FIRST APPEAL No. 183 OF 1998 Against the Judgment and Decree dated 10th February, 1998 passed by Sri J.P. Singh, Subordinate Judge Ist Court, Saharsa in Money Suit No.38 of 1994. LIFE INSURANCE CORPORATION OF INDIA & ORS. ……………..………. Defendants-Appellants Versus SMT. MIRA DEVI ……..……………………… Plaintiff-Respondent ******** For the Appellant : Mr. Umesh Prasad Singh, Sr. Advocate Mr. Rajeev Ranjan Prasad, Advocate Mr. Prakash Chandra Jha, Advocate with him. For the Respondent : None Dated : 28th day of April, 2011 P R E S E N T THE HON'BLE MR. JUSTICE MUNGESHWAR SAHOO J U D G M E N T 1. The appellant has filed this First Appeal against the impugned Judgment and Decree dated 10th February, 1998 passed by Sri J.P. Singh, the learned Subordinate Judge Ist, Saharsa in Money Suit No.38 of 1994 decreeing the plaintiff-respondent’s suit for a sum of Rs.2,12,000/- with interest at the rate of 6 per cent per annum pendente lite and future. 2. The plaintiff-respondent filed the aforesaid money suit No.38 of 1994 claiming recovery of RS.2,12,000/- from the appellants on account of death claim on the basis of L.I.C. policy No.530052804 in the name of the husband of the plaintiff, namely, late Prabhu Paswan. The plaintiff also Mungeshwar Sahoo, J. - 2 - prayed that it be declared that the rejection by defendant No.3-appellant is illegal. On 28.03.1990, the husband of the plaintiff made a proposal for Jivan Mitra Policy (double cover endowment plan) for a sum of Rs.1,00,000/- under table No.88/15 on the basis of quarterly premium of RS.2295/- through the agent of Life Insurance Corporation. The Life Insurance Corporation accepted the said proposal and granted first premium receipt of RS.2295/- on 31.03.1990. The plaintiff is nominee of the said policy. The maturity date of the aforesaid policy was 28.03.2005. After acceptance of the said policy, the husband of the plaintiff made regular payment of premium quarterly up to 21st March, 1991. Then husband of the plaintiff Prabhu Paswan died all of a sudden due to heart failure on 09.05.1991 in his native place Mahesh Khoot. The plaintiff made claim with the appellant which ultimately rejected by the appellants on 12.12.1993 holding that the policy to be void. The said order is illegal. The plaintiff sent several legal notices. But no payment was made hence the plaintiff filed the suit. 3. On being noticed, the defendant appeared and filed contesting written statement contending that the aforesaid policy was secured after playing fraud upon the Life Insurance Corporation of India and after obtaining false medical certificate. In the proposal statement signed by Prabhu Paswan on 09.03.1990, the insured gave false answer and had submitted a false document and suppressed correct information with regard to his health as well as his age. The age given by insured as 47 is false. He was suffering from Pulmonary Tuberculosis but he suppressed the said fact at the time of getting the said policy and signing personal statement at the time of revival of policy. As fraud was committed on the Life Insurance Corporation, the policy was repudiated and it was declared to be void and claim was rejected. - 3 - 4. On the basis of the aforesaid pleadings of the parties, the learned Court below framed the following issues : (i) Is the suit as framed maintainable? (ii) Has the plaintiff got cause of action and right to suit? (iii) Whether the suit is barred by law of limitation? (iv) Whether the Policy No.530052804 was obtained by the husband of the plaintiff after playing fraud on the Officers of the Life Insurance Corporation and the same is void ? (v) Whether the said policy is genuine and the plaintiff is entitled to death claim on the basis of the aforesaid policy? (vi) Whether the plaintiff is entitled to recover a sum of Rs.2,12,000/- towards the death claim as well as a decree for the same? (vii) Whether the plaintiffs are entitled to any other relief or reliefs? 5. While deciding Issue No.4 & 5, the learned Court below discussed the oral as well as documentary evidences from paragraph 5 upto 34 and ultimately at paragraph 35 found that impugned policy is not void and was not obtained by the husband of the plaintiff after playing fraud on the Officers of the Life Insurance Corporation rather the same is genuine and the plaintiff is entitled to death claim on the basis of the said policy. On the above finding, the learned Court below decreed the plaintiff suit. 6. The learned senior counsel, Mr. Umesh Prasad Singh appearing on behalf of the Life Insurance Corporation-appellant submitted that the learned Court below has wrongly interpreted Section 45 of the Insurance Act, 1938 and recorded a finding that after two years, the appellant cannot be allowed to repudiate the policy. In support of his submission, the learned counsel relied upon A.I.R. 1962 (Supreme Court) 814 Mithulal Nayak Vs. Life Insurance Corporation and A.I.R. 1959 Patna 540 Smt. Banarsi Devi Vs. New India Assurance Company Ltd. and submitted that the husband of the plaintiff was suffering from tuberculosis but intentionally and - 4 - knowingly, the deceased Prabhu Paswan suppressed the said fact and signed Ext. ‘A’ and got the policy revived. This Ext. has been proved by the Life Insurance Corporation by evidences but the learned Court below wrongly discarded the said evidences. According to the learned counsel, there was no regular payment of premium quarterly and therefore, the policy lapsed. For reviving the said policy, the deceased made declaration and signed the required form Ext. ‘A’ on 10.01.1991 and got the policy revived. In the Ext. ‘A’, the insured gave false negative answer with respect to the question regarding his suffering from disease like Asthma, Tuberculosis or any other disease of Lungs. This is nothing but fraud played by the deceased on the Corporation and, therefore, the Corporation has rightly repudiated the policy. 7. The learned counsel further submitted that the learned Court below has wrongly held that the quarterly premium was regularly paid and through Ext. 4/e, the premium was paid for the 1st quarter of 1991 although from perusal of the record, Ext. 4/e is another document which is not related with the policy. This is error apparent on the face of the record. According to the learned counsel, since the policy lapsed, therefore, Ext. ‘A’ was signed by the husband of the plaintiff but the learned Court below has wrongly held that Ext ‘A’; is a created document. If it is held that Ext. ‘A’ is created document then the policy lapsed and, therefore, also the plaintiff is not entitled for the policy amount. On these grounds, the learned counsel submitted that the impugned Judgment and Decree are liable to be set aside and the plaintiff’s suit be dismissed with cost. 8. When this appeal was heard, nobody appeared on behalf of the respondent. 9. In view of the above facts, the points arises for consideration in this appeal is as to whether the learned Court below has rightly decided - 5 - Issue No.4 & 5 in favour of the plaintiff-respondent or whether the impugned Judgment and Decree are liable to be set aside. 10. As stated above, the plaintiff case is that her husband Prabhu Paswan got a policy on 28th March, 1990 being Jivan Mitra (double cover endowment plan) for a sum of Rs.1 lakh. The quarterly premium was Rs.2,295/- and the maturity period was 28th June, 2005. The defendants- appellant’s case is that fraud was committed on the appellant and by suppressing the material facts intentionally, the policy was obtained by the deceased. Second defence is that while the policy was in lapsed condition, the deceased signed Ext. ‘A’ giving false declaration about his health and ailment and, therefore, the policy has been rightly repudiated. The parties have adduced oral as well as documentary evidences in support of their respective cases. It may be mentioned here that the issuance of policy under Jivan Mitra in favour of husband of plaintiff Prabhu Paswan for a sum of Rs.1 lakh on the basis of quarterly premium of RS.2295/- is accepted by the Life Insurance Corporation. Only the dispute is that while proposal was made by the deceased on 09.03.1990 and the personal statement signed by him on 11.03.1990, he gave false statement regarding his health and age. Further when the policy was in lapsed condition, the deceased husband of plaintiff again signed Ext. ‘A’, on 10.01.1991 wherein again he intentionally and falsely declared that he was not suffering from tuberculosis or any long disease. Admittedly, in this case, the policy is dated 28th March, 1990 and for the first time, the appellant repudiated the policy after more than 2 years and after death of husband, death claim made by the plaintiff. Section 45 of the Insurance Act 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 - 6 - 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. According to the learned counsel, the statement made by the deceased at the time of making proposal and also at the time of revival of the policy was on a material matter which was suppressed fraudulently, intentionally and, therefore, the policy was void policy and restriction of two years is not applicable. 12. In the case of Smt. Banarsi Devi A.I.R. 1959 Patna 540 Division Bench (Supra) at paragraph 9, it has been held that the objection on the ground that inaccuracy or falsehood has been admittedly taken after the expiry of two years from the date on which the policy was effected, there is heavy onus laid on the defendant company to establish 3 things (1) that the false statements were on a material matter, (2) that the policy-holder knew at the time of making them that the statements were false, (3) that they were fraudulently made. 13. In A.I.R. 1962 (Supreme Court) 814 Mithulal Nayak case (Supra), the Apex Court at paragraph 8 held that the 3 conditions for the application of the second part of S.45 are :- (a) The statement must be on a material matter or must suppresses facts which it was material to disclose. - 7 - (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. 14. As stated above in the present case, admittedly, the repudiation was made after two years. Therefore, in view of the aforesaid settled principal of law by this Court as well as by the Hon’ble Apex Court, the appellant is required to prove the 3 facts (1) that the statements must be on a material matter or must suppresses facts which it was material to disclose. (2) the suppression must be fraudulently made by the policy-holder and (3) that the policy holder must have known at the time of making the statement that it was false or that it suppressed fact which it was material to disclose. The appellant have produced Ext. ‘A’ which is dated 10.01.1991. According to the appellant, this Ext. ‘A’ was signed by Prabhu Paswan, the deceased husband of the plaintiff wherein at column No.(2) (a) (i) the answer was given as ‘No’ which is a material fact which should have been disclosed by the insured. This Ext. ‘A’ is a form which is required to be filled up for revival of lapsed policy. Therefore, the question is whether the policy of the deceased Prabhu Paswan ever lapsed? Only if it is found that the policy lapsed then only this Ext. ‘A’ could have been signed or obtained from Prabhu Paswan. Ext. ‘4’ series are the premium receipts. The first premium receipt dated 31.03.1990 is for Rs.2295/- granted by the Life Insurance Corporation in favour of the deceased husband of the plaintiff. This receipt has been marked as Ext. 4/C. As stated above, the premium was to be paid quarterly; therefore, the next premium was to be paid by the end of June, 1990. Ext.4/B is the premium receipt dated 08.06.1990 for Rs.2295/-. The next quarterly premium was to be paid within September, 1990 which was paid and the receipt is dated 25.09.1990 i.e., Ext.4/A. Likewise the fourth - 8 - quarterly premium was to be paid was December, 1990 which was paid on 27.12.90. The money receipt for Rs.2295/- is Ext.4/D. Likewise, the first premium of 1991 was to be paid within March, 1991 and the said premium was paid on 21st March, 1991 and the receipt has been marked as Ext. 4/e on admission of the appellant. From the aforesaid receipts, it appears that the quarterly premium was regularly paid without any default. The next quarterly premium was to be paid by June, 1991 but in the meantime, the husband of the plaintiff died on 19.05.1991. Therefore, there was no question of lapse of the policy arises. 15. So far the submission of the learned counsel for the appellant that Ext. 4/e relates to different matter and is not related with the present case or policy of the deceased is concerned, from perusal of the record, it appears that Ext.4./e was marked as Ext. 4/e on admission of the appellant and the said document, i.e., the money receipt dated 21.03.1991 is on record. However, because of clerical mistake, the office has marked another document as Ext.4/e. In view of the above facts because of mistake of the Clerk concerned, instead of marking the relevant document which has been marked as Ext. 4/e on admission, different document has been marked, the appellant cannot be allowed to take advantage of the said mistake. I personally perused the record and I find that the money receipt for the policy for Rs.2295/- dated 21st March, 1991 is available on record. I, therefore, find that there is no mistake apparent on the face of the record committed by the Court below. Now, in view of the above documentary evidences, it is clear that all the quarterly premiums were paid by the deceased-husband of the plaintiff regularly. From the pleading also, it appears that the appellant never raised the question that any of the quarterly premium was not paid within time stipulated and the policy lapsed. There is no such specific case in - 9 - the written statement. Only it is pleaded that while the policy was in lapsed condition Ext. ‘A’; was signed by the deceased. This Ext. ‘A’ is dated 10.01.1991. When the premium have been paid regularly, there was no question of lapse of the policy arises. How the policy lapsed has also not been specifically stated. None of the money receipts have also been disputed by the appellant. Therefore, in my opinion also, the policy never lapsed. The learned Court below also considering all these aspects of the matter and the evidence found that there was no question of lapse of policy. I do not find any reason to interfere with that finding. If the policy did not lapse then why Ext. ‘A’ was executed by the deceased. There is no explanation. From perusal of the signature appearing on this Ext. ‘A’ and the signature of the deceased on the initial policy paper Ext. ‘16’ i.e., the proposal form, the signature do not tally. Even by naked eyes, it is clear that the signature of Ext. ‘A’ is entirely different than the signature of Ext. ‘16’. No one can say that the signature is of same person. I, therefore, find that the learned Court below has rightly found that there is much discrepancy in the signatures. In view of the above facts that the policy did not lapse and there was no occasion for revival of the policy, no question of making any declaration by Ext. ‘A’ arises coupled with the fact that signatures of Ext. ‘A’ entirely differs from Ext. ‘16’, it can safely be held that Ext. ‘A’ is nothing but created document. The learned Court below has rightly, therefore, found that Ext. ‘A’ is created document. The learned counsel for the appellant submitted that appellant is corporation and it is not expected that the Corporation would have created the document because whatever document was available on record, the same has been produced. I do not agree with the learned counsel for the reasons stated above. - 10 - 16. The appellant have produced Ext. ‘B’, the medical report signed by Prabhu Paswan wherein also, declaration has been made that Prabhu Paswan is aged about 47 years and the illness of tuberculosis has not been stated. Ext. ‘C’ is the certificate of agent Sitaram Gupta and Ext. ‘D’ is also of the agent. These declarations were made prior to acceptance of the policy in the first quarter of 1990. Ext. ‘E’ is the discharge slip Nazarath Hospital, Mokama which is dated 29.01.91. Ext. ‘F’ is the day-to-day prescription of the hospital during this period, i.e., from admission to discharge dated 27.01.91 to 29.01.91. The disease of the deceased was diagnosed as Koch’s chest. It further appears from Ext. ‘E’ that the deceased husband of plaintiff, namely, Prabhu Paswan was discharged from the hospital on the request of the patient himself. It is the plaintiff case that the disease was not correctly diagnosed and, therefore, the husband got himself treated in another clinic. In view of the above fact even if it is held that he was suffering from tuberculosis, which was diagnosed during 27.01.91 to 29.01.91 then in such circumstances the deceased was not knowing that he was suffering from tuberculosis when he made proposal for the policy on 28th March, 1990. This is not the case of the appellant that he was suffering from tuberculosis prior to making proposal in March, 1990. In such circumstances, there is no question of suppression of fact by the deceased-husband of plaintiff arises when proposal for policy was made in March, 1990. So far Ext. ‘A’ is concerned, we have already held that no reliance can be placed on Ext. ‘A’. IN such circumstances, there is no question of suppression of disease by the deceased arises. 17. So far declaration of age is concerned, the deceased declared his age as 47. The learned counsel for the appellant submitted that this is false. So far this ground is concerned also, there is no age proof contrary to this - 11 - statement of the deceased. Moreover, it is not so material to repudiate the policy and it does not come within the aforesaid condition mentioned in Section 45 of the Insurance Act. 18. In this case on behalf of the plaintiff-respondent, various documents have been produced and witnesses have been examined. Ext. ‘6’ is medical prescription written by P.W.8. Ext. ‘7’ is death certificate dated 19.05.1991 and Ext. ‘7/A’ is medical attendant certificate. These facts are not disputed by the appellant. From perusal of Ext. ‘8’, it appears that for the first time, the L.I.C. repudiated policy of 12.12.1993 on the ground of suppression or withholding correct information regarding age and health. Likewise various other documents Ext.8/C, Ext.9, Ext.10, Ext.11 series Ext.13, Ext.17 and Ext.18 series are the documents which relates to the employment of the husband of plaintiff and various letters and certificate of cremation of dead body and claim application etc. which are not relevant for the purpose of deciding the issues involved in the case. These facts are not disputed by the appellant. 19. The witnesses examined on behalf of the plaintiff-respondent, i.e., P.W.1, 2 and 8 to 12 have stated about the good health of the deceased prior to his death and that he was not suffering from tuberculosis. He died on 19.05.1991 because of heart failure. The plaintiff herself has been examined as P.W.11. Ext.1 series are the legal notices. As has been held in the aforesaid decisions, the burden of proving the fact alleged by the appellant that the deceased suppressed correct information was on the appellant. From the discussion of the evidences oral and documentary, I find that the appellants have failed to prove the allegation made by them that the deceased suppressed material facts regarding his age and health. Therefore, the rejection order passed by the appellant rejecting the death claim is - 12 - illegal. The defendant-appellant could not have rejected the claim on unfounded grounds. 20. In view of my above discussion, I find no reason to interfere with the findings of the learned Court below. Accordingly the findings of the learned Court below on these points are hereby confirmed. 21. In the result, I find no merit in this First Appeal and accordingly, this First Appeal is dismissed. In the facts and circumstances of the case, there shall be no order as to costs. (Mungeshwar Sahoo, J.) Patna High Court, Patna The 28th day of April, 2011 Sanjeev/A.F.R.