Report No. 112
3.3. Category (b).-
In this case, the death of the insured is within 2 years and the repudiation of the claim is also within 2 years. In this class of cases, courts, while accepting the doctrine of uberrima fides have insisted upon the fairness of the insurer also and required proof that someone, on behalf of the insurer, had drawn the attention of the insured to tricky and ambiguous questions in the form of proposal and that the insured had clearly understood the question before giving his answer1. In All India General Insurance Co. v. S.P. Maheshzvari, AIR 1960 Mad 484, the Court upheld the repudiation of the claim of the respondent, on the ground that there was a deliberate misrepresentation by the insured about his drinking habits and that there was non-disclosure by the insured that he was suffering from venereal disease. In the course of the judgment, Anantanarayanan J., however observed:
"even within the 2 years period, only misrepresentations which are material, in the sense of having some effect upon life expectation, whether direct or indirect, should be allowed in defence for avoidance of the contract. Of course, within this period, the further conditions laid down in section 45 need not be made applicable. For instance, it may not at all be necessary to lay down that the policy-holder knew that the statement was false, or that he fraudulently suppressed this knowledge. But, if the law is to be retained, as it stands, cases of hardship and injustice might arise, within the 2 years period, which the courts would be powerless to remedy, since the principle of warranty would hold the field. I might also observe that, with modern scientific methods of medical examination including serological and X-ray tests, in cases of doubt, it should be more and more possible for Insurance Companies to satisfy themselves about life expectation by accurate data, which have nothing to do with what the insured man says about his own health".
1. LIC v. Shakuntala Bai, AIR 1975 AP 68.