A Bench, comprising Justices S B Singh and Harjit Singh Bedi, in a recent judgment, has made it clear that if a customer fails to furnish nec essary particulars while applying for the policy, the company cannot be held liable for non-payment of money. "Where there has been a suppression of fact, acceptance of the (insurance) policy by an officer of the insurance company would not be binding upon it," the court said.

"Since the terms of the contract of insurance are being governed by the provisions of a statute, non-disclosure of such material facts would render the policy repudiable," it added. The owners of a ship, Sea Lark, took a loan from Canara Bank which, in turn, insured the vessel with United India Insurance Company for a period of one year, commencing from April 12, 1979.

Even though the bank renewed the insurance policy for another year, with due date being April 11, 1981, the vessel sunk on July 21, 1980.

When the insurance company was approached for money, it refused to accept the claim of the ship owners and the bank on the ground that the vessel was not seaworthy and the master of the ship had no requisite qualification.

Aggrieved by the stand of the insurance company, a civil suit was filed before Madras High Court. A single judge Bench noted that one Hemchandra Babu, who was the agent of the insurer, had kept columns blank while getting the form filled. Hence, the Bank could not be held responsible, said the court.

The owners then filed an appeal before the Division Bench, which upheld the single judge's order. The owners then approached the Supreme Court. The apex court too noted that several columns, which were material for the purpose of entering into a contract of insurance, were left blank. Hence, the insurance company was not liable to pay for the losses, the court ruled.