Obul Reddi, J.:— The defendant the Life Insurance Corporation of India, represented by its Divisional Manager Machilipatnam, is the appellant. The Subordinate Judge Machilipatnam, decreed the suit brought by the widow of the insured against the defendant for recovery of a sum of Rs. 53,100/- being the total amount due under five life insurance policies.
2. B. Venkateswarlu, the husband of the plaintiff insured his life under Policy Nos. 12807645, 12876162, 12881223, 12882042 and 12925085 for Rs. 10,000/- Rs. 5,000/- Rs. 15,000/- Rs. 10,000/- and Rs. 5,000/- on 1-11-56, 21-11-58, 11-11-58, 17-7-1959 and 12-10-59 respectively at Machilipatnam and nominated his wife, the plaintiff, as the person entitled to the amounts due under the policies in the event of her surviving him. Venkateswarlu died on 23-4-1961 at his village Viswanathapalli, the cause, according to the plaintiff, being “loose motions and vomitings.” The plaintiff, thereafter, intimating the death of her husband, asked for claim forms and, on receipt of those forms, she duly filled them up and despatched them on 25-7-1961 along with the five policies by registered post to the Divisional Manager of the Corporation at Machilipatnam for payment of the amounts due under the policies at an early date.
3. The defendant, on receipt of the claim forms and the policies, informed the plaintiff by a registered notice dated 16-3-62 that it was gathered in the course of routine enquiries made by an official of the Corporation that her husband. Bh. Venkateswarlu, suffered from diabetes prior to the proposals made by him for insurance and that he had also undergone treatment for the said ailment and that he wilfully withheld the material facts relating to his disease and that the non-disclosure of full facts amounted to breach of warranty which he had given regarding his health and as such, the contracts have become null and void disentitling the plaintiff to any claim under the five policies. The plaintiff then sent a reply stating that her husband never suffered from diabetes or at any rate to his knowledge prior to the proposals made by him, that he had never undergone any treatment for the said ailment and that the doctors of the defendant-Corporation examined him thoroughly and sent their reports which were accepted by the defendant before the policies were issued. According to her, the defendant-Corporation played into the hands of the enemies of her husband, who were responsible for the false information given about her husband's health. As her claims were not acceded to, the plaintiff gave a notice and laid action. The suit was resisted by the defendant-Corporation among other grounds, that the deceased wilfully gave false answers in the personal statements submitted by him in respect of the five policies on the basis of which the Corporation issued the policies covering risks on the life of the assured. To the knowledge of Venkateswarlu, all the answers given to the questions were false and were made with fraudulent intention of obtaining the policies withholding the truth regarding his state of health. It is alleged that he was suffering from diabetes at least for ten years prior to his placing the proposals for insurance and that he was taking treatment from 1951 onwards from various doctors for the said disease. He had also purchased insulin from Machilipatnam Drug Stores and taken injections daily from one Subbarao, an Ayurvedic Doctor at Viswanathpalli. The questionnaire and the declarations contained in the proposal forms were explained to him in Telugu and it is only after he understood the same that he gave answers and signed underneath the declarations. In the circumstances, having regard to the terms and conditions of the policies, the. Corporation is entitled to repudiate its liability under the policies.
4. On the two main issues that arose for decision, the Subordinate Judge held that he cannot give a positive finding that Venkateswarlu was suffering from diabetes by the time he took the insurance policies and that he suppressed the fact to the Insurance Corporation and gave a decree for the suit amount with subsequent interest at 6% per annum and directed the parties to bear their own costs.
5. The learned Advocate General appearing for the appellant-Corporation contended that the insured had suppressed a material fact viz. the disease-diabetes from which he was suffering and that the declaration was made fraudulently concealing his ailment and as such, the insured's wife, the assignee, is not entitled to recover the total amount due under the five policies.
6. Mr. Padmanabha Reddy, the learned counsel appearing for the respondent, contended that the appellant-Corporation has failed to establish that the insured had made any fraudulent suppression of any material fact knowing that his declaration or statement was false and that the burden laid upon the appellant under Section 45 of the Insurance Act, was not discharged, as is evident from the non-examination of the medical officers of the Corporation, who had examined the insured as also the agents of the Corporation, who were present at the time when the declarations were made by the insured, and therefore there are no grounds for interference.
7. The main question involved in this appeal is whether the conditions laid down in the second part of Section 45 of the Act are satisfied so as to entitle the appellant to avoid the policies in question.
8. Section 45, as amended in 1941, reads:—
“No policy of life insurance effected before the commencement of this Act shall after expiry of two years from the date of commencement of this Act and 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 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:
Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”
9. Therefore, the three conditions which require to be satisfied are: (1) the statement must be on a material matter or must suppress facts which it was material to disclose; (2) the suppression must be fraudulently made by the policy-holder, and (3) 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: see Mithoolal Nayak v. Life Insurance Corporation Of India, AIR 1962 SC 814.
10. It is, therefore necessary in the first instance to scan the evidence on record to see whether the insured was guilty of fraudulent suppression of a material fact. We may point out at this stage that the learned Counsel for the respondent has invited our attention to the fact that the proposal forms are in English, a language with which the insured was not conversant as he only knew Telugu to read and write.
11. D.W 1 is a Superintendent in the appellant-Corporation and he filed Exs. B-1 to B-17 which consist of the proposals of the insured, confidential reports of the medical officers, the acceptance of the policy by the appellant-Corporation and the policies issued to the insured. Among these, Ex. B-5 is a confidential report of the Medical Officer regarding the health of the insured and it was obtained to ensure that the insured continued to be of good health.
12. D.W 2 is an Investigating Officer with reference to the suit policies and his local enquiries revealed that the insured was suffering from diabetes and was treated for the same by D. Ws. 3 and 4 on the strength of the information gathered by him, he submitted his report to the Corporation.
13. D.W 3 is a Civil Assistant Surgeon and was the Medical Officer in charge of L.F Dispensary at Pedakalle palli in 1952. He says that late Venkate-Swarlu (the insured? who happened to be the Village Munsif of Viswanathpalli, caine to him and had treatment for diabetes and relied upon an entry, Ex. B 23 in the Nominal Register (Ex, B-22) of the L.F Dispensary. He gave a letter, Ex. B-24, when D.W 2 came on investigation, stating that he treated the insured for one and half months between JL 950-53. The main infirmity in his evidence is that he was unabie to assert that the entry, Ex. B-23, relates to the insured, Bh. Venkateswarlu. According to him, the name noted in Ex. B-23 tallies with the name of the insured and therefore it may be that of the insured. A scrutiny of the Nominal Register would show that at page 120 three entries of the same name Venkateswarlu and as against one of the names only (Ex. B-23) the disease diabetes was noted. He gave a letter, Ex. B-24 to D.W 2 as, after going through the records, he found one entry in the entire Nominal Register, which tallied with the name of late Venkateswarlu. He does not say that he had examined the urine of Venkateswarlu before he made the entry, Ex. B-23, diagnosing the disease, from which the patient was suffering as diabetes. It is admitted by him that he did not know Venkateswarlu before and that at Avanigadda, which is close to the village of late Venkateswarlu, there were medical practitioners with M.B, B.S Degree.
14. There is no special reason why Venkateswarlu should have approached D.W 3 when he was in a position to go to Avanigadda, the taluk head quarters, where there were more qualified medical men. In view of the fact that he was not able to assert that the entry, Ex. B-23, in the Nominal Register relates to Venkateswarlu it is difficult to hold that he treated him for diabetes during 1950 and 1953 as stated by him in Ex. B-24. On his own showing, he could not have treated him from 1950 for he took charge of the L.F Dispensary at Pedakallepalli only in 1952, and admittedly he did not know Venkateswarlu prior to 1952. Therefore, in these circumstances, it will be hazardous to rely upon evidence of this witness.
15. We must, however, point out that the Court below, having observed that Ex. B-23 is not established to relate to late Venkateswarlu and that “it may relate to him or it may not relate to him”, erred in relying upon the oral testimony of D.W 3 to hold that, sometime between 1950 and 1953, Venkateswarlu “took some injections for diabetes and nothing more.” A general finding of this nature without material to support it cannot be sustained.
16. D.W 4 is a Licentiate In Indian Medicine and he was a private Medical Practitioner at Avanigadda between 1952–1954. He claims to have treated the insured, Venkateswarlu for diabetes by giving him insulin injections. He also claims to have examined his urine and “found traces of sugar.” It would appear from his evidence that the insured went to him with insulin and asked him to give injections. What little effect his statement in chief-examination may have was completely shattered in cross-examination. He was unable to say whether he gave the injections to Venkateswarlu at Avanigadda or Kothapalem or Viswanathapalli, to which village the insured belonged. It Is not as if he treated him for any length of period. He could recollect only “two or three occasions” when he gave injections to Venkateswarlu and does not remember ‘who supplied him the syringe for injections.” If really, as he wants the Court to believe, he was treating Venkateswarlu for diabetes, there is no reason why Venkateswarlu should have given up this doctor thereafter as admittedly D.W 4 did not see him afterwards. The statement in Ex. B-25 to D.W 2, the Investigating Officer, that he treated Venkateswarlu between 1952 and 1954, is falsified by his own admission that he did not give him more than two or three injections and that he never saw him thereafter. We have, therefore, no hesitation, as the lower Court did, in rejecting his evidence.
17. The learned Advocate General placed reliance on the evidence of D.W 5, the Manager of the Masulipatnam Medical stores and the credit bills, Exs. X-1 to X-15 showing the purchase of medicines made by Venkateswarlu during his life-time. Two among the bills (Exs. X-5 to X-15) according to this witness, contain the initials in Telugu of Venkateswarlu. D.W 10 is the Salesman of the said Medical Stores and he wrote the credit bills. The evidence of these witnesses, supported by the credit bills, shows that Venkateswarlu was purchasing among other medicines insulin vials from 1956 to 1961. The question is whether they were purchased for his own use or for others. To similar effect is the evidence of D.W 9, the proprietor of Satyanarayana Medical Stores, Avanigadda, with this difference that he has not filed any accounts or bills evidencing purchase of insulin vials. It is not known on what basis he gave the statement, Ex. B-16, to the Investigating Officer of the appellant-Corporation and, therefore, it is difficult to hold merely on his oral testimony that late Venkateswarlu purchased insulin vials from his medical stores or that insulin vials, if any, purchased from his medical stores, were intended for Venkateswarlu. The evidence of D.W 3, as has been found by us, is not acceptable and therefore it will be difficult to say that the insulin vials purchased from the medical stores of D.W 5 were for his (insured's) own use. The evidence therefore does not establish, beyond suspicion that the insured was suffering from diabetes and for that reason, he purchased the insulin vials under Exs. X-5 to X-15.
18. On this evidence, it cannot be said that the burden that lies so heavily on the appellant-Corporation has been discharged so as to entitle it to repudiate the contracts.
19. The learned Advocate-General, in this connection Invited our attention to a decision of the Madras High Court in East and West Life Insurance Co. v. Venkiah, AIR 1944 Mad 559 where it is held:—
“Though the practice of calling upon an insured person who knows only Telugu to answer questions couched in English cannot be commended the duty of making himself acquainted with the contents of what he was signing, undoubtedly lies upon the assured himself and he must be held responsible for the statements in the application for reinstatement that he had had no sickness, ailment or injury since the last medical examination and had not been attended upon or prescribed for by any physician. If the answers to the declaration in the application for reinstatement are on the face of them untrue (the insured being treated for arsenic dermatitis and being In the nursing home for 5 weeks), the company can repudiate the liability under the policy however free from danger the dermatitis may have been, and however complete its cure.”
20. That was a case where the policy had lapsed, but under its terms could be reinstated on evidence being furnished of good health to the satisfaction of the directors. The insured paid the premium and the policy was reinstated on an application signed in Telugu by the policy-holder, who could not read or write English. The policy-holder had to make two declarations.” (i) That since the day of my examination for the above-mentioned policy, I have had no sickness ail ment or injury whatever except as follows and” (ii) I have not been attended, nor prescribed by any physician, except as follows:” There was also a clause in the application form, which says that “if any of the statements or representations contained herein prove to be incomplete or untrue then this reinstatement shall be Ipso facto null and void.” The principal question that came to be considered by the learned Judges was the circumstances under which that application came to be signed by the insured. The case of the company was that the contents of the form were explained by its agent (D.W 5) in Telugu and it was only after that, the declaration was signed by the policy-holder. The learned Judges were unable to rely upon the evidence of the agent (D.W 5) as representing the truth and pronounced, that, on the facts of that case, the policy-holder must be held responsible for the declarations made that he had no sick ness or ailment or injury and had not been attended upon or prescribed for by any physician.
21. It is on strength of the above decision that the learned Advocate Gene ral says that, notwithstanding the fact that the agents or the medical officers of the appellant-Corporation have not been examined there is a positive duty on the part of the insured to disclose the material facts and that he cannot plead ignorance of the language. It must be remembered that the above case was decided on the facts of that case and the Insurance Company had examined its agent (D.W 5) though the learned Judges were unable to rely upon his admission as being necessarily an admission of the truth.
22. Mack, J. sitting with Krishna swami Naidu J. in K. Ammal v. O.G S.L Assurance Co., AIR 1954 Mad 636, dealing with the scope of Section 45 of the Insurance Act, observed that mere signature of an insured person who does not understand English, on the proposal forms with a binding declaration in English is not enough to prove his know ledge of what he was signing and to bind him literally and irrevocably to such a contract.
23. The liability of the company under the contract has to be decided on the facts and circumstances of each case and not on the mere answers recorded as “yes” or “no” against the relevant columns in the proposal forms by some one else and declarations signed by the insured person, who did not know English.
24. It is needless to emphasize) that the contracts of insurance are “Uberrimae fidei” and that the insured must make a complete and true disclosure of all the facts known to him relating to his health. As stated by Fletcher Moulton, L.J in Joel v. Law Union and Crown Insurance Co., (1908) 2 KB 863 at p. 883, the insurer is entitled to be put in possession of all material Information possessed by the insured. The enunciation of the doctrine uberrimae fidei by Lord Blackburn in Borwnlie v. Catnpbell, (1880) 5 AC 925 at p. 954 was relied upon by Fletcher-Moulton, L.J:
“In policies of insurance, whether marine insurance or life insurance, there is an understanding that the contract is uberrima fides, that, If you know any circumstance at all that may influence the underwriter's opinion as to the risk he is incurring, and consequently as to whether he will take it, or what premium he will charge if he does take it, you will state what you know. There is an obligation there to disclose what you Know, and the concealment of a material circumstance known to you, whether you thought it material or not, avoids the policy.”
25. It is thus clear that what to be seen ultimately is whether there has been an honest and frank disclosure of the material facts which were within the knowledge of the insured and whether he has made any fraudulent concealment of the material facts.
26. Here is a case where the appellant-Corporation has not examined either its agent or medical Officer, as the case may be, who recorded the answers in the proposal forms, to discharge the onus that rests on the Corporation that the answers were faithfully recorded after interpreting in Telugu the questions in the proposal forms and that the insured fully understood the meaning of the questions. Without examining those who were responsible for recording the answers in the language not known to the insured, it cannot be said the onus resting on the appellant-Corporation has been discharged by merely relying upon the fact that the declarations were signed by the insured.
27. In this connection, the observation of Fletcher Moulton, L.J, in (1908) 2 KB 863 may be profitably noticed:—
“I fully agree with the words used by Lord St. Leonards in his opinion in the case” of — ‘Anderson v. Fitzgerald’. (1853) 4 HLC 484 at 507, to the effect that in this way provisions are introduced into policies of life assurance which, “unless they are fully explained to the parties, will lead a vast number of persons to suppose that they have made a provision for their families by an insurance on their lives, and by payment of perhaps a very considerable proportion of their income, when in point of fact, from the very commencement, the policy was not worth the paper upon which it was written.”
28. What is lacking in this case is the absence of evidence that the questionnaire was fully explained to and was understood by the insured so as to establish fraudulent concealment or suppression of a material fact which was within his knowledge.
29. Ex. B-2 is the proposal form of the date 6-11-???. Column 3 details the diseases and the information required is whether any of the relations of the proposer had suffered from any one of those diseases referred to therein and if so, to give details. The answers against this column are “No. No.” Column 4 is intended for a statement as to the usual state of health and the answer is “Good” and that he had no bodily defect or deformity and that his weight has been fairly stationary. Against Column 4 (d) which reads:— “Have you consulted a medical practitioner within the last five years if so, give details”, the answer entered is “No.” Column 7, On which reliance is placed by the Corporation, reads “Have you ever passed blood, pus albumen or sugar in the Urine “and the answer is “No.” The Medical Examiner one M. Seshacharyulu, certified that the proposer had signed in his presence after admitting that all the answers have been correctly recorded. The Medical Examiner, also sent his confidential report and against Column 8 he has noted “No sugar, no albumen and other abnormalities — Nil”. Neither he nor one D. Sitamma (presumably the agent of the Corporation), who introduced the insured, has been examined.
30. Ex. B-9 is the proposal form dated 31-12-58 and the Medical Examiner again is M. Seshacharyulu. The person who introduced the proposer here is one D. Venkatcharyulu, a Field Officer of the Corporation and he too has not been examined. The answers were all recorded by Seshacharyulu and his confidential report is on the same lines as Ex. B-2.
31. Ex. B-12 is another proposal form dated 22-7-59 and the Medical Examiner is one G, Subba Rao, who recorded the answers. He examined the insured at his clinic and his report also shows that there was no sugar, no albumen and no other abnormalities. Neither this Doctor nor B.S Murthy (presumbly the agent of the Corporation) who introduced the insured, has been examined.
32. Ex. B-14 is the proposal form of the date 10-12-1959 and the Medical Examiner is one G.V Krishnayya, who noted down the answers. His confidential report also shows that late Venkateswarlu did not have any sugar, albumen or other abnormalities. This time the introduction was by D. Venkatacharyulu a Field Officer and neither the Medical Examiner nor D. Venkatacharyulu has been examined.
33. D.W 7 the local District Medical Officer, was examined to give general opinion that diabetic patient will have sugar in the urine and the insulin injections are prescribed. It is also stated by him that, in the case of diabetes inssipus there will not be any sugar in the urine and that insulin injections are prescribed for jaundice and mental diseases. His evidnece, therefore, is absolutely of no avail for determining the question whether there was any concealment of the disease diabetes by the insured.
34. The evidence of D.W 8, the Assistant Karnam of Viswanathapalli, does not at all advance the case of the appellant Corporation any further as it only shows that, whenever Venkateswarlu applied for leave because he used to feel out of sorts and weak, he (D.W 8) was officiating in his place.
35. The evidence let in by the plaintiff is only to show that her husband did not suffer from the ailment attributed to him. P.W.s 1 and 2, the residents of the village, were examined to show that he enjoyed good health and that he did not suffer from diabetes. The plaintiff, it may be stated, was never present at the time when the proposal forms were filled up and declarations were signed by her husband and according to her, no doctor ever treated her husband for diabetes. Since none of the persons examined by the plaintiff was present at the time when the declarations were signed by Vehkateswarlu, their evidence does not at all help us to determine the question of concealment of the disease-diabetes. The burden, nevertheless is upon the appellant under the second part of Section 45 of the Act to establish the fraudulent concealment of the disease by making a false declaration.
36. It is well to remember that Vehkateswarlu (the insured) is a holder of five policies and it could not have been easy for him to have escaped detection of the disease by different medical examiners of the Corporation, who examined him between 1956 and 1959. By mere reason of the fact that two of the credit bills among Exs. X-1 to X-15, for the purchase of insulin vials and other items, contain the initials of Venkateswarlu, it is difficult to hold that the insulin vials purchased were for his use as he was suffering from diabetes. They could as well be for the use of the members of his family or others. Further, these bills do not show that they were purchased under the prescription given by any registered Medical Practitioner.
37. The scope of Section 45 of the Act has been explained by a Division Bench of this Court in New India Assurance Co. v. T.S Raghavareddi, AIR 1961 Andh Pra 295; Satyanarayana Raju, J. (as he then was), speaking for the Court, observed:—
“The effect of Section 45 is that after the expiry of the two years in either of the cases contemplated therein, the insurers are prevented from relying upon the usual term that the truth of the statements made in the proposal and the answers in the declaration form the basis of the contract. Under the Section, the policy cannot be avoided on the ground of misstatements or untrue answers, unless the insurers, are able to establish (1) that the statement was inaccurate or false; (2) that such state, ment was on a material matter or that the; statement suppressed facts which it was material to disclose; (3) that the statement was fraudulently made by the policy-holder, and (4) that the policy-holder knew at the time of making the statement that it was false to his knowledge or that facts which it was material to disclose had been suppressed.”
38. It will, therefore, be difficult to attribute to a layman like Venkateswarlu the knowledge of the fact that he was suffering from diabetes so as to constitute a fraudulent suppression of a material fact. The Supreme Court has since, in AIR 1962 SC 814, explained the scope of Section 45 and laid down the conditions which require to be satisfied by the Corporation. The second part of Section 45 places a burden on the Corporation to satisfy, the conditions and unless they are satisfied, the policy cannot be avoided on the ground of “misstatement of facts. The confidential reports forwarded by the Medical Examiners show that they were unable to discover the existence of sugar in the urine of Venkateswarlu.
39. It is true that there is a corresponding duty or obligation on the insured person to make a true and complete disclosure of the material facts; but such disclosure does not extend to matters not within the knowledge of the proposer for insurance. The confidential reports submitted by the Medical Examiners of the Corporation will have to be accepted as true, as ordinarily the presumption is that they submitted the reports only after a thorough and careful examination of the proposers in accordance with the questionnaire, unless it is shown by the Corporation that either the Medical Examiner, who submitted the report, made a false record or that the proposer made a fraudulent suppression of the material facts being aware of the illness from which he was suffering. Therefore, having regard to the facts and circumstances of the case, without the evidence of the person, whether of the doctor or the agent, who interpreted and put the questions to the proposer and what answers were given to the questions, the declaration signed by the proposer in a language different from the language of the application form is not sufficient to prove that there has been any such non-disclosure of the material facts by the insured as would, in the absence of fraud, render the policy voidable. By its failure to examine the concerned agents or the Medical Examiners, the appellant-Corporation has failed to discharge the burden laid upon it under Section 45 of the Act
40. It is thus manifest that the three conditions laid down by their Lordships of the Supreme Court in AIR 1962 SC 814, have not been satisfied. For the reasons recorded by us, we confirm the judgment and decree of the trial Court and dismiss the appeal with costs.
41. The Cross-objections have been preferred by the plaintiff, as costs were disallowed by the lower Court. Awarding costs is a matter of discretion and we are unable to say that the discretion has not been properly exercised by the lower Court. In the circumstances, the cross-objections are dismisssed, but without costs.
42. For the same reasons, the appeal (A.S 158/66) preferred by the defendant is dismissed. No costs.
43. Appeals dismissed.