Summary
Repudiation of the life-insurance claim was upheld because the proposer falsely denied a life policy obtained only two months earlier. The prior cover was material to underwriting and required truthful disclosure in response to express questions. The Court did not decide whether an immaterial misstatement under a warranty alone would suffice. Although the consumer complaint was dismissed, money already withdrawn unconditionally under the Supreme Court’s interim order was protected from recovery under Article 142.
Issues
- Whether non-disclosure of the recent prior life cover justified repudiation.
- Whether signing a proposal filled by another excused the false answers.
- Whether the interim withdrawal should be recovered after dismissal.
Provisions considered
- Section 45, as applicable to this policy, Insurance Act, 1938The then two-year statutory restriction did not govern this repudiation made within two years; the Court upheld it on established material non-disclosure. (¶¶ 12–14, 27–29)
- Article 142, Constitution of IndiaExercised to protect the nominee’s unconditional interim withdrawal from recovery despite dismissal of the complaint. (¶ 33)
Held
- Utmost good faith required full and accurate disclosure of known material facts. Materiality concerned whether a prudent insurer would be influenced in accepting or pricing the risk; the proposer could not decide to withhold an expressly requested known fact. (¶¶ 15, 22–27)
- The recent prior policy was material because it could prompt financial underwriting and inquiry into two substantial covers obtained close together. The Court resolved the case on materiality and left unnecessary the broader argument that warranty permitted avoidance even for immaterial inaccuracies. (¶ 27–28)
- The signed proposal adopted its answers. The argument that another person filled the form or that its contents had not been understood did not absolve the proposer on this record. (¶¶ 29, 31)
- NCDRC wrongly departed from its earlier decisions without distinguishing them. The repudiation stood and the complaint failed, but the unconditional withdrawal under the interim order was not recoverable. (¶¶ 30, 32–33)
Result
Appeal allowed without costs; NCDRC order set aside and consumer complaint dismissed. Under Article 142, the amount already withdrawn unconditionally pursuant to the Supreme Court’s interim order protected from recovery.