that the insurance company had paid owing to Ram Ran’s premature death; the Court noted that no basis for this proposition had been shown and that no authority was cited. The Court remarked that, analogously, if a joint family purchases an asset that later appreciates, the appreciation accrues to the family rather than to any single member. Finally, the respondents advanced the argument that insurance proceeds should be treated as a distinct category of property, belonging to the individual on whose life the policy was taken, but again no supporting authority was cited.

The counsel for the respondents called the Court’s attention to the reported decision in Venkata Subba Rao v. Lakshminarasamma. In that case the learned Chief Justice Rajamannar and Justice Venkatarama Aiyar, who was then a puisne judge, expressed a view on the character of the proceeds of a life-insurance policy taken by a member of a joint family. Their observation was quoted at length: “In our opinion, having regard to modern social conditions and the growth of individual consciousness in marked contrast to the more corporate outlook of an earlier day, the general presumption must be that when one of the members of a joint family insures his life, the amount of the policy belongs to the assured as his separate property and does not become a joint family asset. No doubt, if there is clear indication that the member did not intend to treat it as his separate asset, the position would be different. In a case where each of the several members of the family has taken a policy in his name the presumption becomes stronger that the policies were not part of the joint family assets. The premia must be treated as amounts drawn by the individual members and they must be debited with those amounts.” The Court noted that it was not required to determine whether the broad principle articulated in that judgment was fully consistent with Hindu law. However, the Court observed that, in the present matter, there were unmistakable indications that none of the three brothers had intended to regard the income that might accrue on the maturity of the insurance policies as a separate asset. Consequently, the case fell within the exception expressly contemplated by the learned judges in the earlier decision.

The Court further considered the argument that the existence of two additional policies, taken at the same time on the lives of the other brothers, might affect the analysis. It held that the presence of those policies made no material difference. Although it had been suggested that those policies were purchased by Ram Ran Vijaya Sinha using his private funds out of affection for his brothers, the Court examined the account books of the Press. Those books demonstrated that the premium for all of the policies was paid from the funds of the Press, which was a joint family business whose income belonged to the family as a whole. No additional material was raised that would undermine the High Court’s finding, and the Court therefore found no reason to disturb that judgment. Accordingly, the appeal numbered 330 of 1955 was dismissed. Finally, taking into account the position adopted by the two brothers whereby the entire liability for the overdraft account with the Bihar Bank fell upon the widow, the Court ordered that each party bear its own costs in the two appeals, deeming that such an order would best serve the ends of justice.