Facts Of The Case: Jamanadas died of jaundice on 4-11-1986 who had an insurance policy with appellants, one and half years after he died. This policy was taken on the grounds of his personal statement that he had not suffered from any illness and had not consulted any medical practitioner within last five years, but had once suffered from indigestion for few days and had taken chooranam from an ayurvedic practitioner.
Arguments Raised: Learned Counsel for respondents as usually relied on Section 45 of the Insurance Act and stated that insurer had right to repudiate a policy on the grounds that statement made in proposal for insurance or any documents which leads to policy was inaccurate or false.
Judgment:Court was of the view that, treating occasional headaches or a bout of indigestion as a ‘material fact’ which an insured was under an obligation to disclose would be extremely unreasonable. No reasonable man would deem it material to tell an insurance company of all the casual headaches he had in his life, and if he knew that it was an ordinary casual headache, there would be no breach of his duty towards the insurance company in not disclosing it.
The confidential report made by the medical officer of the insurance Company shows that the appellant was in ‘first class life’. And the jaundice of which he died had nothing to do with the undisclosed indigestion from which he suffered 18 months earlier. And the only connection between them would be the advantage life insurance was seeking. Therefore non-disclosure would not amount to an untrue statement and Life Insurance Company was held not justified in repudiating the policy. And therefore his wife was entitled to the insurance claim.
Comments: – This case puts forth the principle that the non-disclosure of ‘material facts’ only provides power to repudiate the contract by the company, but other ordinary facts which are unconnected to the main contract entered into by the insured cannot be ignored. Here for the same reason Company was restrained from taking such step, on the bases of facts which were irrelevant to be disclosed (i.e. indigestion) by the insured to effect of the contract.
