Suppression of material facts in a mediclaim proposal can justify repudiation when undisclosed illness affects underwriting risk.

In a mediclaim contract, the insured must make full and truthful disclosure of facts specifically asked in the proposal form. Non-disclosure of pre-existing diabetes and chronic renal failure, where the insured knew the true medical condition, was treated as suppression of a material fact because it would influence a prudent insurer's assessment of risk. Repudiation of the claim was therefore justified. The Court also noted that although the National Commission wrongly referred to concurrent findings, remand was unnecessary because the claim failed on merits due to fraudulent suppression and fresh consideration would serve no useful purpose.

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Issues: (i) Whether non-disclosure of pre-existing diabetes and chronic renal failure in the proposal form amounted to suppression of a material fact justifying repudiation of the mediclaim claim; (ii) whether the erroneous reference to concurrent findings by the National Commission required remand.

Issue (i): Whether non-disclosure of pre-existing diabetes and chronic renal failure in the proposal form amounted to suppression of a material fact justifying repudiation of the mediclaim claim.

Analysis: A mediclaim policy is a contract of insurance governed by the doctrine of utmost good faith. When specific information is sought in the proposal form, the proposer must make a true and full disclosure of facts within his knowledge. A fact is material if it would influence a prudent insurer in deciding whether to accept the risk or on what terms. The answers given in the proposal form that the insured was in sound health and had not undergone treatment were contrary to the medical material showing chronic renal failure and diabetes for many years. The Court held that the insured knew the true state of health and that the information withheld was plainly relevant to underwriting the risk.

Conclusion: The non-disclosure amounted to suppression of material facts, and repudiation of the claim was justified.

Issue (ii): Whether the erroneous reference to concurrent findings by the National Commission required remand.

Analysis: The National Commission was incorrect in stating that the fora below had recorded concurrent findings, since the State Commission had differed from the District Forum. However, after independently examining the record, the Court found the claim to be not maintainable on merits because of fraudulent suppression. In that situation, sending the matter back for fresh consideration would serve no useful purpose.

Conclusion: Remand was not warranted.

Final Conclusion: The appeal failed because the insurer was entitled to repudiate the mediclaim claim on account of suppression of material facts, and the dismissal of the revision petition was left undisturbed.

Ratio Decidendi: In an insurance contract, non-disclosure of a fact within the proposer's knowledge that would influence a prudent insurer's decision to accept the risk is suppression of a material fact and entitles the insurer to repudiate the claim.

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