Insurance Law| Insurer's Burden To Prove Insured Suppressed Material Facts : Supreme Court

While upholding the insurance claim repudiated by the insurance company on the ground of suppression of policies already held by the insured, the Supreme Court observed that the insurance company failed to discharge the burden of proof to show that the insurer had other policies existing while taking a policy from it.

“The cardinal principle of burden of proof in the law of evidence is that “he who asserts must prove”, which means that if the respondents herein had asserted that the insured had already taken fifteen more policies, then it was incumbent on them to prove this fact by leading necessary evidence…. Therefore, it can be safely concluded that the respondents (insurance company) have failed to adequately prove the fact that the insured-deceased had fraudulently suppressed the information about the existing policies with other insurance companies while entering into the insurance contracts with the respondents herein in the present case. Therefore, the repudiation of the policy was without any basis or justification.”, the Bench comprising Justices BV Nagarathna and AG Masih said.

The insured has taken a life insurance policy from the insurer. After the death of the insured, her daughter (appellant) as a nominee filed an insurance claim with the insurer. The claim was denied by the insurer based on the assertion that the insured had suppressed the fact of existing policies held by him before contracting the new policy.

The appellant had preferred to appeal before the Supreme Court against the order of the National Consumer Dispute Redressal Commission (“NCDRC) denying the insurance claim of the appellant.

Before the Supreme Court, the insurance company while relying on the Judgment of Reliance Life Insurance Co Ltd vs. Rekhaben Nareshbhai Rathod contended that the claim of the insured was rightly repudiated by them as the repudiation of the claim due to suppression of the fact of other existing insurance policies was upheld by the Supreme Court in Rekhaben case.

Per contra, the appellant pointed out that the insurer had failed to discharge the burden of proof to show if any policy existed when the insured purchased the new policy from the insurer.

Finding force in the appellant's contention, the Judgment authored by Justice BV Nagarathna held that the denial of the appellant's insurance claim was without any basis because the respondents/insurer had failed to discharge the burden of proof to show if the insured had suppressed the information about the existing policies with other insurance companies while entering into the insurance contracts with the respondents/insurer herein in the present case.

“The respondents have merely provided a tabulation of information about the other policies held by the insured-deceased. The said tabulation also has missing information with respect to policy numbers and issuing dates and bears different dates of births. Further, this information hasn't been supported with any other documents to prove the averment in accordance with law. No officer of any other insurance company was examined to corroborate the table of policies said to have been taken by the deceased policy holder, father of the appellant herein. Moreover, the table produced is incomplete and contradictory as far as the date of birth of the insured is concerned.”, the court observed.

Judgment of Rekhaben Nareshbhai Rathod's Distinguished

In support of the repudiation of the insurance claim, the insurer contended that the Supreme Court in the Rekhaben case, upheld the repudiation of the insurance claim due to suppression of the fact of other existing insurance policies.

However, unable to agree with the respondent/insurer's contention, the court distinguished the case of Rekhaben from that of the present case.

In the Rekhaben case, there was an admission of the fact of suppression of previous policies purchased by the insured, however, in the present case there was no admission of the suppression of previous policies taken by the insured.

“However, the aforesaid judgment (Rekhaben case) is distinguishable from the present case, insofar as there is no admission by the appellant herein of any previous policies taken by the insured. In that case (Rekhaben case), after the admission by the policy holder, the Court was tasked only with the question of whether the fact about previous polices qualified to be a “material fact” that was suppressed. However, in the present case, in light of Section 45 of the Insurance Act, 1938, the burden rests on the insurer to prove before the Court that the insured had suppressed the information about the previous policies. This burden of proof has to be duly discharged by the insurer in accordance with the law of evidence.”, the court observed.

Conclusion

Based on the above premise, the insurer/respondent was directed to make the payment of the insurance claim under both policies to the appellant, amounting to Rs. 7,50,000/- and Rs. 9,60,000/-, with interest at the rate of 7% per annum from the date of filing the complaint, till the actual realization.

Counsel For Petitioner(s) Mr. Venkateswara Rao Anumolu, AOR Mr. Sunny Kumar, Adv.

Counsel For Respondent(s) Mr. Praveen Mahajan, Adv. Ms. Adviteeya, Adv. Mr. Nishant Sharma, Adv. Mr. Rakesh K. Sharma, AOR

Case Title: MAHAKALI SUJATHA versus THE BRANCH MANAGER, FUTURE GENERALI INDIA LIFE INSURANCE COMPANY LIMITED & ANOTHER

Citation : 2024 LiveLaw (SC) 300

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