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A.P. Venkatachalam Vs. Life Insurance Corporation of India, by Its Divisional Manager - Court Judgment

LegalCrystal Citation
SubjectInsurance;Civil
CourtChennai High Court
Decided On
Reported in(1986)1MLJ59
AppellantA.P. Venkatachalam
RespondentLife Insurance Corporation of India, by Its Divisional Manager
Cases ReferredKalyani Aehi v. Life Insurance Corporation of India Ltd.
Excerpt:
- - the life assured had failed to disclose the same in the proposal as well as in the personal statement. she died on 1.2.1973 owing to chronic renal failure with congestive cardiac failure. the plaintiff, who is an agent of the life insurance corporation, is well aware of the health conditions of the life assured, who is none other than his wife. therefore, the suit in its entirety has to fail. rajagopalan, learned counsel for the appellant, contends that the learned subordinate judge erred in holding that the assured failed to disclose material particulars which vitiate the contract of insurance and his reasons therefor are erroneous and unsustainable. it is further contended on behalf of the appellant that the learned subordinate judge failed to see that there is no proper.....1. the plaintiff in o.s. no. 364 of 1974 on the file of the court of the learned principal subordinate judge, erode, is the appellant herein. the suit was filed for recovery of rs. 22,812/-with subsequent interest and costs.2. the case of the plaintiff, as stated in the plaint, is as follows:- the plaintiff is the husband of late nachiammal. nachiammal had taken out two life insurance policies under policy nos. 12034935 and 44550825. the former was for rs. 10,000/-and the latter was for rs. 20,000/-. the insured nachiammal died on 1.2.1973 suddenly at vellore, where she had gone to her son's house, and where she was a partner in a business under the name and style of 'srinivasa textiles'. on 7.3.73 the plaintiff, who was the nominee in both the above insurance policies, applied to the.....
Judgment:

1. The plaintiff in O.S. No. 364 of 1974 on the file of the Court of the learned Principal Subordinate Judge, Erode, is the appellant herein. The suit was filed for recovery of Rs. 22,812/-with subsequent interest and costs.

2. The case of the plaintiff, as stated in the plaint, is as follows:- The plaintiff is the husband of late Nachiammal. Nachiammal had taken out two life insurance policies under Policy Nos. 12034935 and 44550825. The former was for Rs. 10,000/-and the latter was for Rs. 20,000/-. The insured Nachiammal died on 1.2.1973 suddenly at Vellore, where she had gone to her son's house, and where she was a partner in a business under the name and style of 'Srinivasa Textiles'. On 7.3.73 the plaintiff, who was the nominee in both the above insurance policies, applied to the defendant for payment of the amount due under them. The plaintiff had also enclosed the original policies, death certificate, and filed the claim after observing all the formalities. The defendant accepted the claim made in regard to the Policy No. 12034935 and issued a cheque towards the amount due under that policy. The defendant has thus impliedly accepted that everything was in order. Later on, inspite of repeated reminders, the defendant was not honouring its commitment towards Policy No. 4450825. Finally on 26.2.1974 the defendant received a reply repudiating the plaintiff's claim for payment of the amount due under the above policy. Nachiammal was of sound health and regular habits. She was quite hale and healthy at the time of insuring her life. She was also tested by a competent and authorised Doctor on behalf of the defendant. The medical examination and the report of the doctor would reveal that the deceased was of sound health and was not suffering from any malady. The deceased had also signed in the declaration form as enjoined and there was no material of non-disclosure of any kind. The deceased was not afflicted with any disease of a serious nature, the non-disclosure of which would have been a material one. The policy No. 44550825 was taken on 12.2.1970. The premium payable was Rs. 506.90 per half year. The deceased had paid six premiums. The deceased had gone to Vellore to her son's house. She suddenly developed sickness and died inspite of treatment at Christian Mission Medical College Hospital at Vellore. The death was sudden and unexpected. Since the deceased had paid premium for three years, her share and the profit will not be less than Rs. 1,000/-. All the reasons urged in the communication dated 26.2.1974 received from the defendant are baseless. The deceased was not susceptible to any ailment which was not normal or likely to occur to any person. She was not guilty of any material of non-disclosure in the declaration form. There was no mis-statement made in the declaration form. The repudiation by the defendant is totally unjustified. The policy was taken nearly three years before the death of the deceased. The defendant has no right to repudiate the policy. To the notice issued by the plaintiff through his lawyer demanding payment of the amount due under the policy together with the earned bonus, the defendant repudiated its liability by quoting a letter dated 26.2.1974. The plaintiff estimates the profit at Rs. 1,000/- and is making a claim for that amount also. He is entitled to interest on the sum of Rs. 21,000/- from the date of death of Nachiammal. Under law and in equity the plaintiff is entitled to interest at 6 per cent per annum on Rs. 21,000/- from 1.2.1973.

3. In the written statement the defendant Life Insurance Corporation of India raised the following contentions:- The defendant repudiated the claim under the suit policy for justifiable, legal and proper reasons. The life assured was not of sound health either at the time of the proposal or some years prior thereto. As soon as the claim was made by the plaintiff, the defendant made discreet enquiries and the investigation revealed that the deceased had, one year before the date of the proposal, suffered from hypertension and reduction in urine output and was also hospitalised. The deceased had fraudulently withheld and suppressed material information regarding her health at the time of effecting the assurance to the defendant. The allegation that the life assured was not afflicted with any disease of a serious nature is false. She had deliberately concealed and furnished false and incorrect answers in the personal statements signed by her - the deceased assured on 24.11.1969 ax the time of her medical examination and personal statement dated 30.1.1970. The deceased had made deliberately fraudulent misstatement and had withheld fraudulently material information from the defendant regarding her health at the time of effecting the assurance, and hence in terms of the policy contract and declarations contained in the form of proposal for assurance, personal statement, the defendant repudiated the claim, and accordingly is not liable for the payment under the above policy, and all the monies that have been paid in consequence thereof belong to the defendant. Prior to the proposal the life assured had taken treatment for hypertension and reduction in the urine output as an out-patient, and later on, as an inpatient from a hospital. The life assured had failed to disclose the same in the proposal as well as in the personal statement. She died on 1.2.1973 owing to chronic renal failure with congestive cardiac failure. The allegations that the deceased went to Vellore to her son's house wherein, she suddenly developed sickness is false. The death does not appear to have been sudden and unexpected. The plaintiff has fraudulently omitted to state the date on which the deceased went to her son's house at Vellore. The allegations in paragraph 9 of the plaint are false, and the assured had given deliberately false answers in the personal statement signed by her and to the questions put to her by the doctor. As the ailment from which the deceased was suffering was a major, ailment, she was bound to disclose the same. The Insurance Contract has therefore become void and the plaintiff cannot claim anything thereunder. The plaintiff is entitled to neither the sum assured, nor the profit of Rs. 1,000/- claimed. The defendant had repudiated the claim on proper and legal grounds. The plaintiff is not, in any event, entitled to claim interest. The plaintiff, who is an agent of the Life Insurance Corporation, is well aware of the health conditions of the life assured, who is none other than his wife. The policy was completed by the plaintiff in his agency. In the agency confidential report dated 28.11.1969 the plaintiff had deliberately given false answers as to the general state of health of the life assured. Without prejudice to what has been stated above, the defendant states that had the policy not been vitiated for reasons stated therein, an amount of Rs. 21,056/- will become payable (sum assured Rs. 20,000/- plus vested bonus Rs. 704/- plus interim bonus Rs. 352/-total Rs. 21,056/-). Therefore, the suit has to be dismissed.

4. On the above pleadings, the following issues were framed by the trial Court:

(1) Whether the plaintiff's wife fraudulently suppressed material facts as alleged in the written statement?

(2) Whether the plaintiff's wife Committed fraud as claimed by the defendant?

(3) To what relief is the plaintiff entitiled?

5. Inasmuch as the defendant has also raised the plea that the plaintiff will not be entitled to interest, the trial Court framed the following additional issue:

Whether the plaintiff is entitled to interest, if so, at what rate and from what date?

The plaintiff A.P. Venkatachalam examined himself as P.W.1. Ex.A-1 dated 1.2.1973, death register extract of Nachiammal, Ex.A-2 dated 7.3.1973 acknowledgment by the defendant to the plaintiff for receipt of policy, documents etc. Ex.A-3 dated 16.3.1973 letter from the defendant to the plaintiff admitting claim under policy No. 12034935, Ex.A-4 dated 22.2.74 reply issued by the defendant to the plaintiff regarding claim under policy No. 4450825, Ex.A-5 dated 27.4.1974 copy of notice issued by the plaintiff's Counsel to the defendant, Ex.A-6 dated 30.4.1974 postal acknowledgment signed by the defendant, and Ex.A-7 dated 4.5.1974 reply issued by the defendant to Ex.A-6 were filed on behalf of the plaintiff. On behalf of the defendant, D.W. 1 Dr. C.H. Sivaraman, D.W.2 Simon and D.W.3 Ramachandran were examined. Ex.B-1 dated 21.8.1973 cer.tificate of hospital for treatment of V. Nachiammal in C.S.I. Hospital, Erode, Ex.B-2 dated 18.4.1969 O.P. record sheet of Nachiammal in C.S.I. Hospital, Erode, Ex.B-3 dated 24.11.1969 application of Nachiammal for insuring her life; Ex.B-4 dated 24.11.69 personal statement of Nachiammal, Ex.B-5 dated 30.1.1970 personal statement regarding the health of V. Nachammal, Ex.B-6 Life Insurance Policy No. 4450825 of Nachiammal, Ex.B-7 dated 6.9.1977 letter by C.S.I. Hospital, Erode to the Branch Manager, L.I.C. of India, Erode, Ex.B-8 dated 24.11.1969 confidential report of medical examiner of V. Nachiammal, and Ex. B-9 dated 28.11.1969 agent's confidential report of V. Nachiammal were filed on behalf of the defendant.

6. Under issues Nos. (1) and (2), the trial Court found that the plaintiff's wife fraudulently suppressed material facts, as alleged in the written statement, and that the plaintiff's wife committed fraud, as claimed by the defendant. Under additional issue, the trial Court found that the plaintiff will not be entitled to the claim under the the insurance policy itself and as such the plaintiff will not be entitled to interest. Under Issue No. 0), the trial Court found that the plaintiff cannot get back the premiums paid by the assured. Therefore, the suit in its entirety has to fail. In the result, the suit was dismissed with costs of the defendant.

7. Aggrieved by the above decision of the trial Court, the plaintiff has preferred the present appeal.

8. On behalf of the appellant, Mr. T.R. Rajagopalan, learned Counsel for the appellant, contends that the learned Subordinate Judge erred in holding that the assured failed to disclose material particulars which vitiate the contract of insurance and his reasons therefor are erroneous and unsustainable. It is further contended on behalf of the appellant that the learned Subordinate Judge failed to see that there is no proper diagnosis regarding the illness when the assured took the policy. Further there is no evidence on the side of the defendant to show that the doctor attending on the assured communicated to the assured that she was suffering from particular illness or the assured herself knew she was suffering from illness. It is further contended on behalf of the appellant that unless the insurer establishes that the assured was aware of her illness and had made a misstatement or misrepresentation the contract cannot be vitiated. It is also contended on behalf of the appellant by the learned Counsel that the learned Subordinate Judge erred in rejecting the report of the doctor Ex.B-8 and the Court ought to have accepted the confidential report of the doctor. Unless the defendant establishes that its doctor who submitted the report Ex.B-8 was negligent or was a party to the suppress sion of material facts, the Court, ought to rely upon Ex.B-8 and grant a decree to the plaintiff.

9. The learned Counsel for the appellant also relied on the provision of Section 45 of the Insurance Act, (4 of 1938), and the decisions in Mithoolal v. Life Insurance Corporation of India : AIR1962SC814 , V. Subramaniam v. L.I.C. Coimbatore (1974) T.L.N.J. 295 Kalyani Achi v. Life Insurance Corporation of India Ltd. (1966) 79 L.W. 662, L.I.C. of India v. Janaki Ammal : AIR1968Mad324 L.I.C. of India v. Shakuntala Bai : AIR1975AP68 Daulat Ram v. Bharat Ins. Co. A.I.R. 1973 Del. 180 and Kamala Wanti v. L.I.C. of India A.I.R. 1981 All. 367 in support of his contentions.

10. Mr. Damodara Rao, learned Counsel for the defendant-respondent herein contends that the decision arrived at by the learned Principal Subordinate Judge in the suit is correct. The learned Counsel for the respondent also refers to the decisions in Krishna Wanti v. L.I.C. of India A.I.R. 1975 Del. 19 L.I.C. of India v. Canara Bank A.I.R. 1974 Mys. 51 and V. Srinivasa Pillai v. L.I.C. of India : AIR1977Mad381 , in support of his contentions.

11. Under the circumstances, the following points arise for determination:

(i) Whether the plaintiff-appellant's wife fraudulently suppressed material facts, as alleged in the written statement; and

(ii) Whether the plaintiff-appellant's wife committed fraud as claimed by the defendant-respondent herein?

Points Nos. (i) and (ii):

12. The plaintiff-appellant herein is the husband of Nachiammal. Nachiammal took out two life insurance policies from the defendant for the sums of Rs. 10,000/-and Rs. 20,000/- respectively. She died on 1.2.1973. Her husband, the plaintiff-appellant herein, is the nominee under the policies. He made a claim for these amounts with bonus. The defendant Insurance Corporation paid one of the policy amounts (for Rs. 10,000/-). The defendant repudiated the claim made on the other policy for Rs. 20,000/-. The plaintiff has therefore instituted the suit for the recovery of a sum of Rs. 20,000/-and also a sum of Rs. 1,000/- towards bonus, and in all Rs. 21,000/- with interest thereon at 6% per annum from 1.2.1973, the date of, death of his wife.

13. The case of the defendant is that the life assured was guilty of fraudulent mis-statements, and that she had fraudulently withheld material information from the defendant regarding her health, when she entered into this contract with the defendant. According to the defendant, she had deliberately concealed material facts and furnished false and incorrect answers in the personal statements signed by her on 24.11.1969 and on 30.1.1970. The defendant claims that prior to the proposal the life assured had taken treatment for hyper-tension and reduction in urine output as an out-patient and also as an in-patient from a hospital, but, had failed to disclose the same in the proposal as well as in the personal statements. The defendant claims that she died on 1.2.1973 owing to chronic renal failure with congestive cardiac failure. The defendant contends that the life assured was suffering from major ailment, which she was bound to disclose, but, had given deliberately and fraudulently false answers in the personal statement signed by her and also the question put to her by the doctor. The defendant therefore contends that the life assured was guilty of fraudulent non-disclosure of material particulars, which vitiated the contract and had rendered it void, and therefore, the repudiation by the defendant is justified, legal and proper and therefore, the plaintiff is not entitled to claim the amount under the policy.

14. In these circumstances, we will have to find cut whether the deceased Nachiammal fraudulently suppressed material facts which she was bound to disclose, and knew at the time of making the statement that the suppressed facts are material facts, which ought to have been disclosed to the defendant at the time of entering into the contract of insurance.

15. It is contended by Mr. T.R. Rajagopalan, learned Counsel for the plaintiff-appellant herein, that inasmuch as the deceased Nachiammal died two years after taking out the policy, it will not be sufficient for the defendant Life Insurance Corporation merely to show that the statements made by the life assured at the time of effecting the insurance were false or incorrect in certain particulars, but, the defendant will have to show that such statements were on a material matter or the insured suppressed facts which it was material to disclose, that the statements were fraudulently made by the policy-holder, and that the policy-holder knew at the time of making it that the statements were false, or that she had suppressed facts which it was material to disclose. Section 45 of the Insurance Act, 1938 (Act 4 of 1938) reads as follows:

45. Policy not to be called in question on ground of mis-statement after two years: 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 statement was false or that it suppressed facts which it was material to disclose:Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.

16. Mr. T.R. Rajagopalan, learned Counsel for the plaintiff-appellant refers to the decision in Mithoolal v. Life Insurance Corpn. of India : AIR1962SC814 for the following proposition:

The three conditions of the application of the second part of Section 45 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 policy holder and

(c) the policy holder 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.

It was held in the said decision as follows:.The principle underlying the Explanation to Section 19 of the Contract Act is that a false representation, whether fraudulent or innocent, is irrelevant if it has not induced the party to whom it is made to act upon it by entering into a contract. That principle did not apply in the instant case. The terms of the policy make it clear that the averments made as to the state of health of the insured in the proposal form and the personal statement were the basis of the contract between the parties and the circumstance that the policy holder had taken pains to falsify or conceal that he had been treated for a serious ailment by a physician only a few months before the policy was taken showed that the falsification or concealment had an important bearing in obtaining the other party's consent. A man who has so acted cannot afterwards turn round and say, 'It could have made no difference if you had known the truth.' In the circumstances no advantage could be taken of the Explanation to Section 19 of the Contract Act.

17. The learned Counsel for the appellant refers to the following observation in the decision in V. Subramaniam v. L.I.C. Coimbatore (1974) T.L.N.J. 295, in support of his contention:

Regarding the suppression of material facts the defendant's case was that the wife got herself admitted in a hospital for treatment of bronchitis which was not brought to the notice of the corporation. On a consideration of the entire evidence, the Court is satisfied that there is hardly any material to support the conclusion of the L.I.C. that the plaintiff or his wife suppressed any material information regarding the health of the wife or the fact of her having been admitted in the hospital. A few days before her alleged admission in the hospital, she was given a good chit by the L.I.C. doctors, followed two years later by two doctors of the L.I.C. who stated that the wife's life was first class. There is hardly any material from which the Court can infer that the wife suffered from a serious lung complaint in 1956. L.I.C. has completely failed in its plea that there was any material suppression of fact which would justify the repudiating the policies. The L.I.C. has a panel of qualified doctors and there is no reason why the medical certificate granted and the confidential report made by them should not be normally accepted by the Courts. It is the duty of the L.I.C. to take the stand if their doctors were either negligent or were party to the suppression of material facts regarding the conditions of health of the proposer, it is its duty to take a definite stand to that effect and seek to prove it and should not be content with mere suggestions at the Bar. In this case the L.I.C. did not take the necessary precaution to conduct the necessary investigation on the health of the proposer.

18. The decision in Kalyani Achi v. Life Insurance Corpn. of India Ltd. (1966) 79 L.W. 662, is relied on by the learned Counsel for the appellant for the following proposition:-

First of all there must be satisfactory proof that the assured was suffering from the ailments which means there must be proof of a proper diagnosis. There must also be further proof that the doctor had communicated to the assured that he was suffering from particular diseases or the assured himself knew that he was suffering from those ailments. It is only if such knowledge is made out that the question of a failure to disclose at all would arise.

19. The learned Counsel for the appellant refers to the decision in L.I.C. of India v. Janaki Ammal (1968) 81 L.W. 54 : A.LR. 1968 Mad. 324, for the following proposition:

A policy can be called in question within a period of two years from the date on which it was effected on the ground that any statement leading to the issue of the policy was inaccurate or false, but if the policy is questioned after a period of two years, the insurer can repudiate that policy only if he shows that such a statement was on a material matter or the insured suppressed fact 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.

An insurer could avoid a contract of insurance after the expiry of period of two years mentioned in Section 45 of the Act only on the ground of suppression of illness, which affects the expectation of life of the insured and not mere temporary or trivial illness and unless the disease he was suffering from is clearly established and it is also established that that disease would have a material bearing on the insurability of the policy-holder, the policy cannot be invalidated.

20. The decision in L.I.C. of India v. Shakuntala Bai : AIR1975AP68 is referred to by the learned Counsel for the appellant for the following proposition:

An insurer seeking to repudiate a policy within two years of its commencement on the ground of misstatement by the insured must prove that he acted fairly by explaining properly the implications of the declarations to be signed by the insured and the amplitude of the questions required to be answered and in the absence of such proof the omission by the insured to refer to a casual indigestion and the name of the doctor who gave medicine on that occasion held could not render as untruthful the insured's statement that he had not suffered from any illness and had not consulted any medical practitioner within the last five years so as to justify repudiation of the policy by the insurer.

21. The decision in Daulat Ram v. Bharan Ins. Co. A.I.R. 1973 Del. 180, is relied on by the learned Counsel for the appellant for the following propositions:

It is not every false statement or suppression that ipso facto enables the insurer to avoid the policy when it is repudiated after two years from the date of the insurance contract. Insurance must establish the conditions laid down in Section 45 to avoid payment under the policy. A statement concerning the illiteracy of the insured or her observing of the purdah cannot be considered to be a material circumstance within Section 45 having a bearing on insurance policy.

22. The learned Counsel for the appellant refers to the decision in Kamala Wanti v. L.I.C. of India : AIR1981All366 . In the said decision, the insured person, aged about 56 years and a resident of Kanpur City, had died of heart failure within two years of taking the insurance policy. He was alleged to have been suffering from carbuncle and diabetes. However he failed to disclose about the said diseases in his personal statement at the time of proposal for insurance policy. The insurance corporation accepted the personal statement and issued the policy. The officer who accepted the proposal for insurance was not examined to show that had he known the facts which had come to the knowledge of the Corporation after the death of the deceased he would have declined to accept the proposals. The alleged family doctor of the deceased who deposed in favour of the Corporation, failed to give information about the family of the deceased when asked in cross-examination. It was held, in the circumstances, that-

It could not be said that there was any misrepresentation of any fact, real or imaginary. The Life Insurance Corporation insured the life of the deceased who had already reached the age of 56 years, and it must be deemed to have accepted the risks which must normally go with the selling of insurance to persons of that age. Therefore it could not be said that the consent of the Life Insurance Corporation to the contract of insurance was caused by any such misrepresentation as to make the contract voidable at the option of the Corporation. Since the fact that a life of a person aged above 55 years residing in a large city could not be insured, was not brought to the notice of the insured person by agent/officer of Corporation, the insured person could not be accused of misrepresentation. Insurance Corporation would be liable to pay the amount payable on the policy of the deceased.

23. The above decisions are referred to by the learned Counsel for the appellant in support of his contention that the deceased Nachiammal was not guilty of fraudulent non-disclosure of material particulars, and as such, the contract of insurance is not vitiated. It is contended on behalf of the appellant that inasmuch as Nachiammal had died two years after taking out the policy, it will not be sufficient for the respondent Life Insurance Corporation merely to show that the statements made by Nachiammal at the time of effecting the insurance were false or incorrect in certain particulars, but, the respondent Life Insurance Corporation will have to show that such statements were on a material matter or the insured suppressed facts which it was material to disclose, that the statements were fraudulently made by the policy-holder, and that the policy-holder knew at the time of making it that the statements were false, or that she had suppressed facts which it was material to disclose.

24. Mr. G.K. Damodara Row, learned Counsel for the respondent Life Insurance Corporation, refers to the decision in Krishna Wanti v. L.I.C. of India A.I.R. 1975 Del. 19, in support of his contention that the deceased Nachiammal suppressed the fact relating to her health and treatment given to her at C.S.I. Hospital, Erode, which was material to be disclosed. In the said decision referred to, the deceased knowing that he had suffered from a heart disease had stated in the proposal that he did not suffer from any heart ailment. Held that this was a statement on a material matter and that he had fraudulently suppressed the fact which was material to be disclosed and the insured knew the statements to be false when he made them. It was further held in the said decision that the fact that the insured was examined by three1 doctors of the Insurance Corporation and that they deposed that in their opinion the deceased was fit to be insured at the time of their examinations did not advance the case of the plaintiff-claimant. The Corporation did not know that there was a fraudulent suppression of facts and the material statements made by the insured in the proposal were the basis on which the policy was issued. The Corporation was therefore entitled to avoid the claim on the policy on the grounds available to the insurers under Section 45 of the Insurance Act, 1938.

25. The learned Counsel for the respondent refers to the decision in L.I.C. of India v. Canara Bank A.I.R. 1974 Mys. 51, /for the following proposition:

The materiality of a fact depends on the surrounding circumstances, and also on the nature of information sought by the insurer. It is not open to an insured to decide for himself as to which fact is material and which is not.

Where the assured was hospitalised for over a month, two biopsy examinations were done involving removal of tissues by a minor operation and there was 'X' ray therapy for a week, any reasonable man would think that there might be something seriously wrong with him, although the assured himself may not have had a clear idea of the disease he might be suffering from. In such a case the questions and personal statements in the proposals of policy assume considerable importance and the assured is expected to answer them truthfully and in good faith.

26. The decision in V. Srinivasa Pillai v. L.I.C. of India : AIR1977Mad381 , is referred to by the learned Counsel for the respondent for the following proposition:

it is normal to expect in a contract of insurance utmost good faith, that is, the insured is expected to answer various queries and takes upon himself the responsibility to give true and faithful information about himself and naturally he must be prompt and honest in answering such questions and making such disclosures. If the insured has knowledge of a fact which others cannot ordinarily have, then he should not indulge himself in suppressio veri or suggestio falsi by making a suggestion which is false or suppressing a matter which is true.

27. In the instant case before us, the burden of proof relating to the case of suppression of material facts by the deceased is upon the defendant-respondent Life Insurance Corporation of India. The defendant has placed certain documents and also examined D.W. 1, D.W.2 and D.W.3 to support its contention.

28. After hearing both sides in this appeal, on behalf of the defendant-respondent herein, C.M.P. No. 12644 of 1984 has been filed under Order 41, Rule 27 and Section 151 of the Code of Civil Procedure for permitting the respondent-petitioner to file the documents, namely,

(1) Letter dated 20.2.1974 addressed to the Medical Superintendent, Church of South India Hospital, Erode, sent by registered post by L.I.C.

(2) Letter dated 23.8.1973 sent by Branch Manager, Erode, addressed to. Divisional Manager, Coimbatore.

(3) Letter dated 23.8.1973 by the Branch Manager to the Medical Superiatendent, C.S.I. Hospital, Erode and

(4) Letter dated 22.8.1973 from the Medical Superintendent, C.S.I. Hospital, Erode, addressed to Branch Manager, L.I.C., Erode.

as additional evidence in the appeal. Mr. G.K. Damodar Row, learned Counsel for the respondent submits that these documents now produced will go to show that the original of Ex.B-1 which is now said to be not traceable by the hospital authorities was a document of truth and that. Dr. Sivaraman (D.W.1) had occasion to treat the deceased Nachiammal in the relevant years mentioned in Ex.B-1 for renal failure and hypertension. Mr. T.R. Rajagopalan, learned Counsel for the appellant, contends that the requirement of Order 41, Rule 27 of the Code of Civil Procedure are not satisfied in the instant case so as to admit these documents at this stage, and that during trial, when the respondent-Insurance Corporation had ample opportunity to file these documents, it had not chosen to do so. In other words, Mr. T.R. Rajagopalan, learned Counsel for the appellant, vehemently contends that at this belated stage these documents cannot be admitted in evidence.

29. After careful consideration of the respective contentions, we are of the opinion that at this belated stage the documents now sought to be introduced as additional evidence cannot be admitted. So C.M.P. No. 12644 of 1984 filed by the respondent under Order 41, Rule 27 of the Code of Civil Procedure is dismissed.

30. D.W. 1 Dr. Sivaraman was the consulting physician in the Church of South India Hospital at Erode, from June 1968 to March 1977. He deposed that he had examined the assured Nachiammal on 11.7.1968, and that she was admitted as an in-patient in the hospital on 30.10.68. D.W. 1 further deposed that the deceased Nachiammal complained about reduction in the amount of urine output, and also mentioned to him about her high blood pressure. The evidence of D.W.1 shows that the diagnosis arrived at by him was that she was suffering from hyper tension with renal failure. According to D.W. 1, when she was discharged from the hospital on 6.11.1968, she had improved, but, subsequently was admitted on 12.11.1968 for an investigation called 'intra venus pyelogram' by which the extent of the damage to the kidney can be assessed. He further stated that she was discharged on 15.11.1968 after the investigation was over. D.W. 1 also deposed that once again she was admitted on 18.4.1969 for mild hypertension, and discharged on the next day. D.W. 1 further deposed that once again she was admitted on 10.6.1972 for severe hypertension with uraemia, and was discharged on 19.6.1972. D.W. 1 Dr. Sivaraman further deposed that once again she was admitted on 12.8.1972 for uraemia, and was discharged on 2.9.1972. The evidence of D.W.1 Dr. Sivaraman also shows that once again she was admitted on 18.11.1972 for progressive uraemia, and was discharged on 1.12.1972 and was transferred to the Christian Medical College Hospital, Vellore. D.W. 1 also identified the extract prepared by him from the registers of the hospital as Ex.B-1. This was furnished to the defendant-respondent herein at their request. P.W. 1 Venkatachalam, the husband of Nachiammal, admitted in his evidence that his wife used to go to the C.S.I. Hospital, Erode, along with the children, and at that time used to check-up her health also. But he stated that the doctors did not inform him or his wife about her ailment. But he admitted that his wife went to the hospital for check-up and if, she was asked to stay for long time in the hospital for check-up, she used to stay there for such time. P.W. 1 Venkatachalam deposed that he does not know for how many years his wife went to the hospital. He also stated in his evidence that he cannot say as to how many days before her death she went to Vellore. He also stated that he does not know for how many days she went to the hospital in a year for examination. P.W. 1 Venkatachalam also deposed that his wife could have taken treatment as an out-patient in C.S.I. Hospital, Erode, for four times in the year 1968 alone, and that she could have been admitted there as an in-patient at times for one or two days. He stated that he does not know if, his wife was admitted as an in-patient in the said hospital for hypertension from 18.4. 1969 to 19.4.1969, and whether she was treated by D.W. 1, Dr.Sivaraman. He further deposed that his wife was taking medicine in the house, but, stated that he does not know what they are, and for what ailment were they taken by her. He stated that he did not enquire about the same. When we take into consideration the evidence of D.W. 1 Dr. Sivaraman vcoupled with the evidence of P.W. 1 Venkatachalam that the deceased Nachiammal was going to the C.S.I. Hospital for medical check-up, and that she was taking treatment as an in-patient, it is clear that prior to the taking of the insurance policy the assured Nachiammal was suffering from hypertension with renal failure.

31. The specific evidence of D.W. 1 Dr. Sivaraman that the accused Nachiammal herself complained about the reduction in the amount of urine output and mentioned about high blood pressure, has not been specifically questioned in the cross-examination. The definite evidence of D.W. 1 is that the diagnosis arrived at by him was that she was suffering from hypertension with renal failure. D.W. 1 further deposed that an investigation called 'intre venous pyelogram' to assess the extent of damage to the kidney was also done from 12.11.1968 to 15.11.1968, and this aspect also had not been questioned in the cross-examination. It is relevant in this connection to note that P.W. 1 Venkatachalam admitted in his evidence that if necessary, the deceased Nachiammal used to stay for longer periods in the hospital for examination. No motive was suggested to D.W. 1 Dr. Sivaraman as to why he should depose falsely against the plaintiff-appellant herein. The evidence of D.W. 1 relating to the ailment of the assured Nachammal was not questioned effectively in his cross-examination.

32. The evidence of P.W. 1 Venkatachalam shows that he does not know as to the actual ailment of his wife Nachiammal. He stated in his evidence that his wife used to go to the hospital often with the children to undergo medical check-up. He stated that at times she used to tell him about what had happened in the hospital and at times she had not told him about it. P.W. 1 also stated that the doctor did not inform him about her ailment. If that be so, P.W. 1 Venkatachalam cannot question the evidence of D.W. 1 Dr. Sivaraman that the life assured was suffering from severe hypertension with renal failure. P.W. 1 Venkatachalam, husband of the deceased Nachiammal, does not say that she had no ailment whatsoever, but, stated that, according to him. Nachiammal's health was alright inasmuch as she was working well and was participating in the functions. He merely stated that he does not know, if she was treated by .D.W.1 Dr.Sivaraman for hypertension. Therefore, taking into consideration the unquestioned evidence of D.W. 1 with regard to the ailment of the assured Nachiammal, and the admissions of P.W. 1 Venkatachalam himself that she could have even remained as an in-patient in the C.S.I. Hospital where D.W. 1 was working, we are of the opinion that the deceased Nachiammal was suffering from hypertension with renal failure. The fact that D.W. 1 Dr. Sivaraman was working in the C.S.I. Hospital, Erode, during the releyant period and the fact that Nachiammal, wife of P.W. 1 Venkata-chalam, had taken treatment there, are not denied by P.W. 1. The evidence of D.W. 1 Dr. Sivaraman that the deceased Nachiammal herself complained about the reduction in the amount of urine output and blood pressure has not been questioned in his cross-examination. Therefore, it is clear that Nachiammal knew that she was suffering from these diseases. It cannot be denied when it is contended on behalf of the respondent herein that severe hypertension with renal failure is certainly bound to affect the longevity of the human life.

33. In the year 1972, the deceased Nachiammal was suffering from severe hypertension and uraemia, and finally she was transferred to the Christian Medical College Hospital, Vellore. The plaintiff contends that his wife Nachiammal had gone to Vellore where her son and P.W.1's brother were residing, and that his son was doing business along with Nachiammal herself. It is relevant to note that the evidence of D.W. 1 Dr. Sivaraman is that on 1.12.1972 it was diagnosed that Nachiammal was suffering from progressive uraemia, and was transferred to Christian Medical College Hospital, Veliore. She died two months later, on 1.2.1973 at Christian Medical College Hospital, Veliore. P.W. 1 Venkatachalam stated that he does not know as to how many days prior to her death she went to Veliore. But he does not say that after she was transferred to Christian Medical College Hospital on 1.12.1972 she came back to Erode and lived there. The evidence of D.W. 1 Dr. Sivaraman is that on 1.12.1972 Nachiammal was transferred to Christian Medical College Hospital, and this part of his evidence is not questioned in his cross-examination. Ex.A-1 death register extract from Nachiammal shows that she died of uraemia. Therefore, taking into consideration all the circumstances, we are of the opinion that Nachiammal was suffering from hypertension with renal failure. These diseases will certainly affect the longevity of the human life. It cannot be contended that Nachiammal did not know about these diseases or the severity of the same, because, by their very nature these diseases will certainly have symptoms which will be known to and felt severely by the deceased Nachiammal. D.W. 1 Dr. Sivaraman has also stated that Nachiammal herself complained about the reduction in the amount of urine output and also abogt the high blood pressure. Therefore, the deceased Nachiammal would certainly have known about these diseases. She has also been taking treatment as an out-patient as well as an in-patient in the hospital. A special investigation called 'intra venous pyelogram' was also conducted. Therefore, when she was questioned by D.W.3 M. Ramachandran, she ought to have stated about her having undergone this investigation at the time of making the proposal for insurance.

34. D.W.3 Ramachandran who was the Development Officer of the respondent-Corporation during the relevant period deposed that it was he who filled up the proposal for insuring the life of Nachiammal, and also the personal statement made by her. They have been marked as Exhibits B-3 and B-4. He also stated that he read out the questions contained in Ex.B-4 one after the other and recorded her answers in her presence. He also stated that after filling up the form Ex.B-4, he ascertained from Nachiammal as to whether they were correctly recorded, and then only got her signature. He (D.W.3) also stated that it was he who had filled up the personal statement (Ex.P-5), According to him, he translated what is contained in Ex.B-5 into Tamil, explained to her, and wrote down the answers given by her. The evidence of P.W.3 also shows that Nachiammal herself knew to read, which was not questioned in cross-examination. D.W.3 Ramachandran also stated that Exhibit B-4 was read over for the second time in the presence of the doctor, who examined her, and her signatures were taken in the presence of the doctor. Of course, it was suggested to him that the signatures of Nachiammal in Exhibits B-3 to B-5 were not taken after reading out the contents, but, were taken even before they were filled up and that they were filled up after obtaining her signatures. But, except this suggestion, there is no evidence for the same. P.W. 1 also stated that the questions in Exhibits B-4 and B-5 were not read out to Nachiammal, and that she was not asked to answer them. It is relevant to note that even according to him, he was not present at that time. Therefore, he cannot know whether the questions were read out to his wife (Nachiammal) and her answers were recorded. In the plaint there is no allegation that Exhibits B-3 to B-5 were not read over to Nachiammal and her signatures were taken therein in blank or that the forms were filled up later. Even in the reply notice (Ex.A-4) the Insurance Corporation had specifically brought to the notice of the plaintiff that-his wife had suppressed material facts in the personal statements given by her. The questions and the answers given by her have also been extracted in Ex.A-4. Therefore, it is clear that the plaintiff ought to have, in the circumstances mentioned in the plaint, known that the personal statements Exhibits B-4 and B-5, and the proposal Ex.B-3 were not read out to the assured Nachiammal and that her answers were not recorded therein. Without doing so, the oral evidence of P.W.1 Venkatachalam that her signatures were taken in blank, and that the forms were filled up later cannot at ail be accepted.

35. It is relevant to note that the assured Nachiammal had stated to the question 9 () in Ex.B-4 that she had not been admitted in a hospital for treatment of examination and to the question 4 () that she had not consulted any doctor during the past 5 years, and these answers will certainly amount to fraudulent suppression of material facts which she was bound to disclose, because, had she informed that she had taken treatment from the C.S.I. Hospital as an out-patient as well as an in-patient, and that she was suffering from renal failure, reduction in the amount of urine output, then the Life Insurance Corporation would have certainly investigated into the matter and decided whether it should accept the proposal by the assured for insurance, and if so, on what terms it should do so. As we have already pointed out, these diseases will certainly affect the longevity of the insured, and have in fact affected her life, and she died of the same disease, uraemia, for which she was treated by D.W. 1 Dr. Sivaraman. Therefore, we find that the suppression of her having suffered from these diseases as well as the suppression of her having taken treatment as well as undergone examination in the hospital are certainly suppression of factors, which she was bound to disclose, but, which she had not disclosed. It is clear, under the circumstances, that the intention is also fraudulent.

36. In this connection it is relevant to note that P.W. 1 Venkatachaiam, husband of Nachiammal, is also an insurance agent. It is not as if, he does not know as to what the assured should say in her reply. Further P.W. 1 himself has sent the confidential report in his capacity as the agent for insuring the life of his own wife. Question No. 6 contained in the confidential report (Ex.B-9) calls upon him to say if, he knew anything about the circumstances which might be likely to add to the risk and to which special attention should be given when considering the proposal. He had stated that there was nothing. He had also recommended the life of the assured as eligible for assurance. So it is clear that the suppression is fraudulent, and it cannot be treated as a bona fide omission to mention about the illness and the treatment.

37. P.W. 1. Venkatachaiam wanted to get over this aspect by stating that he had not sent the confidential report. Later on, when he was confronted with Ex.B-9, he admitted his signature in Ex.B-9, but, stated that the name of his wife was not true in Ex.B-9, at the time when he signed it, which is thoroughly unacceptable. The evidence of P.W. 1 that he does not know about the illness his wife was suffering cannot at all be accepted. His own evidence shows that his wife Nachiammal was often going to the hospital. Though he stated that his wife went along with the children and at that time she used to check-up her health also, it is clear that this is merely an after thought. No such allegation has been made in the plaint. It has been stated that she was of sound health. P.W. 1 Venka-tachalam went to the extent of saying that he does not know even to fill up the proposal form. In these circumstances, we are of the opinion that the assured Nachiammal had fraudulently suppressed the illness for which she had taken treat-ment, at the time of making of the proposal and personal statements. These suppressions are all of material factors. She had knowledge that she was suffering from hypertension and also reduction in the output of urine. She had taken treatment as an out-patient as well as an in-patient in the C.S.I. Hospital. She had suppressed about the special investigation 'intra venous pyelogram' conducted for the purpose of assessing the damage to her kidney. Therefore, these suppressions clearly make the contract of insurance a void one, and therefore, the Life Insurance Corporation will not be liable to pay the amount due under the policy to the policy-holder.

38. In the present case, we find that the three tests that are to be satisfied for avoiding the contract of insurance, as laid down in Kalyani Aehi v. Life Insurance Corporation of India Ltd. (1966) 79 L.W. 662 are amply satisfied. The evidence of D.W. 1 Dr. Sivaraman who had given treatment to the assured Nachiammal has not been effectively questioned in the cross-examination, and no motive was suggested to him. . It was not even suggested to him that Nachiammal was not taking treatment from him for the ailment as spoken to by him. In the instant case before us, even prior to the proposal the deceased Nachiammal was suffering from hypertension and renal failure. She had not only undergone investigation, but, also taken treatment as an in-patient in the hospital. As pointed out already, these diseases would certainly affect the longevity of the human life, and would have a material bearing on the insurability or otherwise of the proposer and the suppression of the same must, in the circumstances, be taken as fraudulent suppression with full knowledge thereof. Therefore, the decisions relied on by the plaintiff-appellant herein cannot be of any help to him. Of course, at the time of accepting the proposal for insurance, the deceased was examined by a doctor who was in the panel of Life Insurance Corporation and her life was declared as 'First Class' by the doctor. But, we are not now on the question whether her health condition was perfect when the proposal was made. The question is whether Nachiammal had been suffering from any disease which would affect the longevity of her life, and whether she had taken treatment for the same or whether she had consulted a doctor with regard to the ailment at any time within five years prior to the contract of insurance. If she had been suffering from such a disease and had taken treatment or had consulted a doctor or had even undergone a medical check-up, it was her duty to disclose the same when she made the personal statements (Exhibits B-4 and B-5). The non-disclosure of these material particulars certainly vitiate the contract of insurance. As pointed out already, the deceased Nachiammal died of the same disease for which she had taken treatment from D.W. 1 Dr. Sivaraman. Therefore, in these circumstances, the fact that Nachiammal's life was declared as 'First Class' under Exhibit B-8 by the doctor of the Life Insurance Corporation at the time when the proposal was accepted by the Life Insurance Corporation cannot in any way help the plaintiff-appellant herein. Therefore, taking into consideration all these circumstances, we find both the points against the plaihtiff-appellant herein.

39. We confirm the judgment and decree of the trial Court, and dismiss the appeal. In the circumstances, there is no order as to costs.

40. C.M.P. No. 12644 of 1984 is also dismissed, but without costs.


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