( 1 ) THIS appeal agamst the decree in O. S. 33 of 1967 on the file of the Civil judge, Udipi, is by the defendant, Life Insurance Corpn. of India, (herein after referred to as LIC ). The suit which had been filed by the Canara Bank ltd. (hereinafetr referred to as Trustee), as a Trustee under five insurance polices, the assured sums thereunder aggregating to Rs. 1,30,000 and tne heirs of the deceased-assured, was decreed for a sum of Rs. 1,65,346 with current and future interest thereon at the rate of 7 per cent per annum. ( 2 ) THE relevant facts leading upto the appeal, briefly, are as follows. One v. G. R. Sriranga Shetty, a merchant of Mercara, took out five insurance policies with the appellant. The fiist four policies were for a sum of rs. 25,000 each and the last one for Rs. 30,000. On the date of subnrssion of his proposals in regard to the first two policies, the assured was 48 years old: All these policies were taken out and issued between the dates 21-12- 1960 and 13-3-1964. These policies had all been issued under the Married women's Property Act, 1874 and the first plaintiff-bank had been constituted a trustee. The assured Sriranga Shetty daed on 12-9-1964 on account of 'enteric', as per his death certificate, that is within 3 years 9 months and 6 months from the dates of issue of the first and the last of the above policies, respectively. For convenience, the details have been furnished in the form of a tabular statement below: ( 3 ) ON the death of the assured, on. 12-9-1964, the trustee preferred claims on all the above policies, on 15-1-1965. 'after some correspondence, the details of which it is unnecessary to set out, on 9-8-1965, the LIC sent a cheque for Rs. 1,35,140 drawn on the Canara Bank Ltd. , Udipi, to the trustee, apparently in full settlement of the claims. According to the trustee, this act constituted a full and final settlement of all the claims. But, the LIC has disputed that it constituted any such concluded settlement or that they had at any time given up theix right to repudiate their liability under the policies for good and sufficient reckons. According to the trustee, this act constituted a full and final settlement of all the claims. But, the LIC has disputed that it constituted any such concluded settlement or that they had at any time given up theix right to repudiate their liability under the policies for good and sufficient reckons. But before the said cheque was encashed by the trustee, the LIC stopped payment thereon and sent intimations to that effect to the trustee, by telegram and letter, on 14-8-1965. intimately, on the basis of the information received by the lic. , by means of a pscu donymous letter, rnd the result of their own subsequent enquiry and investigation, the claims based on all the policies were repudiated by the LIC by a letter dt. 24-6-1966. After exchange of notices, the present suit came to be filed for reliefs outlined earlier. The repudiation, by the LIC of its liability under the policies in question, was based principally on the ground that the assured had made false statements in the proposal forms and personal, statements, in answer to the quetions posed by the insurer, and which had a bearing on his previous state of health, and that such statements related to materjal facts and the same were deliberately and fraudulently suppressed by the assured, although they were well within his knowledge. ( 4 ) THE case of the trustee, in substance, was that the statements did not relate to material facts and the assured has had no knowledge of such facts and that they wer;e not material enough to warrant disclosure by him, m anrwer to the questions contained in the proposal form and personal statements. On behalf of the LIC. , the suit was resisted principally on the ground that the assured had made several false statements- which it was material to disclose and that if answers to some of them had been truthfully given, there was every chance of the proposals for insurance bein found unacceptable. In its written statement, the LIC. , has set cut the circumstances which led to the repudiation of the claim, particularly the facts relative to the hospitalisation of the assured from 4-8-1959 to 5-9-1959, hardly 14 months prior tc the first of the above proposals, during whicn 'biopsy' was done twice and deep X Ray treatment given for a week in regard to a suspected 'chronic inflammatory adenitis' on the neck. It is contended that the policies had become void on account of such false and fraudulent statements, in regard to matters material for an insurer to detetmine the insurability of the assured, as a result of which the claims in respect of all the policies deserved to be rejected. ( 5 ) IT is also averred on behalf of the LIC. , that in regard to more than one question, the answeis contained in the proposal forms and personal statements were untrue to the knowledge of the assured.--Attention particularly, has been invited in the written statement, to the following : " (c) Question No. 4 (a ). What has been your usual state of health? answer: Good. Question No. 4 (d ). Have you consulted a Medical Practitioner within the last five years If so, give details answer: No. (d) Question No. 7. In the case of all the 5 policies and No. 6 in another form in the case of last policy: have you ever suffered from any of the following ailments? (a) Giddiness, fits, neurasthenia, neuraligia, paralysis, insanity, nervous breakdown or any other disease of the brain or the nervous system? answer: No. (a) Giddiness, fits, neurasthenia, neuralgia, paralysis, insanity, sight or hearing? In case of discharge from the ear, state when it was last noticed answer: No. (j) Malaria, typhoid, influenza, kala azar, filariasis or any other fever lasting for a week answer: No. (k) Any other illness within the last five years requiring treatment for more than a week? answer: No. (e) Question No. 9 in all these policies and question No. 8 in one of the forms in the last policy. (a) Did you ever have any operation, accident or injury? If so, give details? answer: No. (b) Have you remained absent from your work on grounds of health during the last 2 years? If so, state when, how long and lor what ailment? answer: No. (f) Question No. 10. In all the policies and question No. 9 in one of the forms in the last policy: - (a) Have you ever had an electro-cardiogram, X-Ray or fluroscopic examination made or your blood examined? If so, givs details? answer: No. (b) Have you evr been in any hospital, asylum or sanitorium toy check-up, observation treament or an operation? If so give details ? answer : No. . . . . . . . . If so, givs details? answer: No. (b) Have you evr been in any hospital, asylum or sanitorium toy check-up, observation treament or an operation? If so give details ? answer : No. . . . . . . . . " ( 6 ) THE trial Court came to the conclusion that the LIC had failed to establish that the assured had undergone treatment for cancer and, therefore, it must be held that the Life Insurance Corporation had failed to prove that Sriranga Shetty, the assured had deliberately and fraudulently suppressed material facts in his personal statement made in connec the with the issue of the policies in question. It was also held that what had been proved by way of facts, regarding hospitalisation, did not amount to material facts the disclosure of which was necessary for an insurer. It was, therefore, concluded that the policies were valid and enforceable, and the provisions of S. 45 of me Insurance Act, 1938, on which alone the insurer could rely to avoid the policies, would be unavailable to the defendant-LIC. On the question relating to estoppel arising out of a settled account, as pkaded, there has been no discussion whatever. ( 7 ) ON behalf ot the appellant, Sri M. Chmnaswamy, the learned Counsel, submitted that several of the answeis gwen, particularly those relating to questions 4 (d), 7 (,i), (K) and 10 (,a) and (b), have been shown to be untrue and false to the knowledge of the assured by adducing reliable and documentary evidence. He especially relied on the answer furnished to question 10 (b) and submitted that in view of the unimpeachable evidence provided by the Doctors and the hospital records, the fact that the assured stayed in a hospital ior ever 30 days and underwent 'biopsy' twice and x-Ray treatment extending over a week should be held to have been established. He especially relied on the answer furnished to question 10 (b) and submitted that in view of the unimpeachable evidence provided by the Doctors and the hospital records, the fact that the assured stayed in a hospital ior ever 30 days and underwent 'biopsy' twice and x-Ray treatment extending over a week should be held to have been established. He further contended on the basis of this that it can by no stretch of imagination be said that the assured might have forgotten all about it in a space of fourteen months, prior to the date of his first of his proposal ior insurance, in regard to the argument that the said treatment, even if it could be called as one such, was not of any materiality and the assured therefore could not be attributed with any fiaudulent intent, he invited attention to the evidence and opinion of several Doctors and witnesses examined on behalf ot the LIC who had unequiocally stated that if the records relating to hospitalisation had been made available at the time of the acceptance of the proposal, they would not have recommended the case for insurance. It is further submitted that on the question of materiality of facts to be disclosed, the proper test to be applied is whether or not the information is material fiom the point of view of the insurer, and not the insured, to enable such insurer to make up its mind as to the insurability or otherwise of the assured and, if found insurable, as to the terms or the policy to be issued. ( 8 ) ON behalf of the respondent-trustee, Sri S. G. Sundaraswamy, the learned Counsel contended that the hospital records would not conclusively establish that the toured under went deep X-Ray treatment. He further contended that the fact that he was hospitalised and underwent some 'biopsy' and treatment as aforesaid would not necessarily mean that the assured was suffering from any serious disease so thai it was incumbent upon him to have considered the whole thing serious enough to warrant mention m the personal statement and, therefore, there was no question of the entertaining of any fraudulent intention on the part of the assured m the context of the answer to questions 10 (b) and 7 (i ). Once this conclusion is accepted, then the provisions of S. 45 of ths Insurance Act would be of no avail to the dcfendant,-LIC. At one stage, it was faintly contended that Sriranga Shetty mentioned in the hospital records was not the assured at all. But, m view of the evidence of some of the Doctors and a relative of the assured, the argument in this behalf was not pressed with any show of seriousness. We do not, therefore, propose to examine it any further. Lazily, it was contended that in view of the contents of the correspondence thst ensued between the Bank and the LIC. , between the dates of preferment of the claim and the issue ef the cheque by the LIC'. , a case of ' settled account' would arise thus giving rise to a fresh contract between the ties and, therefore, fraud, if any anterior to it would not affect the legality or effectiveness of it. We may at this stage itself, briefly dispose of this contention. In reply to this argument, it was contended by Sri Chinnaswamy that subsequent to the stoppage of payment of the cheque, the trustee had itself written that the LIC was well-advised to examine the matter thoroughly and satisfy itself as to the validity of the claim arising from the policies, and this circumstance should, therefore, be sufficient to hold that there was no concluded agreement in regard to any such settlement. We do not consider it necessary to examine this contention in any detail, as no authority bearing on this question, was cited in supportt of it. But, in the view we propose to take of this case, namely, that the assured had fraudulently suppressed material facts which were within his knowledge while furnishing the answers to the questions contained in the personal statements, this contention has to be rejected, as such a contract, if any, would be clearly vitiated on account of the fraud practised by the assured, in connection with the issue of the policies in question. The contention, therefore, has to fail. ( 9 ) WE now turn to the main contention based on the provisions of S. 45 and s. 17 of the Insuranqe Act and Contract Act respectively. The contention, therefore, has to fail. ( 9 ) WE now turn to the main contention based on the provisions of S. 45 and s. 17 of the Insuranqe Act and Contract Act respectively. But, it is to be remarked that the case on behalf of the trustee, in the context of the answer to question 10 (b) is, as already indicated, put substantially on the basis of no compliance with the requirements relating to fraudulent intention specified in S. 45 of the Insurance Act. The basis for such a contention has been that knowledge on the part of the assured that he had been suffering from any ailment serious enough, in his opinion, to treat the fact of his hospitalisation in question as a material circumstance warranting disclosure, had not been proved. ( 10 ) BEFORE proceeding with the discussion bearing on the contentions, we propose to refer, rather briefly, to a few of the decided cases cited on both sides, which have a bearing on some of the principles governing the matter on hand. ( 11 ) IN Joel v. Law Union and Crown Insurance Co. , (1908) 2 K. B. 863, the Court of Appeal in England while dealing with a contract of insurance which was sought to be avoided by the insurer on the ground of non-discloure of a material fact, to wit that the assured had consulted a Doctor for nervous depression, held that the answers to that question and others had not, on a true construction of the documents, formed the basis of the contract, and therefore, granted a new trial. But the passage in the judgment of Fletcher Moulton L. J. , needs to be noticed, with respect in order to show, atleast, that the knowledge by the assured, that a fact is material or not, would not be of much moment and that the proper test to apply was whether a reasonable man would have recognised that it was material to disclose the knowledge in question in order that the insurer be able to make up his mind whether the proposal ought to be accepted or not. The passage is : "the contract of life insurance is one uberrimae fide. The insurer is entitled to be put in possessoin of all material information possessed by the insured. The passage is : "the contract of life insurance is one uberrimae fide. The insurer is entitled to be put in possessoin of all material information possessed by the insured. This is authoritatively laid down in the clearest language by Lord Blackburn in Brownlie v. Campbell (5 A. C. 925, at p. 954): "in policies of insurance, whether marine insurance or life insurance, there is an understanding that the contract is uberrimae fides (Sic in the report) that, if you know any circumstance at all that may influence the underwriter's opinion as to the risk he is incurring, and consequently as to wheher he will take it, or what premium he will charge, if he does take it, you will state what you know. There is an obligation there to disclose what you know, and the concealment of material circumstance known to you, whether you thought it 'material or not, avoids the policy'. There is, therefore, something more than an obligation to treat the insurer honestly and frankly, and freely to -tell him what the applicant thinks it is material he should know. That duty, no doubt, must be performed, but it does not suffice that the applicant should bona fide have performed it to the best of his understanding. There is the further duty that he should do it to the extent that a reasonable man would have done it; and, if he has fallen short of that by reason of his bona fide considering the matter not material', whereas the Jury, as representing what a reasonable man would think, hold that it was material, he has failed in his duty, and the policy is avoided. This further duty is analogous to a duty to do an act which you undertake with reasonable care and skill a failure to do which amounts to negligence, which is not atoned for by any amount of honesty or good intention. The disclosure must be of all you ought to have realised to be material, not of that only which you did in fact realise to be so. " (Emphasis supplied ). ( 12 ) THE next case is of the Privy Council in Mutual Life Insurance Co. of new York v. Ontario Metal products Co. , Ltd. , 1925 AC. 344. " (Emphasis supplied ). ( 12 ) THE next case is of the Privy Council in Mutual Life Insurance Co. of new York v. Ontario Metal products Co. , Ltd. , 1925 AC. 344. Here also, liability under an insurance policy was sought to be avoided by the insurer on the ground that the assured had deliberately suppressed the act of her having, been treated by a medical practitioner in answering a question in a proposal for insurance. In answering a question: "what is the test of materiality", the position has been stated thus :"it is the insurers who propound the questions stated in the application form, and the materiality or otherwise of a misrepresentation or concealement must be considered in relation to their acceptance of the risk. . . "agam,"in their view, it is a question of fact in each case whether, if the matters concealed or misrepresented had been truly disclosed, they would, on a fair consideration of the evidence, have influenced a. reasonable insurer to decline the risk or to have stipulated for a higher premium. "the next case is of Raton Lal v. Metropolitan Insurance Co. , Ltd. , AIR. 1959 Pat. 413. At page 416 of the Report, on the question of the nature of material fact, referring to English cases, it is observed by Ahmed, J. as follows :"therefore, in this case non-disclosure of material facts even in the absence of misrepresentation or fraud may make the contract voidable at the instance of the parties to whom 'uberrima fides' is due. But then in such cases sometimes a ticklish question arises as to what is a material fact. Authorities say that any fact which tends to suggest that the life insured is likely to fall short of the average duration is a material fact, Thomson v. Weens (1884-9 AC. 671); and rightly so for after all life assurance is nothing but a scientific assessment of an average duration of a life, and that is not possible unless all correct data about the life are diligently and faithfully made available to the company. But then the border line between what is material and what is not material is more often than not so faint and dim that there is always a danger of one being taken for the other. But then the border line between what is material and what is not material is more often than not so faint and dim that there is always a danger of one being taken for the other. Therefore, in order to avoid this danger one has to be careful in drawing a distinction between what is illness or material change in health and what is ordinary simple disorder. A disorder is not one 'tending to shorten life' simply'from the circumstance that the assured dies from it, Watson v. Marewaring (1813-4 Taunt 763 ). " ( 13 ) ON behalf of the respondent, considerable reliance was placed on certain decisions in Lakshni Ince. Co. v. Bibi Padmawati, AIR. 1961 Punj 253, which was affirmed by the Supreme Court m 1937 Company Cases 667, and LIC v. Janak Ammal, AIR. 1968 Mad. 324. We shall examine them, with reference to the points raised in regard to them, before concluding, the discussion, on this aspect with a reference to the decision of the Supreme Court in Mutholal Nayak v. Life Insurance Corporation, AIR. 1962 SC. 814. ( 14 ) IN Lakshni Ince. Co. v. Bibl Padmawati, the Court was concerned with an assured who had been treated for tuberculosis, but did not know that he was suffering from such disease as his Doctor had not told him about it. In regard to a question in the personal statement, bearing on this aspect, while taking out the policy of insurance, he had answered in the negative. But on behalf of the respondent herein reliance was placed on an observation that the clauses in a contract of insurance must be construed - in favour of the assured whenever there is an ambiguity or two equally reasonable inferences are possible, on proved facts. It appeals to us unnecessaiy to reproduce the relevant enunciation, as no such situation is present in the case on hand. For the same reason, it is not also necessary toreferto the decision of the Supreme Court in appeal against the judgment of the High Court of Punjab. But, it was argued that the facts m that case were quite close to those in the present ease. We think that the decisions in question turn on the facts of that case and the facts of the case on hand are clearly distinguishable. But, it was argued that the facts m that case were quite close to those in the present ease. We think that the decisions in question turn on the facts of that case and the facts of the case on hand are clearly distinguishable. The question posed therein, the answer to which has been made the basis for the repudiation of liability by the insurer, is not on all fours, with Q-10 (b) concerned herein. The latter clearly refers to hospitalisation even as regards a check up, apart from treatment for any other ailment. The trial Court in the instant case has clearly misdirected itself in thinking that the insurer had set out to prove that the disease the assured was suffering from was cancer, and had failed to prove the same. As the question was argued before us, on behalf of the insurer, the case was put not so high. It was. merely contended that the assured had made untrue statements with regard to hospitalisation and X-Ray treatment given there for the 'adenitis' of his throat. . Hence these cases are not of much assistance to the respondent trustee. ( 15 ) THE next case is of the High Court of Madras in LIC v. Janaki Ammal. This case also is distinguishable. That was a case where an assured treated for 'hypochondria' omitted to mention that fact while taking out a policy of insurance. The Court held that the fact concerned was not material, even from the point of view of the insurer, as 'hypochondria' of the nature found in that case was no ailment at all. ( 16 ) WE now turn to the last relevant case of Mithoolal Nayak v: LIC. That was a case where the assured had omitted to refer to the fact of his having undergone treatment for diarrhoea and anaemia by a Doctor. The supreme Court after analysing S. 45 of the Insurance Act, has set out the ingredients necessary to be established by an insurer in order to avoid a liability under a policy of insurance, in accordance with the terms of that section. It is, however, worthy of note that the suppression cf the fact of aforesaid treatment was held to be fraudulent by the Court within the meaning cf S. 17 of the Contract Act. It is, however, worthy of note that the suppression cf the fact of aforesaid treatment was held to be fraudulent by the Court within the meaning cf S. 17 of the Contract Act. The passage is at page 819 of the above Report and runs thus :"no doubt, Mahajan Deolal's son now tries to make light of the illness of his father, but Dr. Lakshmanan's evidence shows clearly enough that in September-October 1943 Mahajan Deolal was suffering from a serious type of anaemia for which he was treated by Dr. Lakshmanan. Mahajan Deolal could not have forgotten in July, 1944 that he was so treated only a few months earlier and further more, Mahajan deolal must have known that it was material to disclose this fact to the respondent company. In his answers to the questions put to him he not only failed to disclose what it was material for him ta disclose, but he made a false staatemet to the effect that he had not been treated by any Doctor for any such serious ailment as anaemia or shortness of breath or asthma. In other words there was a deliberate suppression fraudulently made by Mahajan Deolal. Fraud, according to S. 17 of the Indian Contract Act, 1872 (IX of 1872), means and includes inter alia any of the following acts committed by a party to a contract with intent to deceive another party or to induce him to enter into a contract. " ( 17 ) ONE other principle laid down therein is that the explanation to S. 19 of the Contract Act, to the effect that a false representation whether fraudulent or innocent, is irrelevant if the pary who is to act on it has not been misled in making the contract, would not be of any assistance to tine r assured in contracts of insurance of the present nature. The argument in substance before the Supreme Court on behalf of the assured, similar to the one urged also in this case was that the insurance company having got the assured examined by several of its own doctors had acted on its own on the basis of the reports of such doctors and, was not at all induced, to act on the misrepresentations, if any, of the assured. This argument was rejected, and the Court held that the explanation to S. 19 of the Contract act could not be invoked in contracts of this nature and in the facts and' circumstances of that case. ( 18 ) REFERRING to S. 45 of the Insurance Act, this is what the Supreme court has said :"the three conditions for the application of the second part of section 45 are- (a ). the statement must be on a material matter or must suppress facts which it was material to disclose; (b) the suppression must be fraudulently made by the policy holder and (c ). the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which was material to disclose. The crucial question before us is whether these three conditions were fulfilled in the present case. We think they were. "keeping in view the aforesaid principles, we shall now proceed to examine the relevant evidence, bearing on such a question. Jt is pertinent to note that in all these cases of proposals and personal statements, preceding the issue of policies, there is a statement by the assured making the statements in proposals and personal statements the basis of the contracts cf insurance evidenced by the five policies in question. That such statements were actually explained to the assured in a language known to him, viz. , Kannada is also acknowledged by the assured in his own handwriting and in that language. We have referred to these circumstances, because an argument was urged, that the assured did not know English although he knew how to sign in English. In these circumstances, we do not feel impelled to consider this argument with any seriousness, and reject it. ( 19 ) ONE other argument is that the assured may not have had the wherewithal to pay the premia due on the policies. Some evidence is on record that he was a businessman arid a tax assessee. We do not wish to say anything more on this aspect, beyond observing that in the proposals the sources of income of the assured have not been disclosed, although specifically invited to do so. Some evidence is on record that he was a businessman arid a tax assessee. We do not wish to say anything more on this aspect, beyond observing that in the proposals the sources of income of the assured have not been disclosed, although specifically invited to do so. We shall refer briefly to the evidence adduced in regard to the hospitalisation and treatment of the assured during the period 4-8-59 to 5-9-59, just 14 months prior to the sending up of the proposal in regard to the first of the above policies. In this context it is also worthy of note that in a space of about 3 years and a few months, the time that had elapsed between the first and the last of the policies, the assumed had insured for heavy sums aggregating tot Rs. 1,30,000 in all, on five policies. The only time he had insured earlier was in 1947 for Rs. 10,000 and Rs. 20,000 on two policies. These policies were no longer in force and had been paid up. No clear or reasonable explanation is forthcoming as to this sudden spurt on his part. It seems in some degree reasonable to infer that it has had something to do with the treatment he received and knowledge he derived as to his state of health during his hospitalisation in 1959. Indeed this was suggested on behalf of the LIC in the course of the arguments. For determining the question of fact whether or not the answer to question 10 (b) related to a material fact or not, it is unnecessary to consider, all the oral and documentary evidence adduced, as, in our opinion, much of it relates to the good health enjoyed by the assured subsequent to such, hoepitalisation and the fact that he did not die of any disease relating to cancer or any ailment affecting the throat. We have aeen from the earlier discussion that it is immaterial for the question on hand that the assured did not die of any disease which had been suppressed by him. We have aeen from the earlier discussion that it is immaterial for the question on hand that the assured did not die of any disease which had been suppressed by him. We have also seen that the materiality or otherwise of the fact suppressed does not depend exclusively on the understanding of the assured, but on the fact whether a reasonable man would or would not think it proper to disulose the same, in a contract based on mutual good faith, as the present one in order to enable an insurer to make up his mind to accept the proposal or not. In this view, we proceed to examine only the evidence relevant in the context of question 10, and the answer thereto which has been reproduced earlier. ( 20 ) ON behalf of the plaintiff, only one witness. PW. 1, the son of the assured has been examined. He has been examined on 16-10-1969. His age therein has beea shown as 26 years. It is, therefore, clear that he mudt have been about 16 to 17 years of age when his father, the assured, had been hospitalised in the year 1959. He flatly denied that his father was ever in the hospital as suggested. His evidence is totally unworthy of acceptance when one has regard for the oral and documentary evidence adduced on behalf of the LIC. We shall leave our comment on this evidence at that. Moreover, the burden of proving this fact is entirely on the lic having regard to the provisions of S. 45 of the Insurance Act, on the basis of which alone the appellant (LIC) could succeed or fail. Among the other evidence, only the evidence of DWs. 1, 2, 3, 4, 6 and 7 is, in our opinion, relevant as bearing on the question on hand. DW. 1, dr. H. V. Suryanarayana Rao, is a Pathologist, who at the relevant point of time was on the staff of the K. R. Hospital, tha one in question. He was also a Professor in the Medical College, in the ENT Branch for over 13 years. He has put in 26 years of service. He speaks to admission of ona sriranga Shetty into the hospital as per -Ex. D2, But the actual register of admission is Ex. D11 and the relevant entry in Ex. D11 a, the relevant' number being 147/8. Ex. He has put in 26 years of service. He speaks to admission of ona sriranga Shetty into the hospital as per -Ex. D2, But the actual register of admission is Ex. D11 and the relevant entry in Ex. D11 a, the relevant' number being 147/8. Ex. D2 shows that he was admitted on 4-8-1959. Ex. D2 also refers to the result of the 'biopsy' and ''limphoid tissue showing chronic inflammatory changes, Ulceration of the surface in some area, detachment of crypts with inflammatory exudate, No evidence of malignancy". He also speaks to Ex. D1, which is a treatment record. This treatment record is, in our opinion, rather revealing. It shows that the assured was given X-Ray for a week from 31-8-59 and that he had an income of rs. 100 per mensem. Some argument was addressed as to the total period of actual treatment. On behalf of the LTC it is stated that such period was of 25 hours duration and on behalf of the Trustee it is contended that such treatment was only of 25 minutes duration. The matter has not been clarified in the course of the examination of DW. 1, who was quite qualified to speak on the point. Be that as it may, the fact remains that Sriranga shetty had undergone treatment by X-Ray for a week. Any such situation in a man's life-time is not likely to be forgotten. He also refers to ex. D3 which sets down the nature of the complaint, and some other documents relative to the assured. He has also stated that cancer is a 'terminal disease'. He is emphatic that the tumour that he had noticed 'looked malignant'. He speaks to the 'biopsy' done twice, both in the tonsils and lymphatic gland. He also avers that he "suspected cancer because it had in the particular case, all the characteristics of cancer". ( 21 ) IN this context, it is relevant to refer to an argument urged on behalf of the Trustee-Bank. In effect it is this: Merely because a patient had been treated by" X-Ray therapy on the basis of suspected cancer, when in fict it was not, it would not follow that the patient was bbund to take such a tretment seriously and refer to it as a material fact in any personal statement such as the one concerned in this case. This argument, assumes that the patient was bound to state only if it was cancer and not otherwise. The materiality of a fact depends on the surrounding circumstances and also the nature of the. information sought by an insurer. It is not open to an assured to decide for himself as to which fact is material and which not. In the instant case, circumstances are: (1) he was hospitalised for over a month; (2) two 'biopsy' examinations were done and these would involve removal of tissues by a minor operation; (3) X-Ray therapy for a week. In the face of all these circumstances, any reasonable man would think that there might be something seriously wrong with him although he may not have had a clear idea of the disease he might be suffering from. Moreover, q. 10 (b) is clear and unambiguous, and clearly refer to hospitalisation. Hospitalisation for about 31 days cannot be classed as a passing phase, and a mere single check up as inferred by the trial Court. In the context of supervening events present in this case, it would be clear that such a question, framed by the insurer, could not be said to be not of any importance to the insurer. In certain given situations, as illustrated by the present case, the question assumes considerable importance. It is, therefore, expected of an assured to answer it truthfully and in good faith. The importance of the question has also been shown by the evidence of several witnesses that if they had known all about it, they would not have recommended the assured as a good risk. We are clearly therefore, of the view that the assured had deliberately withheld this fact and with the fraudulent intention of inducing the insurer to accept the risk. We further hold that this fact was a material one from the point of view of the insurer, and the acceptance of the risk by it, We are also satisfied that the assured was fully aware of the fact of hospitalisation and the treatment, at the time he sent up his proposals for insurance. We, therefore, disagree with the view of the trial Court on this question. ( 22 ) THE other three witnesses DWs. 2 to 4 are also Doctors. DW. 2 speaks to the admission of the patient into the hospital. DW. We, therefore, disagree with the view of the trial Court on this question. ( 22 ) THE other three witnesses DWs. 2 to 4 are also Doctors. DW. 2 speaks to the admission of the patient into the hospital. DW. 3 is the Doctor who first examined the assuied and recommended his admission for further examination in the K. R. Hospital. DW. 4 is the Pathologist who examined the tissues durng 'biopsy' and opined that the 'adenitis' was not malignant and, therefore, not cancer. DW. 6 is almost a neighbour of the assured. He speaks to his having seen a swelling on the neck of the assured prior to his death. DW 7 is a Doctor who was a House Surgeon at K P Hospital from 1-7-1959 to 15-9-1959. He speaks to his having talked with Sriranga shetty then. What is significant is that he has taken up private practice at Mercara and his clinic is hardly 150 yards from the house of sriranga Shetty. This is what he says : "he (Sriranga Shetty) had come to my Clinic at Mercara. enquired him of his ailment in Mysore. He said he was alright and nothing to worry. He had not forgotten his treatment in the hospital at Mysore". This would clearly show that the assured was conscious of his treatment and had not forgotten all about it. ( 23 ) BEFORE concluding one other question that arises in this case requires to be briefly considered. It is in evidence that the premia on the policies were being regularly paid up. Such payments, it is stated, amount to a fairly large sum of over Rs. 12,000. There is no rcief sought as regards this amount, either alternatively or otherwise Assuming that such a relief fells to be considered, either in equity or at law, it is apparent that in view of the law as laid down by the Supreme Court in the case of Mithoolal nayak that neither S. 64 nor S. 65 of the Contract Act would apply, to claim relief on the basis of money had and received, as the same was based on a contract founded on fraud, tha respondent plaintiff would not be entitled to any such relief. But in the course of the debate, it was stated on behalf of the LIC by its learned Counsel, that refund of such amount lies within the discretion of the insurer as per ths very provision of the Insurance Act. Since it is clearly a matter left to the discretion of the insurer, we wish to say no more about it. For the above reasons, this appeal has to succeed and is allowed. The judgment and. decree in appeal are, therefore, set aside and the suit will stand dismissed. ( 24 ) AS regards costs, it is seen that the LIC is already in possession of all the monies paid as premia. This apart, judging from the events subsequent to the death of the assured, i. e. , on 12-9-1964, upto the date of repudiation, i. e. , 24-6-1966 the plaintiffs were more or less led to believe by the conduct of the LIC that there was a reasonable basis for their claim. We, therefore, think that this is a fit case where parties should be directed to bear their own costs both here and in the Court below. It is ordered accordingly. --- *** --- .