Back
1965 Supreme(All) 221
Allahbad High Court
D.P.UNIYAL,RAJESHWARIPRASAD
Brahm Dutt Sharma - Appellant
Versus
Life Insurance Corporation of India - Respondent
Decided On : 12/24/1965
S.B.L. Gaur and K.B.L. Gaur, for Appellant; Jagdish Swarup and S.D. Agarwal, for Respondent.
False statements in an application for insurance can vitiate the policy if they are made a part of the contract and are found to be false.
Headnote:
INSURANCE - LIFE INSURANCE - FALSE STATEMENTS IN APPLICATION - EFFECT - INSURANCE ACT, 1938, S. 45 - CONTRACT ACT, 1872, S. 30 - LIFE INSURANCE CORPORATION ACT, 1956, SS. 7, 9(2) - O. XXII, R. 10, C.P.C.
Fact of the Case:
The appellant, Brahma Dutta, filed an appeal against the dismissal of his suit by the Civil Judge, Meerut, seeking recovery of Rs. 35,000 from the respondent, Crown Life Insurance Company, Toronto, Canada, under an insurance policy issued to his deceased uncle, Mukhtar Singh. The Company denied the claim, alleging false statements in the application regarding Mukhtar Singh's occupation, status, and residential and business address, and that the policy was effected by Brahma Dutta for his own benefit without an insurable interest.
Finding of the Court:
The court found that the statements made by Mukhtar Singh in the application for insurance regarding his occupation, status, and residential and business address were false. It also found that the policy was effected by Brahma Dutta for his own benefit and that he had no insurable interest in Mukhtar Singh's life.
Issues: 1. Whether the statements made by Mukhtar Singh in the application for insurance were false. 2. Whether the policy was effected by Mukhtar Singh or by Brahma Dutta for his own benefit. 3. Whether Brahma Dutta had an insurable interest in Mukhtar Singh's life.
Ratio Decidendi: 1. The court held that the statements made by Mukhtar Singh in the application for insurance were false, as evidenced by the fact that he was not a zamindar or mill owner as claimed, but a village teacher with a meager salary, and that he did not reside in Meerut or own any spinning or weaving mill there. 2. The court found that the policy was effected by Brahma Dutta for his own benefit, as evidenced by the fact that he paid the premiums, was named as the beneficiary, and had no explanation for why Mukhtar Singh would have assigned the policy to him while leaving his wife and children unprovided for. 3. The court held that Brahma Dutta did not have an insurable interest in Mukhtar Singh's life, as there was no evidence of any obligation on Mukhtar Singh's part to effect the insurance policy for Brahma Dutta's benefit.
Final Decision: The court dismissed the appeal, upholding the decision of the Civil Judge, Meerut, and dismissing Brahma Dutta's suit for recovery of Rs. 35,000 from the Crown Life Insurance Company.
2. The facts giving rise to this appeal, shortly stated, are as follows : On the 15th January 1951 Mukhtar Singh, deceased uncle of the appellant, made an application for insurance in the Crown Life Insurance Company, Toronto, Canada, with its branch office at Bombay (hereinafter referred to as the Company) for a sum of Rs. 35,000. In that application he stated his occupation as landlord and mill owner. Weaving and Spinning Mills, and his place of residence as C/o Brahma Dutta Sharma, Gujrati Well Meerut City. On the basis of the above application the Company issued an Interim policy to Mukhtar Singh on the 19th February 1951. The interim policy was approved by the Head Office of the Company which issued Insurance Policy No. 573766, dated 21st May 1951 in favour of the said Mukhtar Singh. In that policy the appellant was described as the nominee of the assured after his death. The policy was issued subject to the endorsements contained therein Clause 4 of the endorsement reads :-
"After the expiry of two years from the data on which it shall have been effected, this policy shall not be called in question by the company on the ground that a statement made in the application therefore or in any other document leading to the issue of the policy was inaccurate or false, unless the company shall show that such statement was on a material matter and fraudulently made by the insured and that the insured knew at the time of making it that the statement was false."
Clause 4 laid down that the application for the policy and any additional statements made to the company, together with the policy and its endorsements, shall constitute the entire contract between the parties. Clause 10 provided that on the policy becoming a claim by death, proof of claim shall include such evidence under oath as may be required by the company of the death of the insured and the causes leading thereto, and of the title of the claimant and proof of age as mentioned in Cl. 8 and such other information as the company may deem necessary to establish the validity of the contract.
3. The first quarterly premium on the policy was admittedly paid on the 12th February 1931 by the appellant himself. The second quarterly premium was also paid by the appellant through a draft or mail transfer on 19/21 May, 1951.
4. Mukhtar Singh Sharma died at Meerut on the night between the 19th and 20th August 1951 and notice of his death and that of the plaintiff's claim was sent to the defendant Company on the 15th September 1951 on the basis of the nomination of the policy in the appellant's favour. The Company by letter, dated the 16th October 1951 wrote to the appellant to give full names and addresses of the persons who were present at the time of the demise of the insured and stated that in accordance with endorsement No. 10 of the policy the Company was entitled to call for such other information that it considered necessary to establish the validity of the contract. Eventually the Company refused the claim of the appellant on the ground that Mukhtar Singh assured had made false and incorrect declarations in his application Ex- A-10 as to his status and occupation, and also as to his residential and business address. Thereupon the appellant brought the suit for recovery of Rs. 35,000 out of which this appeal has arisen.
5. The suit was resisted by the Company inter alia on the ground that the statements made by the assured Mukhtar Singh Sharma in Part I and Part II of the application for policy were false and that since these statements were agreed to be the basis for contract of insurance the suit was liable to be dismissed. It was further pleaded that the insurance policy was not really effected by Mukhtar Singh Sharma deceased for his use and benefit but was got effected by the appellant for his own use and benefit and that the appellant had no insurable
