Authored By : Harold Derbyshire, N.G.A. Edgley

Harold Derbyshire, C.J.

1. This is an appeal from a judgment of Panokridge J,, andthe decree consequent thereon whereby he adjudged that the plaintiffs wereentitled to recover a sum of rupees five thousand and profits from thedefendants in respect of Life Insurance Policy No. 28484 issued by thedefendants on 11th June 1935. The policy was taken out by Jadunath Sarkar whowas a Government Official in the Province of Bengal. The plaintiffs are thewidow and children of Jadunath Sarkar. The policy itself was the result of aproposal and declaration made by Jadunath on 14th May 1935, the proposal beingaccepted the defendant company after a medical examination of Jadunath by theirdoctor. Jadunath was a Hindu governed by the Dayabhag School of Hindu law, whodied intestate on 4th April 1938, the due premiums having been in the meantimepaid. The defendants declined to pay the sum payable under the policy on theground (a) that Jadunath untruly stated in his proposal that no proposal on hislife had ever been declined by any Insurance Company whereas in fact a proposalin writing and dated 30th September 1932, was made to the Sun Life AssuranceCompany of Canada for an assurance on his life, but that the said AssuranceCompany declined to accept the same and (b) that in Jadunaths personalstatement he concealed the fact that this proposal was rejected, and that healso concealed and/or made an untrue statement as to the results of his medicalexamination with a view to insure his life with the Sun Life Assurance Companyof Canada. When the case came up for trial, the plaintiffs solicitor by aletter dated 22nd May 1940, to the defendants solicitors raised the plea ofwaiver as follows:

In continuation of my letter to you dated 26th April last Ihave to furnish you with the following particulars regarding the question ofwaiver to be taken up by the plaintiffs at the hearing of this suit viz. -Assuming but not admitting that the life of Jadunath Sarkar had been rejectedon 5th October 1932 by the Sun Life Assurance Company of Canada as alleged inpara. 4(a) of the written statement the fact of such rejection was communicatedto the defendant company by a rejection card duly issued and sent to thedefendant company on the 17th day of October 1932 by the Indian Life AssuranceOffices Association.

2. There were two other pleas of waiver raised in thatletter arising out of matters alleged to have occurred after the death of thedeceased. Those second and third pleas were not sustained at the trial and theyhave not been raised herein. The policy itself contains this clause:

Provided always (1) that the proposal and declaration madeby the assured and the personal statement before the medical examiner withdeclaration made by the life assured dated as specified in the schedule shallbe the basis of this contract, it being nevertheless hereby expressly declaredthat after the expiry of three years from this date, neither error in noromission from, such proposal, personal statement or declaration, not wilful andin the nature of fraud, shall render this policy void.

3. The proposal referred to contained the following:questions and the answers thereto:

4. The declaration contained the following:

I on behalf of myself and of any person who shall have anyinterest in my policy issued under this policy do hereby solemnly declare thatthe statements and representations made in this proposal are correct and trueto the best of my knowledge and belief, whether written by my hand or not andshall, along with the declaration and statement made before the medicalexaminer be the basis of the contract between me and the above Life InsuranceCo.

5. That was signed by Jadunath in the presence of themedical examiner. In the personal statement in answer to a question if he eversuffered from diabetes he said "No". There was a further declarationas follows:

I the undersigned applicant for insurance (Jadunath Sarkar)do solemnly declare that according to the best of my knowledge and belief, I amnow in good health, that my age does not exceed that mentioned above and that Ihave fully and faithfully answered all such questions as have been put to me bythe Medical Examiner and I hereby covenant and agree that this declarationshall be the basis of the contract between myself and the Company and if anyuntrue averment is contained herein or if any of the facts required to be setforth in the proposal and in the personal statement be not truly stated allmoneys which shall have been paid up on account of the assurance made inconsequence hereof shall be forfeited and the Assurance itself be absolutelynull and void.

6. Put shortly, the contention of the defendants appellantsis that the answers to questions NOB. 5-A, B and C given in the proposal wereuntrue and untrue to the knowledge of Jadunath. It is not disputed that on 30thSeptember 1932, Jadunath applied to the Sun Life Assurance Company of Canadafor a life Insurance Policy and it is not denied that no such policy was everissued upon that application. That in itself is sufficient to show that theanswer to question No. 5A, was untrue. But it is said that the answers were not"wilful and in the nature of fraud" to use the words of the policy itself.Evidence has been given by Dr. Kumode Nath Ghose of Calcutta to the effect thaton 30th September 1932, at the instance of the Sun Life Assurance Company heexamined Jadunath for the purpose of ascertaining whether the Sun LifeAssurance Company would accept Jadunaths proposal. Dr. Ghoses evidence isthat he found slight trace of sugar in Jadunaths urine, that in order tofurther assure himself he took another sample of urine from Jadunath, and thathe again found sugar. He made his report accordingly to the Sun Life AssuranceCompany. A little time after that Jadunath came to the house of Dr. Ghose - touse his own words: "He came to me two or three times to my house and hetried his best to convince me that he was not passing sugar. He was very anxiousto have a policy from the Sun Life. But I convinced him later on by taking twoor three samples of his urine and examining it in his presence, that he waspassing sugar. Then he dropped his proposal." He also says : "He(i.e. Jadunath) came and informed me that his life had not been acceptedbecause he was informed by the company that he was passing sugar in hisurine."

7. Now, the learned Judge has made no adverse comments uponDr. Ghoses evidence and I see no reason to disbelieve it. It is clear fromthat evidence that Jadunaths answer to question No. 5B "Was any medicalman consulted as to insurability of your life - No" was not correct asalso the answer to question No. 6C "If so, who and with what results -Does not arise". The rejection of a proposal to effect a life insurance isnot a thing that a man is likely to forget, and when he goes to the length oftrying to persuade the doctor who examined him for the Insurance Company, thathe was not suffering from any untoward symptoms in the way that Jadunath did,it is impossible to think that when Jadunath gave his answers to questions Nos.5A, B and C he did not know that what he said was untrue. Those answers wereuntrue and they were untrue to the knowledge of Jadunath. Jadunath is dead and cannotspeak for himself; we have to do the best we can under the circumstances andhowever unfortunate the result may be for Jadunaths family, the conclusionmust be arrived at that Jadunaths answers were wilfully untrue and as he wasproposing to obtain through them a policy of insurance on his life, that theywere in the nature of fraud. That being so, the basis of the contract ofinsurance had according to the terms of the policy gone, and the insured andhis representatives had no rights under it.

8. But it is said that the company - the Western India LifeInsurance Co. Ltd. - knew about 17th October 1932, that is to say, a short timeafter the proposal, that these answers were untrue, but that they continued toaccept the premiums payable under the policy down to the death of the deceasedand that they thereby waived their right to insist that the basis of the policyhad gone. The learned Judge has upheld that plea of waiver. The plea is based,as the letter of 22nd May 1940 sets out, on a statement that a rejection cardwas sent on 17th October 1932, by the Indian Life Assurance Offices Associationto the defendant company. It is necessary to explain what a "rejectioncard" is and how it comes into existence. There is an institution in Calcuttacalled the Calcutta Claims Bureau. This institution is run by a number ofEuropean Insurance Companies who are, if I may use the word, the constituentsof the Bureau. In addition to these European Companies, there is another memberwhich is called the Indian Life Assurance Offices Association. The Indian LifeAssurance Offices Association has as its constituents a number of IndianInsurance Companies. The Indian Life Assurance Offices Association has its headquarters in Bombay, but has a branch in Calcutta.

9. The Calcutta Claims Bureau operates in this way: wheneverone of its constituent members has occasion to reject a proposal of lifeinsurance, it sends particulars of the rejection to the Claims Bureau whichmakes a note of it and then issues to each of its constituents a card on whichare certain particulars relating to the rejected proposal. The card itself ispink in colour and ruled out into certain rectangles. Each card is given aserial number which is put on the left-hand top corner. In the next rectangleat the top are words indicating the name of the person whose proposal has beenrejected. The full name was not put down in this rectangle in 1932; forinstance in the case of this particular rejected proposal with the Sun LifeAssurance Company (which was a constituent member of the Claims Bureau) wasthis word "Sir" which is a short for "Sirkar" andunderneath "Jadunath". In the next rectangle at the top right-handcorner is the date of the rejection and immediately below the name of theperson rejected is the date of his birth. In the adjoining rectangle under thedate of the rejection is an Index number which indicates the name of thecompany to whom the proposal had been made and by whom it has been rejected. Itis obvious that this rejection card is intended to give information of therejection to the constituent members but not to disclose too much to any personwho has no right to it. The constituent member knows from a key which isprovided which is the Insurance Company that is indicated in the last rectanglein the middle row and each member can, if so minded, get into touch with therejecting company and ascertain the circumstances of the rejection.

10. It is said by the plaintiffs here that a rejection cardwas received by the Western India Life Insurance Company on 17th October 1932,that the defendant company, namely, the Western India Life Insurance Company,knew or had the means of knowing about that time of his rejection, and that bytaking the premiums thereafter they waived their rights under the policy. It isnecessary at this stage to realise what is meant by waiver and what are theconditions necessary for its operation. There is a passage in the Treatise onthe Law of Evidence by the late Woodroffe J. and the late Mr. Syed Ameer Ali, Edn.9, by the late Woodroffe J. at page 760 as follows:

A waiver is an intentional relinquishment of a known right,or such conduct as warrants an inference of such relinquishment; and there canbe no waiver unless the person against whom the waiver is claimed had fullknowledge both of his rights and of the facts which would enable him to takeeffectual action for their enforcement. The burden of proof of such knowledgeis on the person who relies on the waiver. A presumption of waiver cannot berested on a presumption that the right alleged to have been waived was known.

11. That passage is founded upon judgment of AshutoshMookherjee, J. in Dhanukdhari Singh v. Nathima Sahu (07) 11 C.W.N. 848. Thepassage in the judgment Of Ashutosh Mukerjee J. is founded on a number ofEnglish cases and in particular, that in Earl of Darnley v. Proprietors &cof the London, Chatham, and Dover Railway (1867) 2 H.L. 43 in that particularcase there was an agreement between two parties giving power to a third to make,within a certain time, an award on a matter in difference between them. One ofthe parties not knowing that the award had been made beyond the specified time,took up the award and paid for it. It was held that his doing that did notamount to a waiver of the condition as to the time for making the award whichwas contained in the agreement. At p. 57 Lord Chelmsford, the Lord Chancellor,said this:

Assuming that the solicitors knew at that time that Cluttonhad not made his award till then, and that when they heard in June from Oakleythat the award as to crossings etc., had been waiting to be taken up for somemonths they also knew that it had not been in existence until after the timefixed by the agreement; yet I cannot think that their act in receiving it andpaying Cluttons charges can have the effect of waiving all objection in pointof time. A waiver must be an intentional act with knowledge.

12. If the plea of waiver which is specifically pleaded isto succeed in this case, it must be shown that the premiums were takenintentionally with knowledge of the untrue statements in the proposal. In myview means of knowledge here would not be enough in order to satisfy the pleaof waiver. In that connexion I refer to the case in Mackintosh v. Marshall (1843)11 M. & W. 116. There the owner of a ship sailing from St. JohnsNewfoundland, asked for an insurance upon that vessel sometime towards the endof January 1842. The vessel had already sailed. The statement of the shipownerwas that the vessel was to sail at the end of the month of December 1841. Thebroker who procured the insurance from the defendant, the underwriter, showedthe underwriter a letter setting out the passage that the vessel, theElizabeth, was to sail at the end of the month (i.e. December) and also putbefore him a copy of Lloyds sailing list from Newfoundland which was describedas being a duplicate, the original being on the vessel to be insured, theElizabeth, The vessel had actually sailed on the 27th, four days before the endof the month; "if the underwriter had looked on the back of the Lloydssailing list which was put before him he would have seen that the vessel hadsailed on the 27th. But he did not examine the back of the list and acceptedthe risk. The risk of course was greater the earlier the vessel had sailed. Itwas held that the underwriter was not bound by the insurance and in givingjudgment Alderson Rule at page 127 said:

I think, the moment it appeared that the party wascommunicating a letter, which clearly stated that the vessel was to sailsubsequently to 27th December, before the Jury could consider the defendant tohave been bound by the list at Lloyds they ought to have had affirmativeevidence that he actually did see it, and not merely that he might. There is:no evidence to shew that.

13. The waiver then must be intentional with knowledge. Whatwas the knowledge of the defendant company with regard to the untrue statementsof Jadunath relating to the rejection of his proposal by the Sun Life AssuranceCompany The card relating to Jadunaths rejection was undoubtedly issued tothe constituent members of the Claims Bureau in October 1932. That is theevidence of Mr. Archer. One can presume that each of those cards in theordinary way would reach each constituent member, although there is always thepossibility that through some mischance or slackness on the part of someoneconcerned with sending out cards, it may be overlooked. But the evidence of Mr.Archer is that the cards with regard to Jadunaths rejection went out inOctober 1932. In the ordinary way one of those cards would reach not theWestern India Life Insurance Company, but the Indian Life Assurance OfficesAssociation. No witness was called from the Indian Life Assurance OfficesAssociation to state that a rejection card relating to Jadunath was sent to theWestern India Life Insurance Company, but the Western India Life InsuranceCompany being a constituent of the Indian Life Assurance Offices Associationwould in the ordinary way, if all went well, get not one of the cards issued bythe Calcutta Claims Bureau, but a similar one issued by the Indian LifeAssurance Offices Association. But again there is always the possibility of onenot reaching some constituent of the Indian Life Assurance Offices Associationincluding the Western India Life Insurance Co. But in the ordinary course ofthings, one would, if all went well, reach the defendant company somewhereabout October 1932. Now the defendant company say that they had no cardrelating to Jadunaths rejection. It is a contest whether a thing usually donewas in the ordinary course of business done or whether, as the defendants say,they did not get a card. Panckridge J., heard the evidence of Mr. Joshi, whowas the office manager of the defendant company. Mr. Joshi impressed himunfavourably, so that he came to the conclusion that in spite of what Mr. Joshisaid about the card not being in possession of the defendant company, thedefendant company had it. Now, the opinion and finding of a Judge who sees thewitnesses and hears their testimony are not lightly to be set aside by anappellate Court which only considers the record of the evidence. Two things,however, have impressed me with regard to the question of the defendantcompanys possession of the pink card. The first is that on receipt of thepresent proposal at their head office in June 1935, the defendant company wrotea letter to the Sun Life Co., on 27th May 1935. It was headed "Your Pol.No. 386723." It will be remembered that in the proposal form, Jadunath hadstated that he hail insured with the Sun Life Assurance Co. for rupees 4000being Policy No. 386723 of 1919. The defendant company wrote on 27th May 1935to the Sun Life Assurance Co.s office in Bombay with regard to that Policy asfollows:

We are considering a proposal from the above gentleman(Jadunath Sarkar) who, we understand, is insured with you under your Pol. No.386723. The party has been medically examined for us, and we have the medicalreport before us. We shall, therefore be much obliged, if you will kindly letus have an extract from your medical report and personal statement on the lifementioned, stating therein the decision of your Board.

If, however, the proposal has been completed at other thannormal rates or under a Scheme of Assurance other than proposed, a true copy ofthe report of the medical examination and of the personal statement of theproposed may kindly be supplied.

14. In answer to that the Sun Life Assurance Co., wrote backa letter on 5th June 1935, stating among other things:

I would like to state that the copies of proposal and themedical report are not available at this office. The proposal was for a policyof Rs. 4000 on endowment 20 plan and was submitted in November 1919. It wasaccepted by our head office at ordinary rates and without a lien.

15. It was evident, therefore, that the defendant companywere concerned with the previous proposal of Jadunath with the Sun LifeAssurance Co. which Jadhunath had disclosed to them and the results of it. Itis difficult to think that if they went to that trouble to enquire from the SunLife Assurance Co. about the 1919 policy, they would have neglected to enquireabout the proposal rejected by the same company in 1932, if they had known ofthat proposal; that is one matter that struck me, which the learned Judge didnot refer to in his judgment and apparently did not consider. There is anothermatter to which the learned Judge did not refer and apparently did not considerwhich seems to me to bear on the question whether the defendant company got apink card relating to Jadunaths rejection. The Hindusthan Co-operativeInsurance Co., which carries on business and has its head office in Calcuttawas, like the Western India Life Insurance Co., a member of the Indian LifeAssurance Offices Association in Bombay. It was a constituent of thatAssociation in the same way that the defendant company was. Jadunath had, as hestated in his answer to question No. 4 of the proposal form in the presentcase, insured with the Hindusthan Co-operative Insurance Co. 1933 for a sum ofRs. 5000. Apparently, that proposal was accepted by the Hindusthan Co-operativeInsurance Co. Now, the Hindusthan Company was due to receive a pink cardrelating to Jadunaths rejection from the Indian Life Assurance OfficesAssociation in 1932 in just the same way that the defendant company were. It isnoteworthy, and there is no question as to this, that they insured the deceasedJadunaths life and what is more they paid upon the policy on Jadunaths death.A representative from the Hindusthan Company, Sachidananda Das Gupta wascalled. His evidence was as follows:

Q. Was Jadunath Sarkar insured with your company

A. Yes.

Q. Is Hindusthan Insurance Co. a member of the Indian LifeOffices Association, Bombay

A. Yes.

Q. Have you paid the claim of Jadunath Sarkar

A. Yes.

Q. Did you receive any card from the Indian Life OfficesAssociation

A. I can answer the question after consulting the file.(Referring to the file) our record does not show that we received a rejectioncard before we took the risk of the policy

16. Later he said in answer to a question:

Q. If you had received the rejection card then you would nothave written to the Association complaining

A. Certainly not.

17. Now, it is said that the usual course of businessindicates that the defendants received that card. The defendants say that theynever got it. In the same way the Hindusthan Co-operative Insurance Company whowere due to get the card never got it. That suggests to my mind that there isdoubt as to whether cards relating to Jadunath were sent out by the Indian LifeAssurance Offices Association as assumed.

18. Panckridge J. in his judgment in criticising theevidence of Mr. Joshi said that he had not produced the file. The file was thesum total of the cards which the defendant company received from the IndianLife Assurance Offices Association, presumably kept in some sort of a file. Mr.Joshi was not bound to produce the whole of that file. He was bound to producethe card relating to Jadunath but not the others. If it had been desired thathe should produce the whole of the cards, an order could have been made to thateffect. None was made. Panckridge J. criticised Mr. Joshis evidence becauseMr. Joshi did not appear to be very willing to produce the other cards,although he did offer to do so. In my opinion that criticism is notwell-founded. He was bound to produce Jadunaths card, if he had it, but he wasnot bound to produce the others. Panckridge J. criticised Mr. Joshi because hehad not examined the serial numbers on the cards. I do not see that it wasnecessary to examine the serial numbers. If he examined the cards and foundthat there was none relating to Jadunath, it seems to me that that was enough.It may be that there was something in Mr. Joshis mind which he was troubledabout which produced an unfavourable impression upon Panokridge J. But afterreading the evidence of Mr. Joshi, it does not appear to me that he either didanything that was unreasonable or refused to do anything that was reasonable.There is no evidence that the Indian Life Assurance Offices Association sentout cards relating to the rejection of Jadunath; having regard to the fact thatthe Hindusthan Co-operative Insurance Company did not receive such card and thefact that the defendant company deny having one and subsequently wrote to theSun Life Assurance Company about the previous policy and not about therejection, I come to the conclusion notwithstanding Panckridge J.s stricturesupon Mr. Joshi and the adverse inference that he drew as to his credibilityfrom his behaviour on the whole that the evidence of Mr. Joshi is correct.

19. I am of the opinion therefore and so find, that at allmaterial times the defendant company was not in possession of the rejectioncard relating to Jadunath. That being so, the defendant company not having themeans of knowledge still less what is essential to the plaintiffs case ofwaiver, the actual knowledge of Jadunaths rejection by the Sun Life AssuranceCompany in 1932 after medical examination, it cannot be said that they waivedtheir rights to insist that the basis of the policy had gone by reason of theuntrue statements made by Jadunath. For that reason I am of the opinion thatthis appeal must be allowed. The appellants will get the costs of the appealbut there will be no costs in the Court below.

N.G.A. Edgley, J.

20. I agree that this appeal must be allowed. In this case,the initial onus lay upon the defendant company to show that they were legallyentitled to avoid the contract. In my view, they were able to discharge thisonus by showing that in 1935 Jadunath Sarkar had omitted to state certainmaterial facts when he made his proposal for insuring his life. The defendantcompany were also able to show that they were not affected by the proviso tothe policy that "after the expiry of three years from this date, neithererror in nor, omission from such proposal, personal statement or declaration,not wilful or in the nature of fraud shall render this policy void." Inother words, they proved that certain material information had been wilfullywithheld from them by Jadunath and that his conduct in this respect was in thenature of fraud. This being the case, the onus was then thrown upon theplaintiff to show that the defendant company had waived their right to annulthe policy.

21. With regard to this point, Mr. Banerjee on behalf of theplaintiffs argues that it is sufficient for his purpose to show that arejection card said to have been issued by the Indian Life Assurance OfficesAssociation reached the defendant company. In order to do this, Mr. Banerjeeattempts to show that this rejection card must have reached the Western IndiaLife Insurance Co., Ltd., in the ordinary course of business. Now the ordinarycourse of business is a relevant fact under Section 16, Evidence Act, and underSection 114 of that Act the Court may presume that the ordinary course ofbusiness is followed. This presumption, however, cannot arise unless the courseof business has been proved or admitted. In my view, the evidence which wasgiven in this case was quite insufficient for the purpose of showing that arejection card must have reached the Western India Life Insurance Co., Ltd. inthe ordinary course of business. It is true that Mr. Archer gave evidence tothe effect that these rejection cards are distributed to the constituents ofthe office in which he is employed. There was, however, no satisfactoryevidence as to the manner in which these cards are re-distributed by the IndianLife Assurance Offices Association, which was one of the constituents of theCalcutta organization. Further, it was not shown what happened to these cardsafter they had been received in the various offices to which they were finallydistributed, whether the system which was followed was such that the absence ofa card, which a constituent office was entitled to receive, would beimmediately detected and whether a requisition would be made for it as a matterof course. With regard to this matter, Panckridge J. states in his judgment:

In my opinion having regard to the relations which mustexist between the Association and those who are its members if it is a factthat the cards were not sent out, it was for the defendants to call evidence tothat effect from the Association.

22. In my view, the learned Judge has wrongly placed theonus upon the defendants with regard to this particular point. Having regard tothe circumstances of the case the onus to prove the course of business lay withthe plaintiffs and not with the defendants. Mr. Joshis answers certainly showthat his office was entitled to receive rejection cards but I am not preparedto hold that his evidence indicates that the rejection card relating to theproposal to the Sun Life Co. in 1932 was actually received by the defendants.It is certainly significant that, when the Western India Life Insurance Co.Ltd., wrote to the Sun Life Assurance Co. of Canada on 27th May 1935, they madeno reference to the rejection of Jadunaths application by the latter companyin 1932; and the letter addressed by the Hindusthan Co-operative InsuranceSociety Ltd. to the Indian Life Assurance Offices Association on 7th November1938 also indicates that the particular company had not received the rejectioncard which is supposed to have been issued by the Indian Life AssurancesAssociation on 17th October 1932. Having regard to this evidence and thecircumstances to which I have referred, I am of opinion that the plaintiffshave not succeeded in discharging the onus which lay upon them to show that therejection card had actually been received by the defendant company.

23. Even if it be assumed, however, that the card had beenreceived by the Western India Life Insurance Co., Ltd., I am of opinion thatthis fact would not be sufficient for the purpose of establishing theplaintiffs case. It would merely show that the defendant company had adocument in their office which if it had been consulted might have indicated tothem that an application for the insurance of Jadunaths life had been rejectedby the Sun Life Assurance Co. in 1932. The question which requiresconsideration in connexion with this matter is whether this knowledge wasactually, present in the minds of those responsible for the affairs of thedefendant company in 1935. Mr. Banerjee states that if the oared had actuallybeen received, his clients would be entitled to succeed having regard to theprovisions of Section 19, Contract Act, the relevant portion of which is in thefollowing terms:

When consent to an agreement is caused by coercion , fraudor misrepresentation, the agreement is a contract voidable at the option of theparty whose consent was so caused.

Exception. - If such consent was caused by misrepresentationor by silence, fraudulent within the meaning of Section 17 the contractnevertheless is voidable, if the party whose consent was so caused had themeans of discovering the truth with ordinary diligence.

24. On this point, Mr. Banerjees argument is that, if thecard had been received, the Insurance Company had the means of ascertainingwith ordinary diligence that a previous proposal had been rejected by the SunLife Assurance Company of Canada. In my view, however, this section cannot applyin the present case where the Insurance Company are relying on the terms of adefeasance clause within the contract itself. The conditions demanded by thisdefeasance clause have been fulfilled and the defendant company are, therefore,entitled to annul the policy unless the plaintiffs are able to prove that thecompany had waived their rights. With regard to the question of waiver, Ientirely agree that strict proof is required and that the burden of proof liesupon the person who alleges it. It is not sufficient merely to prove that theInsurance Company had the means of knowing that a previous proposal forinsurance had been rejected by another company; but it is also essential toshow that they actually had this knowledge at all material times and that theyknowingly condoned the conduct of the assured in furnishing them with incorrectinformation. In my opinion, this matter is covered by the principle laid downby Cockburn C.J. in Bates v. Hewitt (1867) 2 Q.B. 595. In that case the learnedChief Justice observed at page 604:

No proposition of insurance law can be better establishedthan this, viz., that the party proposing the insurance is bound to communicateto the insurer all matters which will enable him to determine the extent of therisk against which he undertakes to guarantee the assured.

25. His Lordship then went on to say:

I do not mean to say that, if the insurer choose to neglectthe information which he receives, he can take advantage of his, wilfulblindness or negligence, if he shuts his eyes to the light, it is his ownfault, provided sufficient information as far as the assured is concerned, hasbeen placed at his disposal. If, indeed, the insurer knows the fact, theomission on the part of the assured to communicate it will not avail as adefence in an action for a loss; not because the assured will have compliedwith the obligations which rested on him to communicate that which was materialbut because it will not lie in the mouth of the underwriter to say that amaterial fact was not communicated to him, which he had present to his mind atthe time he accepted the insurance.

26. The principle which appears to have been adopted in thiscase is that possession of the means of knowledge will not be sufficient toconstitute waiver by the insurer but that actual knowledge of the material factmust be proved. This principle was also followed by the Court of appeal inLondon General Insurance Company v. General Marine Underwriters Association(1921) 1 K.B. 104. It follows, therefore, that the onus lay upon the plaintiffsnot only to show that the rejection card had been received by the defendantcompany but that these cards were consulted by that company in the ordinarycourse of business at the time when proposals for insurance were received. Theletter written by the Hindusthan Co-operative Insurance Society Ltd., to theIndian Life Assurance Offices Association on 7th November 1938, to whichreference has already been made, seems to show that in that office at any ratethese cards could not have been consulted as a matter of general routine whenapplications for insurance were received. Further, Mr. Joshis evidence seemsto indicate that until 1338, even if these cards were received in the office ofthe Western India Life Insurance Co. Ltd., it is unlikely that any regular andsystematic use was made of them. In fact, it was not until 1938 that a registerwas introduced for the purpose of facilitating reference to these rejectioncards. It follows, therefore, that in any view of the case the plaintiffs havefailed to discharge the onus which lay upon them and the defendants areentitled to succeed in this appeal.

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Western India Life Insurance Co. Ltd. vs. Asima Sirkar and Ors. (16.07.1941 - CALHC)