The central legal point established in the judgment is that the suppression of material facts regarding the insured's health condition renders the insurance policy void ab initio, as per the provisions of the Insurance Act, 1938, Section 45.

Thiru Justice A. Raman, President—The opposite party is the appellant. The complainant is the respondent.

2. The complainant’s case is that her son namely Srinivasan had taken insurance policy for Rs. 50,000/- on 20.3.1993. He had taken another policy for another sum of Rs. 50,000/- on 3.1.1997. The premiums were regularly paid. The complainant’s son Srinivasan, the insured, died. The complainant preferred a claim. The opposite party repudiated the claim with regard to the policy dated 3.1.1997 bearing No. 730717912. Hence, the complaint.

3. The opposite party contended that the complainant’s son was an employee of Indian Bank and that it is true that he had taken two policies each for Rs. 50,000/- one on 20.3.1993 and another on 3.1.1997. With regard to the second policy, the complainant’s son had suppressed material facts. He was suffering from Tuberculosis for which he was under treatment and was on leave for more than 32 days. But in the proposal form, while answering question on the personal history, he had stated that he did not suffer from any illness requiring treatment for more than a week and that he was not admitted in any hospital or nursing home for general checkup, observation, treatment or operation and that he has not suffered from any ailment pertaining to liver, stomach, heart, lungs, kidney, brain or nervous system and that he has stated that his health has been good. Since it was a non-medical policy, the proposal was not subjected to any medical examination by the panel of doctors. Though he was suffering from Pulmonary Tuberculosis even prior to the filling in the proposal form, he had suppressed this ailment. He had applied for leave for more than 32 days from 9.9.1996 to 10.10.1996 and thereafter periodically on the ground that he has been taking treatment and that he has been hospitalized. He also sought reimbursement of medical expenses therefor. As there has been suppression of material facts, the policy was rightly repudiated. With regard to the first policy of the year 1993 as the deceased was hale and hearty and at that time he was not affected with any disease and also there was no suppression, the same was honoured. Thus, there is no deficiency in service.

4. The lower Forum by its order dated 22.6.1999 issued a direction to the opposite party to pay the benefits of the policy with interest at 12% per annum along with a compensation of Rs. 10,000/- and a cost of Rs. 500/-. Hence, this appeal by the opposite party.

5. The contract of insurance being one based upon good faith, if there is any suppression of material facts which would affect the very basis of the contract, then the contract would fail. Here in this case on hand, the case of the opposite party is that the complainant’s son was suffering from Tuberculosis which was concealed by him when he took out the policy and thus as there was material suppression concerning his health, the contract of insurance thus stands vitiated and, therefore, the opposite party is not bound to honour the same. The proposal form has been marked in this case as Ex. B1. The complainant has given a declaration stating that “...I do hereby agree and declare that these statements and this declaration shall be of the contract of assurance between me and the Life Insurance Corporation of India and that if any untrue averment be contained therein, the same shall be absolutely null and void and all monies which shall have been paid in respect thereof shall stand forfeited to the Corporation. In the relevant page which contains the questionnaire regarding his personal history, he has answered all the columns as “No” and also stating in the affirmative that his health has been good. Though these columns contain about 10 questions, we are concerned with the answers to the questions (a) to (e). (a) During the last five years did you consult a Medical Practioner for any ailment requiring treatment for more than a week? (b) Have you ever been admitted to any hospital or n