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Sheoshankar Vs. Life Insurance Corporation of India, Bombay - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Case NumberAppeal No. 115 of 1961
Judge
Reported in[1973]43CompCas284(Bom)
ActsInsurance Act, 1938 - Sections 45
AppellantSheoshankar
RespondentLife Insurance Corporation of India, Bombay
Appellant AdvocateV.R. Manohar, Adv.
Respondent AdvocateA.S. Bobde and ;M.L. Vaidya. Advs.
Excerpt:
company - insurance policy - section 45 of insurance act, 1938 - suit for recovery of amount in insurance policy dismissed by trial court - policy holder hid material facts at time of entering into contract - duty of policy holder to disclose all material facts before entering into contract - contract of insurance entered into with insurance company vitiated - policy in suit void and no relief can be granted to plaintiff - held, no interference required in decision of trial court. - - 200 from the insurance company as well increase the amount of insurance from rs. she died on september 7, 1956, and the cause of her death was stated to be heart failure due to labour (sic. 12. on this repudiation by the defendant-corporation, the plaintiff served the defendant with a notice of suit.....padhye, j.1. this is a plaintiff's appeal whose suit for the recovery of the amount on an insurance policy has been dismissed by the trial court. the insurance was originally taken with the indian mercantile insurance company ltd., but subsequently the life insurance corporation of india took over the management of all the life insurance companies including the indian mercantile company ltd., with effect from 1st september, 1956, and hence the defendant, life insurance corporation of india, is held liable for the claim. the original policy which bears the no. 36348 with the indian mercantile insurance company ltd. was for an amount of rs. 50,000 on joint lives of the present plaintiff and his wife, deceased kamalabai. prior to the taking of the instant insurance, the plaintiff had made.....
Judgment:

Padhye, J.

1. This is a plaintiff's appeal whose suit for the recovery of the amount on an insurance policy has been dismissed by the trial court. The insurance was originally taken with the Indian Mercantile Insurance Company Ltd., but subsequently the Life Insurance Corporation of India took over the management of all the life insurance companies including the Indian Mercantile Company Ltd., with effect from 1st September, 1956, and hence the defendant, Life Insurance Corporation of India, is held liable for the claim. The original policy which bears the No. 36348 with the Indian Mercantile Insurance Company Ltd. was for an amount of Rs. 50,000 on joint lives of the present plaintiff and his wife, deceased Kamalabai. Prior to the taking of the instant insurance, the plaintiff had made earlier another proposal on the joint lives of himself and his wife, Kamalabai, with the Ruby General Insurance Company Ltd. for a sum of Rs. 30,000 on 17the April 1956. With this proposal the assured, namely, the plaintiff and his wife, had given their personal statements and the agent through whom the policy was taken also made his report and the proposal being for a sum in excess of Rs. 25,000, medical examiner's report was also submitted. The medical examine had to fill in two forms, one based on the answers given by the assured and the second on his medical examination of the assured. The Ruby General Insurance Company, however, did not accept the proposal for the sum of Rs. 30,000 as proposed, but was willing to insure the joint lives for a sum of Rs. 10,000. The counter-proposal of the Ruby General Insurance Company was, however, not acceptable to the proposes and by a letter addressed by one G. V. Pendhari, who was an insurance agent, to the life superintendent, Ruby General Insurance Company Ltd., with copy to the divisional manager, Bombay, he informed the Ruby General Insurance Company that the proposer were not willing to complete the same and the proposal may be canceled without any liability. A letter was also addressed by the plaintiff on August 6, 1956, to the divisional manager, Ruby General Insurance Company Ltd., Bombay, informing it that since the company was accepting the proposal only for an amount of Rs. 10,000 he was unable to complete its proposal since his proposal had not been accepted as proposed. It is, however, not known as to when the counter-proposal to accept the insurance for Rs. 10,000 was made by the Ruby General Insurance Company. According to the plaintiff, he came to know about the reduced proposal on the 5the August 1956, through the agent; whereas according to the defendant, the plaintiff must have come to know about this reduced proposal even before the proposal to the Indian Mercantile Insurance Company Ltd. was made by the plaintiff and his wife.

2. The plaintiff states in the plaint that a proposal for insurance on the joint lives of the plaintiff and his wife was made on July 15, 1956, with the Indian Mercantile Insurance Company for a sum of Rs. 40,000. There are, however, two proposal forms which are exhibits D-2 and D-4 of 15the July, 1956, and 23rd July, 1956. In these proposal forms the proposed assured gave the details which are required to be answered as per the questionnaire in the proposal forms. Questions Nos. 7 and 8 in the said proposal forms seek information as to whether any proposal on the proposer's life has been or is about to be made to any other company or companies and question No. 8 requires the proposer to say whether he has been insured in this or any other company. Question No. 9 seeks information as to the result of such proposal. The answer to question No. 7 was given in the negative and in answer to the question No. 8, the proposes stated that they were insured with the Ruby General Insurance Company Ltd. for an amount of Rs. 30,000 for the joint life and in answer to the question No. 9 (d) which is : 'Has the proposal been accepted on terms otherwise than as propose If so, give full particulars'. The answer is in the negative.

3. In this proposal, the monthly income of the plaintiff who was the only earning member has been given as Rs. 600. At the end of this proposal, there is a declaration which is required to be signed by the proposer. The material portion of this declaration is as under :

'I further declare that the above statement and answers are true in every particular and that I have not withheld or concealed any information or circumstances affecting the risk of an assurance on my life, and I agree that this statement and declaration along with a further statement made or to be made before the medical examiner and declaration relative thereto or any other declaration of insurability in lieu thereof, whether written in my hand or not and such evidence of age as is or may be produced, shall be the basis of the contract between me and the Indian Mercantile Insurance Co. Ltd., and that if any untrue averment be contained therein the contract of assurance shall be absolutely null and void.'

4. Further material part is :

'I do hereby further declare that this proposal shall not be deemed to be accepted by the company unless and until the acceptance letter is issued by the head office of the company and is received by me and the full premium indicated in the letter of acceptance has been paid to the company together with any other requirements called for in accordance with the terms of the letter of acceptance and the first premium receipt as issued by the company. Any payment made by me by way of estimated first premium before the acceptance letter is issued shall be kept in suspense to my credit and if the proposal is accepted, shall be applied towards payment of the full premium indicated in the letter of acceptance ...'

5. The proposal is also required to be accompanied by a personal statement of the assured which is recorded by a medical examiner of the insurance company on the answers given by the assured to the questions in the form of personal statement. The medical examiner of the insurance company is also required by the insurance company to medically examine the assured and fill in the details required in the form. The assured were examined by Dr. De Costa on July 24, 1956, and he filled in the forms on the information given by the assured on his own personal examination. Dr. De Costa examined Kamalabai, the deceased, on July 24, 1956. In the personal statement also the assured has to give a declaration, material part of which is to the following effect :

'I do hereby declare that the foregoing answers have been given by me after fully understanding the questions and the same are true in every particular and that I have not withheld any information and I do hereby agree that this declaration together with the proposal for assurance shall be the basis of the contract to be made between me and the Indian Mercantile Insurance Co. Ltd.'

6. We shall come to the details of the answers given in the proposal form and the personal statement later. On this proposal the Indian Mercantile Insurance Company registered the proposal as No. 39944, dated July 15, 1956, and by its letter dated 30the July, 1956, (exhibit D-8), accepted the said proposal and demanded an amount of Rs. 1,927-8-0 (Rs. 1,927.50), as the first premium. The insurance company stated that the company was prepared to issue a policy to the assured on the terms undernoted. It further states the plan acceptable to the company, as proposed at ordinary rates and subject to usual female extra. In this letter, it was further stated that until the first premium in full was paid and accepted as such by the company, no liability is attached to the company which reserved a right to cancel the acceptance. There is also a further clause stating as under :

'If between the date of your medical examination for insurance in this company and receipt of the first premium at the head office or issue of this acceptance letter, whichever is later, your suffer from any illness or injury or there is a change in your family history or occupation or if a proposal for assurance on your life is made to another life office or is declined or not accepted at ordinary rates and as proposed the assurance shall be void unless you intimate the same to us in writing to enable the company to Re-approve the proposal.'

7. Thereafter, the plaintiff paid in the Nagpur office an amount of Rs. 1,927-8-0 on account of the first premium on August 3, 1956, and a provisional receipt bearing No. 13313 was issued by the Nagpur branch manager. This receipt refers to the acceptance letter No. 39944. The payment of this first premium was thereafter acknowledged by the head office at Bombay, by its interim policy receipt dated August 4, 1956, which refers to proposal No. 39944 and policy No. R-36348. Though an amount of Rs. 1,927-8-0 was paid by the plaintiff, the receipt was for Rs. 1,727-8-0 for 12 months from 4the August. 1956. The said receipt also recites that 'the acceptance of this premium places the company on the risk covered by the insurance, provided the terms and conditions of the acceptance letter have been complied with; the policy is under preparation and will be forwarded in due course.' Thus, according to the plaintiff the risk for this assurance of Rs. 40,000 was in the first place covered as from 30the July, 1956, when the proposal was accepted and in any case on the 3rd of August, 1956, when the first premium was paid at the Nagpur office and in any case on the 4the of August 1956, when the Bombay office received the payment and conveyed to the assured that the risk was covered on the acceptance of the said premium.

8. Out of the payment of Rs. 1,927-8-0 made by the plaintiff an amount of Rs. 200 remind in balance with the insurance company. According to the plaintiff, it was then proposed by his insurance agent that he may instead of withdrawing the amount of Rs. 200 from the insurance company as well increase the amount of insurance from Rs. 40,000 to Rs. 50,000 on payment of additional premium which would amount to Rs. 231-14-0. The plaintiff then made a request by his letter dated 9the August, 1956, to the branch manager of the insurance company at Nagpur to increase the amount of insurance from Rs. 40,000 to 50,000 and also paid the difference of Rs. 231-14-0 on which the Indian Mercantile Insurance Company issued a premium receipt on that date for the amount of Rs. 231-14-0 and made an endorsement on the top of the said receipt that it was difference due to the change of the sum assured from Rs. 40,000 to 50,000. In this receipt the number of the policy has been given as 36348/R dated August 9, 1956.

9. The Indian Mercantile Insurance Company then issued a letter (exhibit P-4 = exhibit D-9), to the plaintiff and his wife on the 20th of August, 1956, informing the assured that their proposal for assurance has been duly considered by the company and that the company was prepared to issue a policy to them on the terms noted thereunder. This letter purports to say that it was issued in lieu of the acceptance letter dated July 30, 1956. In this letter the proposal number has been given as 39944 dated July 15, 1956, and the sum proposed is shown to be Rs. 50,000. This letter also shows that until the first premium in full was paid to and accepted as such by this company, no liability attached to the company which reserved the right to cancel this acceptance. It may be noted that by this time the full amount of the first premium on the sum of 40,000 had been paid by the assured on the 3rd of August, 1956, in the Nagpur branch and was received by the Bombay branch on August 4, 1956. As in the earlier letter of acceptance, this letter also states that if between the date of their medical examination for insurance in this company and receipt of the first premium at the head office or issue of this acceptance letter whichever is later, they suffer from any illness or injury or there is a change in their family history or occupation or if a proposal for assurance on their life is made to another life office and is declined or not accepted at ordinary rates and as proposed, the assurance shall be void unless they intimate the same to the company in writing to enable the company to Re-approve the proposal. The Nagpur branch office of the Indian Mercantile Insurance Company also wrote to the plaintiff and his wife on the 23rd of August, 1956, informing them that the head office has increased the sum assured from Rs. 40,000 to Rs. 50,000 and enclosed the interim policy receipt No. 36442 for the amount covering the risk on the life of the assured with effect from August 4, 1956, under the above policy for Rs. 50,000. It was stated that the policy was under preparation and the same would be forwarded to them shortly. This letter also makes a reference to the proposal No. 39944 and policy No. 36348 on the joint life (exhibit P-5).

10. The plaintiff's wife, Kamalabai, fell ill on September 2, 1956, and that was her last illness. She died on September 7, 1956, and the cause of her death was stated to be heart failure due to labour (sic. lobar) pneumonia of left lung. During her last illness between 2nd and 7th September, 1956, Dr. L. S. Kale was attending on her. By this time the formal insurance policy was not issued by the company to the assured and it was issued by the company on 22nd of October, 1956, and received by the plaintiff thereafter. The insurance policy is exhibit P-16 and bears the policy No. 36348-R and is for a sum of Rs. 50,000. In this policy the risk date is given as August 4, 1956; the date of last payment is given as August 4, 1980, and the date of maturity is given as August 4, 1983.

11. On the death of any one of the joint assured the amount of the policy was payable to the survivor. On the death of Kamalabai, the plaintiff, who was the survivor, made a claim on the said policy to the Life Insurance Corporation of India, Unit Indian Mercantile Insurance Company, as by that time the Life Insurance Corporation of India had taken all the life insurance business. It appears that the plaintiff had informed about the death of his wife by his letter dated October 25, 1956, and subsequently, sent another letter on 13th December, 1956, which was acknowledged by the defendant by its letter dated 29th December, 1956 (exhibit P-6). While acknowledging the letter, the defendant-Corporation sent a set of claim forms which were to be completed by the plaintiff in order to enable the Corporation to consider the claim. These forms were then completed by the plaintiff by about 4th of February, 1957, and were sent to the defendant-Corporation, which acknowledged the receipt thereof by its letter dated 13th February, 1957. There was then some correspondence between the plaintiff and the defendant by which the plaintiff was requesting the defendant-Corporation, to settle his claim early while the defendant-Corporation was informing the plaintiff that it was investigating into the matter. Ultimately, by its letter dated 13th August, 1958 (exhibit P-13), the life Insurance Corporation of India repudiated all liability under the policy on account of the deceased having withheld correct information regarding her health at the time of effecting the assurance with the Unit Indian Mercantile Insurance Company. In this letter the defendant-Corporation mentioned the questions which were answered incorrectly by the deceased in the personal statement made by her on July 24, 1956. Those questions were 4(a), (d), 7(b), (c), (j), and 10(a) and (b). The defendant Corporation by this letter told the plaintiff that the answers given to these question were incorrect and false and they held indisputable proof to show that some time before the date of proposal she had suffered from eosinophilia with extreme dyspnoea and dilated heart and mitral stenosis for all of which she had taken treatment from medical men and in a hospital and that an X-ray of her chest was taken which showed enlarged heart. It was also stated in this letter that, between the date of proposal and the date of issue of the acceptance letter, she had taken treatment form medical men, but she did not disclose the same to the Indian Mercantile Insurance Company as she was bound to do in terms of the acceptance letter dated August 20, 1956. The letter also stated that during the said period a proposal to another insurance company on the joint lives of the plaintiff and his wife was accepted by that company for a reduced sum assured and not as proposed, but the assured had not intimated this fact to the Indian Mercantile Insurance Company although they were bound to disclose it in terms of the acceptance letter referred to above.

12. On this repudiation by the defendant-Corporation, the plaintiff served the defendant with a notice of suit dated 11th August, 1959, and the defendant having failed to comply with that notice, the instant suit was filed by plaintiff on September 7, 1959.

13. The plaintiff claimed that the proposal was accepted on July 30, 1956, when the acceptance letter was given by the insurance company and in any case on 3rd of August, 1956, when the payment of the first premium was made. This insurance was for a sum of Rs. 40,000. The revised sum of Rs. 50,000 in place of Rs. 40,000 was only a modification of the original contract and was not a new contract in substitution of the old one for Rs. 40,000. The plaintiff claimed Rs. 59,000 from the defendant which included Rs. 50,000 as the sum assured and Rs. 9,000 as interest on Rs. 50,000 from September 8, 1956, to September 6, 1959, at 6 per cent. per annum. The plaintiff in the alternative had suggested in paragraph 12 of the plaint that in any case the defendant was liable to pay at least Rs. 40,000 to the plaintiff along with interest thereon. Though there is no such alternative specific prayer in the relief claimed by the plaintiff he has asked for any other relief which the court deems fit. According to the plaintiff, there was no kind of misrepresentation or mis-statement or suppression of any facts, much less material facts, and the defendant was not entitled to repudiate the contract.

14. The law with respect to insurance previously was that any mis-statement on the part of the assured while making the proposal or at any stage thereafter avoided the contract of policy and the insurer was not liable for the claim on such policy. In Condogianis v. Guardian Assurance Company Ltd. their Lordships pointed out that, if in point of fact, the answer is untrue, the warranty still holds, notwithstanding that the untruth might have arise inadvertently and without any king o fraud. Secondly, the materiality of the untruth is not in issue; the parties having settled for themselves - by making the fact the basis of contract and giving warranty - that as between them their agreement on that subject precluded all inquiry not the issue of materiality. A similar view has been taken in Lakshmishankar Kanji Rawal v. Gresham Life Assurance Society Ltd., where it has been held that where the representations, statements and agreements made by an assured in his application for a policy of life assurance are made a basic condition of contract by the policy of life insurance, the truth of the statements contained in the proposal are, apart from the question of their materiality, the condition precedent of the liability of the assurance company. It has further been held that some of the false answers in the form were filled in by the agent of the company will not make any difference as it must be held that either the assured authorised these answers to be given or by his negligence he made it possible for the agent to deceive the company. In either case the company is absolved.

15. The insurance, law, however, has undergone a material change. The Insurance Act, 1938, has been amended from time to time and section 45 of the Act, as amended by Act No. 13 of 1941, which is relevant for our purposes, is to the following effect :

'45. No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy holder and that the policyholder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.'

16. We are not here concerned with the proviso to section 45. The section is divided into two parts. Under the first part, if the insurer calls in question the policy within a period of two years from the date on which it was effected, then the insurer-company has only to show that a statement made in the proposal for insurance, or in any report of a medical officer, or referee, or friend of the insured, or in any other document, leading to the issue of the policy was inaccurate or false. Even an incorrect statement which may not be on a material fact and suppression of fact which may not be on a material point, would be enough for the insurer-company to a void the contract of policy under this part. Under the second part, where a period of 2 years expired after the date the policy was effected without any challenge to it by the insurer, the insurer could call it in question only on showing that such statement was false or that it suppressed fact which it was material to disclose. The question as to the date on which the policy could be said to be effected and the date on which the proposal can be said to have been accepted assumes importance in this case as on the determination of this question will depend whether the repudiation by the insurer has been within two years or after a period of 2 years from the date on which the policy was effected.

17. According to the learned counsel for the plaintiff-appellant, the policy in this case was effected on the 30th of July, 1956, when the proposal was accepted by the insurance company and in any case not later than 4th of August, 1956, when the payment of the first premium was received by the company's Bombay Office. On the other hand, the learned counsel for the defendant Corporation contends that the policy must be taken to have been effected on October 22, 1956, when the document of policy was issued by the Indian mercantile Insurance Company Ltd. (exhibit P-16). We have been referred first to the words in section 45 itself which relate the word 'effect' to the word 'policy'. It is stated that the word 'policy' used in section 45 means a document of policy issued formally as in exhibit P-16 and since such a policy in the present case has been issued on October 22, 1956, that must be taken to be the date on which the policy has been effected. Secondly, we were referred to section 66, sub-section (b), of the Stamp Act which uses the words 'makes, executes or delivers out any policy which is not duly stamped.' We are unable to read in section 45 of the Insurance Act that the word 'effected' means the data on which a formal policy in cold print is issued. In order to make a contract, there is a proposal and an acceptance. As soon as the proposal is accepted by the other contracting party, the contract is complete and that is the basis of the right of one party and the liability of the other. The liability does not of the first time arise on the formal document of policy. It is only a formal expression of a contract which has already taken place. The date, therefore, material is the date of the acceptance and it is from that date that the rights and liabilities will accuse. Whenever a formal policy is made, it has to be duly stamped in accordance with the provisions of the Stamp Act then prevailing and section 66 of the Stamp Act makes the act of not duly stamping the policy punishable. That does not, however, mean that the policy becomes effective only from the date the formal document is executed or issued. In our opinion, the phraseology used in section 45 of the Insurance Act relates to a date from which the policy of insurance, that is, a contract of insurance, becomes effective and such date would be the date of the acceptance of the proposal from which the risk on the life of the proposer is covered.

18. We were referred to Life Insurance Corporation of India v. Bibi Padmawati. In this case two life insurance policies were taken, one on September 8, 1944, and the other on November 12, 1944. The first policy elapses in March, 1947, and the second in May, 1947. The insured applied for revival of these polices in November, 1948, and they were received some time thereafter. The insured died in April, 1949. The question arose whether the policies could be avoided under the first part of section 45 or only under the second part. It is not clear from the judgment as to whether the dates on which the policies were taken related to the dates of the acceptance of the proposal, that is, the dates from which the risks on the life of the insured were covered or whether they represented the dates of the formal documents of policies. Even if those dates could be taken to be the dates of the formal documents of policies, it would always be subsequent to the date of the acceptance or the coverage of the risk. There was no repudiation till the death of the insured which occurred more than 2 years after the aforesaid dates. The question, therefore, as to when the policies can be said to have been effected within the meaning of section 45 of the Insurance Act was not for consideration in the said case.

19. Surajmull Nagoremull v. Triton Insurance Co. Ltd. was a case of marine insurance and under the Indian Stamp Act No. II of 1899, section 7 provided that no contract for sea-insurance shall be valid unless the same is expressed in a sea-policy. On the law then applicable to marine insurance, their Lordships held that no court can enforce as valid that which competent enactments have declared shall not be valid. This decision has thus no application.

20. Reliance was then placed on Mithoolal Nayak v. Life Insurance Corporation of India. In this case the document of policy was issued on March 13, 1945, and it was to come into effect from January 15, 1945. The claim was repudiated by the insurer by letter dated October 10. 1947, and from these facts it was expressed that the two years had expired from the date on which the policy was effected. It will be seen that the date of this repudiation by insurer is more than 2 years after March 13, 1945, when the policy was issued as well as 15th of January, 1945, when the policy came into effect. There is no decision in this case as to when the policy can be said to have been effected. This decision, therefore, is also of not much help in the present case.

21. It may be noted that in the instant case by its letter dated 30th July. 1956, the insurer conveyed to the insured that the proposal has been accepted. This letter further stated that until the first premium was paid an accepted as such by the company no liability attached to the company which reserves the right to cancel the acceptance. The first premium is paid on 3rd of August, 1956, at the Nagpur office and received by the Bombay office on 4th of August, 1956. Then there is a letter from the in user dated 4th August, 1956 (exhibit D-5) which is styled as interim policy receipt which acknowledges the payment of the first premium and it says that the acceptance of this premium places the company on the risk covered by the insurance. Both the terms and conditions of the acceptance letter have been compiled with. This has reference to the letter dated 30th July, 1956. This receipt also gives the policy No. as R-36348. It would thus be seen that the risk on the life of the insured has been covered as from 4th August, 1956, and it was irrespective of a formal document of policy. If after the date of the acceptance and before the issue of a formal document of policy, death of the insured had occurred, the insurer-company was certainly liable for the claim of insurance and it would have been no answer to say that a formal document of policy had not been issued by that time. This would, therefore, show that the policy, that is, the contract of insurance between the parties, has become effective since the date of the acceptance of the proposal from which date the risk is covered. It is in this sense that the words 'policy of life insurance effected' have been used in section 45 of the Insurance Act. Even the formal policy issued in this case also refers to the date August 4, 1956, from which the risk of insurance is covered. The policy further mentions the date of last payment as August 4, 1980, and the date of maturity as August 4, 1981. It further gives the same number of the policy as was given in the letter dated 4th August, 1956, which would show that the policy became effective or, in other words, the policy was effected on August 4, 1956. We have, therefore, no hesitation in holding that the policy must be taken to have been effected on August 4, 1956, under the original proposal for Rs. 40,000.

22. If that is taken to be the date on which the policy can be said to have been effected, then the repudiation of the claim which is by the defendant's letter dated August 13, 1958, is clearly beyond a period of two years from that date and the defendant-Corporation will have to establish the matters mentioned in the second part of section 45 of the Insurance Act. It is, however, contended by the defendant-Corporation that the policy if not taken to have been effected on October 22, 1956, must in any case be taken to have been effected on August 23, 1956, when the proposal to increase the insurance amount from Rs. 40,000 to Rs. 50,000 was finally accepted by the company. The contention is that the contract which was earlier entered into for a sum of Rs. 40,000 was substituted by a new contract for the amount of Rs. 50,000 and it was the new contract and it is the date of acceptance of such contract that must be taken into consideration. In other words, the defendant's case is that there has been a novation of contract and the latter contract has taken the place of the former contract. On this reasoning the repudiation is within two years of the policy or contract and, as such, the defendant could repudiate its liability only by showing under the first part of section 45 that the statements made in the proposal and in the related documents were inaccurate or incorrect or untrue without showing anything more.

23. In this connection, it has to be noted that the original proposal for Rs. 40,000 having been accepted latest by the 4th August, 1956, that contract was complete and all the necessary formalities that were required to be gone into while making the proposal and before its acceptance were gone into, that is, the insured had submitted duly filled in proposal forms, had submitted to the medical examination by the insurer's medical examiners, had given their personal statements before the medical examiners and were also medically examined and thereafter their proposals were accepted. This contract, therefore, was complete and was, at no time, expressly canceled. That contract had already become operative from the 4th of August, 1956. However, by letter dated August 9, 1956, the insured requested the insurer to increase the amount of insurance from Rs. 40,000 to Rs. 50,000. For this increase there were no fresh proposals, no fresh personal statements and no fresh medical examination. It was no the basis of the old proposals and the statements made along with them and the medical examination at that time that only on the payment of the difference in the first premium the insurance for the sum of Rs. 50,000 in lieu of Rs. 40,000 was accepted. Even though the amount was increased to Rs. 50,000 the risk was still covered for this whole amount as from 4th August, 1956, as was originally done in respect of the insurance for Rs. 40,000. That would be clear from the letter of the insurance company dated August 23, 1956, as well as the formal policy dated October 22, 1956. It cannot be said that this coverage for Rs. 10,000 more was altogether a new contract. It was simply a modification of the old contract without altering its material terms and without being inconsistent with the same. Such a contract, therefore, cannot be said to be a novation or new contract in substitution of the old contract so as to make the old contract absolutely ineffective and making effective only the new contract.

24. The Calcutta High Court in Juggilal Kamlapat v. N. V. International Credit-En-Handels has stated that mere alteration or modification of the terms of a contract do not amount to its recession. The court further stated that the modifications are read into and become part and parcel of the original contract and the original terms also continue to be part of the contract and are not rescinded and/or superseded except in so far as they are inconsistent with the modifications. Similar view has been taken in Vishram Arjun v. Irukulla Shankariah, in which while considering the terms of the original contract and the subsequent agreement, their Lordships stated that the subsequent agreement only related to some other terms and was no a self-contained agreement in relation to the original contract of sale and that the subsequent agreement did not constitute a novation but was substantially an agreement of remission. They further stated that in fact both these two agreements put together formed one complete subsisting contract. They observed that novation is a substitution of a contract and not a mere variation of some of its terms. They further observed that the new contract should rescind or extinguish the previous contract, and a new and independent agreement concerning the same mater as the previous agreement may be construed to discharge the former only if the terms of the latter are so inconsistent with those of the former that they cannot stand together. They further observed that in other words, a contract will be said to be rescinded by another between the same parties when the latter is inconsistent or renders impossible the performance of the former and if their legal effect is the same, though they differ in terms, even then it will be a mere ratification of the first and they must be construed together. In the instant case, there is nothing inconsistent between the first contract and the second agreement. No material terms have been altered. There is only a modification with respect to the amount of insurance, everything else remaining the same. In fact, there is no fresh proposal which is a foundation of a contract, nor any further statements or medical examination in respect of the subsequent agreement were there and it is on the basis of the first proposal itself that the increase in the amount is accepted. The second agreement for the increase in the amount must, therefore, be read into the original contract itself which was accepted on the 4th of August, 1956. In any case, the earlier contract which came into effect from August 4, 1956, was not rescinded or obliterated and remained effective as from the 4th August, 1956. Even with respect to the increased amount, the additional amount of theirs premium was paid on the 9th of August, 1956, and, as such, in any case, the policy for Rs. 50,000 would become effective from August 9, 1956, and even from that date, the repudiation is after the period of 2 years.

25. The learned counsel for the defendant-Corporation, however, contended that this new contract was wholly in substitution of the old one and this was the only effective contract which could be in force. For this purpose, strong reliance has been placed on the company's letter dated 20th August, 1956 (exhibit P-4), which mentions that it has been issued in lieu of acceptance letter dated July 30, 1956. From this it is sought to be inferred that the earlier acceptance dated July 30, 1956, has been canceled by this letter and the only acceptance is on 20th August, 1956. It has, however, to be noted that this has also a reference to the original proposal No. 39944, dated July 15, 1956, and it will be further clear from the letter dated 23rd August, 1956 (exhibit P-5), that it was only the original contract which was simply modified by increasing the amount of the insurance. This letter (exhibit P-5) refers to the same old proposal No. 39944 and the same policy No. 36348 and further states that the risk on the life of the insured has been covered with effect from August 4, 1956, which was also the date under the old contract. The contention, therefore, cannot be accepted that the policy became effective only from the 20th of August, 1956, and not from an earlier data. According to us, the policy became effective even with respect to the amount of Rs. 50,000 from the 4th August, 1956, and the repudiation by letter dated August 13, 1958, being after the period of two years from the date on which the policy has been effected, the matter will fall under the second part of section 45 of the Insurance Act. The insurance company will have to show that the statement made by the in user in the proposal and the other documents leading to the issue of the policy was not only inaccurate or false, but such statement was on a material matter and that the policyholder knew at the time of making it that the statement was false or that the insurer will have to show that the insured suppressed facts which it was material to disclose and that the policyholder know at the time of making it that it suppressed facts which it was material to disclose.

26. The policy in the instant case was a joint policy, that is, on the joint lives of the plaintiff and his wife, deceased Kamalabai. In such a joint policy, a false statement by any one of the joint proposer is sufficient to avoid the policy, as has been held in Vaman Ganesh v. Western India Life Assurance Company. It was pointed out in that case that the declaration made by the assured was false and there was a willful suppression of true facts. It was held that the case was one of joint and several liability, in which it was sufficient to defeat the claim on facts which make the policy of any one of the assured void and unenforceable. It was further held that the question of the appellant's own knowledge regarding the truth or otherwise of the statement made by the assured who was dead was not, therefore, material. It will, therefore, be enough if the defendant were to show that the insured made an inaccurate or false statement on a material matter and that it was fraudulently made and that he knew at the time of making it that the statement was false or that the policyholder suppressed facts which it was material to disclose and he know at the time of making it that he suppressed facts which it was material to disclose. It has, therefore, to be seen whether the defendant in this case succeeded in proving the aforesaid requirements of section 45 of the Insurance Act.

27. What constitutes 'a material fact' under section 45 of the Insurance Act has been considered in several decisions. What facts are material is a question of fact in each case. The Sind Judicial Commissioner's Court in Shivkumar Radhakrishindas v. North British and Mercantile Insurance Co. Ltd. has laid down a test which, to our mind, is a correct test that all such facts which would influence a reasonable man either to accept or to decline the risk or to stipulate for a higher premium would be material. The insurance companies have devised several forms. One of them is the proposal from, the other is the personal statement of the proposer which is recorded by a medical examiner on the basis of the answers given by the proposer to questions mentioned in the form and put by the medical examiner to the proposer. In is on the basis of these statements that the insurer consider the proposal and that forms the basis of the contract. In fact, in the forms it has been made specifically clear that the statements made by the proposer would be the basis of the contract. It is, therefore, of utmost importance that these statements made by the proposer must be true and there should not be suppression of any material fact. In the prescribed forms there are several questions which have a material bearing on the matter of acceptance of the proposal. On the basis of the truthfulness of those statements, the insurer may be persuaded to accept the proposal of the insured. If, however, the facts were otherwise, the in user might have declined to accept the proposal or would have agreed to accept the same in a modified from either for a lesser amount or for an extra premium. Some of the statements may not be as important as others. Some statements may not have the effect of influencing the judgment of the insurer while accepting the policy; whereas, the other statements may have an important bearing inasmuch as those statements would influence the decision of the insurer one way or the other. It is from this point of view that it has to be seen whether the insurer has shown that the insured has made inaccurate or false statements on material matters. If this is established, then it must be further shown that the policyholder must have known at the time of making the statement that it was false. The latter requirement could be inferred from the circumstances brought out on record. Similar would be the case regarding the suppression of facts which it was material to disclose.

28. In an insurance matter the age of the insured and the state of his health at the time of the proposal and prior to it are of prime importance because it is on the basis of this that the insurer may consider whether it should accept the proposal and if so, on what terms. It is with this view that he forms have been devised and detailed information as to the state of health of the insured at the date of the proposal and in the past is required with minute details. Not only that, but an obligation is also cast on the insured to inform the insurer if he is afflicted by any disease or ailment between the date of the proposal and the acceptance of the insurance. In the case of a woman, special care is taken as the insurance on the life of a woman is considered to be a hazard. A person suffering from serious disorder or having continued illness for prolonged periods may not be taken to be a sound case for insurance. It cannot, however, be said that no person should ever fall ill. Mostly, every person during his life span has some ailments or the other; some may be of minor type, others may be of major type. Minor ailments or ailments of a passing nature may not affect the life expectation of a person; whereas major illness in the life of a man or some dangerous ailments or serious disorders may affect the expectation of his life. A person who has suffered only from minor ailments or short or ordinary illnesses, may not be considered to be a rejectable case for insurance. The state of health, therefore, is not always a material fact, but may become a material fact if on that depends the decision of the insurer. A man may suffer from the ordinary passing ailments like cough and cold or ordinary fever for a short period, or a casual headache or bodily pain. That would not, however, affect the general health of the person and such a case could be favourably consider for insurance by the insurer. These, therefore, could not be called the material matters and if there is any suppression with respect to such minor ailments or an inaccurate or false statement on such matters, that would not necessarily vitiate the contract. We may refer for this purpose to the decisions in P. V. Janaki v. Kalliani Amma and Lakshmi Insurance Co. Ltd. v. Bibi Padmawati, which was affirmed by the Supreme court in Life Insurance Corporation of India v. Bibi Padmawati.

29. The above principles have been laid down by several decisions of the different High Courts and the Supreme Court and we may mention a few of them. They are : Keshav Seethamma v. Bombay Life Assurance Co. Ltd., V. K. Srinivasa Setty v. Premier Life and General Insurance Co. Ltd., Smt. Benarasi Debi v. New India Assurance Co. Ltd., Ratan Lal v. Metropolitan Insurance Co. Ltd., New India Assurance Co. Ltd. v. Tambireddi Subba Raghavareddi, Lakshmi Insurance Co. Ltd. v. Bibi Padmawati and Mithoolal Nayak v. Life Insurance Corporation of India. In the Supreme Court case, last mentioned, their Lordships have summarised the three conditions for the application of the second part of section 45 of the Insurance Act. They are : (a) the statement must be on a material matter or must suppress facts which it was material to disclose, (b) the suppression must be fraudulently made by the policyholder, and (c) the policyholder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose. We have, therefore, to see whether in the instant case these three conditions have been fulfilled.

30. The first repudiation of the claim by the insurance company is by the letter dated 13th August, 1958 (exhibit P-13), in which it has been stated that the correct information regarding the health of the deceased was withheld and that the answers given to the questions referred to therein were incorrect and false and the deceased also had not disclosed certain illnesses between the date of proposal and the date of acceptance and, therefore, the contract was avoided. These statements which were made the basis of this repudiation were in reply to questions Nos. 4(a), (d), 7(b), (c), (j), 10(a) and (b) in the personal statement signed by the deceased Kamalabai, at the time of her medical examination on July 24, 1956. It was also stated that the insured, Kamlabai, had before the date of the proposal suffered from eosinophilia with extreme dyspnoea an dilated heart as well as mitral stenosis for all of which she had taken treatment form medical men and in a hospital and that on X-ray of her chest was taken which showed enlarged heart. It was further stated in this letter that between the date of proposal and the date of issue of the acceptance letter, she had suffered from diarrhoea and dysentery with nausea vomits for which she had taken treatment from medical men but she did not disclose the same to the Indian Mercantile Insurance Company as she was bound to do in terms of the acceptance letter dated August 20, 1956. It is also stated that she had not intimated that during the aforesaid period a proposal to another insurance company on the joint lives of the plaintiff and his wife was accepted by that company for a reduced sum and not as proposed. In the aforesaid repudiation letter the concerned questions and answers to them have been reproduced. They are :

Question 4(a) : What has been your usual state of health

Ans. Good.

(d) Did you consult a medical practitioner within the last 5 years and for what complaints; if so, give particular

Ans. No.

7. Have you ever suffered from any of the following ailments. If so, for how long and with what results Ans.

(b) Persistent cough, asthma, pneumonia, pleurisy, spitting of blood, tuberculosis or any other affection of lungs Ans. No.

(c) Fainting attacks, paid in chest, breathlessness, palpitation or any disease of heart

Ans. No.

(j) any other illness within the last five years, requiring medical treatment for more than a week If so, state duration and treatment taken

Ans. No.

10. (a) Have you ever had an electro-cardiogram, X-ray or fluoroscopic examination made, or your blood examined If yes, give details

Ans. No.

(b) Have your ever been in any hospital, asylum, or sanatorium for check-up, observation, treatment or an operation If yes, give details

Ans. No.

31. These grounds of repudiation have been reiterated in the written statement field in the suit and a further ground was added that the answer to question No. 2 was also false to their knowledge. That question was with respect to the children dead and alive and it was contended that the proposer had withheld important information with respect to the children. The plaintiff stated that the answers that were given by the deceased, Kamlabai, to questions 4(a), (d), 7(b), (c), (j) and 10(a) and (b) were neither incorrect nor false. He has denied that Kamlabai had suffered from eosinophilia with extreme dyspnoea, dilated heart and mitral stenosis before the date of proposal or that she had taken treatment from medical men or in a hospital. He has denied that any X-ray of her chest was taken showing an enlarged heart. It is necessary now to go through the evidence on behalf of the defendant to see if it has succeeded in discharging the burden thrown on it by the second part of section 45 and if the defendant has discharged the burden, whether the plaintiff has satisfactorily rebutted the same. In order to prove that the insured made inaccurate and false statements on material facts, knowingly and fraudulently, and they knowingly and fraudulently suppressed material facts, the defendant has examined several witnesses in order to show that the deceased, Kamlabai, suffered from major ailments prior to the date of the proposal, for which she had taken treatment from medical men and in the hospital.

32. Dr. Mahadeo Yadeo Deo (D.W. 1) is a senior medical practitioner, practicing in Nagpur since 1947, before which he was working as a doctor in the Army. The plaintiff was known to him for about 6-7 years. He has treated the plaintiff's wife, Kamlabai, and their children in the year 1954. He also treated Kamalabai in October 1955. In 1957 also he had treated the plaintiff's children. He has deposed from his memory as well as with reference to his registers, receipt books and notes or the prescription paper. One Champalal Kala (D.W. 2) who was an inspector in the defendant Corporation was deputed to make enquiries by the Nagpur division office into this insurance case. In that enquiry he saw Dr. Deo who informed the said Champalal that he had treated the plaintiff's wife. On being requested. Dr. Deo had given notes from the prescription papers he had made for the plaintiff's wife, Kamlabai, and delivered to Champalal. Thereafter, those original prescriptions were lost and could not be produced by Dr. Deo. Exhibits D-22 and D-23 are the letters written by Dr. M. Y. Deo to the Zonal Manager, Life Insurance Corporation of India, Bombay, regarding the treatment given to Kamlabai. Exhibit D-21 dated August 9, 1957, is the note which had been prepared by Dr. Deo from the prescriptions for giving it to Champalal Kala. Exhibit D-24 contains entries from the out-patients' register for the year 1954-55 with respect to Mrs. Sheo Shankar Khamele, that is, the wife of the plaintiff. The note exhibit D-21 shows that the deceased, Kamlabai, wife of the plaintiff was treated by Dr. Deo, during the period December 30, 1954, to January 31, 1955, for toothache and fever. She was treated between February 11, 1955, to February 22, 1955, for eosinophilia of lungs with archaized blood and between October 28, 1955, and October 29, 1955, she was treated for eosinophilia with extreme dyspnoea and dilated heart. Some injections were also given to her.

33. An objection has been taken that the original prescriptions have not been filed and these are only notes from those prescriptions and are not admissible in evidence. Dr. Deo, however, has stated on oath that he had the original prescriptions with him. When Champalal Kala called on him, he showed those prescriptions to Champalal Kala and from those original prescriptions this note was prepared by him for giving it to Champalal Kala for the purpose of the defendant-company. He has also stated on oath that the original prescriptions were thereafter lost and were not traceable. A suggestion seems to be thrown out by this witness that perhaps his compounder who seems to be in plaintiff's service might have removed those original prescriptions. The fact of the loss has, however, been deposed to by Dr. Deo and there is no reason why he should be disbelieved on that point. It would be seen that even in the register, the diseases from which the deceased was suffering during those periods have been mentioned. The basis for the acceptance of the secondary evidence having been laid, the notes of Dr. Deo (exhibit D-21) would be admissible in evidence as secondary evidence and we do not think any exception can be taken to the admissibility of that evidence. This evidence shows that between February 11, 1955, to February 22, 1955, and on 28th and 29th of October, 1955, the deceased, Kamlabai, was suffering from a serious disorder and the nature of the ailment she was suffering from could not be said to be minor or negligible. Dyspnoea is breathlessness and is not a minor thing to be ignored. Dilated heart also is a serious disorder impairing the health of a person. If the deceased, Kamlabai, was suffering from these disorders prior to the date of proposal, then these being material matters, it was incumbent upon the insured to truly and correctly state the nature of these ailments and the fact of her having taken the treatment from the medical men and it was also incumbent on the in user to disclose these facts to the insurer.

34. The next witness is Champalal Kala (D.W. 2), who was deputed to make enquiries by the Nagpur division office of the defendant-Corporation in the matter of the claim of the plaintiff on the insurance policy in question. He had made enquiries with Dr. Deo, Dr. Sahu, Daga Memorial Hospital, Mahal Maternity Home, Dr. Gumastha, Dr. Kale and from other sources. The defendant has then examined Dr. Gajanan Sahu (D.W. 3), who is a senior medical practitioner at Nagpur and who had treated the plaintiff's wife from August 8, 1956, to March 31, 1957 (sic). The history-sheet of Kamlabai maintained by Dr. Sahu which is at exhibit D-30, would show that during that period she was being treated by him for nausea, vomits, diarrheas and dysentery and was given almost continues treatment upto September 1, 1956. In this prescription or the history sheet Dr. Sahu has noted that she has dysenteric stools about 20-25 and her pulse was very weak. But, the important thing that has been noted by Dr. Sahu which must have been on the information given by the plaintiff or his wife, Kamlabai, or by both, that the deceased, Kamlabai, had abortion of two months about 15 days back. This statement was of August 8, 1958. There was no reason for Dr. Sahu to state this fact in the prescription if it would not have been told either by the plaintiff or his wife or both of them and Dr. Sahu could not have any means of knowing about this matter except from the plaintiff or his wife. There is no reason why this statement in the aforesaid prescription should not be taken as correct. This would show that the deceased, Kamlabai, had conceived some time in the month of May, 1956, that is, by the time the proposal was made she had already conceived which is a material fact in the matter of insurance and such information is specifically required by the insurance company while insuring the life of a woman.

35. We have then the evidence of Vimlabai, wife of Atmaram Sohoni (D.W. 4) who was a matron in the Mahal maternity Home. She had produced the registers from her institution which showed that the deceased, Kamlabai was admitted in the maternity home of the purpose of delivery and she was attended to by Dr. Winker and Kamlabai had given a birth to a still-born child on December 9, 1952. In the usual course of business this maternity home maintains a register for women delivering child and when the expectant mother are admitted in the maternity home, they are required to give certain information as per the columns in the register and such information is taken down in the register. The entries in the register whose that this was the third delivery of Kamlabai and at that time she had one son living. The present delivery was abnormal and it was a still-birth. She left the hospital on December 17, 1952.

36. The next witness is Kusum Winker (D.W. 5) who conducted the delivery of Kamlabai, as per the entry in the register. Shriram Hari Tambe (D.W. 6) is an employee of the defendant-Corporation and pursuant to the instruction of the Divisional Manager, he had made enquiries from Dr. Deo, Dr. Sahu, Mahal Maternity Home, Dage Memorial Hospital and Dr. Gumasta. He made enquiries also from Dr. (Mrs.) Mudholkar, who was then the superintendent of that hospital and learnt from her that the deceased, Kamlabai, had been to that hospital for treatment, but her bed head ticket could not be found. Vishnu Bhagwan Atkar (D.W. 7) is an employee of the Daga Memorial Hospital. He was then a clerk while Dr. (Mrs.) Mudholkar was the Superintendent of the Daga Memorial Hospital. The defendant had produced a certified true copy of the entire in the register of indoor patient relating to the deceased, Kamlabai. Dr. (Mrs.) Mudholkar had also written letters to the Zonal Manager, Life Insurance Corporation, on March 19, 1958, and July 24, 1958, stating therein that Kamlabai Khamele was admitted in the hospital on October 29, 1955, and was discharged cured on December 6, 1955. She further states that Kamlabai was admitted for mitral stenosis. In the second letter, exhibit D-32, she states that a copy of the entries in the register in respect of patient, Kamlabai, has been enclosed. These letters have been proved by Vishun (D.W. 1) to be in the handwriting of Dr. (Mrs.) Mudholkar, who was then in Bombay.

37. Objection has been taken to the admissibility of these documents. It is urged that these documents have not been properly proved as Dr. (Mrs.) Mudholkar who has sent these letters and who is living, has not been examined to prove her signatures on those documents. It is true that she has not been examined. She was at the time when the letters were written in Government service and had written these letters as such public servant. Only for the purpose of just proving her signatures on these documents to summon her for giving evidence at Nagpur would have been a waste of time and money and Vishnu (D.W. 7) who must have had several opportunities of seeing the signatures of Dr. (Mrs.) Mudholkar and must have seen her sign was a competent witness to prove her signatures and letters. The entry in the register is also said to be not proved. The register is maintained in the regular course of business in the Hospital which is a public hospital. The registers are required to be maintained by the rules and regulations of the medical department and if the entries are made in the registers in the regular course, they could be admissible in evidence. A certified true copy of the entry from the said register would also be admissible without any proof. It appears that when these documents were being admitted, no objection was taken on behalf of the plaintiff as to their admissibility. When these documents were tendered in evidence objections ought to have been raised at that time and it is now too late at this stage to raise any objections to the admissibility of the said documents. They were admitted on record and exhibited by the trial court. They cannot be challenged now this stage. The documents themselves are not inherently inadmissible. The defect may be only in the mode of proof of those documents. If objection to the mode of proof is not taken at the proper time, such objection cannot be taken at a later stage. In Gopal Das v. Sri Thakurji their Lordships have observed :

'Where the objection to be taken is not that the document is in itself inadmissible but that the mode of proof put forward is irregular or insufficient, it is essential that the objection should be taken at the trial before the document is marked as an exhibit and admitted to the record. A party cannot lie by until the case comes before a court of appeal and then complain for the first time of the mode of proof.'

38. In view of this, there is not force in the contention of the learned counsel for the appellant that these documents, exhibits D-31 and D-32, from the register should not have been admitted on record. Even so, the contention is raised that the entry in the said register has not been connected with the plaintiff's wife, Kamlabai. It is contended that in the register the name has been shown as Kamlabai without the husband's name or the surname and her age is shown as 25 and the address is given as in from of the Itwari Post Office. The ages are not very accurately recorded in these registers and many a time it is only an estimate of the person making the entry. However, the address which has been given tallies with the address of the deceased, Kamlabai Khamele, the plaintiff's wife. it will be found that at many places in the correspondence the plaintiff has given this address. Besides, the letter of Dr. (Mrs.) Mudholkar (exhibit D-31) date 19th March, 1958, shows that it was kamalbai Khamele who was admitted in he hospital on October 29, 1955, and was treated till December 6, 1955, for mitral stenosis.

39. Besides this, there is the evidence of the plaintiff's own witness, Dr. Kale (P.W. 2) which without doubt connects the deceased, Kamlabai Khamele, with the entry in the Daga Memorial Hospital. Dr. Kale had treated Kamalabai during her last illness from 2nd of September, 1956, to 7th of September, 1956. Naturally, when a patient comes for treatment the doctor would ask about any prior illnesses and the treatment that is taken and it appears in that enquiry the plaintiff and Kamlabai told him that she had been treated in the Daga Memorial Hospital for some ailment. This is what he states in his cross-examination in paragraph 2 of his deposition :

'During my treatment to Kamlabai in September, 1956, she and the plaintiff on being questioned by me had told me that Kamlabai was treated in Daga Memorial Hospital, Nagpur for heart disease before that, Mitral stenosis is a kind of heart disease.'

40. He further stated that he had treated the plaintiff's wife, Kamlabai, for malaria from May 20, 1956, to May 24, 1956. He also found during his treatment that Kamlabai's heart was weak. This would clearly show that the deceased, Kamlabai Khamele, did take treatment in the Daga Memorial Hospital for mitral stenosis which is kind of heart disease and which is a serious disease and not a minor one. Dr. Kale could not have any means to know about this unless he was told by the plaintiff and his wife. There is no reason to disbelieve the evidence of Dr. Kale on that point.

41. The defendant has also examined Ratanlal Motilal Bhatia (D.W. 8) who was a clerk in Ruby General Insurance Company in the year 1956. He proved the letters, exhibits P-25, P-26 and D-33. Exhibit D-33 is a letter of 9th June, 1956, from the Ruby General Insurance Company which informs the branch office, Nagpur, that it would consider the proposal of Mr. Khamele, that is, the plaintiff, for a maximum sum assured of Rs. 10,000. It is reasonable to assume that the purport of this letter must have been communicated to the plaintiff by the branch office, Nagpur, soon after it was received by it. The plaintiff has stated that the he came to know about this reduced offer only on August 5, 1956, through the agent of he divisional office of the Ruby General Insurance Company and not before that. The plaintiff has not shown how he came to know about this counter offers only on the 5th or 6th August, 1956, and not before. We are not prepared to accept that the plaintiff had not learnt about the reduced offer by the Ruby General Insurance Company before the 4th of August, 1956. We feel that the plaintiff must have come to know about this even prior to the making of the proposal to the Indian Mercantile Insurance Company and it is because of the disinclination of the Ruby General Insurance Company that the plaintiff sought insurance with the Indian Mercantile Company. If that is so, then the plaintiff and the deceased, Kamlabai, ought to have disclosed this fact in the proposal or the personal statement made to the Indian Mercantile Insurance Company while insuring their joint lives.

42. We may also refer to the personal statements made by the plaintiff and his wife at the time of the proposal with the Ruby General Insurance Company. In exhibit P-25 the insured gave out that at that time they had two living children aged 2 years and 8 months, respectively; two were dead, one died in 1953 of small pox at the age of one month after ailing for a month and the other died in 1954 of infantile cirrhosis liver at the age of 9 months after ailing for 3 months. In this statement no mention has been made of the still-born child in the year 1952. Similar statement is to be found in exhibit P-26, exhibits P-32 and P-32. In the statements before the Indian Mercantile Insurance Company, however, Kamlabai has given only two living children aged 2 years and one year and has not said anything about the dead children. She has stated her usual state of health to be good, though it appears from the evidence already discussed that the was suffering from eosinophilia, dyspnoea, dilated heart and mitral stenosis and other diseases. The insured denied that she suffered either from asthma, breathlessness or any disease of heart or any other illnesses within the last five years requiring medical treatment. The also denied that she had ever been in any hospital for treatment. In reply to question No. 13(c) she has only stated that she had only two conceptions and both of them have gone full time.

43. From the discussion of this evidence, the following facts emerge :

(a) the deceased, Kamlabai, had conceived not less that 6 times. At the time of making the proposal she had two children living, two had died and one was still-born and she had conceived at the date of making of the proposal and, subsequently, there was an abortion of 2 months.

(b) She had always been ailing and was taking medical treatment of Dr. Deo, Dr. Sahu and in the hospitals, such as Daga Memorial Hospital.

(c) At least two of her deliveries were not normal, that is, the still born delivery and the abortion.

(d) The deceased has taken treatment of Dr. Deo for eosinophilia and asthma and at that time she was also having extreme breathlessness pointing to either serious type of eosinophilia or asthma or some cardiac heart trouble.

(e) She had also a heart disease for which she was admitted in the Daga Memorial Hospital and was treated there for about one month and a quarter. She was treated there for mitral stenosis.

(f) She was treated by Dr. Deo only for two days during which time she was suffering from dyspnoea and either eosinophilia or asthma and was thereafter admitted to the Daga Memorial Hospital which shows that the disease from which she was suffering was not an ordinary one but required careful treatment in a hospital.

(g) From the fact that Dr. Deo did not continue the treatment and she was immediately thereafter admitted to the Daga Memorial Hospital where she was treated for a month and a quarter must have made her aware that she was suffering from a serious disorder. She must have also been aware that she was suffering from some heart disease giving rise to breathlessness.

44. Now all these facts which have been established in the evidence of the defendant were material facts which it was necessary for the insured to state correctly and truly in the proposal or in the personal statement and to disclose them fully in those documents. The plaintiff and the deceased must have had full knowledge about the number of conceptions the deceased had. They must have had knowledge about the children born to them and how many were lying and how many were dead. They must have also knowledge about the birth of a still-born child and the abortion. Since the deceased, Kamalabai, was taking treatment from one doctor to another and had also got her X-rayed, though the X-ray photograph has not been produced, they must have inquired and come to know about the real ailment of Kamlabai. In any case, the plaintiff must have known about the ailment of Kamlabai. In any case, the plaintiff must have known about the ailment for which Kamlabai was being treated from place to place. The plaintiff and the deceased had knowledge that during the period of 5 years prior to the date of proposal Kamlabai was being medically attended to by medical practitioner. These were the matters within the knowledge of the insured and related to the material facts. It was for them to have disclosed these facts in the statements they made in the documents leading to the policy when there were specific questions relating to the matter and they had only to answer the questions correctly. Instead of disclosing all these matters, the plaintiff and the deceased suppressed these facts at the time of the proposal and thereafter and denied about any illness or about any medical treatment, etc., and with respect to children even made false statements, which were false to their knowledge. In fact, at the earlier proposal they gave one information while at the proposal in question they gave a different information. These facts, therefore, would show that the plaintiff and his wife, the insured, made either false statements on material matters or suppressed facts which it was material to disclose. They also knew at the time of making of this statement that it was false and/or that they were suppressing facts which it was material to disclose. It is reasonable to draw an inference that the insured must have done this with a view to get their proposal accepted by the Indian Mercantile Insurance Company. Otherwise there is no reason why the statement made in the forms supplied to the Ruby General Insurance Company and the Indian Mercantile Insurance Company should materially differ. A reasonable inference, therefore, can be drawn that such a false statement or the suppression of the material facts was fraudulently made by the policyholders in order to gain an unfair advantage. The defendant has, therefore, shown from the evidence on record, both oral and documentary as well as the attending circumstances, that the plaintiff and his wife made false statements on material matters and suppressed facts which it was material to disclose. The defendant has also shown that the plaintiff and his wife must have known at the time of making the statements that they were false or that they suppressed facts which it was material to disclose. The defendant has also shown that the suppression was fraudulently made by the plaintiff and his wife.

45. From all the evidence and the circumstances it will not be unreasonable to infer that seeing that Kamlabai was suffering from the serious disorders and keeping indifferent health throughout and expectation of her life was not much, the plaintiff was making frantic efforts to get an insurance for an exorbitant amount so that on her death he would get a fabulous amount on payment of a comparably small sum. It appears that the plaintiff must not have had much hope of the survival of his wife for a sufficiently long time. It is with that view that he first wanted to insure their joint lives for an amount of Rs. 30,000 with Ruby General Insurance Company and if we accept the case of the plaintiff that he was not aware of the counter-offer of the Ruby General Insurance Company for a reduced sum of Rs. 10,000 which he ultimately refused, then this insurance with the Indian Mercantile Insurance Company for Rs. 50,000 would have taken the total insurance to Rs. 80,000. The total yearly premium on these two policies would have been near about Rs. 4,450, that is, about Rs. 375 per month which certainly the plaintiff could not be in a position to pay as in exhibit P-17 he has stated that his monthly income was Rs. 400 to Rs. 450. This was in reply to the letter of the Ruby General Insurance Company dated 17th May, 1956, and the reply was on 19th May, 1956. Even assuming that the present policy would be the only policy, even then the monthly premium would come to about Rs. 180 per month.

46. The plaintiff has examined himself and Dr. Kale who has in fact supported the case of the defendant. The plaintiff in his evidence has simply denied about the alleged ailments and treatment of Kamlabai. He denied that Kamlabai had ever any abortion which stands falsified by the evidence of Dr. Sahu. He admits that Kamlabai had given birth to a still-born female child which admittedly was not shown at the time of the proposal. Even in this deposition he contradicts the statement which was made in the proposal to the Ruby General Insurance Company with respect to the birth of children. He has also stated in his evidence that Kamalbai had conceived only three times which cannot be correct as shown already. He had even denied that Kamlabai was ever treated by Dr. Deo which statement appears to us to be false and incorrect. From the evidence of Dr. Deo and the documents he has produced, it is quite apparent that Kamlabai was being treated by Dr. Deo from time to time. The plaintiff, therefore, has not been able to rebut the evidence which has been given on behalf of the defendant. We, therefore, accept the evidence tendered on behalf of the defendant and hold that the plaintiff and his wife had deliberately suppressed material facts which they ought to have disclosed and of which they had knowledge and that they have made inaccurate and false statements knowing that they were false and such statements were made by them fraudulently with a view to have their proposals accepted. On this evidence, we hold that the contract of insurance entered into with the Indian Mercantile Insurance Company is vitiated and not binding on the defendant. The policy in suit on which the plaintiff bases his claim is, therefore, void and the plaintiff is not entitled to make any claim on the basis of the aforesaid policy. The plaintiff, therefore, was not entitled to any decree whatsoever. The plaintiff suit, therefore, was rightly dismissed by the trial court. We see no reason to interfere with the decision of the trial court.

47. Accordingly, the appeal fails and is dismissed with costs.

48. Appeal dismissed.


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