BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD.
FA.No.315/2011 against C.C.No.61/2010 District Forum, KAKINADA.
Between
SBI Life Insurance Co Ltd.,
Central Processing Center
Kapas Bhavan, CBD Belapur
Navi Mumbai-400 614 . .Appellant/
Opp.party No.2
And
1. Vellanki Narasimha Rao
R/o.Door No.2-49E,
Endowments Colony,
Kakinada. ..Respondent/
Complainant.
2. State Bank of India
Represented by its Branch Manager,
Kakinada, East Godavari District. Respondent/
O.P.1
Counsel for the Appellants : Sri G.Anand Kumar
Counsel for the Respondents : Mr.E.S.R.Prasad-R1
(Mr.Vamaraju Srikrishnudu)
FA.No.386/2011 against C.C.No.61/2010 District Forum, Kakinada.
Between
STATE BANK OF INDIA,
Sriramnagar Branch, Bhanugudu Junction
Kakinada, East Godavari District-533 003
Represented by its Dy.Manager (Accounts Officiating) ..Appellant/
O.P.1
And
1. Mr.Vellanki Narasimha Rao
S/o.Hanumantha Rao, aged 39 years,
R/o.Door No.2-49E-4,
Endowments Colony,
Kakinada. ..Respondent/
Complainant.
2. SBI Life Insurance Co Ltd.,
Central Processing Center
Kapas Bhavan, Plot No.10, CBD Belapur
Navi Mumbai-400 614 .Respondent/
Opp.party 2
Counsel for the Appellant : M/s Vamaraju Srikrishnudu.
Counsel for the Respondents : M/s E.S.R.Prasad-R1
Mr.G.Anand Kumar-R2.
QUORUM: THE HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT,
SMT.M.SHREESHA, HON’BLE MEMBER,
AND
SRI S.BHUJANGA RAO, HON’BLE MEMBER.
THURSDAY, THE THIRTIETH DAY OF AUGUST,
TWO THOUSAND TWELVE
Order (Per Smt.M.Shreesha, Hon’ble Member)
***
Aggrieved by the order in C.C.No.61/2010 on the file of District Forum, Kakinada, opposite party No.2 preferred appeal, F.A.No.315/2011 and opposite party No.1 preferred appeal, F.A.No.386/2011. Since both the appeals arise out of the same C.C. they are being disposed of by a common order.
The brief facts as set out in the complaint are that the complainant submitted that his mother, Vellanki, Sita Mahalakshmi, has housing loan account with opposite party No.1. The complainant submitted that at the time of opening the account, opposite party No.1 officials informed that they had tie up with 2nd opposite party and if the account holders are interested they can pay insurance and they will send the premium through bank to 2nd opposite party. The complainant submitted that his mother gave consent to opposite party No.1 bank and thereby after opening the account every year, opposite party No.1 sent the premium to 2nd opposite party for renewal and the complainant’s mother was under the impression that she was covered under Suraksha policy. The complainant submitted that his mother noticed that opposite party No.1 stopped sending premiums to 2nd opposite party and immediately approached first opposite party informing about non payment of premium to second opposite party on her behalf for which opposite party No.1 replied that he was in no way connected to SBI life insurance and directed her to contact Regd. Office at Nariman Point, Mumbai. Thereby his mother addressed a letter stating that premiums were not deducted but there was no reply. The complainant submitted on several requests, his mother was asked to contact one Padma, SBI Life of Kakinanda, Mr.Bhagavan, SBI Life Visakhapatnam and Mr.Babu Rao, SBI life Visakhapatnam and all efforts were in vain and finally the complainant’s mother was asked to write a letter to SBI Life Insurance and accordingly she addressed a letter on 28-4-2009 informing all the efforts made. Thereafter on 31-5-2009 the complainant’s mother expired and the complainant addressed a letter to SBI Life Insurance Corporation, Mumbai and demanded for claim forms for which opposite party No.2 addressed a letter on 05-9-2009 and informed registration of a complaint under Ref. FDCL 254 and asked to correspond with the reference letter and enclosed claim forms to the complainant. The complainant sent the claim forms as per the letter of 2nd opposite party for which on 11-9-2009, 2nd opposite party has addressed a letter to opposite party No.1 with a copy to the complainant under Ref.55566/OPS/09/CL/D/47268 and the policy number of his mother is 82001128101. In the said letter, they informed first opposite party that they received the claim endorsement on 2-9-2009 and the date of commencement of the policy is 23-7-2004 and the premiums were received upto 22-7-2007 and the date of death of the complainant’s mother is 31-5-2009 and hence the policy is lapsed as on the date of death. In the said letter, it was also mentioned that as per the policy terms and conditions, if the premium was not paid before expiry of grace period, the policy will be lapsed and expressed their regret to settle the claim. The complainant immediately approached first opposite party but it did not reply properly and thereafter he addressed a letter dated 25-9-2009 to HEAD CLAIMS, CLAIM Department of 2nd opposite party informing the issue and questioned as to why opposite party No.1 has not collected premiums even though there were sufficient funds in the account of his mother and also addressed another letter dated 23-12-2009 to settle the claim at the earliest for which opposite party No.2 addressed a letter dated 7-1-12010 addressing opposite party No.1 with a copy to the complainant stating that as per the records available, the policy lapsed, hence the claim was repudiated. They also stated that the Registrar of claims informed that the case of the complainant would be reviewed by the Claims Review Committee and the decision of the Committee on the claim will be informed to the complainant shortly. Thereafter by way of letter dated 14-4-2010, 2nd opposite party addressed a letter to first opposite party with a copy to the complainant that the case has been reviewed by Claims Review Committee as the policy was not renewed till July, 23,2007, the complainant has lost opportunity to get insurance claim. The complainant submitted that from the beginning the mode of premium is through opposite party No.1 only and the complainant’s mother never paid the amounts directly to 2nd opposite party and therefore there is clear deficiency in service on the part of opposite parties. Hence the
complaint for a direction to the opposite parties to pay the death claim amount of his mother along with interest from the date of death till the date of realization together with Rs.10,000/- towards deficiency in service and Rs.5,000/- towards costs.
Opposite party no.1 was served with notice but remained exparte.
Opposite party no.2 filed counter resisting the case. It contended that in case of group insurance scheme, though the privity of contract is between the master policy holder and the insurer, the terms and conditions of the policy also bind the individual members. It admitted the issuance of Master Policy No.82001128101 which covers the depositors of State Bank of India who satisfy the eligibility criteria and pays the premium. The policy is a one year renewable group term assurance policy and hence the renewal is not automatic and has to be mutually decided between the Master policy holder and the insurer. Opposite party No.2 submitted that the main grievance of the complainant is against opposite party No.1 and it is not aware of the transactions/premium remittance agreement between the life assured and opposite party No.1 and as per Section 64 VB of insurance Act, no insurer shall assume any risk in respect of any insurance business unless and until the premium payable is received by them, the policy lapsed from 23-7-2007. As per schedule 1 clause (5) sum assured in the event of the death of the Member at any time, after 45 days of commencement of risk subject to the policy being in force but not later than the member completing the age of 60 years, to pay the beneficiary or grantees the amount of sum assured and in the instant case, the insurance cover was not in force as on the date of the life assured and submitted that there is no deficiency in service and prayed that the complaint be dismissed.
Based on the evidence adduced i.e.Exs.A1 to A6 and B1 to B6 and the pleadings put forward, the District Forum allowed the complaint directing opposite parties 1 and 2 to pay to the complainant the policy amount together with interest at 9% p.a. from the date of complaint i.e. 09-8-2010 till the date of realization together with costs of Rs.1,000/-.
Aggrieved by the said order, opposite party No.2 preferred appeal, F.A.No.315/2011 and opposite party No.1 preferred appeal, F.A.No.386/2011. Since both the appeals arise out of the same C.C. they are being disposed of by a common order.
It is the complainant’s case that he is the son of late Vellanki Sita Mahalakshmi who opened an account with opposite party no.1 bank for housing loan purpose and Ex.A1 evidences that this loan account was opened on 06-7-2004 and the last date of payment is 10-12-2010. It is the complainant’s case that at the time of opening of loan account, they were informed by the bank officials that opposite party No.2, insurance company, would insure all account holders and that the premiums would be sent through opposite party no.1 bank and we observe from Ex.A1 that the premiums were deducted by the bank in 2004, 2005 and 2006 and the date of commencement of policy is 23-7-2004 and admittedly the premiums were received by the insurance company upto 22-7-2007. While so, the insured died on 31-5-2009 evidenced under Ex.A2, death certificate. The complainant informed the said fact to opposite parties, and opposite party no.2 replied on 11-9-2009, vide Ex.A4 stating that the policy is in a lapsed condition as on the date of death. A copy of the same was also sent by opposite party no.2 to opposite party no.1 vide Ex.A5 and on further representation by the complainant, opposite party No.2 replied vide Ex.A6 dated 14-4-2010 that their Claims Review Committee also upheld the decision of the repudiation. A letter is also written by the insured on 13-8-2007 to the branch Manager of opposite party No.1 bank stating that the premiums were not deducted, but there was no reply to this letter. On 28-4-2009, the complainant herein got addressed a letter to the bank stating that the premiums were not deducted from his mother’s account. The subsequent letters written by the complainant to the Branch Manager on 25-9-2009, 23—12-2009 and 12-5-2010 were not marked by the District Forum.
It is appellant/opposite party no.1 bank’s case that the group insurance scheme was taken on a yearly basis and it is not a permanent policy and it is renewable at the option of the bank and insurance company and they can exercise their right to discontinue the insurance policy if they are of the view that it is not viable. The bank has not undertaken that it will pay the premiums regularly and opposite party no.1 further contended that the premiums of the insured were received only upto 23-7-2006 and the Master Policy itself lapsed with effect from 23-7-2007. Moreover the deceased did not raise any objection for non renewal of the policy or non payment of the premiums. As the insurance policy itself was not renewed and lapsed with effect from 23-7-2007, the bank did not collect any premium amounts thereafter and only acted as an agent between the member and the insurance company and therefore are not liable to pay any amounts.
It is the case of appellant/O.P.2 that it did not receive any premiums after 23-7-2007 and when the policy was in a lapsed condition, there is no concluded contract and it is the responsibility of the policy holder to keep the policy in force and that it is clearly mentioned in the preamble to the Master Policy as follows:
‘Subject to the payment of appropriate premiums specified herein and on proof of the happening of the contingencies stated herein in respect of the Members, the company shall pay to the Grantees or beneficiary as shall be authorized by the Grantees, as the case may be, the benefit in accordance with the terms, provisions and conditions hereof” Also as per Schedule 1, clause No.(5) sum assured (a) in the event of the death of the Member at any time after 45 days from the Date of commencement of Risk, subject to the policy being in full force, but not later than the Member completing the age of 60 years, to pay the Beneficiary or Grantees, the amount of Sum Assured”
As per Section 64VB of the Insurance Act, no insurer shall assume any risk in India in respect of any insurance business unless and until the premium payable is received by him in advance or is guaranteed to be paid to the insurer in the manner prescribed by the rules framed under the Insurance Act. Based on these grounds, the appellant/O.P.2 contends that their repudiation is justified.
We observe from the record that while it is an admitted fact that the policy has lapsed on 23-7-2007 because of non payment of premiums and the insured died on 31-5-2009, there is no communication by opposite party no.1 bank to the complainant with respect to deduction of premiums or the lapsing of the policy. It is also an admitted fact that opposite party no.1 bank deducted the premiums from 23-4-2004 till 22-7-2007 i.e. the premium was deducted for a period of three years and thereafter without any communication or notice to the policy holder, the bank has unilaterally stopped deducting the premiums and admittedly did not forward the premiums to the insurance company. It is the contention of the bank that the discretion to cancel the policy if it is not found viable lies with the bank and the insurance company and that the policy is not a continuous policy but is renewable every year. Ex.B1 is the Group Insurance Policy, terms and conditions, entered into between the bank and the insurance company in which the annual renewal date is given as July, every year. It is stated in the general conditions, clause 5 as follows:
5. If the Grantees do not renew this policy on any Annual Renewal Date by paying premiums then falling due as set out in the schedule, the Grantees may resume payment of premium only with the consent of the Company and subject to such conditions as may be prescribed by the company.
No where is it stated that this policy can be cancelled at the discretion of the bank. When there is a month i.e. July stipulated for renewal every year, there are no substantial grounds for opposite party no.1 bank to contend that the policy is only a yearly policy and can be cancelled at any time as per their discretion. Keeping in view the principles of natural justice and balance of equities, we are of the considered view that opposite party No. 1 bank ought to have issued a notice to the member/insured with respect to non payment of premiums/lapsing of the policy. It is not even the case of opposite party No.1 bank that they have issued any such notice to the insured herein. Keeping in view the aforementioned reasons, we find the contention of the bank that they have every right to discontinue the policy, without filing any such terms and conditions and also without issuing any notice to the insured, unsustainable. For the reasons cited above, the appeal i.e. F.A.No.386/2011, preferred by opposite party No.1 bank is dismissed and the order of the District Forum is confirmed against the liability of the bank. However with respect to the liability of the insurance company, it is an admitted fact that the policy lapsed on 23-7-2007 and the death of the insured is on 31-5-2009 and therefore as on the date of death of the insured, the policy is in a lapsed condition and there is no concluded contract between the complainant and the insurance company herein. It is not a salary savings scheme where the concept of employer and agent can be applied as done by the District Forum. We are of the considered view that the insurance company herein cannot be construed as a Principal and the bank as an agent and no liability can be fastened on the insurance company when the policy has lapsed and there is no concluded contract as on the date of death of the insured. For the reasons cited, F.A.No.315/2011 filed by the insurance company is allowed and the order of the District Forum is modified fastening the liability on opposite party No.1 bank alone.
In the result, F.A.No.315/2011 filed by the O.P.2/insurance company is allowed and F.A.No.386/2011 filed by opposite party No.1 bank is dismissed and hence we direct O.P.1 to pay to the complainant, the policy amount together with interest at 9% p.a. from the date of complaint i.e. 09-8-2010 till the date of realization together with costs of Rs.1,000/-. Case against opposite party no.2 is dismissed. Time for compliance four weeks.
Sd/-PRESIDENT.
Sd/-MEMBER.
Sd/-MEMBER.
JM Dt.30-8-2012
