A policy of life insurance effected after the coming into force of the Insurance Act, 1938 cannot 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.

Judgment

S. K. DAS, J. : This is an appeal on a certificate granted by the High Court of Madhya Pradesh under Art. 133(1)(a) of the Constitution. The appellant is Mithoolal Nayak, who took an assignment on October 18, 1945 of a life insurance policy on the life of one Mahajan Deolal for a sum of Rs. 25,000 in circumstances which we shall presently state. Mahajan Deolal died on November 12,1946. Thereafter, the appellant made a demand against the respondent company for a sum of Rs. 26,000 and odd on the basis of the life insurance policy which had been assigned to him. This claim or demand of the appellant was repudiated by the respondent company by a letter dated October 10, 1947 which in substance stated that the insured Mahajan Deolal had been guilty of deliberate mis-statements and fraudulent suppression of material information in answers to questions in the proposal form and the personal statement, which formed the basis of the contract between the insurer and the insured. On the repudiation of his claim the appellant brought the suit out of which this appeal has arisen. The suit was originally instituted against the Oriental Government Security Life Assurance Co. Ltd., Bombay, which issued the policy in favour of Mahajan Deolal on March 13, 1945. Later, on the passing of the Life Insurance Corporation Act. 1956, there was a statutory transfer of the assets and liabilities of the controlled (life) business of all insurance companies and insurers operating in India to a Corporation known as the Life Insurance Corporation of India. By an order of this Court made on February 16, 1960 the said Corporation was substituted in place of the original respondent. For brevity and convenience we shall ignore the distinction between the original respondent and the said Corporation and refer to the respondent in this judgment as the respondent company. The suit was decreed by the learned Additional District Judge of Jabalpur by his judgment dated May 7, 1949. The respondent company then preferred an appeal to the High Court of Madhya Pradesh. This appeal was heard by a Division Bench of the said High Court and by a judgment dated August 28, 1956, the appeal was allowed and the suit was dismissed with costs. It is from that appellate judgment and decree that the present appeal has been brought to this Court.

2. We now proceed to state some of the relevant facts relating to the appeal and the contentions urged on behalf of the appellant. Mahajan Deolal was a resident of village Singhpur, Tahsil Narsinghpur. It appears that he was a small landholder and possessed several acres of land. Sometime in December 1942, Mahajan Deolal submitted a proposal through one Rahatullah Khan, an agent of the respondent company at Narsinghpur, for the insurance of his life with the respondent company for a sum of Rs. 10,000 only. Mahajan Deolal s age at that time was about 45 as stated by him. In the proposal form which was submitted to the respondent company, Mahajan Deolal mentioned the name of one Motilal Nayak, by profession a doctor, as a personal friend who best knew the state of the health and habits etc. of the insured. This Motilal Nayak, be it noted, is a brother of the appellant, the evidence in the record showing that the two brothers lived together in the same house. When the proposal for insurance of his life was made by Mahajan Deolal in December 1942, he was examined by a doctor named Dr. D. D. Desai. This doctor submitted two reports about Mahajan Deolal: one report, it appears, was submitted with the proposal form through the agent of the respondent company; another report was sent in a confidential cover along with a letter from the doctor. In this letter (Ex. D-22) the doctor explained why he was submitting two medical reports. In substance he said that the report submitted with the proposal form at the instance of the agent, Rahatullah Khan, was not a correct report and the correct report was the one which he enclosed in the confidential