ORDER
S.R. Singharavelu, J.
1. The plaintiffs in O.S.No. 207 of 1986 on the file of Sub-Court, Namakkal, filed the above appeal. Pending appeal, the first appellant died. Her only daughter, the second appellant, i's already on record as her legal.
2. Appellants-plaintiffs filed the suit for recovery of money under the policy of Insurance and after due trial, the learned Subordinate Judge dismissed the suit, against which, the plaintiffs have preferred this appeal.
3. The plaintiffs had averred in their plaint as follows:
One R. Muthusamy Gounder had taken a life insurance policy dated 7.2.1983 for a sum of Rs. 1.00 lakh in Policy No. 45149780 and on 24.1.1983, a sum of Rs. 7,770 was remitted towards premium for one year. He is the husband of the first plaintiff and father of the second plaintiff. The policy stood both in the name of said R. Muthusamy Gounder and his wife. He was in sound health all along. He suddenly died at Vadugam village of Rasipuram taluk on 8.12.1983. Since he did not execute any Will or testament, the plaintiffs, as his legal heirs, are entitled for the amount due under insurance policy. Thus, the plaintiffs are entitled for a sum of Rs. 1,03,400. The defendant insurance company is stated to have cancelled the policy on the ground of suppression of material particulars by Muthusamy Gounder about his health. This cancellation of policy is incorrect. As Muthusamy Gounder died suddenly and he was having sound health all along, there was no suppression of material particulars and so, the cancellation of policy by the defendant company is incorrect. Therefore, the plaintiffs are entitled to the amount due under the policy along with bonus and interest.
4. The respondents-defendants had filed a written statement, contending inter alia, as follows ;
The policy was issued on 7.2.1983 on the ground of the particulars provided by Muthusamy Gounder in the proposal form. He died within ten months of the issuance of the policy. On enquiry, it was learnt that Muthusamy Gounder was in-patient in the Government Hospital between 30.10.1980 and 26.11.1980 for treatment of ulcer. It was informed that he was also suffering from Tuberculosis. It was also learnt that between 31.7.1983 and 1.9.1983, he was again admitted in the hospital for his heart-disease and Tuberculosis. All these material particulars were wantonly suppressed by Muthusamy Gounder. Therefore, the Insurance Company had rightly cancelled the policy and informed the same. In the questionnaire Question Nos. 18, 20 and 22 of the proposal form, Muthusamy Gounder had firmly denied and answered in the negative. He had also promised that whatever stated in the questionnaire was only true. There was also an undertaking that if whatever material particulars given by Muthusamy Gounder in the proposal form were found untrue, then he was bound to lose the premium amount and also that the contract would be cancelled. It is only in the above circumstances, the contract was rightly cancelled.
5. An additional written statement was filed by the defendants, stating that Muthusamy Gounder was suffering from T.B. and Ulcer and he underwent an operation in 1980 and was taking treatment as an inpatient in Government Hospital, Namakkal from 30.10.1980 to 26.11.1980 and from 31.7.1983 to 1.9.1983, Muthusamy Gounder had no sons. Athiappan, his son-in-law, was helping him for the treatment. Muthusamy Gounder died at Vadugam village while he was living with his daughter and son-in-law. The second plaintiff's farm at Kailasampalayam was also known as Sorakki Kadu, Keethu Kadu and Kavadi Kara Thottam.
6. The appellants-plaintiffs filed a reply statement, stating that it is false to contend that Muthusamy Gounder was suffering from T.B. and Ulcer and that he was taking treatment as an inpatient at Government Hospital, Namakkal from 30.10.1980 to 26.11.1980. Muthusamy Gounder was never living with second plaintiff and he was only rarely visiting her house. It is also false to say that Muthusamy Gounder was living along with Athiappan, his son-in-law. The second plaintiffs farm was known as Mohan Kadu or Kavadi Karankadu.
7. On the above pleadings, the following issues were framed :
(i) Whether the plaintiffs are entitled to the suit amount?
(ii) To what relief, the plaintiffs are entitled to?
8. First plaintiff examined herself as P.W.1 and Exs.A-1 to A-5 were marked on her behalf. Defendants examined Dr. Swarnam as DW.1, Dr. N. Palaniappan as DW.2, Dr. Kulandaivel as DW.3 and its Branch Manager namely Murthy as DW. 4. They have exhibited Exs.B-1 to B-20.
9. The learned Subordinate Judge, Namakkal, after considering the entire documentary and oral evidence, had concluded that there was suppression of material facts by Muthusamy Gounder and based on which, the contract was rightly repudiated by the defendants-insurance company. Therefore, the plaintiffs were non-suited.
10. Now the points that arise for consideration before us in this appeal are, (1) Whether there was suppression of material facts by Muthusamy Gounder while taking his insurance policy? and (2) Whether the plaintiffs are entitled to claim the suit amount
11. POINTS 1 & 2 :
11.1. This is a case, of repudiation of contract of insurance at the instance of the Divisional Office of LIC at Coimbatore, whose branch office was situated at Tiruchengode and both of which are arrayed as respondents/defendants 1 and 2. The appellants/plaintiffs 1 and 2 are respectively the widow and the daughter of the deceased Muthu Gounder, son of Ramiah Gounder of Kailasampalayam, Rasipuram Taluk, in whose name, the endowment assurance policy with profits for Rs. 1.00 lakh under Policy No. 45149780 dated 7.2.1983, payable on maturity or death whichever is earlier, was taken, Payment of the first yearly premium of Rs. 7,770 was made on 24.1.1983 and the acknowledgement of which was marked as Ex.A-1. The proposal dated 20.1.1983, filled in by Mr. Kulandaivelu, agent of LIC, was marked as Ex.B-14. The policy dated 18.4.1983 was issued under Ex.B-17. Muthu Gounder died on 8.12.1983. A copy of the death certificate dated 1.10.1984 was marked as Ex.B-18. It was on 30.1.1984, the first plaintiff Athayee, widow of Muthu Gounder, who died subsequent to the suit, had applied for the claim under Form 'A' through Ex.B-19. The letter of the respondents under Ex.A-3 dated 28.8.1984 was sent, repudiating the contract, for the reason that Muthu Gounder had suppressed material factors, more particularly by answering no to the question numbers 18, 20 and 22 in the proposal form. Question No. 18 relates to whether he is suffering from Peptic Ulcer or any desease of the stomach, liver or spleen. Question No. 20 was as to whether he had consulted a Medical Practitioner within last five years, requiring the treatment for more than a week. Question No. 22 was with respect to any surgery undergone by the insured. For all these questions, Muthu Gounder had answered in the negative in the proposal form.
11.2. The defendants pointed out that as per the evidence of Dr. Palaniappan (D.W.2), who was Assistant Surgeon in the Government Hospital at Namakkal, he had issued Ex.B-12 for making claim, form under Ex.B-1 to the LIC, wherein it was found that on 26.11.1980 and 19.8.1983, Muthu Gounder was discharged from the said hospital after having been treated for ulcer. This was mentioned in Ex.B-12. It was further found therein that the same patient Muthu Gounder was admitted twice for treatment of Duodenal Ulcer from 30.10.1980 to 26.11.1980 and from 31.7.1983 to 19.8.1983. It was mentioned that for the first time he was operated on 15.11.1980 for duodenal obstruction. D.W.2 had also spoken about Exs.B-1, B-4, B-6 and B-8. Ex.B-1 relates to the treatment of Muthu Gounder for the said ulcer between 30.10.1980 and 26.11.1980, Ex.B-4 relates to the period between 18.9.1981 and 7.10.1981, Ex.B-6 relates to the period from 3.8.1981 to 12.8.1981. Ex.B-8 relates to the period from 17.8.1981 to 25.8.1981. All the time, Muthu Gounder was treated only for ulcer and duodenal obstruction.
11.3. D.W.3, Dr. Kulandaivelu, Assistant Surgeon of the said hospital, had spoken about Ex.B-10, which would mention that there was earlier surgery undergone for the same ulcer. The first surgery was spoken to by D.W.2 as on 15.11.1980. There is no direct or substantive evidence as to the second surgery, as found under Ex.B-10. Moreover, it is very much important to note that the periods under Exs.B-10 and B-11 are subsequent to the date of proposal or policy.
11.4. By relying upon all these documents, it was contended by the appellants /plaintiffs that although Muthu Gounder was ill, more particularly, suffering from ulcer and also underwent surgery in that regard, what he had answered in column Nos. 18, 20 and 22 of Ex.B14 proposal form was as if he never had stomach disease and he never underwent any surgery in that regard. This, according to the respondents/defendants, was suppression of material factors, enabling them to repudiate the contract under Section C, 1938.
11.5. The contention of the learned counsel for the appellants /plaintiffs was that Muthu Gounder mentioned under Exs.B-1, B-4, B-6, B-8 and B-10 was different from Muthu Gounder of this case; for which he relied upon the description of father's name in Exs.B-1 and B-10 respectively as Athiappa Gounder and Rama Gounder, whereas the father's name of Muthu Gounder of this case, was Ramaiah Gounder. The age under Exs.B-1 and B-10 was mentioned as 67 and 60 years respectively, whereas, under the proposal, the date of birth of Muthu Gounder was mentioned as 7.3.1934. So, as on the date of Ex.B-1, his age was 46 years.
11.6. But, a careful perusal of the evidence of D.W.2, along with the particulars found in Exs.B-4, B-6 and B-8, would go to show that the complaint and description of disease and other clinical factors belong to the same person, as found in Exs.B-1 and B-10 and therefore, the wrong description of Athiappan, the son-in-law of Muthu Gounder, as the name of the father of the latter and wrong description of Muthu Gounder's age under Exs.B-1 and B-10 cannot be taken shelter by the appellants/plaintiffs. It may even be incidental or mistakenly recorded.
11.7. A combined reading of all the records of treatment would only indicate the deceased as a single person and who was rightly described in Exs.B-4, B-6 and B-8, as the Muthu Gounder of this case. In fact, D.W.2 had emphatically spoken about the same. So, the incidental mistaken description of Muthu Gounder's father and the age under Exs.B-1 and B-10 may not be useful to the appellants.
11.8. Thus, what we find is that prior to the proposal dated 20.1.1983, there was one surgery held on 15.11.1980 for duodenal obstruction and that treatment for peptic and duodenal ulcer was also given for this Muthu Gounder at Government Hospital, Namakkal. Thus, the connected records, showing the treatment prior to the date of policy, are Ex.B-3 (31.7.1980 to 19.8.1980), Ex.B-1 (30.10.1980 to 26.11.1980), Ex.B-6 (3.8.1981 to 12.8.1981), Ex.B-8 (17.8.1981 to 25.8.1981), Ex.B-4 (18.9.1981 to 7.10.1981) and Ex.B-11 (5.9.1982 to 8.7.1983). Since the period under Exs.B-5 and B-9 is covered by the period mentioned under Ex.B-4, we need not take into account Exs.B-5 and B-9. Thus, between 30.10.1980 and 8.7.1983, Muthu Gounder was treated as an inpatient for duodenal ulcer for several times.
11.9. Learned counsel for the appellants relied upon Mrs. Om Prabha Jain v. Abnash Chand and Anr., : [1968]3SCR111 , and K. Mani v. Elumalai 2002 (3) CTC 598 and contended that evidence cannot be let in against the pleading and such evidence recorded in that proper pleading need not be given credence at all.
11.10. True it is that in para 6 of the written statement, what was contended by the respondents/defendants was that Muthu Gounder had undergone an operation for ulcer for which he was hospitalised from 30.10.1980 to 26.11.1980 and that as a chronic T.B.patient, he had been admitted in the hospital from 31.7.1983 to 1.9.1983 for ischaemic heart disease with T.B. This is what was mentioned in the pleading about the disease of Muthu Gounder. But, in none of the documents filed by them, we find any observation as if Muthu Gounder was suffering from either ischaemic heart disease or T.B. Therefore, what remains in the pleading is that he was hospitalised between 30.10.1980 and 26.11.1980 and also between 31.7.1983 and 1.9.1983. As the policy is dated only 18.4.1983 for the purpose of suppression of material factors, the second period pleaded in the written statement, namely, 31.7.1983 to 1.9.1983 is of no use, since it pertains to the period, which is subsequent to the date of policy. Thus, what remains under the pleading is that, Muthu Gounder had undergone an operation for ulcer, for which he was hospitalised from 30.10.1980 to 26.11.1980.
11.11. We have already found that a combined reading of other documents, along with the evidence of D.W.2, would go to show that Muthu Gounder of this case underwent a surgery for duodenal obstruction on 15.11.1980, for which he was admitted as an inpatient between 30.10.1980 and 26.11.1980 and the age and the father's name as found in Ex.B-1 were only mistakes.
11.12. Even assuming that there need not be any pleading for the contents of each of the documents showing the treatment undergone by Muthu Gounder, what all the documents filed by the respondents/defendants would show is that, prior to the taking of policy, Muthu Gounder underwent treatment several times for peptic ulcer and also underwent surgery for duodenal obstruction. Whether this suppression will come under Section 45 of the Insurance Act is the question now.
11.13. Section 45 of the Insurance Act, 1938 reads as follows :
'45. Policy not to be called in question on ground of mis-statement after two years.- No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall 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 policy holder and that the policy holder, 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 this 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.'
11.14. As mentioned in L.I.C. of India v. Parvathavardhini Ammal. AIR 1965 Mad. 859, 'the burden of proof under Section 45 of the Insurance Act is a very heavy one which the statute has squarely placed upon the insurer who cannot escape the obligation of examining the medical examiners or doctors on whose reports he accepted the insured's proposal, by merely putting forward speculative theories. The prima facie presumption is that the certificates or reports given by the doctors of the insurer are true and genuine ones, and the consequence of non-examination of the doctors must be clearly visited upon the insurer and every adverse inference should be drawn against the insurer for the omission, i.e., for withholding material evidence, both oral and documentary.'
11.15. In the above cited case, it was further observed as follows:
'It is true that special features are attached to a contract of insurance and these contracts are uberrima fides resting upon a complete and truthful disclosure of all the facts by the insured. In such contracts, the principle of caveat emptor has absolutely no application. Nondisclosure of material facts would go to the root of the matter, it being regarded as fatal to the validity of the contract. Under Section 45 of the Act as amended in 1941, the Legislature has eliminated the nice distinctions of English Common Law with regard to the doctrine of warranty. The insurer, under the Indian law, as amended, has no right to avoid the contract by merely relying on some inaccuracy or falsity in respect of some of the recitals or items in the proposal for insurance, or even in reports of Medical Officers or any other documents connected with contract of insurance. Tt is imperative that to avoid the contract, the insurer must prove that material facts have been suppressed and that either suppression of material facts or fraudulent misrepresentation of material facts occurred with the full knowledge of the assured.'
11.16. In Mithoolal Nayak v. Life Insurance Corporation of India, : AIR1962SC814 , the Supreme Court pointed out that, in order to apply Section 45, three conditions must be satisfied, namely, (a) the statement must be on a material matter or must suppress facts which it was material to disclose, (b) the suppression must be fraudulently made by the policy holder, and (c) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.
11.17. It was again held in Kulla Ammal (died) and Ors. v. The Oriental Government Security Life Assurance Co. Ltd., by its Manager at Bombay, : AIR1954Mad636 (DB) as follows :
'The Insurance Company's repudiation of liability is really based in this case on a Shylockian interpretation of a written contract which we are called upon to enforce, the Insurance Company relying on the letter of this contract and nothing but the contract which cannot be varied by one jot or title. We have indicated supra that mere signature of an insured person who does not understand English, on these forms with this binding declaration in English, is not enough to prove his knowledge of what he was signing and to bind him literally and irrevocably to such a contract. It is elementary law and justice that a person cannot be bound in law by his signature to a document which he does not understand, In no case to which we have been referred has a person, who did not know English, been held irrevocably bound by an insurance contract without the examination as a witness of the person who interpreted the questions to him and recorded the answers.
A legal principle or theory, if pushed to extreme logical conclusions, may more often than not result in grave injustice as in the present case, if not absurdity. It is true that hard cases must not be allowed to make bad law. But, on the contrary, good law should not be permitted, by misapplication to be pushed to such literal and technical extremes, as in the defence of the present action, to degenerate into mechanical machinery which results in injustice without regard to the human background, facts and circumstances. Judicial resource in the direction of achieving justice should be quite equal to the task of minimising, if not eliminating, hard cases which at first blush appear to be necessitated by settled law called good under which if too many hard oases cannot be avoided; there should then result a radical change in the law.
11.18. In this case also, a careful perusal of the proposal form would go to show that everything was filled in by Kulandaivel, agent of LIC and what remained for Muthu Gounder was to simply sign. He was a villager and there is no evidence that he was a literate. P.W.1, the widow of the deceased Muthu Gounder, had herself deposed that the proposal was filled in by only agent, Kulandaivel and they did not know the contents thereof. Therefore, it is impossible to say that all the ingredients of Section 45 narrated above have been fulfilled, in the sense that there is no evidence to hold that Muthu Gounder had voluntatily and knowingly and with an intent to deceive the Insurance Company, burked the material factors, relating to his health.
11.19. It was also observed in Kulla Ammal (died) and Ors. v. The Oriental Government Security Life Assurance Co. Ltd., : AIR1954Mad636 as follows :
'True it is that a contract of life insurance has been called one 'uberrimae fidei', in which the insurer is entitled to be put in possession of all the material information possessed by the insured. However, the doctrine, of 'fides uberrima' is certainly not intended to be one-way traffic, but calls for a reciprocal obligation resting on the Insurance Company of placing before a Court all the evidence in its possession without reserve.... The importance of that decision Joel v. Law. Union & Crown Insurance Co., 1908 (2) KB 883 as in fact in all English decisions on the point of insurance company liability is that it really emphasises the necessity of determining the liability on the facts of each case, and not on mere 'yes' or 'no', recorded in these forms signed by an assured person and written by someone else. Again, in cases where the assured knows a language in which the proposal forms and the personal statements are made, he must be presumed by affixing his signature to these solemn statements; to have read the questions and understood the implications of the answers he, was making.'
11.20. In this case, we have no evidence whatsoever from any person as to who put the questions to this assured, how they were interpreted to him or who wrote the answers. There is also a certificate issued under Ex.B-15, whereby Dr. R. Swaminathan of R. Thiruchengode had, after mentioning about the health of the deceased Muthu Gounder, specifically contended that the health by then was in first class condition. This Doctor Swaminathan had not been examined by the Insurance Company. If he was subjected to cross-examination, it would have been made known as to whether the health condition of Muthu Gounder was first class or not. It is in this circumstance, the mere signature of Muthu Gounder found in the proposal where the contents have been filled in by someone else and more particularly Kulandaivel as evidenced by P.W.1 will not go to clothe an element of fraud upon Muthu Gounder.
11.21. The evidence of the above observations will only go to show that Muthu Gounder did not do anything and all that was done was only by agent Kulandaivel. In such circumstances, it was held in Para 14 of Kulla Ammal (died) and others v. The Oriental Government Security Life Assurance Co. Ltd., : AIR1954Mad636 that the Insurance Company agent was aware of the condition of the health of the insured; but did not communicate it to the company and that his knowledge was the knowledge of the company. Thus, in this case also, the knowledge of Kulandaivel, agent, that the health, condition of Muthu Gounder was good will be taken as the knowledge of the Insurance Company.
11.22. As mentioned earlier, the non-examination of Dr. Swaminathan, the author of Ex.B-15, whereby the health condition of Muthu Gounder was mentioned as first class, will also go against the respondents/defendants; more particularly, when there is not even an iota of evidence on the side of the Insurance Company that Muthu Gounder was suffering from ischaemic heart disease. In. fact, in Ex.B-19 dated 30.1.1984 in Form-A, the reason for the death of Muthu Gounder was mentioned as heart attack. This was not repudiated by the Insurance Company either in the pleadings, or through the evidence. None of the doctors examined on the side of the Insurance Company had also spoken about the reason for death. It is quite common knowledge that ulcer, by itself, is not a killer disease, unless there is perforation and emergency surgery is required, to save the life. It is not the case on hand that Muthu Gounder suffered from any dangerous complication to his health due to ulcer. May be that he could have undergone, a surgery for duodenal obstruction successfully. There is no evidence to hold that death of Muthu Gounder was as a result of the disease of ulcer. As mentioned earlier, ulcer is not a killer disease. The specific reason for the death of Muthu Gounder was heart attack. There was no evidence that Muthu Gounder had ever suffered any heart attack earlier. So, there is no question of ulcer being considered as a material factor, much less its suppression.
11.23. The test is as to whether the policy would have been issued, had it been disclosed that the insured was suffering from a particular kind of ailment. It is common knowledge that all ailments are not impediments in the issuance of a policy for life insurance. Only certain dreadful arid killer diseases will make the insurer to hesitate for issuance of the policy and not of simple routine ailment or disorder to which the entire mankind is in one form or other susceptible and it is not also as if the insurer will have to be in search of only such persons, having a robust health without even the smallest disorder in their system. Therefore, it is for us to see whether the fact suppressed was of a disorder, which is relevant or material, touching the longevity or the expectancy of life of the insured. As a matter of fact, not all facts suppressed were dealt with under Section 45 of the Act and only if material matter was suppressed or statement containing material matter was fraudulently given, the said provision will be applied against the insured. The meaning of 'material matter' in the Oxford Dictionary was given as relevant and concerned with the matter of reasoning and not form, i.e., here, it is material with respect to the acceptance of risk, which, in turn, touching the longevity or expectancy of life of the insured. Duodenal obstruction or ulcer, after treatment, has no risky factor and will not also be injurious to the longevity of the person concerned. In this case, we do not find any other disorder prior to the acceptance of the policy. The reason for the death of the insured was also only due to heart attack, regarding which no ailment was earlier found. So, even assuming that there was suppression of ulcer, it is not a material matter so as to attract the provision of Section 45. Thus, even considering that the suppression was made by Muthu Gounder voluntarily and with full knowledge thereof; since it has no relation with the cause of death, the Insurance Company cannot be allowed to repudiate the contract.
11.24. According to the observation made in Hanil Era Textiles Ltd. v. Oriental Insurance Co. Ltd. 2001 (1) SCC 269 Muthu Gounder would be entitled for the amount due under the policy with interest at the rate of 12% p.a. from the date of plaint till the date of realisation. Hence, the points are answered in favour of the appellants/plaintiffs.
12. In the result, Appeal Suit is allowed; setting aside the judgment and decree of the trial Court and making the second appellant entitled to the amount due on the policy of Muthu Gounder with interest at 12% p.a. from the date of plaint till the date of realisation with costs. No costs in the appeal.