Karnataka High Court
Life Insurance Corporation Of India vs Smt. B. Kusua Rai on 23 August, 1988
Equivalent citations: [1992]75COMPCAS712(KAR), 1989(1)KARLJ52
JUDGMENT Navadgi, J.
1. This is defendant's appeal against the judgment and decree dated August 31, 1977,made by the First Additional Civil Judge, Mangalore. The Life Insurance Corporation of India, the appellant, and Smt. B. Kusuma T. Rai, the respondent herein were the defendant and the plaintiff respectively in the trial court. The appellant and the respondent in this appeal, for the sake of convenience, would be referred to in the course of this judgment as the defendant and the plaintiff respectively.
2. The plaintiff filed a suit in O.S. No. 6 of 1975, seeking a decree directing the defendant to pay a sum of Rs. 30,000 as due under the policy bearing No. S. 39675124, a sum of Rs. 5,385 towards interest on Rs. 30,000 from January 6, 1972, to January 3, 1975, at the rate of 6 per cent per annum and a sum of Rs. 15 towards the cost of registered notice.
3. The facts on which the plaintiff founded her reliefs are these :
B.S. Thimmappa Rai (hereinafter referred to as "the assured"),the husband of the plaintiff, had insured his life for a sum of Rs. 30,000 under policy No. S. 39675124. The assured had nominated the plaintiff as a nominee.
4. The assured died on January 6, 1972, at Father Muller's Hospital at Kankanady, Mangalore. The assured, prior to his death, had assigned his policy in favour of the Vijaya Bank Ltd. as security for the amounts borrowed by him. The Vijaya Bank, after the death of the assured, and on the strength of the assignment, furnished proof of death and lodged the claim with original policy on April 8, 1972. The defendant repudiated the claim on July 30, 1973, on the ground that the policy-holder had made a deliberate mis-statement and had wthheld material information regarding his health at the time of effecting the assurance.
5. The plaintiff paid the amounts due to the Vijaya Bank and got the policy reassigned in her favour. Hence, she was entitled to claim the amounts due under the policy.
6. She made a request to the defendant on October 8, 1973, to pay the amounts due to her under the policy. The defendant neither paid the amounts nor replied. On June 10, 1974, the plaintiff sent a registered notice through her lawyer to the defendant demanding the amounts due under the policy. The defendant sent a reply dated July 11, 1974, repudiating the claim once again on the same grounds on which it had repudiated the claim on July 30, 1973, when the same had been lodged by the Vijaya Bank. The plaintiff alleged that the contentions raised by the defendant for repudiating the claim were neither true nor valid in law. She denied the material allegations made by the defendant in the reply dated July 11, 1974. She averred that the terms, if any, in the policy of contract entitling the defendant to repudiate the claim were unenforceable, invalid and opposed to law and public policy. She stated that the assured, at the time of proposal of the policy, had been examined by a doctor approved by the defendant and that the defendant, after getting a certificate from the medical officer and after being satisfied about the state of health of the assured, issued the policy, adding that the repudiation of the claim was unjust and opposed to law.
7. The defendant filed a written statement, taking very many defences. Among other things, it contended that the proposal and the personal statement made by the assured for taking the insurance policy constitute a basic for the contract of insurance; that they are the material parts of the contract; that the assured had made false and incorrect statements in the personal statement submitted by him knowing fully well that the statement he was making was false and incorrect; that the assured was under an obligation to disclose all material facts regarding his health so that it could determine whether or not to accept the risk; that the assured had suppressed material facts while making the personal statement; that he had suggested false facts; and that the answers given by the assured to items Nos. 4, 6, 8, 9 and 10 of the personal statement dated September 28, 1968, were all proved to be false. It also contended that since the year 1967, the assured was suffering from bronchial and cardiac asthma and had in fact died due to such a disease; that the assured has suppressed the fact that he was suffering from cardiac asthma since prior to the date of making his personal statement and that due to the illness he had been forced to take leave from his official duties and official work. The assured had also been treated for cardiac asthma prior to his making personal statement and prior to the issue of the policy. The defendant contended that it was entitled to repudiate the policy.
8. The trial court, on the basis of the pleadings, framed the following issues for trial :
1. Whether the contract of insurance relating to policy No. S. 39675124 is vitiated by fraud, suppression of material facts and wanting in uberrimae fides ?
2. Whether the defendant is entitled to repudiate the contract of insurance and whether it has duly and rightly repudiated the contract of insurance ?
3. Whether the personal statements made by the assured on September 28, 1968, are incorrect, and false to the knowledge of the policy holder and as such, the policy issued is not valid and binding on the defendant ?
4. Whether the defendant had conducted investigation subsequent to the death of the policy holder and the investigation revealed facts which entitled the defendant to repudiate the policy of contract ?
5. Whether the deceased, B.S. Thimmappa Rai, was suffering from bronchial and cardiac asthma during and since 1986 and whether on account of this, he was unable to attend to the official duties and office on various occasions ?
6. Whether the deceased had consulted several doctors on various occasions during the period 1968 till his death?
7. Whether the terms of the policy entitled the defendant to repudiate the claim?
8. Whether the suit is not maintainable for want of a succession certificate from the proper court?
9. Whether the defendant is estopped from now proving the state of health of the deceased?
10. Whether the plaintiff is the heir of the deceased policy-holder?
11. Whether there is any subsisting nomination in favour of the plaintiff?
12. Whether the proposal and personal statements form the basis of the policy and if so, whether there are any incorrect statements therein, and if so, whether the defendant was entitled to repudiate the policy because of the said incorrect statements?
13. Whether the plaintiff has no cause of action to file the suit?
14. What is the correct amount, if any, due to the plaintiff?
9. The defendant opened the case and adduced evidence to prove the material issues. It adduced the evidence of six witnesses and depended upon 82 documents.
10. As against this the plaintiff examined herself and produced two documents in support of her claim.
11. The trial court, on consideration of the evidence, held that the plaintiff was entitled to receive a sum of Rs. 30,000 as due under the policy taken by the assured, as his nominee, plus a sum of Rs. 958.16 towards bonus. It also held that the plaintiff was also entitled to interest on Rs. 30,000 + 958.16 from August 1, 1973, till the date of payment at the rate of 6 per cent per annum. It, therefore, granted a decree in favour of the plaintiff.
12. It is this decree that is challenged before us in this appeal.
13. We are taken through the pleadings, the evidence and the judgment and decree. We have perused the record and proceedings in O. S. No. 6 of 1975.
14. Sri C. Srinivasa Iyengar, learned counsel for the defendant, submitted that the trial court erred in disbelieving Dr. D.K. Nanjundeshwara (DW-2), exhibit D-2 the certificate dated September 4, 1972, issued by DW-2, and exhibit D-3, the letter written by DW-2 to the defendant on November 18, 1972. Elaborating, he contended that the reasoning adopted by the trial court for disbelieving exhibits D-2 and D-3 is faulty and unconvincing and that the conclusion reached by the trial court that DW-2 had issued exhibit D-2 for the sake of fees was uncharitable. According to him, the whole approach of the trial court to the evidence of DW-2 and the documentary evidence exhibits D-2 and D-3 is incorrect and improper and such a wrong approach landed the trial court in reaching unsustainable conclusions with regard to the evidence of DW-2 and exhibits D-2 and D-3. He contended that the trial court was not justified in concluding that the defendant had not proved exhibits D-4,D-5 and D-6 though after holding that the said documents had been produced from proper custody. According to him, there was no objection by the plaintiff for reception of exhibits D-4 and D-6 in evidence when they were tendered in evidence through the deposition of Y. Srinivasan (DW-3). Further, according to him, even if it was assumed that there was no objection by the plaintiff when exhibits D-4 to D-6 were tendered in evidence only for the purpose of marking them, the trial court was not correct in holding that the defendant had not proved the contents of exhibits D-4 to D-6 from the evidence of K. Muthanna Rao (DW-6). It was his submission that the trial court refused to place reliance on the evidence of DW-6 on mere conjectures and surmises and not on solid and valid grounds.
15. Learned counsel further submitted that the trial court erred in holding that even if exhibits D-4 to D-6 were held proved, they would not help the defendant in satisfying the three requirements laid down in the second part of section 45 of the Insurance Act, 1938 ("the Act",for short). He relied upon certain authorities in support of the appeal to which we would advert a little later.
16. On the other hand, Sri B.V. Acharya, learned counsel for the plaintiff, supporting the judgment and decree under appeal, submitted that no fault can be found with the reasoning adopted by the trial court to discard the evidence of DW-2 and exhibits D-2 and D-3. It was stated by him that DW-2, in spite of being told to preserve the record relating to the treatment of the assured, by the defendant, failed to preserve the same and that the trial court was correct in making a comment on this conduct DW-2 and making it as one of the grounds for the disbelief of the sworn words of DW-2. It was his contention that the trial court rightly held that the defendant had failed to prove exhibits D-4 to D-6 in accordance with the rules known to the law of evidence and that it would not be correct to say that the trail court was wrong in rejecting the evidence of DW-6 on the basis of conjectures and surmises. According to him, DW-6 was a wholly incompetent witness to prove the handwriting in exhibits D-4 to D-6 and the signatures appearing in each of them as those of the assured. He strenuously urged that there was an inherent contradiction between exhibits D-4 and D-5 and exhibit D-48, the leave account statements of the assured, showing the particulars of leave taken by him during the years 1964 to 1967 and the trial court rightly noticing this inherent incongruity demolishing the evidentiary efficacy of exhibits D-4 to D-6, held that even if they were held as having been proved, they were not available to the defendant to discharge the burden placed on it under section 45 of the Act. He submitted that even if it is assumed for the sake of arguments that the assured had asthmatic attacks within two years of September 28, 1968, and that he had taken treatment for cough and cold on September 25, 1968, and September 28, 1968, he could not have known that he was suffering from cardiac asthma and that it would be too much to expect the assured to state in his personal statement (exhibit D-59) that he was suffering from asthma and that he had deliberately suppressed that fact and the fact of his having taken leave within two years of September 28, 1968, for taking treatment for the ailment. Learned counsel submitted very emphatically that the trial court after marshalling the fact and correctly approaching the evidence in the proper perspective and applying the relevant law to the facts proved, has rightly decreed the plaintiff's suit. It was his contention that the trial court was justified in upholding the claim of the plaintiff and negativing the pleas raised by the defendant. He stated that the judgment and decree are sound and legal, calling for no interference.
17. In view of the aforesaid contentions raised at the Bar, the points that arise for our consideration and determination are these :
(1) Whether the defendant has succeeded in establishing the contention that the statement made by the assured in the personal statement, (exhibit D-59) was on material matters or suppressed facts which it was material to disclose; that the suppression was fraudulently made by the assured and that the assured knew at the time of making the statement that it was false or that he suppressed facts which it was material to disclose?
(2) Whether the defendant was entitled to repudiate the claim under the policy?
(3) Whether the judgment and decree under appeal are correct, legal and proper?
18. Our decisions on the aforesaid points are as under :
(1) In the affirmative.
(2) In the affirmative.
(3) In the negative.
19. Before proceeding to give our reasons for our decisions, we feel it appropriate to refer to the undisputed facts, facts proved by the evidence adduced by the plaintiff and defendant without challenge from the other side, the nature and characteristics of the contract of insurance with special reference to life insurance, and the legal position with regard to the conditions to be fulfilled by the insurer to successfully repudiate the claim or liability in respect of a policy given by it, under section 45 of the Act.
20. The assured was an employee of the Vijaya Bank. He was working in the Ulsoor branch of the Vijaya Bank before he was transferred as branch manager to the Madikeri branch of the said bank. He was working as branch manager in the Madikeri branch during the years 1968, 1969 and 1970.
21. On September 25, 1968, K. Muthanna Rao, examined as DW-6, who is in the employment of the defendant since 1961 and who was working as Development Officer at Madikeri between 1961 and 1972, approached the assured with a request to take a life insurance policy. On September 28, 1968, the assured prepared a proposal form for insuring his life as per exhibit D-58 and signed the printed proposal form at exhibit D-58(a). It was DW-6, who filled the form putting the questions to the assured and eliciting answers. The assured went through the contents of the exhibit D-58 including the printed declaration and then affixed his signature. Exhibit D-59 is the personal statement, also in printed form. It was filled by DW-6 recording the answers given by the assured in the presence of Dr. Bhashyam, who was then working as District Surgeon, Mercara. The assured, before affixing his signature to exhibit D-59, went through the contents and admitted the entries. Exhibit D-59 was attested by DW-6 and Dr. Bhashyam. The confidential report of Dr. Bhashyam (medical examiner), which is part of exhibit D-59 - the second printed sheet, is marked as exhibit P-1.
22. The assured was suffering from cardiac asthma and corpul monale. He was admitted in the Government Headquarters Hospital, Madikeri, for treatment of the ailment on December 9, 1968, and was discharged on December 30, 1968. He was treated by one Dr. G.N. Shirbur, who could not be examined during the trial of the suit as he was in Iran. The documents marked as exhibits D-8 to D-47 would show that the assured had obtained leave on the ground of illness and for the reason that he was suffering from cardiac asthma. The assured was continuously treated for the disease since December 9, 1968, at Mercara and other places. He died due to the disease only on January 6, 1972, in St. Father Muller's Hospital at Kankanady, Mangalore. Exhibit D-65, the death extract would show that the assured was aged 50 years at the time of his death. His date of birth as mentioned in exhibit D-58 is March 18, 1921. As on September 28, 1968, the assured was 47 years, 6 months and 10 days.
23. The assured, during his life time, had obtained a loan from the Vijaya Bank. He had assigned the policy, exhibit D-61,in favour of the Vijaya Bank as a security for the loan. After the death of the assured, the Vijaya Bank lodged the claim exhibit D-66 with the death extract exhibit D-65 and the certificate by employer, exhibit D-67, to the defendant.
24. The defendant instituted an investigation into the claim and B.M. Shetty (DW-5), who was working as branch manager, Mercara, from 1972 to 1974, conducted the investigation. During the course of the investigation he collected exhibits D-2 and D-3 from DW-2 and exhibits D-49 to D-55. He submitted his report as per exhibit D-56. The defendant repudiated the claim on July 30, 1973.
25. The plaintiff paid the amounts due to the Vijaya Bank, got the policy reassigned in her favour and made a request to the defendant on October 8, 1973, to pay the amounts due under the policy to her. There was no response from the defendant either way. The plaintiff sent a notice through her lawyer to the defendant demanding the amounts due under the policy.
26. The defendant sent a reply on July 11, 1974, repudiating the claim on the grounds on which it had repudiated the claim when put forward by the Vijaya Bank. It was this repudiation that led to the institution of the suit culminating in the decree in favour of the plaintiff, challenged in this appeal.
27. Insurance is a contract whereby, for a stipulated consideration one party undertakes to compensate the other, for loss of a specified subject by specified perils, the party agreeing to make the compensation is the insurer or underwriter, the other is the insured or assured, the agreed consideration, the premium, the written contract a policy, the events insured against risks or perils and the subject, right or interest to protected, the insurable interest.
28. Life insurance is a contract between the holder of a policy and an insurance company, whereby the company agrees in return for premium payments, to pay a specified sum that is, the face value or the maturity value of the policy to the designated beneficiary upon the death of the insured. It is that kind of insurance in which the risk contemplated is the death of a particular person upon which event, if it occurs with a prescribed term or according to the contract, whenever it occurs, the insurer undertakes to pay a stipulated sum to the legal representatives of such person or to a third person having an insurable interest in the life of such person.
29. The insurance contracts are uberrimae fide. The are founded upon utmost good faith. If one party fails to observe this utmost good faith, the contract may be avoided by the other. Thus, absence of good faith avoids the contract. This is a principle of universal application to all classes and types of insurance contracts. The obligation to deal fairly and honestly is upon both parties in equal degree.
30. In contracts uberrimae fide, the contracting parties are placed under a special duty towards each other, not merely to refrain from active misrepresentation, but to make full disclosure of all material facts within their knowledge.
31. It is well-settled that in insurance contract, the principle of caveat emptor has no place.
32. In insurance contracts, the risk undertaken by the insurer is and can only be learnt from the representation made by the intending insured. If there is non-disclosure of a material factor, such a conduct would be fatal to the validity of the contract. It is upon these principles, it is said that there is a legal obligation cast upon the party proposing the insurance to communicate not only every material fact of which he had actual knowledge, but he is also deemed to know every material fact which he ought to have knowledge, in the ordinary course of business. A complete and bona fide disclosure of all the facts by the assured is a must to make the transaction valid and enforceable.
33. The legal position as concluded by a long catena of decisions is that the contract of insurance including the contracts of life insurance are contracts uberrimae fides and every fact of materiality must be disclosed, otherwise, there would be good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take plae between proposal and acceptance. If there are any mis-statements or suppression of material facts, the policy can be called in question.
34. 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 nay statement leading to the issue of the policy was inaccurate or false.
35. An insurer seeking to repudiate a policy within two years of its commencement on the ground of mis-statement by the insured, as held by the High Court of Andhra Pradesh in Life Insurance Corporation of India v. Shakuntala Bai, , 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. It has been held that 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 the occasion, could not render untruthful the insured's statement that he had not suffered from any illness and had not consulted nay medical practitioner within the last five years so as to justify the repudiation of the policy by the insurer.
36. The insurer could avoid a contract of insurance after the expiry of the period of two years mentioned in section 45 of the Act.
37. It would be advantageous to reproduce section 45 of the Act as amended by the Insurance (Amendment) Act, 1941 (13 of 1941), section 31 (8-4-1941). The section reads :
"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, 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 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 material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose :
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."
38. A reading of the material part of the section, relevant for the present purpose, would show that the insurer can repudiate the policy after a period of two years only if he shows that the 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, referred to in the first part of the section, was on a material matter or the insured suppressed the fact which it was material to disclose; that it was fraudulently made by 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. A careful reading of section 45 would indicate that it modifies the common law in so far as the policy is sought to be challenged on account of mis-statement or suppression of facts in any document after the expiry of two years from the date on which it effected.
39. The evident object of section 45 is to place certain restrictions on common law right of the insurer to repudiate his liability under the policy in certain circumstances. It appears that the object is to make it clear that the standard of good faith is required to be further emphasised from the point of view of the insured after the expiry of certain minimum period. Section 45 does not confer any right on the insurer to repudiate a policy which has been in force for less than two years on the ground of falsehood or inaccuracy of a statement irrespective of its materiality and if the insurer wants to repudiate the liability under such a policy, he has to satisfy the requirements of the general law of insurance.
40. This section eliminates the distinction created by the doctrine of warranty under the English common law. The insurer cannot avoid the consequence of an insurance contract by simply showing inaccuracy or falsity of statement. Burden is cast on the insurer to show that the statement was on a material matter, or that facts have been suppressed which it was material for the policy-holder to disclose. It is further to be proved that the statement was fraudulently made by the policy-holder with the knowledge of the falsity of statement or that the suppression was of material facts which had not been disclosed. In other words, proof of deliberate fraud and not merely of constructive fraud or of mis-statement has to be shown.
41. In Mithoolal Nayak v. life Insurance Corporation of India , the assured had omitted to the fact of this having undergone treatment for diarrhoea and anaemia by a doctor. The Supreme Court in the said case has laid down the necessary ingredients to be established by the insurer in order to avoid liability under a policy of insurance, in accordance with the terms of section 45.
referring to section 45 of the act, this is what the Supreme Court has said (at page 184 of 32 Comp Cas):
" the three conditions for the applications of the 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 The crucial question before us is whether these three conditions were fulfilled in the present case. We think they were ."
42. On the question of the nature of a material fact, we may refer to Joel v Law Union and Crown Insurance Co. [1908] 2 KB 863 (CA). It was a case of a contract of insurance . The insurer had sought to avoid it on the ground of non-disclosure of a material fact, to wit, that the assured had consulted a doctor for various nervous depression. The Court of Appeal (in England), while dealing with the case, held that answers to that question and others had not, on a true construction of the documents, formed the basis of the contract. It granted a new trial.
43. The passage in the judgment of Fletcher Moulton L.J. needs to be noticed for the proposition that the knowledge by the assured as to whether a fact is material or not, would not be much moment and that the proper test to be applied would be whether a reasonable man would have recognised that the insurer would be able to make up his mind whether the proposal ought to be accepted or not. The passage reads (at page 883) :
"The contract of life insurance is one uberrimae fide. The insurer is entitled to be put in possession of all material information possessed by the insured. This is authoriatively laid down in the clearest language by Lord Blackburn in Brownlie v. Campbell [1880] 5 AC 925 (at page 954) :'in policies of insurance, whether marine insurance, there is an understanding that the contract is uberimma fides (sic in the report) that, if you know any circumstances at all that may influence the underwriter's opinion as to the risk he is incurring, and consequently, as to whether he will take it, or what premium he will charge, if he does take it, you will state what you know. There is an obligation there to disclose what you know, and the concealment of material circumstances known to you, whether you thought it 'material or not, avoids the policy'. There is, therefore, something more than an obligation to treat the insurer honestly and frankly, and freely to tell him what the applicant thinks it is material he should know. That duty, no doubt, must be performed, but it does not suffice that the applicant should bona fide have performed it to the best of his understanding. There is the further duty that he should do it to the extent that a reasonable man would have done it; and, if he has fallen short of that by reason of his bona fide considering the matter not material, whereas the fury, as representing what a reasonable man world think, hold that it was material, he has failed in his duty, and the polity is avoided. This further duty is analogous to duty to do an act which you undertake with reasonable care and skill a failure to do which amounts to negligence, which is not atoned for by any amount honesty or good intention. The disclosure must be of all you ought to have realised to be material, not of that only which you did in fact realise to be so."
44. In Mutual Life Insurance Co. v. Ontario Metal Products Co. Ltd. [1925] AC 344 (PC), the liability under an insurance policy had been sought to be avoided by the insurer on the ground that the assured had deliberately suppressed the fact of her having been treated by a medical practitioner in answering a question in a proposal for insurance. The Privy Council, in answering the question : "What is the test of materiality?", elucidated the legal position thus (at page 351): " ...It is the insurers who propound the questions stated in the application form, and the materiality or otherwise of a misrepresentation or concealment must be considered in relation to their acceptance of the risk ..."
45. The Privy Council further observed :
"...In their view, it is a question of fact in each case whether, if the matter concealed or misrepresented had been truly disclosed, they would, on a fair consideration of the evidence, have influenced a reasonable insurer to decline the risk or to have stipulated for a higher premium."
46. In Life Insurance Corporation of India v. Canara Bank Ltd. [1973] 43 Comp Cas 534; [1973] 2 Kar LJ; AIR 1974 Mys 51, this is what is said about the materiality of a fact by this court (headnote of AIR):
"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 assured 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."
47. Thus, whether a fact is material or not depends upon the circumstances of a particular case. Evidence regarding materiality may not always necessary. The test to determine materiality is : Whether the fact has any bearing on the risk undertaken by the insurer. If the fact has any bearing on the risk, it is a material fact; if not, it is not material.
48. In a life insurance contract, the risk contemplated is the death of the assured. Therefore, any fact which tends to suggest that the life insured is likely to fall short of the average duration would be a material fact. This would be a fact, the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of the risk or in fixing the rate of premium.
49. It can be said that life insurance being a scientific assessment of an average duration of a life, such assessment would not be possible unless the correct data about the life are diligently and faithfully made available to the insurer. But there would be cases where the border line between what is material and what is not material is dim and thin. In such cases, the danger of taking one for the other would be there. To obviate such a danger, one has to be careful in drawing a distinction between what is illness or a material change in health and what is an ordinary simple disorder.
50. In Mithoolal Nayak's case , the Supreme Court held that the suppression of the fact of the assured having undergone treatment for diarrhoea and anaemia was fraudulent within the meaning of section 17 of the Contract Act. The Supreme Court held (at page 186 of 32 Comp Cas and at page 819 of AIR 1962 SC):
"No doubt, Mahajan Deolal's son now tries to make light of the illness of his father, but Dr. Lakshmanan's evidence shows clearly enough that in September-October, 1943, Mahajan Deolal was suffering from a serious type of anaemia for which he was treated by Dr. Lakshmanan. Mahajan Deolal could not have forgotten that in July, 1944, he was so treated only a few months earlier and further more, Mahajan Deolal must have known that it was material to disclose this fact to the respondent company. In his answers to the questions put to him he not only failed to disclose what it was material for him to disclose, but he made a false statement to the effect that he had not been treated by any doctor for any such serious ailment as anaemia or shortness of breath or asthma. In other words, there was a deliberate suppression fraudulently made by Mahajan Deolal. Fraud, according to section 17 of the India Contract Act, 1872 (9 of 1872), means and includes, inter alia, any of the following acts committed by a party to a contract with intent to deceive another party or to induce him to enter into a contract."
51. The other enunciation made by the Supreme Court in Mithoolal Nayak's case , is that the Explanation to section 19 of the Contract Act to the effect that a false representation was fraudulent or innocent would be irrelevant if the party, who is to act on it, has not been misled in making the contract, would not be of assistance to the assured in contracts of insurance of the type on hand.
52. When the material fact relates to a disease or ailment, there must be satisfactory proof that the assured was suffering from the ailment, which means there must be proof of a proper diagnosis, There must also be satisfactory proof that the doctor had communicated to the assured that he was suffering from a particular disease or the assured himself knew that he was suffering from that disease. It is needless to state that it is only if such a knowledge is made out that the question of failure to disclose would arise.
53. Coming to the question relation to the proof of the three conditions for the application of the second part of section 45 of the Act and the nature of the burden of proof, it has to be observed that all the elements necessary for the application of the second part of section 45 have to be proved cumulatively. If one or more of them is not proved, the challenge would fail. The burden of proving them all lies on the insurer and the onus probandi rests heavily on the insurer.
54. Keeping in view the legal position, we now proceed to consider the relevant evidence bearing on the points formulated for our consideration and the correctness of the findings recorded by the trial court on the various issues formulated by it in the light of the submissions made by both the sides.
55. Exhibit D-61 is the policy that was effected on November 12, 1968, on the basis of the proposal, exhibit D-58, and the personal statement exhibit D-59. The assured, and employee in the Vijaya Bank, had obtained a loan, assigning his interest under the policy in favour of his employer as security for repayment of the loan. The endorsement of assignment is dated September 8, 1971. The assignment had been registered. The nominee under exhibit D-61 was the plaintiff. It was payable to her subject to the assignment created in favour of the Vijaya Bank. Exhibit P-2, the deed of reassignment, executed by the Vijaya Bank in favour of the plaintiff, has proved the reassignment. In view of the reassignment, the Vijaya Bank ceased to have any interest in the policy. The nomination of the plaintiff existed and subsisted. It was on the basis of this nomination that the plaintiff sought to recover the money due under the policy.
56. Being the nominee, the plaintiff was entitled to claim the money due under the policy to the exclusion of other heirs of the assured. Add to that, being the wife, she is undoubtedly the heir.
57. When the plaintiff, as a nominee, was entitled to claim the proceed of the policy and when, under the terms of the contract (exhibit D-61), the defendant undertook to pay the money that became due on the policy to the nominee of the policy-holder, it could not lie in the mouth of the defendant to contend that it can be held liable to pay the money to the plaintiff on her obtaining a succession certificate from a competent court. A succession certificate would not be necessary when a nominee is to receive the proceeds of the policy. The plaintiff had a cause of action to institute the suit. As rightly averred in the plaint, the cause of action for the suit arose on January 6, 1972, the date of the demise of the assured, and on July 30, 1973, and July 11, 1974, when the defendant repudiated the claim when the same was put forward by the Vijaya Bank and thereafter by the plaintiff. For the aforesaid reasons, we affirm the finding of the trial court on issues Nos. 8, 10, 11 and 13.
58. It is undeniable that if the assured was suffering from cardiac asthma (and dilation of heart), as stated in exhibit D-2, prior to September 28, 1968, and that if the assured had taken leave for getting treatment for the ailment asthma prior to September 28, 1968, the statements made by him in exhibits D-59, pressed into service by the defendant in respect of the said facts, would be statements on a material matter and would amount to suppression of facts which it was material to disclose for the assured. If really the assured was suffering from asthma and enlargement of heart prior to September, 28, 1968, and had taken leave for treatment of the disease of asthma earlier to September 28, 1968, and if he knew that he was suffering from the disease, to discharge the obligation to deal fairly and honestly and to communicate the material facts relating to the disease asthma he (assured) was suffering from, the assured should have made a complete and bona fide disclosure about the same. If the assured was in such a circumstance, it was the duty of the assured to disclose the knowledge in question in order that the defendant would be able to make up its mind as to whether the proposal for the insurance ought to be accepted or not. The circumstance relating to the disease the assured is stated to have been afflicated with and the fact of the having taken leave for treatment and of having taken treatment were really circumstances that could have influenced the opinion of the defendant as to the risk it was incurring and consequently as to whether it should undertake the risk and what premium it would charge.
59. If the defendant succeeds in establishing the first requirement for the application of section 45 of the Act, the question as to whether the statement or the suppression was fraudulently made by the assured with knowledge at the time of executing exhibits D-58 and D-59 and whether the statement was false or that he suppressed the facts which it was material to disclose, would arise for consideration.
60. The defendant, to discharge the burden placed on it, has relied upon oral as well as documentary evidence.
61. The oral evidence consists of the testimony of K.T. Cheluvaraj (DW-1), Dr. D.K. Nanjundeshwara (DW-2), Y. Srinivasan (DW-3), K. Venkatarmanayya (DW-4), B.M. Shetty (DW-5) and K. Muthanna Rao (DW-6). The documentary evidence consists of exhibits D-1 to D-82. It has mainly relied upon exhibits D-2 and D-3 and exhibits D-4, D-5 and D-6.
62. Dr. D.K. Nanjundeshwara (DW-2) is the doctor practision medicine at Madikeri since 1937. He is aged about 64 years and is an L. A. M. S (Licentiate in Ayurvedic Medicine and Surgery). He was examined on June 15, 1977.
63. DW-2 testified that he knew the assured (deceased, Thimmappa Rai); that the assured used to go to him now and then; and that he had treated the assured. In the course of cross-examination, it was elicited from him that the assured went to him on September 25, 1968, complaining of asthma. It was further elicited from him that on the dated mentioned in exhibit D-2, sometimes, the children of the assured used to go to him and take medicine and sometimes he used to go to the house of the assured to give medicine. He denied the suggestion that he had not at all treated the assured.
64. B.M. Shetty (DW-5), who conducted the investigation regarding the claim, collected exhibits D-2 and D-3 from DW-2. It is significant to note that the evidence of DW-5 that he did collect exhibits D-2 and D-3 from DW-2 has not been challenged. DW-2 vouched that he wrote exhibit D-2, after search of the record, on September 4, 1972, on his letter head under his signature. He subscribed on oath to the correctness of exhibit D-2. Exhibit D-3 is another letter written by DW-2 on November 18, 1972, on his letter head under his signature.
65. A perusal of exhibit D-2 would show that the assured was under the treatment of DW-2 during the years 1968-69 and the beginning of 1970 and that he was suffering from cardiac asthma and had dilation of heart. Exhibit D-2 further shows that up to September 28, 1968, the assured had taken treatment from DW-2. It reads that he had taken treatment on September 25, 1968, September 26, 1968, September 27, 1968, and even on September 28, 1968, as well.
66. Exhibit D-3 is letter written by DW-2 in reply to the letter of an officer of the defendant dated October 11, 1972, informing that the information he had furnished about the treatment given to the assured was on the basis of his record and that the record has been preserved and would be preserved as desired by the defendant.
67. The trial court has disbelieved the oral evidence of DW-2 and has rejected exhibit D-2 on the ground that DW-2, though asked to preserve the record, had not done so; that his evidence was contrary to the contents of exhibit P-1 and that the assertion of DW-2, as stated in exhibit D-2, that the assertion of DW-2, as stated in exhibit D-2, that the assured had taken treatment after December 30, 1968, was improbable. The trial court has concluded that DW-2 had issued exhibit D-2 to make money and that, therefore, he was not entitled to credence.
68. On careful examination of the oral evidence of DW-2 and the documentary evidence exhibits D-2 and D-3, we are unable to concur with the view taken by the trial court in regard to the said evidence.
69. Indeed, as stated on oath and in exhibit D-3, DW-2 must have issued exhibit D-2 on the basis of the record maintained by him. As a medical practitioner with a long standing in the field, he must have maintained the record with regard to the patients examined and treated by. Naturally, DW-5, in the course of his investigation, must have made enquiries as to the doctor from whom the assured had taken treatment, if any, prior to September 28, 1968, and must have, in the course of his investigation, reached DW-2. He must have obtained exhibit D-2, and the defendant, through its officer, must have made queries as to the basis on which exhibit D-2 has been issued and as a reply to the queries, DW-2 must have written exhibit D-3. The defendant must have asked DW-2 to preserve the record contemplating legal action by the assignee or the plaintiff. The defendant asked DW-2 to appear before the trial court to give evidence along with the record. Responding to the summons, DW-2 appeared before the court on June 15, 1977, nearly after a lapse of four-and-a half years. There is no material placed on record by the plaintiff that after November 18, 1972, at any time till June 15, 1977, there was a request by the defendant to DW-2 to preserve the record. If DW-2 destroyed the record relating to the assured or did not take care to preserve it, ensuring its non-misplacement after a lapse of considerable time, in the absence of any fresh request by the defendant to preserve the record under the impression that the record was no more required to be preserved, can it be a ground to reject his oral testimony and exhibits D-2 and D-3 as unbelievable ? We find it extremely difficult to support the reasoning of the trial court to discard the oral evidence of DW-2 and exhibits D-2 and D-3. It would be travelling too much without any premises to hold that exhibit D-2 had been issued by from month of DW-2 that no record had been opened and maintained in respect of the treatment given to the assured, the reasoning of the trial court that exhibit D-2 cannot be believed at all could have commended itself for acceptance.
70. The second ground on which the trial court disbelieved DW-2 and exhibits D-2 and D-3, on careful examination, does not appear to be a sound ground. Indeed, it is true, exhibit D-2 shows that even on the date of the proposal and personal statement (September 28, 1968), the assured had taken treatment, from DW-2. It is also borne out from exhibit P-1 and the oral evidence of DW-6 that the assured was examined by Dr. Bhashyam on that day. It is in the evidence of DW-6 that after the assured put his signature. Exhibit D-59 is shown to have been attested by DW-6 and Dr. Bhashyam. The evidence of DW-6 shows that Dr. Bhashyam was expected to fill exhibit P-1, the part of exhibit D-59, after examining the assured and that exhibit P-1, the confidential report, was prepared by Dr. Bhashyam not in the presence of DW-6.
71. Be that as it may, the hard fact remains that in respect of the questions to be answered relating to the condition of chest and heart in columns Nos. 5 and 6 of exhibit P-1, the doctor did not note any defect in the symmetry of the chest, in the lungs, and in the size, position and impulse of the heart. It was on the basis of the contents of exhibit P-1 that the trial court concluded that the evidence of DW-2 and exhibit P-1 is the confidential report of the medical examiner. It shows that the assured was examined on September 28, 1968, at 10.30 a.m. The examination was for the purpose of insurance. If the assured, notwithstanding the examination by Dr. Bhashyam, went to DW-2 with whom he had taken treatment on the three preceding dates, it cannot be said that the recital in exhibit D-2 that the assured took treatment from DW-2 on September 28, 1968, cannot be believed.
72. Exhibit P-1 was marked as an exhibit in the course of cross-examination of DW-6. The plaintiff did not examine Dr. Bhashyam. It appears that at no stage of the trial of the suit, the defendant contended that exhibit P-1 had not been proved as required by law and that, therefore, it should be excluded from consideration. Such a contention was not raised even before us in the appeal.
73. The document being marked for the plaintiff, this could not be a case of a party producing two sets of evidence, one contradicting the order or mutually destructive of each other. This would be a case where it would be a mere appreciation of evidence, weighing the credibility and acceptability of the evidence of DW-2 and exhibit D-2 vis-a-vis, exhibit P-1.
74. It would be relevant now to advert to the contention of Shri B. V. Acharya, learned counsel for the plaintiff, about the conduct of the defendant in conducting the suit and the duties enjoined on the defendant as Corporation doing life insurance business in a claim of the kind on hand
75. The Life Insurance Corporation carrying on business of life insurance - a nationalised business- owes a great responsibility to the public. On claims being repudiated, if the matter reaches the court, the Life Insurance Corporation should not contest the suit in the way and in the manner in which an ordinary litigant contests it. The contest should be on a higher plane, so as to inspire confidence and leave the impression in the minds of the public that their claims are not resisted on unsound and insecure foundations with frivolous pleas and reckless allegations.
76. On the facts and in the circumstances of this case, it is difficult to conclude that the fight projected by the defendant is without any basis or on frivolous pleas and reckless allegations.
77. The defendant has placed on record all the material gathered by DW-5 who had been entrusted with the investigation into the claim. If it had suppressed exhibit P-1, the contention of Shri B. V. Acharya, that the conduct of the defendant in conducting the suit leaves much to be desired, would have been accepted. There was free and forthright and full disclosure of all the evidence collected by the defendant and we have not been able to see any attempt on its part to withhold or suppress material advantageous to the plaintiff and detrimental to its plea.
78. We have already concluded that in this case, it is difficult to hold that the defendant chose to contest the claim without a careful scrutiny of the investigation of facts to support the defence.
79. Indeed, it is true, the Life Insurance Corporation should examine its responsible officers under whose supervision the policies are effected and the doctors on its panel who certified to the good health of the assured, so that the court could have the assistance of their evidence while determining the truth. In the case on hand, the defendant examined DW-6, the person who canvassed the business from the assured and who had played a prominent part in effecting the policy. Though it can be said that the defendant should have examined Dr. Bhashyam, we cannot call it an omission which cannot be exonerated in view of the fact that the defendant, which commenced the evidence to discharge the burden placed on it, produced exhibit P-1, part of exhibit D-59, and raised no objection either for making it as exhibit or for reading it in evidence. Even if Dr. Bhashyam had been examined, he could have spoken to the record he prepared as per exhibit P-1. Hence, the principle of law that the insurer cannot escape the obligation of examining the doctors on whose report the insured's proposal is accepted, may not be available to the plaintiff to ask us to invest the contest with unfairness. Any way, not-examination of Dr. Bhashyam cannot be a circumstance to hold that the defendant has failed to discharge the burden placed on it.
80. In A. P. Venkatachalam v. Life Insurance Corporation of India [1986] ACJ 656 (Mad), the authority depended upon by Sri C. Srinivasa Iyengar, learned counsel for the defendant, the assured had not disclosed at the time of making the proposal and personal statement that she was suffering from hypertension and renal failure and that she had been treated in a hospital. At the time of accepting the proposal, the assured had been examined by the doctor on the panel of the Corporation. He had declared her life as 'first class'. She had later died of those diseases. On these facts, it was held that the suppression had been made knowingly and fraudulently and the contract of insurance was vitiated. The fact that the assured's life had been declared by the doctor of the Corporation as first class, it was held, would not be of any help to the claimant. If the defendant fails to prove that prior to September 28, 1968, the assured was suffering from cardiac asthma and dilation of heart, and had taken treatment after taking leave, exhibit P-1 would go to the aid of the plaintiff to canvass that the defendant has failed to satisfy the three requirements of the second part of section 45 of the Act. On the other hand, if the defendant succeeds in establishing the facts aforesaid, exhibit P-1, which goes contra to the defence, would not help the plaintiff.
81. Having disposed of the contention, we now proceed to examine whether exhibit P-1 destroys the evidentiary efficacy of the testimony of DW-2 and the probative value of exhibit D-2.
82. The medical reports which are submitted by the medical examiner and which are considered as confidential reports, will have to be accepted as true as, ordinarily, the presumption is that such reports are submitted only after a thorough and careful examination of the proposers in accordance with the questionnaire, unless its is shown by the Corporation that either the medical examiner, who prepared the report, made a false report or that the proposer made a fraudulent suppression of the material facts being aware of the illness from which he was suffering.
83. There is absolutely no material brought on record to discredit the evidence of DW-2. Even no motive is suggested to him to impeach his credit. It is inconceivable to think that DW-2, without treating the assured on the dates mentioned in exhibit D-2, would have gone in the words of the defendant as its instrument to prepare a false record and to perjure himself. He might not have examined the assured with the aid of x-ray, might not have taken blood for test and might not have taken ECG. But it is hard to accept the contention that without such tests, DW-2 could not have diagnosed the ailments on clinical test examining the assured with the aid of stethoscope. We are unable to see any force in this contention. DW-2, a doctor, who started practice in 1937, would not have found it difficult to diagnose the ailment the assured was suffering from on clinical tests. The evidence has received sufficient strength and support from exhibit D-2. When the evidence of DW-2 has emerged unscathed and clearly establishes that the assured was suffering from cardiac asthma and dilation of heart; that he had taken treatment from him (DW-2) from September 25, 1968, to September 28, 1968 (both days inclusive); and that when there is nothing on record to jettison the evidence of DW-2 with the reasonable possibility of the assured making fraudulent suppression of material fact being aware of the illness from which he was suffering from not being excluded, we feel persuaded to hold that exhibit P-1 cannot be preferred to the positive and affirmative evidence of DW-2, establishing the fact relating to the ailment of the assured and the treatment taken by him (assured) under DW-2 from September 25, 1968, to September 28, 1968.
84. The next reason assigned by the trial court to disbelieve the evidence of DW-2 is that the assured having taken treatment in the Government Hospital, Madikeri, as an inpatient from December 9, 1968, to December 30, 1968, for cardiac asthma and heart ailment, could not have gone to DW-2 thereafter for treatment of the same diseases. We are afraid, there is no substance in the reasoning. Absolutely, there is no material to hold that the assured, on December 30, 1968, was discharged from the hospital after complete recovery of the ailments. As a matter of fact, the diseases the assured was suffering from were of such a nature which could not have been cured completely. Be that as it may, the discharge of the assured from the hospital after treatment would not lead to the necessary conclusion that he did not suffer from the same diseases after his discharge. If the assured, on relapse of the diseases for which he had taken treatment earlier, thought it convenier to approach DW-2 for treatment earlier, thought it convenient to approach DW-2 for treatment earlier, thought it convenient to approach DW-2 for treatment, from whom he had taken treatment earlier to his admission to the hospital, can it be said that the fact of the admission of the assured in the hospital, can it be said and his discharge would make improbable the evidence of DW-2 that he treated the assured after December 30, 1968.
85. The last reason assigned by the trial court to disbelieve DW-2 is wholly erroneous and ex facie infirm. May be, as added by DW-5 to his report exhibit P-56, the postscript, DW-2 might have demanded fee for issuing the certificate. He could not have granted a certificate to the defendant gratis. It appears, the trial court went entirely wrong in concluding without any basis or foundation that DW-2 was a witness ready to issue certificates for the sake of fee. The approach of the trial court to the evidence of DW-2 in this regard is opposed to the well-established principles governing appreciation of evidence.
86. Disagreeing with the trial court, we hold that DW-2 is a reliable and believable witness and that exhibits D-2 and D-3 are acceptable.
87. The accepted evidence would show that the assured was suffering from cardiac asthma and dilation of heart prior or September 28, 1968, and that he had taken treatment for the said diseased from DW-2 on September 25, 1968, September 26, 1968, September 27, 1968, and September 28, 1968.
88. The conclusion reached by the trial court that even if the evidence of DW-2 was accepted, it would not help the defendant in discharging the burden placed on it, is incorrect. The conclusion, it appears, is based on the incorrect reading of the evidence of DW-2. DW-2, in the course of cross-examination stated :
"... I did not inform nor do I remember now if I had informed Thimmappa Rai that he is suffering from cardiac asthma and dilation of heart..."
89. The statement extracted above cannot be read as meaning that DW-2 did not inform the assured of the nature of the diseases. The trial court has proceeded on the assumption that DW-2 had not at all made known or informed the assured about the diseases.
90. Even taking a liberal view of the statement of DW-2 in favour of the plaintiff, the question that still survives for consideration would be whether on September 28, 1968, when the assured made the personal statement, he knew that he was suffering from cardiac asthma and heart ailment and that he had taken leave for treatment of the said diseases and had got himself treated. We postpone the answer to this question for the present.
91. We now go to the next set of evidence, viz., the evidence of DWs-3 to 6 and exhibits D-4, D-5 and D-6.
92. According to the defendant, the assured had taken leave from April 24, 1967, to April 27, 1967, under leave application (exhibit D-4) dated April 24, 1967, for treatment of asthma; that he took leave for four days in the 1967, under leave application (exhibit D-5) dated September 29, 1967; and that he took leave for one day on August 20, 1968, under leave application (exhibit D-6) dated August 20, 1968. These documents were produced by DW-3 along with other documents marked as exhibits D-7 to D-46. They consist of the leave applications filed by the assured between December 6, 1968, and January 3, 1972, the discharge certificate, medical certificates, fitness certificates, fitness certificates, joining reports, etc. We have to observe that though the trial court has held that these documents would not be relevant, we cannot ignore the facts emerging from this body of documentary evidence duly proved by the defendant the assured took leave for treatments of asthma and corpul monale (congestive cardiac failure); that he took treatment as an inpatient for the said diseases after exhibit D-59; and that eventually he died of the same diseases on January 6, 1972, in a hospital. This fact would have a bearing on the decision to be rendered on point NO. 1 raised by us. Exhibits D-4, D-5 and D-6 (Exhibit D-6 is not very much material, since it shows that the assured applied for leave for one day on August 20, 1968, due to severe cough and cold) were tendered in evidence when DW-3, on being summoned, produced them and they were marked as exhibits D-4, D-5 and D-6. The defendant sought to prove the handwriting and signature of the assured on exhibits D-4, D-5 and D-6 from the evidence of DW-6. A reading of the judgment would show that after the evidence was closed, a contention was raised on behalf of the plaintiff that the contents of exhibits D-4 to D-6 had not been proved in accordance with law and that, therefore, they should be excluded from consideration. The trial court, dealing with this contention, concluded that exhibits D-4, D-5 and D-6 had not been proved by the defendant.
93. It is impossible to affirm the conclusion.
94. Exhibits D-4 to D-6 are documentary evidence. Under section 61 of the Indian Evidence Act, the contents of documents may be proved either by primary or by secondary evidence. The defendant got produced the primary evidence to prove the contents of exhibits in the evidence of DW-3 and referred to by DW-6. The mode of proving the contents of documents is dealt with in section 61 to 66. The mode of proving the genuineness of the documents produced as evidence is dealt with in sections 67 to 73 of the Indian Evidence Act. Section 67 refers to documents other than documents required by law to be attested. It says that if a document is alleged to be signed or to have written wholly or in part by any person, the signature or the handwriting of so much of the document as is alleged to be in that person's handwriting must be proved to be in his handwriting.
95. In this case, the defendant sought to prove the contents of exhibits D-4 to D-6 by getting the primary evidence produced through the evidence of DW-6 and by circumstantial evidence.
96. The three leave applications exhibits D-4, D-5 and D-6, were marked as such, as observed earlier, in the evidence of DW-3. The Supreme Court in Sait Tarajee Khimchand v. Yelamarti Satyam, , has laid down that mere marking of a document as an exhibit does not dispense with its proof. There was no objection and indeed, there could not have been any objection by the plaintiff for the admissibility of exhibits D-4 to D-6 in evidence. They were relevant to the controversy under enquiry and therefore, admissible in evidence. It was contended then on behalf of the plaintiff that the mode of proof put forward by the defendant was insufficient and the objection was taken at the trial. The ordinary methods of proving the handwriting are : (1) by calling as witness a person who wrote the document or, (2) saw it written, or signed or, (3) who is qualified to express an opinion as to the handwriting by virtue of section 47; (4) by a comparison of handwriting by virtue of section 73; (5) by the admission of the person against whom the documents is tendered; (6) by expert evidence under section 45; (7) by internal evidence afforded by the contents of the document; and (8) if the signature of handwriting is to be proved by circumstantial evidence, the court should be satisfied that the circumstantial evidence irresistibly leads to the inference that the person in question must have signed it or written it. Section 47 of the Evidence Act deals with the question of identification of handwriting. Handwriting may be acquainted with the handwriting by that person in answer to documents purporting to be written by that person have been habitually submitted to him.
97. In this case, DW-6 went before the trial court claiming that he was acquainted with the handwriting and signature of the assured, since he had seen the assured writing and signing.
98. It is in the evidence of DW-6 that he knew the assured since 1966; that he was familiar with the handwriting and signature of the assured; that he had an account in the Madikeri branch of the Vijaya Bank; that he used to go to the office of the assured; and that he had, on several occasions, seen him write and sign. It is also in his evidence that exhibits D-4 to D-7 are in the hand, and bear the signature, of the assured. He has also identified the handwriting and signature in exhibits D-9, D-11, D-14, D-16 to D-19, D-13 to D-29, D-31 to D-36, D-39 to D-44 and D-46 as that of the assured . It was this witness in whose presence the assured put his signature on Exhibits D-58 and D-59.
99. It is by now well-settled that when a witness states in his examination-in-chief that he is acquainted with the handwriting of a person, it would be for the other side to show by cross-examination that the witness was really incompetent to testify under section 47 of the Evidence Act. (vide the principles laid down in Shyam Pratap Ram Missir v. Benni Nath Dubey, AIR 1942 Patna 449; Pusaram v. Manmal, AIR 1952 Raj 1023 - Affirmed by a Division Bench in special appeal reported In AIR 1955 Raj 186).
100. Let us see now whether the cross-examinations of DW-6 has brought out any material to show that he is not a competent witness to testify to the handwriting and signature of the assured.
101. It is very pertinent to note that the claim of DW-6 that he was familiar with the handwriting and signature of the assured was not questioned . His claim that he had an account in the Madikeri Branch of the Vijaya Bank and that he used to go to the branch and had, on several occasions, seen the assured write and sign, was denied in the form of a suggestion that he had no account with the Madikeri branch. The trial Court chose to disbelieve DW-6 on the ground that no documentary evidence had been produced to show that DW-6 had bank accounts and that DW-6 could not have had occasion to see the assured write and sign. It is rather difficult to accept the reasoning. DW-6 knew the assured since 1966 and claimed familiarity with the handwritten and signature of the assured. A persons may be acquainted with the handwriting of another person when he has seen that person write. The evidence, not being been traversed commends for acceptance. Absence of documentary evidence to prove that DW-6 had an account in the Madikeri branch cannot detract from accepting the evidence of DW-6 against whom nothing is alleged and nothing could be alleged. There is nothing to disbelieve the evidence of DW-6 on this point. The trial court has proceeded to observe without any basis that even if DW-6 had banks accounts, he would have been going to the bank to deposit money and to withdraw money and could not have any occasion to see the assured writing down documents and signing them. For a variety of reasons, DW-6 might have bad occasion to visit the branch in addition to operate his own account. Added to that, it is not the case of DW-6 that he had seen the assured write and sign only on his visits to the branch to operate his account. The trial court, without appreciating the evidence of DW-6 in the proper perspective, held that DW-6 was not a competent witness to speak about the handwriting and signature of the assured on Exhibits D-4 to D-6. We find in his evidence that he had seen the assured writing on several occasions in view of his acquaintance with the assured since 1966 acceptable. His evidence would prove the contents of exhibits D-4 to D-6.
102. The fact that the employees of the Vijaya Bank in Madikeri Branch would have been more competent to depose regarding the handwriting and signature of the assured admits of no exceptions. But the fact that they were not examined by the defendant could not be a ground to view the evidence of DW-6 with suspicion or disbelief.
103. Exhibits D-4 to D-6 are the leave applications, produced by DW-3, the Superintendent of Vijaya Bank, Administrative office, Bangalore, The trial Court rightly held that if the assured, being in the employment of the Vijaya bank, were to absent himself from duty had to apply for leave to the administrative office and if he wanted medical leave, had to append the medical certificate. It also rightly held that exhibit's D-4 to D-6 had been produced from proper custody.
104. In our view, the handwriting and signature of the assured on exhibits D-4 to D-6 can be said to have been proved by circumstantial evidence. The circumstantial evidence is so cogent, satisfactory and consistent that it, leads to the inference that the assured must have written and signed exhibits D-4 to D-6.
105. A careful reading of exhibits D-4 to D-6 would show that the leave applications were forwarded to the administrative office by the officer empowered to forward such applications and that the applications were processed and ultimately, the leave applied for by the assured was sanctioned by sanctioning authority, except in respect of exhibits D-4, in which it appears, there is no signature of the sanctioning authority.
106. This internal evidence afforded by the contents of the documents would prove the contents. The trial Court has missed this aspect of there matter. Though it referred to the enunciation made by the Supreme Court in Shri Baru Ram v. Smt. Prasanni, , it failed to examine whether the enunciation was applicable to the facts brought on record. In our view, the enunciation (at page 98) :
"Mr. Doabia fairly conceded that there was no legal evidence on this point; but his arguments was that from the other findings of fact recorded by the high Court, it would be legitimate to infer that the appellant had made the said signature. In our opinion, this contention is wholly untenable. It must be borne in maiden that the allegation against the appellant is that he has committed a corrupt practice and a finding recorded by the High Court it would be legitimate to infer that the appellant had signed the form and had in fact appointed Puran Singh as his polling agent. Mr. Doabia argues that it is not always absolutely necessary to examine and expert of to lead other evidence to prove a handwriting. It would be possible and legal, he contends, to prove the hand writing a person from circumstantial evidence. Section in 67 of the Indian Evidence Act, 1872 (1 of 1872), provides, inter alia, that if a document is alleged to be signed by any person, the signature must be proved to be in his handwriting. Sections 45 and 47 of the said Act prescribe the method in which such signature can be proved. Under section 45, the opinion of the handwriting expert is relevant while under section 47 the opinion of nay person acquainted with the handwriting of the person who is alleged to have signed the document is admissible. The explanation to the section explains when a person can be said to be acquainted with the handwriting of another person. Thus, there can be no doubt as to the manner in which the alleged signature of the appellant could and should have been proved; but even assuming that the signature of the appellant can be legally held to be proved on circumstantial evidence, the principle which governs the appreciation of such circumstantial evidence in cases of this kind cannot be ignore. IT is only if the court is satisfied that the circumstantial evidence irresistibly leads to the inference that the appellant must have signed the form that the Court can legitimately reach such a conclusion, In our opinion, it is impossible to accede to Mr. Doabia's argument that the fact held proved in the high Court inevitably lead to its final conclusion that the appellate had in fact signed the form. It is clear that in reaching this conclusion, the High Court did not properly appreciate the fact that there was no legal evidence on the point and that the other facts found by it cannot even reasonably support the case of respondent No. 1. We must accordingly reverse the finding of the High Court and hold that respondent No. 1 has failed to prove that the appellant had committed a Corrupt Practice under section 123(7) (c) of the Act".
107. It is applicable on all fours to the facts of this case.
108. The circumstantial evidence is so strong that it leads to the inevitable inference that exhibits D-4 to D-6 are by the assured, bearing his signatures. The conclusions, would be logical, legal, and legitimate.
109. In our view, the trial court was not correct in holding that the contents of exhibits D-4 to D-6 are shown to be untrue by the evidence adduced by the defendant itself. The evidence to which the trial could has made reference is exhibits D-48, the extract of the leave account. Here again, the trial court committed an error in concluding that exhibits D-4 to D-6 do not represent the real state of affairs relying on exhibits D-48 without noticing the infirmities appearing in it. Exhibit D-48 claims to show the leave available of the assured on grounds of health from September 1, 1955, to September 30, 1968. It shows that during the month of September, 1967, the assured had taken leave for three days from September 26, 1967, to September 28, 1967. This accords with the contents of exhibits D-5 except in respect of September 29, 1967, the date for which the assured had asked for leave, Exhibits D-48 shows that in the month of August, 1968, the assured had availed of leave for one day on august 20, 1968, Exhibits D-6 agrees with it. The fact that the assured had applied for leave from September 26, 1967, to September 29, 1967, deserves to be accepted in preference to exhibits D-48. A reading of exhibits D-5 would show that the assured had four days' casual leave to his credit and that he had availed of the same in anticipation of sanction and the sanctioning authority granted four days' casual leave. With the possibility of some mistake in preparing exhibit D-48 with reference to the leave taken by the assured in the moth of September, 1967, being not excluded, the trial court ought not to have made the discrepancy a ground to descried exhibits D-4, the assured in the month of September, 1967 being not excluded the trial could ought not to have made the discrepancy a ground to discard exhibit D-5. A reading of exhibits D-4 would show that on the date of exhibit D-4 the assured had 12 days casual leave to his credit: that by the time exhibit D-4 came to be processed, the assured had availed of four days' leave in anticipation of sanction and that the sanctioning authority made no order granting the leave. It appears, precisely for this reason, that exhibit D-48 is silent with regard to the availment of casual leave by the assured in the month of august, 1967. That apart the reasonable probability of exhibit D-4 not faithfully representing the correct state of affairs is not excluded. K. Venkataramanayya (DW-48) does who testified that exhibit D-48 was prepared in his office and was certified by him to be correct, had to admit in the cross-examination that exhibit D-48 does not bear his signature. A document like exhibit D-48, which does not bear any stamp of authenticity with the admitted incorrect record it displays with regard to the days of leave taken by the assured to the month of September, 1967 and the reasonable probability of to recording the leave particulars of the assured availed of in the month of August, 1967, cannot outweigh the contents of exhibits D-4, D-5, and D-6 whose authenticity and genuineness cannot be impeached and which stand duly proved. It would be too much to assume that the Vijaya Bank would go in the hands of the defendant to fabricate documents to the disadvantage of the estate of its erstwhile employee or his legal representatives.
110. We, therefore, hold that the defendant has duly proved exhibits D-4, D-5 and D-6 and that the proved documents show that the assured had taken four days' casual leave from April 24, 1967, to April 27, 1967, due to his inability to attend the office on account of a sudden attack of asthama; that being unable to attend the office on account of being afflicted with asthma, the assured had taken leave for four days in the month of September, 1967 (From September 26, 1967, to September 29, 1967), and that in the month of August, 1968, he had day's casual leave on August 20, 1968, because of cough and cold.
111. It is clear from the evidence of DW-6 and exhibit D-59 that the assured stated that he had not consulted any medical practitioner within five years preceding September 28, 1968; that he had not suffered from persistent coughs, asthma, pneumonia, plesurisy, spitting of blood, tuberculosis of any affection in the lungs; that he had no remained absent from work on grounds health during the two-years period preceding the date of proposal and personal statement; that he had been in any hospital asylum, sanatorium for check-up, observations treatment or an operation and that he had non usual medical attendant by any of answers to questions nos. 4(b), 6(b), 8(a), 9(b) and 10 respectively of the questionnaire printed in exhibits D-59. There is not denial that exhibits D-58 and D-59 were the basis of the contract between the assured and the defendant and, therefore, material parts of the contract. The evidence adduced by the defendant has shown that, on material matters, there was a statement and that the assured had suppressed the facts which it was material to disclose.
112. The question that survive for consideration is : Whether the statement made by the assured on material matter was made by the assured with the knowledge at the time of making the statement that it was false ?
113. The assured was working as a branch manager in the Vijaya Bank. He is alliterate. He had taken leave for eight day in the months of august and September, 1967 being unable to attend to his duties on account of sudden attack of asthama and being down with asthma. He had taken treatment from Dr. Nanjundeshwara (DW-2) from September 25, 1968 to September 28, 1968, for cardiac asthma and dilation of the heart. Cardiac is parting to the heart or to esophageal opening of the stomach., Asthma is a term used to mean "difficult breathing". It also denotes "brachial". In view of these facts, it is difficult to hold that he did not know when he made the personal statements as per exhibit D-59 that he was suffering from asthma and dilation of heart. The answers given by him to the material questions in exhibit D-59, adverted to earlier, were false to his knowledge. We find it impossible to hold that the assured had forgotten his absence from work on grounds of asthma in 1967, and the fact of his having taken treatment from DW-2 from September 25, 1968, to September 28, 1968. As a matter of fact, he took treatment from DW-2 even on the date of proposal and personal statement. The medical attendant was DW-2. When, under his own hand, he had written leave applications asking for casual leave on the ground of his inability to attend the office because of asthama we find it difficult to accept the contention of learned counsel for the plaintiff that by giving negative answers to the various material questions referred to earlier, the assured coat be said to have made a false statement. The evidence is almost conclusive to show that on September 28, 1968. The assured knew that the answers he was giving to the material questions were false. The evidence has clearly established that he suppressed the facts which it was material to disclose.
114. The fraudulent intention in making a false statement and in suppressing facts which it was material to disclose is apparent. It would be difficult to invest the proposal for insurance with innocence when the material placed on recorded by the defendant has shown the falsity of the statement on material matters and concealment of facts that had a bearing on the risk to be undertaken under the policy. Fraudulent intention is apparent. The reasoning of the trial court that the evidence, exhibits D-2, D-3 and D-4 to D-6, would not establish the requirements of the second part of section 45 of the Act cannot be upheld. The support drawn from the evidence of DW-6 by the trial court really does not support the plaintiff's case. DW-6, a lay man, though acquainted with the assured since 1966, could not have been able to see the diseases the assured was suffering from by mere external observation. As a matter of fact, if the assured was suffering from cardiac asthma and dilation of heart, DW-6, as a responsible officer of the defendant, would not have approached the assured for insurance.
115. Having examined the evidence in the light of the submissions made at the Bar, we are unable to uphold the finding of the trial court on issues Nos. 1 to 7, 9 and 12. The findings deserve to be reversed.
116. Before concluding, one other questions that arises in this case requires to be considered. The policy was effected on November 12, 1968. The assured died on January 6, 1972. The prima on the policy must have been regularly paid-up. But the plaintiff sought no relief as regards this amount either alternatively or otherwise. Assuming that such a relief falls of considered either in equity or at law, in view of the law laid down by the Supreme Court in Mithoolal Nayak's case referred to earlier :
"This bring us to the last question, namely, whether the appellant is titled to a refund of the money he had paid to the respondent company Here again, one of the terms of the policy was that all moneys that had been paid in consequences of the policy would belong to the company if the policy was vitiated by reasons of a fraudulent suppression of material facts by the insured. We agree with the High Court that where the contract's band on the ground of framed, the party who has been guilty of fraud or a person who claims under him cannot ask for a refund of the money paid. It is a well-established principles that courts will not entertain an action for money had ad received, where, in order to succeed, the plaintiff has to prove his own fraud. We are further in agreement with the High Court that in cases in which there is a stipulation that by reason of a breach of warranty by ones of the parties to the contract, the other party shall be discharged from the performance of his part of the contract, neither section 65 nor section 64 of the Indian contract Act has any application."
117. The plaintiff would not be entitled to any such relief. But the refund of such amount lies within the discretion of the defendant as per the provision of the Act. Since it is clearly a matters left to the discretion of the defendant, we do not wish to say anything more about it except expressing the hope that the defendant would consider the question of refund of the amount received as prima to the plaintiff in view of the facts and circumstances stances of the case.
118. For the reasons stated earlier, we record, our findings in the affirmative of points Nos. 1 and 2 and in the negative on point No. 3. The appeal is entitled to succeed. It is, therefore, allowed. The Judgment and decree under appeal are set aside. The suit, out of which this appeal has arisen, shall stand dismissed.
119. On the facts and in the circumstances of the case, we direct the plaintiff and the defendant to bear their respective costs both here and in the court below.