Summary
An insurer alleging concealed prior life policies must prove that factual basis; an incomplete, inconsistent table in an affidavit did not shift the burden to the nominee to disprove it. Rekhaben concerned admitted prior cover and was distinguishable. Ambiguous proposal questions were also construed against the insurer. The Court reversed repudiation, set aside the NCDRC order and awarded the specified claims under both policies with 7% annual interest from filing of the complaint until realisation.
Issues
- Whether the insurer proved fraudulent suppression of prior policies.
- Whether Rekhaben or the nominee’s failure to deny unsupported particulars justified repudiation.
- How ambiguous proposal questions affected the insurer’s defence.
Provisions considered
- Section 45, as applicable before amendment, Insurance Act, 1938The historical two-year framework applied to these policies and repudiation; the insurer bore the burden of establishing the alleged material and fraudulent suppression. (¶¶ 13, 14, 15, 16, 17, 35)
- Sections 101–104 and 106, Indian Evidence Act, 1872Elementary burden-of-proof principles apply in summary consumer proceedings. The insurer asserting facts excluding liability had to establish them before requiring a response to its unsupported allegation. (¶¶ 41, 42, 43, 44, 45, 46, 48, 49, 50, 51)
- Regulation 2(d) and explanation, IRDA (Protection of Policyholders’ Interests) Regulations, 2002Material information concerns underwriting the risk; the Court discussed the prudent-insurer test and reciprocal good-faith duties. (¶¶ 21, 22, 24, 25, 26, 32)
Held
- Utmost good faith entails reciprocal disclosure duties, and materiality concerns information bearing on the insured risk and the prudent insurer’s decision. Prior insurance can be material, as Rekhaben held, but that case involved admitted prior cover. It did not relieve the present insurer of proving that the alleged policies existed and belonged to this insured. (¶¶ 18, 19, 20, 21, 22, 24, 25, 26, 32, 33, 34, 35)
- The insurer’s table omitted important issue dates and identifying details and gave inconsistent birth dates. No policy copies or testimony from issuing insurers corroborated it. The NCDRC wrongly treated those unsupported particulars and the nominee’s failure expressly to deny them as proof of concealed prior policies. (¶¶ 36, 37, 38, 48, 49, 50)
- Summary consumer procedure does not dispense with elementary evidence principles. The party asserting the facts supporting its defence must prove them; the initial deficiency cannot be supplied by the opposing party’s omissions. The Court distinguished the continuing legal burden from the evidential onus that can shift after sufficient evidence. (¶¶ 41, 42, 43, 44, 45, 50)
- Queries 6.1 and 6.2 were unclear on the Court’s reading, and no evidence supported the alleged revival-related nondisclosure. Applying contra proferentem to genuine ambiguity in the insurer’s drafted questions, the negative answers could not justify repudiation on these facts. (¶¶ 39, 40, 52)
- The insurer could not repair its failure of proof by first tendering the supporting documents with its Supreme Court counter-affidavit after failing to lead proper evidence before the District Forum and tendering unauthenticated documents before the State Commission. Repudiation lacked a proved basis. (¶¶ 48, 51)
- The NCDRC order was set aside. The insurer must pay Rs.7,50,000 and Rs.9,60,000 under the two policies with 7% per annum interest from filing of the complaint until realisation. Parties bear their own costs. (¶¶ 53, 54, 55)
Result
Appeal allowed; NCDRC order set aside. Insurer to pay Rs.7,50,000 and Rs.9,60,000 with 7% annual interest from complaint filing until realisation. Parties bear their own costs.