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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> National Consumer Disputes Redressal Commission Effect of mis-representation on contract is same as that of non-disclosure; it affords ground for avoiding contract to aggrieved party MANU/CF/0511/2016 - (20 Oct 2016) </td> </tr> <tr> <td align="left" valign="top">Branch Manager, LIC of India v. Jyothi Sudhir</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">In facts of present case, Husband of complainant obtained an insurance policy namely Money Plus Plan from Petitioner corporation, insuring his life to extent of Rs. 4 lacs. In the proposal form submitted by him, the assured was required to answer certain questions with respect to the state of his health. Assured took a specific stand in proposal form submitted by him that he had not consulted any medical practitioner requiring treatment for more than a week and he was not suffering from Diabetes, High BP or any other disease.

A perusal of discharge summary issued by Yenepoya Hospital, would show that, assured was admitted in aforesaid hospital on 13th July, 2007 and his ailment was diagnosed as Hypertension, Diabetes Mellitus and Vertebrobasilar Insufficiency. Discharge summary further shows that, he had been suffering from Diabetes Mellitus for the last ten years and was taking treatment for the said ailment. It also shows that he had Hypertension for the last three years. It is thus evident that the assured made a false statement in the proposal form with respect to the state of his health. He concealed the fact that he had been suffering from Hypertension and Diabetes for years before the proposal form was submitted.

In P.J. Chacko vs. Chairman, L.I.C. of India, AIR 2008 SC 425, Supreme Court observed that if a person makes a wrong statement, with knowledge of consequence therefrom, he would ordinarily be estopped from pleading that even if such a fact had been disclosed, it would not have made any material change. It was further observed that the proposer must show that his intention was bona fide and a proposal can be repudiated if a fraudulent act is discovered. It was also observed that in such a case, it was not necessary for the insurer to establish that, suppression was fraudulently made by the policy holder or that he must have been aware at the time of making the statement that the same was false or that the fact was suppressed which was material to disclose. Effect of mis-representation on contract is precisely same as that of non-disclosure; it affords aggrieved party a ground for avoiding a contract.

Though term "material fact" has not been defined in Insurance Act, it is understood to mean any fact which would influence judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be "material". False or inaccurate statement by assured was on a material aspect which influenced decision of insurer on whether to accept proposal or not. Consequently, while dismissing complaint, it was held that, insurer was justified in repudiating claim on account of false statement made by the assured in the proposal form.</td> </tr> <tr> <td align="left" valign="top" >Relevant : P.J. Chacko vs. Chairman, L.I.C. of India, AIR 2008 SC 425</td> </tr> <tr> <td align="left" valign="top" >Tags : Contract, False Statement, Repudiation</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>