Madras High Court

Divisional Manager vs S.Kanagasabapathy on 3 April, 2023

                                                                                S.A.No.584 of 2007

                                  THE HIGH COURT OF JUDICATURE AT MADRAS
                                                DATED: 03.04.2023
                                                       CORAM:
                              THE HONOURABLE MR.JUSTICE V.LAKSHMINARAYANAN

                                              S.A.No.584 of 2007
                                                       and
                                         M.P.Nos.2 of 2007 and 1 of 2008

                     1.Divisional Manager,
                       New India Assurance Co. Ltd.,
                       69-70, Sekkupettai Nadu Street,
                       Kancheepuram.

                     2.Branch Manager,
                       New India Assurance Co. Ltd.,
                       514-515, Gandhi Road,
                       Kancheepuram.                                              ...Appellants

                                                         Vs.

                     1.S.Kanagasabapathy
                     2.V.Andal Ammal                                            ...Respondents


                     Prayer: Second Appeal filed under Section 100 of C.P.C., against the
                     judgment and decree made in A.S.No.6 of 2004 dated 29.04.2005 on the file
                     of the Sub-ordinate Court, Kancheepuram against O.S.No.501 of 2000 dated
                     18.03.2003 on the file of the Principal District Munsif Court,
                     Kancheeepuram.




                     1/13


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                                                                                     S.A.No.584 of 2007




                                           For Appellants      : Mr.M.B.Raghavan
                                           For Respondents     : Mr.R.Mubarak Basha



                                                    JUDGMENT

The parties are referred to as per their rank in the suit. The

defendants are the appellants. The plaintiffs are husband and wife. They

have a child aged about 11 years. The 1 st plaintiff is employed as a

Secretary in Kancheepuram Co-operative Town Bank Limited. The 2nd

plaintiff is a house wife. The plaintiffs approached the Divisional Engineer,

New India Insurance Company Limited, who is the 1st appellant before this

Court for taking a medical claim policy on their behalf.

2.It is their case, they complied with all the requirements of the

defendants and having been satisfied with the same, the policy was issued to

them under the medical claim Insurance scheme for Rs.1,00,000/-. The

period of policy is from 01.03.1999 to 29.02.2000. In and about September,

1999, the 2nd plaintiff developed difficulty in breathing and was suffering

from chest pain. She noticed that it happened when she was carrying on her

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normal activities. Therefore, she consulted a Doctor at the Apollo Hospital,

Chennai, who conducted the master health checkup. In turn, she was

referred to a Cardiothoracic Surgeon one Dr.Sridhar, who examined her and

gave a certificate that she is suffering from congenital heart disease with a

history of dyspnoea. She was admitted for cardiac evaluation and artrial

septal defect operation and she was discharged from Apollo Hospital.

3.According to the 2nd plaintiff, she never suffered any symptoms,

therefore, there is no necessity for her to be aware that she was suffering

from congenital difficulty. The Master Check-up was conducted on

25.10.1999, whereas the policy commenced on 01.03.1999. According to

her, it was not within her knowledge and therefore, she could not be

expected to disclose information to the defendants. For the medical

treatment, surgery and post-care treatment, the entire expenditure was

Rs.1,19,710/-. Invoking the health insurance policy, the plaintiffs lodged a

claim for a sum of Rs.1,00,000/- with the defendants.

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4.The defendants 1 and 2 turned down the request of the plaintiffs

on the ground that the 2nd plaintiff had suppressed the factum of her

condition and secondly, on the ground under Clause 4.3 of the contract of

Insurance. According to the said clause, during the first year of the

Insurance cover, amongst other diseases, congenital internal disease had

been excluded. In other words, the contract of the Insurance was repudiated

on the grounds of suppression and secondly, even if there was no

suppression, on the ground, the ailment is not covered by the policy of

Insurance.

5.The learned Trial Judge framed the following issues:-

“1.Whether the claim of the plaintiffs that he came to know the terms and conditions of Insurance Policy only on 03.08.2000 is true?

2.Whether the plaintiffs concealed the existence of congenital disease at the time of proposal?

3.Whether the plaintiff is entitled for relief of declaration as prayed for?

4.Whether the plaintiff is entitled for mandatory injunction as prayed for?

5.To what relief?”

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6.Before the Trial Court, the plaintiffs examined themselves as

P.W.1 and P.W.2 and marked Exs.A1 to A8. On the side of the defendants,

D.W.1 was examined and Exs.B1 to B6 were marked. The learned Trial

Judge non-suited the plaintiff on both the grounds that there was a

suppression of material facts as well as that the disease is not covered. On

appeal, the learned Sub-ordinate Judge at Kancheepuram allowed the appeal

in A.S.No.6 of 2004 on 29.04.2005, on the ground that the plaintiffs were

not aware of the terms and conditions of the Insurance Policy and the same

cannot be attributed to them.

7.Aggrieved over the reversal finding, the present Second Appeal

has been presented. At the time of the admission, the following substantial

questions of law were framed:-

“1.Whether the respondents are not estopped from pleading that the terms of the Insurance Policy are not known to them or not binding on them, when the Proposal Form has been signed with a declaration that the terms were fully known?

2.Whether the terms of the Policy, especially, Exclusions 4(1) and 4(3) could be avoided by plea of lack of

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knowledge when the Proposal contains declaration that the terms were known to the Proposer and the Policy terms have also been filed by the respondents?

3.In view of the judgment of the Supreme Court in A.I.R.1966 SC 1644 whether the standard terms of the Policy as filed by the respondents themselves can be ignored on the plea that it was known to them?

4.Whether the lower appellate Court has not committed a serious error of law in holding that the claim is payable contrary to the express provisions of the contract as contained in Exclusions 4(1) and 4(3) of the Policy?

5.Whether the duty of disclosure of facts in a proposal for insurance can be avoided by placing a burden upon the Insurer to examine each and every person who seeks insurance?

6.Whether despite the failure to disclose material facts in the proposal, the lower appellate Court could have held that the Policy was valid on the pretext that the appellants should have conducted medical examination?

7.Whether any duty of medical examination can be imposed on an Insurer and person taking the Policy excused despite non-disclosure and suppression, on the ground that the Insurer has failed to conduct medical examination?

8.Whether the relief of declaration and injunction

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without a specific prayer for payment of money is maintainable.

9.Whether the suit has been properly valued without payment of Court Fee on the amount payable under the Policy?”

8.Heard Mr.M.B.Raghavan, learned counsel appearing for the

appellants and Mr.R.Mubarak Basha, learned counsel appearing on behalf

of the respondents.

9.I have to say that I am not in agreement with the view of the

learned first appellate Judge stating that the contract of Insurance and the

policy were not made aware to the plaintiffs. It is the duty of the plaintiffs

to go through the contract. After having been satisfied with the terms there

of, they signed a contract with open eyes. Having signed the contract, the

parties cannot plead that they were not aware of the same.

10.However, in so far as the congenital issue is concerned, I am in

agreement with the learned counsel appearing for the respondents that there

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was no occassion for the plaintiffs to be aware of the condition and there is

no evidence before the Court that the said condition was suppressed from

the defendants at the time of taking the Insurance Policy.

11.Mr.M.B.Raghavan would rely upon the judgment of the

Supreme Court in Reliance Life Insurance Company Limited and

another Vs. Rekhaben Nareshbhai Rathod reported in (2019) 6 SCC 175

wherein, it was held that the contract of Insurance being an accepted

contract, any suppression makes the contract void. A careful reading of

Paragraph 28 would reads as follows:-

“28.Materiality of a fact also depends on the surrounding circumstances and the nature of information sought by the insurer. It covers a failure to disclose vital information which the insurer requires in order to determine firstly, whether or not to assume the risk of insurance, and secondly, if it does accept the risk, upon what terms it should do so. The insurer is better equipped to determine the limits of risk-taking as it deals with the exercise of assessments on a day-to-day basis. In a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not accept the risk is a material fact. If

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the proposer has knowledge of such fact, she or he is obliged to disclose it particularly while answering questions in the proposal form. An inaccurate answer will entitle the insurer to repudiate because there is a presumption that information sought in the proposal form is material for the purpose of entering into a contract of insurance.”

12.As already pointed out, there is no evidence on record to show

that the plaintiffs were aware of the condition and still they did not disclose

the same to the defendants. Following the view of the Supreme Court, I

would hold that as the plaintiff did not have knowledge of said fact and

consequently, she did not disclose the same. Hence, the contract cannot be

treated as void ab initio.

13.On the second point, Mr.M.B.Raghavan would vehemently

contend that under the contract, Clause 4.3 would non-suit the plaintiff. I

have gone through clause 4.3 of the contract, which reads as hereunder:-

“During the first year of the operation of the Insurance cover the expenses on treatment of disease such as eataract benign prostatic, Hypertrophy for menorrhagia or

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Fibromyoma, Hernia, Hydrocele, congenital Internal diseases, Fistula in Anus, piles, sinusitis and related disorders are not payable. If these diseases are pre-existing at the time of the proposal, they will not be covered ever during subsequent period of renewal.”

14.The categoric ailments shown in Clause 4.3 shows, they must

be a congenital internal disease. For Clause 4.3, it matters not whether the

plaintiffs were aware of the disease or not. The exclusion is only for a

period of one year from the date of Insurance. However, in this case, I have

already held that the plaintiffs did not have the knowledge of her medical

condition. Clause 4.3 does not deal with medical conditions but only with

diseases. Therefore, I would hold Clause 4.3 does not apply and the

defendants are liable to pay the plaintiffs a sum of Rs.1,00,000/-.

15.In so far as the plea that the suit for recovery of money alone is

maintainable, here is a case where there is a repudiation of the contract and

therefore, the plaintiffs necessarily had to seek for a declaration that the

contract is valid and binding on them. Since a mere suit for declaration is

not sufficient, a further relief of mandatory injunction has been sought for, I

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would not find fault with the frame of the suit, especially when both the

Courts below have not gone into the same. I do not want to venture into it

for the first time in a second appeal. I do not want to non-suit the plaintiffs

on the ground of frame of the suit. Therefore, the second appeal is

dismissed on the ground, different from one taken by the lower Appellate

Court and the decree of the lower Appellate Court in A.S.No.6 of 2004 in