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Major B.A.S. Chopra Vs. the New Zealand Insurance Co. Ltd. - Court Judgment

LegalCrystal Citation
CourtKolkata High Court
Decided On
Case NumberSuit No. 1486 of 1962
Reported inAIR1967Cal35
ActsCity Civil Court Act, 1953 - Section 5(4); ;Insurance Act, 1938; ;Contract Act, 1872 - Section 124
AppellantMajor B.A.S. Chopra
RespondentThe New Zealand Insurance Co. Ltd.
Cases ReferredEvans v. Employers Mutual Insurance Association Ltd.
- b.n. banerjee, j. 1. the plaintiff sues the defendant insurance company for recovery of rs. 9,000, with interest thereon, on a motor car insurance policy in respect of his lanchester saloon car, which was said to have been lost to the plaintiff by theft; alternatively the plaintiff claims an enquiry as to damages for loss of the car by theft and a decree for the amount of damages so ascertained.2. according to the plaintiff, by a policy of insurance, dated march 24, 1961, the defendant company, in consideration of premium paid, insured the plaintiff and undertook to indemnify him against loss of or damage to his abovementioned car, for a sum of rs. 10,000 and agreed that if the car was lost, inter alia, by theft, at any time during march 18, 1961 and december 28, 1961, the defendant.....

B.N. Banerjee, J.

1. The plaintiff sues the defendant insurance company for recovery of Rs. 9,000, with interest thereon, on a motor car insurance policy in respect of his Lanchester Saloon Car, which was said to have been lost to the plaintiff by theft; alternatively the plaintiff claims an enquiry as to damages for loss of the car by theft and a decree for the amount of damages so ascertained.

2. According to the plaintiff, by a policy of insurance, dated March 24, 1961, the defendant company, in consideration of premium paid, insured the plaintiff and undertook to indemnify him against loss of or damage to his abovementioned car, for a sum of Rs. 10,000 and agreed that if the car was lost, inter alia, by theft, at any time during March 18, 1961 and December 28, 1961, the defendant company would pay to the plaintiff the value of the said car at the time of such theft, provided that the liability of the defendant company would not exceed on the whole the said sum of Rupees 10,000. After the expiry of the first period of insurance, the policy was renewed for a period of one year from December 29, 1961 to December 28, 1962, for the reduced sum of Rupees 9,000. This reduction was made, it is said, at the suggestion of the defendant company on account of the depreciation of the estimated value of the car. During the continuance of the period of this insurance, on December 31, 1961, the plaintiff went to attend a function at the Ordnance Club and parked the car on Clyde Row, near the Club, at about 21-45 hours. When hecame out of the Club at about 02.30 hours, on January 1, 1962 he discovered that the car was lost by theft. The plaintiff informed the Officer-in-charge, Hastings Police Station, and also gave notice to the defendant company about the theft. Thereafter, on January 10, 1962, the plaintiff submitted a written claim, with necessary particulars, claiming Rs. 9000 as the estimated amount of the loss. The defendant company, however, repudiated its liability under the policy, on the ground that the plaintiff had made material misrepresentation about the purchase value of the car in the proposal form. In these circumstances, the plaintiff filed this suit, for reliefs hereinbefore stated.

3. The defendant company filed a written statement denying liability for the claim. The defendant company admitted receipt of a notice concerning the theft of the car but did not admit that the car was lost by theft. Without prejudice to the above contention, the defendant pleaded that on March 18, 1961, the plaintiff made several statements and declarations in a proposal form and his statements and declarations were made the basis of the policy, which expressly provided that the truth of the statements in the said proposal would be condition precedent to the liability of the defendant company to pay under the policy. In disregard of the requirement that utmost good faith was necessary in both the parties during the making of the contract of insurance, it was alleged, the plaintiff made a written declaration in the proposal form that he had purchased the car for Rupees 10,000 and that the estimated value of the car was also Rs. 10,000. Tt was, however, discovered by the defendant company that the declararation was false or fraudulent and that the plaintiff had purchased the car only for Rs. 6000. The defendant, it was pleaded, was therefore entitled to repudiate the liability under the policy and did so. It was also pleaded that the plaintiff was not entitled to any sum under the policy far less any interest thereon. Alternatively, it was pleaded that the indemnity claimed was excessive.

4. On the pleadings, the following issues were raised:


1. Did the plaintiff make a false or fraudulent declaration in the Proposal Form to the effect that he had purchased the insured car for Rs. 10,000?

2. Was the defendant entitled to repudiate its liability under the Insurance Policy on the ground that the plaintiff had made a false or fraudulent declaration?

3. Was the car insured with the defendant lost by theft, as alleged in paragraph 5 of the plaint?

4. What was the value of the said car at the time of its alleged theft?

5. Was the plaintiff entitled to claim interest at the rate of 6 per cent or any interest at

6. Has this Court jurisdiction to try this suit?

7. To what relief, if any, is the plaintiff entitled?

Issue 3. This issue was not ultimately pressed, after evidence was adduced by and on behalf of the plaintiff, and is answered in the affirmative.

Issue 6. Relying on Section 5 Sub-sections (1). and (2) of the City Civil Court Act, it was contended, on behalf of the defendant, that inasmuch as the cause of action, if any, for the suit arose within the City of Calcutta and also inasmuch as the suit was for recovery of a sum less than Rs. 10,000, the City Civil Court only had jurisdiction to try the suit. This contention is not of substance. The suit relates to the construction of a mercantile document (namely, a policy of insurance) and the claim exceeds Rs. 5000 in value. Under Sub-section (4) of Section 5, read with Item 4(iv) of the First Schedule of the City Civil Court Act this Court, and not the City Civil Court, has jurisdiction to try the suit. This issue is therefore answered in the affirmative.

Issues 1 and 2. The ordinary law relating to the formation of contracts is that each party is under a duty not to make any misrepresentation concerning the subject-matter of the contract to the other. If consent to an agreement is caused by misrepresentation, the agreement becomes voidable, under Section 19 of the Contract Act, at the option of the party whose consent was so caused. Under the ordinary law, there is no positive duly to tell the whole truth in relation to the subject matter of a contract. There is only the negative obligation to tell nothing but the truth. In a contract of insurance, however, there is an implied condition that each party must disclose every material fact known to him. This type of contract is called contract uberrimae fides, that is to say, contracts in which the utmost good faith is required. Explaining the characteristics of this type of contract. Rolfe B observed in Dalglish v. Jarvie, (1850) 2 Mac and G 231 (243):

'In case ot insurance a party is required not only to state all matters within his knowledge which he believes to be material to the question of insurance, but all which in point of fact are so. If he conceals anything that he knows to be material, it is fraud, but besides that, if he conceals anything that may influence the rate of premium which the underwriter may require, although he does not know that it would have such effect, such concealment vitiates the policy.'

The observation contains a succinct statement of the law on the point. Now, the extent of the duty to disclose, as appears from the observation quoted above, rests upon two constituent elements, namely, knowledge and materiality. The assured (or the insurer) must disclose material facts which he knows or ought to know, at the time when he is making or is under the duty to make disclosure. The assured is under such duty until there is a binding contract of insurance made. The question as to whether certain facts arc or are not material is not one for the assured to decide but is to be determined by the views of reasonable and prudent insurer. Thus, materiality is a question I of fact, to be decided in the circumstances of each case and may be generally taken to embrace every circumstances which would influence the judgment of a prudent insurer in fix-Ing the premium or determining whether he will take the risk and, if so, at what premium and on what conditions. The general practice of insurers of motor cars is to submit to the prospective assured, as was also done in the instant case, a proposal form upon which certain questions relating to the risk to be insured are asked. This practice has considerable bearing upon the question of materiality involved in non-disclosure and misrepresentation. The proposal form as a rule contains express terms or as they are called warranties, by which the truth of the answers to the proposal form is made the basis of or condition precedent to the liability of insurers under the contract. The proposal form, in the instant case (Ex. C) also contains similar warranties as appears from the declaration subscribed by the plaintiff on the declaration form. Now, if representations made by the assured, in the proposal form, are incorporated as 'basic terms' into the contract of insurance, the question of materiality becomes irrelevant. The parties agree that the representations thus embodied shall form part of their contract, and for their breach, however immaterial, however innocent, the insurer will be entitled to avoid the policy. If any authority for the proposition be needed, reference need be made to Dawson Ltd. v. Bonnin, (1922) 2 AC 413 : 1922 All ER 88 in which Viscount Cave (Lord Haldane and Lord Dunnedin agreeing with him and Viscount Finlay and Lord Wrenbury dissentiate) observed:

'Basis is defined in the Imperial Dictionary as 'foundation of a thing that on which a thing stands or lies' and similar definitions are to be found elsewhere. The basis of a thing is that upon which it stands, and on the failure of which it falls, and when a document consisting partly of statements of fact and partly of undertakings for the future is made the basis of a contract of insurance, this must, I think, mean that the document is to be the very foundation of the contract, so that if the statements of fact are untrue, or the promissory statements are not carried out, the risk does not attach.'

In the above observation, there may be one exception thought of. The doctrine of imputed knowledge operates in principle so as to affect the insurer with knowledge of all the circumstances which have been communicated to or are known by the agent of the insurer, acting in the course of his employment and within the scope of his authority. Disclosure or representation to the insurers agent by the assured is disclosure or representation to the insurer, where it is made to the agent acting as such, and within his authority so to act on behalf of the insurer. This is what was held in Ayrey v. British Legal and United Provident Assurance Co. Ltd., (1918) 1 KB 136, if I may say so, very properly.

5. Keeping in view the above propositions of law, I now proceed to examine the facts revealed in the instant case.

6. That the plaintiff purchased the motor car, the subject matter of the suit, for Rupee6000 is now beyond dispute. The plaintiff himself admits that (Q. 9). This was also proved by defendant's witness Nikhil Moitra (Q. 13). Nevertheless, in the proposal form (Ex C), under the heading 'Particulars of automobiles to be insured', sub-heading 'cash purchase price of automobile', (i) 'when new' and (ii) when bought by the proponent' the plaintiff respectively wrote the figures Rs. 38,000 and Rs. 10,000. The plaintiff gives an explanation as to why he made this misrepresentation. Me says that he had one Morris Minor Car insured with the defendant company This car, he sold in February 1961, before he purchased the Lan-chester car, which is the subject matter of the suit, and became entitled to the balance of the premium for the unexpired period of insurance of the Morris Minor Car (Qq. 3 to 6 and 11). He further says that either on the 17th or the 18th March, 1961, immediately after the purchase of the Lanchester car, he rang up F. N. Rowe of the defendant insurance company, and wanted to insure the newly bought car, on the same day, for the price paid for the car, namely Rs. 6000 (Q. 10). He also says that he saw Rowe shortly after the telephonic conversation, at the office of the defendant company, and by that time, he says, Rowe had prepared a paper wherein the insurance premium the plaintiff was to pay tor the oar, on tne basis of Rs. 6000 was shown (Q. 12). What happened thereafter appears from his answer to Q. 18, which I set out below:

'He (meaning Rowe) gave me the estimates. Then he wanted to see the car and at the same time he wanted to see the cash receipt for which I had purchased the car. 1 showed him the receipt. He wanted me to establish the ownership of the car. I showed him the stamped receipt which I had got from the owner of the car. He saw the car and after he saw the car he said, 'the car is very good. It is not usually available. It is an imported car. Its market value is far far more than Rg. 10,000. You insure it for Rs. 10,000. Why do you insure it for lesser priceP When I gave the figures, he had a white piece of paper on which he was making notes of the particulars of the car in pencil.'

Questioned as to whether the white piece of paper was written on in his presence the plaintiff replied (Q. 21):

'He took particulars from me. First he wrote 6000 which he crossed when he came back after seeing the car and then when he suggested that the car should be insured for Rs 10,000 he induced me for insuring it for Rs. 10,000. He then deleted the figure and put the figure Rs. 10,000.'

The plaintiff then deposed (Qq. 22 and 24) that the manner in which proposal form (Ex. C) was to be filled up including what price to write under the column 'cash purchase price of automobile' was dictated to him by Rowe and he filled up the form accordingly. The premium payable on Rs. 10,000, namely, Rs. 183.04 was noted on the white piece of paper. Deducting Rs. 139.32, being the balance due out of the premium paid for insurance of Morris Minor Car, Rowe asked him to pay Rs. 43.72 p. only.The piece of white paper, referred to by the plaintiff in his evidence, is glued on the proposal form (Ex. C) and forms part of it. The plain-was cross-examined at length (Qq. 227 to 57 and 306 to 312) but he did stick to his version of the case. The defendant company examined as a witness F. N. Rowe, now an assistant-in-charge of the Claims Department, who was the assistant-in-charge of the Accident Department of the Office of the defendant in the year 1961, (After dealing with the evidence His Lordship proceeded).

In the circumstances of the instant case, as discussed above, it is far more probable that the plaintiff saw Rowe in his office in connection with the insurance and was advised and guided by him. That being so, there was an occasion for Rowe to advise the plaintiff what estimated value of the automobile to write on the proposal form and in order to make the estimate reasonable to write the same figure as the purchase price of car. Having considered the evidence of the plaintiff and the defendant's witness Rowe, I am inclined to believe in the version of the plaintiff, and hold that the plaintiff was advised or induced by Rowe to exaggerate the purchase price and to overvalue the estimated value.

7-8. I have now to consider the effect of this induced or advised misrepresentation on the insurance policy. It has often been held that disclosure or representation to the insurance agent by the assured is disclosure or representation to the insurer, where it is made to the agent acting as such, and within his authority so to act on behalf of the insurers. Thus, where full and accurate disclosure of the material tacts has been made to the insurer's agent, the assured is not adversely affected by the failure of the agent properly to perform his duty of communication to the insurer his principal. In the instant case, however, I am not to deal with disclosure made by an assured to an insurance agent as an agent is commonly known. Here the disclosure was made to an officer of the defendant company namely, an assistant-in charge of the Accident Department, whose duty was to deal with proposals for insurance and to arrange [or issue of policies (Qq. 79 to 81 of Rowes evidence). Anything made known to him may be knowledge imputed to the defendant company, in so far as he was acting within his authority. In Article 999 of MacGillivry on Insurance Law (5th Edition), the law on the point has been stated us follows:

'Where knowledge can be properly imputed to the company, the fact that there is a warranty may become immaterial because if the company issued the policy with knowledge that the facts were not as warranted, the breach of warranty would be waived.'

Thus in the case of (1918) 1 KB 136, the proposal form for the policy contained a clause providing that if any information which ought to be made known to the insurance company with reference to the assurance were withheld the policy would be absolutely void. The assured was described in the proposal form as a fisberman. which was his ordinary occupation. The fact that he wasalso a member of the Royal Naval Reserve, and was therefore exposed to additional risks, was not stated in the proposal fprm, but was communicated verbally to the District Manager of the Insurance Company and the premiums under the policy were subsequently paid and accepted by the District Manager. In holding that the District Manager's knowledge of the true facts was the knowledge of the company, Lawrence J. observed :

'It is true that the proposal form contained a declaration that if any information which ought to be disclosed to the company with reference to the proposed insurance had been withheld the policy would be absolutely void, and if the fact of the assured being a member of the Royal Naval Reserve had been concealed it would have invalidated the policy. I also agree that the district manager had no authority to make a new contract on behalf of the company, but it is not necessary, in order to hold the company liable to the plaintiff, to regard the district manager as having made a new contract. It was the duty of the district manager to supervise the company's subordinate agents, and he was the means of communication between them and the head office. The district manager was told by the plaintiff that the assured was in the Royal Naval Reserve and had been called up for service, and it was a reasonable thing for her to assume that the making of that communication to the district manager was equivalent to informing the company's head office. It was not necessary in my opinion, that the communication should have been made direct to the head office or to the company's general manager. It is clear that the plaintiff believed that the communication to the district manager would be passed on by him to the head office, because on being told by him that the fact of the assured being in the Royal Naval Reserve was immaterial she continued to pay the premiums. The evidence of the plaintiff was uncontradicted, For the defendants called no witnesses. In my opinion the receipt of premiums by the district manager with full knowledge of the facts was a waiver by the company of the objection that there had been a concealment of a material fact.'

Agreeing with Lawrence J., it was further observed by Atkin J. :

'The true principle to be invoked is best stated in the judgment of Bowen L J. in Bentsen v. Taylor Sons and Co. (2), (1893) 2 QB 274, (283) where he said; 'Did the defendants by their acts or conduct lead the plaintiff reasonably to suppose that they did not intend to treat the contract for the future as at an end, on account of the failure to perform the condition precedent?' That passage was cited by Viscount Reading C. J. in Panoutsos v. Raymond Hadley Corporation of New York, (1917) 2 KB 473, (478) and applied to a case where the question was whether the defendants were entitled to take advantage of a breach of a condition precedent in a contract, and the question as stated by Bowen L. J. is the question which arises in this case.

For the purpose of the operation of the principle of estoppel it must of course be shownthat the company knew that the condition precedent had not been performed and that depends on whether the knowledge of the district manager must be imputed to the company. I think it must be. I have great difficulty in see-ing how an assured who desired to impart information to the company could reasonably be supposed to do so otherwise than by giving the information to the district manager. He is the person who is named on the premium card as the district manager of the company, and in my opinion it must be implied that the person holding that position is the person who has authority to receive on behalf of the company information as to all matters affecting a policy issued by the company, and that it was his duty to pass on to the company such information as he might receive. I think, therefore, that the knowledge of the district manager that there had been a breach of a condition by reason of the concealment of a material fact was the knowledge of the company.'

In the above statement of law, an explanation was added by the Court of Appeal in England in Newsholme Bros v. Road Transport and General Insurance Co. Ltd., (1929) 2 KB 356 namely, where the agent himself at the request of the proposer, filled up the answers in supposed conformity with the information supplied y the proposer, he was merely the amauesis of the proposer and the knowledge of the true facts on the part of the agent could not be imputed to the insurance company; for if he knew the answers were untrue, he was committing a fraud on the company, which prevented his knowledge being imputed to the company.

9. The statement of law, which I have quoted from MacGillivary's book was referred to with approval by S. P. Milter, J. in Maniluxmi v. Hindus than Co-operative Insurance Society Ltd., : AIR1962Cal625 although in that case, his Lordship found against the assured on the particular facts of the case.

10. I have already found that to defendant's witness Rowe, the officer whose duty it was to insure cars on behalf of the defendant company, the plaintiff disclosed the actual price for which he had purchased the Lanchester Car. That price, was noted by Rowe on a white piece of paper (Part of Ex. C) but was later on scored through by him and a different price, namely, Rs. 10,000 put in its place. This change I have reasons to believe, was effected at the suggestion of Rowe to the plaintiff, as already found. The instant case is stronger in facts than those in Ayrey's case (supra) and the observations in that case apply with greater force to this case.

11. Mr. Majumder learned Advocate for defendant company, invited my attention to (1) Anderson v. Fitzgerald, (1853) 4 HLC 484 in which it was held that where representation was part of the contract, its truth, not its materiality was in question, (ii) Thomson v. Weems, (1884) 9 AC 671 in which Lord Blackburn observed as follows:

'It is competent to the contracting parties, if both agree to it and sufficiently express their intention so to agree, to make the actual existence of anything a condition precedent to theinception of any contract, and if they do so the non-existence of that thing is a good defence. And it is not of any importance whether the existence of that thing was or was not material; the parties would not have made it a part of the contract if they had not thought it material, and they have a right to determine for themselves what they shall deem material'

'I think when we look at the terms of this contract, and see that it is expressly said in the policy, as well as in the declaration itself, that the declaration shall be the basis of the policy, that it is hardly possible to avoid the conclusion that the truth of the particulars (which I think, include his statement that he was of temperate habits) is warranted.'

(iii) Condogianis v. Guardian Assurance Co. Ltd., (1921) 2 AC 125, in Lord Shaw sitting in the Privy Council observed:

'It is unnecessary to state that the answer given by the appellant in the proposal falls clearly within the express declaration which is now to be quoted. The terms of that declaration are as follows: 'This proposal is the basis of the contract and is to be taken as part of the policy and (if accepted) the particulars are to he deemed express and continuing warranties furnished by or on behalf of the proponent; and any questions remaining unanswered will be deemed to be replied to in the negative. The proposal is made subject to the company's conditions as printed and/or written in the policy to be issued hereon, and which are hereby accepted by the proponent.' The case accordingly is one of express warranty. If in point of fact the answer is untrue, the warranty still holds, notwithstanding that the untruth might have arisen, inadvertently and without any kind of fraud. Secondly, the materiality of the untruth is not in issue; the parties having settled for themselves--by marking the fact the basis of the contract, and giving a warranty--that as between them their agreement on that subject precluded all inquiry into the issue of materiality. In the language or Lord Eldon in New Castle Fire Insurance Co. v. MacMorran and Co., (1815) 3 Dow 255. (262). 'It is a first principle in the law of insurance, on all occasions, that where a representation is material it must be complied with--if immaterial, that immateriality may be inquired into and shown; but that if there is a warranty it is part of the contract that the matter is such as it is represented to be. Therefore the materiality or immateriality signifies nothing.'

'The more serious proposition arose on the construction of the question and answer. In a contract of insurance it is a weighty fact that the questions are framed by the insurer, and that if an answer is obtained to such a question which is upon a fair construction a true answer, it is not open to the insuring company to maintain that the question was put in a sense different from or more comprehensive than the proponent's answer covered. Where an ambiguity exists, the contract must stand if an answer has been made to the question on a fair and reasonable construction of that question. Otherwisethe ambiguity would be a trap against which the insured would be protected by Courts of law.'

'But upon the other baud, the principle of a fair and reasonable construction of the question must also be applied in the other direction--that is to say, there must also be a fair and reasonable construction of the answer given; and if on such a construction the answer is not true, although upon extreme literalism it may be correct, men the contract is equally avoided.'

(iv) (1922) 2 AC 413 in which the House of Lords held, by majority, that the recital in the policy that the proposal would be the basis of the contract made the truth of the statements contained in the proposal, apart from the question of materiality, a condition of the liability of the insurer and inaccurate answers in the proposal entitled to--insurer to avoid liability. Basing his argument on the cases cited above, Mr. Majunider contended that in the instant case also, tile answers given to the questions in the proposal form (Ex. C) were warranted as true and correct in every respect and that there was an express declaration to the effect that the proposal and the declaration shall be the basis of the contract of insurance. As such, the incorrect and untrue answers as to the cash purchase price of the automobile and its estimated value entitled the defendant company to avoid liability under the policy, without more, and that this Court need to consider further as to how and why the incorrect and untrue statements were made. I am not impressed by the argument. The cases relied upon by Majunider had no occasion to deal with the question of waiver of misrepresentation or inaccurate statements made to the knowledge of the insurer and under circumstances indicating that the misrepresentation or inaccurate statements were knowingly ignored by the insurer. Moreover, T have to deal with a case in which Rowe. an officer of the defendant company, improved upon the proposal made by the plaintiff, as already indicated, had knowledge of the actual purchase of the car and with that knowledge either advised or induced or accepted a wrong statement concerning the purchase price and the estimated value of the car. This was very wrong on the part of Rowe to do and the defendant cannot be allowed to take advantage of it and deny liability.

12. Mr. Majunider no doubt wanted to argue that even though Rowe, the officer of the defendant company, had knowledge of the real purchase price of the automobile (which, of course, he did not admit), that knowledge should not be attributed to the defendant company and strongly relied upon the following decisions in support of this argument namely. In re, Hampshire Land Co., (1898) 2 Ch 743 and J. C Houghton and Co. v. Nothard Lowe and Wills Ltd., (1928) AC 1. The two decisions do not help Mr. Majumder in his argument, because the first of the two cases proceed on the basis of fraud and irregularity committed by the officer, in disregard of his duty, and as such his knowledge was not imputed to his employee company the second case proceeded on thebasis that two directors, who entered into the disputed agreement, were parties to the wrong done to their company and as such their company was not estopped from the disputing agreement. In the instant case, it is nobody's case that Rowe was acting fraudulently or against the interest of the defendant company. Before I leave this point, I need refer to Evans v. Employers Mutual Insurance Association Ltd., (1936) 1 KB 505. In that case:

'The claimant signed a proposal form for the insurance of his motor car with the respondents. That form contained (inter alia) the following questions 'For how long has proposer and proposer's driver (i) held a driving licence, (ii) had a practical experience of motor car driving?', to which the answer given was '5 years'. That answer was untrue as referring to the experience of and length of licence held by the claimant. A policy was duly issued, containing a clause that the truth of the statements in the proposal form should be a condition precedent to liability on the part of the respondents. During the currency of the policy an accident occurred resulting in damage to the car and injuries to third parties, whereupon the claimant made a claim under the policy, in which, in answer to the question how long he had been driving motors, he answered, 'six weeks'. That document, together with the proposal form, was handed to the respondents' claims superintendent, who was authorized to deal with such matters, and was passed on by him, in accordance with the practice of the office, to a clerk for the purpose of checking the statements they contained and noting any discrepancies therein. The clerk noticed the discrepancy but did not call attention to it, considering it of no importance. Thereafter the respondents paid the claim in respect of damage to the car and certain medical expenses, and took over the negotiation of the claims by third parties, but before settling these the claims superintendent became aware of the discrepancy between the statements in the proposal form and those in the claim form, whereupon the respondents repudiated liability. In arbitration proceedings the umpire held that the respondents could not repudiate liability after having obtained the information they had received through their agents, and notwithstanding that information, having paid the claimant and taken over the right or dealing with the third-party claims.'

In appeal from the decision of Branson J., on a case stated by the umpire, Greer I,. J. observed as follows:

'If there be no evidence that the company has delegated the ascertainment of relevant facts to some officer of the company, it may well be that nothing short of knowledge by the Board of Directors will bind the company. But the knowledge of the directors is attributed to the company because they are agents of the company to whom the duty of knowing the particular facts in question has been delegated by the company. If it be established by evidence that the duty of investigating and ascertaining the facts has been delegated in the ordinary course of the company's business fo a subordinate official, the company will in law be boundby his knowledge for the same reasons that it is affected by the knowledge of the board of directors. In my judgment the umpire was entitled to infer from the facts found by him and stated in the special case that the Association were bound by the knowledge obtained by Mitchell in carrying out the duties entrusted to him in the ordinary course of the conduct of the business of the Association. It would be impossible For an insurance company's business to e carried on if they did not delegate to officials the duty of exercising their contractual rights in considering and deciding what course to take with reference to claims which have to be dealt with from day to day. The decision of the umpire in favour of the claimant cab be supported on the above ground, and it is therefore, in my judgment, not incorrect in law either on the claim or counterclaim.'

Agreeing with Greer L. J. Siesser L. J. further observed:

'In (1929) 2 KB 356 (374) Scrutton L. J. quoting Lord Sumner, says: 'The knowledge of a person who acquires it in a breach of duty, and is guilty of a breach of duty in respect to it, is not to be imputed to a company to whom, from the hypothesis, he would be very unlikely to disclose it in fact'. In this case, so far from acquiring the knowledge in breach of duty. Mr. Mitchell acquired it in the course of his duty and. hut for an erroneous estimate of its significance, he would in the ordinary course of his work have communicated it to Mr. Morice or Mr. Last, who were the persons as I have said, who were competent, and in fact decided on behalf of the company to maintain the action in place of the claimant. I think that the knowledge of Mr. Mitchell must be imputed to Mr. Morice, to Mr. Last and to the company, and that the company cannot escape merely because Mr. Mitchell was negligent in the performance of it. If Mr. Morice had such imputed knowledge it follows as the learned umpire has found, that he with such knowledge of the untruth, on behalf of the company affirmed a policy after the company had notionaly become aware of the true facts, and if the claimant thereupon relinquished his rights to deal with the matters arising out of the accident and allowed the company' to deal with them by suborgation or otherwise, the company are precluded from repudiating their liability.'

In this case also. Rowe acquired the knowledge, in course of his duty and not in fraud of the interest of the defendant company, which was to earn higher premium as a result of what he did. I, therefore, do not make much of this branch of the argument of Mr. Majumder. Thus I hold that the plaintiff had misrepresented the purchase price of the car, in the proposal, but that was done under circumstances in which Rowe had a part, as already discussed. Thus, the defendant company is not entitled to repudiate liability, for reasons already stated

13. Issue 4. Although the plaintiff estimated the value of the car at the reduced figure of Rs. 9000. under the renewed policy on account of wear and tear, during the period of use of the insured car by himself, he is entitled torecover only the market value of the car on the date of the theft and not the price paid for the car nor the estimated value. (On consideration of evidence his Lordship came to the conclusion that Rs. 5000 was the reasonable value of the car at the material time.)

14. Issue 5. Notice under the Interest Act 1839 was given by the plaintiff's solicitor to the defendant company on July 5, 1962. In the circumstances of the instant case, I do not think fit to decree any interest in favour of the plaintiff, because of the part he himself played in giving rise to the present dispute. This issue is answered in the negative.

15. Issue 7. The plaintiff is entitled to a sum of Rs. 5000 only from the defendant company under the insurance policy in suit.

16. In the result. I decree this suit in part for Rs. 5000 only, with post decreed interest thereon at 6 per cent per annum. Regard being had to the facts of this case, I direct that parties shall bear their own costs.

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