Ahmad, J.:— This appeal arises out of a suit for the realisation of a claim under an insurance policy on the death of the life insured, namely, that of one Pyare Lal of Siwan. It is not denied that Pyare Lal died on 19-4-1946, and the plaintiffs, who are his sons and appellants in this Court, are his successors and heirs. Obviously, therefore, here there is no scope for any controversy as to the title of the plaintiffs nor in fact there is any.
2. Further it is not denied that on 23-1-1946, Pyare Lal filled up an application form supplied by the agent of the respondent company to insure his life for a sum of Rs. 10,000/- on twenty years' endowment and having signed it handed over the same to that agent along with a cheque for a sum of Rs. 549/1/-, that being the first annual premium payable for the year 1946 and that thereafter on medical examination by the doctor of the company his life was found to be a first class life, Exhibit 2(a), which is dated 31-1-1946, is the kutcha receipt of the aforesaid amount granted by the respondent Metropolitan Insurance Company Ltd., under the signature of one H.N Chakravarty, Collector. It reads:
“Received with thanks from Mr. Pyare Lal the sum of Rupees Five hundred forty-nine and one anna on account of advance against a new proposal.
Rs. 549/1/- by cheque.
Sd. H.N Chakravarty, Collector”.
3. Thereafter on 27-3-1946, the respondent company sent a letter which is headed as “Acceptance letter of proposal granted by the Metropolitan Insurance Co. Ltd. to Pyare Lall” and the contents of it read: as follows:
“We beg to inform you that your proposal for an Assurance dated 23-1-1946 has been accepted for a sum assured of Rs. 10,000/- on the following terms and under conditions noted overleaf and that a policy for the said sum assured will be issued on receipt of the sum noted hereunder as ‘net due’ provided all formalities required by the Company for acceptance thereof to take up risk on your life have been duly complied with.
Terms of Acceptance—
On 20 years' endowment with enhanced profits.
Premium payable yearly at Rs. 549/1/-
First instalment payable Rs. 549/1/-
Less amount in deposit Rs. 549/1/-
Net due Rs.
Kindly oblige us by remitting the aforesaid amount within fifteen days from this date, if it has not already been paid.
Yours faithfully,
Sd. Illegible
For Secretary”.
4. And finally this was followed by a regular receipt which is dated 28-3-1946. It is headed as “Premium collection receipt granted by the Metropolitan Insurance Company Ltd. to Pyare Lall” and the body runs in the following terms:
“Premium Collection Receipt No. XVI. 1550.
Received with thank oil 28-3-1946 the sum of Rs. 549 as. 1 (Rupees Five Hundred and Forty Nine and anna one only) being the yearly premium due on nil against policy No. on the life of Mr. Pyare Lall.
Sd. Illegible,
Collector.
Sd. Illegible.
Accounts Officer.
(On two annas stamp)
Bengal.
Seal of Metropolitan Insurance”.
5. It, however, so happened that before this acceptance could be supplemented by a regular policy, the assured, as already stated, died on 19-4-1946. The finding of the trial court as to the amount, which was paid along with the proposal, is that originally the defendant company kept it in suspense account and thereafter it was on 28-3-1946, that they finally adjusted the same towards the first annual premium.
6. Accordingly at the trial it has been held that it was on 28-3-1946 that the policy was finally accepted and then became a binding contract between the parties. It is, however, not denied that even then had the matter rested there all alone, there was no difficulty in the claim being decreed as prayed for in the plaint. But the matter seems to have, been complicated by the plea set up by the defendant company that though the insured died on 19-4-1946, that is to say, long after the acceptance of the policy but the illness which was responsible for bringing about this death had already set in and was there since 23-3-1946, that means, much within time when the proposal was still under consideration before the company.
7. Therefore, it is said that this being a new factor concerning the health of the insured, it should have been brought to the notice of the company. The reason given for this contention is that though in the meantime in between the aforesaid date of illness and death, the policy had already been accepted but it was specifically stated therein that it was subject to certain conditions, two of which read as follows:
“1. That until the full amount of the first instalment of premium reaches the office and is accepted by the Company as such, no risk on your life will commence and the company reserves the right to cancel this acceptance.”
“2. That if you fall ill or if there occurs any change whatsoever in connection with your health or that of your family members or in your family history or if a proposal on your life with this company or with any other Insurance Company is pending decision or declined or not accepted on the terms proposed by you on or between the dates of your proposal and the completion thereof by acceptance by the Company of the first instalment of premium, this acceptance letter and the policy which may be issued under this acceptance letter shall become invalid and shall not have any effect unless intimation of such event shall have been made to this office in writing and the proposal re-approved by the Directors”.
8. These conditions, it is not congested, were in the nature of warranties which in the case of insurance operate as absolute conditions, non-compliance with which voids the contract of insurance.
9. Accordingly, the submission made is that condition No. 2 here was a condition precedent to constitute any liability thereunder against the company. In other words, it is said that in the present case, apart from the common law liability which calls upon every candidate for insurance to make a full and faithful disclosure of all the facts material to the risk, there was in this case also a contractual liability on the part of the insured to inform the company about the illness, which, as claimed by the defendant company, had already set in, though after medical examination but in any case long before the acceptance of the policy.
10. That liability, according to the defendant, not having been discharged by the insured, it was open to the company in law to avoid the contract and to refuse any payment thereunder. True that on the side of the plaintiffs it is not denied that the death of the assured had been proceeded by a short illness, but their version of the story is that illness had set in for the first time on the evening of 28-3-1946 and not at any time before that. Further their claim is that it is wrong to say that no intimation of this illness had ever sent to the company.
11. Therefore, according to the plaintiffs, there was no default on the part of the insured either in the matter of disclosing all the facts material to the risk as contemplated under common law or in the matter of discharging what was undertaken under the contract.
12. The trial court, however, has accepted the defence plea and it has found “(1) that Pyare Lall fell ill oil 23-3-1946, a date which was prior to acceptance and (2) that by not informing the company of illness which took place prior to acceptance the insured committed a breach of warranty entitling the defendant company to revoke the contract”.
13. It has accordingly dismissed the suit though with an observation that “the loss in this case to the, sons of the assured had been caused by the failure to issue the acceptance letter at an early date” and with a further expression of opinion that “it would resound to the credit of the defendant if they would see their way to pay up the amount claimed to the sons of the assured in spite of the success”. Perhaps for some reason or other the defendant company in spite of all these observations could not find their way to make any payment to the plaintiffs and hence this appeal.
14. The well-settled law in the field of insurance is that contracts of insurance including the contracts of life assurance are contracts uberrima fides and every fact of materiality must be disclosed otherwise there is good ground for rescission. And this duty to disclose continues up to the conclusion of the contract and covers any material alteration in the character of the risk which may take place between proposal and acceptance Looker v. Law Union and Rock Insurance Co., (1928) 1 KB 554. Jessel M.R in London Assurance Co. v. Monsel, (1879) 11 Ch D 363, observed:
“As regards the general principle I am not prepared to lay down as making any difference in substance between one contract of assurance and another. Whether it is life, or fire, or marine insurance. I take it good faith is required in all cases and though there may be certain circumstances from the peculiar nature of marine insurance, which require to be disclosed, and which do not apply to other contracts of insurance, that is rather in my opinion an illustration of the application of the principle than a distinction of principle.”
15. Therefore, in this case non-disclosure of material facts even in the absence of misrepresentation or fraud may make the contract voidable at the instance of the parties to whom ‘uberrima fides’ is due. But then in such cases sometimes a ticklish question arises as to what is a material fact. Authorities say that any fact which tends to suggest that the life insured is likely to fall short of the average duration is a material fact Thomson v. Weems, (1884) 9 AC 671; and rightly so for after all life assurance is nothing but a scientific assessment of an average duration of a life, and that is not possible unless all correct data about that life are diligently and faithfully made available to the company.
16. But then the border line between what is material and what is not material is more often than not so faint and dim that there is always a danger of one being taken for the other. Therefore, in order to avoid this danger one has to be careful in drawing a distinction between what is illness or material change in health and what is ordinary simple disorder. A disorder is not one ‘tending to shorten life’ simply from the circumstance that the assured dies from it Watson v. Mainwaring, (1813) 4 Taunt 763.
17. A good health means reasonably good health Yorke v. Yorkshire Insurance, (1918) 1 KB 662; and National Mutual v. Smallfield, (1922) N.Z Law 1074. A warranty of good health can ‘never mean that a man has not in him the seeds of some disorder. We are all born with the seeds of mortality in us’ Willis v. Poole, (1780) 2 Parks' Marine Insurance 8th Ed p. 935. Life insurance is peculiar in that the assured is often ignorant as to the fact most material in assessing the premium — the state of his own health.
18. Though he may have a general idea as to his own physical well-being, he may well be unaware of an incipient but deadly disease within his system that a doctor might have diagnosed. The rule is, warranties apart, that the insurers may only avoid the policy if the assured knowingly misrepresents his state of health. It is true that this is not consistent with what Roche J., laid down in Graham v. Western Australian Insurance, (1931) 40 LR 64.
19. According to that learned Judge, the principle had been settled for years that “if there is information given, be it quite innocent, which is not a matter of contract, and never becomes a matter of contract, yet, nevertheless, if it is inaccurate, it can be used to avoid the policy or policies in question.” It, however, appears from authorities that though this may be true as to marine risks but so far as life insurance is concerned, that does appear to stand on a special position in this respect, as is evident also from the discussion made in Halsbury's Laws of England, Volume 18, Article 588. Therein a distinction has been drawn between misrepresentation and non-disclosure and in the course of that it has been observed:
“…….Since, however, the duty to disclose is limited to facts within the knowledge of the assured, a mistaken statement about a material fact (Wheelton v. Hardisty, (1858) 8 E and B 232) made honestly, that is, with belief in its truth, will not affect the validity of the contract (Anderson v. Fitzgerald, (1853) 4 H.L Cas. 484), unless there is an express condition that it shall do so”.
20. It may be said that the present case is one where there was a condition imposed on the assured and accepted by him that in case he fell ill or there was any change in his health between the date of the proposal and the date of his acceptance by the company, he would send an intimation of that event to the company. But in this connection it has to be remembered that a statement which is expressed to depend upon the assured's state of mind will not be untrue simply because he was unaware of the true facts (1858) 8 E. and B. 232.
21. Therefore, if in his honest judgment there was no illness or any change of health but only an ordinary disorder, the mere non-communication of that event to the company cannot be a ground for the insurer to avoid the policy. This, in my opinion, in ultimate analysis always turns out to be a question of fact whether any particular physical nervous disorder amounts to an illness or is a mere disorder. Looked at, therefore, from these points of view that we have to approach the present case.
22. Now the question arises as to when the contract was actually accepted by the company. In the plaint no doubt it has been stated that the risk was accepted by the company on 28th March, 1946 and perhaps on that basis the trial court also is inclined to think that the contract entered into in this case was completed on that day. But to my mind it appears that the statement made in the plaint must be dependent on what had been communicated by the company to the plaintiffs and not on their independent information and in fact the plaintiffs could not have any independent information at all about the question as to when the proposal sent by the assured was accepted by the company.
23. Therefore, that statement cannot be much relied upon to find out as to when the proposal made by the assured became a binding contract. In answer to this question I think a very reliable evidence is to be found in the clear admission made by the company itself in a letter addressed by them to Baijnath Prasad, Pleader. It is dated 26-7-1947 and marked exhibit 4 on the record. Therein the first paragraph reads as follows:
“Your letter dated 29-6-47 is to hand and in reply we bring to your notice the following facts. The said Pyare Lal gave a proposal to us for Rs. 10,000/- on 23-1-46. It took some time for the final decision of the case on medical ground and the proposal after full consideration was accepted on 26-3-46 and in our letter on 27-3-46 we communicated to the assured our acceptance of the proposal. As money was in deposit in the office for premium, we took the risk on 28-3-46 and we sent intimation to that effect too.”
24. Therefore, in the face of that admission the plea now set up that the contract was accepted on the 28th March, 1946, is not at all worthy of any serious consideration. Further perhaps it may be argued that the acceptance, if any, which was made on 26th March, 1946, was subject not only to condition No. 2 but also to condition No. 1 both of which have already been quoted above.
25. But in the present case condition No. 1 has no significance in view of the fact that the first instalment of the premium had already been sent by the assured to the company along with the proposal which he had signed on 23rd January, 1946 and that was lying with the company. Therefore, the moment the proposal was accepted by the company, the condition as to the remittance of the first instalment by the assured and the acceptance of the same by the company also automatically stood complied with.
26. For these reasons I think there is no escape from the conclusion that the contract undoubtedly became a binding obligation between the parties on the 26th March, 1946. If that is so then I think the only important question for consideration is whether at any time before that date any fact had come to the knowledge of the assured that the life insured was likely to fall short of the average duration. The answer to this question on the facts stated in this case essentially depends on the determination, firstly, whether the assured had at all developed any complaint about his health at any time between that date and the date of his medical examination, and, secondly, whether the complaint, even if any, amounted to any illness or only to a simple ordinary disorder which a human life in ordinary course of business is always susceptible to. (His Lordship then examined the evidence and proceeded to state as follows:—)
27. Therefore, on a consideration of the entire evidence brought on the record by both the parties, I hold that the defendant has failed to prove that Pyare Lal had fallen ill at any time before the evening of 28th March, 1946. It is true that he had already sent for the doctor on the previous evening, namely, on 27th March, 1946, but on that day the complaint, if any, as stated by P.W 2, was nothing more than exhaustion or what we may call ordinary simple disorder otherwise had there been anything serious, the doctor, D.N Roy, should have undoubtedly prescribed some medicine to the patient.
28. But the very fact that the defendant has failed to produce any prescription of that date on the record goes a long way to give strength to the testimony of P.W 2 that till then it was a case of exhaustion and nothing more than that. As such there could not be any reasonable ground for Payre Lal to think that the complaint, if any, was in any way more than an ordinary normal disorder. Therefore, my answers to the questions raised above are (1) that the assured had not developed any complaint about his health at any time between the date of his medical examination and 26th March, 1946 and (2) that the complaint which he had on 27th March, 1946, was of an ordinary disorder character and not what is known as illness.
29. If that is so then there was no breach of warranty by Pyare Lal if he did not send any information of his illness which began on the 28th March, 1946 as in any view of the matter the policy had already been accepted by them. Accordingly I hold that the Insurance Company was not justified in withholding payment of the amount due under the policy of insurance on the life of Pyare Lal deceased. I further hold that the plaintiffs are entitled to interest at 6 per cent per annum on the amount due from the date of the institution of the suit until the date of realisation.
30. The result is that the judgment and decree passed by the court below are set aside, the suit is decreed as stated above and the appeal is allowed with costs throughout.
31. Rai, J.:— I agree.
M.K.S
32. Appeal allowed.
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