Smt. Balwant Kaur vs Life Insurance Corporation of India

J.V. Gupta, J.—This is plaintiff''s second appeal whose suit for the recovery of Rs. 20,000 against the Life Insurance Corporation of India was decreed by the trial court but has been dismissed in appeal.

The facts, in brief, are that on August 10, 1962, Sampuran Singh, husband of the plaintiff, Balwant Kaur, got himself insured for a sum of Rs. 20,000 under policy No. 6581182. He died on June 18, 1968, and the plaintiff being his nominee filed the present suit for the recovery of the said amount as the Life Insurance Corporation refused to honour the policy and repudiated it on the ground that answers to questions Nos. 8 and 9 of the proposal form (exhibit D1) had not been correctly answered by the insured. According to the plaintiff, the policy in question was a legal and a valid contract between the parties and so far as questions Nos. 8 and 9 were concerned, it was pleaded that there was no deliberate or fraudulent mis-statement by the policy-holder inasmuch as the proposal form was in English and it had been filled in by the agent, and the policy-holder did not understand it being illiterate. The facts mentioned under questions Nos. 8 and 9 were said to be non-material or unlikely so as to entitle the Life Insurance Corporation to repudiate their liability under the policy in dispute. The suit was contested on the ground that Dwarka Dass Mahajan had no authority to file the suit under the power of attorney which had not been properly executed or attested. The liability under the policy in question was denied on the ground that it had been obtained by suppression of material facts and by making untrue and fraudulent proposal, and, consequently, the contract of insurance was void ab initio. The trial court found that Shri Dwarka Dass Mahajan was duly authorised to file the suit and verify the plaint. It was further held that Sampuran Singh, deceased, had made no fraudulent statements in the proposal and they were not proved to be material, and, consequently, the Life Insurance Corporation was liable for the payment in question. In view of these findings, the suit for the recovery of Rs. 20,000 was decreed. In appeal, the learned Additional District Judge reversed the said findings of the trial court and came to the conclusion that the suit had been filed by the plaintiff not through her duly authorised agent nor had the plaint been properly verified, i.e., not by either of the two. It was further found that the policy in question was not a valid contract as the insured, Sampuran Singh, suppressed material facts by not answering questions Nos. 8 and 9 in the proposal form. In view of this finding, the suit was dismissed. Dissatisfied with it, the plaintiff has come up in second appeal.

The learned counsel for the appellant contended that questions Nos. 8 and 9 in the proposal form (exhibit D1) were not at all material and the question of their suppression as such did not arise. In any case, argued the learned counsel, the insured, Sampuran Singh, was illiterate, and the proposal form being in English, was filled in by an officer of the Life Insurance Corporation itself in the presence of one Tilak Raj who, according to the Life Insurance Corporation, had made Sampuran Singh, the deceased, understand the questions. The said Tilak Raj has not been produced by the Life Insurance Corporation, and, therefore, the finding arrived at by the lower appellate court on this issue was wrong, illegal and based on surmises and conjectures. It was further contended that the previous policy had lapsed and when an application for its revival was made, it was never rejected on any medical ground. Moreover, it was for the Life Insurance Corporation to prove on which ground the said policy had not been revived. Since no evidence was produced by the Life Insurance Corporation in that behalf, it could not be held that there was any suppression of material facts so as to render the policy invalid.

After hearing the learned counsel for the parties, and after going through the relevant evidence on record, I am of the considered view that the whole approach of the learned Additional District Judge was wholly wrong, illegal and misconceived. The findings on both the issues are based on surmises and conjectures, Shri Dwarka Dass Mahajan, who was the special attorney of the plaintiff, filed the suit, and the trial court rightly came to the conclusion in that behalf. In any case, the finding of the lower appellate court on this issue is not being supported by the learned counsel for the respondent. As regards merits, suffice it to say that u/s 45 of the Insurance Act, 1938, after a period of two years of the death (sic) of the insured, a policy of life insurance cannot be called in question by the insurer until the insurer shows that the statement made in the proposal form was false and it related to 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. In other words, it is the responsibility of the insurer to prove that the facts were material, and they were fraudulently withheld by the insured. From the evidence on record, the Life Insurance Corporation has failed to prove these facts so as to render the policy invalid. The approach of the trial court in this behalf is fully convincing when it observed that:

"I have examined all these aspects of this issue. I am of "the opinion that the defendant corporation has not been able to place on record the earlier policy No. 10581239 or its secondary evidence is placed on record and so it cannot be established whether the deceased, Sampuran Singh, was assured earlier. I do not agree with the contentions of the learned counsel for the defendant that exhibit DW 4/2 is the secondary evidence of the earlier policy because it is merely a receipt signed by the deceased, Sampuran Singh, showing that he has received policy No. 10581239. The defendant corporation has also not brought on record any document which should clearly establish that the earlier policy had not been revived for such and such reasons. Letter, exhibit DW 4/3, merely shows that the consideration of revival of the earlier policy has been postponed for six months but it is also mentioned therein that a fresh full medical report is necessary. Letter, exhibit DW 4/5, also merely shows that the sum of Rs. 796.01 is lying in suspense account to the credit of the above policy but it does not clearly indicate as to why it is lying in suspense account and surely the court cannot assume that the deceased, Sampuran Singh, was assured earlier and that the earlier policy had not been revived unless the defendant corporation had brought the relevant documents on record. Surely the court cannot base its findings on conjectures. I am also of the opinion that the defendant corporation has not been able to establish clearly whether the assured, namely, Sampuran Singh, the deceased, had understood the questions which were in English before answering the same. The evidence of D.W 1, B.J. Sood, is not sufficient because he is an officer of the defendant Corporation and for that reason it was incumbent on the defendant Corporation to produce an independent witness, namely, Tilak Raj, who was present when the assured had replied to the questions put to him in the proposal. "

Admittedly, the independent evidence of Tilak Raj was withheld by the Life Insurance Corporation. Not only that, they did not produce a copy of the earlier policy nor any other evidence to show that the same was not revived on account of any medical advice ; rather, the letter, exhibit DW4/4, produced by the Corporation shows that when Sampuran Singh was medically examined for reviving the earlier policy, the doctor reported that "I am also enclosing my report on the life of Section Sampuran Singh on Form No. 3306 and Form No. 3312 and hope you will find the same to be normal." Surprisingly enough, the Corporation did not produce the said report which was enclosed with the said letter. It, thus, clearly proves that material evidence was withheld by the Life Insurance Corporation. From the facts and circumstances of the case, it could not be proved that the deceased, Sampuran Singh, had withheld any material information, and that was of such a nature so as to render the policy invalid. It is most unfortunate that on the facts of the present case, the Life Insurance Corporation repudiated the claim of the plaintiff on account of certain grounds which could not at all be substantiated by them at the trial, and, therefore, they are liable to be burdened with heavy costs. People get themselves insured with the idea that after their death, the money will be paid to their dependants soon thereafter. In the present case, the amount was not paid until August, 1982, whereas the insured died on June 18, 1968. In these circumstances, the plaintiff is entitled to special costs.

Consequently, the appeal succeeds, the judgment and decree of the lower appellate court are set aside, and that of the trial court decreeing the suit are restored with costs throughout, besides the costs u/s 35A, Civil Procedure Code, 1908, which are assessed at Rs. 3,000. The plaintiff shall be further entitled to interest at the rate of 6% p. a. from the date of the filing of the suit till the payment of the amount.