In Brief
Oriental Insurance Company Limited repudiated an excavator insurance claim on the ground that the insured, Mahendra Construction, failed to disclose a prior claim lodged under a previous insurance policy when applying for the new policy. While the previous policy was enclosed with the proposal form, the insured did not explicitly state that a prior claim of Rs 36.66 lakhs had been settled. The Supreme Court held that the insured was under a solemn obligation to expressly disclose all material facts and prior claims in the proposal form. Merely enclosing a previous policy does not discharge this duty; the insurer cannot be required to conduct its own enquiries. The suppression of material facts about prior claims goes to the root of the insurance contract and validates the insurer's repudiation. The Court allowed the appeal and set aside the decisions of the SCDRC and NCDRC that had directed payment of the claim.
The lawyer headnote and full judgment text are available to registered users.