The Supreme Court, in its ruling on April 10, 2024, emphasized the responsibility of each party to discharge the burden of proof specific to them. Regarding insurance contracts, it highlighted that the insurer bears the burden of proving any alleged non-disclosure of material facts, especially if fraudulent, rather than shifting this burden onto the insured or any other party.
…….the burden of proving a fact always lies upon the person who asserts the same. Until such burden is discharged, the other party is not required to be called upon to prove his case. The court has to examine as to whether the person upon whom burden lies has been able to discharge his burden.
The court in the instant revision petition overturned the 2019 decision of the National Consumer Disputes Redressal Commission (NCDRC) and instructed the insurance company to honor the appellant, Mahakali Sujatha's claim under both policies. The amounts due, totaling Rs 7,50,000 and Rs 9,60,000 respectively, were to be paid with an interest rate of 7% per annum from the date of filing the complaint until fully settled.
The case involved insurance claims denied for the appellant's father following his death in a train accident in 2011. The deceased had two policies from Future Generali India Life Insurance Company Limited. The company alleged the deceased had withheld information about existing life insurance policies from other insurers, citing fifteen policies from various insurers besides theirs. However, the court found the evidence presented insufficient to validly reject the claim.
The court stressed the fundamental principles of burden and onus of proof, asserting that the burden rests on the party making the claim until adequately discharged. It criticized the NCDRC for accepting the insurer's claims without demanding substantial evidence and relying solely on a table indicating fifteen policies bought by the deceased.
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. Therefore, in our view, the NCDRC could not have relied upon the said tabulation and put the onus on the appellant to deal with that issue in her complaint and thereby considered the said averment as proved or proceeded to prove the stance of the opposite party.
Furthermore, the court deemed the insurer's repudiation of the policy unjustified, lacking a factual basis. It concluded that the insurer failed to sufficiently demonstrate fraudulent suppression of information about existing policies by the insured.
The court stated that any documentary evidence on which the respondent relies, should have been produced before the District Forum but it was not done. Further no oral or documentary evidence was produced by the respondents to prove their assertion. Their application to annex certain documents to support their claim before the state commission was also declined because of the unauthenticated nature of the documents. In the views of court, this all proves that the respondents 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. Hence, the repudiation of the policy was without any basis or justification.
Referring to the legal principle of "Uberrimae fidei" governing insurance contracts, the court highlighted the reciprocal duty of full disclosure between both parties. It emphasized the importance of complete disclosure to enable informed decision-making and fair contract formation, cautioning against the suppression of material facts affecting the insured risk and decision-making process. However, not every question can be said to be material fact and the materiality of a fact has to be adjudged as per the rules stated in the aforementioned judgment.
Accordingly, the Court, while setting aside the order passed by the NCDRC, directed the Insurance Company to pay the insurance claim to the Nominee of the deceased insured person along with interest.