2024 Supreme(SC) 332

SUPREME COURT OF INDIA
B.V. NAGARATHNA, AUGUSTINE GEORGE MASIH, JJ.
Mahakali Sujatha – Appellant
Versus
The Branch Manager, Future Generali India Life Insurance Company Limited and Another – Respondents
Civil Appeal No. 3821 of 2024
Decided On : 10-04-2024

IMPORTANT POINTS
(1) Burden of proving the fact which excludes liability of Insurer to pay compensation, lies on Insurer alone and no one else.
(2) There is an essential distinction between burden of proof and onus of proof – Burden of proving a claim or defence is on party who asserts it – It is easier to prove an affirmative than a negative.

Headnote:

(A) Insurance Act, 1938 – Section 45 – Insurance – Death of policy holder in a train accident – Death claim repudiated on the ground that policy holder had suppressed material facts in his application form with respect to existing life insurance policies from other insurers – Just as insured has a duty to disclose all material facts, insurer must also inform insured about terms and conditions of policy that is going to be issued to him and must strictly conform to statements in proposal form or prospectus, or those made through his agents – Principle of utmost good faith imposes meaningful reciprocal duties owed by insured to insurer and vice versa – Onus was on insurer to show that insured had fraudulently given false information and said information was related to a material fact – Test is, whether, circumstances in question would influence prudent insurer and not whether it might influence him – Full disclosure must be made of all relevant facts and matters that have occurred up to the time at which there is a concluded contract – Materiality of a particular fact is determined by circumstances existing at the time when it ought to have been disclosed and not by events which may subsequently transpire – If a fact, although material, is one which proposer did not and could not in particular circumstances have been expected to know, or if its materiality would not have been apparent to a reasonable man, his failure to disclose it is not a breach of his duty. (Paras 17, 18, 22, 24, 27 and 28)

(B) Insurance Act, 1938 – Section 45 – Proposal for insurance – Basic rules – (a) A fair and reasonable construction must be put upon language of question which is asked, and answer given will be similarly construed – This involves close attention to language used in either case, as the question may be so framed that an unqualified answer amounts to an assertion by proposer that he has knowledge of facts and that knowledge is being imparted – However, provided these canons are observed, accuracy in all matters of substance will suffice and misstatements or omissions in trifling and insubstantial respects will be ignored; (b) Carelessness is no excuse, unless error is so obvious that no one could be regarded as misled – If proposer puts ‘no’ when he means ‘yes’ it will not avail him to say it was a slip of pen; answer is plainly reverse of truth; (c) An answer which is literally accurate so far as it extends, will not suffice if it is misleading by reason of what is not stated – It may be quite accurate for proposer to state that he has made a claim previously on an insurance company, but answer is untrue if in fact he has made more than one; (d) Where space for an answer is left blank, leaving question un-answered, reasonable inference may be that there is nothing to enter as an answer; (e) Any answer given, however accurate and honest at the time it was written down, must be corrected if, up to the time of acceptance of proposal, any event or circumstance supervenes to make it inaccurate or misleading. (Para 30)

(C) Consumer Protection Act, 2019 – Section 67 – Insurance Act, 1938 – Section 45 – Insurance – Death of policy holder in a train accident – Death claim repudiated on the ground that policy holder had suppressed material facts in his application form with respect to existing life insurance policies from other insurers – No material facts should be suppressed which may have a bearing on risk being insured and decision of party to undertake that risk – However, not every question can be said to be material fact and materiality of a fact has to be adjudged as per rules stated in the Judgment – Though proceedings before Consumer Fora are in nature of a summary proceeding, yet elementary principles of burden of proof and onus of proof would apply – Respondent insurance company has produced no documentary evidence whatsoever before District Forum to prove its allegation that insured had taken multiple insurance policies from different companies and had suppressed the same – Respondents have failed to adequately prove fact that insured-deceased had fraudulently suppressed information about existing policies with other insurance companies while entering into insurance contracts with respondents – Repudiation of policy was without any basis or justification – Respondent company directed to make payment of insurance claim under both policies to appellant. (Paras 32, 41, 48, 51 and 53)

(D) Indian Evidence Act, 1872 – Sections 102 and 106 – Burden of proof and onus of proof – There is an essential distinction between burden of proof and onus of proof – Burden of proof lies upon a person who has to prove the fact and which never shifts but onus of proof shifts – Such a shifting of onus is a continuous process in evaluation of evidence – Whether burden of proof has been discharged by a party to lis or not would depend upon facts and circumstances of case – Party on whom burden lies has to stand on his own and he cannot take advantage of weakness or omissions of opposite party – Burden of proving a claim or defence is on party who asserts it – It is easier to prove an affirmative than a negative. (Paras 41 and 43)

Facts of the case:

Present civil appeal has been filed by complainant, who is daughter of insured-deceased who is also nominee under subject life insurance policies of her late father. Appellant is assailing order dated 22.07.2019 passed by National Consumer Disputes Redressal Commission, New in Revision Petition No. 1268 of 2019. By impugned order, NCDRC has allowed the revision petition filed by respondent-opposite party, thereby setting aside orders passed by District Consumer Forum and State Consumer Forum and sustaining repudiation of complainant’s claim by opposite party insurer-company.

Findings of Court:

Respondent company is directed to make payment of insurance claim under both policies to appellant, amounting to Rs. 7,50,000/- and Rs. 9,60,000/- with interest at the rate of 7% per annum from date of filing the complaint, till actual realisation.

Result : Appeal allowed.