ORDER

V. K. DABAS, MEMBER

In United India Insurance Co. Ltd. Vs. M.K.Corporation,III(1996)CPJ8(SC), the Hon’ble Supreme Court held as under:-

“It is a fundamental principle of Insurance Law that utmost good faith must be observed by the contracting parties. Good faith forbids either party from concealing (non disclosure) what he privately knows,to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. Just as the insured has a duty to disclose, ”Similarly, it is the duty of the insurers and their agents to disclose all material facts within their knowledge since obligation of good faith applies to them equally with the assured.

The duty of good faith is a continuing nature. After the completion of the contract, no material alteration can be made in its terms except by mutual consent.

    In the case in hand, the facts are  that the complainant had purchased a policy of insurance in respect of a truck HR 55 M 7834 owned by it from the OP without disclosing that it had taken a claim of insurance from the previous insurer in the last year of the insurance policy.  It had , claimed no claim bonus @ 25% of the premium amount to which it was not entitled to. On coming to know about this fact , the OP insurance company had cancelled the policy.  In our considered opinion the cancellation of the policy was justified in the facts and circumstances of the case. The claim lodged by the complainant on account of the cost of repairs as the truck had met with an accident, was not payable and was rightly declined by the OP. We see no merits in this complaint. The same is hereby dismissed.

Copy of the order be made available to the parties as per rule.   File be consigned to record room.

     Announced in open sitting of the Forum on.....................