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1992 Supreme(Kar) 166
Karnataka High Court
PRABHAVATI GANGADHAR - Appellant
Versus
LIFE INSURANCE CORPORATION OF INDIA, DHARWAD - Respondent
Decided On : 06-05-92
W.P. : 16051 of 1984
ANANTH MANDAGI, N.A.MANDAGI, V.C.BRAHMAIAYAPPA
The burden of proof in cases of fraudulent suppression of material facts and the enforceability of insurance policies.
Headnote:
Insurance - Life Insurance - Section 45 of the Insurance Act, 1938 - Summary of Acts and Sections: Section 45 of the Insurance Act, 1938 - The court discussed the Provisions of Section 45 of the insurance act and its interpretation in Mithoolal Nayak v Life Insurance Corporation of India, AIR 1962 SC 814. The court emphasized the conditions to be fulfilled for the application of the Provisions of the second part of Section 45 and highlighted the burden of proof in cases of fraudulent suppression of material facts.
Fact of the Case:
The deceased had taken 6 life insurance policies, and after his death, the petitioner, his mother, preferred claims. The respondent-corporation repudiated the claims on the ground of the insured's alleged suppression of health information in the proposals for insurance.
Finding of the Court:
The court rejected the respondent's contention that the writ petition is not maintainable to enforce the terms of the policies and held that the respondent-corporation cannot wriggle out of its commitments under the policies without valid reasons. The court found that the respondent failed to prove fraudulent suppression of material facts by the deceased-insured.
Issues: Enforceability of the insurance policies, fraudulent suppression of material facts, maintainability of the writ petition.
Ratio Decidendi: The court emphasized the enforceability of the insurance policies and the burden of proof in cases of fraudulent suppression of material facts.
Final Decision: The court allowed the petition and directed the respondent-corporation to honor its obligations under the policies and settle the claims of the petitioner. The respondent-corporation was also directed to pay interest on the wrongfully withheld amounts due under the policies.
( 1 ) ONE anil gangadhar shanbhag died on 10-12-1980 at the age of 27 years as evidenced by the death certificate produced under memo dated 19-7-1991.
( 2 ) IT appears during his life-time he had taken 6 life insurance policies, the particulars of which are as follows:
Policy No.
Date ot commencement
Sum assured
1. 40196022
21-9-1972
Rs. 15,000/-
2. 40380276
28-12-1975
Rs. 10,000/-
3. 40380277
28-12-1975
Rs. 10,000/-
4. 40384001
18-3-1976
Rs. 10,000/-
5. 50384083
20-3-1976
Rs. 10,000/-
6. 40469599
10-8-1978
Rs. 25,000/-
after his death, the petitioner, who is the mother of the deceased, preferred claims in respect of the amounts due under the aforesaid six policies issued by the respondent, together with the incidental benefits accruing thereon. The said claims were made by the petitioner on 19-1-1981. The respondent-corporation, in several letters which are marked as annexures-b to f, repudiated the claims made by the petitioner on the ground that the insured had suppressed certain material facts regarding his state of health when he took the policies. While repudiating the claims, the respondent-corporation has stated that the deceased-insured had suffered from "atrial septal defect" for which he had consulted medical men and had taken treatment in a hospital and the same was not disclosed at the relevant time in his proposals for the insurance policies.
( 3 ) SRI Mandgi, learned counsel appearing for the petitioner relying on the Provisions in Section 45 of the insurance Act, 1938, submitted that the repudiation by the respondent is legally untenable. Section 45 reads as hereunder:"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 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 of 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 a 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, 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".
( 4 ) RELYING on the above Provisions, the learned counsel contended that in view of the fact, that more than two years had elapsed from (he effective date of each of the policies as on the date when the insured died and claims were lodged by the petitioner, it is not open for the respondent to call in question the said policies on the ground that any statement made in the proposals 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 policies, was inaccurate or false. He submitted that the respondent has not shown 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 deceased insured and that be knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.
( 5 ) THE statement of objections on behalf of the respondent was filed during the course of hearing. In fact, in the first instance, in the
