The judgment establishes the requirement of fraudulent misrepresentation and intentional suppression of material facts for the legal repudiation of an insurance claim under Section 45 of the Insurance Act.

The instant First Appeal is directed against the Judgment and decree dated 7.1987 whereby the learned Additional District Judge No. 2, Ajmer dismissed the suit filed by the plaintiff appellant for recovery of Rs. 36,000/-.

Briefly put, the plaintiff appellant filed the suit with the averments in the plaint that the defendant was the Corporation established under the Life Insurance Corporation of India Act, 1956. The plaintiff husband late Shri Belaram submitted a proposal for insurance of his life for a sum of Rs. 25,000/-on 211.1976 to the Life Insurance Corporation of India, Ajmer Division, Ajmer (“LIC” for short). According to the plaintiff , the proposal was accepted and consequently first yearly instalment of extra premium amounting to Rs. 2,245/-paid by the proposer was adjusted and Policy Rs. 25833199 under the Table and Term 24-15 wa issued to Belaram commencing the risk from 22.1977. The second yearly instalment due on 22.1978 was also paid and the policy remained in force. The insured Shri Belaram died on 17.1978 and the plaintiff being the nominee in the aforesaid policy became entitled to claim the policy amount which claim was made by her. However, under a letter received by the plaintiff on 29.1979, the defendant informed the plaintiff that they had decided to repudiate all liabilities under the aforesaid policy as the deceased withheld material information regarding his health. The plaintiff made a representation on 11.1979 for sympathetic consideration and issued reminders and also served a notice dated 19.3.1981 through her counsel but without any effect. The plaintiff averred that the allegation of withholding material information by the deceased was thoroughly incorrect and reputation claimed by the defendant was against the contract and the governing law. Besides the sum assured of Rs. 25,000/-, the plaintiff claimed bonus of Rs. 2000/-and interest @ 12 per annum from the date of death of her husband and hence filed the suit for recovery of Rs. 36,000/-and other ancillary reliefs.

The defendant LIC in its written statement averred inter alia that the proposal was submitted with the desire of perpetuating fraud in the matter of obtaining policy. The averment regarding extra premium and commencement of policy were not disputed with the contention that at that time the defendant was not aware of the fraud. The defendant maintained that the claim was rightly repudiated

for the reason stated in the reputation letter. In the additional pleas, the defendant made the following

averments in para 15 :

“15. That while submitting the proposal form and answering the questions in personal statement

the deceased will fully and fraudulently suppressed that he had suffered from Tuberculosis,

Diabites, hypertension and other diseases. If in answer to the relevant questions he had disclosed

the information about his aforesaid ailments the defendants Divisional Office would have been put

on its guard and the underwriter would not have recommended the acceptance of proposal by

Divisional Office. In such circumstances the deceasd would have been put to proper checkup in

every respect and the proposal with all the checkup reports would have been submitted to the

Central Office and it would have been a matter for central office either to reject the proposal or to

accept it on such terms as the Central Office thought fit. The fact that the deceased died of heart

failure is also enough testimoney of the fact that the suffered from Diabeties, Hypertension,

Tuberculosis etc. Thus looking to the averments in the proposal form personal statement, and the

policy conditions the contract of Insurance stood vitiated. And the plaintiff is not entitled to base

his claim on such an unenforceable and void contract.”

The defendant, therefore, prayed for dismissal of the suit with costs.

On the pleadings of the parties the learned trial Court framed the following issues on 9.1982 : “Issues :

1. Whether the plaintiff is entitled to the am