P.C. CHACKO AND ANR. versus CHAIRMAN, LIFE INSURANCE CORPORATION OF INDIA AND ORS.

Citation: [2007] 12 S.C.R. 352 · Decided: 20-11-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

.-
A 
P.C. CHACKO AND ANR. 
v. 
CHAIRMAN, LIFE INSURANCE CORPORATION OF INDIA 
AND ORS. 
B 
NOVEMBER 20, 2007 
[S.B. SINHA A~D HARJIT SINGH BEDI, JJ.] 
Insurance Act, 1938: 
c 
s. 45-Life Insurance policy-Non-disclosure and mis-statement 
in proposal form-Repudiation of policy within two years-Legality 
of-HELD: A deliberate wrong answer which has a great bearing on 
contract of insurance, if discovered, may lead to the policy being 
vitiated in law-On facts, it has not been shown that repudiation of 
... 
D 
contract of insurance was not done by insurer with extreme care and 
caution or was otherwise invalid in law. 
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One 'C' took an insurance policy on 21.2.1987. He died on 
E 6. 7.1987. The claim of his nominees, the appellants, was not acceded 
to by the respondent-Corporation for non-disclosure and mis-statement 
in the proposal form. The insured had undergone an operation for 
Adenoma Thyroid. But in the proposal form in answer to the question 
as to whether he ever had any operation he replied 'No'. Therefore, 
, . 
F the insurer repudiated the policy on 10.2.1989. However, the suit filed 
by the appellants for recovery of the insured amount was decreed by 
the trialcourt and the single Judge of the High Court declined to interfere. 
But the Division Bench of the High Court allowed the appeal of the 
insurer holding that the non-disclosure related to a material fact which 
G was required to be answered correctly. Aggrieved, the plaintiffs filed 
the instant appeal. 
' . 
Dismissing the appeal, the Court 
HELD: 1.1. An insurance policy should not be obtained with a 
H 
352 
__ ,,, 
-l 
P.C. CHACKO v. CHAIRMAN, LIFE INSURANCE 
353 
CORPORATION OF INDIA 
fraudulent act by the insured. Proposal can be repudiated if a fraudulent A 
act is discovered. The proposer must show that his intention was bona 
fide. It must appear from the face of the record. A deliberate wrong 
answer which has a great bearing on the contract of insurance, if 
discovered may lead to the policy being vitiated in law. Ifa person makes 
a wrong statement with knowledge of consequence thereof, he would B 
ordinarily be estopped from pleading that even if such a fact had been 
disclosed, it would not have made any material change. 
[Para 15and16] (359-A-C; 358-G-H] 
1.2. In the instant case, the basic fact of the matter is not in dispute. C 
The insured had undergone an operation for Adenoma Thyroid. It was 
a major operation. Although the said operation was undergone by him 
four years prior to the date of the proposal made by him, he did not 
disclose thereabout prior to obtaining the insurance policy. He died within 
six months from the date of taking of the policy. In a case of this nature D 
it was not necessary for the insurer to establish that the suppression 
was fraudulently made by the policy holder or that he must have been 
aware at the time of making the statement that the same was false or 
that the fact was suppressed which was material to disclose. 
[Para 10 and16] (357-B-C; 359-B-C] E 
Mithoolal Nayak v. Life Insurance Corporation of India, (1962] 
Suppl. 2 SCR 571 and Life Insurance Corpn. of India & Ors. v.Asha Goel 
(Smt) & Anr., [2001] SCC 160, relied on. 
All India General Insurance Co. Ltd. and Anr. v. S.P. Maheshwari, 
F 
AIR (1960) Madras 484, held inapplicable. 
Allianz Und Stuttgart er Life Insurance Bank Ltd. v. Hemanta Kumar 
Das AIR (1938) CAL 641, cited. 
Ratan Lal & Anr. v. Metropolitan Insurance Co. Ltd AIR (1959) G 
PAT 413, referred to. 
1.3. Section 45 of the Insurance Act, 1938 postulates repudiation 
of the policy within a period of two years. The Statute, therefore, itself 
provides for the limitation for valid repudiation of an insurance policy. H 
354 
SUPREME COURT REPORTS 
(2007] 12 S.C.R. 
A It takes into account the social security aspect of the matter. It has not 
been shown in the instant case that repudiation of the contract of 
insurance was not done by the respondent with extreme care and caution 
or was otherwise invalid in law. [Para 12 and21) [358-A-C; 361-G) 
B 
1.4. Life Insurance Corporation being a State within the meaning 
of Article 12 of the Constitution oflndia, its action must be fair, just and 
equitable. This is nota case where the contract ofinsurance or a clause 
thereof is unreasonable, unfair or irrational. It is also not the case of 
the appellants that in framing the questionnaire in the application/ 
C proposal form, the respondents had acted unjustifiably or the conditions

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