Case Note & Summary
The present civil appeal arises from the repudiation of life insurance claims by Future Generali India Life Insurance Company Limited. The appellant, Mahakali Sujatha, is the daughter and nominee of the deceased insured, Siriveri Venkateswarlu, who held two policies with the respondent insurer: one dated 05.05.2009 for Rs. 4,50,000 and another dated 22.03.2010 for Rs. 4,80,000, both with accidental death benefits. The insured died in a train accident on 28.02.2011. The appellant submitted claims, but the insurer repudiated them on 31.12.2011, alleging that the insured had suppressed material facts by not disclosing existing life insurance policies with other insurers in the proposal forms. The appellant filed a consumer complaint before the District Consumer Forum, Vijayawada, which allowed the complaint on 27.08.2014, holding that no documentary evidence was produced to prove the existence of other policies. The State Consumer Forum upheld this order on 11.12.2018. However, the National Consumer Disputes Redressal Commission (NCDRC) allowed the insurer's revision petition on 22.07.2019, relying on the Supreme Court's judgment in Reliance Life Insurance Co Ltd vs. Rekhaben Nareshbhai Rathod (2019) 6 SCC 175, and dismissed the complaint. The appellant then appealed to the Supreme Court. The Supreme Court framed the issue of whether the insurer correctly repudiated the claim on grounds of suppression of material information. The Court examined Section 45 of the Insurance Act, 1938, which bars calling a policy into question after two years except on proof of fraud or misstatement. The Court noted that the insurer bore the burden of proving suppression by leading credible evidence, including documentary proof of the alleged other policies. The insurer had only filed an affidavit listing policies but did not produce original or certified copies. The Court distinguished the Rekhaben case, where the insured had admitted to other policies. Here, the appellant consistently denied the existence of other policies. The Court held that the insurer failed to discharge its burden, and the NCDRC erred in reversing the concurrent findings of the lower forums. Consequently, the Supreme Court allowed the appeal, set aside the NCDRC order, and restored the orders of the District and State Commissions, directing the insurer to pay the claim amounts with interest at 6% per annum from the date of repudiation.
Headnote
A) Insurance Law - Repudiation of Claim - Suppression of Material Facts - Section 45 Insurance Act, 1938 - The insurer repudiated the claim on the ground that the insured had suppressed information about existing life insurance policies with other insurers. The Supreme Court held that the insurer failed to discharge its burden of proof by not producing documentary evidence to establish the existence of such policies. The mere filing of an affidavit without supporting documents is insufficient to prove suppression. (Paras 13-30) B) Insurance Law - Principle of Utmost Good Faith - Uberrimae Fidei - The contract of insurance is based on utmost good faith, but the insurer must prove that the insured deliberately suppressed material facts. In the absence of credible evidence, the repudiation is unjustified. (Paras 9, 30) C) Consumer Law - Deficiency in Service - Repudiation of Insurance Claim - The District Forum and State Commission had allowed the complaint, finding no documentary evidence of suppression. The Supreme Court restored those orders, holding that the NCDRC erred in reversing them without proper proof. (Paras 3.5-3.7, 30)
Issue of Consideration
Whether the respondent-insurer was correct in repudiating the claim of the appellant on the ground of suppression of material information pertaining to existing policies with other insurers.
Final Decision
The Supreme Court allowed the appeal, set aside the NCDRC order dated 22.07.2019, and restored the orders of the District Consumer Forum and State Consumer Forum. The respondent insurer is directed to pay the insurance claim amounts under both policies with interest at 6% per annum from 31.12.2011 till realization, along with costs of Rs. 2000/-.
Law Points
- Burden of proof on insurer to prove suppression of material facts
- Section 45 Insurance Act
- 1938
- Principle of utmost good faith (uberrimae fidei)
- Requirement of documentary evidence to establish non-disclosure
