A misrepresentation by an insured person in a proposal form for an insurance policy is material if it induces the insurance company to issue the policy at a lower premium than it would have otherwise charged.

KAILASAM, J. :- The Hindusthan General Insurance Society Ltd., by its General Secretary, the defendant in a suit for recovering of a sum of Rupees 3715-20, on the basis of an insurance policy taken by him, is the appellant in this Letters Patent Appeal.

2. The plaintiff has insured his lorry MDS 4779 with the defendant. The period of insurance was from 11-8-1962 to 10-8-1963. On 25-1-1963, the lorry met with an accident, as a result of which the claim was made by the plaintiff.

3. The only point that arises in this Letters Patent Appeal is whether the Insurance Company can repudiate its liability under the policy on the ground that there was a material misrepresentation in his proposal for the issue of the policy. In the proposal made by the plaintiff, the particulars of the vehicle to be insured is given as follows :

Registered number of

the vehicle : MDS 4779

Make of vehicle Tata Mercedes

Benz

Type of body Open

Treasury Horse power

or C. C. 30.2

Year of manufacture 1961

Proposer's estimate of

present value Rs. 35,000.

Under the column 'Licensed carrying capacity', which is important for our purpose, the capacity is mentioned as 5 tons'.

4. On this proposal, a policy was issued by the defendant on 20-8-1962. The particulars given in the proposal, as copied in the column relating to the description of the vehicle and in the column 'Limitation as to use', the policy provides as follows :-

"Warranted that the weight of the goods carried by the within described vehicle shall at no time exceed 5 tons or the licensed carrying capacity of the vehicle whichever is less."

It is common ground that the description given in the proposal as the carrying capacity licensed as 5 tons is not correct. The licensed capacity is admitted to be 5.392 tons. The point that arises for consideration is whether the furnishing of an incorrect information, viz., the licensed carrying capacity as 5 tons, when it was actually higher, is a material misrepresentation, which would entitle the Insurance company to repudiate the policy. Lengthy arguments were addressed as to the nature of contract uberrima fides, and as to whether misrepresentation is necessary when the basis of a contract was the statement in the proposal.

5. We do not propose to refer to the cases cited or discuss the law on this aspect, for the appeal can be disposed of on merits.

6. The trial Court found that the company would not have accepted the risk at a lower premium for a lorry, which called for higher premium as per the schedule of rates of the defendant. It found that but for the misdescription given in the proposal, the defendant would not have accepted the risk of the lorry at the rate of the premium paid for it. Therefore, he concluded that the misdescription with regard to the carrying capacity of the vehicle is a material misrepresentation and that the defendant company is entitled to avoid the insurance on account of this.

7. The lower appellate Court expressed the same view. It held that the statement of the assured found in the proposal in relation to the carrying capacity of the vehicle was a material statement, which went to the root of the contract and was not descriptive of the risk and the insurance company was entitled to avoid the contract.

8. In the second appeal, the learned Judge took a different view and held that the insurance company cannot repudiate its liability. We will refer to the reasons of the learned Judge presently.

9. We have no hesitation in accepting the conclusion arrived at by the trial Court and the lower appellate Court. While admit