(1) The Life Insurance Corporation of India (Unit: The Oriental Government Security Life Assurance Co., Ltd, Bombay) hereinafter called the Company is the appellant in this appeal. The respondent, Srimathi Parvathavardhini Ammal, is the widow of one V. S. N. C. Narasimhan Chettiar, (hereinafter referred to as the assured or V. S. N. C.), has filed the suit O. S. No. 62 of 1958 on the file of the sub-Court, Tiruchirapalli to recover a sum of Rs. 20,000 due under an insurance policy No. 1733287 dated 22-5-1954 and a sum of Rs. 30,000 due under another insurance policy No. 1855372 dated 26-3-1955 on the ground that the said policies were accepted at the ordinary rate by the Insurance company certifying the life of V. S. N. C. Aforesaid as a first class one by four eminent doctors of the company, that the plaintiff (respondent) was the nominee under the aforesaid two policies, that the said assured died on 20-5-1955, on account of coronary thrombosis which attack set in on 17-5-1955, and that the Insurance company had wrongfully repudiated the claim of the plaintiff on 26-11-1957.
(2) The three grounds on which the plaintiff's claim was resisted by the company were (1) that V. S. N. C., the assured was suffering from high blood pressure and diabetes with high percentage of sugar and albumen in his urine, and that he did not disclose the same to the company at the time when the two policies were made by him; (2) that V. S. N. C. did not disclose to the company that he made a proposal in 1929 for insurance to the branch of the Oriental Insurance Co. at Tiruchirapalli and that it was accepted with an extra amount, but that it did not materialise for that reason and (3) that the correct ages of the parents of V. S. N. C. at the time of their deaths were not given by him, when the proposals for the suit policies were made, but that he deliberately and fraudulently gave incorrect and false dates. As the policies were repudiated after the expiry of two years from the date of which they were effected, under S. 45 of the Insurance Act, the burden of proving that the policies were vitiated by any fraudulent suppression of material facts was rightly placed upon the company.
(3) The learned Subordinate Judge, in a very carefully considered judgment fully analysed the oral and documentary evidence adduced on both sides and came to the conclusion that the defendant company not only had not discharged the burden but that the plaintiff had satisfactorily proved that V. S. N. C. the deceased was not guilty of any fraudulent misrepresentation or suppression of material and important facts when he made the proposals for insurance which were accepted by the company. We have ourselves carefully scrutinised the evidence, both oral and documentary, bearing upon the three relevant aspects mentioned above, and we are glad to say that the learned Subordinate Judge's perspective of approach and his assessment or the oral and documentary evidence are quite sound and satisfactory. We have no hesitation in accepting, completely, his reasoning and conclusions. As we will presently show this is one of those cases in which not only the defendant company has totally failed to discharge the burden arising under S. 45 of the Insurance Act, but the plaintiff has positively proved that the policy was not vitiated by any of the circumstances mentioned in S. 45 of the Act.
(4) We shall first take up the question as to whether the assured was suffering from diabetes and high blood pressure, with sugar and albumen in urine and whether he fraudulently suppressed this important information when he made the proposal for insurance.
(After discussing the evidence of the defendants, the learned Judge found as follows):--
Thus, it is crystal clear, that the company has decided to repudiate the policies only because the assured died within a short time after the policies were effected and that the company would not make any one of its employees responsible for the averments in the written statement and tender him for cross examination. In our opinion, this unsavoury feature of the case powerfully reacts against the defendant in the matter of its discharge of its burden arising under S. 45 of the Insurance Act.
(The learned Judge discussed the evidence adduced on the side of the plaintiff and came to the following conclusion):
To sum up therefore, we are clearly of the opinion that there is acceptable satisfactory proof on the plaintiff's side that V. S. N. C. did not suffer from blood pressure or diabetes or from any other serious ailment.
(5) We then pass on to the next point
'Whether the policies were vitiated by the alleged ground that the assured did not disclose to the company that he made a proposal in 1929 for insurance to the branch of the Oriental Insurance Co., at Tiruchirapalli, that it was accepted with an extra amount, but that it did not materialise for that reason'.
The learned Judge has discussed the evidence touching this aspect of the matter in great detail in paras 34 to 6 of his judgment. We are satisfied that the perspective approach of the learned Subordinate Judge is correct and that the defendant has not discharged the burden.
(After discussing the evidence on this point the learned Judge gave the following finding):--
For all the reasons, we are of the opinion that there is no substance in this point of alleged infructuous proposal of insurance in the year 1929.
(6) We now pass on to the last point, i.e., the assured did not give the correct ages of his parents at the time of their deaths when the proposals for policies in question were made. Here too we are clearly of the opinion that the defendant has not discharged the burden.
(His Lordship discussed the evidence on this point and gave the following finding):--
To sum up, therefore, the defendant has not laid the proper foundation for their plea by proving that the ages mentioned in Ex. B 45 are the correct ages. Under those circumstances, it is futile for the defendants to charge the assured with having given any false or incorrect answers. On this portion of the case too, we accept the reasonings and findings of the learned Judge and hold that the policies were not vitiated for this alleged false or incorrect representation.
(7) Even though some other points were raised in the lower court, learned counsel for the appellant raised only the above three points and did not advance any serious arguments and we have dealt with the three aspects which were stressed by learned counsel.
(8) In view of the findings of the fact which we have arrived at, it is not really necessary to consider in great detail the case-law regarding the duty of disclosure on the part of the assured and the scope of the presumption under S. 45 of the Insurance Act and how it should be discharged by the company. We may first refer to the following observations of a Bench of this Court in Kulla Ammal v. Oriental Life Assurance Co. Ltd., : AIR1954Mad636 as regards the perspective of approach in such cases:
'A legal principle or theory, if pushed to extreme logical conclusion may, more often than not, result in grave injustice as in the present case, if not absurdity. It is true that hard cases must not be allowed to make bad law. But on the contrary, good law should not be permitted, by misapplication to be pushed to such literal and technical extremes, as in the defence of the presentation, to degenerate into mechanical machinery which results in injustice without regard to the human background, facts, and circumstances. Judicial resource in the direction of achieving justice should be quite equal to the task of minimising, if not eliminating, hard cases, which at first blush appear to be necessitated by settled law, called good under which, if too many hard cases cannot be avoided, there should then result a radical change in the law.'
It is true that special features are attached to a contract of insurance and these contracts are uberrima fide resting upon a complete and truthful disclosure of all the facts by the insured. In such contracts the principle of caveat emptor has absolutely no application. Non-disclosure of material factor would go to the root of the matter it being regarded as fatal to the validity of the contract. Under S 45 of the Insurance Act, as amended in 1941, the Legislature has eliminated the nice distinction of English Common law with regard to the doctrine of warranty. The insurer under the Indian Law, as amended, has no right to avoid the contract by merely making out some inaccuracy or falsity in the respect of some of the recitals or items in the proposal for insurance, or even in the report of the Medical Officer or any other document connected with the contract of insurance. Under the section, it is imperative that to avoid the contract the insurer must prove that material facts have been suppressed and that either the suppression of material facts or the fraudulent representation of material facts occurred with the full knowledge of the assured. Under the two years rule proof of material and deliberate fraud is necessary and not mere constructive fraud.
(9) Reference may be made in the connection to a Bench decision of the Punjab High Court in Lakshmi Insurance Co. v. Bibi Padma Wati, which contains an elaborate discussion of the legal position and the relevant case law both English and Indian. The scope of S. 45 came up for detailed consideration before a Bench of the Andhra Pradesh High Court in New India Assurance Co. Ltd. v. T. S. Raghava Reddi, : AIR1961AP295 . It was held that under S. 45, the policy cannot be avoided on the ground of mis-statements or untrue answers unless the insurers establish (a) that the statements were inaccurate or false; (b) that such statements were on material factors or that material facts were suppressed and not disclosed, and (c) that the assured knew at the time of making those statements that they were false to his knowledge or knew that these facts were material to disclose and deliberately suppressed. It was pointed out that all these conditions should be concurrently satisfied under S. 45. The principle of this decision would apply to this case with regard to the defendant's plea on the question of the proposal of the year 1929 and the correct ages of the parents of the insured at the time of their death. The doctors examined on the side of the plaintiff have given evidence that the longevity of the parents of the assured has no relevance to the question of the insurance effected by V. S. N. C. There is no rebutting evidence. The company has failed to establish (a) that it was a misstatement of material facts and (b) the insured was aware of the true age and deliberately gave false ages.
(10) There is a useful discussion of the scope of S. 45 to the same effect in a Bench decision of the Assam High Court in New India Assurance Co. Ltd. v. Sulochana, AIR 1962 Ass 65. There also it has been pointed out that S. 45 of the Act has materially modified the Common Law when the policy is sought to be challenged on account of mis-statements or suppression of material facts after the expiry of two years. This decision has also held that S. 45 has to a great extent mitigated the rigours of the rule that any misrepresentation within the ambit of the Warranty covered by the terms of the insurance policy would be sufficient to successfully challenge the policy.
(11) Reference may also be made to the discussion of the legal principles in All India General Insurance Co. Ltd. v. S. P. Maheswari, : AIR1960Mad484 a recent Bench judgment, to which one of us was a party for the statement of the law regarding the scope of S. 45 and the measure of the burden of proof cast upon the assured. In that case the assured took a policy on 2-1-1948 and died on 13-6-1948 within the two years period and the question arose as to how far the failure of the assured to disclose that the assured was addicted to drinking habits and was having syphilis could entitle the Insurance Company to repudiate the policy. On the facts the learned Judge took the view that there was a fraudulent and deliberate suppression of material facts and there was no question of the applicability of the rule of special burden embodied in S. 45.
(12) In a recent judgment of the Supreme Court in Mithoolal v. Life Insurance Corporation of India, : AIR1962SC814 the scope of S. 45 was considered. In that case, the repudiation took place after two years had expired from the date on which the policy was effected. But on the facts it was held that the assured had fraudulently suppressed the facts that he had certain serious ailments such as anaemia, shortness of breath etc. The Supreme Court pointed out that in order to apply S. 45 three conditions must be satisfied: (a) the statement of the assured must be of a material fact or must have suppressed facts which it was material to disclose; (b) the suppression must be fraudulently made by the policy holder, and (c) the policy holder must have known at the time of making the statement that it was false for that he suppressed facts which it was material to disclose. It is unnecessary to refer to the other cases on the point.
(13) Judge from any test we are clearly of the opinion that the defendant has totally failed to discharge any of the conditions aforesaid and the heavy burden laid upon it.
(14) Before parting with this case, we would like to make an observation, The business of life insurance has been nationalised and in the matter of its business activities, the Life Insurance Corporation has a great responsibility to the public. Whenever claims are repudiated and disputes come to courts of law the Life Insurance Corporation should not put up fight on the pattern of ordinary litigants. But it must be on a higher plane, so as to inspire confidence in the public that claims are not resisted on frivolous pleas and reckless allegations. All the relevant materials gathered by the Corporation in the course of its investigation of a particular claim should be placed before the Court to enable it to adjudge the truth. There should be a frank and full disclosure of all the material evidence and no attempt should be made to suppress or withhold the same.
(15) It is familiar knowledge that decisions of courts relating to insurance claims acquire great publicity in the area out of which the claims or such disputes arise and a big scare will be created in the minds of the public, if impression gains ground that claims are resisted without a careful scrutiny of a proper investigation of facts to support the defence. Doctors of the company who certify to the good health of the assured and responsible branch managers of the Corporation under whose supervision the policies are effected must be examined so that the Courts can have the assistance of their evidence while determining the truth. In cases where the defence raise a case of fraud and conspiracy between the assured and the employees of the company, in fairness the Corporation should, in the first instance, take immediate and suitable action against these employees so as to satisfy themselves that there has been a fraud or conspiracy. Fair play and public interests alike demand that the Corporation should not retain such dishonest employees in its service (without taking action against them) but at the same time repudiate the claims under the policy by reason of fraud or conspiracy on the part of such employees.
(16) In this case we cannot exonerate the Corporation for its omission to examine Mr. Bhat, Madura Branch Secretary or Manager (who is still in service) who had played a prominent part in the effecting of the policy. We cannot equally exonerate the Corporation for its omission to examine the employees of the company who gathered the materials in the stage of investigation and gave instructions for the preparation of the written statement.
(17) For all these reason we dismiss the appeal with costs.
(18) Appeal dismissed.