Sumitra's, husband 'Subba Rao' took a policy on the life of 'Surekha', who is the wife of an employee 'Suresh' working for 'Subba Rao'. He later on assigned this policy to 'Sumitra'. On the death of 'Surekha', 'Sumitra'

An important factor for a valid contract is that it should be not expressly declared to be void by the Act. As per section 30 of Indian Contract Act, 1872 "agreements by way of wager are void". A "wager" is a "a promise to give money or money's worth upon the determination or ascertainment of an uncertain event". An insurance contract in certain cases resembles a wager when it is not supported by "insurable interest", and therefore such contracts are void. In this case, there is a lack of insurable interest and so they are void. The claims are not payable by the insurance company as there is no "insurable interest" in the contracts. There is a clean evidence of violation of principle of insurable interest. Further the transfer and assignment is not according to law. The contracts are void ab-initio on the ground of absence of Uberrimae Fidei.