Holding

A claim cannot be repudiated on the ground of a pre‑existing condition that was disclosed in the proposal form and considered by the insurer before issuing the policy.

Summary

Manohan Nanda purchased an overseas mediclaim policy to travel to the USA. A medical examination disclosed his diabetes mellitus‑II, which he disclosed in the proposal form and supporting reports. After suffering an acute myocardial infarction in the USA, the insurer repudiated the claim, alleging non‑disclosure of a pre‑existing condition (hyperlipidaemia) and reliance on an exclusion clause. The Supreme Court held that the appellant had fully disclosed his diabetes and that the insurer, having assessed the risk and issued the policy, could not later invoke a pre‑existing condition clause to avoid liability. Applying the principles of uberrimae fidei and contra proferentem, the Court found no material suppression and declared the repudiation illegal. The appeal was allowed, directing the insurer to indemnify the appellant with interest and costs.

Issues considered

The appellant had suppressed or failed to disclose any material fact concerning pre‑existing medical conditions in the proposal form.
Whether the insurer could repudiate a claim on the ground of a pre‑existing condition that was disclosed before policy issuance.
Interpretation of the exclusion clause and its applicability under the doctrine of contra proferentem.
Whether the National Consumer Disputes Redressal Commission was justified in dismissing the complaint under the Consumer Protection Act, 1986.

Legislation cited

Consumer Protection Act, 1986s. 21(9)

Subjects

insurancemediclaimpre‑existing conditionnon‑disclosureuber rimae fideicontra proferentemConsumer Protection Actclaim repudiation

Judgment

1138 [2021] REPORTS
SUPREME COURT 11 S.C.R. 1138 [2021] 11 S.C.R.

A MANMOHAN NANDA
v.
UNITED INDIA ASSURANCE CO. LTD. & ANR
(Civil Appeal No. 8386/2015)
B DECEMBER 6, 2021
[DR. DHANANJAYA Y CHANDRACHUD AND
B. V. NAGARATHNA, JJ.]
Consumer Protection Act, 1986 – s.21 – Insurance –
Repudiation of claim on ground of suppression or non-disclosure
C
of material facts – Appellant intended to travel to the USA –
Appellant was issued a overseas mediclaim business and holiday
policy – The appellant was medically examined at the instance of
respondent No. 1 insurance company prior to the consideration of
his request for issuance of a mediclaim policy – The medical report
D categorically noted that the appellant had diabetes-type II (mellitus-
II) – No other adverse medical condition was found – In the medical
exam report, specific queries were sought as to whether any
abnormalities were observed in the electrocardiogram test of the
appellant and any possible illness or disease for which the appellant
may require medical treatment in the ensuing trip to the USA – To
E
both these queries, the doctor who examined the appellant had
answered “normal” and “no” respectively – The insurer thereafter
accepted the proposal form – Thereafter, the appellant boarded a
flight to USA, on exiting the airport, appellant felt weak and started
sweating – He was admittted at a medical centre – Three stents were
F inserted to remove blockage from his heart vessels – Appellant
claimed benefit under the mediclaim policy – However, appellant
received a letter from respondent stating that his claim had been
repudiated as the appellant had a history of hyperlipidaemia and
diabetes and the policy did not cover pre-existing conditions and
complications arising therefrom – Aggrieved, the appellant filed a
G
complaint u/s.21(9) of the 1986 Act – The Commission held that
concealment or non-disclosure of material facts regarding pre-
existing heart ailment was a valid ground for repudiation of the
insurance claim by the respondent-insurer – On appeal, held:
Appellant had in the proposal form disclosed that he was suffering
H from diabetes mellitus-II and for which the medical test reports were
1138
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1139
LTD. & ANR.

submitted along with the proposal form which were considered by A
the insurance company before the policy was issued to the appellant
– In fact, the appellant stated in his representation against the
repudiation of the policy that he was taking lipid-lowering medicines
not because he was suffering from hyperlipidaemia but as it was
customary to take such medication for prevention of cardio-vascular
B
complications in diabetics – He also stated that he had informed
the physician-doctor, who examined him prior to obtaining the policy,
of the medicines he was taking – Therefore, the insurance company
was well aware of the fact that the insured was a diabetic and was
taking all necessary medication for preventing further complications
and controlling the disease – Hence, there was no suppression of C
any material fact by the appellant to the insurer – The repudiation
of the policy by the respondent insurance company was illegal and
not in accordance with law – Consequently, the appellant entitled
to be indemnified under the policy.
Insurance – Mediclaim Policy – After assessment of medical D
condition – Held: 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 E
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.
Insurance – Mediclaim Policy – Object of – Held: The object
of seeking a mediclaim policy is to seek indemnification in respect F
of a sudden illness or sickness which is not expected or imminent
and which may occur overseas – If the insured suffers a sudden
sickness or ailment which is not expressly excluded under the policy,
a duty is cast on the insurer to indemnify the appellant for the
expenses incurred thereunder.
G
Doctrine/Principle – Principle of ‘uberima fides’ between
insurer and insured – Held: 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 H
1140 SUPREME COURT REPORTS [2021] 11 S.C.R.

A 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 – It is also open
to the parties entering into a contract to extend the duty or restrict
it by the terms of the contract.
B
Insurance – Mediclaim Policy – Contra Proferentem Rule –
Appellant claimed insurance under a mediclaim policy –
Respondents contended that as per the terms and conditions of the
policy “all the complications arising out of pre-existing condition
is not payable” – Claim was repudiated – Held: Respondents were
C not right in stating that as per the terms and conditions of the policy
“all the complications arising out of pre-existing condition is not
payable” – Acute myocardial infraction can occur in a person who
has no history of diabetes mellitus-II – One of the risk factors for
the aforesaid cardiac episode is diabetes mellitus-II – The fact that
D the appellant had diabetes mellitus-II was made known to the
insurance company – The aforesaid clause has to be read against
the respondent insurer by applying the contra proferentem rule against
it – Otherwise, the very contract of insurance would become
meaningless in the instant case – Hence, the respondent-insurance
company was not right in repudiating the policy in question.
E
Words and Phrases – “Material Fact” in insurance policy –
Held: 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 – If specific
queries are made in a proposal form then it is expected that specific
F answers are given by the insured who is bound by the duty to
disclose all material facts.
Allowing the appeal, the Court
HELD: Uberrimae Fidei
G 1. The insurance contracts are special contracts based on
the general principles of full disclosure inasmuch as a person
seeking insurance is bound to disclose all material facts relating
to the risk involved. Law demands a higher standard of good
faith in matters of insurance contracts which is expressed in the
legal maxim uberrimae fidei. [Para 30][1157-B-C]
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1141
LTD. & ANR.

2. Just as the insured has a duty to disclose all material A
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
B
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 entering into a contract to
extend the duty or restrict it by the terms of the contract.
[Para 34][1159-A-C] C
3. Full disclosure must be made of all relevant facts and
matters that have occurred up to the time at which there is a
concluded contract. It follows from this principle that the
materiality of a particular fact is determined by the circumstances
existing at the time when it ought to have been disclosed, and D
not by the events which may subsequently transpire. The duty to
make full disclosure continues to apply throughout negotiations
for the contract but it comes to an end when the contract is
concluded; therefore, material facts which come to the proposer’s
knowledge subsequently need not be disclosed. [Para 40]
[1160-D-F] E

4. Thus, a proposer is under a duty to disclose to the insurer
all material facts as are within his knowledge. The proposer is
presumed to know all the facts and circumstances concerning
the proposed insurance. Whilst the proposer can only disclose
what is known to him, the proposer’s duty of disclosure is not F
confined to his actual knowledge, it also extends to those material
facts which, in the ordinary course of business, he ought to know.
However, the assured is not under a duty to disclose facts which
he did not know and which he could not reasonably be expected
to know at the material time. The second aspect of the duty of G
good faith arises in relation to representations made during the
course of negotiations, and for this purpose all statements in
relation to material facts made by the proposer during the course
of negotiations for the contract constitute representations and
must be made in good faith. [Para 41][1160-F-H]
H
1142 SUPREME COURT REPORTS [2021] 11 S.C.R.

A 5. The basic rules to be observed in making a proposal for
insurance may be summarized as follows :
(a) A fair and reasonable construction must be put upon the
language of the question which is asked, and the answer given
will be similarly construed. This involves close attention to the
B language used in either case, as the question may be so framed
that an unqualified answer amounts to an assertion by the
proposer that he has knowledge of the facts and that the
knowledge is being imparted. However, provided these canons
are observed, accuracy in all matters of substance will suffice
and misstatements or omissions in trifling and insubstantial
C respects will be ignored; (b) Carelessness is no excuse, unless
the error is so obvious that no one could be regarded as misled.
If the proposer puts ‘no’ when he means ‘yes’ it will not avail him
to say it was a slip of the pen; the answer is plainly the reverse of
the truth; (c) An answer which is literally accurate, so far as it
D extends, will not suffice if it is misleading by reason of what is not
stated. It may be quite accurate for the proposer to state that he
has made a claim previously on an insurance company, but the
answer is untrue if in fact he has made more than one; (d) Where
the space for an answer is left blank, leaving the question un-
answered, the reasonable inference may be that there is nothing
E to enter as an answer. If in fact there is something to enter as an
answer, the insurers are misled in that their reasonable inference
is belied. It will then be a matter of construction whether this is a
mere non-disclosure, the proposer having made no positive
statement at all, or whether in substance he is to be regarded as
F having asserted that there is in fact nothing to state; (e) Where
an answer is unsatisfactory, as being on the face of it incomplete
or inconsistent the insurers may, as reasonable men, be regarded
as put on inquiry, so that if they issue a policy without any further
enquiry they are assumed to have waived any further information.
However, having regard to the inference mentioned in head (4)
G above, the mere leaving of a blank space will not normally be
regarded as sufficient to put the insurers on inquiry; (f) A proposer
may find it convenient to bracket together two or more questions
and give a composite answer. There is no objection to his doing

H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1143
LTD. & ANR.

so, provided the insurers are given adequate and accurate A
information on all points covered by the questions; (g) Any answer
given, however accurate and honest at the time it was written
down, must be corrected if, up to the time of acceptance of the
proposal, any event or circumstance supervenes to make it
inaccurate or misleading. [Para 42] [1161-A-H; 1162-A-C]
B
Contra Proferentem Rule
6. The Contra Proferentem Rule has an ancient genesis.
When words are to be construed, resulting in two alternative
interpretations then, the interpretation which is against the person
using or drafting the words or expressions which have given rise C
to the difficulty in construction, applies. This Rule is often invoked
while interpreting standard form contracts. Such contracts heavily
comprise of forms with printed terms which are invariably used
for the same kind of contracts. Also, such contracts are harshly
worded against individuals and not read and understood most
often, resulting in grave legal implications. When such standard D
form contracts ordinarily contain exception clauses, they are
invariably construed contra proferentem rule against the person
who has drafted the same. [Para 44][1162-F-H]
7. On a consideration of the aforesaid judgments, the
following principles would emerge: (i) There is a duty or obligation E
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; (ii) What may be a material fact in a case would F
also depend upon the health and medical condition of the
proposer; (iii) 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; (iv) 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 G
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-

H
1144 SUPREME COURT REPORTS [2021] 11 S.C.R.

A disclosure of a material fact, and seek to repudiate the claim; (v)
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
B
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; (vi) The
insurer must be able to assess the likely risks that may arise
C 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
D
has led to a particular risk in respect of which the claim has been
made by the insured; (vii) 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
E on the queries made in the proposal form and the answer to the
said queries given by the proposer. [Para 52][1172-A-G]
8. The respondent insurance company could not have
repudiated the policy on the ground that acute myocardial
infraction suffered by the appellant on landing at San Francisco,
F USA was a “pre-existing and related complication” which was
excluded under the policy. The insurer was informed about the
pre-existing condition of the appellant, namely, diabetes mallitus-
II and it was for insurer to gauge a related complication under
the policy as a prudent insurer and then issue the policy when
satisfied. In the absence of the same, the treatment availed by
G the appellant for acute myocardial infraction in USA could not
have been termed as a direct offshoot of hyperlipidaemia and
diabetes mellitus so as to be labelled as a pre-existing disease or
illness which the appellant suffered from and had not disclosed
the same. At any rate, the appellant had in the proposal form
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1145
LTD. & ANR.

disclosed that he was suffering from diabetes mellitus-II and for A
which the medical test reports were submitted along with the
proposal form which were considered by the insurance company
before the policy was issued to the appellant. In fact, the appellant
stated in his representation dated 16th November, 2009, against
the repudiation of the policy that he was taking lipid-lowering
B
medicines not because he was suffering from hyperlipidaemia but
as it was customary to take such medication for prevention of
cardio-vascular complications in diabetics. He also stated that
he had informed the physician, who examined him prior to
obtaining the policy, of the medicines he had been taking.
Therefore, the insurance company was well aware of the fact that C
the insured was a diabetic and was taking all necessary medication
for preventing further complications and controlling the disease.
Hence in view of this Court, there was no suppression of any
material fact by the appellant to the insurer. [Para 66][1177-H;
1178-A-E]
D
10. Further on the disclosures made by the appellant with
regard to his existing disease, namely diabetes mellitus-II, the
insurance company considered the same and issued the policy in
question to the appellant. The respondent insurance company as
a prudent insurer considered the details given by the appellant
in the proposal form and issued the policy. The insurance company E
did not think that the medical and health condition of the appellant
was such which did not warrant issuance of a mediclaim policy.
The insurance company therefore did not decline the proposal of
the assured as a prudent insurer. [Para 67][1178-F-G]
11. Therefore, the respondents were not right in stating F
that as per the terms and conditions of the policy “all the
complications arising out of pre-existing condition is not payable.”
As already noted, acute myocardial infraction can occur in a person
who has no history of diabetes mellitus-II. One of the risk factors
for the aforesaid cardiac episode is diabetes mellitus-II. The fact G
that the appellant had diabetes mellitus-II was made known to
the insurance company. Therefore, it is observed that any
complication which would arise from diabetes mellitus-II was also
within the consideration of the insurer. Despite the aforesaid facts
regarding the medical record of the insured, the insurance
H
1146 SUPREME COURT REPORTS [2021] 11 S.C.R.

A company decided to issue the policy to the appellant. The aforesaid
clause has to be read against the respondent insurer by applying
the contra proferentem rule against it. Otherwise, the very contract
of insurance would become meaningless in the instant case.
Hence, in considered view of this Court, the respondent-insurance
company was not right in repudiating the policy in question.
B
[Para 68][1178-G-H; 1179-A-C]
General Assurance Society Ltd., v. Chandmull Jain AIR
1966 SC 1644; Delhi Development Authority v. Durga
Chand Kaushish AIR 1973 SC 2609; Md. Kamgarh
Shah v. Jagdish Chandra AIR 1960 SC 953; United
C India Insurance Co. Ltd. v. Orient Treasures (P) (2016)
3 SCC 49 : [2016] 1 SCR 1; Central Bank of India v.
Hartford Fire Insurance Co. Ltd. AIR 1965 SC 1288;
Sushilaben Indravadan Gandhi v. New India Assurance
Co. Ltd. (2021) 7 SCC 151 : 2020 (4) JT 539 – relied
D on.
Satwant Kaur Sandhu v. New India Assurance Co.
(2009) 8 SCC316 : [2009] 10 SCR 560; Canara Bank
v. United India Insurance Co. (2020) 3 SCC 455 : 2020
(3) SCALE 228;Oriental Insurance Co Ltd. v. Mahendra
E Construction (2019) 18 SCC 209; LIC of India v. Smt.
G.M. Channabasamma (1991) 1 SCC 357 : 1991 ( 5)
JT 73; Canara Bank v. United India Insurance Co.
(2020) 3 SCC 455: 2020 (3) SCALE 228; Hari Om
Agarwal v. Oriental Insurance Co. 2007 (98) DRJ 246;
Sushilaben Indravadan Gandhi and Ors. v. The New
F India Assurance Co. Ltd. and Ors. (2021) 7 SCC 151 :
2020 (4) JT 539; Export Credit Guarantee Society v.
Garg Sons International (2014) 1 SCC 686 : [2013] 1
SCR 336; Satwant Kaur Sandhu v. New India
Assurance Co. (2009) 8 SCC 316 : [2009] 10 SCR 560;
G LIC of India v. Smt. G.M. Channabasemma (1991) 1
SCC 357 : 1991 (5) JT 73; Canara Bank v. United
India Insurance Co. (2020) 3 SCC 455 : 2020 (3)
SCALE 228; Reliance Life Insurance v. Rekhaben
Nareshbhai Rathod, (2019) 6 SCC 175: [2019] 6 SCR
733; Life Insurance Corporation of India v. Manish
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1147
LTD. & ANR.

Gupta, (2019) 11 SCC 371; Branch Manager Bajaj A
Allianz Life Insurance Co. v. Dalbir Kaur AIR 2020
SC 5210; Sulbha Prakash Motegaonkar and Ors. v.
Life Insurance Corporation of India, Civil Appeal No.
8245/2015; Meenakshi Saxena & Anr. Vs. ECGC
Limited (formerly known as Export Credit Guarantee
B
Corporation of India Limited) & Anr. – (2018) 7 SCC
479 : [2018] 5 SCR 421 – referred to.
Carter v. Boehm (1766) 3 Burr 1905; Reynolds v.
Phoenix Assurance Co. Ltd. (1978) 2 Lloyd’s Rep. 440
– referred to.
C
Halsbury’s Laws of England, Fourth Edition, Para 375,
Vol.25: Insurance; MacGillivray on Insurance Law (9th
Edition, Sweet and Maxwell London, 1997 at p.280);
Colinvaux’s Law of Insurance (6th Edi., 1990 at p.42)
– referred to.
D
Case Law Reference
[2009] 10 SCR 560 referred to Para 12
[2016] 1 SCR 1 relied on Para 45 (e)
[2013] 1 SCR 336 referred to Para 45 (f)
E
[2009] 10 SCR 560 referred to Para 50 (i)
[2019] 6 SCR 733 referred to Para 50 (ii)
[2018] 5 SCR 421 referred to Para 71 (ii)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8386 F
of 2015.
From the Judgment and Order dated 22.05.2015 of the National
Consumer Disputes Redressal Commission, New Delhi in Consumer
Complaint No.92 of 2010.
Gopal Sankaranarayanan, Sr. Adv., Ms. Zehra Khan, Shrutanjaya G
Bhardwaj, Ms. Shreya Choudhary for M/s Law Associates, Advs. for
the Appellant.
Ms. Sunaina Phul, Mohit Paul, Advs. for the Respondents.

H
1148 SUPREME COURT REPORTS [2021] 11 S.C.R.

A The Judgment of the Court was delivered by
NAGARATHNA J.
1. This appeal assails order dated 22nd May, 2015, passed by the
National Consumer Disputes Redressal Commission (hereinafter referred
to as “the Commission” for brevity) in Consumer Complaint No. 92/
B 2010 by which the complaint filed by the appellant was dismissed.
2. The facts in a nutshell are that the appellant had sought an
overseas mediclaim policy- B (hereinafter referred to as “mediclaim
policy”) as he intended to travel to the United States of America (“USA”)
to attend the wedding of his sister-in-law’s daughter. The appellant was
C medically examined at the instance of respondent No. 1 insurance
company prior to the consideration of his request for issuance of a
mediclaim policy. On his medical examination, the report categorically
noted that the appellant had diabetes-type II (also known as diabetes
mellitus). No other adverse medical condition was found.
D 3. In the medical exam report, a specific query was sought as to
whether any abnormalities were observed in the electrocardiogram test
of the appellant. There was another query regarding any possible illness
or disease for which the appellant may require medical treatment in the
ensuing trip to the USA. To both these queries, Dr. Jitendra Jain, the
doctor who examined the appellant had answered “normal” and “no”
E respectively. The representative of the respondent insurer on receipt of
the medical reports assured the appellant that on verification of the same
the policy would be issued.
4. The insurer thereafter accepted the proposal form and issued
the Overseas Mediclaim Business and Holiday Policy bearing Policy
F Number 190100/46/09/ 44/70000008 valid from 19th May, 2009 to 1st
June, 2009, to the appellant. Thereafter, the appellant boarded a flight to
San Francisco, USA on 19th May, 2009 at around 1:00 a.m. from Delhi
airport and reached San Francisco on the same day at around 2:00 p.m.
(local time). On exiting the customs section at San Francisco airport,
appellant felt weak and started sweating. His wife got him admitted at
G
the SFO Medical Centre at San Francisco airport and after he received
initial medical treatment, he was shifted to the Mills Peninsula Medical
Centre (hereinafter referred to as “Medical Centre” for the sake of
brevity) where angioplasty was performed on the appellant on 19th May,
2009 and 22nd May and three stents were inserted to remove the blockage
H from the heart vessels.
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1149
LTD. & ANR. [B. V. NAGARATHNA J.]

5. In order to avail the benefit under the mediclaim policy, A
appellant’s son-in-law contacted M/s Corris International, a foreign
collaborator of respondent No. 1 and 2, which was to provide emergency
assistance and claims administration services to the insured. M/s Corris
International sought certain documents regarding details of treatment
given by the Medical Centre as well as details of the mediclaim policy
B
for the purpose of considering the same for indemnifying the appellant.
The appellant was discharged on 24th May, 2009.
6. Two and a half months thereafter, appellant started receiving
bills from the cardio vascular wing of the Medical Centre and SFO
Medical Centre towards the treatment he received at their facility. On
19th August, 2009, the appellant sent a letter annexing all bills in original C
as well as the discharge summary to the Divisional Manager of
respondent No. 1 at their Bhopal office. The same letter was also sent
to respondent No. 2.
7. On 22 nd August, 2009, appellant received a letter from
respondent No. 2 stating that his claim had been repudiated as the appellant D
had a history of hyperlipidaemia and diabetes and the policy did not
cover per-existing conditions and complications arising therefrom. The
said repudiation was with regard to Bill No.1 i.e. the bill raised by the
Medical Centre for USD 2,29,719. The appellant protested against the
repudiation and requested his claim to be settled on a priority basis as
the Medical Centre and the other centre in the USA where he had taken E
treatment had started pressing for release of payment. In this regard a
representation was sent on 16th November, 2009. However, by its letter
dated 9th April, 2010, respondent No.1 reiterated its repudiation of the
claim made by the appellant.
8. Being aggrieved, the appellant filed a complaint under Section F
21 (9) of the Consumer Protection Act, 1986 (hereinafter referred to as
“Act” for brevity) against the respondents, being Consumer Complaint
No.92/2010 before the Commission. A reply was filed to the complaint
by respondent No.1 stating that appellant’s claim was rightly rejected by
respondent No.2 on the ground of non-disclosure of a pre-existing disease
G
as the treatment report of the appellant showed prior medication such as
statins, which is a lipid lowering medicine. The said reply was filed on 3rd
March, 2011. Respondent No.2 also filed its reply on 27 th April, 2011.
Appellant filed his rejoinder to the replies of the respondents in August,
2011. Appellant also filed an additional affidavit enclosing medical opinions
of three doctors on affidavit stating that prescription of statins to a person H
1150 SUPREME COURT REPORTS [2021] 11 S.C.R.

A having diabetes-type II is by way of precaution and not because the
patient would be suffering from any cardiovascular disease. Respondent
No. 1 and 2 filed their evidence by way of affidavit and thereafter written
submissions were filed by both sides. Subsequently, the Commission
dismissed the complaint filed by the appellant on the ground of non-
disclosure of material facts. Hence this appeal by the claimant.
B
9. Before proceeding further, it would be useful to encapsulate
the reasoning of the Commission for dismissing the complaint filed by
the appellant herein, as under:
(i) The Commission concluded that the complainant had a
history of hyperlipidaemia and peptic-ulcer disease in
C addition to diabetes mellitus. Since this was disclosed by
the complainant to medical authorities in the USA, the
Commission found that there was no reason why he could
not have disclosed the condition to the respondent- insurance
company at the time of obtaining the mediclaim policy.
D (ii) That statins are lipid lowering agents which are found
beneficial in primary and secondary prevention of cardio-
vascular complications in diabetics. Given that the
complainant had admitted that he had been under statin
medication, it was found that he had a pre-existing disease
of which disclosure had not been made.
E
(iii) The Commission held that it was the duty of the complainant
to have ensured that complete facts about his health
condition were brought to the knowledge of the insurance
company at the time of obtaining the insurance policy. The
complainant breached this duty of disclosure and acted in a
F manner contrary to the principle of ‘uberima fides’ between
the insurer and the insured.
(iv) Having regard to general condition 10 of the policy, the
Commission found that for any sickness for which insured
had sought advice or had taken medical treatment even at
G the time of issuance of policy, the insured was not entitled
to claim benefit under the policy owing to the “pre-existing
exclusion” under the policy.
(v) The Commission held that concealment or non-disclosure
of material facts regarding pre-existing heart ailment was
a valid ground for repudiation of the insurance claim by the
H respondent - Insurer.
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1151
LTD. & ANR. [B. V. NAGARATHNA J.]

10. We have heard Mr. Gopal Sankarnarayanan, learned Senior A
Counsel along with Ms. Zehra khan, learned counsel, for the appellant
and Ms. Sunaina Phul, learned counsel for respondent No.1 and perused
the material on record.
11. Learned Senior Counsel for appellant submitted that the
appellant was about 55 years of age when he and his wife travelled to B
San Francisco, USA to attend the wedding of his sister-in-law’s daughter.
Appellant was issued overseas mediclaim policy by respondent No.1
after undergoing the requisite medical tests namely: 1) Blood sugar test,
2) Urine examination 3) Electrocardiogram test. Dr. Jitendra Jain,
Assistant Professor in the Department of Medicine, Peoples’ Medical
College, Bhopal, examined the appellant and answered the medical C
questionnaire as provided in the proposal form. The mediclaim policy,
issued to the appellant was for the period between 19 th May, 2009 and
1st June, 2009 and was subsequently extended to 21st June, 2009. The
policy in question contained the nature of coverage and excluded pre-
existing conditions as defined in general condition 10. That on boarding D
the flight to San Francisco from Delhi airport on 19th May, 2009, the
appellant travelled in good health and was fit on the flight. It is only on
arrival at San Francisco airport that the appellant felt weak and was
admitted to the SFO Medical Centre for preliminary treatment and was
later shifted to the Medical Centre. The appellant availed the treatment
for which the charges were USD 2,41,932, approximately Rs. 1,08,86,940 E
at Rs.45 per USD. Since the respondent insurer erroneously repudiated
the claim made by the appellant, the consumer complaint was filed before
the Commission. The Commission by its order dated 22nd May, 2015,
without appreciating the case of the appellant in its true perspective,
dismissed the complaint on the ground that appellant had not disclosed F
true and complete information about his health while taking the policy
and therefore the repudiation clause applied.
12. It was contended by learned Senior Counsel along with learned
counsel for the appellant that the repudiation of the contract on the ground
of suppression of pre-existing disease by appellant was wholly erroneous. G
Our attention was drawn to the fact that respondent No.1 had repudiated
the claim on the premise that the appellant was suffering from
hyperlipidaemia at the time of seeking the insurance policy and in fact
had been prescribed statins, which fact had not been disclosed to the
insurer. It was contended that the appellant had no knowledge that he
was suffering from hyperlipidaemia at the time of submission of the H
1152 SUPREME COURT REPORTS [2021] 11 S.C.R.

A proposal form. The obligation to disclose any fact extends only when the
said fact is known to the appellant but not otherwise. In support of this
submission, reliance was placed on Satwant Kaur Sandhu v. New India
Assurance Co. - (2009) 8 SCC 316. In fact, the proposal form itself
stipulates that it should be completed to the best of the insured’s
“knowledge and belief”. The appellant had stated that he was not suffering
B
from hyperlipidaemia and that the same was diagnosed for the first time
on 19th May, 2009 at the Medical Centre in San Francisco. The doctor
had noted “hyperlipidaemia”, under the column “IMPRESSION”, after
examining the appellant on 21st May, 2009, but the same did not find a
place under “discharge diagnosis” issued to the appellant on 24 th May,
C 2009. There was no intention to suppress any material fact by the appellant
at the time of filling the proposal form as the appellant had no knowledge
that he was suffering from hyperlipidaemia as on 15th May, 2009, when
the proposal form was filled by him.
13. It was next contended that the proposal form was worded in
D such a manner that there was no specific query which could have led to
the appellant disclosing that he was suffering from hyperlipidaemia. This
argument was made as an alternative submission on the assumption that
the appellant had in fact knowledge that he was suffering from
hyperlipidaemia at the time of filling up of proposal form seeking insurance
policy.
E
14. It was further contended that the proposal form and the
insurance policy did not define the terms “pre-existing disease,” “pre-
existing ailment,” “pre-existing condition”, ”disease” or “illness.” That
query number 2 of part 2 dealing with “medical history” in the proposal
form namely “have you ever suffered from any illness or disease up
F to the date of making this proposal”, was too vague and the appellant
left the column blank. Failure to fill in all the queries in the proposal form
cannot be termed as suppression or misdeclaration vide Canara Bank
v. United India Insurance Co. - (2020) 3 SCC 455.
15. Further, question number 5 which read, “Have you ever
G suffered from any illness or disease or had any accident prior to
the first day of insurance” is also overarching as no person can answer
such a question in the negative. Every person to whom a mediclaim
policy is offered, would have, at some point of time, suffered from some
disease or illness but for the same to be considered as a pre-existing
H disease, ailment, condition or illness on which ground a claim could be
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1153
LTD. & ANR. [B. V. NAGARATHNA J.]

repudiated, there is need for a specific definition to be incorporated in A
the policy. This is because every disease or illness cannot be considered
as a pre-existing disease or condition so as to exclude the benefit of the
policy to a policy holder. According to the learned Senior Counsel for the
appellant, the nature of a disease or illness which would exclude a policy
holder or an insured from the benefits of the said policy must be clearly
B
mentioned in the policy itself. The same cannot be vague or non-specific
so as to enable the insurer to interpret the policy to its benefit whenever
a claim is made under the mediclaim policy.
16. It was submitted that for an insurer to repudiate the policy it
must establish suppression or a misrepresentation of material facts on
C
the part of the insured vide Oriental Insurance Co Ltd. v. Mahendra
Construction - (2019) 18 SCC 209 and LIC of India v. Smt. G.M.
Channabasamma - (1991) 1 SCC 357. In order to repudiate the policy,
the insurance company was also required to prove the following:
(a) That the heart attack suffered by the appellant on 19th May,
D
2009 was caused by diabetes mellitus-type II and
hyperlipidaemia,
(b) That hyperlipidaemia was a “pre-existing condition,”
(c) That this fact was known to the appellant and was
suppressed by him at the time of filling up the proposal form, E
i.e. on 15th May, 2009.
17. Instead, respondent insurer only denied that the acute coronary
syndrome for which the complainant-appellant herein had to be treated
at the Medical Centre was a sudden and unexpected sickness. The
respondents, on the other hand, found that a past history of diabetes F
mellitus and hyperlipidaemia were the main causes for the cardiovascular
ailment for which the insured was treated. In support of this stand, the
insurer filed only an affidavit of evidence of its panel doctor, Dr. P.R.
Purandare, which merely opined- “It is obvious that the insured was
suffering from diabetes mellitus and hyperlipidaemia. Also, he was G
taking medications for the same.”
18. There was no evidence let in by the respondents to show that
the pre-existing condition of diabetes mellitus- type II was the cause for
the heart attack suffered by the appellant on 19 th May, 2009 or that the
appellant had any pre-existing heart related illness, disease or condition. H
1154 SUPREME COURT REPORTS [2021] 11 S.C.R.

A 19. It was further urged that the appellant had filed discharge
summary notes of the doctors at the Medical Centre where he was
treated for the period between 19th May, 2009 and 24th May, 2009 and a
perusal of the said documents would indicate that the appellant was
“without prior coronary history.” That from the discharge summary notes
per se, there can be no proof of the appellant suffering from
B
hyperlipidaemia as on 15th May, 2009 when he filled the proposal form
or that the same was a pre-existing condition. That in fact, the discharge
summary indicated the “discharge diagnosis” given to the appellant on
24th May, 2009 which only mentioned:
(a) Acute anterior wall myocardial infraction with congestive heart,
C
(b) Diabetes-type II.
20. That the respondent failed to prove that the heart attack suffered
by the appellant on 19th May, 2009 was caused by diabetes mellitus-
type II and hyperlipidaemia. That appellant had disclosed that he was a
D diabetic and was on medication and the tests done for the same showed
good results. It was submitted that the respondent further failed to prove
that the appellant was suffering from hyperlipidaemia at the time of
filling the proposal form and had made a false representation and
suppressed material facts.

E 21. Referring to the specific terms of the insurance policy, it was
contented by the learned Senior Counsel for appellant that an insurance
policy should be given a purposive interpretation in favour of the insured-
appellant herein. The insurance policy and its components must be read
as a whole and given a meaning which furthers the expectations of
parties and also of the realities of the insurance business vide Canara
F Bank v. United India Insurance Co. - (2020) 3 SCC 455. Further,
the exemption of liability clauses in insurance contracts are to be
construed contra proferentem, in favour of the insured in case of
ambiguity vide Sushilaben Indravadan Gandhi v. New India
Assurance Co. Ltd. - (2021) 7 SCC 151. Reliance was also placed on
G Hari Om Agarwal v. Oriental Insurance Co. - 2007 (98) DRJ 246
wherein the Delhi High Court found that repudiation of a claim towards
treatment for a heart attack on the ground of pre-existing ailment of
diabetes, which was disclosed, was illegal because the object of the
insurance policy was to “cater to medical expenses incurred by the
assured” and therefore the exclusion clause could be overridden in light
H of the object.
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1155
LTD. & ANR. [B. V. NAGARATHNA J.]

22. It was contended by learned Senior Counsel for the appellant A
that the insurance company had failed to prove that the appellant had
suppressed any material fact which was in his knowledge at the time of
filling the proposal form and that the heart attack suffered by the appellant
on 19th May, 2009 arose “out of a pre-existing condition” and was
therefore outside the purview of the insurance policy.
B
23. As opposed to the aforesaid arguments, learned counsel for
respondent No.1 supported the repudiation of the policy by the insurer
and the dismissal of the complaint by the Commission on grounds of
misrepresentation and non-disclosure of material facts in the proposal
form, by the appellant insured. It was submitted that had the appellant
C
disclosed that he was suffering from hyperlipidaemia which was an
existing disease as on the date of the making of the proposal, the insurer
may not have issued the mediclaim policy to him. The insured therefore
did not disclose this vital fact and had not answered the column related
to illness or disease suffered by him up to the date of the filling up of the
proposal form. It was contended that there was a specific clause in the D
schedule of the policy under the heading “important” to the following
effect :
“Notwithstanding anything stated in the policy, it is hereby
agreed that all claims occasioned by, happening through or
in consequence of any disease which is existing on the date E
of commencement of risk, whether specifically declared or
not, the proposal form completed by the insured, is excluded
from the scope of the policy.”
24. It was also necessary that the policy form had to be completed
disclosing all material facts and failure to do so could nullify the policy F
itself.
25. It was contended by learned counsel for respondent No. 1
that the medical history which was suppressed by the appellant in the
proposal form required to be filled up by him prior to the issuance of the
policy, was in fact disclosed to the doctors in USA where he was given G
treatment, by stating that he was prescribed statins which is for the
purpose of controlling/treating hyperlipidaemia. In sum and substance,
the submission was that the non-disclosure or the failure to disclose the
past medical history relating to a pre-existing medical condition in the
proposal form was a good reason to repudiate the policy. This aspect
H
1156 SUPREME COURT REPORTS [2021] 11 S.C.R.

A was rightly appreciated by the Commission and consequently the
Commission dismissed appellant’s complaint, which Order would not
call for any interference in this appeal.
26. Learned counsel for the respective parties have relied upon
certain judgments of this Court in support of their submissions, which
B shall be referred to later.
Points for consideration
27. Having regard to the submissions of the learned Senior Counsel
and learned counsel for the respective sides, the following points would
C arise for our consideration:
(i) Whether the appellant herein had suppressed or not
disclosed material facts in the proposal form which could
have led the insurer to repudiate the policy in question?

D (ii) Whether the Commission was justified in dismissing the
complaint?
(iii) What Order?
28. The fact that a policy namely, Overseas Mediclaim Policy-B,
was issued by the respondent insurance company to the appellant is not
E
in dispute. The appellant intended to travel to USA to attend his sister-
in-law’s daughter’s wedding which was to take place in May, 2009.
Consequently, the appellant sought an overseas mediclaim policy. Dr.
Jitendra Jain, the doctor who examined the appellant prior to issuance of
the policy noted as per Annexure A-2 that the appellant had diabetes
F mellitus-II (DM-2) which was controlled on drugs. There was no mention
of any past history of any disease, operation, accident, investigation etc.
An electrocardiogram test (ECG) was taken and the doctor noted the
same as “normal.” The doctor further noted that there was no current
illness or disease which would possibly require medical treatment during
the proposer’s (appellant’s) forthcoming trip. The doctor did not
G
recommend any stress test. It was also found that in the blood and urine
tests of the appellant there was no trace of sugar. The serum glucose/
fasting test result showed 92%, which was well within the normal values
i.e. between 70-110 mgs %. The urine examination also did not reveal
any abnormality. Thereafter the appellant was requested to fill up the
H proposal form.
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1157
LTD. & ANR. [B. V. NAGARATHNA J.]

29. Before we proceed, it is necessary to discuss two aspects of A
the matter which give rise to the controversy in the present appeal. The
first is what may be expressed in the legal maxim uberrimae fidei or
the principle of good faith and the corresponding principle of disclosure
of all material facts by the parties to an insurance policy. The second
principle is expressed in the contra proferentem rule.
B
Uberrimae Fidei
30. It is observed that insurance contracts are special contracts
based on the general principles of full disclosure inasmuch as a person
seeking insurance is bound to disclose all material facts relating to the
risk involved. Law demands a higher standard of good faith in matters C
of insurance contracts which is expressed in the legal maxim uberrimae
fidei.
31. Mac Gillivray on insurance law 13th Ed. has summarised the
duty of an insured to disclose as under:
“...the assured must disclose to the insurer all facts material D
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 E
making of the contract on the relevant terms.”
32. Lord Mansfield in Carter v. Boehm (1766) 3 Burr 1905
has summarised the principles necessitating disclosure by the assured in
the following words:
“Insurance is a contract of speculation. The special facts F
upon which the contingent chance is to be computed lie most
commonly in the knowledge of the assured only; the
underwriter trusts to 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
G
the circumstance does not exist. The keeping back 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 risk run is really
different from the risk understood and intended to be run at H
1158 SUPREME COURT REPORTS [2021] 11 S.C.R.

A 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.”
B The aforesaid principles would apply having regard to the nature
of policy under consideration, as what is necessary to be disclosed are
“material facts” which phrase is not definable as such, as the same
would depend upon the nature and extent of coverage of risk under a
particular type of policy. In simple terms, it could be understood that any
fact which has a bearing on the very foundation of the contract of
C insurance and the risk to be covered under the policy would be a “material
fact”.
33. Under the provisions of Insurance Regulatory and
Development Authority (Protection of Policyholders’ Interests)
Regulations,2002 the explanation to Section 2 (d) defining “proposal form”
D 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-
E
(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
F 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
G 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.
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1159
LTD. & ANR. [B. V. NAGARATHNA J.]

34. Just as the insured has a duty to disclose all material facts, the A
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
B
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 entering into a contract to extend the duty or
restrict it by the terms of the contract.
35. 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 C
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. D
36. In relation to the duty of disclosure on the insured, any fact
which would influence the judgment of a prudent insurer and not a
particular insurer is a material fact. The test is, whether, the
circumstances in question would influence the prudent insurer and not
whether it might influence him vide Reynolds v. Phoenix Assurance E
Co. Ltd. (1978) 2 Lloyd’s Rep. 440. Hence the test is to be of a
prudent insurer while issuing a policy of insurance.
37. The basic test hinges on whether the mind of a prudent insurer
would be affected, either in deciding whether to take the risk at all or in
fixing the premium, by knowledge of a particular fact if it had been F
disclosed. Therefore, the fact must be one affecting the risk. If it has no
bearing on the risk it need not be disclosed and if it would do no more
than cause insurers to make inquiries delaying issue of the insurance, it
is not material if the result of the inquiries would have no effect on a
prudent insurer.
G
38. Whether a fact is material will depend on the circumstances,
as proved by evidence, of the particular case. It is for the court to rule as
a matter of law, whether, a particular fact is capable of being material
and to give directions as to the test to be applied. Rules of universal
application are not therefore to be expected, but the propositions set out
in the following paragraphs are well established : H
1160 SUPREME COURT REPORTS [2021] 11 S.C.R.

A (a) Any fact is material which leads to the inference, in the
circumstances of the particular case, that the subject matter of
insurance is not an ordinary risk, but is exceptionally liable to be
affected by the peril insured against. This is referred to as the
‘physical hazard”.
B (b) Any fact is material which leads to the inference that the
particular proposer is a person, or one of a class of persons, whose
proposal for insurance ought to be subjected at all or accepted at
a normal rate. This is usually referred to as the ‘moral hazard’.
The materiality of a particular fact is determined by the
C circumstances of each case and is a question of fact.
39. 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.
D 40. Full disclosure must be made of all relevant facts and matters
that have occurred up to the time at which there is a concluded contract.
It follows from this principle that the materiality of a particular fact is
determined by the circumstances existing at the time when it ought to
have been disclosed, and not by the events which may subsequently
E transpire. The duty to make full disclosure continues to apply throughout
negotiations for the contract but it comes to an end when the contract is
concluded; therefore, material facts which come to the proposer’s
knowledge subsequently need not be disclosed.
41. Thus, a proposer is under a duty to disclose to the insurer all
F material facts as are within his knowledge. The proposer is presumed to
know all the facts and circumstances concerning the proposed insurance.
Whilst the proposer can only disclose what is known to him, the proposer’s
duty of disclosure is not confined to his actual knowledge, it also extends
to those material facts which, in the ordinary course of business, he
ought to know. However, the assured is not under a duty to disclose
G facts which he did not know and which he could not reasonably be
expected to know at the material time. The second aspect of the duty of
good faith arises in relation to representations made during the course of
negotiations, and for this purpose all statements in relation to material
facts made by the proposer during the course of negotiations for the
contract constitute representations and must be made in good faith.
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1161
LTD. & ANR. [B. V. NAGARATHNA J.]

42. The basic rules to be observed in making a proposal for A
insurance may be summarized as follows :
(a) A fair and reasonable construction must be put upon the
language of the question which is asked, and the answer
given will be similarly construed. This involves close attention
to the language used in either case, as the question may be B
so framed that an unqualified answer amounts to an
assertion by the proposer that he has knowledge of the facts
and that the knowledge is being imparted. However,
provided these canons are observed, accuracy in all matters
of substance will suffice and misstatements or omissions in
trifling and insubstantial respects will be ignored. C

(b) Carelessness is no excuse, unless the error is so obvious
that no one could be regarded as misled. If the proposer
puts ‘no’ when he means ‘yes’ it will not avail him to say it
was a slip of the pen; the answer is plainly the reverse of
the truth. D

(c) An answer which is literally accurate, so far as it extends,
will not suffice if it is misleading by reason of what is not
stated. It may be quite accurate for the proposer to state
that he has made a claim previously on an insurance
company, but the answer is untrue if in fact he has made E
more than one.
(d) Where the space for an answer is left blank, leaving the
question un-answered, the reasonable inference may be that
there is nothing to enter as an answer. If in fact there is
something to enter as an answer, the insurers are misled in F
that their reasonable inference is belied. It will then be a
matter of construction whether this is a mere non-disclosure,
the proposer having made no positive statement at all, or
whether in substance he is to be regarded as having asserted
that there is in fact nothing to state. G
(e) Where an answer is unsatisfactory, as being on the face of
it incomplete or inconsistent the insurers may, as reasonable
men, be regarded as put on inquiry, so that if they issue a
policy without any further enquiry they are assumed to have
waived any further information. However, having regard
H
1162 SUPREME COURT REPORTS [2021] 11 S.C.R.

A to the inference mentioned in head (4) above, the mere
leaving of a blank space will not normally be regarded as
sufficient to put the insurers on inquiry.
(f) A proposer may find it convenient to bracket together two
or more questions and give a composite answer. There is
B no objection to his doing so, provided the insurers are given
adequate and accurate information on all points covered by
the questions.
(g) Any answer given, however accurate and honest at the
time it was written down, must be corrected if, up to the
C time of acceptance of the proposal, any event or
circumstance supervenes to make it inaccurate or
misleading.
[Source : Halsbury’s Laws of England, Fourth Edition,
Para 375, Vol.25 : Insurance]
D
43. Sometimes the standard of duty of disclosure imposed on the
insured could make the insured vulnerable as the statements in the
proposal form could be held against the insured. Conversely, certain
clauses in the policy of insurance could be interpreted in light of the
contra proferentem rule as against the insurer. In order to seek specific
E information from the insured, the proposal form must have specific
questions so as obtain clarity as to the underlying risks in the policy,
which are greater than the normal risks.
Contra Proferentem Rule

F 44. The Contra Proferentem Rule has an ancient genesis. When
words are to be construed, resulting in two alternative interpretations
then, the interpretation which is against the person using or drafting the
words or expressions which have given rise to the difficulty in
construction, applies. This Rule is often invoked while interpreting
standard form contracts. Such contracts heavily comprise of forms with
G printed terms which are invariably used for the same kind of contracts.
Also, such contracts are harshly worded against individuals and not read
and understood most often, resulting in grave legal implications. When
such standard form contracts ordinarily contain exception clauses, they
are invariably construed contra proferentem rule against the person
H who has drafted the same.
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1163
LTD. & ANR. [B. V. NAGARATHNA J.]

45. Some of the judgments which have considered the contra A
proferentem rule are referred to as under :
a) In General Assurance Society Ltd., v. Chandmull Jain -
AIR 1966 SC 1644, it was held that where there is an
ambiguity in the contract of insurance or doubt, it has to be
construed contra proferentem against the Insurance B
Company.
b) I n Delhi Development Authority v. Durga Chand
Kaushish - AIR 1973 SC 2609, it was observed:
“In construing a document one must have regard, not to
the presumed intention of the parties, but to the meaning C
of the words they have used. If two interpretations of
the document are possible, the one which would give
effect and meaning to all its parts should be adopted
and for the purpose, the words creating uncertainty in
the document can be ignored.” D
c) Further, in Central Bank of India v. Hartford Fire
Insurance Co. Ltd. AIR 1965 SC 1288, it was held:
“What is called the contra proferentem rule should be
applied and as the policy was in a standard form contract
prepared by the insurer alone, it should be interpreted in E
a way that would be favourable to the assured.”
d) In Md. Kamgarh Shah v. Jagdish Chandra AIR 1960
SC 953, it was observed that where there is an ambiguity it
is the duty of the court to look at all the parts of the document
to ascertain what was really intended by the parties. But F
even here the rule has to be borne in mind that the document
being the grantor’s document it has to be interpreted strictly
against him and in favour of the grantee.
e) In United India Insurance Co. Ltd. v. Orient Treasures
(P) (2016) 3 SCC 49 this Court quoted Halsbury’s laws G
of England (5th Ed. Vol. 60, Para 105) on the Contra
Proferentem rule as under :
“Contra proferentem rule.-Where there is ambiguity in
the policy the court will apply the contra proferentem
rule. Where a policy is produced by the insurers, it is H
1164 SUPREME COURT REPORTS [2021] 11 S.C.R.

A their business to see that precision and clarity are attained
and, if they fail to do so, the ambiguity will be resolved
by adopting the construction favourable to the insured.
Similarly, as regards language which emanates from the
insured, such as the language used in answer to questions
in the proposal or in a slip, a construction favourable to
B
the insurers will prevail if the insured has created any
ambiguity. This rule, however, only becomes operative
where the words are truly ambiguous; it is a Rule for
resolving ambiguity and it cannot be invoked with a view
to creating a doubt. Therefore, where the words used
C are free from ambiguity in the sense that, fairly and
reasonably construed, they admit of only one meaning,
the Rule has no application.”
f) Learned counsel for the appellant have relied upon
Sushilaben Indravadan Gandhi and Ors. v. The New
D India Assurance Co. Ltd. and Ors. (2021) 7 SCC 151
wherein it was observed that any exemption of liability
clause in an insurance contract must be construed, in case
of ambiguity, contra proferentem against the insurer. In
the said case reliance was placed on Export Credit
Guarantee Society v. Garg Sons International (2014) 1
E
SCC 686 wherein this court held as under:
“The insured cannot claim anything more than what
is covered by the insurance policy. “The terms of the
contract have to be construed strictly, without
altering the nature of the contract as the same may
F
affect the interests of the parties adversely.” The
clauses of an insurance policy have to be read as
they are. Consequently, the terms of the insurance
policy, that fix the responsibility of the insurance
company must also be read strictly. The contract must
G be read as a whole and every attempt should be made
to harmonise the terms thereof, keeping in mind that
the Rule of contra proferentem does not apply in case
of commercial contract, for the reason that a Clause
in a commercial contract is bilateral and has
mutually been agreed upon.”
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1165
LTD. & ANR. [B. V. NAGARATHNA J.]

46. Delving on the facts of the case and on consideration of IMT- A
5 and IMT-16 of the comprehensive private car (B) policy with regard
to the limitation of liability clause, it was observed that the contra
proferentem rule applies in case of real ambiguity and if on a reading of
the whole policy the meaning of the clauses of a contract are clear there
is no room for the application of the doctrine. On the facts of the said
B
case, the appeal was allowed by holding that the insurance company
was liable to pay the entire amount claimed. The said case arose from
an appeal against the order of the High Court of Gujarat wherein the
Court had directed that the liability of the insurer shall be limited to a
sum of Rs. 25,000/- and the remaining claim amount shall be payable by
the employer (hospital) of the deceased. Ambiguity arising with regard C
to the interpretation of the term ‘employee’ as appearing in the limitation
of liability clause in the insurance contract was construed contra
proferentem against the insurance company by holding that the deceased
was not an employee of the hospital and that therefore, the entire liability
would lie upon the insurer. This Court, therefore, required the insurer
D
therein to pay the entire claim amount to the wife of the deceased.
47. MacGillivray on Insurance Law (9th Ed., Sweet and Maxwell
London, 1997 at p. 280) deals with the rule of Contra Proferentem as
under :
“The contra proferentem Rule of construction arises only E
where there is a wording employed by those drafting the
Clause which leaves the court unable to decide by ordinary
principles of interpretation which of two meanings is the right
one. ‘One must not use the Rule to create the ambiguity - one
must find the ambiguity first.’ The words should receive their
ordinary and natural meaning unless that is displaced by a F
real ambiguity either appearing on the face of the policy or,
possibly, by extrinsic evidence of surrounding circumstances.”
48. Colinvaux’s Law of Insurance (6th Ed., 1990 at p. 42) has
elucidated on the said rule in the following words:
G
“Quite apart from contradictory clauses in policies,
ambiguities are common in them and it is often very uncertain
what the parties to them mean. In such cases the Rule is that
the policy, being drafted in language chosen by the insurers,
must be taken most strongly against them. It is construed
contra proferentem, against those who offer it. In a doubtful H
1166 SUPREME COURT REPORTS [2021] 11 S.C.R.

A case the turn of the scale ought to be given against the speaker,
because he has not clearly and fully expressed himself.
Nothing is easier than for the insurers to express themselves
in plain terms. The assured cannot put his own meaning upon
a policy, but, where it is ambiguous, it is to be construed in
the sense in which he might reasonably have understood it. If
B
the insurers wish to escape liability under given circumstances,
they must use words admitting of no possible doubt.”
49. The aforesaid principles could be applied to the present case
having regard to the nature of the policy in question i.e. a mediclaim
policy, the specific queries in the proposal form and the answers thereto
C given by the appellant in the context of the general and specific clauses
therein.
50. But before entering upon the factual controversy in the instant
case, it would be useful to discuss the relevant judgments cited at the
Bar :
D
(i) Learned Senior Counsel for appellant have relied upon the
following judgments in support of the claim of the appellant:-
a) Satwant Kaur Sandhu v. New India Assurance Co. (2009)
8 SCC 316 :
In the said case the husband of the appellant therein had
E
taken a mediclaim policy provided by the respondent insurer therein
for the period from 7th May, 1990 to 6th May, 1991. The appellant
therein suddenly fell ill and was admitted to a hospital in Ludhiana
and thereafter to a health centre in Chennai where his condition
deteriorated ultimately leading to his death on 26th December, 1990.
F The insurance company therein was informed about his death
and a claim for reimbursement was made. The respondent insurer
therein made inquiries from Madras Institute of Nephrology
(Health Centre) and obtained a certificate dated 6th May, 1992,
stating that the deceased was a known case of “chronic renal
failure/diabetic nephropathy” and that the complainant was on
G
regular haemodialysis at his place leading to his death. The
insurance company therein repudiated the claim. The core question
considered by this Court in the said case was whether the fact
that the policy holder was suffering from chronic diabetes and
renal failure at the time of taking out the mediclaim policy was a
H material fact and therefore, on account of non-disclosure of this
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1167
LTD. & ANR. [B. V. NAGARATHNA J.]

fact in the proposal form, the respondent Insurance Company A
was justified in law in repudiating the claim of the appellant therein.
This Court dealt with the concept of material fact and
observed at para 20 as under:
“20. The upshot of the entire discussion is that in a
Contract of Insurance, any fact which would influence B
the mind of a prudent insurer in deciding whether to
accept or not to accept the risk is a “material fact”. If
the proposer has knowledge of such fact, he is obliged
to disclose it particularly while answering questions in
the proposal form. Needless to emphasise that any C
inaccurate answer will entitle the insurer to repudiate
his liability because there is clear presumption that any
information sought for in the proposal form is material
for the purpose of entering into a Contract of
Insurance.”
D
Ultimately this Court held as under:
“21. Bearing in mind the aforestated legal position, we
may advert to the facts in hand. As noted earlier, the
proposal form contained the following two questions:
Details of illness which may require treatment in the near E
future;
Details of treatment/surgical operation in the last two
months.
Answers given by the proposer to the two questions were
“Sound Health” and “Nil” respectively. It would be F
beyond anybody’s comprehension that the insured was
not aware of the state of his health and the fact that he
was suffering from diabetes as also chronic Renal
failure, more so when he was stated to be on regular
haemodialysis. There can hardly be any scope for doubt
G
that the information required in the afore- extracted
questions was on material facts and answers given to
those questions were definitely factors which would have
influenced and guided the respondent - Insurance
Company to enter into the Contract of Mediclaim
Insurance with the insured.” H
1168 SUPREME COURT REPORTS [2021] 11 S.C.R.

A Learned counsel for the respondent insurer has also relied
upon Satwant Kaur Sandhu supra and has emphasised on para
20 of the said judgment extracted above.
It was observed that there was clear suppression of material
facts relating to the health of the insured and that therefore, the
B respondent insurer was fully justified in repudiating the insurance
contract. But the aforesaid judgment is sought to be distinguished
by learned counsel for appellant.
(b) In LIC of India v. Smt. G.M. Channabasemma (1991) 1
SCC 357, it was observed that there is an obligation upon the
C assured to disclose all material facts which may be relevant to the
insurer but after issuing a policy, the burden of proving that the
insured had made false representations and suppressed material
facts is on the insurer. In the said case, it was held that the
physician’s statement did not lead to a conclusion that the
D respondent therein was influenced by a serious disease for a long
time. On consideration of the evidence led by the parties therein,
it was observed that the insurer had failed to prove that the insured
was suffering from diabetes or tuberculosis at the time of filling
up the proposals for the policies or that he had given any false
answer in his statements or suppressed any material fact which
E he was under a duty to disclose. The finding of the Trial Court
that the assured had committed fraud on the insurer while taking
out the policies was reversed and the appeal was allowed.
(c) Canara Bank v. United India Insurance Co. (2020) 3 SCC
455, is a case in which this Court held that if a column is left
F blank, the insurance company should ask the insured to fill up the
column. If the insurance company while accepting the proposal
form does not ask the insured to clarify any ambiguity then the
insurance company after accepting premium cannot urge that there
was a wrong declaration made by the insured. Leaving out a column
G blank does not mean that there was a misdescription of facts. To
make a contract void, the non-disclosure should be of some very
material fact. Therefore, the insurer therein was directed to
indemnify the insured in the case. The judgment in Satwant Kaur
Sandhu (supra) was distinguished and held not applicable in this
case.
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1169
LTD. & ANR. [B. V. NAGARATHNA J.]

d) Hari Om Agarwal v. Oriental Insurance Co. 2007 (98) A
DRJ 246, is a decision on a mediclaim policy. In the said case, it
was held that the insured had suffered from diabetes as well as
hypertension at the time of submission of the proposal. The insured
was advised to undergo ECG which he did. Thereafter, the
proposal was accepted and the cover note was issued. Clause
B
4.1 of the policy therein came up for interpretation. It was observed
that hypertension and diabetes could lead to a host of ailments
such as stroke, cardiac disease, renal failure, liver disorder,
depending upon various factors. Such ailments can equally arise
in non-diabetics and those without hypertension. Giving a
contextual interpretation to clause 4.1 of the policy, it was observed C
that such an interpretation was necessary to avoid rendering a
medical cover meaningless. Hence the main purpose rule was
pressed into service by holding that clause 4.1 of the said policy
could not be used to override the primary liability of the insurer.
(ii) The following citations were relied upon by learned counsel D
for respondent No. 1 in support of validity of the repudiation
of the insurance claim:
a) Reliance Life Insurance v. Rekhaben Nareshbhai Rathod,
(2019) 6 SCC 175, is a case where the insured therein, while
seeking a life insurance policy failed to disclose in the proposal E
form that he had earlier obtained another insurance cover for his
life, two months before obtaining the policy in question. The spouse
of the assured therein submitted a claim under the terms of the
policy after the death of the assured. The insurance company
repudiated the claim on the ground of non-disclosure of the fact
that insured had taken out another policy to insure his life before F
obtaining the policy in question. The State Commission found that
the repudiation of claim was unjustified as the omission of the
insured to disclose a previous policy of insurance would not have
influenced the mind of a prudent insurer. The National Commission
affirmed the findings of the State Commission. In an appeal before G
this Court, the decision of the National Commission was reversed
and the Court allowed the claim to be repudiated by the insurer. It
was held that the disclosure of the earlier cover was material to
an assessment of the risk which was being undertaken by the
insurer. The duty of full disclosure required that no information of
substance or interest to the insurer be omitted or concealed. H
1170 SUPREME COURT REPORTS [2021] 11 S.C.R.

A b) In Life Insurance Corporation of India v. Manish Gupta,
(2019) 11 SCC 371, the respondent therein had obtained a
mediclaim policy from the appellant insurer. The proposal form
sought disclosure of health details and medical information of the
assured. With regard to the query as to whether the proposer/
assured had suffered from any “cardio-vascular disease e.g.
B
palpitations, heart attack, stroke, chest pain,” the assured answered
in the negative. The assured underwent a mitral valve replacement
surgery. A claim for treatment expenses was made by the hospital
where treatment was administered and the said claim was
repudiated by the insurer on the ground of non-disclosure of pre-
C existing cardiac condition. An appeal filed before this Court was
allowed. This Court, on consideration of documentary material
placed before it found that the discharge card of the assured
recorded his history of “rheumatic heart disease since childhood.”
This Court therefore allowed the repudiation of claim by the insurer
on the ground that the assured had failed to disclose, at the time
D
of seeking the mediclaim policy, that he had suffered from
rheumatic heart disease since childhood.
51. We have also considered the following judgments :
c) In Branch Manager Bajaj Allianz Life Insurance Co. v.
E Dalbir Kaur - AIR 2020 SC 5210, a proposal form was submitted
to the appellant therein for a life insurance policy containing
questions pertaining to the health and medical history of the
proposer and required a specific disclosure as to whether the
proposer had undergone any treatment. The proposer answered
F the queries in the negative. Further a query regarding specific
diseases or disorders suffered was also responded to in the
negative. A policy of insurance was issued by the insurer on 12th
August, 2014, insuring the life of the proposer for a sum of Rs.
8.50 lakhs payable on maturity with the death benefit of Rs. 17
lakhs. On 12th September, 2014, the insured, Kulwant Singh, died
G giving rise to a claim under the policy. The claim was subjected to
an independent investigation and the records revealed that the
deceased had been suffering from hepatitis C. The claim was
repudiated giving rise to a consumer complaint which was allowed
by the District Forum. The appeal before the State Forum was
also dismissed, so also by the National Commission, the revision
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1171
LTD. & ANR. [B. V. NAGARATHNA J.]

was dismissed. Being aggrieved the insurance company had A
preferred an appeal before this Court. It was held that the
investigation conducted by the insurer in the said case clearly
indicated that the deceased was suffering from a pre-existing
medical condition which was not disclosed to the insurer despite
specific queries relating to any ailment, hospitalisation or treatment
B
undergone by the proposer in column 22 of the proposal form
therein. Hence the judgment of the Commission was set aside but
since the claim amount was paid to the respondent, exercising
jurisdiction under Article 142 of the Constitution it was directed
that no recoveries be made by the respondent insurer therein.
C
In the aforesaid judgment, this Court distinguished Sulbha
Prakash Motegaonkar and Ors. v. Life Insurance Corporation
of India, Civil Appeal No. 8245/2015 decided on 5th October,
2015, by holding that in the said case the assured therein suffered
myocardial infraction and succumbed to it. The claim was
repudiated by the insurance company on the ground that there D
was a suppression of a pre-existing lumbar spondylitis. It was in
this background that this Court held that the alleged concealment
was of such a nature that would not dis-entitle the deceased from
getting his life insured. In other words, the pre-existing ailment
was clearly unrelated to the cause of death. E
52. On a consideration of the aforesaid judgments, the following
principles would emerge:
(i) There is a duty or obligation of disclosure by the insured
regarding any material fact at the time of making the F
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.
(ii) What may be a material fact in a case would also depend G
upon the health and medical condition of the proposer.
(iii) 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.
H
1172 SUPREME COURT REPORTS [2021] 11 S.C.R.

A (iv) 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
B
fact, and seek to repudiate the claim.
(v) 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
C 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
D by the insured and for that reason repudiate the claim.
(vi) 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
E
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.
F
(vii) 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
G said queries given by the proposer.
53. We shall now consider the facts of the present case. The
relevant portion of proposal form for the overseas mediclaim policy-B is
extracted as under:
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1173
LTD. & ANR. [B. V. NAGARATHNA J.]

A

B

C

D

E

F

G

H
1174 SUPREME COURT REPORTS [2021] 11 S.C.R.

A 54. The proposal form was submitted by the appellant on 15th
May, 2009. The proposed date of departure of the appellant to USA was
19th May, 2009. As required, the proposal form was accompanied with:
(a) ECG test printout with report, (b) fasting blood sugar and urine strip
test report. The proposal form also stated :
B “In the absence of such medical tests and reports due to a
shortage of time before travel, cover may still be granted
subject to a satisfactory proposal form by the sum assured
under the policy, in respect of expenses incurred for the
treatment of illness, disease shall be restricted to US 10,000
Dollars only which shall not cover the cost of medical treatment
C for pre-existing disease. In case of accident, however, the
full sum of insured benefit will be available.”
55. Learned counsel for the insurer contended that in the columns
dealing with medical history - query no. 2 which reads, “have you ever
suffered from any illness or disease up to the date of making this
D proposal” no answer was given by the appellant. Hence, there was
suppression of the fact that the appellant was suffering from a heart
disease for which he was prescribed statins and the said fact was material
fact as it related to a pre-existing disease or illness which is excluded
under the policy. In support of this submission, reliance was placed on
E the following clause:
“IMPORTANT
Notwithstanding anything stated in the policy it is hereby and
agreed that all claims occasioned by, happening through or
in consequence of any disease which is existing at the date of
F commencement of risk, whether specifically declared or not,
the proposal form completed by the insured, is excluded from
the scope of the policy.”
In support of this clause, reliance was placed on clause 10 (b)
(typed as 11 (b) in Annexure A-6.) and 10 (c) which state that the policy
G was not designed to provide an indemnity in respect of medical services,
the need for which arises out of a pre-existing condition as defined under
clause 10 (b). A pre-existing condition was defined to mean “any sickness
for which the insured person had sought medical advice or had
taken medical treatment in the preceding 10 months prior to the
commencement of travel.”
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1175
LTD. & ANR. [B. V. NAGARATHNA J.]

56. It was contended that there was non-disclosure or suppression A
of the fact that the appellant had been advised to take statins owing to a
cholesterol problem, which is a risk-factor for cardiac disease and this
fact was not disclosed in the proposal form whereas it was mentioned to
the doctor who treated the appellant in USA. Hence the repudiation of
the policy was justified.
B
57. We have considered the aforesaid submissions in light of the
relevant clauses in the proposal form and by taking into consideration
the arguments of the learned Senior Counsel for the appellant.
58. On a reading of the queries pertaining to medical history it is
noted as under: C
(i) Query no. 1 which reads, “are you in good health and free
from physical and mental disease and infirmity?” The answer
given was “yes.”
This indicates the current status of health at the time of filling up
of the proposal form. D
(ii) On the other hand, query no. 2 which reads “have you ever
suffered from any illness or disease up to the date of making
this proposal?”, is a query with regard to the past health condition
of the insured.
(iii) The above is discerned from query no. 4 which reads, “have E
you ever been admitted to any hospital, nursing home/clinic
for treatment or observation?”
(iv) Query no. 5 which reads, “have you suffered from any illness
or disease or had an accident prior to the first day of
insurance?” F
59. On a contextual and conjoint reading of the aforesaid queries
it is evident that the object of seeking answers from a proposer to the
aforesaid queries was, as a prudent insurer to discern whether the
proposer had any pre-existing condition for which he had taken medical
advice or medical treatment in the 12 months preceding the
G
commencement of travel. Any disclosure of an illness or disease suffered/
diagnosed in 12 months preceding the commencement of travel would
indicate a pre-existing condition which fact may lead a prudent insurer
not to provide an indemnity in respect of medical services, the need for
which may arise during the term of the mediclaim policy or lead the
insurer to reduce the scope and coverage of risk under the policy. H
1176 SUPREME COURT REPORTS [2021] 11 S.C.R.

A 60. In the instant case, since the appellant herein answered query
no. 1 in the affirmative and query no. 4 and 5 in the negative it implies
that he did not suffer from any illness or disease up to the date of making
his proposal apart from what had been disclosed by him, namely diabetes
mellitus-II. The respondent insurer being appraised about the said medical
condition of the appellant, issued policy to the appellant herein. The
B
respondent insurer did not consider the said medical condition of the
appellant as a risk factor for any possible cardiac ailment during the
term of the policy so as to decline acceptance of the proposal form and
issuance of the mediclaim policy. Also, report of the ECG was considered
by one of the panel doctors of respondent-insurer and having found the
C same to be normal, the policy was issued to the appellant.
61. That apart, query no. 8 in the policy is worded in following
terms:
“Please give details of any knowledge of any positive
existence of any ailment, sickness or injury which may require
D medical attention whist on tour abroad.”
The answer to the same was “NIL.”
62. In support of the aforesaid answer, the submission of learned
Senior Counsel along with learned counsel for appellant was that ECG
E report and blood and urine test reports were given as the appellant had
knowledge of his ailment, namely, diabetes mellitus-II and the same were
taken into consideration favourably by the insurer as the said reports
showed normal results. It was contended by learned Senior Counsel for
the appellant that the appellant had no knowledge of any heart ailment
which could require medical attention whilst on tour abroad.
F
63. It was further submitted that the appellant was on statins and
the same was prescribed to him as diabetes mellitus-II which was
disclosed by the appellant in the proposal form is one of the risk factors
for cardiac disease. Thus, in order to reduce the risk of a cardiac ailment
in future, statins were prescribed. The same is also prescribed for
G controlling hyperlipidaemia but the appellant did not suffer from any heart
ailment or hyperlipidaemia.
64. We find considerable force in the argument made on behalf of
the appellant. This is because while diabetes mellitus-II is a risk factor
for a cardiac ailment in a person, it is not a hard and fast rule that every
H person having diabetes mellitus-II would necessarily suffer from a cardiac
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1177
LTD. & ANR. [B. V. NAGARATHNA J.]

disease. Conversely, a person who does not suffer from diabetes mellitus- A
II can also suffer from a cardiac ailment. Thus, what the appellant had
knowledge of was the existence of diabetes mellitus-II, for which he
was under treatment. In order to disclose the status of the said disease
he had submitted his ECG report, blood and urine test reports which
showed normal results. The fact that ECG report showed normal
B
parameters would indicate that the appellant had no cardiac disease.
The prescription of statins to the appellant was only as a precaution to
prevent a possible cardiac ailment from developing in the future as
diabetes mellitus-II is a risk factor for such a disease. But by that, it
cannot be deduced or inferred that because the appellant had a cardiac
ailment or hyperlipidaemia, he was prescribed statins. C
65. Further, what was required to be disclosed in query no. 8
under the caption medical history was
“Knowledge of any positive existence of any ailment, sickness
or injury which may require medical attention whist on tour
abroad” D

This means that any ailment, sickness or injury of which the
proposer had positive knowledge of, and which may require imminent
medical attention whilst on tour abroad and during the term of the policy
had to be disclosed. If the proposer had no knowledge of any ailment he
had, obviously there could be no disclosure of any ailment or sickness E
which would require medical attention whilst on tour abroad. In fact, the
aforesaid query has also to be considered in the context of the further
declaration sought by the insurance company to the effect that the
proposer was:
(a) not travelling against the advice of a physician, F
(b) not on the waiting list of any medical treatment,
(c) not travelling for the purpose of receiving medical
treatment,
(d) not received a terminal prognosis for a medical G
condition before the date of submitting the proposal
form.
66. Viewed in the aforesaid perspective, it is held that the
respondent insurance company could not have repudiated the policy on
the ground that acute myocardial infraction suffered by the appellant on H
1178 SUPREME COURT REPORTS [2021] 11 S.C.R.

A landing at San Francisco, USA was a “pre-existing and related
complication” which was excluded under the policy. The insurer was
informed about the pre-existing condition of the appellant, namely, diabetes
mallitus-II and it was for insurer to gauge a related complication under
the policy as a prudent insurer and then issue the policy when satisfied.
In the absence of the same, the treatment availed by the appellant for
B
acute myocardial infraction in USA could not have been termed as a
direct offshoot of hyperlipidaemia and diabetes mellitus so as to be labelled
as a pre-existing disease or illness which the appellant suffered from
and had not disclosed the same. At any rate, the appellant had in the
proposal form disclosed that he was suffering from diabetes mellitus-II
C and for which the medical test reports were submitted along with the
proposal form which were considered by the insurance company before
the policy was issued to the appellant. In fact, the appellant stated in his
representation dated 16th November, 2009, against the repudiation of the
policy that he was taking lipid-lowering medicines not because he was
suffering from hyperlipidaemia but as it was customary to take such
D
medication for prevention of cardio-vascular complications in diabetics.
He also stated that he had informed the physician, Dr. Jitendra Jain, who
examined him prior to obtaining the policy, of the medicines he had been
taking. Therefore, the insurance company was well aware of the fact
that the insured was a diabetic and was taking all necessary medication
E for preventing further complications and controlling the disease. Hence
in our view, there was no suppression of any material fact by the appellant
to the insurer.
67. Further on the disclosures made by the appellant with regard
to his existing disease, namely diabetes mellitus-II, the insurance company
F considered the same and issued the policy in question to the appellant.
The respondent insurance company as a prudent insurer considered the
details given by the appellant in the proposal form and issued the policy.
The insurance company did not think that the medical and health condition
of the appellant was such which did not warrant issuance of a mediclaim
policy. The insurance company therefore did not decline the proposal of
G
the assured as a prudent insurer.
68. Therefore, the respondents were not right in stating that as
per the terms and conditions of the policy “all the complications arising
out of pre-existing condition is not payable.” As already noted, acute
myocardial infraction can occur in a person who has no history of diabetes
H
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. 1179
LTD. & ANR. [B. V. NAGARATHNA J.]

mellitus-II. One of the risk factors for the aforesaid cardiac episode is A
diabetes mellitus-II. The fact that the appellant had diabetes mellitus-II
was made known to the insurance company. Therefore, it is observed
that any complication which would arise from diabetes mellitus-II was
also within the consideration of the insurer. Despite the aforesaid facts
regarding the medical record of the insured, the insurance company
B
decided to issue the policy to the appellant. The aforesaid clause has to
be read against the respondent insurer by applying the contra
proferentem rule against it. Otherwise, the very contract of insurance
would become meaningless in the instant case. Hence, in our considered
view, the respondent-insurance company was not right in repudiating
the policy in question. C
69. The object of seeking a mediclaim policy is to seek
indemnification in respect of a sudden illness or sickness which is not
expected or imminent and which may occur overseas. If the insured
suffers a sudden sickness or ailment which is not expressly excluded
under the policy, a duty is cast on the insurer to indemnify the appellant D
for the expenses incurred thereunder.
70. Hence in the instant case, the repudiation of the policy by the
respondent insurance company was illegal and not in accordance with
law. Consequently, the appellant is entitled to be indemnified under the
policy. In view of the aforesaid discussion, we hold that the Commission E
was not right in dismissing the complaint filed by the appellant herein.
71. The appeal is allowed in the following terms:
(i) The respondents are directed to indemnify the appellant
regarding the expenses incurred by him towards his medical F
treatment within a period of one month from the date of
receipt of a copy of this judgment with interest at the rate
of 6% per annum from the date of filing the claim petition
before the Commission till realisation.
(ii) Since the expenses incurred by the appellant was in terms G
of US Dollars and the claim would be paid in terms of Indian
Rupees, the exchange rate as it existed on the date the
claim petition was filed by the appellant herein before the
Commission or at Rs.45 INR, whichever is lesser, shall be
reckoned for the purpose of determining the conversion rate
H
1180 SUPREME COURT REPORTS [2021] 11 S.C.R.

A of US Dollars into Indian Rupees vide Meenakshi Saxena
& Anr. Vs. ECGC Limited (formerly known as Export
Credit Guarantee Corporation of India Limited) & Anr.
– (2018) 7 SCC 479.
(iii) The appellant is also entitled to Rs. 1,00,000/- payable by
B the respondents towards the cost of litigation.

Ankit Gyan Appeal allowed.

C

D

E

F

G

H