Haryana

Charkhi Dadri

CC/11/2022

Suresh Kumar(deceased) - Complainant(s)

Versus

Kotak Mahindra Life Insurance Company Limited - Opp.Party(s)

Sh. Surender Sangwan

12 Nov 2024

ORDER

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, CHARKHI DADRI

                                                                    Consumer Complaint No.: 11/2022

Date of Institution: 25/01/2022

    Date of order: -       12/11/2024

 

Suresh Kumar  (since deceased) S/o Dharampal through Legal Heirs 1. Lajwanti widow 2. Monika daughter and 3. Abhilash S/o Suresh Kumar S/o Dharampal, R/o Village Dhohki, Tehsil & District Charkhi Dadri

      

....Complainant

                                                versus

 

1. Kotak Mahindra Life Insurance Company Limited, 1^st Floor, One House, situated at Hansi Road, Bhiwani through its Manager.
2. Kotak Mahindra Life Insurance Company Limited, Subhash Park, 1^st Floor No.5, Scheme No.19, Subhash Road, Rohtak through its Manager.
3. Kotak Mahindra Life Insurance Company Limited, Regd. Office, 2^nd Floor, Plot no. C-12, G Block, BKC, Bandra (E) Mumbai-400051 through its MD/CEO.

                                                                            ....Opposite Parties (OPs)

COMPLAINT UNDER THE CONSUMER PROTECTION ACT

 

Before:           HON’BLE MANJIT SINGH NARYAL…………….PRESIDENT.

                      HON’BLE DHARAM PAL RAUHILLA…..……….MEMBER.

 

Argued by:    Shri Surender Singh Sangwan Adv. for complainant.

                       Shri Deepanshu Tuteja Adv. for OPs

 

O R D E R

 

                   The facts of the complaint are that the husband of the complainant viz. Shri Suresh Kumar (deceased) had purchased a vehicle bearing registration No. HR61D-5833 (Open Body Diesel Haulage Truck) by raising the loan and purchased an Insurance Policy No.CD000301, dated 03/12/2020, cover term 36 months from OPs for a sum assured of Rs.14,00,000/-. After taking the policy, Shri Suresh Kumar had paid four installments of loans and died on 25/04/2021 after which the installments were not paid. The OPs were intimated about the death of Shri Suresh Kumar and his death claim was filed under the said Insurance Policy.  However, instead of settling the claim, OPs vide letter dated 02/12/2021 had repudiated the claim. The repudiation of the claim amounts to a grave deficiency in service on the part of the OPs which has caused mental agony and harassment to the complainant.  So, the complainant has come to this forum and has filed the present complaint with the prayer to direct the OPs to pay Rs.14,00,000/- along-with interest and compensation to the complainant.

2.                 The OPs in a written statement has submitted that the Life Assured (LA), viz. Shri Suresh Kumar had submitted to OP No.1, a proposal/application for the purchase of Life Insurance Policy from “Kotak Mahindra Life Insurance Company Limited”.  The said proposal for issuance of plan was accepted by OPs and consequently, a Policy bearing No.CD000301 for a sum of Rs.14,00,000/- was issued on 03/12/2020. The insurance company had received a claim intimation dated 20/07/2021 along-with death certificate and other documents stating that the Shri Suresh Kumar had expired on 25/04/2021 i.e. within five months from issuance of subject cover. On receipt of the death claim intimation, the company had immediately initiated the process of statutory investigation in order to verify the authenticity of the claim. It is pertinent to inform that during the assessment of the subject claim, it was revealed that the deceased was suffering from Cerebrovascular Accident (CVA)/ Cerebellar Abscess and had undergone treatment for the same prior to the date of signing of the Declaration of Good Health (DOGH).  This very fact clearly established that the deceased had suppressed and concealed the very factum of suffering from pre-existing disease at the time of issuance of the policy.  The OPs has rightly repudiated the claim vide letter dated 02/12/2021 on the ground of suppression of material facts by the Life Assured at the time of filling up of proposal form.  There is no deficiency in service on the part of the OPs and thus, prayed for the dismissal of the present complaint.

3.                 The learned counsel for the complainant in support of his case has filed affidavit Ex.CW1/A,Ex.CW2/A, Ex.CW3/A and tendered the documents Ex.C1 to Ex.C8 and closed the evidence on 17/03/2023.

4.                 Learned counsel for the OPs filed the affidavit Ex.RW1/A of Hetal Maniar – DVP, Legal, and tendered the documents Ex.R1 to Ex.R8 and closed the evidence on 24/05/2023.

5.                 We have heard the arguments advanced by learned counsel for the parties at length.  All the documents have been perused very carefully and minutely.

6.                 In the present case, there is no dispute with regard to the fact that the complainant has availed loan facility from Kotak Mahindra Bank Limited (KMBL), a Bank of Group of OPs on 03/12/2020.  There is also no dispute that the Life Assured, Shri Suresh Kumar (deceased) had signed a proposal/application for the purchase of Life Insurance Policy - “Kotak Complete Cover Group Plan” on the same day on 03/12/2020 when loan was availed.  Consequently, the Policy was issued on 03/12/2020 bearing no.CD000301 for a sum of Rs.14,00,000/-.

7.                 The plea of the complainant is that the OPs had wrongly, illegally and only to cause mental agony and harassment repudiated the legal and genuine claim of the complainant and that amounts to a grave deficiency in service on the part of the OPs. In support of his case, he has relied upon the judgment titled as Santosh Kanwar Vs. LIC of India, Revision Petition no.2049 of 2000 decided by the Hon’ble National Consumer Disputes Redressal Commission, New Delhi on 09/09/2008 and case No. FA-643/09, titled as National Insurance Co. Ltd. Vs Gurbachan Singh, decided by State Consumer Disputes Redressal Commission, Delhi on 21/02/2023.

8.                 The main stand of the OPs is that the claim of the complainant was rightly and legally rejected by the OPs as the LA, Shri Suresh Kumar (deceased) had misrepresented/concealed certain facts about his health as he had taken treatment for Cerebellar Abscess prior to issuance of the policy as per past history recorded in the discharged summary (Ex.R5) issued by VK Neurocare and Trauma Research Institute.  This very fact clearly established that Life Assured was suffering from chronic pre-existing disease at the time of issuance of the policy.  The OPs have rightly repudiated the claim of the complainant vide letter dated 02/12/2021 on the ground of suppression of material facts by the Life Assured at the time of filling up of the proposal form.  OP averred that the contract of insurance is a contract of Uberrima fides meaning utmost good faith which implies that all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal.  

9.                 We have looked into the judgments referred by the learned counsel for the complainant and the OPs, we are of the view that ratio decided in the aforesaid cases would not render any assistance in support of their averments and the arguments, as facts and circumstances of the cases are not identical to that of the present case.

10.               On perusal of the documents/evidences placed on record and arguments advanced by counsel of the parties, a summary of facts and circumstances of the present case and our view point emerged therefrom are enumerated hereunder: -

10.01.         The Life Assured (LA), viz. Shri Suresh Kumar (deceased) had availed loan for Rs.14,00,000 (Rupees fourteen lakhs only) from Kotak Mahindra Bank Ltd. (a Bank of the Group company of the OPs) for commercial vehicle having Registration No.HR61D5833, Chasis No.MEC2246CDJP061277, Engine No.400952D0061078, Model BHARATBENZ3123R8X2 BS IV, Manufacturer DAIMLER INDIA COMMERCIAL VEHIC, hypothecated to KOTAK MAHINDRA BANK LTD. as per Registration Certificate placed on record.  Prima-facie, it appears that with a view to secure the loan, the Kotak Mahindra Bank Ltd. had arranged a Master Insurance Policy No.CD000301, Certificate No.CD000301_ CE932648_80934854 - Kotak Complete Cover Group Plan – A non-linked non-participating Group Credit Life Insurance Plan where the LA), Shri Suresh Kumar (deceased) was also one of the Member with Member ID:80934854 with Sum Insured of Rs.14,00,000 with its group company viz. Kotak Mahindra Life Insurance Company Ltd. (the Insurance Company or OPs).  It was not the policy opted by the LA voluntarily, contrary, it was the policy compulsorily arranged by the Kotak Mahindra Bank from its group company (the OPs) to secure its loan given to its borrowers including the LA. On perusing the Membership Form cum Declaration of Good Health on which LA had put his signatures, it reveals that the form was cyclostyled printed form where under the Head of “DECLARATION OF GOOD HEALTH” at Clause No.4 it has been printed that “I have never suffered and not presently suffering from (a) High blood pressure….. (b) Stroke, paralysis in any form or any other cerebrovascular disease (c) Diabetes or any other Endocrinal Disease, Kidney Disease, (D)……. to (h)…….“ The names of various diseased have been printed on the form without any option of “Yes” or “No” to be ticked/agreed or disagreed by the LA in regard to having or not having any particular disease and taking or not taking treatment for the same disease earlier. The signatures of the LA on the said form were obtained on 03/12/2020, the same day when loan was given to LA by the Kotak Mahindra Bank. Apart from other terms and conditions, a Schedule of Repayment of Loan was attached to the Insurance Policy. The Repayment Schedule is as under:

Sr. No.	From Date	To date	Cover(in Rupees)
1	03-DEC-20	02-JAN-21	14,00,000
2	03-JAN-21	02-FEB-21	13,68,513
3	03-FEB-21	02-MAR-21	13,36,657
4	03-MAR-21	02-APR-21	13,04,428
5	03-APR-21	02-MAY-21	12,71,821
6	03-MAY-21	02-JUN-21	12,38,832
7	03-JUNE-21	02-JUL-21	12,05,457
8	03-JUL-21	02-AUG-21	11,71,690
9	03-AUG-21	02-SEP-21	11,37,529
10	03-SEP-21	02-OCT-21	11,02,967
11	03-OCT-21	02-NOV-21	10,68,000
12	03-NOV-21	02-DEC-21	10,32,623
13	03-DEC-21	02-JAN-22	9,96,832
14	03-JAN-22	02-FEB-21	9,60,622
15	03-FEB-22	02-MAR-21	923,988
16	03-MAR-22	02-APR-21	8,86,924
17	03-APR-22	02-MAY-21	8,49,426
18	03-MAY-22	02-JUN-21	8,11,489
19	03-JUN-22	02-JUL-21	7,73,107
20	03-JUL-22	02-AUG-21	7,34,276
21	03-AUG-22	02-SEP-21	6,94,990
22	03-SEP-22	02-OCT-21	6,55,244
23	03-OCT-22	02-NOV-21	6,15,032
24	03-NOV-22	02-DEC-21	5,74,349
25	03-DEC-22	02-JAN-22	5,33,189
26	03-JAN-23	02-FEB-21	4,91,548
27	03-FEB-23	02-MAR-21	4,49,418
28	03-MAR-23	02-APR-21	4,06,795
29	03-APR-23	02-MAY-21	3,63,672
30	03-MAY-23	02-JUN-21	3,20,045
31	03-JUN-23	02-JUL-21	2,75,906
32	03-JUL-23	02-AUG-21	2,31,250
33	03-AUG-23	02-SEP-21	1,86,071
34	03-SEP-23	02-OCT-21	1,40,363
35	03-OCT-23	02-NOV-21	94,119
36	03-NOV-23	02-DEC-21	47,334
37	03-DEC-23	02-JAN-22	0

 

          As evident from the above Schedule, the policy was arranged by the Kotak Mahindra Bank Ltd. through its own group company viz. Kotak Mahindra Insurance Company Ltd. to secure the loan in case of death of the Borrower viz. Shri Suresh Kumar (deceased) for a period of 3 years and the period of policy was synchronized with the schedule of repayment of the loan. It vindicates that the very purpose of the policy was to secure the loan in case of death of the Insured.  

10.02.         The OPs in their written statement has admitted that the Master Policy Holder i.e. Kotak Mahindra Bank Ltd. has not been impleaded as necessary party as the Deceased Member had taken loan from the Master Policy Holder, Kotak Mahindra Bank and to secure the risk on said loan, subject insurance policy cover was purchased by the Answering Respondent Company i.e. Kotak Mahindra Life Insurance Company Ltd.  The terms of Certificate of Insurance mentioned in the written statement, which prove that policy was taken to secure the loan, are as under:-

Policy number	CD000301
Member ID	80934854
Name of Member	Suresh Kumar
Plan name	Kotak Complete Cover Group Plan
Premium Amount (inclusive of GST)	Rs.28,527.56
Cover commencement date	03/12/2020
Sum Assured	Rs.14,00,000
Plan Option	Life Cover
Cover term	36 months

 

          There is no iota of doubt that the primary concern for the insurance cover for life of Shri Suresh Kumar (deceased) was to secure the loan given to him by the Kotak Mahindra Bank with no concern of benefit to legal heirs and signatures of the Life Assured were obtained by the Bank to serve its purpose of own interest.

10.03.         Further, OPs had engaged the Investigation Agency viz. Inside Track Services Pvt. Ltd. on 08/08/2021 to investigation the claim.  The Agency submitted its Final Investigation Report on 02/09/2021 wherein, inter-alia, it has been mentioned that the LA had taken treatment for CEREBELLER ABSCESS and remained admitted in VK Neurocare and Trauma Research Hospital from 10/09/2016 to 15/09/2016 and death of LA was due to “Heart Attack”.  The Complete Investigation Findings of the said Report is reproduced below: -

“During the course of investigation, it was learned that LA was self-employed and his annual income was around INR 2,40,000. LA was friendly person and did not have any kind of animosity with anyone. LA was known by locals and neighbours.  All nearby locals and neighbors were interviewed on the death matter of LA, Mr. Suresh Kumar and it emerged that LA demised on 25/04/2021 at home due to heart attack.

IO visited the residential address of LA and met Nominees, Mrs. Lazwati and she stated that she is the permanent resident of the above provided address and that LA was her husband was self-employed by profession having annual income around 2,40,000/-. As per nominee, LA was healthy person who did not have any kind of illness prior to his death.  LA demised on 25/04/2021 at home due to heart attack.  LA’s cremation was one at village cremation ground in presence of locals and relatives, complete statement is attached with report for reference.

Having reached in LA’s vicinity IO very smartly and diligently carried out an enquiry regarding LA’s past health condition, place & cause of death, it was revealed that LA was known case of high BP and brain hemorrhage on September, 2016 for which he was treated at VK Neurocare and Trauma Research Hospital.  LA demised on 25/04/2021 at home due to heart attack at home, as per knowledge of locals.

IO visited said VK Neurocare and Trauma Research Hospital and collected medical records.  As per discharge summary 10/09/2016 to 15/09/2016, LA was admitted to the hospital with c/o vertigo and headache (since 3 days), difficulty in walking since 3 days and was diagnosed with CVA which is pre RCD in nature.  Apart from that no significant past illness history found in the name of LA.

IO searched nearby hospitals but no records in the name of LA came into light.

The based on above finding, company may take appropriate actions in this case.”

          It reveals from the above-mentioned extracts of the Investigation Report that the cause of death was “Heart Attack” and it has no relation with the treatment taken in September, 2016 that too, more than 4 years ago from taking the insurance cover. The same cannot be attributed to the cause of death of life assured and the OPs should not take advantage of the same for repudiation of claim.

10.04.         In this context, it is pertinent to draw attention to Clause 45 (4) of the Insurance Act, which inter-alia provides that 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 on the ground that any statement or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal. It has also been provided in the said clause 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.

          Further, the provisions of calling of the policy by insurance company implies that any disease or treatment taken for any disease prior to 3 years may not have any adverse impact for extending insurance cover to the insured. The period of 3 years for calling the policy is important factor which implies or may be interpreted that in case any treatment is taken prior to 3 years should not be considered for debarring the Insured to take insurance cover. In this case, the claim was repudiated on the ground that treatment taken in September, 2016 was not disclosed in the form/application for insurance cover signed on 03/12/2020 after lapse of more than 4 years from the previous treatment.  

 The above referred Clause (45) (4) of the Insurance Act is reproduced below: -

          “(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 of the 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.

Explanation: - For the purposes of this sub-section, the misstatement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.”

10.5.            The complainants have filed claim for Rs.14,00,000 being Sum Insured under the Policy.  However, as the policy is under the Group Credit Life Insurance Plan and linked with repayment of the loan, the insurance claim to the extent of outstanding amount of the loan after accounting for the amount paid by the Life Assured till his death on 25/04/2021.  At the time of death of the Life Assured the loan outstanding was Rs.12,71,821 as per the Repayment Schedule attached to the Policy(Ex- C1 and R2), the claims deserves merit for Rs.12,71,821 only.

11.              In the light of above-mentioned facts and observations, we are of the considered view that OPs are deficient in service in repudiating the claim, hence the complaint is allowed partly with following directions to the OPs:-

(i)       To pay Rs.12,71,821 (Rupees twelve lakh seventy one thousand eight hundred twenty one only) being loan outstanding at the time of death of Life Assured with interest @ 9% p.a. from 02/12/2021 being date of repudiation of the claim by the OPs.

(ii)      To pay Rs.20,000 (Rupees Twenty thousand only) towards compensation for mental agony, harassment caused to the complainants.

(iii)     To pay Rs.10,000 (Rupees ten thousand only) towards litigation charges.

12.              The above-mentioned sums be paid to the complainants being legal heirs of the deceased Shri Suresh Kumar viz. (1) Lajwanti widow of Shri Suresh Kumar  (2) Monika daughter of deceased Shri Suresh Kumar and Abhilash son of deceased Shri Suresh Kumar in equal share.  The OP No. 1 & 2 shall make the compliance of the order within 45 days from the date of receipt of copy of this order.  Non compliance of this order on the part of OP No. 1 & 2 will lead to action in terms of Section 71 and 72 of the Consumer Protection Act, 2019.  The copy of order be supplied to the parties free of cost as per rules.  Order be promptly uploaded on the website. File be consigned to the record room, after due compliance.