Full Judgment Text
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PETITIONER:
HINDUSTAN IDEAL INSURANCE CO. LTD.
Vs.
RESPONDENT:
LIFE INSURANCE CORPORATION OF INDIA
DATE OF JUDGMENT:
12/04/1962
BENCH:
SARKAR, A.K.
BENCH:
SARKAR, A.K.
SUBBARAO, K.
MUDHOLKAR, J.R.
CITATION:
1963 AIR 1083 1963 SCR Supl. (2) 56
ACT:
Insurance--"Person making the reference"--Meaning of--No
period prescribed for moving the Corporation--Effect--Life
insurance Corporation Act, 1956 (31 of 1956), ss. 16(2) 48
(2) (f)--Life Insurance Corporation Rules, 1956, r. 12 Sub-
rr. (i), (ii), (iii).
HEADNOTE:
The Life Insurance business of the insurer. The Andhra
insurance Company Ltd., vested in the Life Insurance Cor-
poration of India and it became entitled in compensation
under s. 16 of the Life Insurance Corporation Act. The
Corporation made and offer of it and claimed various
deductions. The
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insurer raised certain disputes and on August 6, 1957, made
an application to the tribunal constituted on May 25, 1937
for re-assessment of the compensation and also for extension
of time for making the application by three months from the
date of its constitution. On September 21, 1937, the
insurer filed another statement giving details of its claim.
In answer to the claim the Corporation filed its written
statement. The tribunal held that the claim for
compensation was time-barred under r. 12 of the Rules framed
under the Act and dismissed the application. It also held
that under s. 16(2) of the Act the insurer had no right to
move directly the tribunal regarding the amount of
compensation, but could move corporation for making a
reference of the dispute to the tribunal and that it did not
show any cause for extending time to make the reference to
the tribunal. Against the judgment of the tribunal, the
insurer obtained special leave to add and thereafter
amalgamated with Hindustan Ideal Insurance Company Ltd.
which was substituted as appellant in place of the insurer.
Held, (Per Subba Rao and Mudholkar, JJ.) That while sub-s.
’(1) of s. 48 confers a power on the Central Government,
sub-s. (2) of s. 16 imposes a duly upon it and thercfore, it
is obligatory upon the Central Government to prescribe the
period within which the insurer is to move the Corporation
for referring the claim to the Tribunal. When the law
requires aperiod to be prescribed for doing a thing, that
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period should be clearly specified with specific reference
to the particular purpose. The specific purpose referred to
in Sub.s. (2) of s. 16 is, to have the matter referred to
the tribunal for decision. "Making of the refer. ence is
thus in the hands of the corporation and not in these of
insurer who can only move the corporation for making the
reference. Time has to be prescribed for enabling the
insurer to move the Corporation. Prescribing time for
making a reference is not prescribing time for moving the
corporation to make the reference. Prescribing time by
implication would not be compliance with the provisions of
Sub-s. (2) of 16.
West Durby Union v. Metropolitan Life Assurance Co. [1897]
A. C. 647, referred to.
While framing r. 12 the Rule making authority lost sight of
the fact that Sub-s. (2) of s. 16 contemplates a reference
not by the insurer but by the corporation. The pro. ceeding
taken before the tribunal were therefore misconceived. No
question of limitation arises because the period within
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which an insurer must move the corporation to make a
reference has not yet been prescribed as required by Sub-
s.(2) of s. 16. It would be open to the appellant to move
the corporation under s. 16(2) after such period is
prescribed. It was urged by the insurer that the claim
cannot treated as barred by time and this was a fit case
for extension of time under the proviso to r. 12.
Held, As r. 12, read by itself does not show clearly whether
it applies to the corporation or it applies to an insurer or
a chief agent or a special agent, it is permissible to look
into the proviso for ascertaining the scope of the main
provisions of that rule. Reading it along with the proviso
would not violate any well accepted rule of construction.
Held (per Sarkar, J.), that the insurer had no right to move
the tribunal directly and the proceedings commenced by it
before the tribunal were therefore wholly misconceived and
no relief could be granted by the tribunal to the insurer.
As the insurer had no right to move the tribunal, no
question of extending time for it to do so really arose. If
the application for extension of time to move the tribunal
is treated as competent under the proviso of r. 12 of the
rules, then also, the appellant is not entitled to any
relief, for there is no justification on the merits to
interfere with the tribunal’s order refusing to extend time.
The proceedings being incompetent, an enquiry as to whether
it had been started out of time would be wholly irrelevant
and it is therefore unneces. sary to express any opinion on
the correct interpretation of r. 12 of the Rules. The
proceeding being incompetent from the beginning it is not
possible for this Court to grant any relief and, therefore,
the appeal must fail in any case.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 82 of 1960.
Appeal by special leave from judgment and order dated
February 17, 1958, of the Court of Life Insurance Tribunal,
Nagpur, in case No. 16/ XVIA of 1957.
B. K. B. Naidu, for the appellant.
S. T. Desai, S. J. Banaji and V. L. Hathi, for the
respondent,
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1962. April 12. The following Judgments were delivered.
The Judgment of Subba Rao and Mudholkar, JJ ; was delivered
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by Mudholkar, J.
SARKAR J.-The Andhra Insurance Company Ltd., hereafter
called the insurer, carried on life insurance and other
insurance business. On September 1, 1956, the life
insurance business of the insurer became vested in the Life
Insurance Corporation of India under the provisions of the
Life Insurance Corporation Act, 1956. The insurer thereupon
became entitled to compensation from the Life Insurance
Corporation under s. 16 of the Act.
On February 19, 1957, the Corporation having determined the
amount of the compensation and obtained the Central
Government’s approval made an offer of it to the insurer as
provided in s. 16. By the letter making the offer, the
Corporation claimed various deductions. The insurer raised
certain disputes. It is not necessary for the purpose of
this appeal to refer to these disputes.
On August 6, 1957, the insurer made an application to the
Tribunal which had been constituted on May 25, 1957 for an
order for re-assessment of the compensation payable to it.
In that application it also made a prayer that the Tribunal
might, if necessary, extend the time for making the applica-
tion by three months from the date of its constitution. On
September 21, 1957, the insurer filed in the Tribunal
another statement giving the details of its claim. The
Corporation in its turn filed its written statement in
answer to the claim of the insurer.
The Tribunal by its judgment dated February 17, 1958 held
that under s. 16 of the Act an Insurer bad no right to
approach the Tribunal directly for deciding any dispute with
the Corporation regarding the amount of the compensation but
had
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to move the Corporation to make a reference of the dispute
to the Tribunal and this, the present insurer had not done.
It also held that the insurer had not shown any cause why
the time to make the reference to the Tribunal should be
extended. It further held that the claim for compensation
was by time. In the result, the Tribunal dismissed the
insurer’s application.
The insurer obtained special leave ’from this Court to
appeal against the judgment of the Tribunal and under that
leave has presented this appeal. After the leave was
granted, the insurer amalgamated with another company called
the Hindustan Ideal insurance Company Ltd. and the latter
company was substituted as the appellant in the place of the
insurer.
Now s. 16 of the Act is in these terms
S. 16 (1) "Where the controlled business of an
insurer has been transferred to and vested in
the Corporation under this Act, compensation
shall be given by the Corporation to that
insurer in accordance with the principles
contained in the First Schedule.
(2) The amount of the compensation to be
given in accordance with the aforesaid
principles shall be determined by the
Corporation in the first insurance, and if the
amount so determined is approved by the
Central Government it shall be offered to the
insurer in full satisfaction of the
compensation payable to him under this Act,
and if, on the other hand, the amount so
offered is not acceptable to the insurer he
may within such time as may be prescribed for
the purpose have the matter reference to the
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Tribunal for decision."
It is obvious from the terms of sub-sec. (2) of s. 16, and
it is indeed not seriously in dispute, that the
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Tribunal can be, moved by an insurer only through the
Corporation. An insurer has no right under the section to
approach the Tribunal directly. The procedure contemplated
is that an insurer has to move the Corporation and the
Corporation has thereupon to refer the dispute raised by the
insurer to the Tribunal. This inevitably follows from the
words in section, namely, "he may...... have the matter
referred to the Tribunal for decision." The section no doubt
does not mention the Corporation but it is clear from the
Act as whole that the reference contemplated was through the
Corporation. The insurer had to move some authority to make
the reference and the only authority under the Act could be
the Corporation. On this part of the case I am in agreement
with the view expressed in the judgment of my brother
Mudholkar.
In the present case however the insurer had directly moved
the Tribunal. This it had no right to do. The proceedings
commenced by it were therefore wholly misconceived. That
being so, the insurer could not have obtained any relief
from the Tribunal nor could the Tribunal have granted it any
relief. In this appeal, therefore, it is not possible for
the Court either to grant any relief to the insurer or its
successor-in-interest, the appellant. The proceeding being
incompetent from the beginning, the appellant cannot ask for
anything in it.
It would have been noticed that the insurer had asked the
Tribunal to extend the time to enable it to make the
application to the Tribunal. As it had no right to move the
Tribunal, no question of extending any time to do so really
arose.
Now r. 12 of the Rule framed under the Act provides for the
time within which a reference
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may be made to the Tribunal in respect of the determination
of compensation payable under the Act." The time prescribed
for the present case was three months from the date on which
the compensation was offered to the insurer. Within these
three months the insurer bad done nothing. This rule,
however, contains a proviso which is in these terms :
"Provided that any such reference may be
admitted by the Tribunal after the period of
limitation prescribed thereunder this rule, if
the person making the reference satisfies the
Tribunal that he bad sufficient cause for not
making the reference within the said period.
If it is contended that the insurer was entitled to move the
Tribunal directly under this proviso and had in fact done
so, then, I think, it must be held that the Tribunal was
right in its view that no cause had been shown by the
insurer why time should be extended. Therefore if the
application so far as it asked for extension of time is
treated as a competent one under this proviso, then also on
the merits, the appellant is not entitled to any relief, for
there is no justification to interfere with the order that
the Tribunal made in this behalf The appeal must in any case
fail.
I do not feel called upon to go into any question of
limitation in the present case. The proceeding being
incompetent, an inquiry as to whether it had been started of
time would be wholly irrelevant. L therefore, think it
unnecessary to express any opinion on the interpretation of
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r. 12 of the Rules made under the Act.
The result is that the appeal is dismissed. As to costs, I
think that as the Corporation itself had not before the
Tribunal contended that the proceeding was incompetent nor
had raised an.* such
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point in its statement of case in this appeal it is not
entitled to any.
MUDHOLKAR, J.-The Andhra Insurance Co... Ltd., (hereinafter
called the Company) was a composite insurance company, that
is, doing business in life insurance, fire insurance and
general insurance. By virtue of the Provisions of s. 7(1)
of the Life Insurance Corporation Act, 1956 (31 of 1956)
(hereinafter called the Act) all its assets and liabilities
pertaining to the life insurance business stood transferred
and vested in the Life Insurance Corporation on September 1,
1956. Under s. 16(1) of the Act the Company was entitled to
receive Compensation from the Corporation determined in
accordance with the principles contained in First Schedule
to the Act. On February 14, 1957, the Corporation wrote to
the Company stating, among other things, that the amount of
compensation payable to it under s. 16(1) of the Act as
determined by the Corporation and approved by the Central
Government comes to Rs. 6,14,636. The Corporation made an
offer of this amount to the Company in full satisfaction of
the compensation payable to it. The Corporation further
stated in its letter that the part of the paid up capital of
the Company and assets representing such part which have
been allocated to the life business of the Company in
accordance with s. 18 of the Life Insurance Corporation
Rules, 1956 (hereinafter called the Rules) amounts to Rs.
3,76,117/- and that as the aforesaid assests have not been
transferred to the corporation the said amount of Rs.
3,76,117/- will be set off against and deducted from the
amount of compensation payable to the Company. Certain
correspondence then ensued between the Company and the
Corporation and it would appear from it that while the
Company accepted the computation of the amount of
compensation made by the Corporation there was disagreement
between the parties over the valuation
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of the assets of the Company which stood transferred to the
Corporation. The Company objected to the deductions of Rs.
3,76,117/. Eventually on August 6, 1957 the Company
preferred a petition of appeal before the Life Insurance
Tribunal, Nagpur, constituted by the Central Government
under s. 17(1) of the Act. On September 21, 1957 the
Company lodged its statement of claim before the Tribunal.
The Corporation resisted the claim out forward by the
Company on various grounds. the Tribunal framed 27 issues
but it gave its findings only on the first three issues and
dismissed the claim. We may mention that we are not
concerned with any of the issues except No. 3 because it is
on the basis of its finding thereon that it dismissed the
claim of the Company. That issue is whether the claim of
the Company is barred by time.
It does not appear from the written statement of the
Corporation that it had raised a plea of limitation. All
the same the Tribunal in its order has said that as the
Company did not lodge a claim before it within three months
of February 14, 1957, which was the date on which
compensation was offered by the Corporation to the Company
it was barred by r. 12 of the Rules framed under the Act.
The Tribunal further observed that the Company. had to move
the Corporation under s. 16(2) of the Act to make a
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reference to the Tribunal, it failed to do so and that it
did not show any cause whatsoever for its failure to do so,.
but instead submitted its claim direct to the Tribunal on
August 12, 1957. No question, therefore, excusing delay
under the proviso to r. 12 arose.
Aggrieved by the decision of the Tribunal the Company moved
this Court under Art. 136 of the Constitution for grant of
special leave to appeal. Leave was granted by this Court on
August 18, 1958. Subsequent to the grant of leave by this
Court the Company in pursuance of its scheme sanctioned by
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the High Court of Andhra Pradesh was amalgamated with the
Hindustan Ideal Insurance Co., Ltd. By reason of this the
letter has now been substituted as appellant under the
orders of this Court dated April 14, 1959.
On behalf of the appellant Mr. B.K.B. Naidu contended that
since the Tribunal itself wag not appointed before the
expiry of the period of three months provided in r. 12, the
claim made by the Company cannot be treated, as barred by
time because in his submission limitation would not commence
to run till the date on which the Tribunal was constituted.
Alternatively he contended that this was a fit case in
which, under the proviso to r. 12, time should have been
extended.
On behalf of the Corporation Mr. S. T. Desai contended that
under sub-s.2 of s. 16 it was not open to ,in insurer like
the Company to prefer a claim directly before the Tribunal
and that all that the law entitled the Company to do was to
move the Corporation to make a reference, that this had to
be done within three months and that thereupon the
Corporation had to make a reference to the Tribunal within
the period of three months prescribed by r. 12. Since this
procedure was not adopted the proceedings before the
Tribunal were incompetent.
Sub-section 2 of s. 16 reads thus :
"The amount of the compensation to be given in
accordance with the aforesaid principles shall
be determined by the Corporation in first
instance, and if the amount so determined is
approved by the Central Government it shall be
offered to the insurer in full satisfaction of
the compensation payable to him under this
Act, and if, on the other hand, the amount so
offered is not acceptable to the insurer he
may within such time as may be prescribed for
the purpose have the matter referred to the
Tribunal for decisions"
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A plain reading of this provision shows that the reference
had to be made not by the insurer but by someone else.
Though that someone is not expressly specified in sub-s. 2,
the context shows that that someone would be none other than
the Corporation. The Central Government has not at any rate
specifically prescribed the period within which the insurer
has to move the Corporation for referring its claim to the
Tribunal for decision.
According to this provision the insurer is entitled to have
the matter referred to the Tribunal for decision "within
such time as may be prescribed for the purpose."
"Prescribed" means prescribed by Rules. It would,
therefore,, follow that the Central Government has to make a
rule prescribing the period within which the insurer must
move the Corporation for making the reference. Mr. Desai,
however, contends that that is not provision means. A-
cording to him the provision has to be read along with s.
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4812)(f of the Act. Section 48 is the provision which
confers power on the Central Government to make rules.
Clause (f) of sub.s. 2 enable it to prescribe the time
within which any matter which may be referred to the
Tribunal for a decision under the Act may be so referred.
Therefore, according to learned counsel, it is the period of
limitation for this purpose which the Central Government has
to prescribe and not the period within which the insurer
must move the Tribunal. He, however, says that the insurer
has to move the Corporation before the expiry of the. period
within which the Corporation is to make a reference to the
Tribunal.
We cannot accept the contention. On the plain language of
sub-s. 2 of S. 16 it is obligatory upon the ’Central
Government to prescribe the period within which the insurer
is to move the Corporation ’for referring its claim to the
Tribunal. No doubt, cl. (f) does not refer to the
prescription
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of time for such a purpose. But the provisions of sub.s. 1
of s. 48 are wide enough to enable the Central Government to
prescribe the time for this purpose. Under that subsection
the Central Government is empowered to make rules to carry
out the purposes of the Act. One of the purpose of the Act
is to prescribe the time within which an insurer has to move
the Corporation for making a reference. While sub-s. 1 of
s. 48 confers a power on the Central Government, sub-s. 2 of
s. 16 imposes a duty upon it and, therefore, it is
obligatory upon the Central Government to make a rule in
this behalf by exercising the power under s. 48 (1).
Mr. Desai then contends that the rule actually framed by the
Central Government that is, r. 12 must be deemed to be
sufficient for his purpose. That rule is in following terms
:
"Reference to Tribunal.-The time within which
a reference may be made to the Tribunal in
respect of the determination of compensation
payable-under the Act, shall be as follows,
namely :-
(i) in the case of an insurer to whom com-
pensation is payable under Part A or Part B or
Part C of the First Schedule to the Act,
within three months from the date on which the
compensation determined by the Corporation is
offered to the insurer
(ii) in the case of an insurer to whom com-
pensation is payable under Part B of the First
Schedule to the Act, within six months from
the date on which the compensation determined
by the Corporation is offered to the insurer
(iii) in the case of compensation payable to a
Chief agent or special agent under the
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proviso to section 36 of the Act, within three
months from the date on which the compensation
determined by the Corporation is offered to
the chief agent or special agent, as the case
may be :
Provided that any such reference may be
admitted by the Tribunal after the period of
limitation prescribed therefor under this
rule, if the person making the reference
satisfies the Tribunal that he had sufficient
cause for not making the reference within
the said period."
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According to Mr. Desai, under sub-r. (1) of this Rule the
Corporation has to make a reference to the Tribunal within
three months. It would, therefore, according to him, follow
that the insurer must move the Corporation before the expiry
of that period and that, therefore, by framing this rule the
Central Government has not only carried out the requirements
of ol. (f) of sub-s. 2 of s. 48 but also of sub-s. 2 of s.
16.
It is difficult to appreciate this argument for two reasons.
The first one is that when the law requires a period to be
prescribed for doing a thing, that period should be clearly specified w
ith specific reference to the particular
purpose. The specific purpose referred to in sub-s. 2 of s.
16 is "to have the matter referred to the Tribunal for
decision." Making of the reference is thus in the hands of
the Corporation and not the insurer who can only move the
Corporation for making the, reference. Time is required to
be prescribed for doing this act by the insurer.
Prescribing time for making a reference is not prescribing
time for Moving the Corporation to make the reference. It
may be that when the latter period is prescribed it would be
possible to sty that before the expiry of that period the
insurer must move the Corporation. But
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prescribing time by implication would not be compliance with
the provisions of sub-s. 2 of s. 16. For, when a period is
prescribed for doing an act the person who has to do that
act is entitled to do it even on the last day. If the
construction of learned counsel is accepted it would mean
that the insurer would be within time under r. 12 if he
moves the Corporation on the date on which the period of
three months expires. If he does that how would it be
possible for the Corporation to make a reference to the
Tribunal also on the same day ?
The second reason for not accepting the construction placed
by learned counsel is that the proviso to r. 12 empowers the
Tribunal to admit a reference after the period of limitation
prescribed therefor if the "person making the reference"
satisfies the Tribunal that he had sufficient clause for not
making the reference within the prescribed period. The
proviso thus indicates that the reference to the Tribunal
contemplated by r. 12 is to be made by the insurer and not
by the Corporation. This appears to be so from the language
of the proviso itself. No doubt r. 12, considered without
the proviso, may well be construed as applying to reference
to be made by the Corporation. But considering the rule
along with the proviso it would appear that the rule was
meant to govern a reference by someone’ else and not the
Corporation. That someone could be either the insurer or a
chief agent or special agent who also is entitled to
compensation under the proviso to s. 36.
Learned counsel then advanced a rather novel argument. The
argument is this. While the opening words of r. 12 may
apply to the Corporation as to an insurer, a chief agent or
a special agent sub-rr. (i), (ii) and (iii) thereof apply
only to the Corporation, whereas the proviso applies only to
an insurer or a chief agent or special agent as the case may
be. If the provision, that is, the whole or r. 12 is
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read thus, the contention proceeds, there would be no lacuna
in the rules, and the proviso to r. 12 would not be rendered
redundant.
All that Mr. Desai could say in support of his contention
that sub-rr. (i), (ii) and (iii) of r. 12 must be construed
to apply to the Corporation alone is that such a
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construction would avoid a lacuna in the rules. But what is
the lacuna ? We have already pointed out that the lacuna is
in not prescribing the time within which an insurer must
move the Corporation for making a reference. That lacuna
will not be removed even if we accept the construction
pressed by learned counsel. That apart, upon the language
of the sub-rules, they cannot be construed as applying to
the Corporation alone.
"earned counsel then contended that if we construe the
proviso in such a way as to make the substantive provisions
of r. 12 applicable to an insurer or a chief agent and not
to the Corporation we would be limiting the scope of the
main enacting provision and that is not permissible.
There is no doubt that where the main provision is clear its
effect cannot be cut down by the proviso. But where it is
not clear the proviso, which cannot be presumed to be a
surplusage, can properly be looked into the ascertain the
meaning and scope of the main provision. By ’looking at the
proviso for this purpose the rule of Constiuction referred
to by learned counsel will not be infringed.’
In the West Derby Union v. Metropolitn Life Assurance Co..
(1) Lord Watson observed :
"......... I perfectly admit that there may be and are any
oases which the terms of ail intelligible proviso may throw
considerable
(1) (1897) A.C. 641, 652.
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light on the ambiguous import of the statutory words."
In the same case Lord Herschell admitted that a proviso may
be a useful guide in the selection of one or other of two
possible constructions of words in the enactment or to show
the scope of the latter in a doubtful case.
Here we find that r. 12 read by itself does not show clearly
whether it appeals to the Corporation special agent. It is
therefore, permissible to look into the proviso for
ascertaining the scope of the main provisions of r.’12. As
we have stated earlier the proviso cannot, upon its proper
construction apply to the Corporation. When, therefore, we
read r. 12 as a whole, that is, along with the proviso we
would not be violating any well-accepted rule of
construction though by so reading it we came to the
conclusion that r. 12 applies only to an insurer or a chief
agent or a special agent but not to the Corporation.
We may further point out that the proviso would be rendered
useless if we are to hold that r. 12 deals with a reference
made by the Corporation only. The reason why we say that it
will be rendered useless is this, Supposing an insurer moves
the Corporation beyond three months for making a reference,
would the Corporation be bound to make the reference ? Upon
the terms of sub-s. 2 of s. 16 the Corporation would only be
bound to make a reference if is moved by the insurer within
the prescribed period. If that is so, then no occasion
would arise for enabling the insurer to move the Tribunal
for condoning the delay. According to Mr. Desai, however,
the Corporation could be compelled by mandamus to make the
reference. The short answer to that is that there being no
duty upon the Corporation to make a reference after the
expiry or the period prescribed by r. 12 no mandamus can
issue to it.
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Another reason for not accepting the contention of learned
counsel is that the proviso speak of the person making the
reference satisfying the Tribunal that he has sufficient
cause for not making the reference, within the same period.
If the insurer is not the person making the reference, how
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can be be said to be permitted to satisfy the Tribunal about
the sufficiency of the cause for condoning the delay in
making the reference ? Mr. Desai, however, suggest that we
should read the words "if the person making the reference
satisfies the Tribunal ... etc." as if they read "if the
person at whose instance the reference is made satisfies the
Tribunal ... etc."’That would be rewriting the provision
which we cannot do.
It seems to us that while framing r. 12 the rule making
authority lost sight of fact that subs. 2 of s. 16
contemplates a reference not by the insurer but by the
Corporation. Learned counsel urged that we should not place
an interpretation upon the rule which will leave a serious
lacuna in the working of the act. We-appreciate his conten-
tion but there is no escape from the result.
The proceedings before the Tribunal were misconceived
because the only way in which they could be initiated was by
a reference by the Corporation and there was no such
reference. No question of limitation arises because the
period within which an insurer Must move the Corporation to
make a reference has not yet been prescribed as required by
sub-s. 2 of s. 16. It will be open to the Appellant to move
the Corporation under s. 16(2) after such period is
prescribed.
In the result we quash all the proceedings before the
Tribunal but in the particular circumstances make no order
as to costs.
Appeal Dismissed.
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