P L D 1967 Karachi 204 (PLP)

Issue 5.‑As below. Reasons. Issues 1, 2 and 6.‑Since these issues are interconnected, I shall discuss my reasons for my findings together. On the question of the deceased being diabetic; before his proposal dated the 17th of April 195.9, the only evidence adduced is the certificate of Dr. Habib Patel, Exh. 5/7, in which the doctor opined thus: "He had a trace of sugar in his urine at admission." This is the only evidence adduced, and it is the case of the plaintiff that the deceased never suffered from any, disease or infirmity, and was in a no al state of health. The case of the defendant is that no contract of insurance was complete until the 27th of February 1959, and until that date, the premium had not been paid by the deceased. After the proposal of the 17th of April Exh. 5/ 1, only a sum of Rs. 300 had been paid towards tae annual premium, which was Rs. 4,143‑

12. On the 24th of April 1959, Exh. 5/2 was written to the defendant with the definite assertion that the contract of insurance would only be considered to be complete when the first premium was paid, and that no risk till then would attach to the defendant. On the 27th of April the deceased wrote and requested pay of the premium in monthly, instead of annual instalments. A receipt Exh. 5/11 dated 20th April 1959, had already been issued to the plaintiff. The balance amount even on the monthly instalment due from the deceased was paid on the 27th of April 1959, and the risk receipt, Exh. 5/5 was issued. It is further the case of the defendant that in accordance with the proposal form, the deceased Abdul Rehman had agreed that the risk on the life of the deceased would only arise after the issuance of the risk receipt and in consideration of the proposal Attention has been particularly drawn to the following clause in the proposal which states as under: "I have read the life prospectus of the Company and agree to abide by the terms and conditions therein. I have also noted and agreed that acceptance of my proposal by the Company or payments of any amount by me towards premium or initial deposit does not being any liability on the Company and that the company will be on risk on my life only after the issuance of their Interim Policy Receipt after full Considera tion of my proposal." In para. 2 of the plaint it is admitted that the deceased had paid the monthly premium of Rs. 370‑14, on the 27th of April and a risk receipt had been issued accordingly. It may be stated that the contentions on behalf of the defendant are twofold: The first is that a duty was cast on the deceased in accordance with defendant's letter Exh. 5/2 dated the 24th April that he should inform the Insurance Company of any injury or illness suffered by the deceased or of his taking any medical advice in regard to it. The deceased did receive an injury which became gangrenous before the conclusion of the contract, and the deceased had failed to inform the defendant, as it was incumbent on him to do and therefore, that the contract was void and not binding on the defendant.

8. The next contention is that independent of the letter dated 24th April 1959, Exh. 5/2, there was a change in the risk between the date of the proposal and the conclusion of the contract on 27‑4‑

59. In his proposal form Exh. 5/1, and the declaration contained in Exhs. 6 and 7, the proposal form and the declaration made therein, were to be the basis of the contract of insurance. The information of the injury and the gangrene that followed were withheld from the defendants before the conclusion of the contract; therefore the contents of the proposal form and the declaration before the medical examiner became untrue on tire 27th April 1959, absolving the defendant of all responsibility and making the contract of insurance void.

9. On the first contention there was a certain Amount of controversy regarding Exh. 5/2, the letter dated the 24th of April which, according to the plaintiff, was not received by him. According to the defendant's witness Abdul Haq, this letter was sent to the deceased by ordinary post. The evidence of Abdul Haq is that Exh. 5/1, the proposal, was accepted by the defendant on the 24th April 1959, and acceptance of it was despatched to the deceased by Exh. 5/2. This letter was sent to the deceased also by ordinary post. The witness was unable to verify from the register and documents in his possession whether an entry of this letter had been made in their register, etc. but it was con tended on the basis of Exh. 5/4, the final letter of acceptance, that the previous letter of acceptance, i.e. Exh. 5/2, stood cancelled, Learned counsel for the plaintiff suggested, and in my view without support and substance that these top lines had been added by the defendant company, a suggestion which was repelled by the defendant's witnesses. The plaintiff, Abdul Mohsin, Exh. 2,7, has stated that Exh. 5/4 was sent by him to the defendant, but was only when it was returned to trim that he noticed the addition allegedly made in this letter. This is hardly believable in the face of his admissions, that he does not know English although he can sign in English, and when in his cross‑examination he stated that he knew nothing of the terms on which the insurance proposal was made, and the correspon dence carried on in regard to it. It has been pointed out by the learned counsel for the defendant that all documents were sent to the defendant by the plaintiff under his letter Exh. 12 dated the 22nd September 1959, according to which only six documents were sent, detailed at the end of the letter. There fore it is clear that Exh. 5/4 was not included in the documents sent to the defendants. Learned defence counsel had pointed out that the defendant returned only those documents which were mentioned in defendant's letter Exh. 18 dated the 19tb April 1962, being the risk receipt No. 9635 issued on the 27th April 1959. The allegation of the plaintiff is set completely at naught by the additional circumstance of his admission that he was not in Karachi on 16‑4‑59, being abroad in Bahrain having returned to Karachi on 1‑5‑1959.

10. The next question is whether the deceased received an injury before the 27th April 1959, which later became gangrenous. According to the defence, this injury was received in the third week of April 1959 and before the 27th April 1959, deceased had consulted Dr. Sattar Exh. 20, a doctor neighbour, in respect of this injury. This fact is admitted by the plaintiff in his letter dated the 24th October 1959, Exh. 14, wherein it was stated that the deceased bad fallen down on or about the 25th of April at about 9 a.m in his bungalow. This circumstance is strengthened by doctor Sattar's report, Exh. 5/9 dated 6th October where the doctor stated that he had examined the deceased on or about the 26th. April at his own residence, and that the deceased had informed him that he had fallen in his bathroom five or six days before that date. At that time the injury was a simple contusion of the left middle toe in its lower two‑third aspect. One‑third of the left foot had an inflamation which the doctor suspected to be due to gangrene and accordingly he advised the deceased admission into an hospital. Dr. Mohd. Sattar has stated thus in his evidence: "According to my examination I can say that the injury was 5 or 6 days old . . . . . I determined the duration of the injury by the colour of the toe which was black at the time, and the inflamation of the part. The toe was dry and senseless. This was a case of dry gangrene." He went on to add that: "When I examined the deceased he informed me that con sequent to a fall in the bathroom he had sustained injury to his affected toe. This fall, according to the deceased, occurred 5 or 6 days before my examination . . . . . I say that the certificate Exh. 5/9 and 5/10 were issued by me and are correct and without any error."

11. The plaintiff Abdul Rehman has urged a strange circumstance by stating that what he has stated in his letter Exh. 14 was out of his own imagination and that his deceased father had told him that after he (the deceased had returned from Hyderabad on the 30th April he had received the injury by a fall in the bathroom. It has therefore been rightly urged that if the deceased had specifically informed the plaintiff about the date, there was no necessity for the plaintiff to write Exh. 14 out of his own imagination. Apart from this, one must revert to the admission of the plaintiff that he was in Bahrain on the 16th of April until his return on the 1st of May 1959, and, therefore, due importance must be given to the overall testi mony of Dr. Abdul Sattar and Dr. Habib Patel whose evidence I will again revert to later. In these circumstances, in my view, it is well established that the deceased received the injury before the 27th April 1959, the date on which the contract of insurance was concluded.

12. On the point of responsibility of the deceased to inform the defendant/Insurance Company of his injury before the completion of the contract and of the contract being void, learned counsel for defendant has relied on Kalinudhabatlu Susila Devi v. The Oriental Government Security Life Assurance Co. Ltd. (A I R 1948 Mad. 192) and Looker and another v. Law Union and Rock Insurance Co. Ltd. ((1928) 1 K B 554). The facts of the former case were that before the proposal for insurance of the deceased was accepted by the Bombay Office of the defendant Company, the appellant's husband contracted a chill after a game of tennis on account of which his temperature began to rise. During the following few days his temperature rose to 105 degrees and then dropped to normal. It remained normal for three days and began to rise again and throughout the month the temperature ranged between 99 to 101 degrees leading the doctor to the opinion that there was something wrong with the applicant which required further investigation. An examination of the deceased revealed a patch of infection on the basis of the lung. The temperature did not drop and the deceased left far d sanatorium in Mysore where he subsequently died of T. B. which had presumable been existing for a considerable time before his death. Whilst receiving attention from the doctor whose suspicions were aroused after the subsidence of his high temperature and its rise again, the deceased received a letter of acceptance from the Insurance Company advising him to intimate to the Insurance Company if any adverse circumstance connected with his general health, however unimportant, occurred between the date of the proposal and the date of the completion of the payment of the first premium in full or the date of the issue of this acceptance, whichever is later, and on failure to do so, the insurance would be invalid. Five days after the death of the assured, the widow filed the suit, the insurance company having repudiated the claim on the ground that the failure of the deceased to report his illness to the company invalidated the contract. It was observed by their Lordships that the letter was sent to make sure that the physical condition of the applicant was the same at the time when a letter of acceptance was received as it was when his proposal form was sent in. The Insurance was meant to have reference to the actual circumstances existing on the day on which the contract was completed and not to the state of health of the applicant on the day when the proposal form was sent in: It was held that where there was a letter of warranty of continued good health up to the date of the issue of acceptance and as the applicant committed' a breach thereof by his failure to disclose, the company was absolved from all liability under the policy; the circumstance that the failure to disclose was after the letter of acceptance was sent, made no difference at all.

13. In Looker and another v. Law Union and Rock Insurance Co. Ltd., the facts of the case were that the company having received a proposal form informed the proposer that his proposal had been accepted, but that if his health remained meanwhile‑unaffected the policy would be issued on payment of the first premium, and that the risk would only commence after the receipt of the first premium. Five days after receiving the letter, the proposer became ill. Two days later his illness was diagonised as pneumonia which proved fatal four days later. No notice of this illness was given to the company. The days before the proposer's death, the company received by post a cheque signed by the proposer three days before his death as payment towards the first premium, and the company sent a certificate stating that the proposal had been accepted and that the policy will be delivered, in due course. The proposer's cheque was not honoured owing to insufficiency in his bank account. It was held that the plaintiff could not recover the insured amount as:‑(I) no contract had been concluded between the proposer and the insurance company, since between the proposal and the alleged acceptance, the illness of the proposer has caused a material alteration in the risk, (2) no notice of the proposer's illness which had caused the material change in the risk had been given to the Insurance Company. Action, J. in delivering judgment at page 59 remarked that in such cases the rule applicable is that‑"acceptance is made in reliance upon the continued truth of the representation made in the proposal which it was agreed should form the basis of the contract of Insurance in the belief that there has been no material change in the risk offered, and that therefore, if anything has happened materially to increase the risk between the proposal and the acceptance, the insurance company are not bound, because that which they have made a condition of the contract going to the root of it, has not been fulfilled". It was further observed that the policy is not binding if any material fact is not disclosed, and that the time up to which it is to be disclosed, is the time when the contract is concluded.‑

14. It is next argued by the learned defence counsel that the contract of insurance is a contract of utmost good faith and independent of Exh. 5/2 dated 24‑0‑59, that it was the duty of deceased insured to inform the defendant company of any change in his health occurring between the date of his proposal and the conclusion of the contract, that is, between the 17th of April and the 27th of April 1959. It was also contended that since the declaration in the proposal form Exh. 5/1 and the declara tion made before the medical examination in Exhs. 6 and 7 were the basis of the contract, these declarations should also be true on the day of the conclusion of the contract, namely, the 27th of April 1959. The concealment of the fact of the injury and the gangrene which occurred before .the 27th of April, falsified the declarations in the proposal form and in Exhs. 6 and 7, and the medical report, making the contract void and absolving the defendant company of all liability. On this aspect, reliance was placed on Traill v. Baring (46 Eng. R 941). In this case an insurance society re‑assured a portion of its risk on one of its policies with a second society, stating that a third society had reassured part of the risk, and that the remainder beyond what it was proposed that the second society should take would be retained by itself, the first society. This was .the intention of the first society at the time, but in the interval between the proposal to the second society and the completion of the reassurance with it, the first society, for reasons connected with its own business, but without the intervention of any new fact, or new information, or change of opinion as to the value of the life ultimately assured, changed its prior intention and reassured the whole of the risk beyond what was to be taken by the second society with the third society. The first society, however, did not communicate its change of intention to the second society, but allowed them to complete their reassurance. Upon a bill filed by the second society against the first society prayed for a declaration that the policy had been fraudulently obtained and ought to be delivered up to be cancelled, and sought an injunction to restrain the action and any other proceeding. Turner, J. in delivering judgment observed:‑ "If a person makes a representation by which he induces another to take a particular course and the circumstances are afterwards altered to the knowledge of the party making the representation but not to the knowledge of the party to whom the representation is made, and are so altered that the altera tion of the circumstances may affect the course of conduct which may be pursued by the party to whom the representa tion is made, it is the imperative duty of the party who had made the representation to communicate to the party to whom the representation has been made the alteration of those circumstances: and the Court will not hold the party to whom the representation has been made, bound, unless such communication has been made."

15. The next case relied on is an arbitration between Marshall and Scotish Employers' Liability and General Insurance Co. (85 L T R 757). In this case one John Marshall on the 31st May 1900, made a proposal in writing to the insurance company for a policy of insurance against accidents and fever. The proposal was addressed to an agent of the Insurance Company, the material parts of which were that the proposal and the declarations shall be the basis of the contract between the insurer and the company. The arbitrator found as a matter of fact all the answers of the insured were true at the time that he made them, and that he was on the 31st May 1940 neither insured nor proposed to insure himself against accidents or disease with any other office or offices. On the 7th of June, the insured made a proposal to the Royal Exchange Assurance Corporation for an insurance against accidents or disease in the sum of 2,

000. The proposal form contained the following questions and replies given by the insured: "Q.‑Are you now insured or proposing to insure against accidents or disease with any other company? A.‑No. But I may insure with another company." Thereafter the insurance by the Marshall and Scottish General Insurance Co. was completed and the Insurance Company issued their policy containing a condition that if the insured at any time during the continuance of the policy insured against death or disablement by accident or disease in any other company without notice being given to the Directors and their written consent obtained, this policy shall be considered to; be void. On the 9th of July the insured met with an accident. It was found by the arbitrator that the insured prior to the accident did not disclose to the Insurance Company the fact that he bad proposed and had been accepted by the Royal Exchange Corporation but he did not mention the fact in the claim which he sent in after the accident. Wright; J. in delivering judgment observed: "When he made the proposal, he said that he was not insured or proposing to insure against accident or disease with any other office or offices. At the time that the statement was made it was true, but before, the policy was issued it became untrue. The law is that these declarations are continuing declaration to the execution of the policy. It is not necessary for the insurance office to show that if the disclosure had been made they would not have granted the policy. They are entitled to the information in order to rake up their minds. Then it is material and important. As to the proposal and the principal clause in the policy; I think the insurance company are entitled to succeed on both grounds." The case of the insured thus failed against the Insurance Company.

16. The next case relied on is The British Equitable Insurance Company v. The Great Western Railway Company ((1869) 38 L J 314). The facts of the case are that in July 1863 B negotiated for the insurance of his life in the plaintiff's office, and in filling up the usual declaration, stated that he could not remember when he was last ill, and that he was and always had been enjoying good health. After examination by the medical officer of the company, he was accepted as a first class life. In August preceding the completion of the contract, B became alarmed about his health. He consulted a physician other than his normal medical attendant, who warned him that he was in a dangerous state of health and prescribed for him. B never communicated this circumstance to the 'Insurance. Company. In September the premium was paid and the policy effected. On the receipt of the premium was endorsed a condition that if any variations have taken place in the health of the assured since the date of the medical examination and before actual payment of the premium, the receipt would be void. Eight months thereafter, B died. It was not proved satisfactorily of what disease. It was held that the non‑communication to the company of his change in health and visit to the physician was fraudulent, and vitiated the policy. Lord Selwyn, in delivering judgment further observed that at the time when the money was paid and the policy issued, John Bird knew that his two answers to the third and the fourth questions, which were "When last ill, and the nature of the illness," and "whether now and ordinarily enjoying good health," were no longer true and therefore,' "it is quite clear that the policy, is a void policy, and one in which the office was entitled to file a bill to have cancelled and delivered up."

17. In the present case, it was also argued for the defendant that in col. 7 of Exhs. 6 end 7 in answer to question F, the categorical reply of the deceased was "No" to the question : "Have you had any other illness or injury not mentioned above ? On the basis of the ruling reported in Law Journal 1869,Vol.38 page 314, the answers to question F of col. 7 became untrue on the date of the completion of the contract and the deceased insurer having failed and/or concealed the fact of his injury and gangrene, setting in the contract of insurance concluded on the 27th of November became void. In my view, the position urge by the defendants on facts and on the law is unassailable, My C findings accordingly on these issues will be that the deceased Abdur Rehman, suppressed the fact of his being diabetic before his proposal, that he suppressed this fact and of his having developed gangrene between 17‑4‑59 and 24‑4‑59 as required by the letter of acceptance, and that he also concealed the fact of the injury having been received by him in his toe. The effect of all this is that the contract in suit with the defendant became void and ineffective. Issue No. 3.‑The death of the deceased as indicated in the certificate of the doctor, Dr. Habib Patel, was cardiac failure. In the death certificate, Exh. 8, issued by the Karachi Municipal Corporation, the cause of death is stated to be "post operative heart failure." The evidence of Dr. Habib Patel is that on the 9th of May 1959, he examined the deceased at his residence and when he found him suffering from gangrene in his left foretoe, having become black, he opined an immediate operation and the removal of the infected toe. The deceased was brought to his clinic and after the routine check, an operation was performed in the presence of Dr. Bashir who had initially brought the deceased to Dr. Patel. The deceased was on the operation table for about 20 minutes during which the affected toe ‑was removed. At the time of the operation, the anaesthetist noticed the pulse of the deceased failing and in spite of injection and immediate administration of oxygen, the deceased died within 10 or 15 minutes of his removal from the operation theatre. From his examination of the toe, Dr. Habib Patel states that the duration of the, gangrene was about a week or possibly two weeks, and states that he recalled from the routine check made of the deceased that there were traces of sugar, which was the only abnormality, and the bulk, of the deceased a hefty man weighing over 200 lbs. To a question to the learned counsel for the plaintiff, Dr. Habib Patel has stated that gangrene can arise both in diabetic and non‑diabetic, but diabetics are more prone to it. The immediate cause of the death of the deceased wok his physical condition at the time of the operation, accen tuated by his diabetic condition. Which had caused an infection and gangrene in the injury to his left toe. Issue No.4.‑The plaintiff's case in para. 4 of the plaint, that the defendant's personally assured him that the claim amount would be paid to him, has been refuted by the evidence of the defendant's witness, Abdul Haq, who stated that they had not assured the plaintiff at any time that they will pay the amount of the policy to him, and further that they never admitted the liability for the same. There is no documentary support, even in the correspondence of the defendants having even indicated their acceptance of the policy at any stage. My finding accordingly on this issue. Issue No. 5.‑The result is that for reasons given earlier, the claim of the plaintiff fails, and his suit is dismissed. In view of the nature of the defence, and the technicalities involved, there will be no order as to costs. K. B. A. Suit dismissed.