*THE HON’BLE SRI JUSTICE K.G. SHANKAR +A.S.No.2444 of 1993 % 30.11.2011 Between: #Krapa Vidyavathi and two others … Appellants Vs. $Life Insurance Corporation of India, Machilipatnam and 4 others … Respondents ! Counsel for the Appellants: Sri A. Narasimha Rao Counsel for the Respondents: A. Srinivasa Rao for R-1 <Gist: >Head Note: ? Cases referred: 1. (1991) 1 SCC 357 2. AIR 1971 AP 41 THE HON’BLE SRI JUSTICE K.G. SHANKAR A.S.No.2444 of 1993 Date: 30.11.2011 Between: Krapa Vidyavathi and 2 others. .. Appellants/ Plaintiffs AND Life Insurance Corporation of India, rep.by the Senior Divisional Manager, Machilipatnam, and 4 others. .. Respondents/ Defendants THE HON’BLE SRI JUSTICE K.G. SHANKAR A.S.No.2444 of 1993 JUDGMENT: Whether any mis-statement in the proposal form for obtaining life insurance policy automatically exonerates the Life Insurance Corporation of India (the first defendant) from liability to honour the policy claim is the question of law that falls for consideration in this appeal. 2. The first plaintiff is the wife of late Krapa Madhava Rao, insured in this case. He died intestate on 20.09.1982. The plaintiffs 2 and 3 are his sons. The second defendant was the mother of Madhava Rao. She died during the pendency of the suit. Consequently, defendants 3 to 5 were brought on record as the legal representatives of the deceased-second defendant. The third defendant died during the pendency of the appeal. 3. When Madhava Rao died, the first plaintiff, who is the nominee of the policy, claimed the sum insured at ` 50,000/-. The first defendant declined to pay on the ground that Madhava Rao suppressed material information and that the policy consequently has become void. As the first defendant refused to honour the policy, the plaintiffs preferred the claim for the policy amount of ` 50,000/-. The plaintiffs indeed claimed that ` 37,500/- be paid to the plaintiffs 1 to 3 put together and the balance of ` 12,500/- out of the amount be paid to the second defendant (as the second defendant being the mother of deceased-Madhava Rao was one of the four class-I heirs of deceased-Madhava Rao). The trial Court concluded that there was material suppression by Madhava Rao and that the policy, therefore, was not enforceable. Accordingly, the suit was dismissed. The plaintiffs preferred the appeal, inter alia contending that there was no material suppression and that policy amount being paltry amount deserves to be paid to the plaintiffs together with interest. 4. The narrow question is whether the plaintiffs are entitled to the money decree as prayed for. 5. Most of the facts are admitted. The dispute is regarding method of computation of the facts. The deceased-Krapa Madhava Rao was unwell from 04.12.1975 till 07.01.1976. He underwent treatment during that period at CBM Bethel Hospital, Vuyyuru. The deceased was suffering from chronic headache, hypertension and palpitation. He was also an edict of alcohol. The deceased underwent treatment, perhaps, for the above ailments from 04.12.1975 till 07.01.1976 i.e., for a period of 33 days. Ex.B.6 is the certificate issued by the Superintendent of CBM Bethel Hospital, Vuyyuru in that regard. 6. In Ex.B.2 proposal form, Column No.22 deals with some of the ailments. I may quote Column No.22 of Ex.B.2 as it has relevance to the rival claims. Column No.22 of Ex.B.2 proposal form reads: “22. (a) Did you ever have any operation, accident or injury? (b) Have you ever had an electrocardiogram, X-ray or screening, blood, urine or stools examination? (c) Have you ever been in any hospital, asylum, or sanatorium for check-up, observation, treatment or any operation? ” 7. Column No.22 (a) relates to operation, accident or injury. Madhava Rao answered the same in the negative. However, it is not the case of anybody that Madhava Rao underwent operation or suffered from an accident or an injury. Column No.22 (b) reads whether Madhava Rao ever underwent ECG, X-ray, screening and examination of blood, urine or stools. The answer to the question was again in the negative. Column No.22 (c) was question relating to the hospitalisation and treatment in any asylum or sanatorium either for check up, observation, treatment or any operation. The answer to this query indeed was again in the negative. 8. The first plaintiff examined himself as PW.1 and also examined a private medical practitioner at Vuyyuru as PW.2. The defendants 3 to 5 did not choose to examine any witness in support of their case, whereas, the first defendant examined as many as three witnesses. DW.1 is the Administrative Officer of the first defendant. He produced Ex.B.2-proposal form, Ex.B.3- medical examination report, and Ex.B.4-policy. The first defendant also examined a Doctor of CBM Bethel Hospital, Vuyyuru as DW.3 and issued Ex.B.6. DW.2 is an attender of the hospital, who was summoned to produce the records. DW.2 deposed that no records relating to late Krapa Madhava Rao were available with them. DW.3 deposed that she issued Ex.B.6 certificate and that she, however, was not the Doctor at the hospital in 1975-76 meaning thereby she did not treat the deceased Madhava Rao. Her evidence was based on available records only. 9. Ex.B.6 is the certificate of hospital treatment of Krapa Madhava Rao. It was admittedly issued by DW.3 at the request of the first defendant. The certificate discloses that the deceased was suffering from chronic headache, hypertension and chronic alcoholism. Column No.9 of Ex.B.6 shows that the deceased was treated for all the ailments. DW.3 did not speak about any personal knowledge. 10. Sri A.K. Nrasimha Rao, learned counsel for the plaintiffs also emphasised the fact that there is no evidence that the deceased underwent treatment subsequently and that it was recorded that the deceased was cured of the ailments on account of which he had to undergo treatment. It would not appear that CBM Bethel Hospital, Vuyuru contains deadiction Centre for chronic alcoholism. While so, on the one hand, it was recorded in Ex.B.6 that the deceased suffered from a few ailments as well as from alcoholism and that he was cured of the same. I do not know whether Ex.B.6 should be read to mean that the deceased was cured of chronic alcoholism. 11. In any event, there is no evidence that the deceased was admitted in the hospital again for any ailment including alcoholism. PW.2 was the family doctor of the deceased Madhava Rao for about 5 to 6 years immediately preceding the death of Madhava Rao. He deposed that the deceased maintained good health and that Madhava Rao did not suffer from alcoholism. He deposed that Madhava Rao died on account of heart attack. It may be noticed that the death of Madhava Rao was not recorded due to alcoholism or other ailments. 12. It may be recalled that Ex.B.6 speaks of more than one ailment that Madhava Rao suffered from. Apart from the fact that there is doubt about the entries in Ex.B.6, it may be noticed that Column Nos.4 to 7 show that Madhava Rao suffered from frequent headache, alcoholism and heart problem. However, when Madhava Rao died and PW.2 certified that the death of Madhava Rao was due to heart attack, there was no further enquiry whether the heart attack that Madhava Rao suffered from leading to his death, was a remnant of the ailment suffered by him in December and January 1975-76. Therefore, it cannot be said that the death of Madhava Rao was due to the ailments that he suffered from leading to his admission in the CBM Bethel Hospital, Vuyyuru. 13. As recorded by the learned trial Judge, DW.3 was subjected to fair amount of cross-examination. DW.3 deposed that the deceased suffered from chronic alcoholism, as can be seen from Ex.B.6. She stated that Ex.B.6 recorded that the deceased was cured of the problems for which he was admitted. She also deposed that there was no evidence that the deceased was in the habit of hitting the bottle after his treatment in the hospital. She finally admitted that alcoholism indeed was not a disease as such. 14. DW.3 admitted that there was no need for one to be hospitalised as inpatient for 33 days if one was suffering from hypertension and alcoholism. She deposed that she did not know why the deceased was retained as inpatient for 33 days in the hospital. DW.3, however, deposed that the deceased was given treatment for alcoholism, hypertension and liver ailments. It, therefore, would appear that the deceased was treated and the deceased was cured of the ailments including alcoholism, chronic headache, hypertension and liver problem. At any rate, it is not the evidence of DW.3 that the deceased continued to suffer from these problems even when the deceased was discharged from the hospital. 15. The more important consideration in this regard is the very authenticity of Ex.B.6. DW.2, an employee of the hospital deposed that the records of the hospital were not available. If so, where from could DW.3 gather information to furnish the details in Ex.B.6. Indeed, DW.3 deposed that she gathered the information from the hospital records. Read with the evidence of DW.2 that no records were available at the hospital, the very Ex.B.6 becomes suspicious. At any rate, the learned counsel for the plaintiffs proceeded on the assumption that Ex.B.6 was true and that the deceased Krapa Madhava Rao suffered from the ailments referred in Ex.B.6, viz., chronic headache, alcoholism, hypertension and liver ailments. I, therefore, also go by the assumption that Ex.B.6 is true and examine whether the deceased committed any material suppression. 16. The whole problem arose on account of the proximity of the death of the deceased Madhava Rao and the date of the policy. Proposal for the policy was on 29.03.1982, vide Ex.B.2 proposal form. Ex.B.4 issued on 23.06.1982 with effect from 29.03.1982. The deceased paid the first premium. The deceased, however, died on 20.09.1982, less than six months from the date of the policy. It would appear that the first defendant authorities became suspicious on account of the death of the deceased shortly after obtaining the policy and consequently embarked upon the enquiry. 17. The primary question, which remains to be answered, is whether Madhava Rao committed suppression of material facts while furnishing the details in Ex.B.2 policy form. 18. Insurance contracts are uberrima fide contracts, i.e., contracts of utmost good faith. No person is expected to enter into contract with the insurer with false claims. Inter alia, it is the contention of Sri A. Srinivasa Rao, learned counsel for the first respondent/first defendant that u/s.45 of the Insurance Act, a policy cannot be questioned by the insurer two years after the issuance of the policy. His contention is that the insurer certainly is entitled to question the bona fides of the insured where the death of the deceased and the claim are made within two years from the date of the policy. 19. The learned counsel for the plaintiffs on the other hand contended that it is for the insurer to establish that there was a fraudulent misrepresentation and suppression of material facts regarding the health of the insured while filling up of the proposal form. In support of his contention, the learned counsel for the plaintiffs placed reliance upon Life Insurance Corporation of India v. Smt. G.M. Channabasamma[1]. In that case, the husband of the plaintiff was described in the policies as T.R. Gurupadaiah, but in the plaint, the plaintiff described him as Gurupadappa. There were as many as four policies. The deceased breathed his last about two months after the taking the 4th policy. The insurer inter alia contended that the deceased must have been aware about his ill-health at least by then. 20. As many as three Doctors treated a person, but none of them was sure that the person treated by the concerned Doctor was the deceased and was the insured. The Doctor of the insurer, however, certified that the insured was maintaining good health at the time of taking out the policies. The Supreme Court considered that the insurer failed to discharge the burden of proof that the insured was suffering from serious ill-health at the time of taking out the policies and knowingly suppressed the material information. It is contended by Sri A.K. Narasimha Rao, learned counsel for the plaintiffs that there is absolutely no evidence showing that the deceased was suffering from serious ill-health at the time of taking out the policy nor was there evidence to show that the deceased was an alcoholic at the time of taking out the policy. He claimed that it is for the first defendant to establish that the deceased suppressed material facts and misrepresentation regarding his health while filling up of the proposal form and that the rejection of the claim is not sustainable. 21. He also considered that adverse inference needs to be drawn where the Doctor and the first defendant considered at the time of the examination of the insured that the insured was in good health, that the insured indeed was healthy and that he, consequently, was not guilty of suppressing any material fact relating to his ill-health. I n the Life Insurance Corporation of India, South Zone, Madras and another v. Bhogadi Chandravathamma[2], the Division Bench of this Court observed that there was indeed duty or obligation on the part of the insured to make true and complete disclosure of material facts and that such disclosure, however, did not extend to matter not within the knowledge of the insured. The Bench considered that the confidential report submitted by the medical examiner of the L.I.C. deserved to be accepted as true since the presumption is that medical examiner submitted the report after thorough and careful examination of the insured. It is the contention of the learned counsel for the plaintiffs that admittedly the insured was examined by the Doctor of the first defendant-Corporation. Admittedly, the Doctor of the first defendant issued Ex.B.3 confidential report. In the confidential report, Dr. K. Babu Rajendra Prasad, who examined the insured, considered that the deceased Krapa Mahdava Rao was fit to be insured. 22. It is not as though the first defendant is contending that Madhava Rao influenced Dr.K. Babu Rajendra Prasad and obtained Ex.B.3 confidential report and that Ex.B.3 confidential report could not be acted upon as it was hit by fraud. No explanation is forthcoming from the first defendant regarding Ex.B.3 confidential report. The first defendant primarily relied upon Ex.B.6 certificate issued by DW.3. Where the Doctor of the first defendant certified the deceased to be healthy at the time of the proposal, I am afraid that it cannot be said that the deceased was suppressing any material fact regarding his health while filling up of the proposal form. 23. It is indeed true that while the deceased underwent treatment as inpatient for about 33 days in CBM Bethel Hospital, Vuyyuru, the deceased did not mention the same in Column No.22 of the proposal form under Ex.B.2. However, there is absolutely no record from 07.01.1976 till the date of policy on 28.03.1982 showing that the petitioner was unwell. It is not possible for the plaintiffs to adduce negative proof that the deceased was no more an alcoholic. In the absence of positive evidence that the deceased continued to be an alcoholic, in the light of Ex.B.6, which stated that the deceased was cured, I have no alternative but to assume that the deceased was no more an alcoholic. In this background, I consider that the failure of the deceased to mention his hospitalisation is not tantamount to suppression of material fact regarding his health. It is not even the case of the first defendant that the deceased was subjected to medication for life and that the deceased suppressed the same. There is no evidence that the deceased was on medication after his discharge from the hospital on 07.01.1976. I, therefore, have no hesitation to hold that the deceased did not suppress any material fact regarding his health, albeit his statement under Column No.22 of Ex.B.2 was not true. 24. Admittedly, the death of Madhava Rao was due to heart attack. Indeed, it would not appear that the deceased was subjected to post-mortem examination. At the same time, PW.2, family Doctor of Madhava Rao deposed that Madhava Rao died on account of heart attack. The learned counsel for the first defendant tried to co-relate the death on account of heart attack to the ailments of the deceased including hypertension. It may be recalled that the deceased was found to be suffering from chronic headache, alcoholism, hypertension and liver problem, as can be seen from Ex.B.6. With reference to hypertension, as referred to in Ex.B.6, the learned counsel for the first defendant contends that the death of Madhava Rao was perhaps due to hypertension leading to heart attack. 25. I may point out at the outset that there is a long gap of about six years between the date of the discharge of the deceased Madhava Rao from the hospital and his obtaining policy. He was discharged from the hospital on 07.01.1976, whereas the proposal was submitted on 28.03.1982. Secondly, Ex.B.6 shows that the deceased was cured of the ailments for which he underwent treatment at the CBM Bethel Hospital, Vuyyuru. Thirdly, it is not sufficient to create a doubt that the deceased could have died of heart attack owing to hypertension. It must be shown that the death of the deceased was a heart attack, which was the result of hypertension that the deceased suffered. There is no evidence to make out this aspect. As admittedly onus is upon the first defendant, in view of Chinnabasamma and also Section 45 Insurance Act, I reject the claim of the first defendant that the death of the deceased was due to hypertension culminating into a heart attack and that the deceased deliberately suppressed the fact that he was suffering from hypertension from and prior to 07.01.1996. There is absolutely no evidence to show that the deceased died on account of suppression of his health condition. This aspect has a bearing upon the false statement by Madhava Rao in Column No.22 of Ex.B.2 proposal form. I would venture to repeat that the statement of the deceased that he was never hospitalised and did not suffer from any ill-health indeed was false. At the same time, the failure to disclose the details cannot be considered to be suppression of material facts regarding the health of the deceased. Added to it, Ex.B.3 confidential report by Dr. K. Babu Rajednra Prasad shows that the deceased was maintaining perfect health at the time of his taking the policy. It was sheer misfortune that the deceased died within six months after obtaining the policy. It cannot be attributed as a suppression of fact against the deceased negating the obligation under Ex.B.4 policy. 26. The learned trial Judge went by the assumption that non-disclosure of the hospitalisation in Column No.22 of the proposal forum under Ex.B.2 was tantamount to suppression of material fact. For various reasons mentioned above, I regret to disagree with the view taken by the learned trial Judge. I conclude that there was no material suppression of fact by the deceased relating to his health at the time of obtaining the policy. The non- disclosure of the hospitalisation of the deceased while the deceased submitted proposal form under Ex.B.2 is not a material suppression of fact regarding the health of the deceased. In that view of the matter, the policy under Ex.B.4 is enforceable. The defendant is liable to honour the claim of the plaintiffs and late second defendant. The plaintiffs are entitled to interest at 12 % per annum from 30.03.1981 on which date the first defendant repudiated the claim of the plaintiffs through Ex.A.1 letter till the date of the suit and interest at 6% per annum from the date of suit till realization, on the principal amount of ` 50,000/-. The plaintiffs are entitled to ` 37,500/-, out of the principle amount of ` 50,000/- which was the sum assured. The defendants 4 and 5, who are the legal representatives of the defendants 2 and 3, are entitled to ` 12,500/-, out of the principle assured policy amount. The plaintiffs as well as the defendants 4 and 5 shall be entitled to interest at the rates mentioned above over their respective share of policy amount on pro-rata basis. 27. The Appeal Suit is, accordingly, allowed. There shall, however, be no order as to costs. _________________ K.G. SHANKAR, J Date: 30.11.2011 Note: L.R. Copy to be marked. (B/o.) Isn [1] (1991) 1 SCC 357 [2] AIR 1971 AP 41