CASE COMMENT

CASE COMMENT : Mithulal Vs. LIC of India AIR 1982 SC 814 - By Simran

Mithulal Vs. LIC of India AIR 1962 SC 814

Court                        :    Supreme Court of India

Equivalent citations : 1962 AIR 814, 1962 SCR Supl. (2) 571 

Civil Appellate Jurisdiction : C.A. No. 224 OF 1959

 Petitioner               :      MITHULAL NAYAK 

                                                        Vs.

Respondent            :      LIFE INSURANCE CORPORATION OF INDIA 

Date of Judgment  :      15/ 01/ 1962

Bench                    :      Hon'ble  Mr. Justice S.K Das , Hon'ble Mr. Justice k. Subharao & Hon'ble Mr. Justice Raghubar Dayal 

Act                       :       Insurance Act , 1938 (4 of 1938 ) , Indian Contract Act, 1872 (9 of 1872)

CASE HISTORY

It is a landmark case of Insurance Act (4 of 1938)  stating that Insurance life policy obtained by deliberate mis-statement and fraudulent supression and  Repudiation, by Company after two years whether proper refund of money paid as premium. The Diseases suppressed in this case Anaemia , shortness of breath, asthma.The judgment of the case was decided by  Justice S.K. DAS on August 28, 1956 of the Madhya Pradesh High Court.

 FACTS in Mithulal Vs. LIC

 The appellant is Mithoolal Nayak, who took an assignment on october 18, 1945 of a life insurance policy on the life of one Mahajan Deolal for a sum of Rs. 25,000/-in circumstances which shall presently state. The policy was issued on March 13, 1945 and it was to come into effect from January 15, 1945 The amount insured was payable after January 15, 1968 or at the death of the insured, if earlier.The policy lapsed for non-payment of premium but was revived in july, 1946. Mahajan Deolal died on November 12, 1946. therefore, two years had expired from the date on which the policy was effected.

 This claim or demand of the appellant was repudiated by the respondent company by a letter dated October 10, 1947 on the ground  of deliberate mis- statements and fraudulent suppression of material information in answers to questions in the proposal form and the personal statement, which formed the basis of the contract between the insurer and the insured.

The Appelant filed a suit to recover the amount of the policy contending that  S.45 Insurance Act, barred the respondent from calling in question the policy after two years on the ground that any statement made in the proposal was false . The suit was decreed by the learned Additional District Judgment of Jabalpur. The respondent company then preferred an appeal to the High Court of Madhya Pradesh. 

ISSUES:-

(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 ?

REASONING:-

S.45 Insurance act, applied to the case as two years lapsed since the policy was effected, in other words the two years could not be counted from the date of the revival. The Second part of S.45 entitled the company to repudiate the contract even after expiry of two years , three conditions were fulfilled viz. 

1. the statement was on a material matter or there was supression of facts which it was material to disclose:
2.  the suppression was fraudulently made by the policy-holder and ;
3. the police-holder must known at the time of the making of the statement that it was false or that it suppressed facts which it was material to disclose.

 

Insured must known about his serious ailment which was stated by Doctor after treatment and then made a false statement even  might known that it was material to disclose. There was deliberately suppression fraudulently made by Insured person. Even though the company has got deceased examined by four doctors before issuing the policy, it was not stopped from questioning the policy and no means of knowing the true facts.

This Motilal Nayak (insured) is a brother of the appellant, the evidence in the record showing that the two brothers lived together in the same house. By stating S.45 it is cleared that the appellant was not entitled even to a refund of the money paid as premium as one of the terms of the policy was that all monies paid belonged to the Respondent company if the policy was vitiated by fraudulent suppression of suppression of material facts. that in cases in which there is stipulation that by reason of breach of warranty by one of parties to the contract the other party shall be discharged from performance ,To such a contract neither S.65 nor S.64 of the Indian Contract Act, 1872 has any application.

 

 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-

1.   the suggestion, as to a fact, of that which is not true by one who does not believe it to be true; and 
2. the active concealment of a fact by one having knowledge or belief of the fact. Judged by the standard laid down in S.17 of the Indian Contract Act ( on Fraud ), the deceased life assured was clearly guilty of fraudulent supression of material facts and statements he must have known to be deliberately false as stated under Section 17 Of ICA, 1872

 When a contract is bad on the grounds of fraud, the party who has been guilty of fraud or a person who claims under him cannot ask for refund of money.

 

Case Laws stated :

1.      P.C Chacko And Another v. Chairman

2.      Life Insurance Company v. Union of India

3.      Ram Chandra Mishra v. L.I.C.

4.      Life Insurane Corpn. Of India And others v. Asha Goel (Smt) And Another

5.      LIC v. SMT. Durga Bai and one Another

 

Jugdment :

 

The judgment of the court was delivered by S.K. Das , J.- This is an appeal on a certificate granted by the High Court of Madhya Pradesh under Ar. 133 (1) (a) of the Constitution. t is held in the case that the policy- holder was quality of fraudulent suppression of material facts relating to his health the policy is vitiated and the person holding the assignment of the policy cannot claim the benefit of the contract  and the company was entitled to avoid the contract by reason of S. 30 of Indian Contract act.

Conclusion :

It is concluded from  the above case that there in no merit in the appeal. The appeal is accordingly dismissed with the costs. So appeal Dismissed.