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Life Insurance Corporation of India Vs. Smt. Manjula Mohanlal Joshi - Court Judgment

LegalCrystal Citation
SubjectInsurance;Contract
CourtOrissa High Court
Decided On
Case NumberF.A. No. 89 of 1968
Judge
Reported inAIR1975Ori116
ActsInsurance Act, 1938 - Sections 45; Contract Act, 1872 - Sections 19
AppellantLife Insurance Corporation of India
RespondentSmt. Manjula Mohanlal Joshi
Appellant AdvocateR.C. Patnaik, Adv.
Respondent AdvocateM.M. Sahu, Adv.
DispositionAppeal dismissed
Cases ReferredLife Insurance Corporation v. B. Chandravathamma
Excerpt:
.....repudiated the contract of insurance on the ground that the assured had made inaccurate and false statements in the proposal as well as in the personal statement on the basis of which the insurance policy was effected. 2. the defendant appellant resisted the suit on the ground that the policy holder made inaccurate and false statements in the proposal as well as in the personal statement dated 19-11-1966 and also suppressed material facts regarding his bodily condition from the insurer. the trial court held that the defendant failed to establish that the assured had given false and inaccurate statement in his personal statement which was attached to the proposal, and accordingly, concluded that the repudiation of the claim by the defendant was unjustified, and decreed the suit. at..........repudiated the contract of insurance on the ground that the assured had made inaccurate and false statements in the proposal as well as in the personal statement on the basis of which the insurance policy was effected. thereupon, the plaintiff filed the suit out of which this appeal arises for recovery of a sum of rs. 17,800/- pursuant to the various terms of the policy of insurance, details of which have been set out in the plaint which are unnecessary to be reproduced here in view of the point canvassed in this appeal.2. the defendant appellant resisted the suit on the ground that the policy holder made inaccurate and false statements in the proposal as well as in the personal statement dated 19-11-1966 and also suppressed material facts regarding his bodily condition from the.....
Judgment:

S.K. Ray, J.

1. This is an insurer-defendant's appeal from the decree passed in a suit instituted in forma pauperis bythe wife of the assured consequent upon the death of the assured, her husband, on whose life a multipurpose insurance policy No. 10527576 had been effected on 23-12-1961, for recovery of a sum of Rs. 17,800/- in terms of that policy. The assured died of cerebral tumour, pulmonary oedema in S. C. B. Medical College on 4-8-1962. Thereupon, the- plaintiff informed the defendant about the death of her husband by letter dated 12-8-1962 and enclosed all the relevant documents with it.

The defendant repudiated the contract of insurance on the ground that the assured had made inaccurate and false statements in the proposal as well as in the personal statement on the basis of which the insurance policy was effected. Thereupon, the plaintiff filed the suit out of which this appeal arises for recovery of a sum of Rs. 17,800/- pursuant to the various terms of the policy of insurance, details of which have been set out in the plaint which are unnecessary to be reproduced here in view of the point canvassed in this appeal.

2. The defendant appellant resisted the suit on the ground that the policy holder made inaccurate and false statements in the proposal as well as in the personal statement dated 19-11-1966 and also suppressed material facts regarding his bodily condition from the insurer. The suppression to which the defendant refers is the concealment of the fact by the assured that he was suffering from hydrocele when the proposal for insurance was made.

3. The parties examined one witness each and exhibited certain documents in substantiation of their respective cases. The trial Court held that the defendant failed to establish that the assured had given false and inaccurate statement in his personal statement which was attached to the proposal, and accordingly, concluded that the repudiation of the claim by the defendant was unjustified, and decreed the suit.

4. The only contention raised by Mr. Patnaik on behalf of the appellant is that the defendant is entitled to repudiate the contract of insurance in question on the ground of the assured having made a false statement of fact in his personal statement that he had no hydrocele, which amounts to fraudulent suppression of a material fact within the meaning of Section 45 of the Insurance Act. 1938 (hereinafter referred to as the Act).

5. It is now necessary to set out some admitted facts. The policy of insurance was for a sum of Rs. 5,000/- effected on the life of the assured on 23-12-1961 (Exhibit 6) This policy was to mature on 23-12-1981, the date of lastpayment of premium being 23-12-1980. The proposal for this policy and the accompanying personal statement of the assured were both sent on 19-11-1961, which are respectively Exhibits 8 and 9. The confidential medical examination report is of the same date and has been exhibited as Exhibit 10. The doctor who submitted this report is the doctor of the Insurance Company. The proposal was duly accepted on 23-11-1961, and policy was issued on that very day. The assured was operated upon for hydrocele by D. W. 1 on 11-2-1962 in a private hospital known as Netaji Seba Sadan where D. W. 1, who is a retired Civil Surgeon, was working as an honorary doctor. According to this witness the assured was operated upon for bilateral hvdrocele. The assured was admitted into S. C. B. Medical College Hospital on 30-7-1962 and died on 4-8-1962 at 4.35 a.m. Ex. 7 is the death certificate which indicates the cause of death to be cerebral tumour, pulmonary oedema. Then after some correspondence between the assured's wife and the insurer, the latter repudiated the death claim by Exhibit 2 dated 21-10-1963.

The relevant portion of Ex. 2 is extracted hereinbelow:--

'The claim under the above policy, we would inform you, has been repudiated by us and the fact of the repudiation has also been intimated to your client Smt. Manjula Mohanlal Joshi the widow of the above deceased, also the nominee under the above policy, at her Saurashtra address and also to her Cuttack address as recorded with us.

A copy of our registered letter dated 15/18-10-1963 issued to your client repudiating her claim under the aforesaid policy is herewith enclosed.'

The letter dated 15/18th October, 1963 runs as follows:--

'xx xx xx xxWith reference to the above, from information and evidence obtained after the death of the deceased assured, it appears that the statements made by him in Proposal and personal statement both dated 19-11-1961 in respect of the above policy which formed the basis of the policy and led to the issue of the policy were inaccurate and/or false. The assured also suppressed facts, the truthful disclosure of which was obligatory upon him.

The claim is, therefore, repudiatedand written off our books which pleasenote.XX xx xx xx'

6. Section 45 of the Act runs asfollows:--

'45 Policy not to be called in question on ground of misstatement after two years No policy of life insurance effect-ed 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 policy holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose :XX XX XX XX

(Proviso is not extracted as it is unnecessary)

This section provides that a policy of insurance, after coming into force of the Act, as is the case here, can be called in question, after expiry of two years from the date on which it was effected, on the ground that false or inaccurate statement made in the proposal for insurance or any other document leading to the issue of the policy (which would include a personal statement) was on a material matter or that the assured suppressed facts which it was material to disclose, and that such statement or suppression was fraudulently made and that the assured knew at the time of making such a false or inaccurate statement that it was false and also knew at the time of suppressing a material fact that it was material to disclose the same. It does not expressly provide for repudiation of a policy of insurance on any such ground before the expiry of two years from the date the policy is effected, though it might be contended that impliedly it indicates that a policy of insurance can be repudiated on those specific grounds indicated in the section or on any other ground which may otherwise be available under any law for the time being in force or under general law of contract.

Since the policy was repudiated on 15-10-1963, within two years of the same being effected on 23-12-1961, the second part of Section 45 of the Act is inapplicable. I am, therefore, faced with the task of examining the legal position whether the policy of insurance can be otherwise repudiated as a result of inaccurate statements made by the assured in the proposal or in the personal statement, under the general law of contract.

7. The general law of contract, it seems to me, would govern the situationnow emerging after holding that Section 45 of the Act is inapplicable. Before adverting to the general law it is appropriate to determine the relevant issues of fact from the evidence led by the parties. The first question to consider is whether the fact that the assured had hydrocele on the date of proposal had been suppressed or deliberately omitted from the personal statement as also from the proposal (Exhibits 9 and 8). Exhibit 8 is not very material, as it is not the defendant's case that any statement made therein was false. Much stress is laid upon the reply given to the question contained in column 7, Clause (f) of the personal statement (Exhibit 9). Column 7. Clause (f) refers to the question as to whether the assured was suffering from hydrocele and the reply is in the negative. It is said that this statement is false and that it relates to a material fact.

In proof of falsity of the statement reliance is placed by the defendant on the evidence of D. W, 1 who has stated that he operated upon the assured in Seba Sadan Hospital on 11-6-1962 and that he had bilateral hydrocele of five years duration. In corroboration of this statement, the witness refers to Ex. B which is the copy of the bed head ticket of the assured at Netaji Seba Sadan Hospital. But he admits that the entry (Exhibit B) is not in his hand and was made by Dr. Bose who has not been examined. He further admits that the entries in Exhibit B were not also made to his dictation and that besides the case sheet shown to him he has no independent memory. He is forced to admit that he cannot say when this case sheet was written and also cannot say exactly the size of the hvdrocele of the assured operated upon by him. Relying upon this evidence of D. W. 1 it is impossible to say that the assured was suffering from hydrocele on the date when the proposal was made or personal statement was recorded. Mr. Patnaik next relies upon the entry in Exhibit B which runs as follows :--

'Hydrocele both sides, he cannot exactly say how long he has got it, but approximately for the last five years as he says. He said he got a trauma on his right testicle by a cricket ball one month back.'

This document was admitted 'without objection on admission' Mr. Patnaik, therefore, contends that the contents of Exhibit B cannot be challenged by cross-examination or otherwise. In this connection he places reliance on the decision in the case of Lionel Edwards Ltd. v. State of West Bengal, AIR 1967 Cal 191. The relevant passage in this decision runs as follows:--

'Documents are either proved by witnesses or marked on admission. When it is marked on admission without reservation, the contents are not only evidence but are 'taken as admitted,' the result being the contents cannot be challenged either by way of cross-examination or otherwise. In respect of documents marked on admission dispensing with formal proof, the contents are evidence, although the partv admitting does not therebv accept the truth of the contents and is free to challenge the contents by way of cross-examination or otherwise.'

Exhibit B having been marked on admission without reservation, the contents of such document are not only evidence but must also be taken to have been admitted. The consequence is that the contents of that document cannot be challenged. In view of this legal position, it must be taken that Dr. Bose made the entries in Exhibit B and that he recorded the statement of the assured that he was suffering from hvdrocele for the last five years and that he got a trauma on his right testicle one month back. Accepting that the assured told Dr. Bose that he had hydrocele for the last about five years, it is not the proof of the fact that he had hvdrocele on the date of the proposal. At best it would indicate his opinion that he had hvdrocele which is nothing more than a lay-man's opinion. The duration of the hydrocele is also a guess work on the part of the assured.

Similarly it must be remembered that Dr. Bose himself did not care to record his expert opinion as to its duration. As against this, the plaintiff has exhibited the confidential report of the medical examiner of the assured (Exhibit 10). This is a contemporaneous document of Exhibit 9. The doctor who examined the assured was the doctor of the insurer. This document was admitted without objection. It is a report of the doctor of the defendant made in confidence and secrecy. According to him who must be presumed to have examined the assured, the latter had no hydrocele on that day. Exhibit 10 being the confidential report submitted by the medical examiner of the defendant will have to be accepted as true as ordinary presumption is that he submitted the report only after a thorough and careful examination of the assured in accordance with the questionnaire unless it is shown by the defendant that the medical examiner submitted a false report (vide the Life Insurance Corporation v. B. Chandravathamma, AIR 1971 Andh Pra 41).

On failure of the defendant in examining the doctor who made the report (Exhibit 10) or the Agent who submitted the proposal. Exhibit 10 must take precedence over Exhibit B and the only necessary conclusion in this state of evidence would be that the assured had no hydrocele on 19-11-1961 when he made his personal statement. Even if it be held that he had hydrocele on the date when he made his personal statement, that in my opinion, cannot be treated as a statement en a material fact. A matter is to be regarded as material when it has some relation with the longevity of the assured. No doctor has been examined to say that the condition of hydrocele would impair the longevity of a person. In the instant case, however, there is no evidence of what size it was. In the circumstances, I cannot accept that the existence of the hydrocele was a material matter. There is also no evidence that the assured who was an illiterate person was aware that he was suffering from hydrocele. On the contrary the evidence discloses that he was of the view that it was a trauma or an ordinary swelling, his testical having been hit by cricket ball. It cannot be said that the assured was guilty of suppression of a material fact or guilty of making a false statement knowing it to be false or suppressed it knowing it that it was a material fact which required disclosure.

When the charge against the assured is that he suppressed a fact or failed to disclose a fact in his personal statement, which was obviously filled up by the agent of the Insurer, it was essential that the insurer should have examined the agent who recorded the personal statement (Exhibit 9) to prove that the questions were explained to him and he understood them and the implication thereof and then gave his answers. In the case of the Life Insurance Corporation v. B. Chandravathamma, AIR 1971 Andh Pra 41 (supra) it has been said that:--

'Where there was no evidence that the questionnaire which was in English was fully explained to and was understood by the insured who was a layman it could not be held that there was fraudulent concealment or suppression of a material fact which was within his knowledge viz., that he was suffering from ......'

To the same effect is the decision in the case of AIR 1959 Pat 540. Viewed from this angle also, it cannot be said that it has been established in this case that the assured made a false statement.

8. Conceding that the statement was a false statement, the contract is voidable contract, which means that it is voidable at the option of the party whose consent was caused by any fraudulent suppression of fact. Section 19 of the Contract Act provides:--

'When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract, whose consent was caused by fraud or misrepresentation, may if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representation made had been true.

Exception:-- If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of Section 17, the contract nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.'

'Fraud' has been defined in Section 17 of the Contract Act as meaning and including any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:--

'(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;XX XX XX'

(other parts of the section need not be extracted as they are not relevant).

The exception to this section provides cases which are excluded from the mischief of Section 19 read with Section 17 of the Indian Contract Act. If the insurer whose consent was go caused had the means of discovering the truth with ordinary diligence that the assured had hydrocele, the contract would be binding despite the fraud committed by the assured. In this connexion the evidence is that the defendant had his own medical officer who examined the assured and submitted his confidential report. There is no evidence that the medical officer gave a false report having been gained over by the assured and, as such the Exception fully operates in this case. Therefore even though the assured concealed the fact of having a hydrocele or made a false statement of that fact in his personal statement, nevertheless the contract cannot be avoided by the defendant on account of the operation of the Exception to Section 19 of the Contract Act. In my opinion, even under the general law of contract, the policy of life insurance cannot be called in question by the defendant.

9. In my opinion, the decision of the Court below is correct. The appeal, accordingly fails and is dismissed with costs. Appeal dismissed with costs.


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