For avoidance of a policy under Section 45 of the Insurance Act, 1938, three conditions must be satisfied: (1) the statement must be on a material matter or must suppress facts which it was material to disclose; (2) the suppression must be fraudulently made by the policy holder; and (3) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.

S. C. MOHAPATRA, J.

( 1 ) THESE two appeals by the defendant arises out of a common judgement in two suits arising out of the same cause of action where the parties are the same, issues are the same and reliefs claimed are the same. Accordingly, they are heard together.

( 2 ) APPELLANT is a statutory body constituted under the Life Insurance Corporation Act, 1956. After this Act came into force, appellant became the sole authority to have life insurances in India. For insuring a life, a proposal is to be made by the life sought to be insured, the proposer is to be medically examined by a medical examiner approved by the insurer who is to give a confidential report to the insurer and the premium amount required is to be paid. Possessed of these two documents, insurer is to decide the question of acceptance of the proposal. Once the proposal is accepted, contract is complete and policy is to be issued. Where, for reasons indicated in term of the policy, it lapses, the same can be revived as per the terms contained therein. On happening of the event mentioned in the policy, insurer is to pay the sum assured with benefits, if any, either to the insured or his nominee or legal heirs as the case may be.

( 3 ) ON 7/12/1970, Debakilal made a proposal (Ext. A) for covering risk of his life for Rs. 30,000/ -. On the previous day, i. e. 9-12-1970, he was examined by an approved medical examiner of the insurer who submitted his confidential report (Ext. N ). Proposal was accepted by the defendant and policy (Ext. B) was issued on 4-2-1971 effective from 28-8-1970. When the policy was in force, on 13-9-1978, deceased made another proposal (Ext. K) for covering the risk of his life for Rs. 40,000/ -. On the same day, the medical examiner approved by the insurer examined him and submitted a confidential report (Ext. P ). That day, a special heart report (Ext. O) was also obtained. Possessed of these documents risk was covered for Rs. 40,000/- as per policy issued subsequently (Ext. J) effective from 20-11-1978. Due to non-payment of premium, the second policy (Ext. 5) lapsed but was revived by the insurer on basis of personal statement of the deceased (Ext. H) made on 23/03/1981 while both the policies were in force. About one and half year before his death, Debakilal was advised by his doctor to reduce in-take of sugar as he was found to be suffering from diabetes. Two and half months before death, Debakilal was examined in S. C. B. Medical College Hospital for angina pain in his heart. From Cuttack, he was taken to Jaslok Hospital in Bombay. At that stage, he expired on 23-6-1982 in Jaslok Hospital, Bombay while under treatment for his heart disease. On 8-6-1982, request was made to the hospital for admission of Debakilal in Jaslok Hospital as per Admission request form (Ext. D ). He was admitted on 12-6-1982 at 10. 00 a. m. On admission, Dr. Thomas took history of Debakilal which was reduced to writing (Ext. F ). Debakilal expired in the hospital on 2-6-1982 at 2. 30 p. m. on account of cardio respiratory arrest due to infraction following coronary bypass surgery for triple vessel coronary disease as revealed from the certificate of hospital treatment granted by Jaslok Hospital (Ext. E ). Dead body was brought to Karanjia and was buried on 24-6-1982 at 5 p. m. in the cremation ground near Deo river bridge, Karanjia (Ext. C ). Death was intimated to the insurer. On receipt of the information of death, insurer sent the required forms on 29-7-1982 which were duly submitted. Claim of plaintiffs were repudiated on the ground that policies had become void as it was found that untrue and incorrect statements were contained in the proposals, declaration, personal statement and material information had been withheld.

( 4 ) SINCE the plaintiffs would have been entitled to settlement of the claims but for the repudiation, main question for decision in the suit was the justification of repudiation.

( 5 ) PLAINTIFF No. 3 was examined as P. W. 1 in