# Smt. Parul Agarwal v. L.I.C. of India, Sonakpur, Moradabad & Ors

- **Citation:** (2023) 8 ILRA 422
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-04-03
- **Case number:** Writ C No. 3149 of 2016
- **Bench:** Kshitij Shailendra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/smt-parul-agarwal-v-l-i-c-of-india-sonakpur-moradabad-ors-50663
- **Pages:** 11

## Headnote

Sri Manish Goyal, Sri P. Mishra, Sri Udai
Shanker Mishra

Held:
Repudiation of life insurance claim by L.I.C. on
ground of non - disclosure of previous policy
upheld - Disclosure regarding earlier policy no.
224492798 was deliberately omitted in one
proposal form and inaccurately denied in
another by mentioning "कोई नह ीं" - Insurance
contract is based on utmost good faith - Insured
is duty - bound to disclose all material facts
within his knowledge - Insurance company
rightly repudiated claim as per law and
guidelines - Judgment in Manmohan Nanda Vs
United India Assurance Co. (2022) 4 SCC 582
not applicable in absence of factual foundation
that agent failed in duty - Mere payment of
premium does not create estoppel against
Corporation where material concealment is
proved - Court drew adverse inference under
Section 114(g) Evidence Act and applied
principle of estoppel under Section 115.
8 All. Smt. Parul Agarwal Vs. L.I.C. of India, Sonakpur, Moradabad & Ors.
423
Writ petition dismissed.

Case Law Discussed:

## Text

422 INDIAN LAW REPORTS ALLAHABAD SERIES
and Revisional Authority has power to
reexamine the issue but contrary in present
case, Deputy Director of Consolidation has
not exercised that power.

34. In view of discussion and findings
on above referred issues, I am of the
considered opinion that all the Authorities
under the Consolidation Act have erred and
miserably failed to return a finding whether
mandatory procedure for recording revenue
entries under 'the Manual' was followed
and have also erred in returning a finding
about adverse possession only on the basis
of revenue entries which only indicates the
possession of the respondents for less than
12 years as well as that PA-10 was not
prepared in terms of the procedure
prescribed under 'the Manual' and further
erred in placing reliance on the evidence of
mukhtar-khas who was not competent to
give evidence in regard to facts which were
in exclusive knowledge of the original
respondent qua to adverse possession.
Lastly, the Authorities have also failed to
give finding that possession of respondent
was nec vi, nec clam, nec precario.

35. The respondents have failed to
point out above referred factors from the
record of the case or from the impugned
orders. Therefore, all three Authorities have
committed grave error of facts as well as of
law. Impugned orders, therefore, are illegal
and liable to be set aside. All the issues are
answered accordingly.

36. Accordingly, all impugned orders
referred above are set aside and the writ
petition is allowed, with no order as to
costs.

37. Legal consequences thereof, shall
follow.

38. By this judgment, this Court has
decided a writ after forty years.
----------
(2023) 8 ILRA 422
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 03.04.2023

BEFORE

THE HON'BLE KSHITIJ SHAILENDRA, J.

Writ C No. 3149 of 2016

Smt. Parul Agarwal ...Petitioner
Versus
L.I.C. of India, Sonakpur, Moradabad &
Ors. ...Respondents

Counsel for the Petitioner:
Sri Neeraj Tripathi, Sri Abhinav Ojha, Sri
Ashutosh Srivastava, Sri Rajendra Pratap
Singh, Sri Rakesh Chandra Pathak, Ms.
Ritwika Tripathi

Counsel for the Respondents:
Sri Manish Goyal, Sri P. Mishra, Sri Udai
Shanker Mishra

Held:
Repudiation of life insurance claim by L.I.C. on
ground of non - disclosure of previous policy
upheld - Disclosure regarding earlier policy no.
224492798 was deliberately omitted in one
proposal form and inaccurately denied in
another by mentioning "कोई नह ीं" - Insurance
contract is based on utmost good faith - Insured
is duty - bound to disclose all material facts
within his knowledge - Insurance company
rightly repudiated claim as per law and
guidelines - Judgment in Manmohan Nanda Vs
United India Assurance Co. (2022) 4 SCC 582
not applicable in absence of factual foundation
that agent failed in duty - Mere payment of
premium does not create estoppel against
Corporation where material concealment is
proved - Court drew adverse inference under
Section 114(g) Evidence Act and applied
principle of estoppel under Section 115.
8 All. Smt. Parul Agarwal Vs. L.I.C. of India, Sonakpur, Moradabad & Ors.
423
Writ petition dismissed.

Case Law Discussed:

1. Manmohan Nanda Vs United India Assurance
Co. Ltd. (2022) 4 SCC 582

2. Satwant Kaur Sandhu Vs New India
Assurance Co. Ltd. (2009) 8 SCC 316

3. United India Insurance Co. Ltd. Vs M.K.J.
Corp. (1996) 6 SCC 428

4. Modern Insulators Ltd. Vs Oriental Insurance
Co. Ltd. (2002) 2 SCC 734

5. Carter Vs Boehm (1766) 3 Burr 1905

Statutes and Provisions Referred:

1. Section 106, 114(g), 115 - Indian Evidence
Act, 1872

2. Section 37 - Indian Contract Act, 1872

3. IRDA (Protection of Policyholders' Interests)
Regulations, 2002

(Delivered by Hon'ble Kshitij Shailendra, J.)

1. Heard Shri Rajendra Pratap Singh,
learned counsel for the petitioner and Shri
Udai Shankar Mishra, learned counsel for
the respondent-Life Insurance Corporation.

2. The instant writ petition has been
filed by one Smt. Parul Agarwal, wife of
late
Vishal Agarwal
challenging
the
impugned order dated 10.09.2015 (annexed
as ''Annexure No.6' to the writ petition)
whereby
the
Insurance
Ombudsman,
(Western U.P. and Uttarakhand), has
dismissed the complaint filed by the
petitioner against rejection of her claim by
the Senior Divisional Managar of the Life
Insurance Corporation (hereinafter referred
to as ''the Corporation') concerning the
insurance
policy
Nos.256487214
and
256487400 vide order dated 14.03.2014
which has also been challenged. Futher
prayer is to issue a direction to the
respondent no.1 to pay to the petitioner the
amount
payable
under
policy
Nos.256487214 and 256487400.

Facts of the Case

3. The facts culled out from the
pleadings contained in the writ petition are
that Vishal Agarwal, i.e. husband of the
petitioner, was holder of three insurance
policies
bearing
nos.224492798,
256487214 and 256487400 issued by the
Corporation and he died on 11.11.2013,
whereafter, the petitioner, as his widow,
preferred a claim against the aforesaid three
policies. It is pleaded that the claim of the
petitoner
in
respect
of
policy
Nos.256487214
and
256487400
was
rejected by the Corporation vide impugned
order dated 14.03.2014 on the ground that
the husband of the petitioner did not
disclose the previous policy No.224492798
in the proposal form. After rejection of her
claim
concerning
the
aforesaid
two
insurance policies, the petitioner filed a
review
application
before
the
Zonal
Manager of the respondent-Corporation
and, thereafter, filed an application before
the
respondent
no.4
i.e
Insurance
Ombudsman on 01.11.2014, however, the
application/complaint of the petitioner was
rejected by the impunged order dated
10.09.2015.

4. The writ petition is founded on the
premise that the impugned order dated
14.03.2014 was passed with a predetermined mind and smells of deep-rooted
prejudice against the petitioner; that the
Corporation,
accepting
the
personal
statement of the deceased to be correct,
issued the policies without any protest and
that there is nothing on record from which
424 INDIAN LAW REPORTS ALLAHABAD SERIES
it can be inferred that the insured ever
made
any
concealment
or
misrepresentation
at
the
time
of
commencement of insurance policy and,
therefore, the impunged orders of
 the Corporation as well as the Insurance
Ombudsman are unsustainable.

5.

A
counter
affidavit
dated
18.04.2016 has been filed on behalf of the
Insurance Company stating that claim
under
policy
nos.256487214
and
256487400 was repudiated on account of
non-disclosure
of
previous
policy
No.224492798. It is further pleaded in the
counter affidavit that as the Corporation
works on the basis of utmost good faith by
relying on the statement of insured in the
proposal form, repudiation of claim was
done as per rules on account of nondisclosure of previous policy in the
proposal form.

6. The petitioner has filed rejoinder
affidavit reiterating her stand taken in the
writ petition.

7. A Supplementary affidavit dated
17.04.2022 has also been filed by the
petitioner substantially relying upon the
judgement of the Apex Court in Civil
Appeal No.8386 of 2015 (Manmohan
Nanda v. United India Assurance Co. Ltd.
& Anr.) reported in (2022) 4 SCC 582 and
referring to the provisions of the Insurance
Regulatory and Development Authority
(Protection of Policyholders' Interests)
Regulations-2002
(in
short
''the
Regulations-2002'), it has been pleaded that
the proposal form was rightly filled up by
the insured with full satisfaction of the
respondent-Corporation.

8. As against the supplementary
affidavit, supplementary counter affidavit
has been filed on behalf of the Corporation
taking the same stand as was taken in the
main counter affidavit. Another rejoinder
affidavit has been filed by the petitioner
reiterating the ratio of Supreme Court in the
case of Manmohan Nanda (Supra).

9. Perusal of order sheet indicates that
this Court, on 16.11.2022, passed the
following order:-

"Supplementary counter affidavit
and rejoinder affidavit filed today are taken
on record.

Sri U.S. Mishra, learned counsel
appearing
for
the
Life
Insurance
Corporation states that original insurance
application form duly filled in and signed
by the petitioner is required to be examined
along with original insurance policy cover
for deciding this case.

Accordingly, he is granted two
weeks' time to produce the original
insurance application form and insurance
policy cover.

List this matter again on 7th
December, 2022 amongst top 10 cases. "

10. Pursuant to the aforesaid order,
original file concerning the claim of the
petitioner was produced on 14.03.2023,
during the course of arguments, by Shri
Udai Shankar Mishra, learned counsel for
the respondent-Corporation which was
retained on record for the purposes of
pronouncing the final judgement which was
reserved on the said date.

11. I have heard the learned counsel
for the parties and perused the record on
the file as well as original record produced
by Shri Mishra.

Contention of Petitioner
8 All. Smt. Parul Agarwal Vs. L.I.C. of India, Sonakpur, Moradabad & Ors.
425

12. The contention of learned counsel
for the petitioner is to the effect that while
claim concerning one policy was allowed
by the Corporation, rejecction of claim in
respect
of
two
policies
bearing
nos.256487214 and 256487400 was wholly
unsustainable and the impugned order
dated 14.03.2014 has been passed taking a
wrong and unsustainable ground. He
further
contends
that
no
fraud/misrepresentation/concealment
was
made by the insured and, moreover, the
proposal form is filled up by the agents of
the insurance company themselves and, in
case, there was something left blank in
''Column No.9', the petitioner cannot be
non-suited on such ground, rather, the same
would be attributable to the insurance
company whose agent had filled up the
form and left something blank. It has
further been argued that as per the decision
of the Hon'ble Apex Court in the case of
Manmohan Nanda (Supra), it was the duty
of the agent of the Corporation to make
specific queries from the insured while
filling up the form and, if no such query
was made and something was left blank in
the form, whatever omission took place
while filling up the proposal form, the same
would
not
constitute
a
ground
for
repudiation of claim of the petitioner.

13. Learned counsel for the petitioner
has placed strong reliace upon paragraph
Nos.34, 35, 36, 40 and 55 of the aforesaid
judgement
that
are
reproduced
hereinbelow:-

"34. Under the provisions of
Insurance Regulatory and Development
Authority (Protection of Policyholders'
Interests)
Regulations,
2002
the
explanation
to
Section
2(d)
defining
"proposal form" throws light on what is the
meaning and content of "material." For an
easy reference the definition of "proposal
form" along with the explanation under the
aforesaid Regulations has been extracted
as under:

"2.
Definitions.:-In
these
regulations, unless the context otherwise
requires:

(d) "Proposal Form" means a
form to be filled in by the proposer for
insurance, for furnishing all material
information required by the insurer in
respect of a risk, in order to enable the
insurer to decide whether to accept or
decline, to undertake the risk, and in the
event of acceptance of the risk, to
determine the rates, terms and conditions
of a cover to be granted.

Explanation:- "Material" for the
purpose of these Regulations shall mean
and include all important, essential and
relevant information in the context of
underwriting the risk to be covered by the
insurer."

Thus, the Regulation also defines
the word "material" to mean and include
all "important", "essential" and "relevant"
information in the context of guiding the
insurer in deciding whether to undertake
the risk or not.

35. Just as the insured has a duty
to disclose all material facts, the insurer
must also inform the insured about the
terms and conditions of the policy that is
going to be issued to him and must strictly
conform to the statements in the proposal
form or prospectus, or those made through
his agents. Thus, the principle of utmost
good faith imposes meaningful reciprocal
duties owed by the insured to the insurer
and vice versa. This inherent duty of
disclosure was a common law duty of good
faith originally founded in equity but has
later been statutorily recognised as noted
above. It is also open to the parties
426 INDIAN LAW REPORTS ALLAHABAD SERIES
entering into a contract to extend the duty
or restrict it by the terms of the contract.

36. The duty of the insured to
observe utmost good faith is enforced by
requiring him to respond to a proposal
form which is so framed to seek all relevant
information to be incorporated in the
policy and to make it the basis of a
contract. The contractual duty so imposed
is that any suppression or falsity in the
statements in the proposal form would
result in a breach of duty of good faith and
would render the policy voidable and
consequently repudiate it at the instance of
the insurer.

40. If a fact, although material, is
one which the proposer did not and could
not in the particular circumstances have
been expected to know, or if its materiality
would not have been apparent to a
reasonable man, his failure to disclose it is
not a breach of his duty.

55. On a consideration of the
aforesaid
judgments,
the
following
principles would emerge:

55.1.
There
is
a
duty
or
obligation of disclosure by the insured
regarding any material fact at the time of
making the proposal. What constitutes a
material fact would depend upon the nature
of the insurance policy to be taken, the risk
to be covered, as well as the queries that
are raised in the proposal form.

55.2 What may be a material fact
in a case would also depend upon the
health and medical condition of the
proposer.

55. 3. If specific queries are made
in a proposal form then it is expected that
specific answers are given by the insured
who is bound by the duty to disclose all
material facts.

55.4. If any query or column in a
proposal form is left blank then the
Insurance Company must ask the insured to
fill it up. If in spite of any column being left
blank, the Insurance Company accepts the
premium and issues a policy, it cannot at a
later stage, when a claim is made under the
policy, say that there was a suppression or
non-disclosure of a material fact, and seek
to repudiate the claim.

55.5 The Insurance Company has
the right to seek details regarding medical
condition, if any, of the proposer by getting
the proposer examined by one of its
empanelled
doctors.
If,
on
the
consideration of the medical report, the
Insurance Company is satisfied about the
medical condition of the proposer and that
there is no risk of pre-existing illness, and
on such satisfaction it has issued the policy,
it cannot thereafter, contend that there was
a possible pre-existing illness or sickness
which has led to the claim being made by
the insured and for that reason repudiate
the claim.

55.6 The insurer must be able to
assess the likely risks that may arise from the
status of health and existing disease, if any,
disclosed by the insured in the proposal form
before issuing the insurance policy. Once the
policy has been issued after assessing the
medical condition of the insured, the insurer
cannot repudiate the claim by citing an
existing
medical
condition which
was
disclosed by the insured in the proposal form,
which condition has led to a particular risk in
respect of which the claim has been made by
the insured.

55.7. In other words, a prudent
insurer has to gauge the possible risk that the
policy would have to cover and accordingly
decide to either accept the proposal form and
issue a policy or decline to do so. Such an
exercise is dependant on the queries made in
the proposal form and the answer to the said
queries given by the proposer. "

14. The contention of learned counsel
for the petitioner is to the effect that while
8 All. Smt. Parul Agarwal Vs. L.I.C. of India, Sonakpur, Moradabad & Ors.
427
claim concerning one policy was allowed by
the Corporation, rejection of claim in respect
of policy nos.256487214 and 256487400 was
wholly unsustainable on the ground that as
the insured had not made disclosure of policy
No. 224492798 in ''Columns No.9' of the
proposal form, therefore, the claim was
rejected ''on the ground of concealment'.

Contention of Respondent-L.I.C.

15. On the other hand, Shri Udai
Shankar Mishra, learned counsel for the
respondent-Corporation,
apart
from
the
defence taken in the counter affidavit in
support of the orders impugned, has
specifically referred to the proposal forms of
the two disputed policies, i.e. policy
nos.256487214 and 256487400 with specific
reference to the ''Column 9' of the proposal
forms. For a ready reference, ''Columns No.9'
of the both the policies are quoted
hereinbelow:-

Column 9

16. The submission of learned counsel
for the respondent-Corporation is that the
existence of the aforementioned two
policies was well within the knowledge of
insured but in one of the forms, disclosure
of only one policy bearing no. 256487214
was made whereas in another form, the
words "कोई नहीं" were mentioned. It is,
therefore, contended that the Insurance
Ombudsman has rightly taken a view that
the policy holder did not want to undergo
special medical examinations at the time of
taking
insurance
policy.
Such
nondisclosure prevented the Corporation from
conducting certain additional checks and
precautions specially with repect to the
medical condition of the insured such as
ECG, FBS, RUA, Hb% & Elisa etc.

17.

Learned
counsel
for
the
respondent-Corporation has placed reliance
upon the judgement of Supreme Court in
Satwant Kaur Sandhu v. New India
Assurance Company Limited reported in
(2009) 8 Supreme Court Cases 316 and
has argued that in the matter of insurance,
parties must act in utmost good faith and
the insured is under a solemn obligation to
make a true and full disclosure of the
information on the subject which is within
his knowledge.
Analysis of rival contentions

18. There is no dispute about the
fact that there were three insurance
policies issued in favour of Late Vishal
Agarwal (husband of the petitioner)
bearing nos.224492798, 256487214 and
256487400. The parties are not at
dispute about the fact that claim for
policy
no.224492798
was
allowed,
whereas
the
claim
for
remaining
policies was rejected under the orders
impugned.
428 INDIAN LAW REPORTS ALLAHABAD SERIES

19. The dispute between the parties is
as to whether non-disclosure of two
policies in ''Columns 9' of the two proposal
forms was fatal to the claim made by the
petitioner.

20. The decision of Apex Court relied
upon by the learned counsel for the
petitioner in Manmohan Nanda (supra)
deals with the definition of proposal form
under the aforesaid Regulations-2002 and
the defintion in ''paragraph 34' is clear to
the effect that "Proposal Form" means a
form to be filled in by the proposer for
insurance, for furnishing all material
information required by the insurer in
respect of a risk, in order to enable the
insurer to decide whether to accept or
decline, to undertake the risk, and in the
event of acceptance of the risk, to
determine the rates, terms and conditions of
a cover to be granted.

21. Insofar as, the contention of
learned counsel for the petitioner to the
effect that the insurance agent sent by the
Corporation, who had allegedly filled up
the proposal form, must have informed the
insured about the terms and conditions of
the policy and also must have raised
specific query from the insured regarding
entries in the relevant Columns (in the
present case Columns No.9), this Court
finds that there is no pleading in the entire
writ petition or in the supplementary
affidavit that the insurance agent or officer
of respondent-Corporation did not raise any
query from the insured regarding policy
numbers to be filled up in Column 9.
Further, there is no pleading to the effect
that the insured had, in fact, informed the
agent/officer of the Corporation about
existence of policy no.224492798, rather, it
is the plea of the petitioner that it was
agent/officer who did not fill up the same in
the proposal form. The Court finds that
mere prinicple of law laid down in the
decision of Supreme Court in the case of
Manmohan Nanda (Supra) has been
argued on behalf of the petitioner without
any factual background. Moreover, even
from the perusal of ''paragraph 55' of the
judgment of the Supreme Court in
Manmohan Nanda (supra), it is clear that
Supreme Court has clearly laid down the
principle regarding what may constitute a
''material fact'.

22. The present case is not the one
where ''Column No.9' was left blank.
Rather, it is a case where, as aforesaid, in
one of the forms, disclosure of one policy
No.256487214
was
made
without
disclosing
anything
about
policy
No.224492798 and in, another form, words
"कोई नहीं" were mentioned. ''Columns 9' as
such, in both the proposal forms were not
left blank.

23. The case can be viewed from
another angle. This Court, from perusal of
the proposal form, finds a clear declaration
by the insured Vishal Agarwal at the end of
the form in the following words:-

प्रस्तावक द्वारा घोषणा/ DECLARATION
BY THE PROPOSER

"मैं त्रवशाल अग्रवाल त्रजसे इसमें जीवन बीमा के
त्रलये प्रस्तात्रवत त्रकया गया है एतद् द्वारा घोर्णा करता ह ं त्रक उपरोक्त
प्रकथन एवं उत्तर मेरे द्वारा प्रश्नों को पूरी तरह समझ लेने के बाद त्रदये
गये है और वह सही है तथा प्रत्येक त्रववरण पूणा है और मैंने कोई
सूचना धिपाई नहीं है। मैं एतद् द्वारा इस बात से सहमत ह ं और
घोत्रर्त करता/ करती ह ं त्रक ये प्रकथन और घोर्ण मेरे एवं भारतीय
जीवन बीमा त्रनगम के अनुबन्ध के आधार पर होगे और यधि कोई
इसमें असत्य कथन पाया जायेगा तो वह अनुबन्द्ि पूर्ण रूप से
रद्द हो जायेगा तथा इस सम्बन्ध में चुकाई गई समस्त धनरात्रश
त्रनगम द्वारा जब्त कर ली जायेगी।

I.................. the person whose life
Insurance is herein being proposed to be
8 All. Smt. Parul Agarwal Vs. L.I.C. of India, Sonakpur, Moradabad & Ors.
429
assured, do hereby declare that the fore
going statement and answers have been
given by me after fully understanding the
questions and the same are true and
complete in every particular and that I
have not withheld any information and I
do hereby agree and declare that these
statements and this declaration shall be the
basis of the contract of assurance between
me and the Life Insurance Corporation of
India and that if any untrue averment be
contained therein the said contract shall
be absolutely null and void and moneys
which shall have been paid in respect
thereof
shall
stand
forfeited
to
the
corporation."

24. The aforesaid declaration has been
signed by the insured-Vishal Agarwal.
Therefore, this Court has no reason to repel
the contention of the Insurance Corporation
that
existence
of
policy
bearing
no.224492798 was deliberately concealed
in one of the forms, whereas in other form,
by mentioning words "कोई नहीं ", both the
policies were concealed.

25. In the facts and circumstances of
the present case, I find it appropriate to
refer three important provisions of the
Indian Evidence Act-1872 which would be
useful for deciding the present controversy.

26. Section 106 of the Evidence Act1872 deals with provision for burden of
proving a fact especially within knowledge.
It is quoted hereinbelow:-

"106. Burden of proving fact
especially within knowledge.--When any
fact is especially within the knowledge of
any person, the burden of proving that fact
is upon him."

27. Section 114 of the Evidence Act1872 is a provision wherein the Court may
draw inferences in any proceedings which
include
inferences
favourable
or
unfavourable (adverse) to any party.
Section 114 alongwith relevant illustration
(g) is quoted hereinbelow:-

"114
Court
may
presume
existence of certain facts. --The Court may
presume the existence of any fact which it
thinks likely to have happened, regard
being had to the common course of natural
events, human conduct and public and
private business, in their relation to the
facts of the particular case.

Illustrations

The Court may presume-

(a)....

(b)....

(c)...

(d)..

(e)....

(f)...

(g). That evidence which could
be and is not produced would, if produced,
be unfavourable to the person who
withholds it;"

(h)......

(i)......

28. Section 115 of the Evidence Act
contains principle of "Estoppel" which
reads as follows:-

"115
Estoppel.
--When
one
person has, by his declaration, act or
omission, intentionally caused or permitted
another person to believe a thing to be true
and to act upon such belief, neither he nor
his representative shall be allowed, in any
suit or proceeding between himself and
such person or his representative, to deny
the truth of that thing. "
430 INDIAN LAW REPORTS ALLAHABAD SERIES

29. Apart from the aforesaid,
reference to Section 37 of the Indian
Contract Act-1872, contained in Chapter
IV, may also be made. This Chapter relates
to performace of contracts and Section 37
provides for obligation of parties to
contract and reads as follows:-

"37. Obligation of parties to
contracts.--The parties to a contract must
either perform, or offer to perform, their
respective
promises,
unless
such
performance is dispensed with or excused
under the provisions of this Act, or of any
other law.

Promises
bind
the
representatives of the promisors in case of
the death of such promisors before
performance, unless a contrary intention
appears from the contract. "

30. In the present case, the contract of
insurance between Vishal Agarwal and
Corporation would certainly bind legal
representative of late Vishal Agarwal, i.e.
the petitioner herein, and proposal forms
described hereinabove would certainly fall
within the category of "contract of
insurance" and, therefore, if, on account of
any false declaration or concealment made
by the decesased, the claim has been
rejected,
the
petitioner,
being
a
successor/representative of her husband,
would not get any relief in the totality of
the facts and circumstances of the present
case.

Conclusion-I

31.

Considering
the
aforesaid
provisions in the light of the material
available
on
record,
particularly
the
proposal form, I find that existence of two
policies
bearing
nos.256487214
and
224492798 was in special knowledge of the
insured Vishal Agarwal but only existence
of policy No.256487214 was disclosed in
one
form
and
the
policy
bearing
No.224492798 was not disclosed in either
of the proposal forms and, therefore, by
invoking the principle of adverse inference
and estoppel, respectively contained in
Section 114(g) and Section 115 of the Act1872,
which
would
apply
to
the
representative of the deceased Vishal
Agarwal, i.e. the petitioner herein, no
advantage of non-disclosure can be given
to the petitioner so as to claim any relief
regarding the two policies repudiated under
the impugned orders.

32. The contention of the learned
counsel for the petitioner to the effect that
insurance company accepted the premium
and, therefore, it was unjustified in
dislodging the claim, is of no consequence
in view of the fact that the proposal forms
were filled in the year 2012 and Vishal
Agarwal died in the year 2013 due to
cardiao-respiratory failure and payment
might have been made only once during
this period. Even otherwise, mere payment
of premium would not estop the insurance
company from repudiating the claim as it is
well within its rights to repudiate or reject
the claim on the ground of non-disclosure
of existence of previous policies at the time
of taking any fresh policy as there are
various factors, administrative, medical as
well as financial which need to be analyzed
by the Corporation, while issuing any fresh
insurance policy to a person who was
already insured.

33. Regarding the principles of
insurance law with respect to action in
good faith, the Apex Court in the Case of
Satwant Kaur Sandhu (supra), relied upon
by learned counsel for the Corporation, has
held that insurance policy is a contract of
8 All. Smt. Parul Agarwal Vs. L.I.C. of India, Sonakpur, Moradabad & Ors.
431
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, the 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. (1908) 2KB 863 (CA)}.

34. In United India Insurance Co.
Ltd. Vs. M.K.J. Corporation, (1996) 6
SCC 428, the Supreme Court has observed
that it is a fundamental principle of
insurance law that utmost faith must be
observed by the contracting parties. Good
faith forbids either party from non-
disclosure of the facts which the party
privately knows, to draw the other into a
bargain, from his ignorance of that fact and
his believing the contrary. (Also see:
Modern Insulators Ltd. Vs. Oriental
Insurance Co. Ltd. (2002) 2 SCC 734).

35. MacGillivray on Insurance Law
(10th
Edition)
has
summarised
the
assured's duty to disclose stating that 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 nor
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.

36. In Carter Vs. Boehm (1558-1774)
ALL ER Rep 183: (1766) 3 Burr 1905,
Lord Mansfield had succinctly summarised
the principles necessitating a duty of
disclosure by the assured by stating that
insurance is a contract of speculation. The
special facts upon which the contingent
chance is to be computed lie most
commonly in the knowledge of the assured
only;
the
underwriter
trusts
his
representation,
and
proceeds
upon
confidence that he does not keep back any
circumstance in his knowledge to mislead
the underwriter into a belief that the
circumstance does not exist. The keeping
back of such circumstance is a fraud, and
therefore the policy is void. Although the
suppression
should
happen
through
mistake, without any fraudulent intention,
yet still the underwriter is deceived, and the
policy is void; because the risque run is
really different from the risque understood
and intended to be run at the time of the
agreement...The policy would be equally
void
against
the
underwriter
if
he
concealed...Good faith forbids either party,
by concealing what he privately knows, to
draw the other into a bargain from his
ignorance of the fact, and his believing the
contrary.

37. The term "material fact" is not
defined in the Act and, therefore, it has
been understood and explained by the
courts in general terms to mean as any fact
which would influence the 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
432 INDIAN LAW REPORTS ALLAHABAD SERIES
bearing on the risk involved would be
"material". As stated in Pollock and Mulla's
Indian Contract and Specific Reliefs Acts,
any fact the knowledge or ignorance of
which would materially influence an
insurer in making the contract or in
estimating the degree and character of risks
in fixing the rate of premium is a material
fact.

Conclusion-II

38. In the present case, the declaration
made by the insured at the bottom of the
proposal form and signed by him contains
clear stipulation to the effect that he has not
withheld any information and that the
statements made by him in the said
declaration shall be the basis of ''contract of
insurance'
between
him
and
the
Corporation and, if any, untrue averment be
contained therein, the contract shall be
absolutely null and void and the money
which shall have been paid in respect
thereof, shall stand forfeited. In the
aforesaid facts and circumstances, the
contention of the petitioner to the effect
that since forms are filled up by the
agents/officers of the Corporation, anything
omitted would not consitute a ground for
repudiation/rejection of the claim, cannot
be accepted. Contrarily, the stand taken by
the Corporation justifying the orders
impugned has substance in the light of
entire material available on record.

39. In view of the above, there is no
good ground to interfere in the orders
impugned. The writ petition lacks merit and
is, hereby, dismissed. No order as to costs.

40. The original record produced by
Shri Udai Shankar Mishra, learned counsel
for the respondent-Corporation, is directed
to be returned to him by the office
immediately.
----------
(2023) 8 ILRA 432
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 12.07.2023

BEFORE

THE HON'BLE SAURABH LAVANIA, J.

Writ C No. 3818 of 2023

Ravindra Kumar ...Petitioner
Versus
State of U.P. & Ors. ...Respondent

Counsel for the Petitioner:
Sanjay Kumar Srivastava, Akshat Kumar

Counsel for the Respondents:
C.S.C., Mohan Singh

Civil Law - U.P. Revenue Code, 2006 -
Section 30, 38 & 210 - U.P. Revenue
Rules, 2016 - Rule 25 & 36 - Correction of
Revenue Map - Duty of Collector - Error or
Omission in Revenue Records - Chakbandi
Manual - Applicability.

Held:
1. The Collector is under a statutory obligation
under Section 30 of the U.P. Revenue Code,
2006, to maintain and correct errors or
omissions in the revenue map and field book
(khasra) of a village, irrespective of whether an
application is filed, when such errors come to
the notice of revenue authorities.

2. The provisions of the U.P. Revenue Code,
2006, and U.P. Revenue Rules, 2016, prevail
over the Chakbandi Manual, and Para 101 of the
Chakbandi Manual does not permit refusal to
correct errors in the revenue map solely on the
ground that the discrepancy is less than three
biswas.

3. The Collector's rejection of the petitioner's
application for correction of the revenue map,
despite reports from Naib
Tehsildar and