The Senior Manager,Sriramlife Insurance Co.Ltd. Vs Sugyani Nahak

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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IN THE HIGH COURT OF ORISSA AT CUTTACK WP(C) No.16722 of 2016

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and batch of Writ Petitions

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(In the matters of applications under Articles 226 and 227 of the Constitution of India, 1950).

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Santosh Behera and Anr. …. Opp. Party(s)

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Advocates appeared in the case through Hybrid Mode: For Petitioner (s) : Mr. G.P. Dutta, Adv. -versusFor Opp. Party(s) : Mr. Sunil Ku. Panda, Adv. (for O.P.1)

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CORAM:

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DR. JUSTICE S.K. PANIGRAHI

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DATE OF HEARING:-17.05.2024 DATE OF JUDGMENT:-25.06.2024

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WP(C) No.16722 of 2016

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along with

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W.P.(C) Nos.9048 of 2016, 16725 of 2016, 16727 of 2016, 16729 of 2016, 16731 of 2016, 2491 of 2017, 2927 of 2017, 16404 of 2017, 21620 of 2017, 23482 of 2017, 23483 of 2017, 23484 of 2017, 23485 of 2017, 23486 of 2017, 23487 of 2017, 27203 of 2017, 27204 of 2017, 27205 of 2017, 27209 of 2017, 27210 of 2017, 2104 of 2018 , 2146 of 2018, 4319 of 2018 and 8463 of 2019.

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Dr. S.K. Panigrahi, J.

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1. Since common question of facts and law are involved in all the abovementioned Writ Petitions, the same were heard together and are being

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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disposed of by this common judgment. However, this Court felt it apposite to deal the W.P.(C) No.16722 of 2016 as the leading case for proper adjudication of all these cases.

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2. The Petitioner/ Shriram Life Insurance Co. Ltd., in W.P.(C) No.16722 of 2016, has made a prayer to quash the award dated 30.05.2016 passed in PLA Case No.319 of 2015 by the Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur directing the Petitioner/ Shriram Life Insurance Co. Ltd. to pay the death benefit under policy No.NP141400146244 with all benefits available under the said policy with interest @ 6% per annum from the date of application in favour of the present Opposite Party No.1 within a period of two months from the date of that order.

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I. FACTUAL MATRIX OF THE CASE:

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3. The facts narrated in the Writ Petition by the Petitioner/ Shriram Life Insurance Co. Ltd. are that the deceased-life assured (in short ‘DLA’) Sabitri Behera, mother of the Opposite Party No.1, had taken a life insurance policy i.e. “Shriram New Shri Raksha” bearing No.NP141400146244 from the Petitioner/ Shriram Life Insurance Co. Ltd. on 18.10.2014. The base sum assured for the aforesaid policy was Rs.5,00,000/- in case of death, the risk cover would be double the sum assured, i.e., Rs.10,00,000/-. The premium was payable at yearly frequency @ Rs.55,733/-. The insured died unexpectedly on 23.11.2014. The Opposite Party No.1 being the registered nominee-cum-legal heir of the DLA raised death claim and submitted all required documents as sought for. The Petitioner insurer, however, repudiated the death claim

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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on 21.05.2015 on the ground that the DLA had suppressed material facts regarding her pre-existing diseases and her annual income.

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4. The Opposite Party No.1 being aggrieved by such order of repudiation which has caused harassment and mental agony, there being no preexisting disease to his knowledge and when the DLA has sufficient mean to pay the sum assured, alleging “deficiency in service”, approached the Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur in P.L.A. Case No.319 of 2015 claiming the death benefit along with cost and compensation. The application was supported by affidavit. The Opposite Party No.1 had produced photo copy of order of repudiation, copy of proposal premium payment receipt, copy of death certificate copy of bank pass book and copy of voter's ID card of the DLA.

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5. The Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur taking into account the factual aspect of the case, vide order dated 30.05.2016 passed in P.L.A. Case No.319 of 2015 and held the order of repudiation of claim passed by the Petitioner/ Insurance Company was neither reasonable nor bonafide. Accordingly, the order of repudiation dated 21.05.2015 passed by the Petitioner/ Insurance Company was set aside and the Petitioner/ Insurance Company was directed to pay the death benefit as stated supra.

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6. Being aggrieved by the order dated 30.05.2016 passed in P.L.A. Case No.319 of 2015 by the Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur, the Petitioner/ Insurance Company is constrained to approach this Court by way of this Writ Petition..

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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II. PETITIONER’S SUBMISSIONS:

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7. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions.

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(i) The life assured had suppressed about her actual income, previous ailment i.e. she was suffering from Gallbladder Cancer prior to two years and also age. It is the admitted fact that the life assured belongs to BPL category, but the declaration made in the proposal form that she was doing business and earning Rs.5,00,000/ - per annum being false, the claim was liable to be repudiated. Had the policy holder provided the correct information regarding income then this could have influenced the Petitioners in assessing the risk of the life of the deceased and the decision could have been different to cover the risk on the life of the deceased life assured. But, the Permanent Lok Adalat in a cryptic manner has awarded the amount in favour of the applicant/ Opposite Party No.1. Hence, the award under Annexure-1 is unsustainable and is liable to be quashed.

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(ii) Since the death of the deceased occurred within two years from the date of commencement of the policy i.e. within 35 days from the date of commencement of the policy, the matter was investigated in view of Section 45 of the Insurance Act, 1938. After investigation, as it was found that the life assured (deceased) had suppressed the material fact regarding her income, health condition and the existing life insurance policy, the claim has rightly been repudiated by the Petitioners on 21.05.2024. However, the Permanent Lok Adalat has failed to take note of the same and passed the impugned award.

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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(iii) Learned Permanent Lok Adalat has committed error of law in holding that Annexures-A to E filed by the petitioners i.e. Annexure-ACopy of policy document with proposal form and premium payment receipt; Annexure-B- copy of the investigation report; Annexure-Ccopy of order of repudiation; Annexure-D- copy of claim form-A (Claimant statement) and Annexure-3- copy of claim form-B (Medical attendant’s statement) are not admissible as some of those documents are photo copies and author of those documents have not been examined admittedly when those documents have been marked without objection. It is well settled proposition of law that once a document is admitted in to evidence without any objection then subsequently it cannot be said that the contents of those documents are not admissible being photo copies or not being proved and as such the findings of the learned forum below is unsustainable and is liable to be quashed.

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(iv) It was further submitted that since from the proposal form as per Annexure-4, it is evident that the life assured gave a declaration that if any statement is untrue or inaccurate or if any matter that might influence the terms of the proposal or not disclosed, the contract shall be null and void. In the instant case, the life assured had admittedly suppressed the material fact. Hence, the award dated 30.05.2016 passed in PLA Case No.319 of 2015 by the Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur cannot be sustained and is liable to be set aside.

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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III. SUBMISSIONS OF THE OPPOSITE PARTY NO.1

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8. Per contra , learned counsel for the Opposite Party No.1 earnestly made the following submissions in support of his contentions:

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(i) The mother of the Opposite Party No.1 had insured her life with the Petitioner vide Policy No.NP141400146244 commencing from 18.10.2014 by paying annual premium amount of Rs.57,500/- (Rupees fifty seven thousand five hundred only) for an assured sum of Rs.5,00,000/- (Rupees five lakhs only), but in case of death of the life assured, the risk covers double the sum assured i.e. Rs.10,00,000/-. The Petitioner was standing as a nominee in the said policy.

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(ii) Unfortunately, the life insured i.e. the mother of the present Opposite Party No.1 died on 23.11.2014. After death of his mother, the Opposite Party No.1 alongwith other family members became helpless. The Opposite Party No.1 intimated the matter to the Petitioner claiming the insurance benefits of his late mother under the said policy. After receipt of the death intimation and prolonged follow-ups, the Petitioner issued claim form etc., which has been submitted with the Petitioner for consideration and settlement of genuine claim of the Opposite Party No.1. The Opposite Party No.1 submitted all the original documents with the Petitioner as per their requirement for settlement of the genuine claim. But, the petitioner intentionally repudiated the genuine claim of the Opposite Party No.1 without going to the merit vide order dated 21.05.2015, which tantamounts gross negligence and deficiency of service on the part of the Petitioner.

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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(iii) The Opposite Party No.1 being aggrieved by such order of repudiation, approached the Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur in P.L.A. Case No.319 of 2015 claiming the death benefit along with cost and compensation. The application was supported by affidavit. The Opposite Party No.1 had produced photo copies of order of repudiation, copy of proposal premium payment receipt, copy of death certificate copy of bank pass book and copy of voter's ID card of the DLA.

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(iv) The Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur taking into account the factual aspect of the case, vide order dated 30.05.2016 passed in P.L.A. Case No.319 of 2015 held the order of repudiation of claim passed by the Petitioner/ Insurance Company was neither reasonable nor bonafide. Accordingly, the order of repudiation dated 21.05.2015 passed by the Petitioner/ Insurance Company was set aside and the Petitioner/ Insurance Company was directed to pay the death benefit as stated supra.

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(v) In such view of the matter, he contended that there is no reasonable ground to interfere with the impugned order. Therefore, the Writ Petition filed by the Petitioner is liable to be dismissed.

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IV. COURT’S ANALYSIS AND REASONING:

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9. In the present case, the vital issue for consideration is “whether the DLA had suppressed the pre-existing diseases and her annual income which was within her knowledge as alleged? and/ or “whether the Opposite Party No.1/nominee is entitled to get the benefit under life insurance policy in the event of death of the life insured if she while

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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submitting the insurance proposal form had suppressed the fact of preexisting diseases and her annual income?

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10. Admittedly, the DLA is the mother of the Opposite Party No.1 and the Opposite Party No.1 is the nominee of the insurance policy. The Petitioner insurer has repudiated the death claim vide order dated 21.05.2015 on the ground that the DLA had suppressed material facts regarding her pre-existing diseases and her annual income.

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11. In order to adjudicate the aforesaid issue, it would be proper to have a look on the impugned order dated 30.05.2016 passed in P.L.A. Case No.319 of 2015 by the Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur. Paragraphs-7 to 10 of the impugned order are extracted as follows:

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“7. The claim investigation report, Anx-B reveals that at the time of death, the DLA was in between 50-55 years old, she was a housewife as well as laborer, had no personal income what so ever, she belonged to a BPL family and was illiterate. The Anx-B also reveals that the DLA was suffering from "Gall Bladder Cancer" for last 2-3 years and as per the version of the neighbors, she was under treatment in Kalinga Hospital, Bhubaneswar and another hospital at Vishakapatana of which address was not known to them. Eventually, the DLA died on 25.11.2015 (23.11.2014 ?) at her home. The investigator had also visited the local Gram Panchayat Office but could not collect any incriminating documents pertaining to medical treatment of the DLA. The investigator had also visited all local medical stores of that vicinity, the M.K.C.G Medical College Hospital & the City Hospital, Berhampur but found no medical treatment reports in the name of the DLA at anywhere, The investigator also visited Kalinga hospital, Bhubaneswar, where the hospital took 15 days to search for records in the name of the DLA but could not trace any medical treatment

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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papers. Unfortunately, the investigator in its cul- de-sac observation has noted that the DLA was suffering from Gall Bladder Cancer for last 2-3 years. It shows hyper interestedness and biased conduct of the investigator. Even though, the investigator was convinced that no material before him in support of his conclusion but showing a mischievous conduct he has given such findings apparently to help the insurer. This investigator is to be reported against to the IRDA. Having knowledge of the nature of the investigator's report that no iota of material to support of the theory of Gall Bladder Cancer could be collected by him, the respondent insurer gave a good-bye to the theory of Cancer and adverted to claim form-B, the Anx-E, the medical attendant's certificate to show that the DLA was suffering from Asthma prior to the date of commencement of risk. Admittedly, the Anx-C is dtd.21.05.2015. It shows as per claim form-B, the DLA was suffering from Asthma though the insurer was aware from Anx-B, dtd.07.05.2015 that there was no hints of Asthma therein as the DLA died of cancer as alleged by the investigator. In claim form-B, Dr. P.K. Pattanik has put his signature on 19.03.2015 but it is not referred in Anx-B, dtd.07.05.2015. befar apart, the certificate Anx-E reveals that the husband of the DLA divulged before the insurer that the DLA was under treatment of Dr. P. K. Patnaik of CARE hospital, Berhampur on 04.11.2014. That the so called Doctor has given medical attendant's certificate, the Anx-E. That report reveals that the DLA was under his treatment on 04.11.2014 and certified that she was suffering from breathlessness and cough for a period of one year preceding 04.11.2014. Neither the signature of the husband of the DLA appended in Claim form-B nor any medical treatment papers except a photo copy of prescription dtd.04.11.2014 appended thereto. Incidentally, no signature or thumb mark of the DLA found in that prescription where the age of the DLA is given as 49 years and the date of prescription over written from 04.11.2013 to 04.11.2014. Moreover, all medical treatment papers of CARE Hospital neither

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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produced or any affidavit of the Doctors filed. The medical prescription is meant for the patient. How CARE Hospital could produce such a document is any body's guess. If it is copied from any register, absence of such register is fatal particularly when the investigator's report dtd.07.05.2015 is conspicuous by its absence this medical paper dtd.04.11.2014. Apparently, therefore, there was no such document seen the light of the day as on 07.05.2015. Only when the insurer found no medical document to discard the claim, the insurer fabricated Anx-E with connivances of their penal Doctor Mr. Prasanta Kumar Patnaik of CARE Hospital, Berhampur. How the CARE Hospital, Berhampur dare to file copy of the alleged medical prescription without signature of the DLA cannot be brushed aside lightly. It has to be reported against to the competent Authority. Sifting the buck on the husband of the DLA cannot be resolved the insurer of its liability, if any. So, we discard Anx-E with alleged medical prescription of CARE Hospital, there being no truth in that document. It supports a case of fraud committed by the Shriram Life Insurance Co. Ltd. to avoid a purported claim. Discarding Anx-E and tainted Anx-B where there is no grain of truth, the plea of pre-existing disease falls like a house of cards. That apart, the claimant statement (Form-A), the Anx-D reveals that Santosh Behera, the son of the DLA divulged before the insurer that his mother was under treatment of Dr. P.K.Pattanaik. This declaration was dtd.21.02.2015. If the husband of the DLA had divulged before the said Dr. P.K. Patnaik that his wife was under his treatment, there was no occasion for the insurer to change the informer. The applicant has denied to have given any such information, when her mother was not suffering either from Gall Bladder Cancer or from Asthma.

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8. We would repeat that the penal doctor of the insurer has manipulated Anx-B & Anx-E, the Doctor having failed to produce any inch of paper to show that the DLA has ever undergone any treatment under him either in CARE Hospital or in his chamber. Non-production of original

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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medical treatment document relating to DLA, alternatively, absence of any affidavit of the said Dr. P. K. Patnaik has adversely affected the claim of the insurer that the DLA was suffering from pre- existing disease which was to her knowledge and had suppressed such material information in the proposal form. No credible evidence in support of the plea of suppression of material fact about previous illness being brought on record, we are of the considered opinion that no implicit reliance can be placed in a tainted document like Anx-B, D & E to discard the nominee, the plan when obtained to secure his future. The thrust of submission of the learned counsel for the applicant that the deceased-life assured having no pre-existing disease to her knowledge and he having not undergone any treatment relating to any such disease under any Doctor or at any Hospital at any time preceding 18.10.2014, date of risk, there is no suppression of "material fact" within the meaning of Sec.45 of the Insurance Act, 1938. Admittedly, the DLA died at her home and not En any hospital. This is a circumstance which supports the claim of the applicant that the DLA had no knowledge any pre-existing diseases, she having not taken any medicine from any medical stores nor undergone any treatment at anywhere. The CARE Hospital has failed to produce any medical treatment papers in support of her treatment. The photo copy of prescription sans signature of the DLA or any of his relatives in the fact and circumstances, when the DLA died at her home, lends absolute assurance to the plea of the applicant.

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9. The learned counsel for the applicant would also contend that since there were no symptoms of Gall Bladder Cancer or Asthma to their knowledge as well as to the knowledge of his deceased mother before the policy was taken, the question of even linking up the symptoms of breathlessness on 04.11.2014 as inserted in Anx-E with any pre-existing disease does not arise. If this is so, then every person should do medical studies and further, should not take any insurance policy. Most of the people are totally unaware of

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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the symptoms of the disease that they suffer and hence, they cannot be made liable to suffer because of certain exclusion clauses. Common people are not at all familiar with medical knowledge and so they cannot diagnose their own disease. If they were expected to be so aware of their medical condition at all times, there would be no use of insurance policies. (Refer: Prabin Damani Vs. Oriental Insurance Company Ltd IV (2006) CPJ 189 (NC). That being the fact and there being no evidence worth consideration that the DLA had pre-existing diseases, the repudiation made by the respondent on that count without any pinch of evidence amounts to "deficiency in service".

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10. Turning to the other plea of the respondent that the DLA was a BPL category person, had exaggerated her extent of income and consequently, there was suppression of "material fact" is heard to be rejected in view of the National Consumer Dispute Redressal Commission findings in Meena Bare case decided on 15th January, 2016 wherein it is held. 'it is common practice for insurance Agent to obtain consumer's signature on a blank proposal form with the assurance that all formalities will be attended to. Agents often fill up wrong information which leads to policy being issued but problem occurring when a claim is lodged'. The finding of the National Commission is that an insured cannot be penalized for wrong information filled in by the agent in the proposal form. A person is free to take as many policies as he wishes so long as he can pay the premium. Here, the Anx-IV, copy of the bank pass book in the name of the DLA reveals the transactions as such, it cannot be said that she had no resources to pay the premium. Moreover, the BPL card is recorded in the name of husband of the DLA. Even if it is assumed for the moment that the DLA during her lifetime was wife of a BPL card holder, that does not mean that she had no capacity to pay insurance premium. The transaction made in bank pass book establishes her financial status. She had paid the proposal premium and there is nothing on record to hold that she died of Cancer or

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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the cause of death was Asthma. That being the matrix brought on record, there is absolutely no material suppression of fact with suppression of pre-existing diseases and misstatement as to the income status of the DLA to her knowledge. In such scenario, the Insurer has no legal right to repudiate the insurance claim by alleging that she was suffering from Asthma before the risk commencement age and there was suppression of income status of the DLA. Consequently, we are of the considered opinion that the insurance company is not justified in repudiating the death claim under Anx-I/C in respect of policy no. NP141400146244 and therefore, is in "deficiency in service" as contended. Under such circumstances, the agony of the applicant and the loss caused to her is understandable. ( Refer: 2002 (3) CPR 231 Life Insurance Corporation of India through Branch Manager Vs. Smt. Susita Devi Agarwal) . There is no suppression of any material fact. 'It needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, the obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment. ( See Joel v Law Union & Crown Insurance) .”

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12. On a bare perusal of the materials on record, averments made in the Writ Petition and the Paragraphs-7 to 10 of the impugned order, it is apparent that the DLA had no knowledge about any pre-existing diseases, she having not taken any medicine from any medical stores nor did she undergo any treatment anywhere. No credible evidence in support of the plea of suppression of material fact about previous

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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illness had been brought on record. Therefore, there is no suppression of “material fact” within the meaning of Section 45 of the Insurance Act, 1938. If I may refer to the Section 45 of the Insurance Act, 1938 which reads as follows:

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“Policy not to be called in question on ground of misstatement 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 & 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 & that it was fraudulently made by the policy-holder & 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.

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Xx xx xx xx xx xx”.

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From a plain reading of the aforesaid provision it can be concluded that there are three conditions for application of the second part of Section 45 of the Insurance Act, which are:

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a. the statement must be on a material matter or must suppress facts which it was material to disclose;

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b. the suppression must be fraudulently made by the policyholder; and

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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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.

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13. Applying the above principle of law in the case in hand suppression of material fact about previous illness and age at the proposal stage has no bearing on the risk undertaken by the insurer i.e. the mother of the Opposite Party No.1 in view of the fact that the DLA had no knowledge about any pre-existing diseases, she having not taken any medicine from any medical stores nor did she undergo any treatment at anywhere. As per Section 45 of the Insurance Act, it does not qualify the materiality or material facts and it cannot be construed as fraudulent suppression to repudiate the contract of insurance.

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14. It is well settled principle of law that the insurance claim cannot be repudiated on the ground of suppression, false or non- discloser of facts in the proposal form which does qualify as a material facts or having no bearing on the risk of the insurer as per Section 45 of the Insurance Act.

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15. In the case of Rohini Nandan Goswami v. Ocean Accident & Guarantee Corporation¹ , while considering the duty of a insured to disclose material facts and the right of the insurer to avoid the insurance policy in case of such non-disclosure, the Court observed that as to w hether a particular fact is material depends upon the circumstances of a particular case. Evidence of materiality is not always necessary. Materiality of a particular fact may be obvious from its very

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1 AIR 1960 Calcutta 696

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nature. The test to determine materiality is whether the fact has any bearing on the risk undertaken by the insurer. If the fact has any bearing on the risk, it is a material fact; if not it is immaterial

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16. A Division Bench of Madras High Court in the case of Life Insurance

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Corporation of India V. Janaki Ammal² ; has observed as follows:

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“Thus/ there is ample authority for the proposition that/ an insurer could avoid a contract of insurance after the expiry of period of two years mentioned in the first part of Section 45 of the Insurance Act only on the ground of suppression of illness, which affects the expectation of life of the insured & not mere temporary or trivial illness & that unless the disease he was suffering from is clearly established & it is also established that disease would have a material bearing on the insurability of the policy holder, the policy cannot be invalidated. We are, therefore, clear that in the circumstances of this case, the mere fact that the deceased had been taking medicines & injections without proof of anything more would not be sufficient to invalidate the policy.”

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17. The Apex Court in the case of Life Insurance Corporation of India and Ors. v. Smt. Asha Goel and Anr³ . , has observed as follows:

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"In course of time the Corporation has grown in size & at present it is one of the largest public sector financial undertakings. The public in general & crores of policyholders in particulars look forward to prompt & efficient service from the Corporation. Therefore the authorities incharge of Management of the affairs of the Corporation should bear in mind that its credibility & reputation depend

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2 AIR 1968 Mad 324

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3 2001 SCW 161

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Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

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on its prompt & efficient service. Therefore, the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it should be one of extreme care & caution. It should not be dealt with any mechanical & routine manner.”

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18. A division Bench of this Court has dealt with a similar case i.e. in the case of Smt. Gouri Sethi v. Divisional Manager of L.I.C. and Ors. AIR 2007 (Orissa) 19, wherein a similar situation, the LIC had repudiated the claim on the ground that the deceased insured had furnished false statement to the questionnaire contained in the proposal form and had suppressed his age and physical deformity. Referring to the aforementioned decision of the Madras High Court in Life Insurance Corporation of India V. Janaki Ammal (supra) this Court hold that the deceased insured had not stated in the proposal form that he was suffering from Acid Peptic disease and Allergic and has been treated for Hypertension prior to taking of the insurance policy. Admittedly, the deceased insured died of Cardiac Vascular Arrest and Hemiplegia. The suppression of prior ailment not affecting the expectation of life cannot be a ground to repudiate the policy. Accordingly, this Court directed the LIC to release the claim of the Petitioner therein. Similarly, in the case of Kuni Lata Sahoo -vs- Senior Manager, L.I.C. of India & Anr.⁴ it has been settled:

¶121

“The Insurance policy/ apart from its special feature/ is a contract between a person seeking to be insured & the insurer. In interpreting the terms of contract of insurance, they should receive fair, reasonable & sensible construction

¶122

4 AIR 2010 Ori 19

¶123

Page 17 of 18

¶124

Signature Not Verified

¶125

Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 18-Jul-2024 16:37:51

¶126

in consonance with the purpose of the contract as intended by the parties. Emphasis in such cases is laid more upon a practical & reasonable, rather than on a literal & strained construction. In interpreting the contract of insurance neither the coverage under a policy should be unnecessarily broadened, nor should the policy be rendered ineffective in consequence of unnatural or unreasonable construction. An attempt should be to construe a contract in liberal manner so as to accomplish the purpose or the object for which it is made. In the absence of ambiguity, neither party can be favoured but where the construction is doubtful, the Courts lean strongly against the party who prepared the contract. Where there is a susceptibility of 2 interpretations, the one favourable to the insured is to be preferred.”

¶127

19. Therefore, in light of the discussion above, keeping the settled principles of law in mind and considering the rival contentions made by both the learned counsel for the Parties, this Court is of the view that there is no error apparent in the a ward dated 30.05.2016 passed in PLA Case No.319 of 2015 by the Permanent Lok Adalat for Public Utility Services, Ganjam at Berhampur so as to warrant interference by this Court. Hence, W.P.(C) No.16722 of 2016 is dismissed.

¶128

20. Accordingly, all the above-mentioned Writ Petitions are dismissed.

¶129

21. Interim order, if any, passed earlier, in any of the Writ Petitions, stands vacated.

¶130

( Dr. S.K. Panigrahi ) Judge

¶131

Orissa High Court, Cuttack, Dated the 25^th June, 2024/B. Jhankar

¶132

Page 18 of 18

The Senior Manager,Sriramlife Insurance Co.Ltd. v. Sugyani Nahak

Case brief

What is this about?

What did the court decide?

The Senior Manager,Sriramlife Insurance Co.Ltd. v. Sugyani Nahak

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

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