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Kasim Ali Bulbul v. New India Assurance Co. AIR 1968 J & K 39

Kasim Ali Bulbul v. New India Assurance Co. AIR 1968 J & K 39

FACTS-

  • The plaintiff, Kasim Ali Bulbul, a wood carving and paper machine business owner, insured his shop and its contents with New India Assurance Co. for Rs. 30,000 from June 8, 1960, to June 8, 1961.
  • Bulbul's shop caught fire on the night of February 4/5, 1961, and again on November 3, 1961, resulting in significant damage and loss of goods.
  • Bulbul filed a claim with the insurance company, but the company rejected it on various grounds, including alleged fraudulent activities and non-compliance with policy conditions.
  • The insurance company argued that Bulbul failed to disclose his previous insurance history and other material facts, thereby voiding the insurance contract.

ISSUE-

  • The main issue is regarding whether there is any misrepresentation or suppression of material facts, whether such discrepancies can make the insurance void? 

RULE-

  • - Failure to comply with policy conditions, such as timely notice of loss and submission of claims, may result in the forfeiture of the insured's right to claim.
  • - Misrepresentation or suppression of material facts by the insured can void the insurance contract.
  • - Insurance companies have the right to repudiate the policy and avoid liability if the insured is found to have made false statements or withheld crucial information.
  • - Courts will not entertain actions for fraudulent claims or misrepresentation by the insured, and the insured cannot claim a refund of premiums in such cases.

HELD-

  • The plaintiff failed to comply with policy conditions regarding timely notice and submission of detailed claims. The court noted that the plaintiff failed to file a claim or institute legal proceedings within three months of the rejection of his claim by the insurance company, as required by the policy.
  • The court found that the plaintiff had previously insured his goods with another company but falsely denied it in the proposal form for the current insurance policy. Despite the plaintiff's claim of illiteracy and lack of understanding, evidence suggested that he knowingly provided false information, which constituted suppression of material facts.
  • It was established that the plaintiff's false statements in the proposal form invalidated the insurance contract.
  • Insufficient evidence was presented to prove that the fire was caused by the plaintiff's connivance or wilful act.
  • The plaintiff's claim for compensation for uninsured goods was not supported by sufficient evidence.
  • The court- “Even if the shop was under the lock and key of the defendant and it caught fire which was accidental the defendant would not by the mere fact of the destruction of the goods therein be liable for the damage.”
  • The plaintiff's suit was dismissed as time-barred and void due to fraudulent misrepresentations and non-compliance with policy conditions. The plaintiff was not entitled to any relief.

COMMENTARIES RATIO/NOTE-

 

  • [s 45.44] Fraudulent Suppression of Material Facts – Policy is Vitiated

 

 

When there is no material on record to suggest that any material fact has been suppressed LIC is not justified in repudiating the claim on this ground  [Vijai Kumar Kohli v Life Insurance Corporation of India (Jeewan Vikas), AIR 1992 All 45]. 

 Whether a person, i.e., the assured, is guilty of a fraudulent suppression of material facts has to be judged by the standard laid down in section 17 of the Contract Act, i.e., whether there was a suggestion as a fact suggestiofalsi of that which was not true by the assured who did not believe it to be true or whether there was an active concealment of a fact suppressioveri by the assured having knowledge or belief of the fact. Where falsification or concealment has an important bearing in obtaining the insurer’s consent, the assured could not take advantage of the explanation to section 19 of the said Act (Contract Act), the principle underlying the said explanation being that false representation, whether fraudulent or innocent is irrelevant if it has not induced the party to whom it is made to act upon it by entering into a contract [Mithoolal Nayak v Life Insurance Corporation of India, AIR 1962 SC 814].