BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD
C.C.NO.76 OF 2011
Between:
Smt Meka Vasundhara
W/o late Meka Narendra Prasad
Aged about 46 yrs,
R/o H.No.4-6-9/58, Veer Savarkar
Nagar, Nacharam, Hyderabad-76
Complainant
A N D
1. IICI Bank Ltd.,
Begumpet Hyderabad
A commercial Bank rep. by its
Branch Manager
2. ICICI Prudential Life Insurance Co.,Ltd.,
Claims Department, 4th Floor, Stanrose House
Appasaheb Marathe Marg, Prabhadevi
Mumbai-025, rep. by its Managing Director
Opposite parties
Counsel for the complainant M/s I.S.Seshavatharam
Counsel for the opposite parties M/s C.V.Srinath(OP1)
M/s BSK Legal(OP2)
QUORUM: SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER
AND
SRI T.ASHOK KUAMR, HON’BLE MEMBER
MONDAY THE TWENTY FIRST DAY OF JANUARY
TWO THOUSAND THIRTEEN
Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)
***
1. Complainants filed the complaint under Section 17(a)(i) of the Consumer Protection Act, complaining deficiency in service against the opposite parties no.1 and 2 seeking direction to the opposite parties to pay the sum assured under insurance policy to the first opposite party for adjustment of the outstanding amount in the loan account of the complainant’s husband and to pay interest on the sum assured as also to pay an amount of `2,00,000/- towards compensation.
2. Facts which are necessary for disposal of the complaint l are that the complainant’s husband, Meka Narendra Prasad during his life time obtained loan from the first complainant-bank under loan account bearing number LBHYD00001613251. The first complainant-bank obtained insurance policy bearing number 06350358 on 28.09.2007 on the life of the borrower by remitting an amount of `71,350/- towards premium of the insurance policy. The complainant’s husband obtained loan to the tune of `31,00,000 from the first complainant-bank by mortgaging his house bearing door number 2-10-240 at Cherlapalli village within the limits of Capra Municipality. The insurance policy was stated to have been dispatched to the complainant’s husband in the year,2009. The complainant’s husband died on 14.03.2010 and he used to pay the EMIs regularly.
3. After the death of her husband, the complainant lodged claim with the second opposite party insurance company. As her claim was not settled, the complainant got issued notice through her advocate on 15.02.2011 and later she filed the complaint.
4. The complainant has claimed that the opposite party no.2 issued the insurance policy and the claim has to be settled and the sum assured has to be adjusted to the loan account of her husband.
5. The opposite parties resisted the claim on the premise that the complaint is not maintainable as the complainant is not consumer nor she has locus standi to maintain the complaint as M/s ICICI Home Finance Company Limited, the first opposite party is the proposer and the complainant’s husband is the member. It is contended that as per the terms of the insurance policy , upon happening of specified event the sum assured is payable to the first opposite party-bank and not to the complainant and that no premium was received by the second opposite party-insurance company. It is contended that insurance policy was a cover for Home Equity Loan and the policy was cancelled in the year,2007 as the loan was cancelled and that the complaint is not maintainable in the absence of the proposer, “M/sICICI Home Finance Company Ltd”.
6. It is contended that the complainant’s father-in-law filed complaint before the Banking Ombudsman against the first opposite party-bank and the complaint against the same subject matter is not maintainable. The matter cannot be adjudicated in summary proceedings. M/s ICICI Home Finance Company Ltd and the second opposite party insurance company are two separate entities and M/s ICICI Home Finance Company Ltd had sent application dated 25.09.2007 signed by the complainant’s husband and the second opposite party issued Home Assurance Plan on 11.10.2007 for sum assured of `25 lkah.
7. The second opposite party-insurance company cancelled the insurance policy in the year 2007 on receipt of request therefor made by the proposer, i.e, M/s ICICI Home Finance Company Ltd and refunded the premium of `1,00,000/- on 3.11.2007 to M/s ICICI Home Finance Company Ltd. Thereafter, the second opposite party has not received any proposal for issuing the insurance policy from M/s ICICI Home Finance Company Ltd or the complainant’s husband. The first opposite party had adjusted the amount by dating back and the second opposite party issued reply to the notice of the complainant.
8. The counsel for the complainant has filed written arguments.
9. The complainant’s father-in-law M.Anand Rao has filed her affidavit and the documents, ExA1 to A15 and on behalf of the opposite parties, the authorized representative has filed his affidavit.
10. The point for consideration is whether the complainant is entitled to the benefits conferred under the insurance policy?
11. The admitted facts are: The complainant’s husband obtained loan under loan account numberLBHYD00001613251 on 29.08.2007 from /s ICICI Home Finance Company Ltd and M/s ICICI Home Finance Company Ltd obtained insurance policy for him by getting deduced an amount of `1,00,000/- from the loan amount towards the premium to the second opposite party- insurance company. The complainant’s husband died on 14.3.2010 at Yashoda Hospital, Hyderabad.
12. The opposite parties challenged the maintainability of the complaint on the premise that the complainant has no locus standi to maintain the complaint as also that she is not consumer within the meaning of Sec.2(1)(d) of the C.P.Act. The second opposite party insurance company issued insurance policy the status of which can be considered in the following paragraphs, in favour of the complainant’s husband who is shown as ‘member’ in the insurance policy and M/s ICICI Home Finance Company Limited at whose instance the insurance policy which is a group insurance policy was issued is shown as “proposer”. The complainant’s husband being member and the insurance policy having been issued covering the risk on his life as also the complainant standing on par with her husband’s status as co-applicant for the loan, the complainant can maintain the complaint and she is consumer within the meaning of Sec.2(1)(d) of C.P.Act as she is the beneficiary of the member who in turn is the beneficiary insofar as the sum assured under the insurance policy is concerned. The point is answered against the opposite party.
13. The question that fall for our consideration is whether the amount assured under the insurance policy can be adjusted towards the due by the deceased husband of the complainant with the opposite party bank.
14. The Policy is issued on payment of single premium. It contains the recital to the effect that the premium was received from the first opposite party.
15. The second opposite party insurance company addressed letter to the complainant’s husband informing him that it has issued the insurance policy and he is at liberty to cancel the insurance policy during the “Free look period”. The letter reads as under:
“To understand your policy better, we suggest that you spend some time to go through the enclosed policy document and the key features document. We have also enclosed a copy of your proposal form for your perusal.
We are sure you understand the benefits of making your premium payments on time. We offer multiple premium payment options, as indicated alongside. We have also tied up with select banks for acceptance of premium payments. For details of payment options, you are welcome to contact us or log on to our website www.iciciprulifecom
You are also entitled to a Free look Period of 15 days. You can avail of this period, starting fro the date you receive your policy, to review or change your policy features, or discontinue it for some reason. Of course, if you request for cancellation after this period, it will be considered according to the terms and conditions of your policy. ”.
16. The complainant has not denied receipt of the aforementioned letter. The insurance policy has covered risk on the complainant’s husband in terms of Clause 2 of the policy which reads as follows:
“Date of commencement of Life Cover:
The Life Cover as respects the member shall commence on the latest of:
a) The date on which the Company receives the Premium as respects the member
b) The date on which the Bank makes first disbursement of the loan as respects the Member
c) The date of the underwriting decision or the date on which the Company has received consent for the counter offer as the case may be and as respects the member
Any such increase in Life Cover amount shall be subject to the then underwriting norms of the Company and receipt of the incremental premium.
17. It is contended on behalf of the opposite parties that the complainant’s husband failed to produce the relevant documents pertaining to the property mortgaged and the first opposite party bank cancelled disbursement of loan a sum of `30 lakh and thereupon the first opposite party requested the second opposite party to cancel the insurance policy and the second opposite party has cancelled the insurance policy. It is contended that the complainant’s husband 8 months thereafter submitted the relevant documents and accordingly the loan amount was disbursed and that no insurance policy was issued as a cover for the home loan in favour of the complainant’s husband.
18. It is not disputed that the complainant’s husband failed to furnish the required documents as also the first opposite party cancelling the disbursement of the loan amount and the second opposite party effecting cancellation of insurance policy. However, in the written arguments the counsel for the complainant comes up with a plea that had there been any cancellation of insurance policy effected by the second opposite party the complainant’s husband ought to have been informed of the same and dispatching of the insurance policy in the year 2009 would falsify the plea of the opposite parties that the insurance policy was cancelled in the year 2009.
19. In the letter dated 19.5.2011 the second opposite party informed the complainant’s father in law that the cheque for Rs.30 lakh was prepared and the cheque for rs.one lakh was issued in favour of the second opposite party insurance company and the second opposite party issued the insurance policy on 29.9.2007 and the policy documents were sent to the communication address and meanwhile disbursement of cheque for `30 lakhs was cancelled due to non-submission of the relevant documents. It is mentioned in the letter that:
After sanction of the loan, application has requested for disbursement of the loan. As per request of the applicant, disbursement cheque of rs.30 lakhs and Rs.one lakh vide cheque no.048597 and 048596 dated 31.8.2007 ahs been prepared. The cheque for Rs.one lakh has been prepared in favour of ICICI Prudential Life Insurance Co., Ltd., (IPRU) as per the request of the applicant towards premium of home assure policy. Accordingly, a home assure policy bearing No.06350358 was issued by IPRU on September 29, 2007 and the policy documents were sent to the communicaton address. In the meanwhile, the disbursement cheque of Rs.30 lakhs has been cancelled due to non-subission of property documents by applicant. Since the disbursement cheque fo Rs.30 lakhs has been cancelled, thereore, home assure policy also got cancelled as the insurance policy was cover for the home equity loan”.
20. The complainant is co-applicant. She has not filed her affidavit. The opposite parties have been consistently stating that the complainant’s husband had not submitted the required documents as a request of which the disbursement of the loan was cancelled and eight months, after the cancellation the disbursement of the loan amount as also the cancellation of the insurance policy, her husband submitted the relevant documents whereupon the complainant’s husband submitted the document and requested for disbursement of the loan in the month of May 2008.
21. As the disbursement of loan was cancelled and the insurance policy was also cancelled, there were no further steps taken insofar as obtaining the insurance policy is concerned and the complainant’s husband had got disbursement of the loan amount leaving aside the aspect of obtaining the insurance policy therefor. In the circumstances, cancellation of the policy effected by the second opposite party and refund of the amount made by it to the first opposite party bank cannot be found fault with. The first opposite party, however, had not taken prompt steps to adjust the amount towards the outstanding due in the loan account of the complainant’s husband and it had rectified its mistake by giving a back dated principle adjustment of rs.one lakh along with interest of `57,226/- whereby the outstanding amount was reduced from `27,71,371/- to `26,14,145/-.
22. The learned counsel for the complainant has relied upon the following decisions:
1. Citizen Cooperative Bank Ltd., Vs Tarlochan Sing, IV (2011) CPJ 148
2. I 2010) CPJ 306 (NC)
3. Punjab National bank Vs Bhupinder Singh, IV (2012) CPJ 129 NC
4. Regional Provident Fund Commissioner Vs Shiv Kumar Joshi, III (199) CPJ 36 (SC)
5. II (2012) CPJ 10 (NC)
23. In Tarlochan Singh’s case it was held that the duty is cast upon the bank to take steps for covering risk under insurance cover. The National Commission held that the bank being a financial institution has to take care of the borrower’s interest. In the present case, the bank has taken care by obtaining the insurance policy coverage risk on the life of the complainant’s husband.
24. In Taba Gloves Private Ltd (supra) the bank had obtained insurance policy and a fire accident was occurred. The insurance company settled the claim with the bank without intimating the complainant. It was held that the bank cannot unilaterally enter into the shoes of the company without their written consent. In the instant case, the complainant’s husband was informed at the time of issuing the insurance policy and also at the time of cancellation of disbursement of loan and the cancellation of the insurance policy as well.
25. Punjab National Bank is a case where the bank extended limit loan facility in favour of its account holder subject to his depositing six kissan vikas patras which on maturity were to be paid to the account holder by the post office. There was some conflict between the branch of the bank and its higher authorities. The facts of the case and those of the present case are completely different.
26. In Shiv Kumar Joshi’s is a case where the Supreme Court had broadened the definition of consumer holding that the definition of consumer under the CP Act includes not only the person who hires the services for consideration but also the beneficiary for whose benefit such services are high. The ratio laid in decision is made applicable to the facts of the case and a finding was returned holding that the complainant is consumer and the complaint is maintainable.
27. In SBH’s decision, the National Commission has considered the aspect whether the bank can sanction the loan and cover it under master policy simultaneously. It was held that the insurance company cannot be held liable and the bank which had granted the loan has the responsibility of obtaining insurance coverage as additional security for housing loan against default in repayment.
28. M/s ICICI Home Finance Company Limited is the proposer as mentioned in the home assured policy statement and single premium of Rs.71,350/- was paid to the second opposite party for initial life cover to the extent of Rs.25 lakh and the life cover commencement date was 28.9.2007. The opposite parties had taken specific plea that M/s ICICI Home Finance Company Limited which is the proposer of the insurance policy is not made party to the complaint. As per terms and conditions of the insurance policy the second opposite party would pay initial life cover on the death of the member and the amount is payable after the death of the member and after full disbursement of the loan. In the instant case no disbursement of the loan amount was made during the period of the subsistence of the insurance policy.
29. The statement of account of the complainant husband with the opposite party no.1 bank would show that a sum of Rs.1,00,000/- was paid to the second opposite party insurance company 31.8.2007 and the second opposite party after effecting cancellation of the insurance policy refunded the amount of rS.1,00,000/- through cheque dated 7.11.2007 to the opposite party no.1 bank. Thus there was no insurance policy in existence as on the date of disbursement of the loan amount to the complainant’s husband.
30. The statement of account maintained by the first opposite party bank would draw inference that the complainant’s husband had the knowledge of cancellation of the insurance policy. However, the first opposite party bank ought to have sent reminder to the complainant’s husband at the time of disbursement of the loan amount that at the first instance when the loan amount was to be disbursed the sum of `1,00,000/- from out of the loan amount sent to the second opposite party insurance company towards premium for the insurance policy was returned by the second opposite party insurance company after cancelling the insurance policy and it was for him to choose for the insurance policy again from the second opposite party by giving instructions to the opposite party no.1 bank to remit the amount to the second opposite party. Taking into consideration of the obligation of the opposite party no.1 bank and the negligence of the complainant’s husband as also the complainant who is none other than co-applicant for the loan amount, we consider in the light of ratio laid in SBH’s decision (supra), we are of the view that a sum of `30,000/- if awarded as compensation to the complainant, it would meet the ends of justice.
31. As held by us in the foregoing paragraphs, the complainant had not substantiated her claim that the first opposite party bank or the second opposite party insurance company were at fault. Admittedly, the second opposite party issued the policy which was related to the disbursement of the loan amount and cancel the disbursement of the loan. Thereafter the complainant’s husband had not taken steps for obtaining the insurance policy as the statement of account would show that the amount collected towards premium was refunded to the opposite party no.1 bank in the year 2007. As such we do not find any substance in the contention of the complainant that she is entitled to claim the sum assured under the insurance policy to be adjusted towards the outstanding due in the loan account of her deceased husband.
32. In the result the complaint is partly allowed. The opposite party no.1 is directed to pay an amount of `30,000/- and costs of `3,000/- to the complainant . The complaint against the opposite party no.2 is dismissed without costs. Time for compliance four weeks.
MEMBER
MEMBER
KMK* DT.21.01.2013
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For complainant for opposite party
NIL NIL
EXHIBITS MARKED
For the complainants
Ex. A1 Original Insurance Policy with covering letter & Premium receipt in booklet, dated 11.10.2007
Ex. A2 Copy of Home loan main applicant proposal form, date 25.09.2007
Ex. A3 Copy of Letter sent by OP-1 to Narendra Prasad Meka, date 15.04.2008
Ex. A4 Copy of Letter Addressed by father of the Deceased to OP-1, date 18.01.2011
Ex. A5 Copy of Letter Addressed by father of the Deceased to OP-2, date 14.01.2011
Ex. A6 Copy of Death certificate of Narendera Prasad Meka, dated 19.03.2010
Ex. A7 Death certificate by Yashoda Hospital sec’bad with reports of cause of death, date 14.03.2010
Ex. A8 Postal complaint-settled letter of letter date 18.01.2011 to OP-1
Ex.A9 Postal complaint-settled letter of letter date 14.01.2011 to OP-2
Ex.A10 Payment receipts (6) of EMI, after death of M. N. Prasad.
Ex.A11 Letter by OP-2 sent in the name of the deceased, date 19.04.2011
Ex.A12 Letter by OP-2 addressed to complainant
Ex.A13 Copy of legal notice sent to OP-1 & 2 by the Lawyer of the complainant, date 15.02.2011
Ex.A14 Receipt of Registration of notice and Postal Acknowledgement of notice by OP-1, dated 18.02.2011
Ex.A15 Receipt of Registration of notice and Postal Acknowledgement of notice by OP-2, dated 19.02.2011
MEMBER
MEMBER
