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    Satwant Kaur Sandhu v. New India Assurance Company Ltd.

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    Shreepriya Sinha
    The Supreme Court held that the insurance company was justified in repudiating the claim based on non-disclosure of material facts. The court determined that the insured's chronic diabetes and renal failure, which were not disclosed on the proposal form, would have influenced the insurer's decision to provide coverage. As this was a contract of utmost good faith, the insured had a solemn obligation to fully and truthfully disclose all material health information known to them. Since the insured suppressed these facts, the repudiation of the claim by the insurer was lawful.

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    Satwant Kaur Sandhu v. New India Assurance Company Ltd.

    Uploaded by

    Shreepriya Sinha
    546 views6 pages
    The Supreme Court held that the insurance company was justified in repudiating the claim based on non-disclosure of material facts. The court determined that the insured's chronic diabetes and renal failure, which were not disclosed on the proposal form, would have influenced the insurer's decision to provide coverage. As this was a contract of utmost good faith, the insured had a solemn obligation to fully and truthfully disclose all material health information known to them. Since the insured suppressed these facts, the repudiation of the claim by the insurer was lawful.

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    The Supreme Court held that the insurance company was justified in repudiating the claim based on non-disclosure of material facts. The court determined that the insured's chronic diabetes and renal failure, which were not disclosed on the proposal form, would have influenced the insurer's decision to provide coverage. As this was a contract of utmost good faith, the insured had a solemn obligation to fully and truthfully disclose all material health information known to them. Since the insured suppressed these facts, the repudiation of the claim by the insurer was lawful.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    546 views6 pages

    Satwant Kaur Sandhu v. New India Assurance Company Ltd.

    Uploaded by

    Shreepriya Sinha
    The Supreme Court held that the insurance company was justified in repudiating the claim based on non-disclosure of material facts. The court determined that the insured's chronic diabetes and renal failure, which were not disclosed on the proposal form, would have influenced the insurer's decision to provide coverage. As this was a contract of utmost good faith, the insured had a solemn obligation to fully and truthfully disclose all material health information known to them. Since the insured suppressed these facts, the repudiation of the claim by the insurer was lawful.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 6

    Satwant Kaur Sandhu v.

    New India Assurance


    Company Ltd.
    Fact Scenario

    ● 7-5-1990 Appellant’s husband had insured himself


    under a mediclaim policy meant to assure the policy
    holder in respect of certain expenses pertaining to
    injury, accident or hopitalisations.
    ● The contract was categorized as a contract of
    insurance falling in category of contect uberrimae fidei
    (contract of utmost good faith).
    ● Information was asked on specific aspects in a
    proposal form, the assured was under a solemn
    obligation to make true and full disclosure of
    information on the subject which is within his
    knowledge.
    ● It is not for the proposer to determine whether
    information sought for is material for the purpose of
    the policy or not.
    ● Obligation to disclose extends to only to facts which
    are known to the applicant and not to what he ought to
    have known.
    Fact Scenario

    ● The policy was for a period from 7th May, 1990 to 6th May, 1991.
    On 11th September, 1990, Pritpal Singh suddenly fell ill and was
    admitted in Hospital. He died on 26th December, 1990. On 29th
    April, 1991 she filed a claim for Rs.23,217.80 for reimbursement
    of the expenses incurred on hospitalization.
    ● The respondent - Insurance Company repudiated the claim on the
    basis of medical history of the insured. The District Forum
    directed the respondent to pay the claimed amount with interest
    at 12% per annum from 1st April, 1991 i.e., 3 months after the
    death of the insured till the date of actual payment.
    ● The respondent was also required to pay Rs.1000/- as cost of
    litigation. The State Commission allowed the appeal there
    against and set aside the order of the District Forum. The appeal
    and revision there against has been dismissed.
    Issues

    The Core question for consideration in this case was whether the fact that at the time of taking out the mediclaim
    policy, the policy-holder was suffering from chronic diabetes and renal failure was a material fact, and therefore, on
    account of non-disclosure of this fact in the proposal form, was the respondent Insurance Company justified in law in
    repudiating the claim of the appellant?
    Holding
    ● The court held that a mediclaim policy is a non-life insurance
    policy meant to assure the policy holder.
    ● It was further mentioned that the insurance contract was falling
    under the category of contract of uberrimae fidei meaning
    contract of utmost good faith on the part of the assured.
    ● The assured was under solemn obligation to make a true and full
    disclosure of the information on the subject which is within his
    knowledge.
    ● The obligation to disclose extends only to the facts which are
    known to the applicant and not to what he ought to have known.
    ● In United India Insurance Co. Ltd v. MKJ Corpn, this court had
    observed that it is fundamental principle of insurance law that
    utmost faith must be observed by the contracting parties.
    Analysis

    ● The term ‘Material Fact’ is not defined in the Insurance Act 1938 so, the courts have relied upon ‘Mischief Rule’
    for a purposive construction on any fact which influence the mind of a prudent insurer

    ● In Pollock and Mulla, it is stated that “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”

    ● The judge in this case, relied upon statements made by the insured in the proposal form as to the state of his
    health which was palpably untrue to his knowledge. There was clear suppression of material facts in regard to
    the health of the insured and therefore the insurance company was fully justified in repudiating the insurance
    claim.

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