In Brief
An insurance company repudiated a claim for a hydraulic excavator that caught fire five days after the policy commenced, alleging the insured failed to disclose a previous insurance claim in the proposal form. Although the previous policy was attached to the proposal, the insured did not expressly state that a prior claim of Rs 36.66 lakhs had been settled. The Supreme Court held that insurance contracts require utmost good faith; the insured must fully disclose all material facts known to them. Merely attaching a document does not satisfy the duty to expressly answer specific questions in the proposal form. The Court allowed the appeal, setting aside lower court decisions and upholding the repudiation of the claim.
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