Punjab

Ludhiana

CC/21/222

Manoj Kumar - Complainant(s)

Versus

Canara HSBC Oriental Bank of Commerce - Opp.Party(s)

Ankur Ghai

09 May 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:222dated22.04.2021.                                                  Date of decision: 09.05.2024. 

 

Sh. Manoj Kumar Karwal son of Late Sh. Ram Parkash, Husband of Late Anju Karwal, resident of 33-B/1401, Street No.3, Near Dairy Complex, Mehar Singh Nagar, Ludhiana.

                                                                                      ..…Complainant

                                                Versus

1. Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited (IRDAI Regd. No.136), 2^nd Floor, Orchid Business Park, Sector-48, Sohana Road, Gurgaon-122018, Haryana.

Second Address:-

Unit No.208, 2^nd Floor, Kanchanjunga Building, 18 Barakhamba Road, New Delhi-110001, India Through General Manager.

2. Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, 2^nd Floor, Plot No.4, New Lajpat Nagar, Pakhowal Road, Adjoining Corporation Bank, Ludhiana-141001 Through General Manager.
3. Coverfox Insurance Broking Private Limited, Unit B-2-601, Boomerang, Chandivali Farm Road, Near Chandivali Studio, Andheri East, Mumbai-400072 Through Managing Director.                                                                                               …..Opposite parties 

Complaint Under Section 35 of the Consumer Protection Act, 2019.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Ankur Ghai, Advocate.

For OP1 and OP2          :         Sh. Nitin Kapila, Advocate.

For OP3                         :         Sh. Kirpal Singh, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                Shorn of unnecessary details, the facts of the case are that Late Ms. Anju Karwal, wife of the complainant got herself insured from OP1 and OP2 through representative of OP3 namely Shallyka by purchasing online policy namely Canara HSBC Oriental Bank of Commerce Life Insurance iSelect + Term Plan for a sum insured of Rs.1 Crore having sum insured/death benefit of Rs.75 Lacs. According to the complainant, the policy terms were never explained nor read out nor given to him or to Anju. Even the policy documents were not supplied to them. The online proposal form was got filled by representative of OP3. The OPs issued policy No.0107410912 dated 30.04.2020 to Anju Karwal after complying all the procedural and medical formalities. Anju Karwal undergone medical tests and reports were submitted to the OPs. The complainant was nominee in the said policy. The complainant stated that he had also taken another similar policy in his own name. Ms. Anju was making payment of the premium in monthly installments and never defaulted in payment of premium. On 04.06.2020, Anju Karwal was hospitalized at AIMC Bassi Hospital, Advance Multi Super Specialty Centre, Tagore Nagar, Ludhiana  due to excessive abdominal pain, vomiting, fever etc. and she undergone various medical tests. The treating doctors referred her to D.M.C. & H on 05.06.2020, where doctors provided her medical aid. She was having difficulty in breathing, nausea, vomiting but due to medical complications, her health deteriorated, for which doctors had to undertake the procedure of Central Line Insertion on 06.06.2020. As health of the patient did not improve and on 07.06.2020, the doctors undertook the procedure of Peritorial Dialysis but she suddenly went into cardio pulmonary arrest. CPR was done but she could not revive and was declared dead on 09.21 PM on 07.06.2020.

                   The complainant further stated that he being husband and nominee of deceased Anju Karwal, intimated the OPs regarding her death. Even mail dated 14.06.2020 was sent to the OPs whereby the complainant called upon the Ops to process and settle the claim under the policy. The OPs vide mail dated 15.06.2020 informed the complainant that his request has been forwarded to the claims department. The complainant provided death certificate of Anju Karwal vide mail dated 18.06.2020. On finding no response, the complainant contacted the OPs vide mail dated 01.07.2020 but the OPs vide mail dated 01.07.2020 informed the complainant that his request has been forwarded to Claims Department but the OPs delayed the matter. The complainant again vide mail dated 06.07.2020 asked the Ops to process the claim as soon as possible. The Ops vide mail dated 08.07.2020 called upon the complainant to supply the documents relating to policy, death certificate, medical record in prescribed forms etc. which the complainant provided vide mail dated 12.07.2020 and even the medical document P and H Form from Bassi Hospital and DMCH were provided to the OPs vide mail dated 29.07.2020 and 02.08.2020. However, the OPs did not process the claim despite receipt of necessary documents. The complainant sent repeated reminders and requests to the OPs including mail dated 11.11.2020 to process the claim but to no avail. The complainant further stated that he received letter dated 4 January (wrongly written as January 04, 2020) which he received on 08.01.2021 whereby the OPs called upon him to provide the documents again which the complainant again submitted without any delay. The delay on the part of the OPs has caused harassment and humiliation to the complainant as well as his family members. The complainant further stated that he was shocked to receive letter dated 19.01.2021 from the OPs whereby the OPs have rejected his claim on the ground that at the time of taking the policy, Anju Karwal had not provided true answers of some questions in the nature of “details of active/lapsed/applied policies of all life insurance companies for last 5 years.” Even the OPs further mentioned in the repudiation letter that critical information was concealed which was material for them to underwrite risk of her life and that Anju had applied for policy of sum assured of Rs.2 Crores prior to taking of the policy with the OPs, which information was not shared with the OPs. According to the complainant, his legitimate claim has been rejected on false, flimsy and frivolous grounds. There was no concealment of any information nor any fraud or misrepresentation has been made by the deceased at the time of issuance of policy by the OPs. The OPs have rendered negligent and deficient services due to which the complainant has suffered mental, physical and emotional agony entitling him to damages from the OPs. Even the complainant sent legal notice dated 30.01.2021 upon the OPs to which the OPs sent an evasive reply dated 15.02.2021. Hence this complaint, whereby the complainant has prayed for issuing directions to the OPs to pay the claim of Rs.75,00,000/- along with interest @12% per annum along with damages to the tune of Rs.1,00,000/- and legal expenses of Rs.50,000/-.

2.                Upon notice, OP1 and OP2 appeared and filed joint written statement and assailed by complaint by taking preliminary objections on the ground of maintainability; lack of jurisdiction; suppression of material facts; lack of cause of action etc.                             

                   Under the column preliminary submissions, OP1 and OP2 stated that Late Mrs. Anju Karwal (DLA) applied for policy namely Canara HSBC Oriental Bank of Commerce iSelect Plus Term Plan vide e-Proposal form bearing No.7000185139 dated 16.04.2020 and she provided the particulars regarding her personal details at the proposal stage which were necessary for apt assessment and assumption of risk by the Company. The DLA had willfully declared that she has understood the product features and importance of all declarations and the company was authorized to terminate the policy incase of any declaration is found to be misrepresented or false in the proposal form. OP1 and OP2 further stated that on the basis of declaration and information provided in proposal form as well as documents submitted by the LA, they issued policy No.0107410912 for monthly premium of Rs.6,218.64 (excusive of all applicable taxes) for premium payment term of 5 years and policy term of 33 years form sum assured of Rs.75,00,000/- with risk commencement date as 30.04.2020. In the proposal form under the column the Life Assured was required to provide the details of the previous insurance policies which were active/lapsed for last five years, which is reproduced as under:-

“3.1  Enter details of all active/lapsed policies for last 5 years and   simultaneously applied proposal(s) with all life insurance companies

Name of the Company	Sum Assured	Status

1. Have any of your Life/Health insurance proposal(s) been declined/postponed/dropped or accepted with modified terms? If yes, please provide details.

NO.”

OP1 and OP2 further stated that they received death claim from the complainant regarding death of life assured on 07.06.2020 and upon evaluation of the claim, it was found that the life assured had not disclosed the correct insurance history details in the proposal form. The Life Assured suppressed the fact that she applied for an insurance policy with TATA AIA Life Insurance for sum assured of Rs.2 Crore which was rejected on the basis of abnormal findings on Tread Mill Test (TMT) and which fact was not disclosed by the Life Assured at the time of taking the policy from the OPs. Further the Life Assured submitted that proposal form with TATA AIA on 20.03.2020 i.e. prior to submitting the proposal for the subject policy. In the proposal form submitted with TATA AIA the Life Assured disclosed one policy held by him with LIC for a sum of Rs.5,00,000/- and as such, the claim of the complainant was repudiated by OP1 and OP2 vide letter dated 19.01.2021 with information to the complainant that the total premium amount paid under the policy shall be refunded towards PNB account ending with ****0907. Even the legal notice dated 30.01.2021 of the complainant was duly replied vide reply dated 15.02.2021. OP1 and OP2 further stated that the claim was rightfully and justifiably repudiated by them on the basis of incorrect and misrepresented detail submitted by the Life Assured in the proposal form.

                   On merits, OP1 and OP2 reiterated the crux of averments made in the preliminary objections and factual submission of the case. OP1 and OP2 have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                The complainant filed replication to the written statement filed by OP1 and OP2 reiterating the facts mentioned in the complaint and controverting those mentioned in the written statement.

4.                OP3 filed separate written statement and assailed by complaint by taking preliminary objections on the ground of maintainability; the complainant has not approached the Forum with clean hands; the complaint is misconceived; the complainant is not a consumer of OP3; non-joinder of legal heirs of Anju Karwal etc.     OP3 stated that it did not receive any premium amount as the same has been paid by the complainant to the other OPs. As no consideration was ever passed by the complainant towards OP3 and as such, the complainant is not the consumer of OP3.          

                   On merits, OP reiterated the crux of averments made in the preliminary objections and factual submission of the case. OP3 has denied that there is any deficiency of service and has also prayed for dismissal of the complaint.

5.                In evidence, the complainant tendered his affidavit as Ex. CA and reiterated the averments of the complaint. The complainant also placed on record documents Ex. P1 is the copy of welcome letter dated 01.05.2020, Ex. P2 is the copy of first premium receipt dated 30.04.2020, Ex. P3 is the copy of premium receipt dated 30.05.2020, Ex. P4 is the copy of medical record of Bassi Hospital, Ludhiana, Ex. P5 is the copy of death summary issued by DMC&H, Ludhiana and other medical record, Ex. P6 to Ex. P8, Ex. P10 to Ex. P17 are the copies of Email correspondence, Ex. P9 is the copy of death certificate of Anju Karwal, Ex. P18 is the copy of letter dated 04.01.2020 issued by the OPs, Ex. P19 is the copy of repudiation letter dated 19.01.2021 issued by the OPs, Ex. P21 to Ex. P24 are postal receipts, Ex. P25 is the copy of reply to legal notice dated 15.02.2021 and closed the evidence.

6.                On the other hand, the counsel for OP1 and OP2 tendered affidavit  Ex. RA of Sh. Jaimal Dhaliwal, Assistant Centre Manager-Operations of OP1 and OP2 along with documents Ex. OP1 is the copy of welcome letter dated 01.05.2020 as well as policy documents, Ex. OP2 is the copy of Death Claim Form dated 07.06.2020, Ex. OP3 is the copy of Email dated 03.12.2020, Ex. OP4 is the copy of proposal form dated 20.03.2020 with TATA AIA Life Insurance, Ex. OP5 is the copy of repudiation letter dated 19.01.2021, Ex. OP6 is the copy of reply dated 15.02.2021 to legal noticedated 30.01.2021 and closed the evidence. 

                   The counsel for OP3 tendered affidavit Ex. 3/Aof Sh. Chirag Desai, Legal Head of OP3 and closed the evidence.

7.                We have heard the arguments of the counsel for the parties and also gone through the complaint, replication, affidavit and annexed documents and written statements along with affidavits and documents produced on record by all the parties.

8.                Admittedly, the DLA Ms. Anju Karwal from OP1 and OP2, purchased online Canara HSBC Oriental Bank of Commerce Life Insurance iSelect + Term Plan having No.0107410912 and sum insured/death benefit of Rs.75 Lacs from the opposite party for herself  on monthly premium of Rs.6218.64 having premium payment term of five years and policy term of 33 years. The risk commencement date was 30.04.2020. DLA underwent medical tests and submitted all the medical record with the OPs before the issuance of policy in question. First time, the DLA Smt. Anju Karwal fell ill and was hospitalized at AIMC Bassi Hospital, Ludhiana from where she was referred to DMC & Hospital, Ludhiana where she remained admitted there from 05.06.2020 till 07.06.2020. She died on 07.06.2020. Intimation of her death was given by the complainant to OP1 and OP2 on 07.06.2020 vide death claim form Ex. OP2. The OPs initiated the process of settlement of claim and the  complainant vide Email dated 14.06.2020 Ex. P6 requested the OPs to settle the claim at the earliest and also submitted cremation slip with the OPs. The OPs vide Email dated 15.06.2020 Ex. P7 informed the complainant regarding forwarding his request to their Claims Department. The complainant submitted death certificate of Anju Karwal with the OPs vide Email dated 18.06.2020 Ex. P8. The OPs vide Email dated 08.07.2020 Ex. P13 asked the complainant to furnish the documents, which the complainant supplied to them vide Email dated 12.07.2020 Ex. P14 and the complainant vide Email dated 29.07.2020 Ex.P15, Email dated 02.08.2020 Ex. P16 also submitted P and H Form from Bassi Hospital, Ludhiana with the OPs. Thereafter, the complainant vide Email dated 11.11.2020 Ex. P17 requested the complainant to process and settle the claim. However, after scrutinizing the documents so supplied by the complainant, OP1 and OP2 rejected the claim of the complainant vide letter dated 19.01.2021 Ex. P19 = Ex. OP5, the operative part of the same is reproduced as under:-

“This is with reference to the captioned policy of late Mrs. Anju Karwal wherein the proposal form was signed on 15-Apr-2020 and in pursuance thereof the policy was issued on 30-Apr-2020.

We refer to the proposal form wherein late Mrs. Anju Karwal had given a declaration that she had made true and complete disclosures of all the facts as may be relevant for the acceptability of the proposal form. However the following questions in the Proposal Form were answered as ‘NO’.

“3.1 Enter details of all active/lapsed policies for last 5 years and simultaneously applied proposal(s) with all life insurance companies.

3.2 Have any of your Life/Health insurance proposal(s) been declined/postponed/dropped or accepted with modified terms? If yes, please provide details.

However during the claim evaluation it has been confirmed that late Mr. Anju Karwal had applied for policy of total sum assured of 2 crores prior to signing the proposal form and the same was not disclosed at proposal stage.

Therefore we have concluded that late Mrs. Anju Karwal had not provided true answers to the questions relating to other insurance policies in the proposal form thereby concealing critical information which was material for the Company to underwrite the risk on her life. Had we known the above mentioned facts at the application stage, we would not have issued the above policy.

We wish to draw your attention to the following clause of the Policy Terms and Conditions.

Fraud Misrepresentation and Forfeiture

Fraud, misrepresentation and forfeiture would be dealt with in accordance with provisions of Section 45 of the Insurance Act, 1938 as amended from time to time. The entire Section 45 is reproduced and enclosed in Annexure 5.

Annexure 5.

4.A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees ofthe insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

Hence, we shall be refunding the premium paid by late mrs. Anju Karwal in your Punjab National Bank account number 100799300000907.

It is further pertinent to mention here that the said non-disclosure goes to the very root of the contract and since our acceptance thereof was based on the misrepresentation, we are bound to treat the same as void ab initio.”

9.                Now the issue for consideration arises whether the repudiation of death claim of Ms. Anju Karwal for suppressing the applying of term policy for total sum assured of Rs.2 Crores with TATA AIA prior to signing of proposal form of OP1 and OP2 is justified or not?

10.              Before adverting to the facts of the case, it is desire-able to recapitulate the relevant regulations  with regard to proposal form. The Insurance Regulatory and Development Authority of India (IRDAI) in its notification dated 16.10.2002 issued the Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations 2002 whereby the “Proposal Form” is defined in Regulation 2(d) as under:-

“2(d) “Proposal form” means a form to be filed in by a proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the s\risk and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.

Explanation: “Material” for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer”

Further Regulation 4, deals with proposals for insurance as under:-

1. Except in cases of a marine insurance cover, where current market practices do not insist on a written proposal form, in all cases, a proposal for grant of a cover, either for life business or for general business, must be evidenced by a written document. It is the duty of an insurer to furnish to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal form.
2. Forms and documents used in the grant of cover may, depending upon the circumstances of each case, be made available in languages recognized under the Constitution of India.
3. In filling the form of proposal, the prospect is to be guided by the provisions of Section 45 of the Act. Any proposal form seeking information for grant of life cover may prominently state therein the requirements of Section 45 of the Act.
4. Where a proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate the information in its cover note or policy. The onus of proof shall rest with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover.”

 

11.              In the present case, perusal of the insurance policy shows that OP3 is the agent of OP1 and OP2, but in its written version and in the affidavit, submitted before this Commission, OP3 has not denied of being agent of OP1 and OP2. Even OP3 has denied having played any active role in obtaining online life insurance by Ms. Anju Karwal from OP1 and OP2. OP3 further went on to disown its own employee namely Shallyka who, in fact, was instrumental in prevailing upon deceased insured for obtaining the policy. It is obvious that the E-proposal of which the OPs are relying, must have been generated through OP3 but copy of which has not been produced on record. As such, this Commission is constrained to draw adverse inference against them for non-production of this material document on record. Even assuming that the information was obtained orally then IRDA regulations mentioned hereinbefore, casts duty upon OP1 and OP2 to incorporate the information in the cover note or the policy issued to the proposer. Further it casts onus of proof upon the insurer in respect of any information not so recorded. So from these circumstances, this Commission is not inclined to conclude that the deceased insured had answered the queries in negative as reflected in the repudiation letter.

12.              Further, whether discussion of particular fact is material or not, would depend upon the facts and circumstances of each case. Reference can be made to Civil Appeal No.3821 of 2024 in Mahakali Sujatha Vs The Branch Manager, Future Generali India Life Insurance Company Limited and another whereby the Hon’ble Supreme Court of India in para No.26 and para No.35 has made the following observations:-

 

“26. Whether a fact is material will depend on the circumstances, as proved by evidence, of the particular case. It is for the court to rule as a matter of law, whether, a particular fact is capable of being material and to give directions as to the test to be applied. Rules of universal application are not therefore to be expected, but the propositions set out in the following paragraphs are well established:

(a) Any fact is material which leads to the inference, in the circumstances of the particular case, that the subject matter of insurance is not an ordinary risk, but is exceptionally liable to be affected by the peril insured against. This is referred to as the “physical hazard”.

(b) Any fact is material which leads to the inference that the particular proposer is a person, or one of a class of persons, whose proposal for insurance ought to be subjected at all or accepted at a normal rate. This is usually referred to as the “moral hazard”.

(c) The materiality of a particular fact is determined by the circumstances of each case and is a question of fact.

35. However, the aforesaid judgment is distinguishable from the present case, insofar as there is no admission by the appellant herein of any previous policies taken by the insured. In that case, after the admission by the policy holder, the Court was tasked only with the question of whether the fact about previous polices qualified to be a “material fact” that was suppressed. However, in the present case, in light of Section 45 of the Insurance Act, 1938, the burden rests on the insurer to prove before the Court that the insured had suppressed the information about the previous policies. This burden of proof has to be duly discharged by the insurer in accordance with the law of evidence.”

 

13.              OP1 and OP2 have relied upon Email dated 03.12.2020 Ex. OP3 of TATA AIA whereby TATA AIA Life Insurance Co. claimed to have rejected the proposal of DLA Ms. Anju Karwal, In fact the contention of OP1 and OP2 is erroneous as perusal of this document shows that the proposal was not at all rejected rather issuance of the policy was deferred. Even assuming the same to be correct, this Commission is also of the opinion that mere applying of a policy cannot be said to be a material fact for a prudent insurer which could have caused prejudice to the insurance company for assessment of risk to be undertaken by the said insurer. The burden of proof was upon the OPs to show and elucidate that how suppression of mere applying of policy, prior to issuance of policy in question has caused prejudice to the rights of OP1 and OP2. So OP1 and OP2 have failed to discharge the burden of onus to prove that the repudiation of death claim of Ms. Anju Karwal was justified. In the light of above said facts and circumstances, it would be just and appropriate if OP1 and OP2 are directed to settle and pay the death claim of Smt. Anju Karwal within 30 days from the date of receipt of copy of this order and OP1 and OP2 are also burdened with composite costs of Rs.20,000/-. However, complaint against OP3 is dismissed.

14.              As a result of above discussion, the complaint is partly allowed with direction to OP1 and OP2 to settle and pay the death claim of Smt. Anju Karwal within 30 days from the date of receipt of copy of this order. OP1 and OP2 shall further pay a composite cost of Rs.20,000/- (Rupees Twenty Thousand only) to the complainant. Compliance of the order be made within 30 days from the date of receipt of copy of order. However, the complaint as against OP3 is hereby dismissed. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.        

15.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

 

(Monika Bhagat)                             (Sanjeev Batra)               Member                                         President  

Announced in Open Commission.

Dated:09.05.2024.

Gobind Ram.