Analysis of the Court:
The Court opined that 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 Court observed that while passing the impugned order, the NCDRC had relied upon the reply and the affidavit filed by the opposite party/ respondent company before the District Forum wherein details of as many as fifteen insurance policies taken from various insurers, other than the policy taken from the respondent company, have been given.
Therefore, the NCDRC concluded that the deceased insured had withheld information in respect of several insurance policies which he had taken from other insurers.
The Supreme Court disagreed with the observations of the NCDRC, inter alia, on the following ground.
The Court noted that the opposite party had failed to produce documentary evidence of the aforesaid policies or in the alternative failed to examine the officers of the various insurance companies so as to prove that the said policies had indeed been issued to the insured who had suppressed this material fact.
The Court examined the documents executed by the insured with the opposite party/ respondent company and applied the contra proferentem rule, and noted that the queries requiring disclosure of more than one policy with other insurer(s) in the form were ambiguous and therefore, the answer given by the deceased cannot be taken in a manner so as to negate the benefit of the policy by repudiation of the same on the demise of the insured.
The question before the Court was whether the opposite party/ respondent company in the present case had adequately discharged its burden of proof about the fact of suppression of previous life insurance policies of the insured.
The Court answered the question in the negative as the respondent insurance company had failed to produce any documentary evidence before the District Forum as well as the State Commission and had only produced a table of incomplete information about the other policies held by the insured-deceased.
The Court held that the repudiation of the policy was without any basis or justification.
The Court also held that given the facts of the case, having regard to the nature of queries, there was no suppression of any material fact based on the contra proferentem rule.
The Court set aside the impugned order of the NCDRC and directed the respondent insurance company to make payment of the insurance claim of the policies to the appellant/ complainant.
The judgement highlights the importance of transparency between the insurer and the insured. The ambiguous nature of the standard formats preferred by the insurance companies and its potential to cause confusion in the minds of the proposer/ consumer can be detrimental.
Source: Barandbench
