Punjab-Haryana High Court
Usha Chopra vs Lic on 3 November, 2025
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
RSA-2359-1996
Usha Chopra and Others . . . . Appellants
Vs.
LIC and Others . . . . Respondents
****
Reserved on: 30.10.2025
Pronounced on: 03.11.2025
****
CORAM: HON'BLE MR JUSTICE DEEPAK GUPTA
Argued by:- Mr. Mahavir Singh Tanwar, Advocate for
Mr. A.S. Tewa"a, Advocate for the appellants.
None for the respondents.
****
DEEPAK GUPTA, J.
This Regular Second Appeal is directed against the judgment and decree dated 16.12.1995 passed by the first Appellate Court of learned Addi-
"onal District Judge, Ludhiana, whereby the insurer's appeal was allowed and the suit for recovery of the assured sum under a life insurance policy filed by plain"ffs (appellants herein) was dismissed, reversing the trial Court's decree dated 03.05.1993 in favour of the plain"ff-nominee.
2. Factual Matrix: The undisputed facts, which emerge on perusal of the file are that Sh. Rajinder Kumar Chopra, husband of plain"ff Smt. Usha Chopra got his life insured with defendant respondent - life insurance Corpora-
"on of India for a sum of ₹25,000/- on 19.09.1985 by submi9ng proposal form Ex.DW6/1. He expired on 26.04.1987 i.e. about one year and seven months af- ter the policy date. The nominee Smt. Usha Chopra i.e. wife of deceased along with her children filed a claim for the sum assured by the insurer. However, the said claim was repudiated by insurance company on the ground that the de- ceased had made mis-representa"on in the proposal for the life insurance. Said 1 of 10 ::: Downloaded on - 11-11-2025 02:30:32 ::: RSA-2359-1996 defence of the respondent- Life Insurance Corpora"on of India, was though not accepted by the learned trial Court, which decreed the suit on 03.05.1993 but the first Appellate Court reversed the finding and accepted the appeal of the Life insurance company, thus dismissing the suit on 16.12.1995.
3.1 Conten ons: Assailing the aforesaid reversal, it is contended by learned counsel for the appellants-plain"ffs that well-reasoned judgment de- creeing the suit by the trial Court has been wrongly reversed by the fist Appel- late Court by mis-apprecia"ng the evidence on record.
3.2 Despite service of no"ce of this appeal upon the respondents, no- body has turned up on their behalf to contest the appeal.
4. A@er considering the trial Court record as available on the DMS of this Court, this Court finds no substance in the submissions made by learned counsel.
5. Analysis by this Court: Undisputedly, it was a non-medical policy, which was issued in the name of Shri rajinder Kumar Chopra, i.e. insured, which means that insured was not required to undergo physical tests like blood, ECG or urine examina"on etc. and in such cases, the insurer relies upon the applicant's self-declara"on of health in the proposal form. Under the Insurance Regulatory and Development Authority of India (IRDAI) guidelines, insurers are free to offer non-medical policies provided - the proposer signs a good-faith declara"on about health; and the company discloses that false statements can void the policy.
6. In such like cases, the applicant-insured is required to make truthful declara"ons in the proposal form. It is based upon the principle of contract of insurance namely, uberrima fides', which is a La"n phrase and means "utmost good faith", i.e., the highest degree of honesty. The applicant is required to make full disclosure of all the material facts that could affect the risk being insured. Insurance contracts are not like ordinary, commercial contracts and they rely heavily on the informa"on given by the proposer. The insurer cannot Page 2 of 10 2 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996 verify every fact independently before issuing the policy and therefore, the law demands complete transparency and good faith.
7. In the present case, in the proposal form Ex.DW6/1 dated 19.09.1985, which was submiIed by the insured Sh. Rajinder Kumar Chopra, he made following declara"on on some of the material ques"ons :
Sr. N: Ques8on Declara8on
by insured
18 Have you ever suffered from or are you suffering from -
(b) High or low blood pressure, rheuma"c liver, pain in No chest, breathlessness, palpita"on, infarc"on or any disease of heart of arteries?
19 Have you been suspected to diabetes or are you suffering No. from diabetes or have ever passed sugar, albumin, pus or blood in urine.
21 Have you remained absent from the place of your work on No. the ground of health during the last five years.
8. However, the insurance company-respondent produced evidence on record that the aforesaid declara"on/informa"on supplied by the insured was wrong. Cer"ficate (Ex.D3) to be read with prescrip"ons (Ex.D2) revealed that insured was suffering from diabetes and was on medica"on w.e.f. 11.09.1985 to 25.10.1986. Not only this, apart from diabetes, he was also the pa"ent of hypertension and had taken medical reimbursement for the disease of diabetes from his employer from the period 11.09.1985 to 15.09.1985, and 19.09.1985 to 23.09.1985. He had also taken sick leave for more than three days during the last five years from the date of insurance policy. These facts were established by the insurance company by examining its Inves"ga"ng Officer to prove enquiry report (Ex.D6).
9. Not only this, DW-1 Dr. Anil Talwar proved the medical treatment and his prescrip"on. DW-2 Narender Kumar from the office of employer of deceased insured proved the record Ex.D2, cer"ficate Ex.D3. DW-4 Brave, the Supervisor Medical Record of CMC, Ludhiana proved cer"ficate Ex.DW4/1 to prove the cause of death of Sh. Rajinder Kumar Chopra and as per his tes"mony said Sh. Rajinder Kumar Chopra was admiIed in the hospital with diabetes Page 3 of 10 3 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996 mellitus, hypertension, accelerated and acure viral and diabetes acruits gas prits, status epilep"ous.
10. Thus, it stands established that even prior to submi9ng the proposal form dated 19.09.1985 Ex.DW6/1 with the respondent-insurance company, the insured Sh. Rajinder Kumar Chopra was suffering from the disease of hypertension and diabetes and was under medica"on. He had even taken leave from his employer in this regard and this way, the informa"on/declara"on made by him in the proposal form (Ex.DW6/1) was materially wrong.
11. Sec"on 45 of the Insurance Act 1938 reads as under:
45. Policy not be called in ques on on ground of misstatement a er three years. --(1) No policy of life insurance shall be called in ques"on on any ground whatsoever a@er the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.
(2) A policy of life insurance may be called in ques"on at any "me within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:
Provided that the insurer shall have to communicate in wri"ng to the insured or the legal representa"ves or nominees or assignees of the insured the grounds and materials on which such decision is based.
Explana on I. --For the purposes of this sub-sec"on, the expression "fraud" means any of the following acts commiIed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy: -- (a) the sugges"on, as a fact of that which is not true and which the insured does not believe to be true; (b) the ac"ve concealment of a fact by the insured having knowledge or belief of the fact; (c) any other act fiIed to deceive; and (d) any such act or omission as the law specially declares to be fraudulent.Page 4 of 10
4 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996 Explana on II. --Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.
(3) Notwithstanding anything contained in sub-sec"on (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the misstatement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate inten"on to suppress the fact or that such misstatement of or suppression of a material fact are within the knowledge of the insurer: Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policyholder is not alive.
Explana on. --A person who solicits and nego"ates a contract of insurance shall be deemed for the purpose of the forma"on of the contract, to be the agent of the insurer.
(4) A policy of life insurance may be called in ques"on at any "me within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:
Provided that the insurer shall have to communicate in wri"ng to the insured or the legal representa"ves or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based: Provided further that in case of repudia"on of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy "ll the date of repudia"on shall be paid to the insured or the legal representa"ves or nominees or assignees of the insured within a period of ninety days from the date of such repudia"on.
Explana on. --For the purposes of this sub-sec"on, the misstatement of or Page 5 of 10 5 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996 suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.
(5) Nothing in this sec"on shall prevent the insurer from calling for proof of age at any "me if he is en"tled to do so, and no policy shall be deemed to be called in ques"on 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."
12. Perusal of above provision shows that Sec"on 45 of the Insurance Act, 1938, embodies the legisla"ve intent to ensure both finality and fairness in contracts of life insurance. It proceeds on the recogni"on that such contracts rest upon uberrima fides i.e., the utmost good faith, requiring absolute candour from both the proposer and the insurer. The provision, as it now stands a@er its amendment by Act 5 of 2015, declares that once a policy of life insurance has remained in force for a period of three years, reckoned from the later of the dates of its issuance, commencement of risk, revival, or addi"on of rider, the policy shall not therea@er be called in ques"on on any ground whatsoever. This clause of finality is absolute and imposes a complete embargo upon the insurer from reopening or repudia"ng the policy a@er the expiry of that period.
13. Within the ini"al three-year span, the insurer retains a limited statutory right to ques"on the contract on two specific grounds-- (i) fraud, or
(ii) misstatement or suppression of a material fact. If repudia"on is based on fraud, the insurer must communicate in wri"ng to the insured or to his nominee or legal representa"ve the precise grounds and suppor"ng material. The Act defines "fraud" as the sugges"on of what is untrue, the ac"ve concealment of a fact known to be true, any act fiIed to deceive, or any act or omission declared fraudulent by law. Mere silence about a fact that may affect the assessment of risk does not, by itself, amount to fraud unless the circumstances impose a duty to speak or render the silence itself decep"ve.
14. Even where fraud is alleged, the insured or his beneficiaries are Page 6 of 10 6 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996 protected and the insurer cannot repudiate the claim, if it is shown that the statement complained of was true to the best of the insured's knowledge and belief, that there was no deliberate inten"on to suppress the fact, or that the insurer already possessed knowledge of it. When the insured has died, the burden of disproving fraud shi@s to the beneficiary. The statute also deems every person who solicits or nego"ates the insurance to be the agent of the insurer, not of the insured, so that the proposer is not penalised for the omissions of intermediaries.
15. Where the ground is misstatement or suppression of a material fact, and not fraud, the insurer may s"ll repudiate the claim within the same three-year period, but must do so in wri"ng and must refund all premiums received within ninety days of repudia"on. A misstatement is material, only if it has a direct bearing on the risk undertaken, and the onus lies on the insurer to establish that it would not have issued the policy, had the true facts been known.
16. The legisla"ve purpose is thus twofold : (i) to ensure prompt and bona fide inves"ga"on of alleged misstatements within a limited period, and (ii) to confer finality and certainty upon policies that have stood the test of "me. The amended sec"on reflects Parliament's inten"on to strengthen consumer protec"on and to prevent belated repudia"ons of matured or long-standing policies.
17. It must, however, be emphasised that the instant case concerns a policy issued in 1985 and a death occurring in 1987, and is therefore governed by the unamended Sec"on 45. Under the pre-2015 regime, the statutory protec"on to the insured extended only for two years from the date of the policy, and even a@er that period the insurer could s"ll repudiate, if it was able to prove that the insured had made a false statement or had suppressed a material fact fraudulently and to his own knowledge. There was thus no absolute bar against repudia"on; and the insurer's right to ques"on the contract was merely condi"oned by a heavier eviden"ary burden a@er two years.
Page 7 of 107 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996
18. Post amendment, the new Sec"on 45 introduces a three-year incontestability rule, making the bar complete and conclusive a@er the expiry of that period and prescribing clear procedural safeguards such as wriIen communica"on of grounds, refund of premiums in cases of simple misstatement, and defined burdens of proof. While the earlier law permiIed insurers to reopen policies by proving fraudulent concealment even beyond two years, the amended sec"on now aims at finality, certainty, and stability in life- insurance rela"onships, ensuring that bona fide policy holders and their nominees are not exposed to repudia"ons long a@er the risk has matured.
19. Applying the above legal principles to the facts of the present case, it is evident that the policy in ques"on was effected on 19.09.1985, and the death of the life assured occurred on 26.04.1987, i.e., within a period of one year and seven months from the date of commencement. Consequently, the protec"on afforded under Sec"on 45 of the Act, as it then stood, had not yet become opera"ve, the two-year period prescribed therein having not expired. The insurer was, therefore, within its statutory right to examine the veracity of the statements made in the proposal and to repudiate the policy, if it discovered material suppression or misrepresenta"on.
20. It is well recognised in medical jurisprudence that diabetes mellitus is a systemic and progressive disease, the root cause of which lies in the malfunc"on of the pancreas, resul"ng in either deficient insulin produc"on or impaired u"lisa"on of insulin by the body. Though metabolic in origin, the disease exerts widespread impact upon the human system, progressively affec"ng vital organs such as the kidneys, heart, eyes, blood vessels, and peripheral nerves. Medical science acknowledges that uncontrolled diabetes substan"ally reduces life expectancy, predisposes an individual to cardiac and renal failure, and leads to complica"ons which cumula"vely endanger life.
21. The concealment of a chronic and progressive condi"on, such as diabetes and hypertension proved by documentary evidence of medica"on and Page 8 of 10 8 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996 reimbursement, cannot be regarded as trivial or inadvertent In the context of a life insurance contract, the existence of diabetes is therefore a material fact having a direct bearing on the expectancy of life and the insurer's assessment of risk. Par"cularly in a non-medical policy, where no independent health examina"on is conducted, the insurer relies exclusively upon the proposer's declara"on regarding his state of health. Non-disclosure of a chronic ailment such as diabetes, which is known to have poten"al fatal consequences, cons"tutes suppression of a material circumstance and strikes at the very root of the principle of uberrima fides i.e., the utmost good faith, on which the en"re edifice of insurance law is founded.
22. The evidence on record clearly reveals that prior to submi9ng the proposal form, the deceased insured was already suffering from diabetes and hypertension, for which he had been receiving regular medical treatment and had even obtained reimbursement from his employer. These circumstances conclusively establish both the existence of the ailments and the insured's knowledge and awareness thereof. Despite this, in the proposal form, he gave nega"ve answers to the specific queries regarding previous illness, medical consulta"on, or treatment. In a non-medical policy, such declara"ons cons"tute the very basis of the contract, since the insurer's assessment of risk depends en"rely upon the truthfulness of the proposer's statements. The concealment of chronic ailments of this nature--having a direct bearing on life expectancy-- amounted to suppression of material facts, thereby vi"a"ng the contract of insurance. The insurer was, therefore, fully jus"fied in repudia"ng the claim, par"cularly as the death of the insured occurred within two years of the commencement of risk, when the statutory protec"on under Sec"on 45 of the Insurance Act, 1938 (as it then stood) had not yet come into opera"on.
23. The plea advanced on behalf of the appellants that the insurer ought not to have relied upon posthumous inves"ga"ons or that the disease was not material, stands nega"ved by the authorita"ve pronouncements of the Hon'ble Supreme Court in Mithoolal Nayak v. Life Insurance Corpora on of Page 9 of 10 9 of 10 ::: Downloaded on - 11-11-2025 02:30:33 ::: RSA-2359-1996 India, AIR 1962 SC 814; Life Insurance Corpora on of India v. Asha Goel, (2001) 2 SCC 160; and P.C. Chacko and another v. Chairman, Life Insurance Corpora on of India and others, (2008) 1 SCC 321, which hold in unambiguous terms that life insurance is a contract founded upon uberrima fides, and that suppression of a material ailment vi"ates the policy, par"cularly when the death of the insured follows soon a@er its issuance.
24. In Satwant Kaur Sandhu v. New India Assurance (2009 INSC 899), Hon'ble Supreme Court has held that non-disclosure of serious diseases like diabetes/renal failure is "material" and jus"fies repudia"on within the permissible period.
25. Conclusion: In view of the foregoing legal and factual posi"on, the judgment and decree passed by the learned Trial Court cannot be sustained. Though, while allowing the appeal filed by the insurance company (respondent herein), the First Appellate Court merely reproduced the observa"ons from the decision in Smt. Kamla Wan v. Life Insurance Corpora on of India, AIR 1981 Allahabad 366, without undertaking any independent discussion as to the applicability of that precedent to the facts of the present case, and did not furnish elaborate or cogent reasons while se9ng aside the findings of the Trial Court, the ul"mate conclusion arrived at by it is legally correct. Be that as it may, this Court, upon an independent appraisal of the evidence and the governing law, finds that the conclusion drawn by the First Appellate Court is fully jus"fied.
26. Final Order: Consequently, the present appeal stands dismissed, affirming the judgment and decree of the First Appellate Court.
(DEEPAK GUPTA)
JUDGE
03.11.2025
Nee ka Tuteja
Whether speaking/reasoned? Yes/No
Whether reportable? Yes/No
Page 10 of 10
10 of 10
::: Downloaded on - 11-11-2025 02:30:33 :::