Seelam Ramanamma vs Divisional Manager, Life Insurance Corporation of India, Machilipatnam

This appeal is by the plaintiff against the judgment and decree dated 8-4-1987 made in OS No.3 of 1981 on the file of the Subordinate Judge, Ongole, dismissing the suit.

The suit is filed for recovery of a sum of Rs.63,000/- being the principal and interest from the defendant-Insurance Company by the widow of insurer, late Veerappa Naidit, who took a policy with the defendant-Corporation for a sum of Rs.50,000/- under the Endowment Insurance Policy No.36618009. He died on 10-8-1976 on account of blood pressure. The plaintiff requested the Corporation to settle the amount, instead the Corporation repudiated the claim by proceedings dated 31-8-1977 on the ground that the deceased-policy holder suppressed two material aspects viz., having suffered florosis disease, blood pressure and as to the correct age. It was claimed by the appellant/plaintiff that the Corporation having processed the policy with due medical examination could not plead ignorance of these aspects. Therefore, the belated repudiation is not valid.

The Corporation contested the said claim, inter alia, on the ground that the said policy commenced from 28-4-1973, and the deceased stated to be of 46 years age. Though the deceased was having florosis disease, it was suppressed from the Corporation. Even as to the age there is no correct disclosure. The birth certificate filed showing the date of birth, as 18-6-1927 is not acceptable in view of tampering and overwriting in the record. Further there is a variation in the ages shown at different places. Therefore, it was claimed that the repudiation is perfectly valid and the plaintiff is not entitled to any amounts under the policy.

In view of the respective pleadings, the lower Court framed the issues and the plaintiff herself examined as PW1 and marked Exs.Al to A11, whereas on behalf of the Corporation DWs.l to 5 were examined marking Exs.Bl to Btl.

On the appreciation of evidence and material on record, the Court below dismissed the suit holding that there was a fraudulent suppression of material facts by the proposer and the plaintiff is not entitled to claim the said amount.

In this appeal, Sri V.L.N.G.K. Murthy, learned Counsel appearing for the appellant contended that Ex.Bl, Certificate shows 18-6-1927 as date of birth of the deceased and the Corporation accepted the same. However, Ex.B4, which is a case sheet of the deceased for the treatment in CMC Hospital, Vellore in the year 1969 shows the date of birth as 1919. Exs.B9 and B10 the voters'' lists of the years 1970 and 1975 show the age of the deceased as 56 and 60 years respectively. It was contended that there is no intention in suppressing the age and no fraud is committed on the part of the deceased. Further, these aspects would not amount to suppression of material fact. Further, it was contended that the area is a notified as having afflicted with the florosis disease through a Gazette Notification issued by the Government and the Corporation can not plead innocence. They should have tested medically to see that the proposer was free from the disease. It was also contended that though the deceased was treated for the disease in the year 1969 as per Ex.B4, it was not such a nature which can remain unnoticed and the symptoms of disease would be apparent even to a naked eye. But the Doctor-DW5 did not record any signs at the time of approving proposals. Therefore, there is no fraudulent suppression on the part of the deceased-policy holder.

Sri J. V. Suryanarayana Rao, learned standing Counsel appearing on behalf of the Corporation contended that the rights and liabilities under Insurance Policy arise out of the contract entered into between the proposer and the Corporation, of which Ex.B8 the personal statement given by the policy-holder forms the basis. He submits that against clauses 4-D, 6-K, 8-C and 9-A of the statement, there is specific denial and factum of the deceased suffering from florosis and age particulars. Therefore, as the suppression is of material facts, the Corporation repudiated after making discreet enquiry.

In view of these rival contentions, the questions which emanate in this appeal are whether there is any suppression of material fact on the part of the deceased-policy holder and whether age and florosis disease constitute material facts, and the suppression of which entitle the Corporation to repudiate the contract.

In this connection, it is relevant to refer to Section 45 of the Insurance Act, 1938 which reads as follows :

"No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement (was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made) by the policy holder and that the policy holder knew at the time of making it that the statement was false (or that it suppressed facts which it was material to disclose):

(Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.)

In Mithoolal Nayak Vs. Life Insurance Corporation of India, , which is also case of repudiation, the Supreme Court on considering the provision held :

"The three conditions for the application of the second part of Section 45 are -

(a) The statement must be on a material matter or must suppress facts which it was material to disclose;

(b) The suppression must be fraudulently made by the policy-holder; and

(c) 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."

"..... The terms of the policy make it clear that the averments made as to the state of health of the insured in the proposal form and the personal statement were the basis of the contract between the parties. .... A man who has so acted cannot afterwards turn round and say :

"It could have made no different if you had known the truth". In our opinion, no question of waiver arises...."

Following the said decision, Division Bench of this Court in The Life Insurance Corporation of India South Zone, Madras and Another Vs. Bhogadi Chandravathamma, reiterated the same principles. In LIC of India v. B. Nagamuni Reeiay 1977 (2) An.WR 207, another Division Bench held that :

''".... The proposal, the personal statement and the life insurance policy all contain a special clause putting the insured on notice that in case of any such deliberate misrepresentation, the contract of insurance would become void and the amounts paid thereunder shall be forfeited. The misrepresentation, therefore, is fraudulent and deliberate and is with respect to a material particular."

Now coming to this case Ex.B2 is a register containing particulars of the persons in an adult education programme. The name of deceased is shown at SI.No.54 showing dateof birth as 18-6-1927. However, the entries do not appear to be normal and there is clear overwriting in the register. The entry which existed appears to have been erased and the white marks showing the erasure are apparent. The date is written on this white patch. Therefore, the entry cannot be safely relied on for the purpose of establishing the correct date of birth. However, basing on the same, date of birth is shown as 18-6-1927 in the proposal. This shows the age 46 on the date of proposals. The voters'' lists in Exs.B9 and B10 of the years 1970 and 1975 show the age of the deceased as 56 and 60 years respectively. On the basis of these documents, he would be 59 and 58 on the said date. Admittedly, the deceased underwent treatment in CMC Hospital, Vellore in the year 1969 and Ex.B4 the case-sheet shows the year of birth as 1919. There are thus inconsistent entries and there is no acceptable evidence. There is no valid material to support the date of birth as shown in the policy. It is apparent that the deceased was not consistent in his statement. The age has relevance to the policy, as it has nexus to the premiums and insurability. Further, admittedly as per Ex.B4 the deceased was treated for florosis in CMC Hospital, Vellore and was advised to make change of place. The deceased belongs to Prakasham district whereas the Hospital at Vellore is at far off place in the Tamil Nadu State. There is no other explanation as to why the deceased has to go that far for treatment of florosis, except that the deceased while on pilgrimage casually had a consultation and treated for the disease. Admittedly the clauses 4D, 6K, 8C and 9A in Ex.BS to the information sought by the Corporation from the deceased-policy holder, there is absolutely no mention to the disease or to the treatment he had to Vellore nor the consultation which he had with the doctors earlier. The personal statement, in its format seeks various information and particulars, which as to be filled up by the proposed policy holder. Amongst those entries to be filled up, entry at 4(D) seeks if he has consulted any medical practitioner within last five years and go give particulars. Entry 6(K) seeks, if he suffered any other illness within last five years regarding treatment for more than a week. Entry 8(C) seeks, if he was advised to have change of place for health reasons. Entry 9(A) seeks, if he ever had an electro cargiogram X-ray fluoroscopic examination made or blood examined etc. The argument that the symptoms which resulted in the year 1969 could not have vanished and continue to remain and noticeable to the naked eye and the doctor could not have missed at the time of proposal entry, needs no further examination. It was to be seen that what exactly the symptoms that were existing in the year 1969. The Ex.B4, case-sheet does not mention any outward symptoms, and no other material is shown in support of the arguments. In the absence of any such visible symptoms, doctor could not be expected to suspect or diagnose the disease, unless it is disclosed to the doctor. Further from all the negative statements made in the aforesaid policy, the deceased has suppressed the factum of suffering from florosis much earlier to the policy. Further the argument advanced on the delay on the part of the Corporation in taking steps to repudiate the contract, do not merit any consideration, as it is not established that the Corporation was aware of the things referred to. Thus both these aspects of age and the disease constitute relevant and basic fact and material to the very nature of the contract of insurance upon life entered into between the policy holder and the Corporation. As already held in Mithoolal Nayak''s case (supra) the personal statements made are germane and influence the rights and obligations thereunder. The person seeking insurance is bound to disclose all such material facts relating to the risk involved in the policy of insurance. The false answers or suppression or withholding of such material information in the proposal form submitted by the assured relating to the state and conditions of health initiate the contract of insurance. Any suppression and non-disclosure thereto would have far reaching effect on the contract. The age and physical condition are relevant for the premiums to be fixed and the insurability of the policy holder. This is not a case of young person entering into such a policy. Apparently the deceased was sufficiently elder person, he was showing the less age than the real and suppressed the disease and having undergone treatment earlier. Therefore, it is held that these twin aspects constitute material facts and the Corporation rightly repudiated the contract and the plaintiff is not entitled to the suit claim.

In view of the aforesaid circumstances, there are no merits in the appeal. Accordingly, the appeal is dismissed. However, in the circumstances, no costs.