Chandigarh

DF-I

CC/901/2022

MRS. SUNITA RANI - Complainant(s)

Versus

CANARA HSBC INSURANCE COMPANY LTD - Opp.Party(s)

DEVINDER KUMAR

02 Feb 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION-I,

U.T. CHANDIGARH

                                     

Consumer Complaint No.	:	CC/901/2022
Date of Institution	:	07/11/2022
Date of Decision	:	02/02/2024

 

Mrs. Sunita Rani wife of late Sh. Jagdish Lal r/o #660, Trivedi Camp, Mubarakpur, SAS Nagar, Mohali (Pb.)

… Complainant

V E R S U S

1. Canara HSBC Insurance Company Ltd. through its Branch Manager, SCO No.3, Firsts Floor, Madhya Marg, Chandigarh Sector 26, Chandigarh 160019.
2. Punjab National Bank, Branch at Village Derabassi, District Mohali, through its Branch Manager.

… Opposite Parties

CORAM :	SHRI PAWANJIT SINGH	PRESIDENT
	MRS. SURJEET KAUR	MEMBER
	SHRI SURESH KUMAR SARDANA	MEMBER

 

                                                                               

ARGUED BY	:	Sh. Devinder Kumar, Advocate for complainant
	:	Sh. Arjun Kundra, Advocate for OP-1
	:	OP-2 ex-parte.

 

Per Pawanjit Singh, President

1. The present consumer complaint has been filed by Sunita Rani, complainant against the aforesaid opposite parties (hereinafter referred to as the OPs).  The brief facts of the case are as under :-

1. It transpires from the allegations, as projected in the consumer complaint, that the late husband of the complainant namely Sh. Jagdish Lal (hereinafter referred to as “DLA”), had availed home loan facility from OP-2/bank after completing all the formalities at the time of release of home loan amount of ₹11,50,000/-. At that time, OP-2 had also offered him loan insurance policy (Ex.C-1) (hereinafter referred to as “subject policy”) for the purpose of safeguarding repayment of installments of loan in case of death of the loanee.  At the time of sanction of loan, OP-2 was known as Oriental Bank of Commerce and after its merger with Punjab National Bank, OP-2 is doing business under the name and style of Punjab National Bank/OP-2.  OP-1/insurer is a joint venture of Canara Bank and PNB (formerly known as Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.) and doing business in the field of insuring home loan. OP-2, while sanctioning home loan to loanee, made him a member of Master Policy issued to it by OP-1.  At that time, OP-2 did not explain the terms & conditions nor had issued any membership certificate of the said policy nor his signatures were obtained and the copy of membership form is Ex.C-2. An amount of ₹49,204.82 was charged by OP-2 by saying that bank has got the loan insured and the said premium amount was one time till the last installment is paid. The tenure of the loan was 9 years w.e.f. 31.12.2018 to 31.12.2027. At the time of obtaining loan, DLA had already retired from Govt. job and was 60 years of age.  The Manager of OP-2 never called the DLA for medical checkup.  On 8.8.2020 at morning time, DLA faced breathing problem during COVID-19 and he was shifted to a private nursing home at Derabassi and due to non availability of oxygen and ventilator, he was shifted to GMCH-32, Chandigarh where he was detected with COVID-19 positive and unfortunately died on 12.8.2020. The cremation of DLA was performed as per guidelines of the Govt. prevailing at that time and copy of his death certificate is Ex.C-3.  Even in the medical record issued by GMCH-32, it was specifically mentioned that the cause of death was shortness of breath as he was suffering from fever for the last five days. The DLA had developed diabetes and CAD problem after the age of 55 years, but, he was normal thereafter and was taking treatment and was quite fit before his death and copy of the treatment record is Ex.C-4.  Thereafter the complainant, being nominee of the DLA, had applied for payment of the sum assured to pay the balance loan amount, but, OP-1/insurer had repudiated the claim vide email (Ex.C-5) on the ground that DLA was suffering from diabetes and CAD problem, which was not disclosed by him before obtaining the subject policy. In this manner, the aforesaid act of the OPs amounts to deficiency in service and unfair trade practice. OPs were requested several times to admit the claim, but, with no result.  Hence, the present consumer complaint.
2. OP-1 resisted the consumer complaint and filed its written version, inter alia, taking preliminary objections of maintainability, cause of action, concealment of material facts and misrepresentation of facts.  However, it is admitted that DLA availed home loan from OP-2 for total sum of ₹11,50,000/- and got the said amount insured from the answering OP vide subject policy after understanding its terms and conditions and copy of the certificate of insurance alongwith enrolment form are Annexure OP-1.  It is further alleged that DLA was required to provide answers with respect to his medical history and he had replied in ‘No’ under the column asking about any previous disease from which he was suffering.  It is further alleged that as the DLA has concealed material facts qua his previous ailment before obtaining the subject policy, there is fundamental breach of the terms and conditions of the subject policy and the claim of the complainant was rightly repudiated, especially when during investigation by the answering OP it was found that the DLA was suffering from diabetes since last 12 years and Coronary Artery Disease (CAD) since the year 2013 and copy of the treating hospital certificate is Annexure OP-4.  Answering OP has further relied upon certain judgments/orders passed by the Hon’ble Apex Court as well as by the Hon’ble National Commission on the point that when the insured has concealed material facts, he/she is not liable for any claim.  On merits, the facts as stated in the preliminary objections have been reiterated. The cause of action set up by the complainant is denied.  The consumer complaint is sought to be contested.
3. OP-2 did not turn up before this Commission, despite proper service, hence it was proceeded against ex-parte vide order dated 16.1.2023.
4. In replication, complainant re-asserted the claim put forth in the consumer complaint and prayer has been made that the consumer complaint be allowed as prayed for.

2. In order to prove their case, contesting parties have tendered/proved their evidence by way of respective affidavits and supporting documents.
3. We have heard the learned counsel for the contesting parties and have also gone through the file carefully, including written arguments.
   1. At the very outset, it may be observed that when it is an admitted case of the contesting parties that the DLA had obtained home loan from OP-2/bank for total amount of ₹11,50,000/- and the said loan was got insured by OP-2/bank from OP-1 under the subject policy on one time payment of total premium of ₹49,204.82 with risk commencement date w.e.f. 31.12.2018 to 31.12.2027, as is also evident from the subject policy (Annexure OP-1) and the DLA died on 12.8.2020 and the claim of the complainant, being nominee of the DLA, has been repudiated by OP-1/ insurer on the ground that the DLA has concealed material facts qua the previous ailment before obtaining the subject policy, the case is reduced to a narrow compass as it is to be determined if OP-1/ insurer is unjustified in repudiating the claim of the complainant and the complainant is entitled to the reliefs prayed for in the consumer complaint, as is the case of the complainant, or if OP-1/insurer has rightly repudiated the claim of complainant and the consumer complaint of the complainant, being false and frivolous, is liable to be dismissed, as is the defence of OP-1/insurer.
   2. In the backdrop of the foregoing admitted and disputed facts on record, one thing is clear that the entire case of the parties is revolving around the terms and conditions of the subject policy, medical record and the repudiation letter, and the same are required to be scanned carefully for determining the real controversy between the parties.
   3. Perusal of certificate of insurance i.e. the subject policy (Annexure OP-1) clearly indicates that the same was obtained by OP-2, which was earlier known with the name of Oriental Bank of Commerce, being master policy holder on payment ₹49,204.82 as one time premium to the insurer/OP-1 for insuring loan amount of ₹11,50,000/- covering the risk w.e.f. 31.12.2018 to 31.12.2027 and the type of cover is specifically mentioned as reducing type cover.  Copy of details and other information are also annexed with Annexure OP-1, which clearly indicates that the sum insured is linked with the tenure of the loan.
   4. Annexure OP-4 is the treating hospital certificate (Form H) obtained by the insurer from GMCH-32, Chandigarh which clearly indicates that the DLA was earlier suffering from diabetes since 12 years and CAD since 2013.
   5. Annexure OP-5 is copy of letter dated 22.12.2021 which clearly indicates that the claim of the complainant was repudiated by OP-1/insurer and the relevant portion of the same is reproduced below for ready reference :-

“During claim evaluation it was found that la was from Type 2 diabetes mellitus and Coronary artery disease since 2013

In view of the above, we regret to inform you that your claim against the subject policy is not payable on account of material medical non-disclosure on part of the Life Assured. Therefore, as per contract, total Premium paid is refundable to the customer hence premium amount of INR-41699/- has been refunded to Punjab National Bank account number 01856011000817 of master policy holder "(Canara Bank (RB & S Wing))" under lender borrower scheme.

We at Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. always strive to be fair in our processing and settlement of claims. We have arrived at our decision to repudiate your claim after careful consideration of the relevant facts, proofs and circumstances.”

 

6. As per the defence of OP-1/insurer, as the DLA has not disclosed about the pre-existing ailment at the time of obtaining the subject policy, the claim was rightly repudiated by it on account of breach of the terms and conditions of the subject policy whereas the case of the complainant is that, in fact, the previous ailment has no nexus with the cause of death of the DLA.
7. However, perusal of the certificate dated 13.8.2020 (Annexure CX) issued by the Department of Forensic Medicine & Toxicology, Government Medical College & Hospital, Sector 32, Chandigarh clearly indicates that as per testing done on 12.8.2020, DLA had tested positive for COVID, and the same has no nexus with alleged pre-existing ailments/diseases i.e. diabetes and CAD on account of which the claim was repudiated by OP-1/insurer. Pertinently, DLA had died on the same day i.e.12.8.2020, as is also evident from copy of his death certificate (Ex.C-3).
8. Moreover, when it has come on record that, in fact, the subject policy was obtained by OP-2 in order to secure the loan amount, it was incumbent upon OP-1 before issuing the subject policy to get the loanee (DLA in the present case) medically examined. In this regard, reliance can be had on the judgment of the Hon'ble Punjab and Haryana High Court in the case of Aviva Life Insurance Company India Limited Vs. Sarita Tripathi & Anr., CWP No.14892 of 2015 decided on 17.10.2022 in which it has been held that the insurer ought not to rescind the claim as it had option not to rely on such declaration and to satisfy itself about the medical and health conditions and also held that where the cause of death has no proximity to health, the said information would only be a relevant information. The relevant paragraphs of the said judgment are reproduced below for ready reference:-

 “30. If the Insurance Company chose not to subject the insured to medical examination before issuing the policy, it ought not rescind the claim as it had options not to rely on such declaration and to satisfy itself about the medical and health conditions. Having exercised its commercial prudence, it should not be permitted to escape its liability. Once it chose to not subject the proposer to medical examination, it can be safely assumed that such information was not grossly material to its decision or that the cost of medical examination to ascertain the health condition was not worth the risk to be covered. 1231

37. Taking into consideration the circumstances referred to above as well as the alleged suppression of material facts and the undisputed factual aspect that the cause of death was neither directly nor indirectly related to any health issues, ailment, sickness or disease and was altogether an independent, unrelated risk i.e. the motor vehicular accident, this Court is of the opinion that the fact of suppression of coronary angiography would have been a material information in case the cause of death was directly or indirectly linked to health. However, since the cause of death has no proximity to health, the said information would only be a relevant information. The insurance policies intend to provide respite to the family upon occurrence of an unfortunate event, the interpretation to be adopted should advance the object of law. The legislative intent of information to be “material” cannot be completely ignored and to deprive an insured of all benefits treating all information to be material.”

9. Further, the Hon’ble National Commission in the case titled as Neelam Chopra Vs. Life Insurance Corporation of India & Ors., IV (2018) CPJ 321 (NC) while dealing with the question of suppression/ non-disclosure of material facts has held as under :-

     12. In the present case, clearly the cause of death is cardio respiratory arrest and this disease was not existing when the proposal form was filled. Clearly, there is no suppression of material information in respect of this disease, which is the main cause of death. The other disease of LL Hansen, which was prevailing for five weeks on the date of admission on 1.8.2003 was also not existing when the proposal was filed by the DLA. The fact of DLA having been treated in the year 2002 for LL Hansen is not supported from any direct evidence though PGI Chandigarh in its certificate has mentioned that disease was treated in 2002. Moreover, this disease does not have any correlation with the cause of death in the present case. Hon’ble Supreme Court in Sulbha Prakash Motegaonkar and Ors. v. Life Insurance Corporation of India, Civil Appeal No.8245 of 2015, decided on 5.10.2015 (SC) has held the following:

        “We have heard learned Counsel for the parties.

                It is not the case of the Insurance Company that the ailment that the deceased was suffering from was a life threatening disease which could or did cause the death of the insured. In fact, the clear case is that the deceased died due to ischaemic heart disease and also because of myocardial infarction. The concealment of lumbar spondylitis with PID with sciatica persuaded the respondent not to grant the insurance claim.

                We are of the opinion that National Commission was in error in denying to the appellants the insurance claim and accepting the repudiation of the claim by the respondent. The death of the insured due to ischaemic heart disease and myocardial infarction had nothing to do with this lumbar spondylitis with PID with sciatica. In our considered opinion, since the alleged concealment was not of such a nature as would disentitle the deceased from getting his life insured, the repudiation of the claim was incorrect and not justified.”

10. In view of the foregoing discussion and the ratio of law laid down above, it is clear that the OP-1/insurer has not been able to connect the previous diseases/ailments with the cause of death of the DLA.  Hence, it is unsafe to hold that OP-1/insurer was justified in repudiating/rejecting the claim of the complainant qua the subject policy and the present consumer complaint deserves to succeed. 
11. Now coming to the quantum of amount to be awarded in the instant case, since it is an admitted case of the parties that the subject policy commenced w.e.f. 31.12.2018 and the DLA had died on 12.8.2020, as per the sum assured schedule attached with subject policy (page 21 of Annexure OP-1), OP-1/insurer is liable to pay an amount of ₹10,18,725.61 (rounded off to ₹10,18,726/-) to the complainant alongwith interest and compensation etc. for the harassment caused to her.

4. In the light of the aforesaid discussion, the present consumer complaint succeeds, the same is hereby partly allowed and OP-1 is directed as under :-

1. to pay ₹10,18,726/- to the complainant (less the amount already paid, if any) alongwith interest @ 9% per annum from the date of repudiation of the claim i.e. 22.12.2021 onwards.
2. to pay ₹50,000/- to the complainant as compensation for causing mental agony and harassment;
3. to pay ₹10,000/- to the complainant as costs of litigation.

5. This order be complied with by OP-1 within forty five days from the date of receipt of its certified copy, failing which, the payable amounts, mentioned at Sr.No.(i) & (ii) above, shall carry interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above.
6. It is, however, made clear that the bank/financier (OP-2) shall have first charge over the aforesaid awarded amount, to the extent the same is due to be paid by the complainant towards the discharge of loan liability, if any, of the DLA.
7. Since no deficiency in service or unfair trade practice has been proved against OP-2, the consumer complaint against it stands dismissed with no order as to costs.
8. Pending miscellaneous application(s), if any, also stands disposed of accordingly.
9. Certified copies of this order be sent to the parties free of charge. The file be consigned.

02/02/2024 hg	Sd/- [Pawanjit Singh] President
	Sd/- [Surjeet Kaur] Member
	Sd/- [Suresh Kumar Sardana] Member