S. K. Das, J. - (1.) This is an appeal on a certificate granted by the High Court of Madhya Pradesh under Art. 133 (1) (a) of the Constitution. 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 we shall presently state. Mahajan Deolal died on November 12,1946. Thereafter, the appellant made a demand against the respondent company for a sum of Rs. 26,000 and odd on the basis of the life insurance policy which had been assigned to him. This claim or demand of the appellant was repudiated by the respondent company by a letter dated October 10, 1947 which in substance stated that the insured Mahajan Deolal had been guilty 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. 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. Later, 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 by a judgment dated August 28, 1956, the appeal was allowed and the suit was dismissed with costs. It is from that appellate judgment and decree that the present appeal has been brought to this Court.
(2.) We now proceed to state some of the relevant facts relating to the appeal and the contentions urged on behalf of the appellant. Mahajan Deolal was a resident of village Singhpur, Tahsil Narsinghpur. It appears that he was a small landholder and possessed several acres of land. Sometime in December 1942, Mahajan Deolal submitted a proposal through one Rahatullah Khan, an agent of the respondent company at Narsinghpur, for the insurance of his life with the respondent company for a sum of Rs. 10,000 only. Mahajan Deolal's age at that time was about 45 as stated by him. In the proposal form which was submitted to the respondent company, Mahajan Deolal mentioned the name of one Motilal Nayak, by profession a doctor, as a personal friend who best knew the state of the health and habits etc. of the insured. This Motilal Nayak, be it noted, is a brother of the appellant, the evidence in the record showing that the two brothers lived together in the same house. When the proposal for insurance of his life was made by Mahajan Deolal in December 1942, he was examined by a doctor named Dr. D. D. Desai. This doctor submitted two reports about Mahajan Deolal:one report, it appears, was submitted with the proposal form through the agent of the respondent company; another report was sent in a confidential cover along with a letter from the doctor. In this letter (Ex. D-22) the doctor explained why he was submitting two medical reports. In substance he said that the report submitted with the proposal form at the instance of the agent, Rahatullah Khan, was not a correct report and the correct report was the one which he enclosed in the confidential cover. In that report Dr. Desai said that Mahajan Deolal was anaemic, looked about 55 years old, had a dilated heart and his right lung showed indications of an old attack of pneumonia or pleurisy. The doctor further said that the general health of Mahajan Deolal was very much run down and he was a total physical wreck. The doctor opined that Mahajan Deolal's life was an uninsurable life. It appears that nothing came out of the proposal made by Mahajan Deolal for the insurance of his life in December, 1942. The evidence 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 Rs. 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 Rs. 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 was stated that an earlier proposal for insuring the life of Mahajan Deolal was pending with the respondent company. Now, in the proposal form (Ex. D-11) there was a question (question No. 13) to the following effect: "Have you within the past five years consulted any medical man for any ailment, not necessarily confining you to your house If so, give details and state names and addresses of medical men consulted." The answer given to the question was- "No". This answer, according to the case of the respondent, was false and deliberately false, because, according to the evidence of one Dr. P. N. Lakshmanan, Consulting Physician at Jabalpur, Mahajan Deolal was examined and treated by the said doctor between the dates September 7, 1943, and October 6, 1943, when the doctor found that Mahajan Deolal was suffering from anaemia, oedema of the feet, diarrhoea and panting on exertion. We shall advert in greater detail to the evidence of Dr. Lakshmanan at a later stage. In his personal statement accompanying the second proposal Mahajan Deolal answered in the negative question 12 (b), the question being as to when he was last under medical treatment and for what ailment and how long. In the same personal statement with regard to questions, or example, question Nos. 5 (a), 5 (b) etc., as to whether he suffered from shortness of breath, anaemia, asthma etc., Mahajan Deolal gave negative answers. The contention on behalf of the respondent company was that these answers in the personal statement were also deliberately false and constituted a fraudulent suppression of material particulars relating to the health of the insured. With regard to the second proposal and the personal statement accompanying it, Dr. Motilal Nayak, brother of the appellant, gave a friend's report, in which he said that Mahajan Deolal's health was good and that he had never heard that Mahajan Deolal suffered from any illness. It is worthy of note here that Dr. Motilal Nayak himself took Mahajan Deolal to Dr. Lakshmanan for treatment at Jabalpur in September-October, 1943. On receipt of the second proposal in July, 1944, Mahajan Deolal was examined by Dr. Kapadia, who was the District Medical Officer of the Railways at Jabalpur. Dr.Kapadia reported that Mahajan Deolal was a healthy man and looked about 52 to 54 years old. He recommended that Mahajan Deolal might be given a policy for 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 February12, 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 had become suddenly worse and that he would not be able to pay the premium for the policy. He requested that the policy be cancelled. In the meantime the premium for 1945 not having been paid, the policy lapsed. Then, on October 28, 1945 Mahajan Deolal made a request for revival of the policy, but a few days before that, namely on October 18, 1945,the policy was assigned in favour of the appellant, by an endorsement made on the policy itself. This assignment was duly registered by the respondent company by means of its letter dated November 1, 1945 in which the respondent company said that it accepted the assignment without expressing any opinion as to its validity or effect. The respondent company also made an enquiry from the appellant as to whether the latter had any insurable interest in the life of the insured and what consideration had passed from him to the insured. To this the appellant replied that he had no insurable interest in the life of Mahajan Deolal except that the latter was a friend and he (the appellant) had purchased the policy for a sum of Rs. 427. 12 nP. being the premium paid by him so far, because Mahajan Deolal did not wish to continue the policy. On his request for a revival of the Policy Mahajan Deolal was again medically examined this time by one Dr. Belapurkar. Later on February 25, 1946 he was examined by Dr. Clarke. The policy was then revived on payment of all arrears of premium, these arrears having been paid by the present appellant. On receipt of the revival fee, the policy appears to have been revived some time in July, 1946. We have already stated that Mahajan Deolal died in November, 1946. The certificate of Dr. Clarke, who was the medical attendant at the time when Mahajan Deolal died, showed that the primary cause of death of Mahajan Deolal was malaria followed by severe type of diarrhoea; the secondary cause was anaemia, chronic bronchitis and enlargement of liver. In the certificate which Dr. Clarke gave there was mention of certain other medical practitioners who had attended Mahajan Deolal at the time of his death. One of such medical practitioners mentioned in the certificate was Dr. Lakshmanan. On receipt of this certificate the respondent company got into touch with Dr. Lakshmanan and discovered from him that Mahajan Deolal had been treated in September-October 1943 by Dr. Lakshmanan for ailments which, according to the doctor, were of a serious nature.
(3.) Several issues were tried between the parties in the trial court. But the four questions which were argued in the High Court and on which the fate of the appeal depends were these:- (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 ;