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1981 Supreme(All) 294
IN THE HIGH COURT OF ALLAHABAD
Deoki Nandan, J.
KAMLA WANTI - Appellant
Versus
L.I.C.OF INDIA - Respondents
Second Appeal 1548 Of 1970
Decided On : 08/03/1981
B.D.AGRAWAL, R.P.Goyal, S.K.SURI
Non-disclosure of a disease in an insurance application does not amount to misrepresentation if the disease is not specifically mentioned in the form and the applicant is not asked about it.
Headnote:
{'KEYWORD': 'LIFE INSURANCE', 'SUBJECT': 'MISREPRESENTATION IN INSURANCE CONTRACT', 'ACT SECTION LIST': ['SECTION 19', 'SECTION 18', 'SECTION 45'], 'SUMMARY': "The court held that the deceased's non-disclosure of his carbuncle and diabetes in his personal statement did not amount to misrepresentation, as these diseases were not specifically mentioned in the form and the deceased was not asked about them. The court also found that there was no evidence that the defendant Life Insurance Corporation would not have consented to the contract but for the said misrepresentation. The court further held that the evidence of Dr. T. B. Nigam, who testified that the deceased suffered from carbuncle and diabetes, was unreliable and could not be relied upon."}
Fact of the Case:
The plaintiff, the widow of the deceased, filed a suit for recovery of Rs. 13,300/- on the foot of an insurance Policy on the life of one Nana Lal Jagjeewan Sanghavi deceased. The defendant Life Insurance Corporation of India repudiated the claim on the ground that the deceased had suffered from carbuncle and diabetes, and that he suppressed this fact in the personal statement made by him along with his proposal for the insurance.
Finding of the Court:
The court found that the deceased did not suffer from carbuncle or diabetes and that his life was not cut short by any such disease. The court also found that the non-disclosure of the deceased's carbuncle and diabetes in his personal statement did not amount to misrepresentation, as these diseases were not specifically mentioned in the form and the deceased was not asked about them. The court further found that there was no evidence that the defendant Life Insurance Corporation would not have consented to the contract but for the said misrepresentation.
Issues: Whether the deceased's non-disclosure of his carbuncle and diabetes in his personal statement amounted to misrepresentation.
Ratio Decidendi: The court held that the deceased's non-disclosure of his carbuncle and diabetes in his personal statement did not amount to misrepresentation, as these diseases were not specifically mentioned in the form and the deceased was not asked about them. The court also found that there was no evidence that the defendant Life Insurance Corporation would not have consented to the contract but for the said misrepresentation.
Final Decision: The court allowed the appeal and decreed the suit for the recovery of the amount payable on Policy No. 7379395 on the life of Sri Nana Lal Jagjiwan sanghavi.
( 1 ) THIS is a plaintiffs second appeal in a suit for recovery of Rs. 13,300/- on the foot of an insurance Policy on the life of one Nana Lal Jagjeewan Sanghavi deceased. The plaintiff was his widow and having died in the course of the appeal in this Court, she is now represented by her heirs and legal representatives.
( 2 ) THE proposal for insurance is dated 30th March. 1964 and was accepted vide letter/receipt issued by the defendant Life Insurance Corporation of India, Ext. 8. The insured appears to have been aged about 56 years at the time of the proposal for insurance and died of "heart Failure" on 29th October, 1965. The plaintiff, being the nominee appointed by the insured, claimed the amount of insurance, but her claim having been repudiated by the defendant Life Insurance corporation of India, she filed the suit giving rise to this second appeal. The suit has been dismissed by both the courts below on the ground that the deceased had suffered from carbuncle and diabetes; that he suppressed this fact in the personal statement made by him along with his proposal for the insurance: and that the contract of insurance was void on account of the said misrepresentation.
( 3 ) I have heard learned counsel for the parties. It is common ground that the deceased having died within two years of taking the insurance policy; Section 45 of the Insurance Act, 1938, is out of the way, and the matter is governed by Section 19 of the Contract Act which runs as under:
"when consent to an agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representation made had been true. Exception:-- If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of Section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. Explanation:-- A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable. " Misrepresentation is defined as under by Section 18:
"18. Misrepresentation means and includes: (1) the positive assertion in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement. " although it has been suggested in paragraph 20 of the written statement that the misstatements and suppression were fraudulently made, but it does not appear that the defendant Corporation relied on any fraud having been practised by the deceased, within the meaning of Section 17 of the Contract Act. The following were the pleas taken by the defendant Corporation for avoiding all liability on the policy in question :
"13. That a proposal for being assured for a sum of Rs. 10,000/- was made by Nandlal Jagjiwan lal Sanghvi on 30th March, 1964. In the said proposal Sri Sanghavi made a declaration that the statements and answers contained in the proposal form were true in every particular and further agreed and declared that those statements and declarations along with further statements made before the Medical Examiner shall be the basis of contract of insurance between him and the defendant and if any untrue averment be contained there
