JUDGMENT
Jaspal Singh, J.
1. John Dryden (1631-1700) said: To the islanding on some distant shore. Kashmiri Lal Bansal who died on 3.4.1974 in the Holy Family Hospital of hepatic malignancy, metastasis, diabetes and haemachromatois seems to have landed in this Court. In any case, one of his survivors is proving true what Thomas Mann said : A man’s dying is more the survivor’s affair than his own.
2. The gentleman happened to be insured with the defendant Life Insurance Corporation of India in a sum of Rs. 1,00,000/- under what is known as plan and term 14-20. This policy had actually lapsed in the year 1972 for reasons of default in the payment of premium but was revived on 29.3.1973. It is this policy which has now become the bone of contention. Whereas the widow of Kashmiri Lal Bansal is laying her claim being a nominee and widow of the insured, the Life Insurance Corporation of India seeks to wash off its liability on the plea that the claim stands repudiated as Kashmiri Lal Bansal, at the time of revival of the policy, had suppressed the ailments from which he was suffering. The widow, however, swears to the good health of her late husband. The battle-lines are thus clearly drawn.
3. The pleadings led to the framing of the following issues:
(1) Is the suit barred by limitation?
(2) Did Kashmiri Lal Bansal, husband of the plaintiff, made misrepresentation and suppression at the time of revival of the life insurance policy in question? If so, what is its effect?
(3) Are the other legal heirs of Kashmiri Lal Bansal not necessary parties, the plaintiff being nominee of the insurance policy?
4. Relief.
4. The discerning eye would have noticed that in the introductory para I have made no reference to the plea leading to the framing of above-noted issue No. 1. I owe an explanation. The reason is that during arguments which were reasonably exhaustive, no reference was made to the objection which led to the framing of the above said issue. Even otherwise, I see nothing to nod my head in approval.
5. Issue Nos. 2 and 3 did, however, witness lot of firework.
6. How should I proceed to deal with the second issue? I think that the best way would be to first grasp the legal requirements and then to weigh the facts on their scale.
7. I was told, and I think correctly, that the principles emanating from Section 45 of the Insurance Act, 1938, would govern this case too. If that be so, let us first have a look at it. Section 45 says:
45. Policy not to be called in question on ground of mis-statement after two years. — No policy of life insurance effected before the commencement of this Act shall after the 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.
8. It is the second part of Section 45 which is relevant and it shows that there are three conditions for the application of that part. In Mithoolal v. Life Insurance Corporation of India, , the Supreme Court enumerates them for us. The conditions are:
(a) the statement must be on a material matter or must suppress facts which it was material to disclose;
(b) the suppression must be fraudulently made by the policy-holder; and
(c) 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.
9. The reason for these conditions is not far to seek. As we all know, the contracts of insurance are uberrimae fidei and as stated by Fletcher Moulton, L.J. in Joel v. Law Union and Crown Insurance Co. (1908) 2 KB 863, the insurer has the right to be put in possession of all material information possessed by the insured. In A.I.G. Insurance Co. v. S.P. Maheshwari , the learned Judges opined that the declarations in the application for policy amount to warranty and if it is found that the averments contained therein are false, the contract would be vitiated and become unenforceable.
10. It does appear that under Section 45 the legislature has eliminated the nice distinction of English Common Law with regard to the doctrine of warranty. Surely, under the Indian law the insurer would have no right to avoid the contract by merely bringing forth some inaccuracy or falsity in respect of some of the recitals or items in the proposal for insurance. To avoid the contract it is imperative for the insurer to prove that material facts have been suppressed and that either the suppression of material facts or the fraudulent representation of material facts occurred with the full knowledge of the assured.
11. Have the conditions, to which a reference has been made above and, which, it appears, must be concurrently satisfied, been really satisfied?
12. Let us brush our memory again. Kashmiri Lal Bansal died on 3.4.1974. His life insurance policy which had lapsed in the year 1972 was revived on 29.3.1973. His revival review slip is Exh. D-15. At the back of it, the department suggested calling for ‘MR. ECG and screening as per rules’. This was on 28.3.1973. The claimant submits that this requirement was met and the requisite certificate and reports were filed. However, as per the Corporation the policy was revived without the deceased having complied with the requirement. Since Mr. Bhagwan Gupta, DW 4, who was admittedly a Development Officer in the Life Insurance Corporation from 1973 to J 981 and who had got the deceased insured and had pursued his application for revival of the policy, has spoken of his having got the deceased medically examined and having submitted the requisite certificates, etc. lam inclined to lean by his side more so when admittedly there is no office note waiving the medical examination and calling of the medical report, and when M.R. Kapoor, DW 3, who is the Assistant Divisional Manager of the defendant Corporation and who had dealt with this case, could not deny the suggestion that medical reports had been removed from the office record.
13. Let us take it that no such certificates, etc., were filed. What would be the position in such an eventuality?
14. To answer it let us examine the evidence led by the Corporation.
15. As already stated above, Kashmiri Lal Bansal had died as an indoor patient in the Holy Family Hospital. He was admitted on 1.4.1974 and he died on 3.4.1974. Dr. S.K. Talwar, DW 1, tells us that the deceased was under his treatment. He makes a lengthy statement. However, I have ventured to pick up the following. He says:
(a) It is difficult to say from the diagnosis arrived at by me as to for how long he was suffering from this disease (cirrhosis of live) and when the patient would have for the first time noticed that.
(b) Papers do not mention for how long he had been suffering or for how long he had been getting himself examined from doctors. It is, of course, mentioned that the patient had lost during the last nine months 40 kg. of weight. This was from the date of the admission in the Holy Family Hospital.
(c) It is difficult to say for how long the patient was suffering from diabetes. There have been cases where patients have been suffering from this disease, but still they may not know that.
(d) Cancer in liver rather develops very fast. It can also be within two/ three months before the death. It can also be that the patient may come to know when the serious complications have already developed. Initially there are no symptoms visible of this disease development.
(e) Oedema can be disappeared (Sic.) temporarily by treatment. The presence of fluid is noticed in the latter part of the illness. The patient may not know about that.
16. Now, as would be borne out from the statement of Dr. Talwar it is not be said that the deceased was actually suffering from the diseases referred to by the doctor at the relevant time, that is, 15.3.1973 or that he knew about them and still suppressed the information.
17. The next medical witness is Dr. Vijay Kumar Jain, DW 5, whom the deceased had allegedly consulted in the City Clinic on 16.7.1973. Dr. Jain gave his statement in Court only on the basis of his certificate, Exh. D-19, which was issued by him on 18.9.1974, that is, more than five months after the death of Bansal and more than one year after the date of his having allegedly examined $ him. What is of equal significance is that he did not bring any record of the City Clinic pertaining to 16.7.1973. In short, thus, the certificate, Exh. D-19, itself cannot be treated to be worthy of reliance and once this certificate goes, the statement made in Court by the witness on its basis also loses credibility.
18. Let us assume that the certificate, Exh. D-19, and the statement made by Dr. Jain, DW 5, are worthy of reliance. What do they show? They show that the deceased was examined by Dr. Vijay Kumar Jain on 16.7.1973 and that when so examined, the deceased complained of pain in abdomen for the last ’10-15′ days besides distention of abdomen for the last ‘two days’ and “Oedema feet off and on — about one year”. Well, what was the diagnosis? The good doctor says:
I could not exactly diagnose the disease and, therefore, wrote that the pain in abdomen could be on account of liver disease or gall-bladder trouble.
And, as regards ‘Oedema feet’, this is what he has to say:
By Oedema I mean swelling of the feet which gets dimpled on pressure…. There can be several causes for Oedema. A patient may not know from what disease he is suffering when he has Oedema feet off and on… I do not remember the intervals of Oedema occurrence which was mentioned as off and on.
And, above all:
My possible diagnosis was by conjectures and whatever clinical examinations were available…. The patient could not know why he was having pain in abdomen from 10/15 days.
19. The deceased had applied for revival on 15.3.1973. If that be so, as per Dr. Vijay Kumar Jain and his certificate, Exh. D-19, the deceased did not suffer from abdominal pain or distention of abdomen or from any other ailment as on 15.3.1973. Of course, it may be taken that probably he had been ‘off and on’ having swelling in his feet but then we do not know the cause for the same. As per Dr. Jain there can be several causes for Oedema’. He, however, does not spell out those causes. An Index of Differentia Diagnosis of Man Symptoms edited by Herbert French, 6th Edn., pp. 519-20, informs that local Oedema is nearly always due to a local cause. The local causes may be congenital, hereditary, traumatic like bruises, sprains, fractures, infective like boils, abscess, venous obstruction and lymphatic obstruction. It may be due to the effects of stings, bites and the like, caused by, for example, bees, wasps, ants and other plants or even on account of local effects of excessive heat and cold, frostbite, sunburn, scalds and burns or due to local effects of irritants and corrosives. Who knows this so-called complaint (for which the doctor himself most probably used the expression ‘Oedema’) was due only to some sting or bite caused by some bees, etc., or due to sunburn, etc. and that is why probably he was discharged as cured?
20. Three things thus emerge out as far as Oedema feet of the deceased are concerned. First, the swelling was only ‘off and on’. What was the interval? We do not know. It is thus within the realm of possibility that in this particular case the swelling may have been due to a cause unconnected with any disease. In any case, we have the categorical statement of Dr. Jain that : “A patient may not know from what disease he is suffering when he has Oedema feet off and on”. If that be so, how can it be said that the deceased knew the disease from which he was suffering? Interestingly Dr. Prem Narain, DW 6, does not speak of Oedema feet and even the certificate, Exh. D-14, issued by the Holy Family Hospital does not speak of Oedema feet or any complaint about it. The symptoms given therein are only ‘loss of weight and headache’ which clearly rule out Oedema of feet as a disease or symptom of any disease.
21. I do not think Dr. Jain advances the case of the Life Insurance Corporation in any manner.
22. Then comes Dr. Prem Narain, DW 6. Though he claims that the deceased had been his regular patient for ‘about 5/10 years preceding his death’ in the certificate, Exh. D-20, issued by him he claims to have been ‘first consulted’ only in July, 1973. He has not produced any record to prove even one visit to him by the deceased. His entire statement is based on the certificate, Exh. D-20, which he issued to the defendant Corporation on 23.8.1974, that is, more than four months after the death of the insured and more than one year after his having allegedly examined him. Admittedly, this certificate was prepared without the assistance of any written record and solely on the basis of memory. Can we rely upon such a certificate more so when the doctor claims to be examining flirty to forty patients a day? And this is not all. As I will presently show the information furnished by him through the certificate is contradictory to what Dr. Vijay Kumar Jain has told us. Let me elucidate.
23. In the certificate, Exh. D-20, it is mentioned that the cause of death was cirrhosis of liver and hepatic coma and that this was ‘inferred from symptoms during one year’. The witness explains that by ‘one year’ he means one year from July, 1973. What were those symptoms? Conveniently, he keeps silent about them. But then, how could he know about those symptoms when he had not examined the patient any time before July 1973? Anyhow, if Dr. V.K. Jain is to be believed, the patient had merely complained abdominal pain ‘for the last 10-15 days’ and of distention of abdomen only for the last ‘two days’. If that be so, wherefrom did Dr. Prem Narain get the ‘symptoms’ persisting for about a year? And interestingly, he nowhere speaks of any complaint regarding Oedema feet. And then, how could he diagnose the diseases, when even Dr. V.K. Jain, who according to him was consulted at his instance, also could not diagnose the diseases? What is of equal significance is that as per Dr. V.K. Jain, the deceased was admitted in City Clinic on 16.7.1973 and discharged on 22.7.1973 as ‘Relieved and apparently cured’. If that was the position, on what basis Dr. Prem Narain came to his own conclusions? One thing more. Dr. Prem Narain was not treating the patient till his death. I say so because he lays no such claim. The doctors who last attended on him were from the Holy Family Hospital. There is nothing to show the carrying out of any autopsy or Dr. Prem Narain having gone through any such report. How can then Dr. Prem Narain say that the immediate cause of death was cirrhosis of liver and hepatic coma? Although he says the deceased was suffering from these diseases since June or July, 1972, the certificate, Exh. D-14, issued by Dr. S.K. Talwar of the Holy Family Hospital shows that the deceased had been suffering from the disease since ‘9 months’ before his death which means since July, 1973, that is, much after the revival of the policy and further that loss of weight and headache’ were the only symptoms of the disease. In any case, Dr. Prem Narain himself admits that the deceased Bansal could not have known that he was suffering from the ailments in question. If he himself was not aware, the question of suppressing what he himself did not know does not arise.
24. Let us be clear about one thing and it is that the defendant Corporation is seeking to avoid life insurance policy on the ground of its having been got revived by means of fraudulent misrepresentation as to matters material to the risk. This being the position the insurer who alleges fraud or misrepresentation has to establish its defenses and if that be so, I must say it has failed to discharge the burden. Apple man on Insurance says that:
If the insured has reason to know of a disease he must disclose it, but if he has no suspicion of the existence thereof, he breaches no duty in failing to disclose it (Volume 1, Section 216 at page 216).
25. This is obviously so because there can be no concealment of a fact of which the insured may not be aware. Concealment is thus what is knowingly concealed. Here, no bad faith can be imputed to the deceased as he was never aware of his ailments. In this respect what is observed in Halsbury’s Laws of England, 3rd Edn., Volume 22, page 191, para 36 is pertinent. Here it is:
Statements by a proposer as to his health are asked for and given on the basis of his belief, because the ordinary man cannot be expected to know what is happening to his internal organs or what specific symptoms may indicate.
Surely, want of good faith, in the absence of knowledge, cannot be imputed to the deceased. He is thus not proved to be guilty of a fraudulent suppression of any material circumstance.
26. This, however, is not the end of the matter for issue No. 3 still remains.
27. It was contended by Mr. Khanna appearing for Life Insurance Corporation that the deceased having admittedly left behind number of heirs and the nominee being only one of them (she being his widow) all the legal heirs ought to have joined hands in setting up the claim, and that the suit being by the nominee alone, would not be maintainable.
28. If I understood him correctly, what was canvassed by Mr. Khanna is that a nominee not being a party to the contract cannot sue on the policy but that the right to sue vested in the legal heirs. Though not cited, my feeling is that in making this submission Mr. Khanna had at the back of his mind the observations to that effect made by Lord Esher, M.R., in Cleaver v. Mutual Reserve Fund Life Association (1892) 1 QB 147.
29. The legal scope in regard to nominations and the assignment is the same under the English and Indian law and in this respect one may only draw attention to Preston and Colinvaux (1950 Edn.), the Law of Insurance (Sweet and Maxwell) and the Law of Life Insurance (Butterworth’s 4th Edn.). As far as Indian law is concerned one need not go beyond Section 39 of the Indian Insurance Act and perhaps to its Section 38 as well. In England as in India, in addition to assignments and creation of trusts one finds in the case of insurances on the assureds own life, for the assured to nominate someone. All that Sub-section (6) of Section 39, Insurance Act does is to confer on the nominee the right to receive the insurance money as between such nominee and the Insurance Company. As per the proviso to Section 39, the policy-holder may elect to come either under nomination under Sub-section (6) of Section 39 or under trust under Sub-section (7) of that section. But then, I need not dwell on Sub-section (7) because it is nobody’s case that the present is not a case of nomination simplicitor within the meaning of Sub-section (6) of Section 39.
30. And, what is the effect of such nomination?
Before I venture to answer the question posed above, a word or two more need to be said. It is not a case, and I say so as since it was not even remotely suggested, of the plaintiff being a ‘beneficiary’. Here is a case where the plaintiff has been named as a ‘nominee’ under Section 39 of the Act. What then are her right? The law seems to be clear and it is that a nomination by itself confers no right of the nominee during the life-time of the assured and gives only a bare right to collect that policy money on his death. A nominee is not to be confused with an assignee. While an assignee is not merely entitled to receive but has a right to the policy money itself, a nominee is competent only to receive the money if the assured did not survive maturity of a policy and has no right to the money. As observed by the Supreme Court in Sarbati Devi v. Usha Devi 1984 ACJ 138 (SC):
A mere nomination made under Section 39 of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.
31. Since Sub-section (6) of Section 39 underlines the obligation of the insurer to pay to the nominee and, if the nominee is “the ti and which is authorised to receive the amount”, I see no reason for holding that without impleading the legal heirs, such a hand cannot extend itself to claim the amount ‘payable’.
32. In the plaintiff entitled to interest? This would be the next question for it was vehemently argued by Mr. Khanna with the support of a Division Bench judgment of the Punjab High Court in Lakshmi Insurance Company v. Bibi Padma Wati AIR 1961 Punj. 253, that the claim with regard to interest deserved to be rejected. It is not disputed that there was no agreement between the assured and the Corporation entitling the former to any interest. Even in the notice served upon the Corporation no claim was set up for interest. The plaintiff has not pleaded any market usage making insurer liable to pay interest. But then, during arguments, the plaintiff had claimed interest only during the pendency of the suit till realisation and keeping in view the judgment of the Supreme Court in Life Insurance Corporation of India v. Gangadhar Vishwanath Ranade AIR 1990 SC 185 and the facts and circumstances of the case as they emerge from what has been noticed above, I do feel that plaintiff is entitled to interest @ 15 per cent per annum on the decretal amount from the date of institution of the suit till realisation.
33. One more thing remains. And, it relates to the formulation of the final order. Should I pass a decree for the recovery of the amount due ignoring the legal heirs or should I mould it keeping in mind their interest also? Since on the death of the policy-holder the amount payable under the policy becomes part of his estate and as a nominee cannot be treated as being equivalent to an heir or legatee (though in the present case the plaintiff happens to be not only the nominee but one of the heirs too) I feel the interests of the other legal heirs must be safeguarded. To my mind, the best course under the circumstances would be to direct the plaintiff to furnish a bond/undertaking to the satisfaction of the Registrar of this Court to pay from the decretal amount and interest payable thereon to the legal heirs of the assured in accordance with the law of succession governing them. With this condition I pass a decree for the recovery of Rs. 1,00,000/- with proportionate costs in favor of the plaintiff and against the defendant Corporation. The plaintiff shall also be entitled to interest on the decretal amount @ 15 per cent per annum from the date of institution of the suit till realisation.