BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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Complaint  Case No  : 556 of 2009

Date of Institution :  22.04.2009

Date of  Decision   :  31.03.2010

Anita Bhardwaj w/o Late Sh. Ramesh Bhardwaj, H.No.1329/6, Phase XI, Mohali.

 ……Complainant

V E R S U S

(1)  HDFC Standard Life Insurance Company Ltd., Regd. Office: Ramon House, H.T. Parkash Marg, 169 Backbay Reclamation, Churchgate Mumbai – 400020, through its Chief Executive Officer.

(2)  HDFC Standard Life Insurance Company Ltd., Branch Office: HDFC SL Chandigarh Branch, Ground Floor, SCO No. 139-140, Sector 9-C, Chandigarh, through its Branch Manager.

(3)  HDFC Limited, SCO No. 153-155, Sector 8-C, Madhya Marg, Chandigarh, through its Branch Manager.

.…..Opposite Parties

CORAM:     SH.LAKSHMAN SHARMA              PRESIDENT

          SH.ASHOK RAJ BHANDARI       MEMBER

PRESENT: Sh.Shailendra Sharma, Adv. for the Complainant.

         Sh.Sandeep Suri, Adv. for OPs.

PER ASHOK RAJ BHANDARI, MEMBER

        Concisely put, Late Sh. Ramesh Bhardwaj – husband of the Complainant, had taken a Home Loan from the HDFC Limited (OP No.3) and in order to secure repayment of loan in case of any mishappening, he took a Life Insurance Policy from OP No. 1 & 2, effective from 4.11.2006, for a period of 08 years, by paying a single one time premium of Rs.9892/-, for a basic sum assured of Rs.3,06,230/- on reducing scale from year to year. Accordingly, he was issued Policy No. 10763157 and was also got medically examined by the OPs. It was averred that on 5.4.2008, he was got admitted in Silver Oaks Hospital, Mohali, where he was detected to be suffering from Dudenal Ulcer. Unfortunately, he breathed his last on 19.4.2008 at that Hospital and the reason for death was given as cardiac Arrest. Immediately, thereafter, the Complainant submitted her claim with the OPs on 5.5.2008 and complied with all the formalities whatsoever asked for by them. But to her utter surprise and dismay, the OPs repudiated her well founded claim vide letter dated 5.3.2009, on the ground that the husband of the Complainant was diagnosed to be suffering from “Diabetics” prior to making application of insurance. Hence, this complaint, alleging that the aforesaid acts of the OPs amount to deficiency in service and unfair trade practice. In the end, the Complainant has prayed for the following reliefs:-

a)  To set-aside the repudiation letter dated 5.3.2009, with a direction to the OPs to adjust the insurance claim against the outstanding loan taken by the husband of the Complainant;

b)  To direct the OPs to pay a sum of Rs.2,00,000/- as damages on account of mental harassment suffered by the Complainant at the hands of the OPs.

2]      Notice of the complaint was sent to OPs seeking their version of the case. 

3]      OPs No. 1 to 3 in their joint written statement, while admitting the factual matrix of the case/reply, pleaded that the health condition of the life assured is a vital material fact, which helps the insurer to determine the life assured’s eligibility for availing the insurance policy and non-disclosure of the same provides the reasonable ground to the OPs to reject the same. As per the medical records, the life assured was a diabetic patient for 2 years but the policy of insurance was issued about 1.5 years before the death of the insured. Since the Life Assured had willfully made an untrue statement about his health, the claim has rightly been rejected by them. Moreover, the Complainant does not have any locus standi to file the present complaint, as her name does not figure anywhere in the policy document. All other material contentions of the Complainant were controverted. Pleading that there was no deficiency in service on their part, a prayer has been made for dismissal of the complaint with exemplary costs.

4]      Parties led evidence in support of their contentions.

5]      We have carefully gone through the entire case thoroughly, including the complaint and the relevant documents tendered by the complainant / OPs. We also heard the arguments put forth by the learned counsels for the Complainant and OPs. As a result of the detailed analysis of the entire case, the following points/issues have clearly emerged and certain conclusions/arrived at, accordingly:-

i]  The basic facts of the case in respect of the Complainant having taken a Home Loan from OP No. 3 and also obtained a life insurance policy from OPs No. 1 & 2 to secure repayment of loan, in case of any mishappening, with the basic term of the Policy for 08 years and basic sum assured as Rs.3,06,230/-, have all been admitted. There was no problem whatsoever for about 02 years, so long as the husband of the Complainant was alive and the loan installments were being paid, as per Schedule. A difficulty arose on 19.4.2008, when the husband of the Complainant expired after remaining admitted in Silver Oaks Hospital, Mohali from 5.4.2008 to 19.4.2008 i.e. for a period of about 02 weeks. After the death of the husband of the Complainant, the Complainant filed a claim with OPs No. 1 and 2 on 5.5.2008 and also complied with all the formalities in respect of documentation and supply of other data required by the OPs for settlement of the claim. The OPs No. 1 and 2, finally, repudiated the claim of the Complainant, on the ground of pre-existing disease, stating that the husband of the Complainant was suffering from Diabetes prior to making application for insurance. The OPs further say that the declaration of good health executed by the husband of the Complainant on 10.9.2006, as part of his application for insurance, was false and, therefore, the OPs have repudiated their liability under the Policy and hence, the present complaint.

ii] The contention of the Complainant is that the claim in question has been repudiated by the OPs, without any reasonable ground, justification or proper cause and, therefore, the rejection of the claim is completely unjustified being arbitrary. The Complainant further says that her husband expired on 19.4.2008 at Silver Oaks Hospital, Mohali and the reason for death had been given as “Cardiac Arrest” and, therefore, there is no record or evidence, which could prove that the Patient had died because of “Diabetes”. Even, presuming that the husband of the Complainant was suffering from Diabetes prior to the issuance of the Insurance Policy, there is clearly no nexus or linkage between diabetes and the cause of his death, which has been specified as Cardiac Arrest. 

iii] The OPs, in support of their case, had submitted the pleadings, their affidavits, as well as written arguments. Their only argument is in respect of the Contract of Insurance, which they call as “Contract of Utmost Good Faith” (uberrimae fidae), stating that the health condition of the life assured is a vital material fact, which helps the insurer to determine the life assured’s eligibility for availing the insurance policy and non-disclosure of the same provides a reasonable ground to them to reject the claim. OPs further say that the Complainant cannot be allowed to take the benefit of wrongs committed by the life assured. Another objection taken by the OPs is that the Complainant does not have any locus-standi to file the present complaint, as her name does not figure any where in the Policy document, as the insurance policy in question was initially issued in the name of the husband of the Complainant and subsequently, it was assigned to OP No. 3, on account of the fact that the husband of the Complainant had taken a Home Loan from them. In view of this, as per the OPs, the Complainant does not stand anywhere. This contention of the OPs is just not tenable, on account of the fact that the payment of premium was made by the husband of the Complainant and not by any of the OPs. It is only subsequently that the husband of the Complainant had raised a Home Loan from OP No. 3 and that the said Policy was assigned to OP No. 3.  In any case, the prayer of the Complainant, who is the wife of the deceased life assured, is to set-aside the repudiation letter dated 5.3.2009, with a direction to the OPs to adjust the insurance claim against the outstanding loan taken by her husband. This prayer clearly shows that the Complainant is not asking any part of the insurance claim for herself and on the contrary, she only wants the claim amount to be used for adjusting the outstanding home loan account balance for the loan raised by her late husband. Therefore, there is nothing wrong on the part of the Complainant in making the present complaint. Further, it is also a fact that after the death of the husband, it is the wife, who is the next close kin of the deceased. Therefore, the objection of the OPs in this respect is not sustainable.

iv]  Now, in respect of the contentions of the OPs on merits, as already stated, the entire focus of the OPs (OPs No. 1 & 2) is on the “Contract of Insurance”, as also on the documents signed by the late husband of the Complainant, especially the Proposal Form. The OPs are further depending on the medical history of the life assured, especially the death certificate, the death summary and other related hospital records, in which while recording the case history of the patient, it was stated that he knew that he was suffering from Diabetes Mellitus Type-II for about 2 years prior to admission. The OPs have also annexed the investigation report, as prepared by their Investigator – MACK INSURANCE AUXILIARY SERVICES PVT. LTD. The OPs have also quoted a few authorities in respect of the element of utmost good faith in insurance contracts, as also as regards non-disclosure of vital facts by the life assured at the time of taking the Insurance Policy and the consequences flowing therefrom.      

v]   The learned counsel for the Complainant, in support of its case, has produced an authority with the following citation:-

      “II(2007) CPJ 452

      DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI.

      LIFE INSURANCE COPORATION OF INDIA

---- Appellant

Versus

      SUDHA JAIN                       ---Respondent

      First Appeal No. A-651 of 2006 – Decided on 31.10.2006.

      Consumer Protection Act, 1986 – Section 2(1) (g) – Life Insurance – Suppression of material facts – Claim repudiated on ground of suppression of fact that deceased was diabetic – Forum allowed complaint – Hence appeal by OP – Maladies like diabetes, hypertensions being normal wear and tear of life, cannot be termed as concealment of pre-existing disease – Insured not bound to disclose diseases easily detectable by basic tests like blood test, ECG – If at time of policy, deceased suffering from disease likely to cause death shortly, doctors on panel of OP would have detected easily – No suppression of material facts – Orders of Forum upheld.

      (Pg. 453 (Paras 7, 8, 9)

      Result: Appeal dismissed.”

vi]  The above stated authority by Hon’ble Delhi State Commission clearly shows that Maladies like diabetes, hypertension being normal wear and tear of life, cannot be strictly speaking termed as concealment of pre-existing disease and further, the Insured was not bound to disclose diseases easily detectable by basic tests like blood test, ECG etc. Further contention of the Complainant is that her husband was also got medically examined by the OPs at the time of issuance of the Life Insurance Policy No. 10763157; whereas, the contention of the OPs is that the life assured was not medically examined at the time of issuance of the policy.  However, the OPs have failed to produce the proposal form, which could have easily established as to whether the life assured was a medical case or a non-medical case. Therefore, there is no substance, material evidence or argument of the OPs that the life assured was not medically examined. In any case, even, if it is presumed that he was not medically examined, as stated by the OPs, it was the prime duty of the OPs to put the life assured under certain routine medical tests like blood test, ECG etc. if they had felt the need to do so, with a view to assure that he was not suffering from any kind of routine maladies like diabetes, hypertension etc. This has clearly not been done by the OPs for the reasons best known to them only.  

6]      Keeping in view the above detailed analysis of the entire case, it is crystal clear that the allegation of the OPs against the husband of the Complainant that he was suffering from diabetes prior to the date of issuance of insurance policy has not been conclusively proved through any record or cogent evidence. There are no records available for the illness of the life assured prior to the date of issuance of the insurance policy, which could have easily established that he was suffering from certain diseases, including diabetes during that period. Even the OPs admitted that the life assured was suffering from diabetes only approximately 02 years prior to the date of the insurance policy; whereas, as per them, the insurance policy itself was issued about 1 ½ years before the death of the life assured. There is not even an iota of evidence in respect of life assured suffering from Diabetes during the 02 years’ period stated by the OPs. Even otherwise, logically speaking, there is hardly any difference between approximately 02 years and approximately 1 ½ years, which in any case, emphatically proves that the life assured was not in any case a chronic patient of diabetes. Had it been so, he would have suffered from diabetes for the last 10-15 or more no. of years and not only for approximately, 02 years. Last, but not the least, the death summary of the life assured shows that the patient had expired only on account of cardiac arrest, which he suffered after remaining in the hospital for about 02 weeks. Even, the detailed medical record of the hospital shows on page 41 that on 18.4.2008 i.e. just a day before his death, the life assured was having normal levels of blood sugar in the range of 86 mg/dl to 140 mg/dl, which further proves that the patient had not died because of diabetes, but due to certain other reasons, which finally, led to cardiac arrest, resulting in his death.

7]      Keeping in view the foregoings, in our considered view, the Complainant has a solid case in her favour. As the complaint has a lot of merit, weight and substance, it surely deserves acceptance. Therefore, we decide the complaint in favour of the Complainant and against the OPs.

8]      We, direct the OPs to do the following: -    

(i) To withdraw the repudiation letter dated 5.3.2009 in respect of the insurance claim of the Complainant against Insurance Policy No. 10763157 and to get the said insurance claim adjusted against the outstanding loan amount standing unpaid in the Home Loan Account of the late husband of the Complainant, with OP No. 3. While getting the Home Loan Account of the life assured adjusted, OPs No. 1 & 2 shall follow the Schedule of Sum Assured, payable for HDFC Home Loan Protection Plan Policy, as listed in the Home Loan Protection Plan Policy issued by them.

(ii) OP No. 3 shall receive the insurance claim amount from OPs No. 1 & 2 and credit the same in the Home Loan Account of the life assured – the late husband of the Complainant, adjust the said amount against outstanding balance sum remaining unpaid, prepare the final statement of account after making the said adjustment and supply the latest Home Loan Accounts Statement to the Complainant. Further, OP No. 3 shall not charge any overdue interest or levy any penalty relating to the intervening period from the date of repudiation of the insurance claim, till the date of credit of insurance claim in the Home Loan Account.

(iii) OPs No. 1 & 2 shall pay  a consolidated compensation of Rs.50,000/- to the Complainant for causing physical harassment, mental agony and pain, on account of repudiation of the genuine insurance claim of the husband of the Complainant.

9]      The aforesaid order be complied with by the OPs, within a period of 30 days from the receipt of its certified copy, failing which OPs No. 1 & 2 shall pay the sum of Rs.50,000/- along with interest @18% per annum with effect from the date of repudiation of the claim i.e. 5.3.2009, till the date of realization, apart from complying with the order as at (i) above.

13]    Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

31.03.2010                                       Sd/-

(LAKSHMAN SHARMA)

PRESIDENT

                                              Sd/-   

(ASHOK RAJ BHANDARI)

MEMBER

‘Dutt’