G. Yethirajulu, J.
1. This appeal is directed against the judgment and decree in A.S.No.23 of 1996 on the file of the District Judge, Nalgonda preferred against the judgment and decree in O.S.No.46 of 1994 on the file of the Subordinate Judge, Miryalguda.
2. The appellants herein are the defendants and the respondent is the plaintiff in the suit. The plaintiff filed the suit for recovery of a sum of Rs.60,000/- payable under an Endowment Assurance Policy given by the Life Insurance Corporation in the name of her late husband.
3. According to the plaintiff, her husband late A.Narsi Reddy obtained an endowment assurance policy for a sum of Rs.50,000/- on 20-3-1990 and the policy was issued by the defendant Corporation on 31-5-1990. While so, the plaintiff's husband died on 9-11-1993 due to ill-health leaving behind the plaintiff and two sons.By the date of the death of her husband the policy was in force. Therefore the plaintiff made a claim before the defendant Corporation, but the defendants repudiated the claim on 25-2-1994 on the ground of mis-statement. When the plaintiff caused a legal notice issued to the defendants, they gave a reply with the same stand. Hence the plaintiff filed the suit for a sum of Rs.60,000/- towards the sum assured and dividend from the defendants with interest at 18% per annum from the date of the death of her husband.
4. The defendant Corporation filed a written statement contending that the assurance policy issued by the defendant Corporation stood lapsed in March 1991 on account of non-payment of quarterly premium and the policy was revived on 20-9-1993 on the strength of a personal statement regarding his state of health, treatment etc. made by the insured after payment of arrears of premium with interest. Since the assured died on 29-10-1993 within a short span of time from the date of revival of the policy, the Corporation caused an inquiry into the health of the assured in order to guard the Corporation from fraudulent claims and to safeguard the interest of the policyholders, as their trustee. The enquiries made by the Corporation revealed that the policyholder suffered from chronic 'Myeloid Lueukaemia' due to which he had undergone treatment in Medwin Hospital in different spells from 17-10-1992 to 23-10-1993. On the basis of the information gathered by the Corporation it was found that the assured suppressed the material information at the time of revival of the policy. The revival of the policy was declared void and the Corporation appropriated all monies paid towards revival of the policy. Since the policy became void, the plaintiff is not entitled to the suit claim. Since the personal statement of health given by the life assured became the basis for the contract and as the life insured suppressed material information about his health and other particulars to the defendant Corporation by giving wrong answers to the relevant questions, the revival became void. The suit is therefore liable to be dismissed with costs.
5. The trial court framed appropriate issues on the basis of the above pleadings.
6. The plaintiff in order to prove her claim examined P.Ws.1 and 2 and marked Exs.A.1 to A.8. The defendants examined D.W.1 and marked Exs.B.1 to B.8.
7. The trial court after considering the oral and documentary evidence adduced by both parties decreed the suit for Rs.60,000/- with subsequent interest at the rate of 12% per annum through its judgment dated 16-12-1995.
8. The defendants being aggrieved by the judgment and decree of the trial court preferred A.S.No.23 of 1996 on the file of the Principal District Judge, Nalgonda challenging its validity and legality.
9. The 1st appellate court after considering the evidence available on record, the relevant provisions of the Act and the legal position on the subject concurred with the findings given by the trial court and accordingly dismissed the appeal with costs through its judgment dated 10-8-1998.
10. The defendants being aggrieved by the judgment and decree of the 1st appellate court preferred this appeal challenging its validity and legality.
11. In the Memorandum of Appeal the appellants raised several grounds including the following grounds of appeal as the substantial questions of law to be considered by this Court:
1. Whether the judgment of the 1st appellate court is vitiated by the error of misreading the evidence and misapplication of law? And
2. Whether the judgment of the 1st appellate court is tainted with perversity and it needs interference by this Court?
POINT Nos.1 & 2:
12. The plaintiff through her pleadings and evidence stated that her husband was hale and healthy till about one week prior to the date of death. P.W.2 a close relation of the plaintiff also deposed that the deceased was hale and healthy till about one week prior to the date of death. It is an undisputed fact that the policy was in force as on the date of death of the deceased. It was contended by the defendants that the policy lapsed due to non-payment of quarterly premium due from March 1991 and the same was revived on 20-9-1993 on the strength of a personal statement relating to the health made by the insured after collecting the arrears of premium with interest. It is an undisputed fact that the revival of a policy dates back to the date of the date of issue and the entire period has to be computed for the purpose of extending the benefit of the policy to the nominee or the legal heirs of the life assured. The plaintiff relied on Exs.A.1 to A.8, which are the receipts for the premium and the correspondence between the plaintiff and the defendants. There is no document filed on behalf of the plaintiff to show whether the life assured suffered with 'Myeloid Lueukamia' and he died due to the resultant cause of the said disease.
13. The plaintiff contended that as per Section 45 of the Insurance Act, 1938 ('the Act' for brevity) a policy shall not be repudiated after the expiry of two years from the date of commencement of policy on the ground of suppression of any material facts. The plaintiff further pleaded that the defendants have repudiated the policy by exercising powers beyond the scope of Section 45 of the Act.
14. Since the defendants could not elicit any favourable information from P.Ws.1 and 2 regarding the cause of death of the deceased, the burden is on the defendants to prove that the deceased Narsi Reddy underwent treatment for the disease mentioned above prior to the date of revival of the policy, that the deceased died due to the resultant cause of the said disease, that the deceased deliberately suppressed the material facts regarding his state of health and gave a wrong statement at the time of getting the policy revived.
15. The defendants in order to discharge their burden adduced oral evidence through D.W.1 and marked Exs.B.1 to B.8. D.W.1 an Assistant Administrative Officer of the defendant Corporation deposed that on 17-11-1993 he received a claim petition from the plaintiff wherein she stated that her husband died on 29-10-1993 due to fever and stomachache. He further deposed that since the deceased died one month 9 days after the revival of the policy, an investigation about the cause of the death of the policyholder was done through the Branch Manager, Kodad and obtained a report from him. D.W.1 further deposed that as per the report the investigating officer opined that the deceased suffered with blood cancer and underwent treatment at Medwin Hospital, Hyderabad before revival of the policy. Therefore he approached the Medwin Hospital and obtained copies of the case sheet and discharge sheet relating to the deceased-policyholder. On the basis of the said report the Corporation came to a conclusion that it should not allow the claim on account of suppression of material facts by the policyholder. In the cross-examination D.W.1 stated that the Corporation accepted the proposal and issued a policy covered by Ex.B.1 and he did not sign or counter-check Ex.B.1 at the time of its revival. The officer concerned counter-checked the policy at the time of its revival. He has no personal knowledge about the deceased-policyholder. He did not investigate about the health of the deceased. It was suggested to D.W.1 on behalf of the plaintiff that the Narsi Reddy who has undergone treatment at the Medwin Hospital was not the husband of the plaintiff and that the deceased policyholder did not die due to blood cancer.
16. Ex.B.1 is the original insurance policy. It does not contain any kind of endorsement about the revival of the policy.Ex.B.2, personal statement alleged to be made by the deceased-policyholder regarding his health, contains the signature of one Mr.K.Narsi Reddy a resident of the village to which the policyholder belonged. It contains the signature of one Mr.K.V.Reddy, an agent of the Corporation at Kodad. This personal statement is not in the handwriting of the deceased policyholder. He signed only in Telugu. The personal statement contains only one signature, which was made on Monday the 20th September 1993, at Kodad. The Corporation did not examine either Mr.K.V.Reddy, an agent of the Corporation, or Mr.Narsi Reddy a resident of K. Reddygudem to speak about the state of health of the deceased as on the date of the alleged Ex.B.2. As per Ex.B.7-copy of the discharge summary of the Medwin Hospital, Mr.Narsi Reddy was discharged from the Hospital on 21-9-1993. Ex.B.2, the alleged revival letter, is dated 20th September 1993. On a perusal of Ex.B.2 it shows that the policyholder and the agent at Kodad signed the said statement on 20th September 1993. It further contains that the declarant who is alleged to have filled and attested Ex.B.2 declared that the contents were read over to the policyholder at Kodad on 20th September 1993, which is more than 100 kms. away from Hyderabad where the deceased was being treated as inpatient in Medwin Hospital. This discrepancy about the presence of the policyholder as inpatient in Medwin Hospital and his presence at Kodad on the same day is not explained by D.W.1. The defendants did not produce the claim petition said to be received from P.W.1 on 17-10-1993 regarding the cause of death mentioned by her. The officer by name Sri P.S.N.Raju, Branch Manager, Kodad who is alleged to have made some investigation regarding the cause of death of the deceased was not examined. D.W.1, who is the Assistant Administrative Officer in the Divisional Office at Secunderabad, did not conduct any investigation and he has no personal knowledge about the ailment alleged to be had by the policyholder as on the date of revival of the policy. The defendants also did not produce the order of revival of the policy. The defendants did not choose to examine either the doctors who have treated the policyholder or the responsible officer from Medwin Hospitals to speak about the identity of the patient referred in Exs.B.4 to B.8. The age of the patient, the nature of disease he had, the period of treatment he had undergone etc., to establish that the patient referred in Ex.B.4 to B.8 was no other than the deceased policyholder and also to prove the signatures of various doctors, who alleged to have treated the deceased for the disease mentioned above. The defendants did not summon the original records from Medwin Hospitals and did not examine the R.M.O., Medwin Hospitals who is alleged to have attested the Xerox copies of the hospital records to establish that Exs.B.4 to B.8 are the true copies of the original records of the hospital.
17. Keeping in view the above list of latches on the part of the defendant, it may be appropriate to refer to Section 45 of the Act and the legal position on this aspect.
18. Section 45 of the Insurance Act, 1938 so far as it is relevant for our purpose is as follows:
No policy of life insurance .... after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policyholder and that the policyholder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose;
Provided that nothing in the section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.
19. Keeping in view the wording of Section 45 of the Act, it may be appropriate to refer to certain decisions in this regard.
20. In LIFE INSURANCE CORPORATION OF INDIA v. AMBICA PRASAD PANDEY1 a single Bench of the Madhya Pradesh High Court held that whenever there is an allegation that the insured was suffering from serious ailment before date of filing of questionnaire of policy, the burden is on the insurance company to prove that there is material suppression of fact by the insured. If the insurer fails to adduce relevant and reliable evidence to discharge its burden and to establish that the insured was suffering from a serious ailment, the insurer is not entitled to repudiate the claim.
21. In LAKSHMI INSURANCE CO. LTD. v. BIVI PADMA WATI2 it has been laid down by the Punjab High Court that
'According to the provisions of Section 45, the insurance contract can be avoided on fraud and a charge of fraud, naturally, requires a high degree of probability. It is well known that fraud is odious and cannot be presumed; fraus est odiesa et non est praesumenda. The courts will not be satisfied with proof, which falls short of showing that intentional misrepresentation was made with the knowledge of perpetrating fraud.
22. In MITHOOLAL NAYAK v. LIFE INSURANCE CORPORATION OF INDIA3 the Supreme Court held that in a contract of life insurance entered into as a result of fraudulent suppression of material facts by the policyholder, the policy is vitiated and the person holding the assignment of policy cannot claim the benefit of contract.
23. In LIFE INSURANCE CORPORATION OF INDIA v. G.M.CHANNA BASEMMA4 the Supreme Court held as follows:
It is well settled that a contract of insurance is contract uberrimae fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding whether the proposal should be accepted or not. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted. The burden of proving that the insured had made false representations and suppressed material facts is undoubtedly on the Corporation.
24. In SHANTA TRIVEDI v. LIFE INSURANCE CORPORATION OF INDIA5 a single Judge of the Delhi High Court held that
Whenever there is an allegation that there was a fraudulent or willful suppression of fact regarding the health of the insured that he was suffering from ectopic kidney which fact was not disclosed by him at the time of filling up proposal forms and on examination of the insured no infection was seen in the urine and the medical evidence was showing that such kidney is not ailment and does not affect longevity of life, except through infection. The non-disclosure of fact of ectopic kidney could not be said to be fraudulent suppression of any material fact.
25. There is no dispute about the power of the Corporation to repudiate the claim under Section 45 of the Act in the event of sufficient proof that the deceased policyholder made a mis-statement of facts regarding his health condition. But in the light of the above legal position and the deficiencies mentioned above, it is doubtful whether the signature of the policyholder on Ex.B.2-personal statement was obtained at Hyderabad or at Kodad and whether the signature of the policyholder was obtained on the date mentioned in it. There is no proof to the effect that the deceased policyholder was appraised about the questions and whether he gave those 'yes/no' answers after understanding the questions. The defendants also did not place any proof that the deceased policyholder subscribed his signature to the statement knowing fully well that it contains the mis-statement of facts regarding his condition of health.
26. In the light of the above discussion I wish to sum up that the Corporation failed to discharge its burden by suffering with the following latches:
14) non-filing of the claim petition said to be made by the plaintiff on 17-11-1993,
15) the discrepancy regarding the place of the signature of the policyholder on Ex.B.2,
16) non-examination of the declarants in Ex.B.2 that they explained the questions to the deceased and he gave the answers after understanding the questions,
17) non-summoning of the original records from Medwin Hospitals,
18) non-examination of any of the doctors who treated the patient referred in Exs.B.4 to B.8,
19) non-examination of the R.M.O., who attested the Xerox copies to prove that they are the true copies of the originals,
20) non-examination of any responsible officer from Medwin Hospital that the patient mentioned in Exs.B.4 to B.8 is no other than the deceased policyholder,
21) failure of the defendants to produce the order reviving the policy,
22) absence of any endorsement on the original policy that it was revived w.e.f. so and so date,
23) non-examination of Sri P.S.N.Raju, the Branch Manager, Kodad, who is alleged to have investigated about the cause of death of the deceased policyholder,
24) lack of personal knowledge to D.W.1 about the state of health of the deceased, the investigation and the hospital record,
25) failure to prove that the personal statement form was filled on the instructions of the deceased policyholder, and
26) failure to establish that the deceased policyholder with a fraudulent intention gave a mis-statement of facts regarding his health condition.
27. In the light of the above discussion, I am inclined to hold that the 1st appellate court was right in concurring with the findings given by the trial court and I do not find any perversity in any of the findings of the 1st appellate court on the points mentioned above.
28. The object of the Life Insurance Corporation is to help the victims or their dependants in general through its various schemes on account of sudden demise of the policyholders and it is not purely a commercial organization meant for getting profits unmindful of the human problems and it is not an organization without any human touch. The Corporation has got a very wide network throughout the country through its agents and field officers as its messengers to spread the information regarding the object of establishing the Corporation and the schemes it is floating to bring as many people as possible under the insurance cover. Many policyholders coming from villages are illiterates with rural background and they are not so worldly wise to know the consequences of the breach, if any, committed by them in keeping the policies in force. The agents of the Corporation are the best persons who generally hail from the places of the policyholders and they are the best persons to gather the necessary information and pass on the same to the Corporation to prevent issuing of policies or revival of such policies on the basis of useful information instead of raising hue and cry sometime after completing all the formalities that a particular policyholder mislead them or resorted to give a mis-statement to have the benefit under the policy. Since all the schemes are intended to help the policyholders or their dependents to the extent possible, if there is any little doubt whether a statement made by a particular policyholder is a misstatement or not the benefit shall go to the policyholder or his dependants.
29. In the case on hand, the defendants miserably failed to establish that the deceased policyholder intentionally mislead the Corporation by giving a mis-statement of facts regarding his health at the time of the alleged revival of the policy. There is no scope to hold that the Corporation is entitled to repudiate the claim on the ground of mis-statement of facts.
30. In view of the above circumstances, I do not find any force in the grounds of appeal and I do not find either misreading of evidence or misapplication of law by the 1st appellate court. Hence the appeal must fail.
31. In the result, the appeal is dismissed with costs by confirming the judgment and decree of the 1st appellate court in A.S.No.25 of 1996.