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HIGH COURT OF CALCUTTA
P. C. Mallick
ROHINI NANDAN GOSWAMI - Appellant
Versus
OCEAN ACCIDENT AND GUARANTEE CORPORATION LTD. - Respondent
Suit 230 Of 1955
Decided On : APRIL 28, 1960
INSURANCE - BURGLARY - POLICY - CLAIM - DEFENCE - FALSE ANSWER TO QUESTION IN PROPOSAL FORM - SUPPRESSION OF FACT - BURDEN OF PROOF - MATERIALITY OF FACT - DUTY OF DISCLOSURE - MORAL HAZARD.
Fact of the Case:
Plaintiff filed a suit to enforce a claim on a fire and burglary insurance policy issued by the defendant in his favor. The policy was for a period of one year from 1-7-1954. The insured properties were furniture, household goods, and personal effects valued at Rs. 7,000/- and trinkets, personal ornaments, and gold sovereigns valued at Rs. 23,000/-. All the said properties were lying in the first floor of premises 6, Gonesh Chatterjee Avenue, Sibpore, Howrah, in the occupation of the plaintiff. On 5-8-1954, there was a burglary and considerable ornaments, silver utensils, and Benarasi saries covered by the policy were stolen and have not been recovered. The defendant denied liability and filed a written statement contending that the plaintiff is guilty of false answer to a question in the proposal form as also of suppression of fact.
Finding of the Court:
The court found that the plaintiff did not give a false answer to any of the questions in the proposal that he was required to answer. In particular, he did not give a false answer to Q. 7 (a). The court also found that the plaintiff never suffered any loss by fire, burglary, house-breaking or larceny. The court further found that the fact of burglary having been committed five years back in the ground floor of the same premises has no bearing on the risk undertaken by the insurer by insuring goods in the first floor of the same premises in 1954.
Issues: 1. Whether the plaintiff gave a false answer to any of the questions in the proposal form? 2. Whether the plaintiff suppressed any material fact? 3. Whether the fact of burglary having been committed five years back in the ground floor of the same premises has any bearing on the risk undertaken by the insurer by insuring goods in the first floor of the same premises in 1954?
Ratio Decidendi: 1. A contract of insurance is a contract uberrima fides and there must be utmost good faith on the part of the assured. 2. The duty is to disclose material facts only. A fact which is the subject-matter of a question in the proposal which the assured is required to answer must be considered to be a material fact, so that a false answer will vitiate the policy in terms of the contract itself. 3. But a fact may be a material fact, even though it is not the subject-matter of a question in the proposal, if the knowledge of that fact will affect the mind of an ordinary insurer to accept the risk. 4. The burden of proving the defence of concealment is on the insurer who sets up this defence. 5. In order to establish its defence of concealment, the insurer must prove: (1) that the facts alleged to have been concealed by the assured were true; (2) that they were material facts, and (3) that they were within the special knowledge of the assured. 6. Whether a particular fact is material depends upon the circumstances of a particular case. 7. Evidence of materiality is not always necessary. Materiality of a particular fact may be obvious from its very nature. 8. The test to determine materiality is whether the fact has any bearing on the risk undertaken by the insurer.
Final Decision: The court held that the plaintiff is entitled to a decree for Rs. 16,889/- with interest at the rate of 6% per annum. The plaintiff is also entitled to the costs of the suit.
( 1 ) THIS is a suit to enforce a claim on a fire and burglary insurance policy issued by the defendant in favour of the plaintiff. The policy is dated 13-7-1954 and the period covered by the policy is one year from 1-7-1954. The proposal on the basis of which the policy was issued is dated 26-6-1954. The properties insured are (i) furniture, household goods and personal effects valued at Rs. 7,000/- and (ii) trinkets, personal ornaments and gold sovereigns valued at Rs. 23,000/ -. All the said properties were lying in the first floor of premises 6, Gonesh Chatterjee Avenue, Sibpore, Howrah, in the occupation of the plaintiff. It is alleged in the plaint that on 5-8-1954 there was a burglary and considerable ornaments, silver utensils and Benarasi saries covered by the policy were stolen and have not been recovered. Particulars of the goods stolen have been set out in paragraph 4 of the plaint. The value of the property stolen has been stated to be Rs. 16,889/-, Due notice of the burglary was given to the police and the defendant. So also the claim, form was duly filed as required by the policy. The defendant having failed and neglected to pay the amount of the loss the present suit has been instituted on 25-1-1955.
( 2 ) THE defendant company is disputing liability and has filed a written statement contending that the plaintiff is guilty of false answer to a question in the proposal form as also of suppression of fact. The negative answer to Q. 7 (a) in the proposal form is false. Q. 7 (a) in the proposal is in the following terms: "have you ever sustained a loss by fire, burglary, house-breaking and larceny?"
( 3 ) IT is alleged in paragraph 4 of the written statement that previously in the month of Falgun 1355 B. S. there was a burglary in the house of the plaintiff. In this burglary, ornaments, clothes and other valuables worth Rs. 1,650/- belonging to the plaintiff and/or his wife were alleged to have been stolen. This fact has been suppressed when the policy was effected. This non-disclosure of fact is alleged to invalidate the policy. It is further contended that the policy was subject to the condition that all benefits under the policy would be forfeited if the plaintiff made a fraudulent claim. The plaintiff having fraudulently concealed material facts from the defendant as mentioned above, has forfeited all rights under the policy. In paragraph 12 the defendant denies that the plaintiff has suffered loss to the extent mentioned and/or claimed in paragraph 4 of the plaint or at all. On these allegations the liability under the policy has been denied. It is submitted that the suit is not maintainable and should be dismissed with costs.
( 4 ) ON these pleadings various issues have been raised by the defendant. A Brief of Documents containing copies of the documents disclosed by the parties has been tendered and marked as an exhibit, formal proof having been dispensed with. At the trial the plaintiff tendered his own evidence and the evidence of three other witnesses. The defendant also tendered the evidence of four witnesses.
( 5 ) THE first document in the Brief of Documents is a copy of the First Information Report or a diary dated 12-3-1949 in the Sibpore Police Station. It records that the plaintiff gave information of a theft having been committed at premises 6, Ganesh Chatterjee Lane. The thief is alleged to have pulled and tore away the necklace from the wife of the plaintiff's "natun Bowma". The list of stolen articles has been given. The diary is dated 12-3-1949. The plaintiff in his evidence stated that the burglary was committed in the ground floor where his brother and his wife were sleeping at the time. Alter the alarm was raised by the plaintiffs brother's wife, the brother ran after the thief and the plaintiff went to the thana which was very near to give intimation of burglary. In Court the plaintiff stated that he gave the information to the police immediately at 3 A. M. and went o
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