ORDER

PER SH. RAKESH KAPOOR, PRESIDENT

In the year 2006, the husband of the complainant Late Sh. Harminder
Singh Banga had approached OP2 for a housing loan of Rs. 3,50,000/-.
0P2 had insisted that Sh. Harminder Singh Banga will have to buy an
insurance policy known as     “House Loan Protected Policy” and only
then the housing loan would be granted to him. He was told that the
insurance policy will be part of the housing loan and was a period of
10 yearsi.e. from 2006 to 2016 on which a onetime premium of Rs.
22,000/- was payable. Sh. Harminder Singh Banga thus availed of the
housing loan of Rs. 3,72,000/- from 0P2 on 7.2.2006 out of which a sum
of Rs. 3,50,000/- was credited to his bank account by 0P2 and a pay
order of Rs. 22096/- was paid to OP1 directly by 0P2 as the insurance
premium to cover the Housing loan under loan protector policy vide
insurance proposal no 16128331. It is alleged by the complainant that
his deceased husband had regularly paid the instalments of housing
loan till his death on 16.10.2010. The last installment was paid on
10.10.2010 on the death of herhusband; the complainant had approached
0P2 for release of property / title documents of the property which
were kept by the bank as security. Instead of releasing the documents,
OP2 asked the complainant to pay the outstanding arrears ine loan
account. The complainant told 0P2 that the housing loan was protected
under the loan protector  policy and it was the duty of OP1,  as per
the insurance policy, to settle the outstanding dues of the loan
account if any . 0P2 had assured the complainant to take up the matter
with 0P1. Nothing materialised for a period of two years. However, On
2.5.2012 the complainant received a letter from 0P2 stating that the
OP1 has informed about the rejection of the said loan protector policy
on health grounds and payment of Rs. 22096/- vide cheque no. 410201
which was sent to complainant from OP1.Further onseeking encashment
details of  the said cheque, OP1 has sent a fresh cheque no. 29049
dated 21.1.2012 which has been credited to the loan account. The OP2
has sought further details from OP1”. OP2 vide letter no. DRO /IMS/
166/ 2012 dated 6.9.2012 also directed OP1 to settle the death claim
of the housing loan of the husband of the complainant to avoid legal
complications but to no effect. Since, OP1refused to pay and settle
the housing loan under the insurance policy purchased by the husband
of
the complainant and since 0P2 refused to hand over the title deeds of
the property, the complainant approached this forum for redressal of
her grievances. The complaint has been contested by OP1. 0P2 despite
appearance on several dates failed to file a written statement and
was, therefore, ordered to be proceeded with ex-parte.
In its written statement OP1  has claimed that the complaint is false
and frivolous and thatthere was no cause of action in favour of the
complainant to file this complaint against  it. OP1, therefore, prayed
for the  dismissal  the complaint against it. It would be of benefit
to reproduce preliminary objection number 1 , 2, and 4 of the written
statement which reads as under:



 PRELIMINARYOBJECTIONS:


1. That the instant complaint against the answering opposite party is
not legally maintainable as no legal and valid contract, as per the
provisions of Indian Contract Act, 1872 was ever entered into between
Mr. Harminder Singh Banga and the opposite party during his life time.
Mr. Harminder Singh Banga submitted a proposal for insurance dated
08.02.2006 & proposed for Loan Protector — Single premium policy for a
sum of Rs.372000/-. As per the underwriting guidelines and rules of
the answering opposite party, Mr. Harminder Singh Banga was required
to undergo Medical Examination from the empanelled doctor of the
company and proposal number 0016128331 was assigned to his proposal
for insurance. Accordingly, the said proposer got himself medically
examined from Dr. N.
N. Jha, of Appolo Clinic, New Delhi and the medical report dated
28.02.2006 confirmed his adverse health condition. Thus, as per the
underwriting rules of the company, the proposal on the life the said
proposer Mr. Harminder Singh Banga was POSTPONED and the amount of
Rs.22096/- paid by the proposer towards proposal deposit was refunded
to him vide Cheque No.410201 dated 29.10.2006 drawn on UTI Bank and a
letter dated 02.11.2006 was sent to the proposer to this effect who
never raised any objection w.r.t. the refund of the proposal deposit
amount during his life time. Thus, no valid contract of insurance was
ever eitered into between the opposite party (Insurance Company) and
proposer Mr. Harminder Singh Banga. Thus, the complaint is prima-facie
liable to be dismissed.
2. That no cause of action has arisen in favour of the complainant
against the answering opposite party as the amount of Rs. 22096/-
deposited by the proposer towards proposal deposit was refunded to the
proposer vide cheque no. Cheque No.4 10201 dated 29.10.2006. Hence the
risk on the life of Mr. Harminder Singh Banga was never accepted by
the answering opposite party and the proposal on his life was
postponed due to adverse medical condition as confirmed in the medical
examination report thus, the question of issuing any policy of
insurance to him did not arise. The contract of insurance was NEVER
CONCLUDED due to non acceptance of the proposal as mentioned
hereinabove thus, no claim is liable to be paid to the complainant as
per the provisions of Indian Contract Act, 1872 & the complaint merits
dismissal on this score alone.

4. That the complaint of the complainant is hopelessly barred by
limitation. That the complaint of the complainant is hopelessly barred
by limitation as per the provisions section 24-A of Consumer
Protection Act, 1986. The proposal dated 08.02.2006 was postponed and
the proposal deposit was refunded vide letter dated 02.11.2006 but the
proposer neither disputed the refund of the proposal deposit nor did
he ever challenge the postponement of his proposal which clearly
indicates that he was fully satisfied with the underwriting decision
and refund of the proposal deposit amount whereas the instant
complaint has been filed by the complainant after expiry of about 7’/2
years of the date of decision of postponement of proposal for
insurance. The complaint as such merits dismissal.


   On merits, OP1  stated that the proposal  in question was sourced
by 0P2 as a corporate agent of OP1 and it had no knowledge of any
alleged loan paid by 0P2. It reiterated that the proposal received was
not accepted and the premium amount of Rs 22,096/- was refunded to the
proposal. It also stated that
a request letter dated 11.1.2012 was received from the sourcing bank
i.e. 0P2 to issue a fresh cheque in lieu of the refund cheque issued
earlier in the name of the proposer where after a fresh cheque bearing
no. 29049 dated 21.1.2012 was issued which was duly encashed and had
been adjusted by 0P2 in the loan account of the proposer. 0P2 has
reiterated that since the proposal had not been accepted, no contract
of insurance had come into  being and therefore, it had no liability
to pay and adjust the loan account of the deceased.


It has prayed that the complaint be dismissed.


We have heard arguments advanced at the bar and have perused the record.


    As already stated,0P2 has chosen not contest the present complaint
and has been proceeded with ex-parte. We are, therefore, deprived of
the defense/version of 0P2 to the present complaint.

However, there are a few facts which are not in dispute  between the
parties.  It is not disputed that in the year 2006, the husband of the
complainant late sh. Harmiinder Singh Banga had availed of a loan of
Rs. 3,50,000/- from OP2. It is also not disputed that a housing loan
of Rs. 3,72,000/- was granted to him by OP2. The amount of Rs.
3,72,000/- included the loan amount of Rs. 3,50,000/- and the
insurance premium amount  of Rs 22,000/-. It is admitted by OP1 that
0P2 was actingas its corporate agent and the proposal for “house loan
protector policy” was sourced through OP2 company. The amount of the
premium of Rs. 22,096/- was also directly deposited by OP2 with OP1
along with the proposal form. It is the case of OP1 that it had not
accepted the proposal. It is also the case of OP1 that late Sh.
Harminder Singh Banga was medically examined by Dr. N. N. Jha of
Apollo Clinic New Delhi and the Medical record dated 1.9.2006
confirmed his adverse health condition. It is the case of OP1 that the
proposal on the life of Mr. Harminder Singh Banga was postponed and
the amount of Rs. 22,096/- being the amount of the premium/proposal
deposit was refunded to him vide cheque no. 410201 dated 29.10.2006
drawn  on UTI bank along with a letter dated 2.11.2006. It is the
further case of OP1 that no valid insurance contract was entered into
between it and Mr. Harminhder Sngh Banga. OP1, however, has  failed to
place on record the letter dated 2.11.2006 or the cheque no. 410201
dated 29.10.2006. It has also failed to place on record any proof of
the fact that the letter dated 2.ll.2006 was actually despatched to
the proposer or was received by him. Curiously enough, when the matter
was taken up by 0P2 ,its corporate agent with it in 2012, it issued a
fresh cheque bearing no. 290049 dated 21.1.2012 for Rs. 22,096/- which
was credited by 0P2 in the loan account. This cheque was apparently
issued in favour of 0P2. It is, therefore, clear that 0P2 was never
informed of the  rejection of the proposal which was sourçed through
it. There is also no evidence on record that the rejection of the
proposal was communicated  the proposer as well. This is also
reflected inthe letter dated 6.9.2012 which was written by 0P2 the
regional manager of OP1. This letter inter-alia  reads as under:-

Sub: Settlement of Death Claim under Loan Protector Policy

Reg : Proposal No. 161 28331 in the name of Shri Harminder Singh Banga
with respect we would like to inform  you  that Shri Harminder Singh
Banga had availed Housing Loan of Rs. 3.72 Lacs (Rs. 3.50 lacs for
purchase of house and Rs. 22,096/- to pay insurance premium  to cover
said Housing Loan under Loan Protector Policy of BALIC) from our GTB
Nagar branch. Insurance Proposal No. 16128331 under Loan Protector
Policy was sent to your esteemed organization on 08/02/2006 with a Pay
Order of Rs. 22,096/-.
The installments of said loan were regulars and suddenly Shri
Harminder Singh Banga expired on 16/10/2010. Legal heirs of deceased
approached our branch for release of documents as the loan was
protected under Loan Protector Policy. As the policy was not available
in our records, our branch approached your Rajendra
Place branch  (bacassurance branch). Inspite of repeated reminders and
personal visits of our staff, no reply is received from you office.
It was orally informed by your official that captioned proposal was
rejected on health grounds and the premium was refunded by your office
vide Cheque No. 410201 dated 29/10/2006 drawn on UTI Bank Ltd in the
name of Shri Harrnindcr Singh Banga. The said cheque was posted at
residential address of the party. Our branch had sought
confirmation of whatever information provided orally and had requested
to you office to  furnish certain details i.e. whether the above
cheque was acknowledged and en-cashed by the party. In response, our
branch has received a cheque no. 29049 dated 21-01-2012 for Rs.
22,096/- drawn on HDFC bank without any covering letter/ details. The
said amount Rs. 22,096/- was credited to party’s loan accont as a part
of the claim amount.

We regret to inform you that neither any information of rejection of
proposal  was given to Bank or to the party since submission of
proposal i.e. 08-02-2006.  The premium amount was kept with your
company. Premium amount is also part of loan amount in consideration
of above mentioned fact, we request you please settle the claim
without any further delay to avoid the legal complication from the
party.



A perusal of this letter makes it amply clear that 0P2 was also orally
informed about the rejection of the proposer and the refund of the
cheque presumably in 2012. Even the corporate agent was not provided
with the copies of the documents in this regard. This leads us to
believe that either OP1 had not acted on the proposal at all or had
kept it pending rather than rejecting the same. Conspicuously enough,
in its written statement OP1 has claimed that the proposer on the life
of Mr. Harminder Singh Banga was postponed. It has not stated that the
proposer had been rejected. It appears to us that OP1 had kept the
proposal pending and had
not rejected the same neither had refunded the amount of the premium
to the proposer and had also not  sent the letter dated 2.11.2006. Had
it been otherwise, OP1 would have placed on record cheque no.10201 and
the letter dated 2.11.2006 through which it was refunded the amount to
the proposer. It would not have used the word “postponed” with respect
to the proposer  but would have used the word “rejected”. Needless to
say that a proposer has either to be rejected or accepted. There is no
provision in the Indian Contract Act which provides for “post-ponment”
of the proposal. We are, therefore, of the considered opinion that OP1
was deficient in rendering services to the complainant. It had kept
the proposal pending and had not refunded the premium received by it
to the complainant. It had never intimated to the complainant to 0P2
that the proposal had been rejected. It was, therefore, bound to pay
the balance on the loan account with OP2.

We also hold 0P2 deficient in rendering service to the complainant. It
was acting as a corporate agent of OP1. It had sourced the proposer on
the life of late Harminder Singh Banga and had directly deposited the
premium amount with OP1. It was its duty to find out as to whether the
proposer had been accepted or rejected. The deceased was always under
the assumption that after having taken the proposal /policy the loan
repayment had been secured and after his death his family will not
have to pay any further amount. He had with that end in view accepted
the condition taking the policy in question and paying an additional
sum of Rs. 22,000/-. Therefore 0P2 should have released the titled
documents immediately to the complainant on the death of late
Sh.Harminder Singh Banga. The adjustment of the loan amount was an
issue which had to be reached between OP1 and OP2 and did not affect
the right of the complainant to receive the title documents after the
death of late Sh. Harminder Singh Banga.

We, therefore, direct 0P2 as under:


1. Release the title documents kept as security against the loan
account as aforesaid to the complainant within 15 days.


2. Pay to the complainant a sum of Rs. 50,000/- as compensation for
pain and agony suffered by her.


3. Pay to the complainant a sum of Rs. 10,000/- as cost of litigation.


We also direct OP1 as under:


1. Pay to the complainant a sum of Rs. 50,000/- as compensation for
pain and agony suffered by her.


2. Pay to the complainant a sum of Rs. 10,000/- as cost of litigation.



The OPs shall pay this amount within a period of 30 days from the date
of this order failing which they shall be liable to pay interest on
the entire awarded amount @ 10% per annum.  IF the OPs fail to comply
with this order, the complainant may approach this Forum for execution
of the order under Section 25/27 of the Consumer Protection Act.

    Copy of the order be made available to the parties as per rule.

    File be consigned to record room.

    Announced in open sitting of the Forum on.....................