Allahabad High Court
Smt. Parul Agarwal vs L.I.C. And 3 Others on 3 April, 2023
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Reserved on 14.03.2023 Delivered on 03.04.2023. Court No. - 52 Case :- WRIT - C No. - 3149 of 2016 Petitioner :- Smt. Parul Agarwal Respondent :- L.I.C. And 3 Others Counsel for Petitioner :- Neeraj Tripathi,Abhinav Ojha,Ashutosh Srivastava,Rajendra Pratap Singh,Rakesh Chandra Pathak Counsel for Respondent :- Manish Goyal,P.Misra,Udai Shanker Mishra Hon'ble Kshitij Shailendra,J.
1. Heard Shri Rajendra Pratap Singh, learned counsel for the petitioner and Shri Udai Shankar Mishra, learned counsel for the respondent-Life Insurance Corporation.
2. The instant writ petition has been filed by one Smt. Parul Agarwal, wife of late Vishal Agarwal challenging the impugned order dated 10.09.2015 (annexed as ''Annexure No.6' to the writ petition) whereby the Insurance Ombudsman, (Western U.P. and Uttarakhand), has dismissed the complaint filed by the petitioner against rejection of her claim by the Senior Divisional Managar of the Life Insurance Corporation (hereinafter referred to as ''the Corporation') concerning the insurance policy Nos.256487214 and 256487400 vide order dated 14.03.2014 which has also been challenged. Futher prayer is to issue a direction to the respondent no.1 to pay to the petitioner the amount payable under policy Nos.256487214 and 256487400.
Facts of the Case
3. The facts culled out from the pleadings contained in the writ petition are that Vishal Agarwal, i.e. husband of the petitioner, was holder of three insurance policies bearing nos.224492798, 256487214 and 256487400 issued by the Corporation and he died on 11.11.2013, whereafter, the petitioner, as his widow, preferred a claim against the aforesaid three policies. It is pleaded that the claim of the petitoner in respect of policy Nos.256487214 and 256487400 was rejected by the Corporation vide impugned order dated 14.03.2014 on the ground that the husband of the petitioner did not disclose the previous policy No.224492798 in the proposal form. After rejection of her claim concerning the aforesaid two insurance policies, the petitioner filed a review application before the Zonal Manager of the respondent-Corporation and, thereafter, filed an application before the respondent no.4 i.e Insurance Ombudsman on 01.11.2014, however, the application/complaint of the petitioner was rejected by the impunged order dated 10.09.2015.
4. The writ petition is founded on the premise that the impugned order dated 14.03.2014 was passed with a pre-determined mind and smells of deep-rooted prejudice against the petitioner; that the Corporation, accepting the personal statement of the deceased to be correct, issued the policies without any protest and that there is nothing on record from which it can be inferred that the insured ever made any concealment or misrepresentation at the time of commencement of insurance policy and, therefore, the impunged orders of the Corporation as well as the Insurance Ombudsman are unsustainable.
5. A counter affidavit dated 18.04.2016 has been filed on behalf of the Insurance Company stating that claim under policy nos.256487214 and 256487400 was repudiated on account of non-disclosure of previous policy No.224492798. It is further pleaded in the counter affidavit that as the Corporation works on the basis of utmost good faith by relying on the statement of insured in the proposal form, repudiation of claim was done as per rules on account of non-disclosure of previous policy in the proposal form.
6. The petitioner has filed rejoinder affidavit reiterating her stand taken in the writ petition.
7. A Supplementary affidavit dated 17.04.2022 has also been filed by the petitioner substantially relying upon the judgement of the Apex Court in Civil Appeal No.8386 of 2015 (Manmohan Nanda v. United India Assurance Co. Ltd. & Anr.) reported in (2022) 4 SCC 582 and referring to the provisions of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations-2002 (in short ''the Regulations-2002'), it has been pleaded that the proposal form was rightly filled up by the insured with full satisfaction of the respondent-Corporation.
8. As against the supplementary affidavit, supplementary counter affidavit has been filed on behalf of the Corporation taking the same stand as was taken in the main counter affidavit. Another rejoinder affidavit has been filed by the petitioner reiterating the ratio of Supreme Court in the case of Manmohan Nanda (Supra).
9. Perusal of order sheet indicates that this Court, on 16.11.2022, passed the following order:-
"Supplementary counter affidavit and rejoinder affidavit filed today are taken on record.
Sri U.S. Mishra, learned counsel appearing for the Life Insurance Corporation states that original insurance application form duly filled in and signed by the petitioner is required to be examined along with original insurance policy cover for deciding this case.
Accordingly, he is granted two weeks' time to produce the original insurance application form and insurance policy cover.
List this matter again on 7th December, 2022 amongst top 10 cases. "
10 Pursuant to the aforesaid order, original file concerning the claim of the petitioner was produced on 14.03.2023, during the course of arguments, by Shri Udai Shankar Mishra, learned counsel for the respondent-Corporation which was retained on record for the purposes of pronouncing the final judgement which was reserved on the said date.
11. I have heard the learned counsel for the parties and perused the record on the file as well as original record produced by Shri Mishra.
Contention of Petitioner
12. The contention of learned counsel for the petitioner is to the effect that while claim concerning one policy was allowed by the Corporation, rejecction of claim in respect of two policies bearing nos.256487214 and 256487400 was wholly unsustainable and the impugned order dated 14.03.2014 has been passed taking a wrong and unsustainable ground. He further contends that no fraud/misrepresentation/concealment was made by the insured and, moreover, the proposal form is filled up by the agents of the insurance company themselves and, in case, there was something left blank in ''Column No.9', the petitioner cannot be non-suited on such ground, rather, the same would be attributable to the insurance company whose agent had filled up the form and left something blank. It has further been argued that as per the decision of the Hon'ble Apex Court in the case of Manmohan Nanda (Supra), it was the duty of the agent of the Corporation to make specific queries from the insured while filling up the form and, if no such query was made and something was left blank in the form, whatever omission took place while filling up the proposal form, the same would not constitute a ground for repudiation of claim of the petitioner.
13. Learned counsel for the petitioner has placed strong reliace upon paragraph Nos.34, 35, 36, 40 and 55 of the aforesaid judgement that are reproduced hereinbelow:-
"34. Under the provisions of Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002 the explanation to Section 2(d) defining "proposal form" throws light on what is the meaning and content of "material." For an easy reference the definition of "proposal form" along with the explanation under the aforesaid Regulations has been extracted as under:
"2. Definitions.:-In these regulations, unless the context otherwise requires:
(d) "Proposal Form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
Explanation:- "Material" for the purpose of these Regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer."
Thus, the Regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer in deciding whether to undertake the risk or not.
35. Just as the insured has a duty to disclose all material facts, the insurer must also inform the insured about the terms and conditions of the policy that is going to be issued to him and must strictly conform to the statements in the proposal form or prospectus, or those made through his agents. Thus, the principle of utmost good faith imposes meaningful reciprocal duties owed by the insured to the insurer and vice versa. This inherent duty of disclosure was a common law duty of good faith originally founded in equity but has later been statutorily recognised as noted above. It is also open to the parties entering into a contract to extend the duty or restrict it by the terms of the contract.
36. The duty of the insured to observe utmost good faith is enforced by requiring him to respond to a proposal form which is so framed to seek all relevant information to be incorporated in the policy and to make it the basis of a contract. The contractual duty so imposed is that any suppression or falsity in the statements in the proposal form would result in a breach of duty of good faith and would render the policy voidable and consequently repudiate it at the instance of the insurer.
40. If a fact, although material, is one which the proposer did not and could not in the particular circumstances have been expected to know, or if its materiality would not have been apparent to a reasonable man, his failure to disclose it is not a breach of his duty.
55. On a consideration of the aforesaid judgments, the following principles would emerge:
55.1. There is a duty or obligation of disclosure by the insured regarding any material fact at the time of making the proposal. What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form.
55.2 What may be a material fact in a case would also depend upon the health and medical condition of the proposer.
55. 3. If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts.
55.4. If any query or column in a proposal form is left blank then the Insurance Company must ask the insured to fill it up. If in spite of any column being left blank, the Insurance Company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or non-disclosure of a material fact, and seek to repudiate the claim.
55.5 The Insurance Company has the right to seek details regarding medical condition, if any, of the proposer by getting the proposer examined by one of its empanelled doctors. If, on the consideration of the medical report, the Insurance Company is satisfied about the medical condition of the proposer and that there is no risk of pre-existing illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible pre-existing illness or sickness which has led to the claim being made by the insured and for that reason repudiate the claim.
55.6 The insurer must be able to assess the likely risks that may arise from the status of health and existing disease, if any, disclosed by the insured in the proposal form before issuing the insurance policy. Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition which was disclosed by the insured in the proposal form, which condition has led to a particular risk in respect of which the claim has been made by the insured.
55.7. In other words, a prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so. Such an exercise is dependant on the queries made in the proposal form and the answer to the said queries given by the proposer. "
14. The contention of learned counsel for the petitioner is to the effect that while claim concerning one policy was allowed by the Corporation, rejection of claim in respect of policy nos.256487214 and 256487400 was wholly unsustainable on the ground that as the insured had not made disclosure of policy No. 224492798 in ''Columns No.9' of the proposal form, therefore, the claim was rejected ''on the ground of concealment'.
Contention of Respondent-L.I.C.
15. On the other hand, Shri Udai Shankar Mishra, learned counsel for the respondent-Corporation, apart from the defence taken in the counter affidavit in support of the orders impugned, has specifically referred to the proposal forms of the two disputed policies, i.e. policy nos.256487214 and 256487400 with specific reference to the ''Column 9' of the proposal forms. For a ready reference, ''Columns No.9' of the both the policies are quoted hereinbelow:-
Column 9 अपनी सभी पॉलिसियों का विवरण नीचे दीजिये। ( पिछले तीन वर्षों में अभ्यर्पित एवं कालातीत पॉलिसियों को सम्मिलित करके)) Please give details of your previous insurance ( including policies surrendered/ lapsed) during last 3 years. पॉलिसी संख्या Policy No. बीमा कम्पनियों का नाम एवं पता जहां से पॉलिसी या पॉलिसियां ली गई है (यदि एल.आई.सी से ली गई हो तो शाखा/ म.का का नाम दें) Insurance Companies from where the previous policies have been purchase--d with address (if previous policies are from LIC of India give name of the Branch DO) योजना एवं अवधि Table & Terms बीमाधन मुख्य योजना Sum Assure--d of Main Plan अवधि बीमा राईडर धन राशि Term Assura--nce rider sum Assure--d गंभीर बीमारी राईडर धन-
राशि Critical illness rider Sum Assure--d दुर्घटना हितलाभ बीमाधन Amount of accident benefit taken जोखिम तिथि Date of Commen--cement क्या प्रस्तावित किये गये अनुसार आधारित सामान्य दरों पर स्वीकृत whether accepted as proposed at ordinary rates, if not give details चिकित्सा या बिना चिकित्सा Medica-l of Non Medica-l क्या पूरे बीमाधन के लिेये चालू है Whethe-r in force for full sum Assure--d यदि नहीं तो अन्तिम चुकता किश्त की देय तिथि या अभ्यपूर्ण तिथि if not give due date of last premiu-=m paid or date of surrend---er दिन/Day महीना/month वर्ष year\ 2564872-14 MBD-2 14-16 55000 NIL NIL 55000 28 07 12 YES N.M YES अपनी सभी पॉलिसियों का विवरण नीचे दीजिये। ( पिछले तीन वर्षों में अभ्यर्पित एवं कालातीत पॉलिसियों को सम्मिलित करके) Please give details of your previous insurance ( including policies surrendered/ lapsed) during last 3 years पॉलिसी संख्या Policy No. बीमा कम्पनियों का नाम एवं पता जहां से पॉलिसी या पॉलिसियां ली गई है (यदि एल.आई.सी से ली गई हो तो शाखा/ म.का का नाम दें) Insurance Companies from where the previous policies have been purchased with address (if previous policies are from LIC of India give name of the Branch/ DO) योजना एवं अवधि Table & Terms बीमा धन मुख्य योजना Sum Assured of Main Plan अवधि बीमा राईडर धन राशि Term Assurance rider sum Assured गंभीर बीमारी राईडर धन राशि Critical illness rider Sum Assured दुर्घटना हितलाभ बीमाधन Amount of accident benefit taken जोखिम तिथि Date of Comme--cement दिन/Day महीना/onth वर्ष yearr\ क्या प्रस्तावित किये गये अनुसार आधारित सामान्य दरों पर स्वीकृत whether accepted as propose--d at ordinary rates, if not give details चिकित्सा या बिना चिकित्सा Medical of Non Medical क्या पूरे बीमाधन के लिेये चालू है Whether in force for full sum Assured यदि नहीं तो अन्तिम चुकता किश्त की देय तिथि या अभ्यपूर्ण तिथि if not give due date of last premium paid or date of surrender कोई नहीं
16. The submission of learned counsel for the respondent-Corporation is that the existence of the aforementioned two policies was well within the knowledge of insured but in one of the forms, disclosure of only one policy bearing no. 256487214 was made whereas in another form, the words "कोई नहीं" were mentioned. It is, therefore, contended that the Insurance Ombudsman has rightly taken a view that the policy holder did not want to undergo special medical examinations at the time of taking insurance policy. Such non-disclosure prevented the Corporation from conducting certain additional checks and precautions specially with repect to the medical condition of the insured such as ECG, FBS, RUA, Hb% & Elisa etc.
17. Learned counsel for the respondent-Corporation has placed reliance upon the judgement of Supreme Court in Satwant Kaur Sandhu v. New India Assurance Company Limited reported in (2009) 8 Supreme Court Cases 316 and has argued that in the matter of insurance, parties must act in utmost good faith and the insured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge.
Analysis of rival contentions
18. There is no dispute about the fact that there were three insurance policies issued in favour of Late Vishal Agarwal (husband of the petitioner) bearing nos.224492798, 256487214 and 256487400. The parties are not at dispute about the fact that claim for policy no.224492798 was allowed, whereas the claim for remaining policies was rejected under the orders impugned.
19. The dispute between the parties is as to whether non-disclosure of two policies in ''Columns 9' of the two proposal forms was fatal to the claim made by the petitioner.
20. The decision of Apex Court relied upon by the learned counsel for the petitioner in Manmohan Nanda (supra) deals with the definition of proposal form under the aforesaid Regulations-2002 and the defintion in ''paragraph 34' is clear to the effect that "Proposal Form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
21. Insofar as, the contention of learned counsel for the petitioner to the effect that the insurance agent sent by the Corporation, who had allegedly filled up the proposal form, must have informed the insured about the terms and conditions of the policy and also must have raised specific query from the insured regarding entries in the relevant Columns (in the present case Columns No.9), this Court finds that there is no pleading in the entire writ petition or in the supplementary affidavit that the insurance agent or officer of respondent-Corporation did not raise any query from the insured regarding policy numbers to be filled up in Column 9. Further, there is no pleading to the effect that the insured had, in fact, informed the agent/officer of the Corporation about existence of policy no.224492798, rather, it is the plea of the petitioner that it was agent/officer who did not fill up the same in the proposal form. The Court finds that mere prinicple of law laid down in the decision of Supreme Court in the case of Manmohan Nanda (Supra) has been argued on behalf of the petitioner without any factual background. Moreover, even from the perusal of ''paragraph 55' of the judgment of the Supreme Court in Manmohan Nanda (supra), it is clear that Supreme Court has clearly laid down the principle regarding what may constitute a ''material fact'.
22. The present case is not the one where ''Column No.9' was left blank. Rather, it is a case where, as aforesaid, in one of the forms, disclosure of one policy No.256487214 was made without disclosing anything about policy No.224492798 and in, another form, words "कोई नहीं" were mentioned. ''Columns 9' as such, in both the proposal forms were not left blank.
23. The case can be viewed from another angle. This Court, from perusal of the proposal form, finds a clear declaration by the insured Vishal Agarwal at the end of the form in the following words:- प्रस्तावक द्वारा घोषणा/ DECLARATION BY THE PROPOSER "मैं विशाल अग्रवाल जिसे इसमें जीवन बीमा के लिये प्रस्तावित किया गया है एतद् द्वारा घोषणा करता हूं कि उपरोक्त प्रकथन एवं उत्तर मेरे द्वारा प्रश्नों को पूरी तरह समझ लेने के बाद दिये गये है और वह सही है तथा प्रत्येक विवरण पूर्ण है और मैंने कोई सूचना छिपाई नहीं है। मैं एतद् द्वारा इस बात से सहमत हूं और घोषित करता/ करती हूं कि ये प्रकथन और घोषण मेरे एवं भारतीय जीवन बीमा निगम के अनुबन्ध के आधार पर होगे और यदि कोई इसमें असत्य कथन पाया जायेगा तो वह अनुबन्ध पूर्ण रूप से रद्द हो जायेगा तथा इस सम्बन्ध में चुकाई गई समस्त धनराशि निगम द्वारा जब्त कर ली जायेगी। I.................. the person whose life Insurance is herein being proposed to be assured, do hereby declare that the fore going statement and answers have been given by me after fully understanding the questions and the same are true and complete in every particular and that I have not withheld any information and I do hereby agree and declare that these statements and this declaration shall be the basis of the contract of assurance between me and the Life Insurance Corporation of India and that if any untrue averment be contained therein the said contract shall be absolutely null and void and moneys which shall have been paid in respect thereof shall stand forfeited to the corporation."
24. The aforesaid declaration has been signed by the insured-Vishal Agarwal. Therefore, this Court has no reason to repel the contention of the Insurance Corporation that existence of policy bearing no.224492798 was deliberately concealed in one of the forms, whereas in other form, by mentioning words "कोई नहीं ", both the policies were concealed.
25. In the facts and circumstances of the present case, I find it appropriate to refer three important provisions of the Indian Evidence Act-1872 which would be useful for deciding the present controversy.
26. Section 106 of the Evidence Act-1872 deals with provision for burden of proving a fact especially within knowledge. It is quoted hereinbelow:-
"106. Burden of proving fact especially within knowledge.--When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him."
27. Section 114 of the Evidence Act-1872 is a provision wherein the Court may draw inferences in any proceedings which include inferences favourable or unfavourable (adverse) to any party. Section 114 alongwith relevant illustration (g) is quoted hereinbelow:-
"114 Court may presume existence of certain facts. --The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.
Illustrations The Court may presume-
(a)....
(b)....
(c)...
(d)..
(e)....
(f)...
(g). That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;"
(h)......
(i)......
28. Section 115 of the Evidence Act contains principle of "Estoppel" which reads as follows:-
"115 Estoppel. --When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing. "
29. Apart from the aforesaid, reference to Section 37 of the Indian Contract Act-1872, contained in Chapter IV, may also be made. This Chapter relates to performace of contracts and Section 37 provides for obligation of parties to contract and reads as follows:-
"37. Obligation of parties to contracts.--The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law.
Promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract. "
30. In the present case, the contract of insurance between Vishal Agarwal and Corporation would certainly bind legal representative of late Vishal Agarwal, i.e. the petitioner herein, and proposal forms described hereinabove would certainly fall within the category of "contract of insurance" and, therefore, if, on account of any false declaration or concealment made by the decesased, the claim has been rejected, the petitioner, being a successor/representative of her husband, would not get any relief in the totality of the facts and circumstances of the present case.
Conclusion-I
31. Considering the aforesaid provisions in the light of the material available on record, particularly the proposal form, I find that existence of two policies bearing nos.256487214 and 224492798 was in special knowledge of the insured Vishal Agarwal but only existence of policy No.256487214 was disclosed in one form and the policy bearing No.224492798 was not disclosed in either of the proposal forms and, therefore, by invoking the principle of adverse inference and estoppel, respectively contained in Section 114(g) and Section 115 of the Act-1872, which would apply to the representative of the deceased Vishal Agarwal, i.e. the petitioner herein, no advantage of non-disclosure can be given to the petitioner so as to claim any relief regarding the two policies repudiated under the impugned orders.
32. The contention of the learned counsel for the petitioner to the effect that insurance company accepted the premium and, therefore, it was unjustified in dislodging the claim, is of no consequence in view of the fact that the proposal forms were filled in the year 2012 and Vishal Agarwal died in the year 2013 due to cardiao-respiratory failure and payment might have been made only once during this period. Even otherwise, mere payment of premium would not estop the insurance company from repudiating the claim as it is well within its rights to repudiate or reject the claim on the ground of non-disclosure of existence of previous policies at the time of taking any fresh policy as there are various factors, administrative, medical as well as financial which need to be analyzed by the Corporation, while issuing any fresh insurance policy to a person who was already insured.
33. Regarding the principles of insurance law with respect to action in good faith, the Apex Court in the Case of Satwant Kaur Sandhu (supra), relied upon by learned counsel for the Corporation, has held that insurance policy is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, the obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment. {See: Joel Vs. Law Union & Crown Ins. Co. (1908) 2KB 863 (CA)}.
34. In United India Insurance Co. Ltd. Vs. M.K.J. Corporation, (1996) 6 SCC 428, the Supreme Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non- disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. (Also see: Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. (2002) 2 SCC 734).
35. MacGillivray on Insurance Law (10th Edition) has summarised the assured's duty to disclose stating that the assured must disclose to the insurer all facts material to an insurer's appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms.
36. In Carter Vs. Boehm (1558-1774) ALL ER Rep 183: (1766) 3 Burr 1905, Lord Mansfield had succinctly summarised the principles necessitating a duty of disclosure by the assured by stating that insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist. The keeping back of such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived, and the policy is void; because the risque run is really different from the risque understood and intended to be run at the time of the agreement...The policy would be equally void against the underwriter if he concealed...Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary.
37. The term "material fact" is not defined in the Act and, therefore, it has been understood and explained by the courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be "material". As stated in Pollock and Mulla's Indian Contract and Specific Reliefs Acts, any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact.
Conclusion-II
38. In the present case, the declaration made by the insured at the bottom of the proposal form and signed by him contains clear stipulation to the effect that he has not withheld any information and that the statements made by him in the said declaration shall be the basis of ''contract of insurance' between him and the Corporation and, if any, untrue averment be contained therein, the contract shall be absolutely null and void and the money which shall have been paid in respect thereof, shall stand forfeited. In the aforesaid facts and circumstances, the contention of the petitioner to the effect that since forms are filled up by the agents/officers of the Corporation, anything omitted would not consitute a ground for repudiation/rejection of the claim, cannot be accepted. Contrarily, the stand taken by the Corporation justifying the orders impugned has substance in the light of entire material available on record.
39. In view of the above, there is no good ground to interfere in the orders impugned. The writ petition lacks merit and is, hereby, dismissed. No order as to costs.
40. The original record produced by Shri Udai Shankar Mishra, learned counsel for the respondent-Corporation, is directed to be returned to him by the office immediately.
Order Date :- 03.04.2023 Jyotsana (Kshitij Shailendra, J.)