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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

REVIEW PETITION(C) No.3538 of 2016 IN

CIVIL APPEAL NO.8543 OF 2009

Dravya Finance Pvt. Ltd. & Anr. …..Petitioners

Versus

S.K. Roy & Ors. …..Respondents

J U D G M E N T

Shiva Kirti Singh, J.

1. Heard learned counsel for the parties. 2. Although this petition is labelled as a contempt petition arising out of

Civil Appeal No.8543 of 2009, by order dated 26th September, 2016, the

contempt proceedings were closed and the petition is now being treated

only as a limited review petition for answering a short but significant

question as to from what date, the interest needs to be calculated and

paid  by  the  LIC  to  the  petitioners  in  terms  of  final  order  dated  10 th

December,  2015  in  Civil  Appeal  No.8543 of  2009.   The  last  but  one

paragraph  of  the  Order  dated  10th December,  2015  is  relevant  for

appreciating  the  issue  relating  to  interest  indicated  above.   That

paragraph runs as follows :-

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“It  is  further  clarified  that  in  view of  the  disposal  of  this Appeal, in the circumstances mentioned above, the Appellant will  be  liable  to  pay  interest  at  the  prevailing  Bank  rate (without penal interest) as per Section 8 sub-section (5) of the Insurance Regulatory and Development Authority (Protection of Policy Holder Interest) Regulations, 2002.  The disposal of this Appeal is without prejudice to other Appeals in which arguments have been closed.”

3. It will also be apposite to extract the Order passed in this case on 26th

September, 2016 which is as follows :-

“On hearing the parties, we find that the order passed by  this  Court  on  10th December,  2015  in  C.A.No.8543  of 2009 has been substantially or may be fully complied with except that a dispute has arisen with regard to interpretation of  observations made  at  the  end  of  that  Order  relating  to payment of interest at the prevailing bank rate.  The dispute requires  an  answer  as  to  the  ‘the  date’  from  which  the interest should be calculated.

In our considered opinion, this dispute raises questions of equity between the parties to be adjusted on account of earlier  orders  passed  in  C.A.No.8543  of  2009  and  the language used in the Order dated 10th December, 2015.  It will be appropriate to consider the issue not under Contempt Jurisdiction  but  in  Review  Jurisdiction.   Therefore,  the contempt proceedings are closed.  

For that purpose, we direct that this Contempt Petition shall now be treated as limited Review Petition and may be listed in Court on 18th October, 2016 i.e. on a non-misc. day.

It is further recorded that the petitioners may accept whatever amount Life Insurance Corporation (LIC) is ready to pay as interest without prejudice to their claims which may be determined by way of Review.

It  goes  without  saying  that  the  petitioners  will  be entitled  to  pursue  their  remedy  by  approaching  LIC  with further particulars/materials in respect of  the cases which are still pending for settlement.”

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4. Since the issue under dispute is very narrow one, it is not necessary to

refer to facts in detail.  It is sufficient to notice that the first petitioner is

a  non-banking  finance  company  engaged  in  the  business  of  lending

money against collateral security.  It accepts life insurance policies as

collateral security through assignment of insurance policies by borrower

in favour of the petitioners.  On 22nd October, 2003 and 2nd March, 2005,

LIC  issued  two  circulars  for  putting  restrictions  on  assignment  of

insurance  policies  with  a  view  to  prevent  “trading”  in  policies.   The

circulars were challenged before the Bombay High Court through two

writ petitions filed in the year 2004.  They were allowed by quashing the

two circulars vide judgments and orders dated 22nd March, 2007 and 23rd

April, 2007 respectively.  No order for grant of any interest was passed by

the High Court nor the petitioners appealed against such orders. 5. LIC challenged the judgments of Bombay High Court by way of S.L.P.(C)

Nos.8918 and 10783, both of 2007.  This Court passed interim order in

favour of LIC and, as a result, the petitioners could get only temporary

registration of assignment in its favour but could not file any death claim

or maturity claim during the pendency of the Civil  Appeal No.8543 of

2009 arising out of SLP against the petitioners.  Ultimately, by the final

order dated 10th December, 2015, Civil Appeal against the petitioners was

disposed of  on the basis of  undertakings furnished on affidavit  which

were accepted by the Court on account of  agreement accorded to the

terms of the undertaking by the learned senior counsel for the LIC.  The

provisional registrations were made permanent and the interim orders

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passed on 4th April, 2008 were recalled.  The LIC was thus required to

process the claim applications or maturity applications as well as fresh

applications  for  registration  in  accordance  with  the  order  dated  10th

December, 2015 and in that context, this Court observed that LIC will be

liable to pay interest at the prevailing bank rate (without penal interest)

as per relevant provisions in the regulations of 2002. 6. It may be indicated, at this stage only, that the other appeals in which

arguments had been concluded also came to be finally dismissed against

the LIC on 29th December 2015.  As a result, the judgment of the High

Court of Bombay declaring the circulars ultra vires stood confirmed. 7. The  present  contempt  petition  came  to  be  filed  against  the  LIC.   As

noticed above, the same was closed on 26th September, 2016 but this

Court directed it to be treated as a limited review petition because of an

apparent omission in the final order dated 10th December, 2015 in not

mentioning as to from what date, the LIC will be liable to pay interest at

the prevailing bank rate (without penal interest). 8. On behalf of the petitioners, Mr. Shyam Divan, learned Senior Advocate

placed reliance upon various sub-regulations of Regulation 8 to suggest

that as per statutory regulations, the interest should be payable after 30

days from the date of  maturity of  the policy or date of  death in case

where the insured died during the pendency of the policy. 9. On the other hand, learned Attorney General appearing on behalf of LIC

pointed out that the High Court did not grant any relief by way of interest

and,  therefore,  equity  can  be  taken  care  of  by  ordering  payment  of

interest only at a reasonable rate from 4th April, 2008 when this Court

passed an interim order but without prejudice to the ultimate rights of

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the parties and, as a result, temporary registration of assignment became

possible. 10. He strongly advocated for reducing the rate of interest from bank rate to

that of savings bank rate on the plea that there was no intentional delay

caused by the LIC and, therefore, its interest should also be protected

while adjusting the equities through grant of interest. 11. As is evident from order passed in this case on 26th September, 2016, the

present  dispute  relates  only  to  a  question  of  adjustment  of  equities

between the parties on account of earlier interim order as well as the

language used in the order dated 10th December, 2015.  The exercise that

needs to be undertaken is really one of modification of the order dated

10th December,  2015,  necessitated  because  of  obvious  omission  in

supplying the date from which the interest should be calculated.  Since

the  High  Court  did  not  grant  any  relief  by  way  of  interest  and  the

petitioners did not challenge the said judgment and order, we find merit

in  the  submission  of  learned  Attorney  General  that  interest  will  be

payable only on or after 4th April, 2008 when this Court imposed certain

restrictions on the petitioners’  right to lodge death claims or maturity

claims for appropriate amounts. 12. However, since the interim order of this Court has stood in the way of the

petitioners from getting its money claims against LIC within due time and

the money has remained with the LIC because of interim arrangement

enforced by this Court, it will not be proper to reduce the bank rate as

ordered already.  Accordingly, we modify the last but one paragraph of

final order dated 10th December, 2015 passed in Civil Appeal No.8543 of

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2009.  It shall be so read as to include a clause that the LIC will be liable

to pay interest at the prevailing bank rate (without penal interest) from

30 days after the date of death or date of maturity relating to the life

insurance policy concerned or from 4th April, 2008, whichever is later. 13. This matter is disposed of accordingly.  We hope and trust that the LIC

will  discharge  its  liabilities  as  per  this  order  with  promptitude  and

without any unnecessary delay.

……………………………….J. [ANIL R. DAVE]

……………………………….J. [SHIVA KIRTI SINGH]

……………………………….J. [R. BANUMATHI]

New Delhi. October 26, 2016.