# Bajaj Allianz Life Insurance Co. Ltd v. Shradha Padmaja Awasthi & Ors

- **Citation:** (2025) 2 ILRA 78
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-02-28
- **Case number:** Matters Under Article 227 No. 7467 of 2021
- **Bench:** Pankaj Bhatia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/bajaj-allianz-life-insurance-co-ltd-v-shradha-padmaja-awasthi-ors-53029
- **Pages:** 13

## Headnote

Civil Law- The Constitution of India,1950Article 227 - Insurance Regulatory and
Development
Authority
(Protection
of
Policyholders Interest) Regulations, 2002Regulations 3 & 4 - The Insurance Act,
1938-Sections-42, 45(3) & (4)---Petition
challenging award to pay compensation along
with interest---The person who solicits and
negotiates a contract of insurance shall be
'deemed for the purpose of the formation of the
contract, to be the agent of the insurer'--- Entire
case of the Insurance Company was based upon
the repudiation of contract of insurance on the
basis of misSt.ment and suppression of material
facts. The said ground is not available to be
pleaded by the petitioner in view of noncompliance of Clause 3 and Clause 4 of the
IRDA Regulations, non-refund of the premium
collected as prescribed under second proviso to
Section 45 (4) and the Insurer not discharging
the burden as prescribed under Section 45(4)
and also not considering the fact that the
Insurer had pleaded that the alleged misSt.ment
or suppression was without any deliberate
intention, even if it is presumed for the sake of
argument that the contract was repudiated on
the ground of fraud as prescribed under Section
45(3) of the Insurance Act.
Petition dismissed. (E-15)

List of Cases cited:

## Text

_Characters 0–39,885 of 43,946. This is a partial read: ask again with offset=39885 for what follows._

78 INDIAN LAW REPORTS ALLAHABAD SERIES
(2025) 2 ILRA 78
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 28.02.2025

BEFORE

THE HON'BLE PANKAJ BHATIA, J.

Matters Under Article 227 No. 7467 of 2021

Bajaj Allianz Life Insurance Co. Ltd.
 ...Petitioner
Versus
Shradha Padmaja Awasthi & Ors.
 ...Respondents

Counsel for the Petitioner:
Prasoon Srivastava

Counsel for the Respondents:
Dhruv Kumar

Civil Law- The Constitution of India,1950Article 227 - Insurance Regulatory and
Development
Authority
(Protection
of
Policyholders Interest) Regulations, 2002Regulations 3 & 4 - The Insurance Act,
1938-Sections-42, 45(3) & (4)---Petition
challenging award to pay compensation along
with interest---The person who solicits and
negotiates a contract of insurance shall be
'deemed for the purpose of the formation of the
contract, to be the agent of the insurer'--- Entire
case of the Insurance Company was based upon
the repudiation of contract of insurance on the
basis of misSt.ment and suppression of material
facts. The said ground is not available to be
pleaded by the petitioner in view of noncompliance of Clause 3 and Clause 4 of the
IRDA Regulations, non-refund of the premium
collected as prescribed under second proviso to
Section 45 (4) and the Insurer not discharging
the burden as prescribed under Section 45(4)
and also not considering the fact that the
Insurer had pleaded that the alleged misSt.ment
or suppression was without any deliberate
intention, even if it is presumed for the sake of
argument that the contract was repudiated on
the ground of fraud as prescribed under Section
45(3) of the Insurance Act.
Petition dismissed. (E-15)

List of Cases cited:

1. Branch Manager, Bajaj Allianz Life Insurance
Comp. Ltd. & ors. Vs Dalbir Kaur: Civil Appeal
No.3397 of 2020 arising out of SLP (C)
No.10652 of 2020, decided on 09.10.2020

2. Reliance Life Insurance Co. Ltd. & anr. Vs
Rakhaben Nareshbhai Rathod: Civil Appeal
No.4261 of 2019 arising out of SLP (C)
No.14312 of 2015, decided on 24.04.2019

3. Satwant Kaur Sandhu Vs New India
Assurance Company Ltd.: 2009 AIR SCW 7213

4. P.C. Chacko & anr. Vs Chairman, Life
Insurance Corporation of India & ors.: Appeal
(Civil) No.5322 of 2007 decided on 20.11.2007

5. M/s Texco Marketing Pvt. Ltd. Vs Tata AIG
General Insurance Company Ltd. & ors.; Civil
Appeal No.8249 of 2022 arising out of SLP
(Civil) No.25457 of 2019, decided on 09.11.2022

6. Saurashtra Chemicals Vs National Insurance
Company Ltd.

(Delivered by Hon'ble Pankaj Bhatia, J.)

1. Heard Sri Prasoon Srivastava,
learned Counsel for the petitioner and Sri
Dhruv Kumar, learned Counsel appearing
on behalf of the respondent no.1. None
appears for opposite party no.2.

2. The present application under
Article 227 of the Constitution of India has
been filed challenging an award dated
21.12.2020 passed by the Permanent Lok
Adalat, Lucknow in Case No.06 of 2017
(Smt. Padmaja Awasthi vs Bajaj Allianz
Life Insurance Company Limited and
another), whereby, the complaint filed by
the respondent no.1 was allowed and the
petitioner
was
directed
to
pay
compensation of Rs.50,00,000/- (Rupees
Fifty Lac Only) along with interest @ 9%
2 All. Bajaj Allianz Life Insurance Co. Ltd. Vs. Shradha Padmaja Awasthi & Ors.
79
from the date of filing of the case
and Rs.5,000/- (Rupees Five Thousand
Only) towards litigation cost.

3.
Challenging
the
award
impugned, the Counsel for the petitioner
argues that the husband of the respondent
no.1 became a member in the Master
Policy issued by the petitioner-Company in
favour of the respondent no.3-Yes Bank for
the period 28.09.2012 up to 27.09.2013.
Under the policy sum assured was Rs.50/-
lac and the premium prescribed was
Rs.16,854/- for a term of one year.
Unfortunately the beneficiary, namely,
Praveen Awasthi died on 26.01.2013 and a
claim was filed. The petitioner-Company
carried out investigation and repudiated the
claim vide letter dated 09.01.2014 on the
ground
that
"medical
consultations/
hospitalization on 23rd December, 2011
and was diagnosed of renal calculi +
abscess-calf muscle with past history of
anticoagulant
medication,
history
of
bleeding, history of blood transfusing and
discharged against medical advice. This
fact was not mentioned in the enrolment
from dated 18.09.2012. These facts known
to deceased life assured were not disclosed
to us, hence the claim is repudiated."

4. In terms of the grievance redressal
prescribed before the Reviewing Committee,
the heirs of the deceased preferred a review,
which too was dismissed on 09.05.2014.
Challenging the said order, the respondent
no.1 approached the Permanent Lok Adalat,
Lucknow who has passed the award
impugned herein.

5. Before the Permanent Lok Adalat,
efforts
for
reconciliation
were
taken,
however, they failed. Thereafter, the issues
were taken up on merit and both the parties
were heard. The Permanent Lok Adalat
framed two issues of determination. First
being "whether the claimant was entitled for
any amount of compensation towards the
insurance claim", and second being "the
relief to which the claimant was entitled".
The Permanent Lok Adalat decided both the
points
of
determination
and
awarded
compensation in favour for claimant.

6. Challenging the said award, the
present application has been filed. It is
pleaded that the deceased was admitted in
Sahara Hospital, Lucknow 23.12.2011 due to
bleeding caused for reaction of 'warfarin
5mg' medicine and was discharged on
27.12.2011 and had also given discharge
certificate to the investigator. The said fact,
according to the petitioner, was not disclosed
in the proposal/ enrolment form, which is the
basis for repudiation of death claim by the
petitioner. The petitioner further places on
record a copy of the medical document dated
23.12.2011 showing that the deceased was
discharged against medical advise by Avadh
Critical/ Coronary Care Unit. Reliance is
placed upon the statement of the brother of
the deceased, which was given at the time of
admission
before
the
Avadh
Critical/
Coronary Care, which is contained in
Annexure-5 of the paper book. It is also
pleaded that the petitioner had provided a
copy of the treatment undergone by the
deceased at S.G.P.G.I., Lucknow and in
terms of the Patient Registration Card, which
was valid from 28.07.2010 to 27.07.2011. In
the light of the aforesaid, it is argued that the
policy was taken by declaring wrong
statements in the declaration form, which
facts have been ignored by the Permanent
Lok Adalat and thus the award is liable to be
set aside.

7. It is further argued by the
Counsel
for
the
petitioner
that
the
respondent no.3-Yes Bank was the 'Master
80 INDIAN LAW REPORTS ALLAHABAD SERIES
Policy Holder' who has issued the policy to
the deceased without ascertaining the
correct facts and without disclosing the
same to the petitioner-Insurance Company
and thus the liability, if any, should be
fastened on Yes Bank and not against the
petitioner. It is further argued that the Yes
Bank is not a corporate agent of the
Company and was simply a Master Policy
Holder. In the present matter, no other
points were argued by the Counsel for the
petitioner. The judgment cited by the
petitioner shall be referred subsequently.

8. The Counsel for the respondent,
strongly, refutes the arguments raised by
the petitioner. He argues that firstly, in the
statement referred to be given by the
brother of the deceased, there is no mention
as to where the said statement was given.
He further argues that the treatment
undergone by the deceased at Sahara
Hospital was duly disclosed and the
discharge summary, which is on record at
page 66 of the paper book, itself
demonstrates that the deceased had taken
'warfarin 5mg' for arm pain. He argues that
the said drugs warfarin was an over the
counter drug, which the deceased had taken
for
arm
pain
and
which
somehow
unfortunately caused coagulopathy, which
was induced by the said medicine warfarin,
for which, the deceased was admitted for a
span of four days. He further argues that
the policy was issued to the deceased by
the respondent no.3-Yes Bank as the
deceased had a Bank Account in the said
Bank. He further argues that all the forms
were filled by the members of the Bank. He
draws my attention to the application made
by the respondent no.1 that the reasons
recorded by the claimant before Review
Committee was never known to the
claimant and had also requested that the
proposal form be specifically provided to
the claimant. It is stated that despite the
said application, the declaration form was
never provided to the respondent no.1. He
further argues that on 28.01.2025 itself a
letter was written by the respondent no.1
that her husband had suffered bleeding on
account of reaction of the medicine
warfarin and was not suffering from any
disease, which is the reason recorded in the
repudiation form. The said letter is on
record at page 89 of the paper book. It is
further argues that all the tests of the
deceased was carried out when he was
admitted at Sahara Hospital. The reports
are on record and were duly given to the
investigator and the said reports which are
on record do not indicate the presence of
any disease on the deceased.

9. It is further argued by the
Counsel for the respondent that the
deceased died on account of cardiac arrest
which cannot be attributed to the reaction
suffered by the deceased on account of the
medicine undertaken for which he was
admitted in the hospital and there is no
corelation in between the cause of death
and the reasons given for rejecting the
claim. He further draws my attention to the
proposal formed as contained at page 40 of
the paper book to suggest that the
declaration of good health was required in
terms of four points. The fourth being
whether the persons sought to be insured
was on medication or under hospital care
for more than 7 days, to which, there is a
tick mark in front of the block "No". He
further argues that for the other columns
the Bank officials had filled "NA" (Not
Applicable)
as
is
evident
from
the
document. He further argues that the
petitioner is wrong in arguing that the
respondent no.3 was not an agent and on
the basis of documents contained on the
website of the petitioner, the respondent
2 All. Bajaj Allianz Life Insurance Co. Ltd. Vs. Shradha Padmaja Awasthi & Ors.
81
no.3, Yes Bank is still shown to be the
Insurance Agent as a corporate agent. He
further draws my attention to the written
statement filed by the Yes Bank before the
Permanent Lok Adalat wherein they
admitted that they were the corporate agent
of the petitioner-Company, which fact
according to him were never disputed by
the petitioner before the Permanent Lok
Adalat or even before this Court. He further
draws my attention to the Regulations
framed by the Insurance Regulatory and
Development Authority (IRDA) in terms of
the power conferred by virtue of Section
114-A of the Insurance Act known as
"Insurance Regulatory and Development
Authority (Protection of Policyholders
Interest) Regulations, 2002 and specifically
places reliance on Regulation 3(4), which
according to him was not contained in the
proposal form. He further places reliance
upon the Regulation 4 (1) and Regulation
4(4) of the said Regulations, 2002, which is
quoted below:

 4. Proposal for insurance (1)
Except in cases of a marine insurance
cover, where current market practices do
not insist on a written proposal form, in all
cases, a proposal for grant of a cover,
either for life business or for general
business, must be evidenced by a written
document. It is the duty of an insurer to
furnish to the insured free of charge, within
30 days of the acceptance of a proposal, a
copy of the proposal form.
 (2) ...
 (3) ...
 (4) Where a proposal form is not
used,
the
insurer
shall
record
the
information obtained orally or in writing,
and confirm it within a period of 15 days
thereof with the proposer and incorporate
the information in its cover note or policy.
The onus of proof shall rest with the
insurer in respect of any information not so
recorded, where the insurer claims that the
proposer
suppressed
any
material
information or provided misleading or false
information on any matter material to the
grant of a cover.

10. The Counsel for the respondent
further places reliance upon the regulations
known as "The Insurance Regulatory and
Development
Authority
(Licensing
of
Corporate
Agents)
Regulations,
2002,
which have been farmed in exercise of
powers under Sections 42, 42-D and 114A
of the Insurance Act, and in particularly,
reliance upon the Code of Conduct as
prescribed under Regulation 9 to suggest
that it is the duty of the corporate agent to
tell the correct and material facts to the
insurer
and
in
view
of
the
said
prescriptions, it has to be presumed that all
the material facts were duly disclosed to the
Insurer.

11. The Counsel for the respondent
lastly argues that no such plea were taken
either in the repudiation order or before
Permanent Lok Adalat and in fact, the
material supplied by the respondent no.1 to
the investigatory of the Bank were
deliberately concealed by the petitionerCompany and were not filed before the
Permanent Lok Adalat. He thus argues that
the application is liable to be dismissed.

12. Before proceeding further with
the submissions of the Counsel for the
parties and the case laws cited, it is
essential to notice the statutory provisions
governing the insurance in India.

13. The Contract of Insurance in
India
governed
by
the
stipulations
contained in the Indian Contract Act and
the Insurance Act. The insurance can be
82 INDIAN LAW REPORTS ALLAHABAD SERIES
done in India only by the company
authorized to carry out the said business in
terms of the license granted to them by
Regulatory Authority constituted under the
Insurance Act.

14. Section 42 of the Insurance Act
prescribes for appointment of Insurance
Agent. For the purpose of the present case,
Section 42(5) is quoted below:

"42.
Appointment
of
insurance agents.-
 (5)
The
insurer
shall
be
responsible for all the acts and omissions
of its agents including violation of code of
conduct specified under clause (h) of subsection (3) and liable to a penalty which
may extend to one crore rupees."

15. Section 45 of the said Insurance
Act makes a restriction to the effect that no
policy of life insurance shall be called in
question after the expiry of three years. The
same can be questioned as having been
obtained by fraud or on misrepresentation
of material facts subject to the restrictions
contained in Section 45(2) and the
restrictions contained in sub-section (3) and
sub-section (4) of Section 45. Section 45 is
quoted below:

 "45. Policy not be called in
question on ground of misstatement after
three years. -(1) No policy of life
insurance shall be called in question on
any ground whatsoever after the expiry of
three years from the date of the policy, i.e.,
from the date of issuance of the policy or
the date of commencement of risk or the
date of revival of the policy or the date of
the rider to the policy, whichever is later.
 (2) A policy of life insurance may
be called in question at any time within
three years from the date of issuance of the
policy or the date of commencement of risk
or the date of revival of the policy or the
date of the rider to the policy, whichever is
later, on the ground of fraud:
 Provided that the insurer shall
have to communicate in writing to the
insured or the legal representatives or
nominees or assignees of the insured the
grounds and materials on which such
decision is based.
 Explanation
I.
-For
the
purposes of this sub-section, the expression
"fraud" means any of the following acts
committed by the insured or by his agent,
with intent to deceive the insurer or to
induce the insurer to issue a life insurance
policy: -
 (a) the suggestion, as a fact of
that which is not true and which the
insured does not believe to be true;
 (b) the active concealment of a
fact by the insured having knowledge or
belief of the fact;
 (c) any other act fitted to deceive;
and
 (d) any such act or omission as
the law specially declares to be fraudulent.
 Explanation II. - Mere silence
as to facts likely to affect the assessment of
the risk by the insurer is not fraud, unless
the circumstances of the case are such that
regard being had to them, it is the duty of
the insured or his agent keeping silence, to
speak, or unless his silence is, in itself,
equivalent to speak.

 (3)
Notwithstanding
anything
contained in sub-section (2), no insurer
shall repudiate a life insurance policy on
the ground of fraud if the insured can prove
that the misstatement of or suppression of a
material fact was true to the best of his
knowledge and belief or that there was no
deliberate intention to suppress the fact or
that such misstatement of or suppression of
2 All. Bajaj Allianz Life Insurance Co. Ltd. Vs. Shradha Padmaja Awasthi & Ors.
83
a material fact are within the knowledge of
the insurer:
 Provided that in case of fraud,
the onus of disproving lies upon the
beneficiaries, in case the policyholder is
not alive.
 Explanation. -A person who
solicits and negotiates a contract of
insurance shall be deemed for the purpose
of the formation of the contract, to be the
agent of the insurer.
 (4) A policy of life insurance may
be called in question at any time within
three years from the date of issuance of the
policy or the date of commencement of risk
or the date of revival of the policy or the
date of the rider to the policy, whichever is
later, on the ground that any statement of
or suppression of a fact material to the
expectancy of the life of the insured was
incorrectly made in the proposal or other
document on the basis of which the policy
was issued or revived or rider issued:
 Provided that the insurer shall
have to communicate in writing to the
insured or the legal representatives or
nominees or assignees of the insured the
grounds and materials on which such
decision to repudiate the policy of life
insurance is based:
 Provided further that in case of
repudiation of the policy on the ground of
misstatement or suppression of a material
fact, and not on the ground of fraud, the
premiums collected on the policy till the
date of repudiation shall be paid to the
insured or the legal representatives or
nominees or assignees of the insured within
a period of ninety days from the date of
such repudiation.
 Explanation. -For the purposes
of this sub-section, the misstatement of or
suppression of fact shall not be considered
material unless it has a direct bearing on
the risk undertaken by the insurer, the onus
is on the insurer to show that had the
insurer been aware of the said fact no life
insurance policy would have been issued to
the insured.

 (5) 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."

16. Section 51 of the Insurance Act
further makes it mandatory to supply the
proposal form etc. Section 51 is quoted
below:

 "51.
Supply
of
copies
of
proposals and medical reports. -Every
insurer shall, on application by a policyholder and on payment of a fee not
exceeding one rupee, supply to the policyholder certified copies of the questions put
to him and his answers thereto contained in
his proposal for insurance and in the
medical report supplied in connection
therewith.

17. As an issue has been raised, as
to whether the respondent no.3 was the
corporate agent of the petitioner or not, it is
essential to notice that agency is prescribed
under Chapter 10 of the Contract Act.
Section 182 of the Contract Act defines the
agent and member and is as under:

 "182."Agent" and "principal"
defined.-An
"agent"
is
a
person
employed to do any act for another, or to
represent another in dealings with third
persons. The person for whom such act is
done, or who is so represented, is called
the "principal".
84 INDIAN LAW REPORTS ALLAHABAD SERIES
18. Section 238 of the Contract Act
also prescribes for the effect on agreement
of misrepresentation of fraud by the agent.
Section 238 is quoted below:

 "238. Effect, on agreement, of
misrepresentation of fraud, by agent.-
Misrepresentation
made,
or
frauds
committed, by agents acting in the course
of their business for their principals, have
the same effect on agreements made by
such agents as if such misrepresentations
or frauds had been made or committed by
the principals; but misrepresentations
made, or frauds committed, by agents, in
matters which do not fall within their
authority, do not affect their principals."

19. In the backdrop of the said
statutory provisions and the facts stated
above, the judgment cited by the various
parties are being referred to.

20. The Counsel for the petitioner
relies upon the judgment of the Hon'ble
Supreme Court in the case of Branch
Manager, Bajaj Allianz Life Insurance
Company Limited and others vs Dalbir
Kaur: Civil Appeal No.3397 of 2020
arising out of SLP (C) No.10652 of 2020,
decided on 09.10.2020 and emphasizes
paragraphs 9 and 10 of the said judgments,
which are quoted below:

 "9. A contract of insurance is one
of utmost good faith. A proposer who seeks
to obtain a policy of life insurance is duty
bound to disclose all material facts bearing
upon the issue as to whether the insurer
would consider it appropriate to assume
the risk which is proposed. It is with this
principle in view that the proposal form
requires a specific disclosure of preexisting ailments, so as to enable the
insurer to arrive at a considered decision
based on the actuarial risk. In the present
case, as we have indicated, the proposer
failed to disclose the vomiting of blood
which had taken place barely a month prior
to the issuance of the policy of insurance
and of the hospitalization which had been
occasioned
as
a
consequence.
The
investigation by the insurer indicated that
the assured was suffering from a preexisting ailment, consequent upon alcohol
abuse and that the facts which were in the
knowledge of the proposer had not been
disclosed. This brings the ground for
repudiation squarely within the principles
which have been formulated by this Court
in the decisions to which a reference has
been made earlier. In Life Insurance
Corporation of India vs Asha Goel, this
Court held:
 "12...The contracts of insurance
including the contract of life assurance are
contracts uberrima fides and every fact of
material (sic material fact) must be
disclosed, otherwise, there is good ground
for rescission of the contract. The duty to
disclose material facts continues right up to
the conclusion of the contract and also
implies any material alteration in the
character of risk which may take place
between the proposal and its acceptance. If
there is any misstatements or suppression
of material facts, the policy can be called
into question. For determination of the
question
whether
there
has
been
suppression of any material facts it may be
necessary to also examine whether the
suppression relates to a fact which is in the
exclusive
knowledge
of
the
person
intending to take the policy and it could not
be ascertained by reasonable enquiry by a
prudent person."
 10. This has been reiterated in
the judgments in P C Chacko vs Chairman,
Life Insurance Corporation of India and
Satwant Kaur Sandhu vs New India
2 All. Bajaj Allianz Life Insurance Co. Ltd. Vs. Shradha Padmaja Awasthi & Ors.
85
Assurance Company Limited. In Satwant
Kaur Sandhu vs New India Assurance
Company Ltd., at the time of obtaining the
Mediclaim policy, the insured suffered from
chronic diabetes and renal failure, but
failed to disclose the details of these
illnesses in the policy proposal form.
Upholding the repudiation of liability by
the insurance company, this Court held:
 "25. The upshot of the entire
discussion is that in a contract of
insurance, any fact which would influence
the mind of a prudent insurer in deciding
whether to accept or not to accept the risk
is a "material fact". If the proposer has
knowledge 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."

21. The Counsel for the petitioner
further places reliance on the judgment of
Hon'ble Supreme Court in the case of
Reliance Life Insurance Co. Ltd. and
another vs Rakhaben Nareshbhai Rathod:
Civil Appeal No.4261 of 2019 arising out
of SLP (C) No.14312 of 2015, decided on
24.04.2019 wherein the provisions of the
Insurance Act and the Regulations framed
thereunder have considered. Emphasis is
supplied in paragraph 26 of the said
judgment, which is quoted below:

 "26. Contracts of insurance are
governed by the principle of utmost good
faith. The duty of mutual fair dealing
requires all parties to a contract to be fair
and open with each other to create and
maintain trust between them. In a contract
of insurance, the insured can be expected
to have information of which she/he has
knowledge. This justifies a duty of good
faith, leading to a positive duty of
disclosure. The duty of disclosure in
insurance contracts was established in a
King's
Bench decision
in Carter
v
Boehm19, where Lord Mansfield held thus:
 Insurance is a contract upon
speculation. The special facts, upon which
the contingent chance is to be computed, lie
most commonly in the knowledge of the
insured only; the under-
 writer
trusts
to
his
representation,
and
proceeds
upon
confidence that he does not keep back any
circumstance in his knowledge, to mislead
the under-writer into a belief that the
circumstance does not exist, and to induce
him to estimate the risque, as if it did not
exist. It is standard practice for the insurer
to set out in the application a series of
specific questions regarding the applicant's
health history and other matters relevant to
insurability. The object of the proposal
form is to gather information about a
potential client, allowing the insurer to get
all information which is material to the
insurer to know in order to assess the risk
and fix the premium for each potential
client. Proposal forms are a significant
part of the disclosure procedure and
warrant accuracy of statements. Utmost
care must be exercised in filling the
proposal form. In a proposal form the
applicant declares that she/he warrants
truth. The contractual duty so imposed is
such that any suppression, untruth or
inaccuracy in the statement in the proposal
form will be considered as a breach of the
duty of good faith and will render the
policy voidable by the insurer. The system
of adequate disclosure helps buyers and
sellers of insurance policies to meet at a
common point and narrow down the gap of
information asymmetries. This allows the
86 INDIAN LAW REPORTS ALLAHABAD SERIES
parties to serve their interests better and
understand
the
true
extent
of
the
contractual agreement. The finding of a
material misrepresentation or concealment
in insurance has a significant effect upon
both the insured and the insurer in the
event of a dispute. The fact it would
influence the decision of a prudent insurer
in deciding as to whether or not to accept a
risk is a material fact. As this Court held in
Satwant Kaur (supra) (1766) 3 Burr 1905
there is a clear presumption that any
information sought for in the proposal form
is material for the purpose of entering into
a
contract
of
insurance.
Each
representation
or
statement
may
be
material to the risk. The insurance
company
may
still
offer
insurance
protection on altered terms."

22. The next reliance on the judgment
of Hon'ble Supreme Court in the case of
Satwant Kaur Sandhu vs New India
Assurance Company Ltd.: 2009 AIR
SCW 7213 has been placed. Para 12 of the
said judgment is quoted below:

"12. There is no dispute that
Section 45 of the Insurance Act, 1938 (for
short "the Act"), which places restrictions
on the right of the insurer to call in
question a life insurance policy on the
ground of misstatement after a particular
period, has no application on facts at hand,
inasmuch as the said provision applies only
in a case of life insurance policy. The
present case relates to a mediclaim policy,
which is entirely different from a life
insurance policy. A mediclaim policy is a
non-life insurance policy meant to assure
the policy holder in respect of certain
expenses pertaining to injury, accidents or
hospitalizations.
Nonetheless,
it
is
a
contract of insurance falling in the
category of contract uberrimae fidei,
meaning a contract of utmost good faith on
the part of the assured. Thus, it needs little
emphasis that when an information on a
specific aspect is asked for in the proposal
form, an assured is under a solemn
obligation to make a true and full
disclosure of the information on the subject
which is within his knowledge. It is not for
the proposer to determine whether the
information sought for is material for the
purpose of the policy or not. Of course,
obligation to disclose extends only to facts
which are known to the applicant and not
to what he ought to have known. The
obligation to disclose necessarily depends
upon the knowledge one possesses. His
opinion of the materiality of that knowledge
is of no moment. (See: Joel Vs. Law Union
& Crown Ins. Co.1)"

23. The next judgment relied upon
by the Counsel for the petitioner in the case
of P.C. Chacko and another vs Chairman,
Life Insurance Corporation of India and
others: Appeal (Civil) No.5322 of 2007
decided
on
20.11.2007,
wherein
the
Hon'ble
Supreme
Court
notices
the
observations made by the Madras High
Court with the following effect:

 "17. It is no doubt true that there
exists
a
distinction
between
a
representation and a warranty. A Division
Bench of the Madras High Court in S.P.
Maheshwari (supra) upon taking into
consideration the history of insurance laws
in United States of America, in England
and in India stated :-
 (10) One great principle of
insurance law is that a contract of
insurance is based upon utmost good faith
Uberrima
fides;
in
fact
it
is
the
fundamental basis upon which all contracts
of insurance are made. In this respect there
is no difference between one contract of
2 All. Bajaj Allianz Life Insurance Co. Ltd. Vs. Shradha Padmaja Awasthi & Ors.
87
insurance and another. Whether it be life
or fire or marine the understanding is that
the contract is uberrima fides 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 an illustration of
the application of the principle than a
distinction in principle. From the very fact
that the contract involves a risk and that it
purports to shift the risk from one party to
the other, each one is required to be
absolutely innocent of every circumstance
which goes to influence the judgment of the
other while entering into the transaction."

24. The last judgment relied upon
by the Counsel for the petitioner is in the
case of M/s Texco Marketing Pvt. Ltd. Vs
Tata AIG General Insurance Company
Ltd. And others; Civil Appeal No.8249 of
2022 arising out of SLP (Civil) No.25457
of 2019, decided on 09.11.2022 with
emphasis of paragraph 15, which is as
under:

"15. An act of good faith on the
part of the insurer starts from the time of its
intention to execute the contract. A
disclosure should be a norm and what
constitutes a material fact requires a
liberal interpretation. It is only when an
insurer is not intending to act on an
exclusion clause, the aforesaid principles
may not require a strict compliance. The
three elements which we have discussed
are interconnected and overlapping. It is
the foremost duty of the insurer to give
effect to a due disclosure and notice in its
true letter and spirit. When an exclusion
clause is introduced making the contract
unenforceable on the date on which it is
executed, much to the knowledge of the
insurer, non-disclosure and a failure to
furnish a copy of the said contract by
following the procedure required by
statute, would make the said clause
redundant and non-existent."

25. The Counsel for the respondent
no.1 places reliance on a Division Bench
judgment of this Court in the case of
Saurashtra
Chemicals
vs
National
Insurance Company Ltd., wherein this
Court had taken a view that the Insurance
Company cannot plead more than the
ground on which the insurance has been
repudiated.

26. The last judgment in the case of
Texco Marketing Pvt. Ltd. (supra) has
been relied upon by the Counsel for the
respondent no.1 also. Relevant paras 21
and 42 reads as under:

"21. On a discussion of the
aforesaid principle, we would conclude
that there is an onerous responsibility on
the part of the insurer while dealing with
an exclusion clause. We may only add that
the insurer is statutorily mandated as per
Clause 3(ii) of the Insurance Regulatory
and Development Authority (Protection of
Policy Holder's Interests, Regulation 2002)
Act dated 16.10.2002 (hereinafter referred
to as IRDA Regulation, 2002) to the effect
that the insurer and his agent are duty
bound to provide all material information
in respect of a policy to the insured to
enable him to decide on the best cover that
would be in his interest. Further, subclause (iv) of Clause 3 mandates that if
proposal form is not filled by the insured, a
certificate has to be incorporated at the end
of the said form that all the contents of the
form and documents have been fully
explained to the insured and made him to
understand. Similarly, Clause 4 enjoins a
duty upon the insurer to furnish a copy of
88 INDIAN LAW REPORTS ALLAHABAD SERIES
the proposal form within thirty days of the
acceptance, free of charge. Any noncompliance, obviously would lead to the
irresistible conclusion that the offending
clause, be it an exclusion clause, cannot be
pressed into service by the insurer against
the insured as he may not be in knowhow of
the same.
 42. Before we part with this case,
we would like to extend a word of caution
to all the insurance companies on the
mandatory compliance of Clause (3) and
(4) of the IRDA Regulation, 2002. Any noncompliance on the part of the insurance
companies would take away their right to
plead repudiation of contract by placing
reliance upon any of the terms and
conditions included thereunder."

27. In the present case, the claim
made by the family of the deceased were
repudiated at the first instance through the
communication dated 09.01.2014 for the
following reasons:

 "Medical
consultations/
hospitalization on 23rd December, 2011
and was diagnosed of renal calculi +
abscess-calf muscle with past history of
anticoagulant
medication,
history
of
bleeding, history of blood transfusing and
discharged against medical advice. This
fact was not mentioned in the enrolment
from dated 18.09.2012.
 These facts known to deceased
life assured were not disclosed to us, hence
the claim is repudiated."

28.
The
Review
Committee
dismissed the review for the following
reasons:

 "It may be brought to your notice
that the company had covered the risk for
the above mentioned policies solely on the
basis of facts as mentioned in the proposal
form. However on receiving the claim
intimation
and
perusal
of
various
documents and medical reports submitted
by you along with your claim, it appears
that
the
deceased
life
assured
was
consultation/ treatment during 23/12/2011
for renal calculi with abscess calf muscle
with
past
history
of
anticoagulant
medication, history of bleeding, history of
blood transfusion. These facts were known
to the life assured prior to making the
proposal for insurance and the same was
deliberately concealed during the proposal
of insurance. Had these facts made known
to us we would not have accepted the
proposal and issued the above said policy.
 Hence
the
Claim
Review
Committee has came to a conclusion that
the earlier decision of the company as
communicated to you of repudiation of
your claim for Death Benefit stands
confirmed for non-disclosure of material
facts known to Life Assured and was
deliberately and willfully concealed in the
proposal for insurance."

29. Thus the claim was repudiated
for misstatement or suppression of material
facts in exercise of powers under Section
45(4) of the Insurance Act.

30. In both two orders referred
above, there were grounds that the
petitioner while filling the proposal form
has suppressed the material facts with
regard to his admission at Sahara Hospital
for caugulopathy, which was a material
suppression. There was no allegation of
fraud being played by the insured or by the
agent, thus, the power to repudiate is
subject to the prescriptions contained in
Section 45(4) of the Insurance Act. Clearly
there is no compliance of the second
proviso to Section 45(4) as the premium
2 All. Bajaj Allianz Life Insurance Co. Ltd. Vs. Shradha Padmaja Awasthi & Ors.
89
amount collected in the policy was never
refunded to the deceased. In the said two
orders, the requirement of the explanation
to Section 45(4) is also missing, wherein,
an onus is cast upon the Insurer to co-relate
the risk undertaken by the Insurer with the
suppression of facts as essentially the cause
of death of the deceased was cardiac arrest
and
the
co-relation
in
between
the
suppression
fact
with
regard
to
coagulopathy with the cause of death is
apparently missing in the said two orders.
The cause of death is apparently missing in
the said two orders.

31. With regard to the fact whether
the Yes Bank which had issued the policy
as being a Master Policy Holder would be
considered as an agent or the petitioner
company, it is essential to notice the
explanation to Section 45(3) of the
Insurance Act which explains that the
person who solicits and negotiates a
contract of insurance shall be 'deemed for
the purpose of the formation of the
contract, to be the agent of the insurer'.

32. In view thereof, the contention
of the Counsel for the petitioner that the
Yes Bank is not an agent and is simply a
Master Policy Holder, merits rejection. As
the policy was solicited by the Yes Bank
and the contract of insurance was also
negotiated by the Yes Bank as is evident
from the stand taken by the Yes Bank at
Permanent Lok Adalat and not denied by
the petitioner company in any pleadings
before the Permanent Lok Adalat or before
this Court. It also appears from the record
that despite the beneficiary of the policy
requesting for providing the proposal form,
the same was not provided and in view of
the observations made by the Hon'ble
Supreme court in para 42 of the judgment
in the case of M/s Texco Marketing Pvt.
Limited (Supra), the right of the Insurance
Company to plead repudiation is taken
away as held in para 42 of the precedent
cited. The Hon'ble Supreme Court in the
case of M/s Texco Marketing Pvt. Limited
(Supra) had the occasion to consider the
nature of the contract of and insurance as
well as the judgment cited by respective
parties before me and concluded in paras
21 and 42 as extracted above.

33. The entire case of the Insurance
Company was based upon the repudiation
of contract of insurance on the basis of
misstatement and suppression of material
facts.