Madhya Pradesh High Court
Life Insurance Corporation Of India vs Ambika Prasad Pandey on 11 March, 1998
Equivalent citations: AIR1999MP13, AIR 1999 MADHYA PRADESH 13, (1999) 2 JAB LJ 304
JUDGMENT V.K. Agrawal, J.
1. This appeal is directed against the judgment and decree D/- 29-10-93 in Civil Suit No. 82-A/89 by VIIIth Additional District Judge, Jabalpur, whereby the claim of plaintiff/respondent for recovery of amount of Rs. 20,425/- of the policy of insurance of his deceased wife, as well as notice charges was allowed and his suit was decreed.
2. The facts no longer in dispute are that, the plaintiff's wife Smt. Manwati Bai was insured by the appellant/defendant for a sum of Rupees 20,000/- on 15-10-1986 The premium thereof was to be paid @ Rs. 1,334/- annually. As against the said policy, two premiums had been paid to the appellant/defendant. Smt. Manwati Bai died pn 7-12-1987, i.e., after about one year and two months, after she was insured. The plaintiff/ respondent had given to the defendant/appellant information regarding death of his wife. He had thereafter also filled up the claim form and had also submitted necessary documents for payment of amount of insurance to him. The appellant defendant however refused to pay the claim under Section 45 of the Insurance Act 1938, on the ground that the material facts regarding the illness of Manwati Bai was suppressed at the time of filling up of questionnaire.
3. Averments of the plaintiff/appellant were that since the defendant/appellant refused to make the payment of claim by their letter D/- 3-3-89 (Ex. P/5-A); plaintiff/respondent served it notice D/- 21-3-89 (Ex. P/6). Thereafter, the plaintiff filed suit for recovery of policy amount, as he was the nominee in the policy of insurance of his wife. It was also alleged by the plaintiff/respondent that the defendant/appellant has wrongfully refused to make payment of amount of policy. He had therefore claimed the amount of insurance as also the notice charges.
4. The defendant/appellant in its written statement has averred that Smt. Manwati Bai at the time of filling the proposal form had suppressed material fact of her illness and made wrong statement regarding her state of health. It was averred by the defendant/appellant that she was suffering from pulmonary tuberculosis since 1985 . and was under treatment. Manwati Bai was also receiving treatment for anaemia, weakness and loss of appetite and was referred to Medical College Hospital, Jabalpur where Dr. B. M. Arora diagnosed that she was suffering from blood cancer. It has therefore been averred that, in view of the material suppression and fraudulent concealment as above, the contract of insurance was hit by the provisions of Section 45 of the Insurance Act. Therefore, the defendant/appellant could repudiate the policy of insurance and the plaintiff/respondent was therefore not entitled to get any amount under the policy. It was therefore prayed by the defendant/appellant that the suit of the defendant/respondent be dismissed.
5. The learned trial Court framed issues as to whether the insured Manwati Bai was suffering from pulmonary tuberculosis in the year 1985 and had fraudulently and deliberately suppressed the above fact in not truly answering the questions Nos. 17-A and 18-A of the proposal form and if so whether the contract of insurance was hit by Section 45 of the Insurance Act. The issues regarding the plaintiff/respondent being the legal heir of deceased Manwati bai and wrongful refusal of claim by the plaintiff/respondent were also framed.
6. The learned trial Court found that it was defendant/appellant could not prove that the insured Smt. Manwati Bai suffered from pulmonary tuberculosis in the year 1985 and it was further held that there was no fraudulent or deliberate suppression of facts by Manwati Bai, regarding her ailment. It was therefore held by the learned trial Court that the contract of insurance was not hit by Section 45 of the Insurance Act, It was also held that the plaintiff/respondent was the legal heir of deceased insured Manwati Bai. It was also found that the defendant/appellant Had wrongfully refused to pay to the plaintiff/respondent the amount of policy of insurance on the life of Manwati Bai. The suit of plaintiff/ respondent was accordingly decreed.
7. The learned counsel for appellant in this appeal relying upon Life Insurance Corporation of India v. Smt. G. M. Channabasamma, AIR 1991 SC 392, mainly urged the, contract of Life Insurance is different from other normal contracts, inasmuch as it is in the nature of contract 'Uberrima fides' and is based on and is entered upon, on the information sought from and furnished by the insured person. It is urged that, the insured Manwati Bai had furnished information as contained in proposal form (Ex. D-l) in answer to questions Nos. 17-A and 18-A that she was not suffering from any diseases as detailed in the said questions; while in fact she was suffering from pulmonary tuberculosis since 1985 and was being treated at M. P. E. B. Hospital and thatshe was also treated for anaemia and other disease and later on detected to be suffering from blood cancer. She was also admitted in the Medical College Hospital, Jabalpur for treatment upto 30th Nov. 1987 and died on 7-12-1987. It has therefore been urged that, since there was material suppression regarding the state of her health by insured Manwati Bai, the contract could be validly repudiated under Section 45 of the Insurance Act by the defendant/appellant and there was no liability to pay any amount under the policy issued in favour of Manwati Bai.
8. As against this, the learned counsel for respondent has urged that there is no material to substantive the averment of defendant/appellant that deceased Manwati Bai was suffering from pulmonary tuberculosis and or that there was any suppression of material fact regarding the state of health by her and therefore the plaintiff/respondent, who is the nominee in the contract of policy and husband of deceased Manwati Bai is entitled to get the claim amount, which has been rightly decreed in his favour. It was further urged by the learned counsel for respondent that, he has already filed a cross appeal, which may be treated as cross-objection regarding the enhancement of the rate of interest oh the decreed amount.
9. The case shall be governed by the principles embodied under Section 45 of the Insurance Act, 1938, which reads :
"Policy not to be called in question on ground of misstatement after two years- No policy of life insurance effected before the commencement of this act, shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the 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, arid 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."
10. The above provision came to be considered by the Apex Court in Mithoolal Nayak v. Life Insurance Corporation of India, AIR 1962 SC 814 and it was pointed out therein that the above provision consists of two parts. The relevant portion of first part states that no policy of life insurance effected after the coming into force of the Act shall, after the expiry of two years from the date on which it was effected, be called, in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false. It was further pointed out therein that the second part of the above section is in the nature of proviso which creates an exception, to the rule therein as above. According to the second part such a policy can be called in to question by the insurer after the aforesaid period of two years, if the insurer shows:-
(a) the statement must be on a material matter or must suppress fact 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.
11. It would thus be clear that the contract of insurance could be avoided only on proof of fraud as enumerated in the second part of Section 43 of the Insurance Act, 1938, as noticed above. A charge of fraud would obviously be required to be proved strictly and shall require high degree of probability. In Lakshmi Insurance Co. Ltd. v. Bibi Padma Wati, AIR 1961 Punj 253 it has been laid down that (at page 267):
"According to the provisions of Section 45, the insurance contract can be avoided on fraud, and a charge of fraud, naturally, requires a high degree of probability. It is well known that fraud is odious and cannot be 'presumed; fraus est odiesa et nonest pracsumenda. The Courts will not be satisfied with proof, which falls short of showing that intentional misrepresentation was made with the knowledge of perpetrating fraud."
12. Moreover, since it is the Insurance Company who alleges fraud, it shall be its burden to prove that the insured had made false representations and suppressed material facts. Reference in this connection may be made to the case of Smt. G. M.Channabasemma(supra) and to Smt. Shanta Trivedi v. Life Insurance Corporation of India, AIR 1988 Delhi 39 and Smt. Saraswati Devi v. Life Insurance Corporation of India, AIR 1996 Delhi 68. However, it may also be noticed that, in view of the special nature of contract, obligation of true disclosure has been cast on the assured to disclose all the relevant facts, to enable the insurer to decide as to whether to accept the proposal for insurance or not. In this context in the case of G. M. Channabasemma (supra) it has been observed :
"It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding, whether the proposal should be accepted or not. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted."
13. In view of the legal position as above, the rival contentions of the parties will have to be considered in the context of material facts placed on record, and it has to be considered whether any material fact regarding the ailment and health of Manwati Bai was suppressed, while answering questions Nos. 17-A and 18-A of the proposal form (Ex. D. 1)? It may be noticed that Manwati Bai in answer to the said questions Nos. 17-A and 18-A had stated that she did not suffer from any disease including tuberculosis, as mentioned in the said questions.
14. The learned counsel for the appellant/ defendant has in this connection, urged that the statement of Dr. Jyoti Khanna (D. W. 1) and the certificate (Ex. D-l) D/- 7-2-89 issued by her clearly indicates that the deceased insured Manwati Bai was suffering from pulmonary tuberculosis since August 1985. Therefore, it is proved that there was material suppression of Information by the insured. It may be pointed here that two documents have been marked as (Ex. D-l) by the learned trial Court; one is the medical certificate of Dr. Jyoti Khanna and the other is proposal form filled up on behalf of insured Manwati Bai. It is pertinent to note that Dr. Jyoti Khanna has candidly admitted that on the date of issuance of said certificate (Ex. D. 1) D/-7-2-89, she had not examined Manwati, Bai. She has also admitted that the register of treatment given to the patient is maintained separately. However, the said register has not been produced. In view of above it is difficult to believe that on 7-2-89 when she issued certificate (Ex. D-1), Dr. Jyoti Khanna would have remembered as to what was the nature of ailment of Manwati Bai and as to what treatment was given to her in the year 1985. In the circumstances, the certificate (Ex. D-l) and the statement of Dr. Jyoti Khanna (D. W. 1) given on the basis thereof cannot be relied upon.
15. Though, it has been alleged that the deceased Manwati Bai was examined by. Dr. B. M. Arora of Medical College Hospital, Jabalpur and it was detected that she was suffering from blood cancer, however, neither Dr. Khanna has been examined nor any documents produced to establish the fact.
16. In this connection, learned counsel for appellant/defendant tried to urge that despite their best efforts, the concerned Dr. B. M. Arora did not attend the Court and also that Dr. Jyoti Khanna did not produce the relevant documents it may be noticed in this connection that there appears to be no prayer or objection made in this connection in the trial Court, while evidence of Dr. Jyoti Khanna was recorded nor was there any prayer to summon Dr. B. M. Arora by coercive method, if need be. From order sheet dt/- 5-12-94 of the trial Court, it would appear that the defendant witness Santosh Kumar Gupta (D. W. 2) was examined on that date and the defendant/appellant stating that he did not wish to adduce any other evidence closed its evidence. That being so, the above contention advanced on behalf of appellant/defendant that he was not given proper opportunity to adduce evidence, or that the defendant should have been given further opportunities to examine Dr. B. M. Arora, cannot be accepted.
17. It may also be noticed in this connection that Santosh Kumar Gupta (D. W. 2) who appears to be an employee of Life Insurance Corporation has admitted that before an insurance policy is issued the insured is examined by a Doctor. The certificate by the said Doctor, who examined Manwati Bai at the time of insurance has not been produced nor the said Doctor has been examined, by the plaintiff/respondent.
18. It is clear that it was the burden of the defendant/appellant to prove that there was material suppression of fact by Manwati Bai. It would further appear that though due opportunity was accorded to the defendant/appellant to adduce evidence, but it has failed to adduce relevant and reliable evidence and has thus failed to discharge its burden and failed to establish that the deceased Manwati Bai was suffering from pulmonary tuberculosis or any other serious ailment at the time she was insured. 19. In view of above since it could not be proved that there was any fraudulent or deliberate suppression of any material fact by Manwati Bai, the claim of plaintiff/respondent was rightly decreed by the trial Court. So far as the cross appeal which at the time of arguments has been prayed to be treated as cross objection, it may be noticed that the trial Court has allowed interest @ 6% p.a. from the date of decree. The learned counsel for respondent/plaintiff has urged that, not only higher rate of interest should have been allowed, but he was entitled to get interest from the date of the said policy, as the defendant/ appellant had wrongfully refused to pay the amount. However, it may be noticed that the plaintiff/respondent in para 5 of the plaint has averred that under the terms of policy the claim of interest is barred, hence, no interest is being claimed.
20. In view of the above averments, the prayer for grant of interest by way of cross-objection cannot be accepted. In view of above, I do not find that there is any reason to interfere in the impugned judgment and decree of the trial Court. Therefore, the appeal as well as the cross-objections are dismissed. The judgment and decree of the trial Court are confirmed and maintained in toto. The parties shall bear their own costs. Counsels' fee Rs. 1,000.00 (one thousand) if certified.