In a contract of life insurance based on 'uberrima fides', the non-disclosure of pre-existing chronic diseases such as diabetes or hypertension in a proposal form constitutes the suppression of material facts, justifying the insurer's repudiation of the policy.

DEEPAK GUPTA, J.

This Regular Second Appeal is directed against the judgment and decree dated 16.12.1995 passed by the first Appellate Court of learned Additional District Judge, Ludhiana, whereby the insurer’s appeal was allowed and the suit for recovery of the assured sum under a life insurance policy filed by plaintiffs (appellants herein) was dismissed, reversing the trial Court’s decree dated 03.05.1993 in favour of the plaintiff-nominee.

Factual Matrix: The undisputed facts, which emerge on perusal of the file are that Sh. Rajinder Kumar Chopra, husband of plaintiff Smt. Usha Chopra got his life insured with defendant respondent - life insurance Corporation of India for a sum of ₹25,000/- on 19.09.1985 by submitting proposal form Ex.DW6/1. He expired on 26.04.1987 i.e. about one year and seven months after the policy date. The nominee Smt. Usha Chopra i.e. wife of deceased along with her children filed a claim for the sum assured by the insurer. However, the said claim was repudiated by insurance company on the ground that the deceased had made mis-representation in the proposal for the life insurance. Said defence of the respondent- Life Insurance Corporation of India, was though not accepted by the learned trial Court, which decreed the suit on 03.05.1993 but the first Appellate Court reversed the finding and accepted the appeal of the Life insurance company, thus dismissing the suit on 16.12.1995.

Contentions: Assailing the aforesaid reversal, it is contended by learned counsel for the appellants-plaintiffs that well-reasoned judgment decreeing the suit by the trial Court has been wrongly reversed by the first Appellate Court by mis-appreciating the evidence on record.

Despite service of notice of this appeal upon the respondents, nobody has turned up on their behalf to contest the appeal.

After considering the trial Court record as available on the DMS of this Court, this Court finds no substance in the submissions made by learned counsel.

Analysis by this Court: Undisputedly, it was a non-medical policy, which was issued in the name of Shri rajinder Kumar Chopra, i.e. insured, which means that insured was not required to undergo physical tests like blood, ECG or urine examination etc. and in such cases, the insurer relies upon the applicant’s self-declaration of health in the proposal form. Under the Insurance Regulatory and Development Authority of India (IRDAI) guidelines, insurers are free to offer non-medical policies provided - the proposer signs a good-faith declaration about health; and the company discloses that false statements can void the policy.

In such like cases, the applicant-insured is required to make truthful declarations in the proposal form. It is based upon the principle of contract of insurance namely, uberrima fides, which is a Latin phrase and means “utmost good faith“, i.e., the highest degree of honesty. The applicant is required to make full disclosure of all the material facts that could affect the risk being insured. Insurance contracts are not like ordinary, commercial contracts and they rely heavily on the information given by the proposer. The insurer cannot verify every fact independently before issuing the policy and therefore, the law demands complete transparency and good faith.

In the present case, in the proposal form Ex.DW6/1 dated 19.09.1985, which was submitted by the insured Sh. Rajinder Kumar Chopra, he made following declaration on some of the material questions :

However, the insur