FACTS OF THE CASE: Plaintiff is (beneficiary of the policy) and her husband late Moolchand insured himself with the defendant on 28-3-1972 for the sum of Rs. 25,000/- he also had filed a proposal form and personal statement on the same date, and died within a month on 16-4-71. Division manager refused the claim by the appellant on the fact that he had concealed the fact that before filing for the present policy he had three policies in March 1965, which had lapsed in March 1970.
Issues: Now it’s to be observed under two broad issues:-
v Whether the deceased deliberately concealed the fact of the existence of earlier three policies in hand?
v Was the fact concealed material to the bearing of risk undertaken by the company i.e. if it still would have insured the life of the insurer if the corporation was made aware of the fact of the facts alleged to be concealed?
Arguments Raised: But plaintiff stated that the fact was told but the same was not recorded by the agent, and contended that even if it was not disclosed it’s not material to the disentitle the defendant. Plaintiff therefore claims interest amounting to 11,000/-, w.e.f. 16-4-1972 at the rate of 12 % per annum. Corporation contended that if it would have known the fact of existence of three policies with the insured it wouldn’t have issued the same to him, and therefore money paid by him would stand forfeited. Being mis-represented by the deceased the contract would stand void under section 45 of the Insurance Act.
Judgment: – Court applied Section 17 and 19 of the Contract Act and held that the Insurer cannot repudiate the liability by showing only some inaccuracy or falsity of the statement, nor can avoid the policy for a material misrepresentation if it has no bearing on the risk. Thus on every misrepresentation or concealment of a fact a contract cannot be avoided merely on trivial and inconsequential misstatement or non-disclosure That the non-disclosure about the lapsed policies had no bearing on the risk and didn’t amount to fraudulent misrepresentation as no undue advantage was derived by the concealment of facts and the corporation was made liable to pay the insurance amount with interest at the rate of 6% per annum w.e.f. 29-12-1973 till payment.
Comments: – This case upholds the same principle of materiality of facts; this principle is widely misused by the companies to discharge themselves from liability of paying the insured. Prior policies though disclosed were firstly, not recorded by the insurer’s agent and secondly even if proved to be concealed had no bearing on the claim made by the insured. What is important is the nexus between the materiality of the facts and the risk borne by the insurance company and everything else is the way of its escape from the responsibility it bears towards the public.
