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High Court Of Delhi
SHANTA TRIVEDI - Appellant
Versus
LIFE INSURANCE CORPORATION OF INDIA. - Respondent
Suit 627 of 1978
Decided On : 04/24/1986
INSURANCE - LIFE INSURANCE - FRAUDULENT SUPPRESSION OF MATERIAL FACTS - AGE, HEALTH, AND KIDNEY CONDITION - REPUDIATION OF POLICIES - ONUS OF PROOF - INTEREST ON INSURANCE AMOUNT - INSURANCE ACT, 1938, SEC. 45.
Fact of the Case:
The plaintiff, Shanta Trivedi, filed a suit against the defendant, Life Insurance Corporation of India (LIC), seeking recovery of Rs. 2,50,000 along with interest for the repudiation of five life insurance policies taken out by her late husband, Uma Shankar Trivedi. The defendant alleged that the policies were vitiated by fraudulent suppression of material facts and misrepresentation regarding the assured's age, health, and kidney condition.
Finding of the Court:
The court held that the defendant failed to prove that the assured had fraudulently suppressed material facts or made misrepresentations regarding his age, health, or kidney condition. The court found that the assured had disclosed his age correctly, that he did not suffer from diabetes mellitus or hypertension at the time of filling up the proposal forms, and that his ectopic kidney was not an ailment that affected his longevity or required disclosure.
Issues: 1. Whether the plaintiff's claim fails due to fraud, misrepresentation, or failure to disclose material facts while obtaining the insurance policies. 2. Whether the plaintiff's claims based on the insurance policies are not payable for the reasons stated in the written statement. 3. In case the policies are payable, what interest, if any, is payable thereon and from what date.
Ratio Decidendi: 1. The onus of proof lies on the insurer to show that the statement made in the proposal for insurance or in any report of a medical officer, referee, or friend of the insured, or in any other document leading to the issue of the policy, was on a material matter, that the insured suppressed facts which it was material to disclose, and that it was fraudulently made by the policy-holder. (Insurance Act, 1938, Sec. 45) 2. The insurer must prove that the insured knew at the time of making the statement that it was false or that it suppressed facts which it was material to disclose. 3. The court found that the defendant failed to prove that the assured had fraudulently suppressed material facts or made misrepresentations regarding his age, health, or kidney condition. 4. The court held that the plaintiff was entitled to recover the insurance amount of Rs. 2,50,000 but was not entitled to any interest as the payment of interest was barred by an express agreement in the insurance policies.
Final Decision: The court decreed in favor of the plaintiff for the recovery of Rs. 2,50,000 from the defendant, but the parties were left to bear their own costs. The decretal amount was to be paid within one month from the date of the judgment, failing which the plaintiff would be entitled to future interest at the rate of 12% per annum on the decretal amount from the date of the suit till payment/realization.
( 2 ) UMA Shanker Trivedi, late husband of the plaintiff had taken out five Life Insurance Policies with the defendant Life Insurance Corporation of India, Jeevan Vihar, 25, Kasturba Gandhi Marg, New Delhi (in short lic), the details whereof are as follows : (See details on next page)
( 3 ) THE plaintiff had been appointed by the assured deceased Uma Shankar Trivedi as his nominee and in that capacity she was to be paid the sums assured under the policies, in the event of the death of the assured before the maturity dates of the polices. The assured fell suddenly ill on the morning of 5th February, 1973 and was immediately removed to All India Institute of Medical Sciences, New Delhi, (hereinafter to be referred to as the institute ) where he was admitted and where he died on 11th February, 1973.
( 4 ) THE defendant-LIC was informed of the death of the assured vide letter dated 7th May, 1973 and insurance claim was also alleged by the plaintiff of the aforesaid policies. Even though the claim filed by the plaintiff was duly acknowledged by the LIC as early as 12th May, 1973 and LIC had also assured the plaintiff of an early settlement of the same, it was ultimately by a letter dated 31st March, 1977/1st April 1977 that the LIC communicated its repudiation of the plaintiffs claim and also asserted its own claim to all the premia paid on the said policies by the assured alleging that the assured had given false answers to certain material questions regarding his age and health. This repudiation S. No Policy No. Date Amount of the Policy. No. . 1. 24212376 28-10-1970 Rs. 50,000 2. . 24217512 13-2-1971 Rs. 50,000, ;, 3. 24227823 , 28-3-1971 Rs. 50,000 4. 24268759. . 19-1-1972 Rs. 45,000 5. 24268760 19-1-1972 Rs. 55,000 of plaintiff s claim by the LIC was considered improper and illegal by the plaintiff who then sent a registered notice dated 22nd July, 1977 through her counsel Mrs. Swaran Mahajan, Advocate protesting against the repudiation and asserting her claim, but the LIC again in its reply dated 22nd September, 1977 through counsel confirmed the repudiation of plaintiffs claim asserting that assured had suffered from Diabetes Mellitus, Hypertension and Kidney trouble for which he had allegedly taken treatment but had not disclosed those material facts in the proposals and personal statements/declarations submitted by him for insurance. Feeling aggrieved, the plaintiff has brought this suit.
( 5 ) THE claim of the plaintiff for the insurance amount has been resisted and controverted by the defendant LIC on the ground that all the five insurance policies were vitiated by fraudulent suppression of material facts and misrepresentation in regard to his age and health of assured and made declarations knowing the same to be false and never disclosed to the LIC that he was suffering from the above mentioned diseases. The alleged fraudulent suppression of material facts and false declarations on the part of the assured are identical in respect of all the five policies and in respect of the same questionnaire of his personal statements which he had to make for each policy. It would be sufficient if the relevant questionnaire is reproduced and the same is reproduced as follows: (For questionnaire see below)
( 6 ) THE aforesaid mis-statements or fraudulent suppression of material facts appear both in the proposal forms of all the five policies as also in the personal statements which he made separately in respect of each proposal It is specifically asserted that at the time he made these personal declarations or filled up the proposal forms he was a patient of diabete
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