Kannayalal vs S. Subbaraya Chetty and Others

Pandrang Row, J.—The appellant in this second appeal and the petitioner in the Revision Petition are one and the same, the appeal and

Revision Petition being alternative remedies pursued for the same purpose, namely, of getting the order of the District Judge of Vellore in C.M.A.

No. 65 of 1934 set aside. That was an appeal from an order passed in an application by the creditor of an insolvent for the assignment of a policy

of insurance taken out by the insolvent in his favour. The second respondent in the petition was the Life Insurance Company and the third

respondent was the wife of the insolvent debtor. The only question that had to be decided by the Courts below was whether the life policy in

question, Ex. I, contains a trust for the benefit of the wife, the third respondent. The verba ipsissima ""the policy is for the benefit of the wife"" are not

to be found in the policy, but it is stated therein that the amount clue on the policy should be paid to the assured, that is, to the first respondent at

the expiry of the period of 15 years, or to his wife on the death of the assured if earlier. In these circumstances, the Subordinate Judge was of

opinion that there was no trust for the benefit of the wife and allowed the petition. On appeal the District Judge came to the contrary conclusion

and allowed the appeal and dismissed the petition. Now the question for me to decide is whether the District Judge''s conclusion is right. The

Subordinate Judge distinguished the case of Abhiramavalli Ammal v. Official Trustee of Madras (1931) 62 M.L.J. 111 : ILR 55 Mad. 171 by

saying that in that case the question had arisen only after the death of the assured whereas in the case before him the assured was alive. He also

distinguished the case in Dinbai v. Bamanshaji ILR (1933) Bom. 513 on the same ground. The District Judge was of the opinion however that the

Subordinate Judge was not right in distinguishing the present case from the earlier case. It was held by Madhavan Nair, J., in that case that the

actual words ""for the benefit of the wife"" need not be in the policy in order to attract the provisions of Section 6 of the Married Women''s Property

Act to any particular policy, and that if on a reading of the words used in the policy it appears that the assured intended in the event of his death

that the policy should enure for the benefit of his wife, then the policy may be deemed to be for her benefit and brought within the purview of

Section 6; in the particular case before him the provision regarding payment was similar to the provision in the present case, and it was held that the

policy fell within Section 6 of the Married Women''s Property Act of 1874 as amended by the subsequent Act of 1923. The only other decision

which appears to take the opposite view is V. Lalithambal Ammal Vs. The Guardian of India Insurance Co., Ltd. and Others, , where the policy

contained practically the same provision about payment to the wife in case she survived the insured before the policy became matured and it was

held that there was no vested interest of the wife in the policy till the death happened and that the assignment of the policy made by the insured was

valid. The decisions however which were relied upon, namely, In re Ioakimidis'' Policy Trusts : Ioakimidis v. Hartcup (1925) 1 Ch. D. 403, In re

Fleetwood''s Policy (1926) 1 Ch. 48 and Cousins v. Sun Life Assurance Society (1933) 1 Ch. 126 were all cases in which it was held that there

was a trust in favour of the wife. Where there is a trust the insured cannot deal with the policy as he likes. This is clear from the provisions of

Section 6 of the Married Women''s Property Act. Once it is found that a policy of insurance effected by a married man on his own life was for the

benefit of his wife, then the section says that it shall be deemed to be a trust and enure for the benefit of the wife according to the interest so

expressed and shall not, so long as any object of the trust remains, be subject to the control of the husband or to his creditors or form part of his

estate. The section also indicates the person to whom in such a case the sum secured by the policy has to be paid, namely, the Official Trustee.

The only way in which a policy of this kind can be attacked by a creditor is by proving that it was effected for the purpose of defrauding the

creditors. No such attempt has been made in this case. I am of opinion that if the words found in the policy lead to the conclusion that the policy

was for the benefit of the assured''s wife, then according to Section 6 of the Married Women''s Property Act, it shall be deemed to be a trust and

enure as such so long as the wife is alive. This does not mean of course that the wife is entitled to claim anything by virtue of the above trust

straightaway. The benefit which accrues to her under the trust will be subject to other conditions in the policy but the trust is impressed upon the

policy from the moment the policy comes into existence, and it cannot in my opinion be said that the trust comes into existence for the first time

only after the event, which is to determine the payment under the policy, takes place. In other words, the wife will not be entitled to claim any thing

under the policy unless the event referred to in the policy happens, but the trust is brought into existence the moment the policy is taken out for the

benefit of the wife. That being the case, the trust attaches itself to the policy, from the very moment of its birth, and the policy cannot thereafter be

looked upon as available to the creditors regardless of the trust imposed upon it. The position therefore in law is that there is a trust impressed on

the policy in favour of the wife; at the same time it cannot be said that the insured has no interest in the policy because in a certain event, namely,

after the expiry of 15 years from the date of the policy, the money thereunder is to be paid to him if he is then alive, and it is only in the event of his

death within this period that the money could be paid to his widow if she is then alive. The policy thus constitutes property in which both the

insured and his wife have an interest. It is not possible to say at present what that interest is because it is entirely dependent on the events above

referred to. In these circumstances it is not open to the creditor to treat the policy as being the property of his debtor and to require an assignment

of it and to compel the insurance company to acknowledge such an assignment as valid and binding upon them. For these reasons, I am of opinion

that the order passed by the District Judge was right and that the application of the petitioner was rightly dismissed. The appeal and the Revision

Petition are therefore dismissed with costs in the appeal. Leave to appeal is refused.