LexMITHOOLAL NAYAK versus LIFE INSURANCE CORPORATION OF INDIA
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2 8.C.R. SUPREME COURT REPORTS 571 MITHOOLAL NAYAK v. LIFE INSURANCE CORPORATION OF INDIA (S.K. DAs, K. SunnA RAO and RAGHUBAR DAYAL JJ.) ln•urance-Life Policy-Obtained by deliberate mis-state- ment and fraudulent suppiusion-Re'JlUdiatio1t by Company <rfter l'JJO yean-Whether proper-Rtfund of money paid. as premium-Insurance Act, 1938 ( 4 of 1938) s. 45-lndian Contract Act, 1/172 (9 of 1872) ss. 64 and 65. In 1942, one M sent a proposal for the insurance of his life. He was examined by Dr. D who submitted two reports, one with the proposal form and one confidential. The confi- dential report showed that M was anaemic, had a dilated heart and his right lung showed indications of an old attack of pneumonia or pleurisy and that he was a total physical wreck. Nothing carr.e out of this proposal and it lapsed. In 1943, M consulted and was treated by one Dr. L for anatrnia orderna of the feet, diarrhoea and panting on exertion. In 1944, M made a second proposal fur insurance of his life. Against the question in the proposal form whether he had consulted any medical man for any ailment within the last five years, he gave tl:e answer, "'No'. He also did not disclose any of his ailments. Aft'f medical examination by one Dr. K the proposal was accepted and a policy for Rs. 25,000/- was issued on March 13, 1945. The policy lapsed for non-payment of premium but was revived in July, 1946. In November, 1946, M died. His assignee, the appellant, made a demand for Rs. 26,000/· but the Company on October 10, 1947, repudiated it on the ground that the policy had been obtained by delibernte mis-statem<nt and fraudulent suppres- sion of material facts. Thereupon, the appellant filed a suit to reco\·er the amount of the policy contending that s. 45 Insurance Act, barred the Company from calling in question the policy after two ye'!rs on the ground that any state- ment made in the proposal was inaccurate or false. Held, that the policy-holder was guilty of fr~udulent suppression of material facts relating to his health and the Company was entitled to avoid the contract. Section 45 Insurance Act applied to the case as two years had lapsed since the policy was effected ; in view of the Ian· guage of s.45 the two years could not be count<d from the date of the revival of the policy. The second part of s. 45 entitled the company to repudiate the contract even after the expiry Jf16S Jat1110ry JS. l96Z MilAH/"1 Jicyal; •. Li/t 1Mt1'anct Corpor.tion of lnclia 572 SUPREME:;COURT REPORTS [1962] BUPP. of two years if three conditions were fulfilled viz. (a) the statement was on a material matter or there was suppression of facts which it WIU material to disclose; (b) the supprcuion was fraudulently made by the policy-holder, and (c} the policy-holdor m,ust have known at the time of the making of ·the statement that it was false or that it suppressed facts which it was material to disclose. When M was treated in 1943 by Dr. L he wa• sull'ering from serious ailments. He must have known that it was material to disclose this but made a false statement that he had not been tr~ated by any doctor for any serious ailment. There was deliberate supprc- 8'ion fraudulmtly made. by M. Even though the Company had got M examinG!I by four doctors before issuing the policy, it was nlM estoppedirom questioning the policy. It had no means oflmowing that M had been treated by Dr. L for srrious ailments. H•ltl, further, that the appellant was not entitled even to a refund of the money paid as premium as one of the term• of the policy was that all monies paid belonged to the Company if the policy was vitiated by fraudulent suppresalon of mat~rial facb. To such a contract neither s. 65 nor s. 6-l of the"Indlan Contract had any application. CIVIL APPELLATE JURISDICTION : C.A. No. 224 of 1959. Appeal from the judgment and decree dated August 28, 1956, of the Madhya Pradesh High Court in F.A. No. 90 of 1949. A. V. V~natha Saatri-, l!J. N. Andley, Ramuhwar Nath and P.L. Vohra, for the appellant. S. T. Desai, R. GanapatAy Iyer and K. L. Hathi, for the respondent. 1962. January 15-The Judgment of the Olurt was deli v.ered by o., 1, S. K. DAS, J.-This is an appeal on a oerti- fioate granted by the High Court of Madhya Pradesh under Art. 133 (I) (a) of the Constitution, The appel- lant ill Mithoolal Nayak, who took an &88ignment on Ootober 18, HM5 of a life imuranoe policy on the
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