Taken up through video conferencing.

1.      This revision has been filed under section 58(1)(b) of the Act 2019 in challenge to the State Commission’s Order dated 25.08.2020 in appeal no. 132 of 2020 arising out of the District Commission’s Order dated 19.08.2019 in complaint no. 92 of 2017.

2.      We have heard the learned counsel for the parties and have perused the material on record including inter alia the District Commission’s Order dated 19.08.2019, the State Commission’s impugned Order dated 25.08.2020 and the petition.

3.      Brief facts of the case, relevant for disposal of this petition, are that the complainant’s husband had a joint account with his brother in the opposite party no. 1 bank (the respondent no. 2 herein). He also had an individual account with the bank. He took insurance from the opposite party no. 2 insurance co. (the petitioner herein) through the bank under a group insurance scheme of the insurance co. administered through the bank. The annual premium for the first three years, 2012, 2013, and 2014, was deducted from the joint account of the complainant’s husband and his brother. On the death of his brother the said joint account was closed. The annual premium for the fourth year, 2015, was deducted from the individual account of the complainant’s husband. All deductions were made by the bank from the joint account / individual account and transferred to the insurance co. The premium in 2016 was due on 18^th July. However the annual premium for the fifth year, 2016, was not deducted by the bank despite sufficient balance being available in the individual account. The complainant’s husband expired on 04^th Dec. 2016. The complainant was the nominee in the insurance policy. Her claim was denied by the insurance co. on ground that since the fifth year’s premium was not paid the policy had lapsed. The sum assured was Rs. 2,50,000/-. But only Rs. 37,309/- was paid to the complainant as refund of the total premia paid i.e. Rs. 40,000/- minus administrative charges.

The District Commission vide its Order dated 19.08.2019 accepted the complaint against the opposite party no. 2 insurance co. and ordered it to pay the balance amount of Rs. 2,12,691/- against the sum assured of Rs. 2,50,000/- with interest at the rate of 9% per annum from the date of submission of the complainant i.e. 27.02.2017 along with compensation of Rs. 10,000/- and cost of litigation of Rs. 5,000/-.

The State Commission vide its Order dated 25.08.2020 dismissed the appeal filed by the insurance co.

As such this petition has been preferred apropos concurrent findings of the two fora below, wherein the sole liability has been imposed on the insurance co.

4.      We take note from the record that in the group insurance policy in question the “Policy Holder Name” is “Baroda Rajasthan Gramin Bank” i.e. the bank, while the “Insured Member Name” is “Mr. Karana Jat” i.e. the complainant’s husband. The policy is a master policy and the bank is the administrator of the said policy. It registers the members and administers the policy which includes deduction of premia from the accounts of the individual members which are maintained in the same bank itself. The annual premium of Rs. 10,000/- for the first three years, 2012, 2013 and 2014, was deducted from the joint account of the complainant’s husband and his brother, on the death of his brother the said joint account was closed, thereafter the annual premium for the fourth year, 2015, was deducted from the individual account of the complainant’s husband, all deductions made by the bank from the joint account / individual account were remitted to the insurance co. by way of bank transfer. The District Commission has given a clear finding of fact that on the joint account being closed after the third year the annual premium of Rs.10,000/- for the fourth year, 2015, was paid from the individual account with an assurance (‘aasvassan’) that the instalment for the next year i.e. the fifth year, 2016, will also be paid from the individual account in due course. It has also clearly determined that there was adequate balance in the individual account in the fifth year, 2016, at the relevant date when the premium was due (i.e. 18^th July) and even subsequently. The State Commission has also given similar findings of fact, clearly recording that after the death of the brother of the complainant’s husband (which occasioned closure of the joint account) the complainant’s husband had given instructions (‘aadesh’) to make the deductions of the premium from his individual account. It has concluded that the District Commission has not erred in any manner in accepting the complaint.

5.      Learned counsel for the insurance co. argues that not having received the premium for the fifth year, 2016, the policy had lapsed and as such there is no deficiency on the part of the insurance co. He however fairly admits that the master policy was in the name of the bank and that the bank was administering its policy. Learned counsel also emphasizes that the default in not making timely payment of the premium for the fifth year, 2016, occurred at the end of the bank and as such the remiss bank cannot be altogether absolved of its liability qua the complainant. The submission is that in the wake of the default being at the end of the bank, fixing sole liability on the insurance co. is inappropriate and inequitable both.

In this context we note that on the one hand there was clear default on the part of the bank in not transferring the premium from the individual account of the complainant’s husband to the insurance co. for the fifth year, 2016, despite having done so in the previous year, 2015, and despite there being adequate balance in the individual account on the relevant date on which the premium was due, on the other hand the bank was the master policy holder and was administering the policy and  further there is nothing on record to show that the insurance co. had in any manner raised this question or taken up this issue with the bank or for that matter contemplated any re-look etc. in its arrangement with the bank when the remiss bank in acting as the administrator of its group insurance policy failed to carry out its duty cast.

6.      Learned counsel for the bank argues that explicit written instructions to make deduction of the premium for the fifth year, 2016, from the individual account were not given by the complainant’s husband and as such the bank cannot be held blameworthy for any default.

In this context we can not loose sight of the fact that the premium for the immediately preceding year i.e. the fourth year, 2015, was very much deducted by the bank from the individual account of the complainant’s husband. As such it is difficult to buy the contention that the same was not required to be similarly done in the immediately succeeding year i.e. the fifth year, 2016, also, and pertinently enough when adequate balance was quite available in the account. In any case this question of fact has been examined and clearly determined by both the fora below in their respective appraisals and both have arrived at the findings that the bank had given assurance / the bank had been instructed to make deduction as per normal wont in the due course of business for the fifth year, 2016, also, from the individual account of the complainant’s husband. We also disconcertingly note that when the installments were being paid from the joint account, the premium for the second year, 2013, which was due on 18^th July was belatedly paid on 31^st July, and the premium for the third year, 2014, which was due on 18^th July was again belatedly paid on 26^th July, that is to say the bank had not been dutiful and diligent enough in paying the premium on the due dates even when the premia was being deducted from the joint account in respect of which even the bank admits that there was no dispute regarding instructions etc. In the fourth year, 2015, also, the premium, which was due on 18^th July 2015, was belatedly paid on 02^nd Jan. 2016 (from the individual account). In all these three instances the insurance co. accepted the premia without demur and the policy was not rescinded or terminated. In the fifth year, 2016, the premium was due on 18^th July 2016; however despite adequate balance being available the same was not deducted. And the complainant’s husband expired on 04^th Dec. 2016.

7.      Learned counsel for the complainant argues that the insurance co. and the bank had their own arrangement amongst themselves and the premium was paid to the insurance co. through the bank’s instrumentality after being deducted from the complainant’s joint account / individual account as per the terms and conditions of the policy and the complainant’s husband had to necessarily maintain an account with the bank for the purpose. The submission is that the insurer and the administrator i.e. the insurance co. and the bank are both liable for ‘deficiency in service’ within the meaning of section 2(1)(g) & (o) of the Act 1986.

8.      To encapsulate the crux, the group insurance policy in question was administered through the bank. The bank registered the individual members and made the deduction of premia from the accounts of the policy-takers which were maintained in the bank itself. Both benefited from the arrangement, the insurance co. got business in the form of policy-takers and also got an administrator to administer the affairs of its said policy-takers, the bank got business in the form of savings accounts of the policy-takers. As such it was a mutually beneficial symbiotic arrangement between the two. 

In the instant case the first three premia were paid from a joint account of the complainant’s husband, the said account was closed on the demise of the joint account holder i.e. the brother of the complainant’s husband, thereafter the fourth was paid from his individual account, and subsequently despite adequate balance being available in the individual account the fifth was not paid at the relevant time when it was due.

In the given facts and circumstances of the case the deficiency on the part of the insurer and of its administrator i.e. the insurance co. and of the bank qua the complainant is writ large. The default in respect of timely transfer of the premium from the complainant’s husband’s individual account to the insurance co. being at its end, the bank-administrator cannot be absolved of its liability. Similarly, being the insurer per se, the insurance co. cannot be absolved of its liability. It bears significance that the insurance co. was in a mutually beneficial symbiotic association with the bank, and also that it did not take up the question of the bank’s default in any manner with the bank i.e. the administrator of its master policy.

A plain appreciation of the proved facts of the case shows that inspite of the complainant’s husband being at no fault, having dutifully paid four instalments of premia, and having dutifully maintained adequate balance in his account for the fifth instalment, the endeavour of both, the insurance co. – insurer and the bank – administrator, has been to anyhow evade their liability of deficiency in service and to anyway assign the blame on the complainant’s husband when he was totally blameless (this inter alia also reflects a highhanded sense of utter unaccountability of the each on their part).

9.      We thus find that both the fora below have erred in absolving the bank of its liability. In our opinion, having regard to the nature and genre of scheme of the things under which the group insurance policy in question was being operated, the liability qua the complainant for ‘deficiency in service’ is of both the insurance co.-insurer as well as the bank-administrator, both are jointly and severally liable.

10.    In so far as the quantum of the award made by the District Commission is concerned, i.e. to pay the balance sum assured with interest at the rate of 9% per annum from the date of submission of the complaint i.e. 27.02.2017 till its actual realisation along with compensation of Rs. 10,000/- and cost of litigation of Rs. 5,000/-, the same appears to be just and equitable in the facts of the present case.

11.    Sequel to the above discussion the award made by the District Commission is modified to the extent that the insurance co. and the bank shall be liable, jointly and severally, to make good the award.

So disposed.

12.    The Registry is requested to send a copy each of this Order to the parties in the petition and to their learned counsel as well as to the District Commission immediately. The stenographer is also requested to upload this Order on the website of this Commission immediately.