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TMI Blog1979 (1) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... iental Government Security Life Assurance Company. Subsequently, he submitted a proposal for life insurance on 11th September, 1959, for an endowment policy for Rs. 50,000 covering a period of fifteen years., The Life Insurance Corporation agreed to accept the risk commencing from 18th November, 1959, and quoted also a higher premium for four years having regard, perhaps, to the state of his health. The insured passed away on 20th September, 1961, within two years of the policy becoming effective. With reference to the policy for Rs. 50,000 which had been taken from the Oriental Government Security Life Assurance Company on 4th October, 1954, there was no dispute and the amount was actually paid in accordance with the terms of the said policy. However, with reference to the policy which became effective from 18th November, 1959, as the death took place within a period of two years of the policy, the LIC disputed its liability to pay the amount. There was some correspondence between the LIC and the widow of the deceased insured, in which the Corporation denied liability to pay the money under the policy on the ground that the policy was ab initio void as the deceased had not made ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e policy is wholly kept up by him for the benefit of a donee, whether nominee or assignee, .......... shall be deemed to pass on the death of the assured. " The section requires attention being paid to the aspect whether any money was received under a policy of insurance kept up by the deceased. In the present case, there is no dispute about the fact that the deceased had taken out a policy from the LIC with effect from 18th November, 1959, and also paid the premium during the period of his lifetime. The policy had thus been kept up by the deceased. There was no other relationship either between the deceased and the LIC or between the accountable person who claimed the benefit of the policy and the LIC, except under a contract of insurance. Originally, the LIC sent a letter dated 7th May, 1963, stating that, based on the information given by Viswanathan in his proposal dated 11th September, 1959, and the proposal statement given before the directors, V. Rajagopal and Sudarsan Lal, on the same day, and in accordance with the special questionnaire form dated 22nd September, 1959, it was decided to accept the risk on his life with an extra premium payable for four years. The deceas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation, so as to warrant any payment being made ex gratia. The payment of Rs. 35,000 is traceable only to the policy of insurance which was taken in 1959. But for that policy there would have been no payment to the accountable person. The description " ex gratia " has been the subject of consideration by the Queen's Bench Division in Edwards v. Skyways Ltd. [1964] 1 WLR 349. That was a case of an airlines company which, by a resolution, empowered its secretary, in his discussions with the British Airline Pilots Association, to agree, should circumstances require, to the payment to redundant air-crew members, of an ex gratia amount approximating to the company's contributions for each member of the pension and superannuation fund. There was a meeting between the representatives of the pilots' association and of the company and at that meeting the principle was accepted that pilots declared redundant and leaving the company would be given an ex gratia payment equivalent to the company's contribution to the pension fund, and that they would be entitled also to a refund of their own contributions to the fund. The plaintiff in that case was a pilot employed by the company and he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire amount of Rs. 50,000. It is, in these circumstances, that the LIC chose to describe the payment as ex gratia as, if it described the payment as under the policy, it would have to pay more. The description, by itself, does not take the payment outside the policy or scope of s. 14 of the E.D. Act. Even assuming that the contract of insurance was void because of non disclosure of material facts, the position may be examined. Learned standing counsel for the Commissioner drew our attention to a decision in Attorney-General v. Murray [1904] 1 KB 165 ; 1 EDC 428 (CA). In that case, a policy of insurance had been effected by the father on the life of the son. This policy was not valid under the provisions of the Life Assurance Act 1774. However, the amount had been received on the death of the son and the question arose in the estate duty proceedings as to whether the said sum was liable to be taxed under the corresponding provisions of the estate duty law in the United Kingdom. The Court of Appeal, speaking through Cozens-Hardy L.J. observed at pages 171-172 (1 EDC 428, 435) : " The statute made the contract of insurance void as between the office and Sir Henry, but no furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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