SATWANT KAUR SANDHU versus NEW INDIA ASSURANCE COMPANY LTD.

Citation: [2009] 10 S.C.R. 560 · Decided: 10-07-2009 · Supreme Court of India · Bench: D.K. JAIN

Cited by 7 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
[2009] 10 S.C.R. 560 
SATWANT KAUR SANDHU 
v. 
NEW INDIA ASSURANCE COMPANY LTD. 
(Civil Appeal No. 2776 of 2002) 
JULY 10, 2009 
[D.K. JAIN AND R.M. LODHA, JJ.] 
Insurance: 
Medic/aim policy - Statement in proposal form as 
regards state of health of insured - Held: Factum of illness 
of insured is a material fact for medicalim policy - Its non-
disclosure will tantamount to suppression of material facts, 
enabling the insurance company to repudiate its liability . 
under the policy - On facts, there was suppression of material 
facts in respect of health of insured - Insurer justified in 
repudiating insurance contract. 
Medic/aim Policy - Nature of - Discussed. 
Words and Phrases - 'Material fact' - Meaning of, in the 
context of medic/aim policy - Insurance Regulatory and 
development Authority (Protection of Policyholders' Interest) 
Regulations, 2002 - Regulation 2 (1) (d). 
The question for consideration in the present case 
was whether statement in proposal form as regards state 
of health, the factum of illness of the policy-holder was a 
'material' fact for the purpose of a mediclaim policy and 
whether its non-disclosure, would tantamount to 
suppression of material fact, enabling the Insurance 
Company to repudiate its liability under the policy. 
Dismissing the appeal, the Court 
HELD: 1. The statement made by the insured in the 
560 
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SATWANT KAUR SANDHU v. NE'(V INDIA 
561 
ASSURANCE COMPANY LTD. 
proposal form as to the state of his health was palpably 
A 
untrue to his knowledge. There was clear suppression of 
material facts in regard to the health of the insured and, 
therefore, the respondent-insurer was fully justified in 
repudiating the insurance contract. [Para 22] [572-H; 573-
A-B] 
B 
2. A mediclaim policy is a non-life insurance policy 
meant to assure the policy-holder in respect of certain 
expenses 
pertaining 
to 
m1ury, 
accidents 
or 
hospitalizations. Nonetheless, it is a contract of insurance 
falling in the category of contract uberrimae fidei, C 
meaning a contract of utmost good faith on the part of 
the assured. Thus, when an information on a specific 
aspect is asked for in the proposal form, an assured is 
under a solemn obligation to make a true and full 
disclosure 'of the information on the subject which is D 
within his knowledge. It is not for the proposer to 
determine whether the information sought for is material 
for the purpose of the policy or not. Of course, obligation 
to disclose extends only to facts which are known to the 
applicant and not to what he ought to have known. The 
E 
obligation to disclose necessarily depends upon the 
knowledge one possesses. His opinion of the materiality 
of that knowledge is of no moment. [Para 12] [568-E-H] 
United India Insurance Co. Ltd. vs. M.K.J. Corporation 
F 
1996 (6) SCC 428 and Modern Insulators Ltd. vs. Oriental 
Insurance Co. Ltd. 2002(2) SCC 734 - relied on .. 
Joel vs. Law Union and Crown Ins. Co. (1908) 2 K.B. 863; 
Carter vs. Boehm, 1766 (3) Burr, 1905, referred to. 
'Mac Gillivray on Insurance Law' (Tenth Edition) -
G 
referred to. 
3. The term "material fact" means any fact which 
would influence the judgment of a prudent insurer in 
fixing the premium or determining whether he would like H 
562 
SUPREME COURT REPORTS 
(2009] 10 S.C.R. 
A to accept the risk. Any fact which goes to the root of the 
~ 
contract of insurance and has a bearing on the risk -
involved would be "material". [Para 17] [570-E-F] 
Indian Contract and Specific Relief Acts by Mui/a, 
B referred to. 
4. In a contract of insurance, any fact which would 
influence the mind of a prudent insurer in deciding 
I 
whether to accept or not to accept the risk is a "material 
fact". If the proposer has knowledge of such fact, he is 
c obliged to disclose it particularly while answering 
questions in the proposal form. Any inaccurate answer 
will entitle the insurer to repudiate his liability because 
there is clear presumption that any information sought for 
in the proposal form is material for the purpose of 
D entering into a contract of insurance. [Para 20] [571-F-H; 
572-A] 
o. In the instant case, it would be beyond anybody's 
comprehension that the insured was not aware of the 
E state of his health and the fact that he was suffering from 
Diabetes as also chronic Renal failure, more so when he 
was stated to be on regular haemodialysis. There can 
hardly be any scope for doubt that the information 
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