| Headnote |
Insurance Act, 1938 – s.45, before the 2014 amendment – Evidence Act, 1872 – Burden of proof – Onus of proof – Repudiation of insurance claim of the complainant on the ground of the material suppression of information regarding the previous policies – Consumer complaint filed – The District Commission allowed the complaint on the ground that no documentary evidence was available to show that deceased-insured had taken various insurance policies from other companies – The State Commission upheld the order of the District Commission – However, the NCDRC observed that the respondent insurance company had given details of the aforesaid policies by way of affidavit and the same was not denied by the complainant in her affidavit – Therefore, NCDRC concluded that deceased insured had withheld information in respect of several insurance policies which he had taken from other insurers – Correctness: Held: As per the language and interpretation of Section 45, the insurer cannot question the policy after the expiry of the time period and if it does, then the burden rests on the insurer to establish materiality of the fact suppressed and the knowledge of the insured about such suppression, so that the repudiation of the claim could be justified by the insurer – In the present case, the onus was on the insurer to show that the insured had fraudulently given false information and the said information was related to a material fact – The respondent insurance company has produced no documentary evidence whatsoever before the District Forum to prove its allegation that the insured had taken multiple insurance policies from different companies and had suppressed the same – Before the State Commission, the respondent had provided a tabulation of the 15 different policies taken by the insured-deceased – However, the said tabulation was not supported by any other documentary evidence, like the policy documents of these other policies, or pleadings in courts, or such other corroborative evidence – The NCDRC had accepted the averment of the respondents, without demanding corroborative documentary evidence in support of the said fact – The approach adopted by the NCDRC was not correct – 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 – The onus cannot be shifted on the appellant to deal with issues that have merely been alleged by the respondents, without producing any evidence to support that allegation – The respondents have merely provided a tabulation of information about the other policies held by the insured-deceased – The table produced is incomplete and contradictory as far as the date of birth of the insured is concerned – Therefore, 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 – The repudiation of the policy was without any basis or justification – Thus, the impugned order passed by the NCDRC set aside. [Paras 16,17, 48, 49, 50] Principle/Doctrine – uberrimae fidei – Insurance – Reciprocal duties:Held: Just as the insured has a duty to disclose all material facts, the insurer must also inform the insured about the terms and conditions of the policy that is going to be issued to him and must strictly conform to the statements in the proposal form or prospectus, or those made through his agents – Thus, the principle of utmost good faith imposes meaningful reciprocal duties owed by the insured to the insurer and vice versa. [Para 22] Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002 – A fact, whether material or not – Propositions:Held: Whether a fact is material will depend on the circumstances, as proved by evidence, of the particular case – It is for the court to rule as a matter of law, whether, a particular fact is capable of being material and to give directions as to the test to be applied – Rules of universal application are not therefore to be expected, but the propositions as set out are well established: (a) Any fact is material which leads to the inference, in the circumstances of the particular case, that the subject matter of insurance is not an ordinary risk, but is exceptionally liable to be affected by the peril insured against – This is referred to as the “physical hazard”; (b) Any fact is material which leads to the inference that the particular proposer is a person, or one of a class of persons, whose proposal for insurance ought to be subjected at all or accepted at a normal rate – This is usually referred to as the “moral hazard”; (c) The materiality of a particular fact is determined by the circumstances of each case and is a question of fact. [Para 26] Evidence Act, 1872 – Burden of proof and onus of proof – Consumer Fora:Held: Though the proceedings before the Consumer Fora are in the nature of a summary proceeding – Yet the elementary principles of burden of proof and onus of proof would apply – Section 101 of the Evidence Act states that whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist – When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person – Section 102 of the Evidence Act provides a test regarding on whom the burden of proof would lie, namely, that the burden lies on the person who would fail if no evidence were given on either side – There are however exceptions to the general rule as to the burden of proof as enunciated in Sections 101 and 102 of the Evidence Act, 1872, i.e., in the context of the burden of adducing evidence: (i) when a rebuttable presumption of law exists in favour of a party, the onus is on the other side to rebut it; (ii) when any fact is especially within the knowledge of any person, the burden of proving it is on him (Section 106) – In some cases, the burden of proof is cast by statute on particular parties (Sections 103 and 105). [Paras 41, 42] Evidence Act, 1872 – Burden of proof and onus of proof – Distinction between:Held: 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 the evaluation of evidence – For instance, in a suit for possession based on the title, once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant, it is for the defendant to discharge his onus and in the absence thereof, the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiff’s title. [Para 43] Evidence – Burden of proof – Insurance contracts – Nondisclosure of a material fact:Held: In the context of insurance contracts, the burden is on the insurer to prove the allegation of non-disclosure of a material fact and that the non-disclosure was fraudulent – Thus, the burden of proving the fact, which excludes the liability of the insurer to pay compensation, lies on the insurer alone and no one else. [Para 45] Word and Phrases – Contra proferentem rule:Held: In United India Insurance Co. Ltd. v. Orient Treasures (P) Ltd., (2016) 3 SCC 49, the Supreme Court quoted Halsbury’s Laws of England (5th Edn. Vol. 60, Para 105) on the contra proferentem rule – Where there is ambiguity in the policy the court will apply the contra proferentem rule – Where a policy is produced by the insurers, it is their business to see that precision and clarity are attained and, if they fail to do so, the ambiguity will be resolved by adopting the construction favourable to the insured. [Para 40] |
