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TMI Blog2019 (4) TMI 2048X X X X Extracts X X X X X X X X Extracts X X X X ..... In Satwant Kaur Sandhu v New India Assurance Co. Ltd [ 2009 (7) TMI 1375 - SUPREME COURT ] , a two-judge Bench of this Court held that under a contract of insurance, the insured is under a solemn obligation to make a true and full disclosure of information asked for in the proposal form - It was further held there is a clear presumption that any information sought in the proposal form is a material fact . The burden cannot be cast upon the insurer to follow up on an inadequate disclosure by conducting a line of enquiry with the previous insurer in regard to the nature of the claims, if any, that were made under the earlier insurance policy. On the contrary, it was the plain duty of the respondent while making the proposal to make a clear and specific disclosure. The insurance policy with New India Assurance Company Limited was for the period from 15 November 2004 to 14 November 2005. The excavator remained uninsured from 15 November 2005 until 10 October 2006. The case of the respondent was that during that period, it was under repair. This fact, together with the receipt of the earlier insurance claim, was material to the decision of the insurer on whether to accept the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was repudiated on the ground that all material facts which were required to be disclosed through the proposal form to enable the insurer to assess the risk profile had not been disclosed. More specifically, it was stated that under paragraph 25(g) of the printed proposal form, the details of claims lodged during the preceding three years were required to be disclosed but were not furnished and, in consequence, the insurer was deprived of the opportunity to assess the risk profile of the vehicle at the time of accepting the proposal for insurance. This led to the institution of a complaint before the SCDRC. 6 The claim was allowed by the SCDRC in the amount of ₹ 23.84 lakhs, together with interest. The SCDRC accepted the contention of the insured that the Administrative Officer who had prepared the pre-insurance report had been fully satisfied about the previous insurance cover and claim and with reference to paragraph 25(g) of the proposal form, the insurance policy with New India Assurance Company Limited had been enclosed . 7 In appeal, the NCDRC held that since the previous insurance policy was annexed to the proposal, the appellant could have known of the claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms: [Subject to certain qualifications considered below], the assured must disclose to the insurer all facts material to an insurer s appraisal of the risk which are known or deemed to be known by the assured but neither known or deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms Elaborating on the principle, in Life Insurance Corporation of India v Smt. G M Channabasamma (1991) 1 SCC 357 , this Court has held: 7...It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding whether the proposal should be accepted or not. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted In LIC of India v Asha Goel (2001) 2 SCC 160 , a two-judge Bench of this Court held thus: 12 The cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance. Information regarding insurance claims lodged by the respondent for his excavator in the preceding three years was a material fact. The burden of establishing that the insured made a false representation and suppressed material facts lies on the insurer. The insurer has placed on the record the best possible evidence in support of the plea that there was a misrepresentation and a suppression of material facts. The mere disclosure of a previous insurance policy did not discharge the obligation which was cast on the respondent, as the proposer, to make a full, true and complete disclosure of the claims which were lodged under the previous policy in the preceding three years. The proposal form contained a specific question regarding claims lodged in the preceding three years. The respondent was under a bounden duty to di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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