TMI Blog1962 (1) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract between the insurer and the insured. On the repudiation of his claim the appellant brought the suit out of which this appeal has arisen. The suit was originally instituted against the Oriental Government Security Life Assurance Co. Ltd., Bombay, which issued the policy in favour of Mahajan Deolal on March 13, 1945. Latter, on the passing of the life Insurance Corporation Act, 1956, there was a statutory transfer of the assets and liabilities of the controlled (life) business of all insurance companies and insurers operating in India to a Corporation known as the Life Insurance Corporation of India. By an order of this Court made on February 16, 1960, the said Corporation was substituted in place of the original respondent. For brevity and convenience we shall ignore the distinction between the original respondent and the said Corporation and refer to the respondent in this judgment as the respondent company. The Suit was decreed by the learned Additional District Judge of Jabalpur by his judgment dated May 7, 1949. The respondent company then preferred an appeal to the High Court of Madhya Pradesh. This appeal was heard by a Division Bench of the said High Court and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the Inspector of the respondent company shows that on receipt of Dr. Desai's reports, the respondent company directed that Mahajan Deolal should be further examined by the Civil Surgeon, Hoshangabad and District Medical Officer, Railways at Jabalpur. Mahajan Deolal could not, however, be examined by the two doctors aforesaid and according to the rules of the respondent company the proposal lapsed on the expiry of six months for want of completion of the medical examination as required by the respondent company. Then, on July 16, 1944, a second proposal was made through the same agent of the respondent company for the insurance of the life of Mahajan Deolal, this time for a sum of ₹ 25,000/-. The Inspector of the respondent company said in his evidence that this second proposal was made at the instance of the same agent, Rahatullah Khan, inasmuch as the proposal of 1942 had not been rejected but had only lapsed. It appears that at the time of the first proposal in 1942 Mahajan Deolal had paid a sum of ₹ 571/- and odd towards the first premium due in case the proposal was accepted. In the personal statement accompanying the second proposal of July 16, 1944, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f fourteen years. In his report Dr. Kapadia noted that Mahajan Deolal had stated that he had suffered from pneumonia four or five years ago, and that he had also cholera some years ago. No mention, however, was made of anaemia, asthma, shortness of breath etc. On December 29, 1944, Mahajan Deolal made a further declaration of his good health and so also on February 12, 1945. On March 13, 1945, the policy was issued by the respondent company. It contained the usual terms of such life insurance policies, one of which was that in case it would appear that any untrue or incorrect averment had been made in the proposal form or personal statement, the policy would be void. The first premium due on the policy was taken from the amount which was already in deposit with the respondent company in connection with the proposal made in 1942. Then, on May 22, 1945, Mahajan Deolal wrote a letter to the respondent company in which he said that his financial condition has become suddenly worse and that he would not be able to pay the premium for the policy. He requested that the policy by cancelled. In the meantime the premium for 1945 not having been paid, the policy lapsed. Then, on October 28, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e :- (1) Whether the policy was vitiated by fraudulent suppression of material facts by Mahajan Deolal ? (2) Whether the present appellant had no insurable interest in the life of the insured, and if so, can he sue on the policy ? (3) Whether the respondent company had issued the policy with full knowledge of the facts relating to the health of the insured and if so, is it estopped from contesting the validity of the policy ? and (4) Whether in any event the appellant is entitled to refund of the money he had paid to the respondent company ? These are the four questions which have been agitated before us and we shall deal with such of them as are necessary for deciding this appeal. 5. So far as the first question is concerned, the learned trial Judge found that though Mahajan Deolal had given a negative answer to question no. 13 in the proposal form and to questions nos. 5(a), 5(b), 5(f) and 12(b) in the personal statement, these answers though not strictly accurate, furnished no grounds for repudiating the claim of the appellant by the respondent company, in as much as s. 45 of the Insurance Act, 1938 (4 of 1938) applied and the answers did not amount to a fraudu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. X X X X X X 8. It would be noticed that the operating part of s. 45 states in effect (so far as is relevant for our purpose) that no policy of life insurance effected after the coming into force of the 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; the second part of the section is in the nature of a proviso which creates an exception. It says in effect that if 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 dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case. We think that they were. We are unable to agree with the learned trial Judge that the ailments for which Mahajan Deolal was treated by Dr. Lakshmanan in September-October, 1943, were trivial or casual ailments. Nor do we think that Mahajan Deolal was likely to forget in July, 1944, that he had been treated by Dr. Lakshmanan for certain serious ailments only a few months before that date. This brings us to a consideration of the evidence of Dr. Lakshmanan. That evidence is clear and unequivocal. Dr. Lakshmanan says that Dr. Motilal Nayak brought the patient to him at Jabalpur. We have already referred to the fact that Dr. Motilal Nayak had himself made a false statement in his friend's report dated July 17, 1944, when he said that he had never heard that the insured had suffered from any illness. It is impossible to believe that Dr. Motilal Nayak would not remember that he had himself taken the insured to Jabalpur for treatment by Dr. Lakshmanan who was an experienced consulting physician. Dr. Lakshmanan said that when he first examined Mahajan Deolal on September 7, 1943, he found that his condition was serious as a result of the impoverished condition of his blood, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consulting physician of repute, for so may days on payment of ₹ 16/- per visit. No doubt, Mahajan Deolal's son now tries to make light of the illness of his father but Dr. Lakshmanan's evidence shows clearly enough that in September-October, 1943. Mahajan Deolal was suffering from a serious type of anaemia for which he was treated by Dr. Lakshmanan. Mahajan Deolal could not have forgotten in July, 1944, that he was so treated only a few months earlier and furthermore, Mahajan Deolal must have known that it was material to disclose this fact to the respondent company. In his answers to the questions put to him he not only failed to disclose what it was material for him to disclose, but he made a false statement to the effect that he had not been treated by any doctor for any such serious ailment as anaemia or shortness of breath or asthma. In other words, there was a deliberate suppression fraudulently made by Mahajan Deolal. Fraud, according to s. 17 of the Indian Contract Act, 1872 (IX of 1872), means and includes Inter alia any of the following acts committed by a party to a contract with intent to deceive another party or to induce him to enter into a contract - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is that a false representation, whether fraudulent or innocent is irrelevant if it has not induced the party to whom it is made to act upon it by entering into a contract. We do not think that that principle applies in the present case. The terms of the policy make it clear that the averments made as to the state of health of the insured in the proposal form and the personal statement were the basis of the contract between the parties, and the circumstance that Mahajan Deolal had taken pains to falsify or conceal that he had been treated for a serious ailment by Dr. Lakshmanan only a few months before the policy was taken shows that the falsification or concealment had an important bearing in obtaining the other party's consent. A man who has so acted cannot afterwards turn round and say : It could have made no difference if you had known the truth. In our opinion, no question of waiver arises in the circumstances of this case, nor can the appellant take advantage of the Explanation to s. 19 of the Indian Contract Act. 12. Our finding on the first question makes it unnecessary for us to decide the second question, namely, whether the present appellant merely gambled on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly out of Court and can not claim the benefit of a contract which had been entered into as a result of a fraudulent suppression of material facts by Mahajan Deolal. 13. This brings us to the last question, namely, whether the appellant is entitled to a refund of the money he had paid to the respondent company. Here again one of the terms of the policy was that all moneys that had been paid in consequence of the policy would belong to the company if the policy was vitiated by reason of a fraudulent suppression of material facts by the insured. We agree with the High Court that where the contract is bad on the ground of fraud, the party who has been guilty of fraud or a person who claims under him can not asked for a refund of the money paid. It is a well-established principal that courts will not entertain an action for money had and received, where, in order to succeed, the plaintiff has to prove his own fraud. We are further in agreement with the High Court that in cases in which there is stipulation that by reason of a breach of warranty by one of the parties to the contract, the other party shall be discharged from the performance of his part of the contract, neither s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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