DR. INDER JIT SINGH, MEMBER

1.         The present Revision Petition (RP) has been filed by the Petitioner against Respondents as detailed above, under section 58 (a) of Consumer Protection Act 2019, against the order dated 12.09.2022 of the State Consumer Disputes Redressal Commission, Andhra Pradesh (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 71 of 2019 in which order dated 03.01.2019 of District Consumer Disputes Redressal Forum, Kurnool (hereinafter referred to as District Forum) in Consumer Complaint (CC) No. 42 of 2017 was challenged, inter alia praying for setting aside the order dated 12.09.2022 of the State Commission.

2.         While the Revision Petitioner (hereinafter also referred to as Complainant) was Appellant before the State Commission and Complainant before the District Forum and the Respondent No. 1 & 2 (hereinafter also referred to as Opposite Party No. 1 & 2 respectively) were Respondent No. 1 & 2 before the State Commission and Opposite Party No. 1 & 2 before the District Forum.

3.         Notice was issued to the Respondent(s) on 21.04.2023. Parties filed Written Arguments on 04.10.2023 (Petitioner), 03.05.2024 (Respondent No. 1) and 15.12.2023 (Respondent No. 2) respectively. 

4.         Brief facts of the case, as presented by the Complainant and as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that: -

            (i)        The Complainant and her husband entered into a loan agreement with Respondent No. 1 on 27.12.2012 and 13.11.2015, securing a loan of Rs.6,00,000/- in both the loan agreement, with both listed as borrowers. Subsequently, Respondent No. 1 applied for insurance coverage with Respondent No. 2 for the loan, but only the Complainant’s name was mentioned on the policy, excluding her husband despite him being a joint borrower. 

(ii)       Despite this error, insurance premiums were deducted from the joint account of the Complainant and her husband. Following her husband's death in a road accident, the insurance claim was denied by Respondent No. 2, stating that the husband was not insured under the policy. The Complainant filed a complaint before the District Forum demanding the clearance of the outstanding loan and compensation for mental distress. However, the complaint was dismissed by the Forum on 03.01.2019, and an appeal to the State Commission was similarly dismissed on 12.09.2022. 

            (iii)     The Complainant argues that the insurance policy should have covered both borrowers, and that negligence by the Respondents led to the denial of insurance benefits. She seeks relief for the outstanding loan and compensation for the inconvenience caused.

5.         Petitioner(s) have challenged the said Order dated 12.09.2022 of the State Commission mainly on following grounds:

1. State Commission failed to appreciate that the husband of the petitioner comes within the definition of Consumer as per section 2 (7) of the Consumer Protection Act, 2019.
2. State Commission failed to appreciate that payment for service by Respondents was paid from the bank account of petitioner’s husband jointly held with the petitioner.
3. State Commission failed to appreciate that Respondent No. 2 was duty bound to check the loan agreements executed jointly by the Petitioner and her husband with Respondent No. 1 before issuing the insurance policies, when application was made by Respondent No. 1 on behalf of petitioner and her husband being the borrowers as per the loan agreement.
4. State Commission failed to appreciate that Respondents are liable for deficiency in service for not mentioning the name of husband of the Petitioner in insurance policies and erroneously writing occupation of petitioner as ‘service’ with a monthly salary of Rs.22,000/- even though she is actually a housewife and in fact it was her husband who was in service and having the monthly salary of Rs.22,000/-.
5. State Commission failed to appreciate that petitioner and her husband are the joint beneficiary of insurance on account being joint borrower as per the loan agreements executed with Respondent No. 1.  

6.         Heard learned counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

            6.1       In addition to the averments made under the grounds (para 5), the Petitioner contended that Respondent No. 1 being the agent of Respondent No. 2 insured the life of Petitioner instead of her husband who was the true borrower of loan and working as a Head Constable under Andhra Pradesh Police Department and the Petitioner is the housewife and is not an earning member.

            6.2       Respondent No. 2 in a negligent manner never bothered to go through the loan agreement and mentioned only Complainant/Petitioner’s name even though her husband was also arrayed as borrower as per the loan agreement. Further, the occupation of the Complainant in the insurance policy is shown as ‘Service’ with the monthly salary of Rs.22,000/- even though Complainant is a housewife. Respondent No. 1 used to deduct premium amount from the joint account of Complainant and her husband and remit it to Respondent No. 2 to provide insurance coverage.

            6.3       On the other hand Respondent-1 contended that the Petitioner/Complainant is the owner of the property which was given as security for obtaining two loans. As per Petitioner’s volition she wanted to insure only one person i.e. herself and paid premium only for insurance of one person. According to the Respondent-1 the husband of the Petitioner was neither named as insured nor any premium paid for his insurance.

            6.4       Further, Respondent-1 contended that Petitioner received the insurance policy in 2016 with the name of the Petitioner as the insured and has not raised any objection and approached the Bank for ‘rectification of policy’ only after the death of her husband. Respondent-1 clarifies that Respondent-1 Bank is not the agent but acts only as a facilitator and a catalyst.

            6.5       Respondent-2 contended that there is no privity of contract between the Petitioner’s husband and the Insurance Company Respondent-2. Therefore, the Insurance Company is not liable to pay. Further, Petitioner was insured with the Respondent-2 for personal accidental cover and damage to the insured’s property due to fire and perils. The Petitioner has kept her name i.e. Kummari Suguna, as the insured in both the policies.

            6.6       The Petitioner never objected for any change or correction in the policy for years 2013-2017. As the contents of the proposal form are ensured by the insured only and the policy terms are based on proposal form. Neither it is the duty of the Insurance Company to look into the nature of the account from which the insurance premium is being paid nor to inquire about the economic capacity of the insured or the borrower of a loan.

7.         The main point for consideration in the present case is whether the deceased (husband of Petitioner-Complainant) was covered under the two insurance policies issued by Respondent No. 2 Insurance Company (Unihome Care Insurance Policy), if not whether Respondent No. 1 Bank was negligent in not including the name of husband of Petitioner-Complainant, who was a co-borrower in the two housing loans advanced by Respondent No. 1 Bank and whether the Respondent No. 1 Bank while submitting insurance proposal to Respondent No. 2 Insurance Company, was acting as agent of Respondent No. 2 Insurance Company or the Petitioner-Complainant. Two loans have been availed by the Petitioner-Complainant along with her husband (deceased) from Respondent No. 1 Bank, where name of Petitioner-Complainant appeared as main borrower and name of her husband as co-borrower. To take care of certain eventualities, the borrower took two insurance policies corresponding to the two loan accounts. However, these policies were issued in the name of Complainant-Petitioner only, whose name in the loan accounts appear first as the main borrower. The policies cover two types of risks-Section-I indemnified the insured the value of property at the time of happening of its destruction by fire, lightning, explosion etc., while Section-II, which is relevant for the present case, covers personal accident/death, extract of relevant paras of which is reproduced below:

“SECTION-II PERSONAL ACCIDENT

Subject to the terms, exclusions, definitions and contained herein or endorsed or otherwise expressed hereon the Company will pay the insured as herein after mentioned.

If at any time during the currency of this policy the insured’s borrower shall sustain bodily injury resulting solely and directly from accident caused by external violent visible means, then the company shall pay to the insured or the borrower’s legal personal representative(s) as the case may be, the sum herein after set forth, is to: if such injury shall within Twelve (12) calendar months of its occurrence be the sole and direct cause of the death of the insured’s borrower, the Capital sum insured stated in the schedule hereto

8.         The Petitioner-Complainant contended that in the present case, Respondent No. 1 Bank has acted as agent of Respondent No. 2 Insurance Company, which is evident from a clear mentions on the policy document where not only Bank is shown as agent, but a Specific Agent Code (BKA92600090004087) is also allotted to the Bank by the Insurance Company in Policy No. 0510052616P100588666. The case of Petitioner-Complainant is that Respondent No. 1 Bank, as agent of Respondent No. 2 Insurance Company was negligent/deficient in service by omitting to cover the husband of Petitioner-Complainant in the insurance policy, especially considering that the husband was not only the co-borrower in the loan accounts, but also the earning member of the family. It is also contended by the Petitioner-Complainant that though the insurance policy is issued only in the name of Petitioner-Complainant, it shows the occupation of insured as ‘Service, it was the husband of Petitioner-Complainant who was ‘in Service’ and not the Petitioner-Complainant, who was only a housewife. Petitioner-Complainant has drawn our attention to following details of the policy no. 051005/46/90/00000116:

For the said policy, a premium of Rs.3207/- has been paid to Insurance Company through the Bank. It is the case of Petitioner-Complainant that Respondent No. 2 Insurance Company insured the Complainant instead of her husband, by keeping him the assignee, while the insured ought to have been the husband of Complainant and assignee ought to have been Respondent No. 1 Bank. The husband of Complainant, who was head constable with Andhra Pradesh Government, died in road accident on 04.03.2017 while on official duty. On 17.03.2017, the Complainant on coming to know of above facts (of insurance policy not in the name of husband) requested Respondents to rectify the mistake, but they did not do so.

9.         Opposite Party No. 2 (Respondent No. 2) Insurance Company in its written version filed before the District Forum took objection to Opposite Party No. 1 (Respondent No. 1) Bank being arrayed as Agent of Opposite Party No. 2 and denied that Bank is Insurance Company’s agent. OP-1 Bank in their evidence affidavit before the District Forum has submitted that they do not categorise and classify the loanee as ‘true borrower’ and ‘otherwise’, as has been stated by the Complainant in the complaint. Bank also denied being agent of the Insurance Company, and submitted that it was only a facilitator to help the borrower to take the available benefit. The choice of who will be the insured is always with the loanee. Because the property was owned by the Complainant, she was insured, and it was done by the Bank as per dictates of the party. Bank further submitted the husband of Complainant was made co-obligant of loan account to ensure due performance and to add to the credit worthiness.  As husband was not the property owner, he was not eligible for the type of loan availed. It was the Complainant in whose name the property stood, was the principal borrower. It was to avoid payment of extra premium that Complainant opted to take the policy to the exclusion of her husband.

10.       Respondent No. 2 Insurance Company also contended that there is no privity of contract between the Petitioner’s husband and the Insurance Company, therefore the Insurance Company is not liable to pay. Further the policy is crystal clear about the name of the insured and there is no ambiguity in the policy. Hence case of United India Insurance Co. Ltd. Vs. Pushpalaya Printers 2004 (3) SCC 694 cited is not applicable. Respondent No. 1 Bank has contended that the Unihome Care Insurance Policy has two elements combined in policy, one is fire insurance of the house property and second personal accident insurance of the insured and Petitioner being the owner, was insured as named in the policy. The Petitioner has approached the Bank for rectification of policy after the death of her husband.

11.       After careful consideration of all the facts and circumstances of the case, we are of the considered view that as the husband of Petitioner herein was not insured even though he was a joint account holder of the loan account, the Petitioner is not entitled to any claim from the Respondent No. 2 insurance company, who has issued the insurance policy based on proposal received from Respondent No. 1 Bank. As regards obligation of Respondent No. 1 Bank, to insure the husband of Petitioner herein, as the Petitioner was the principal borrower and her husband was only a co-borrower, and the property in question was in the name of Petitioner, Respondent No. 1 Bank was not under any bounden obligation to get husband of the Petitioner insured. Even the premium paid is only for one person. If the Petitioner wanted her husband to also get insured, she ought to have specifically asked the Bank to insure both. Hence, to this extent, Bank is not at fault.

12.       However, coming to the contention of Petitioner herein that Respondent No. 1 Bank acted as agent of Respondent No. 2 Insurance Company, which is denied by both the Bank and Insurance Company, we are of the considered view that a bare perusal of the insurance policy document shows that Bank was Agent of the Insurance Company and even a specific code has been assigned to it. Extract of relevant cover page of the policy is reproduced below:

Hence, on this count, we are in agreement with the contentions of the Petitioner as any insured/policy holder, on seeing such a document, will assume that prima facie Bank is acting as agent of Insurance Company. Hence, both the Bank and Insurance Company mislead the Petitioner-Complainant to believe that Bank is acting as agent of Insurance Company with respect to policy in question.  Further, we are in agreement with the contentions of Petitioner that Bank has wrongly depicted Petitioner’s occupation as ‘service’ with monthly salary of Rs.22,000/- while she was a housewife and it was her husband who was salaried with this level of salary. If any untoward event could have happened to Petitioner in this case, Insurance Company could have repudiated the claim on the ground of wrongful declaration. Hence, to this extent, we hold the bank negligent and deficient in service entitling the Petitioner to some compensation, if not, the insurance claim.

13.       State Commission while dismissing the appeal has observed as follows:

“12. Point:    Appellant/complainant contended that she is not the only borrower of two housing loans which were secured by insurance policies issued by the 2^nd opposite party. According to the appellant her husband was the co-applicant for the loans and on his death the benefit of insurance policies was not given. She says that the 1^st opposite party had wrongly taken the policies in her name, instead of her husband. As per Ex.A2 loan sanction letter dated 27.12.2012 complainant is the borrower. Therefore, insurance policies were issued in her name. Taking advantage of the death of her husband in a road accident, complainant is trying to blame the 1^st opposite party and the 2^nd opposite party. The District Commission considered all the aspects of the case and dismissed the complaint. There are no merits in the appeal.

14.       District Forum, while dismissing the Complaint has observed as follows:

“7.       POINTS i and ii:- It is not in dispute that the complainant and her deceased husband had availed two housing loan Nos. 408708354000010 for a sum of Rs.6,00,000/- and 408708361000001 for a sum of Rs.6,00,000/- in the year, 2012 and 2015 from opposite party No.1 Bank and got insured with opposite party No.2. Ex.A2 is the two sanctioning letters in respect of two loans. Ex.A3 is the two insurance policies. It is also not in dispute that the husband of complainant died in road accident on 04.03.2017. Ex.A1 is the F.I.R., in Crime No.18/2017, Yemmiganur Rural Police Station, dated 04.03.2017. Ex.A3 is the policy bearing No.051005/4612/90/00000116 the complainant got insured for the period from 17.01.2013 to 16.01.2023 for an assured sum of Rs.8,00,000/- for damage to house due to fire and allied perils and personal accident of insured. As per Ex.A3 the policy bearing No.0510052616P100588666 for the period from 11.04.2016 to 10.04.2031 for sum assured amount of Rs.6,00,000/- for personal accident of insured and damage to house due to fire. Ex.A10 is the two proposal form for Uni Home Care Policy obtained under R.T.I., Act. It is the case of the complainant that the opposite party No.1 bank negligently sent the name of complainant in the proposal form as a insured person but the true borrower was her husband, who was the earning member in family. After the death of her husband he came to knowledge of said fact and she made requisition to rectify the said mistake, but opposite parties did not rectify and repudiated the claim on the ground that her husband is not covered under the above policies. Ex.A5 to Ex.A7 are the letters written by complainant to opposite parties. Ex.A8 is the repudiation letter, Ex.A9 is the letter sent by opposite party No.1 to Salary Disbursing Authority, dated 19.04.2017 along with loan application.

8.         The dispute arises in the present case is with regard to insurance coverage on the life of complainant instead of her husband. As per the loan  documents and insurance policies it is very clear that the complainant and her husband availed loans for construction of house and obtained insurance policies from opposite party No.2 for the building against fire and allied perils and in person/borrower against death due to accident is covered under both the policies. According to opposite party No.1 as per the Banking Rules the owner of house could be eligible borrower so the complainant is insured under above person as she is the owner of the property. Her husband is co-applicant /co-obligant to ensure proper repayment. It is not denied by complainant that she is the owner of the property which is mortgage with opposite party No.1 bank.

As per Ex.A10=Ex.B1 and Ex.B2 proposal forms and policy documents (Ex.B3 and Ex.B4) it is clear that the opposite party No.2 insurance company issued policies in favour of complainant as per the information provided by opposite party No.1 bank. Hence opposite party No.2 is not at fault and not responsible for any acts committed by opposite party No.1 bank. Therefore there is no deficiency of service on the part of opposite party No.2.

As seen from the proposal forms (Ex.A10=Ex.B1 and Ex.B2) we noticed that the opposite party No.1 bank applied for insurance as a proposer and had not taken any signature from the complainant. It is not the allegation of complainant that opposite party No.1 bank did not take any authorization from them to obtained insurance as a proposer at the time of sanction of loans. Therefore it is clear that opposite party No.1 bank was authorized to apply for insurance. The owner of land who is the eligible/main borrower was insured under the above policies for personal accident and damage to property due to fire accident allied perils according to its Rules. Admittedly the above loans were availed in the year 2012 and 2015 and the husband of complainant was not an illiterate person who does not known or would not enquire about the Banking Rules and not provided even the Xerox copy of policy documents. Therefore there is no force in the contention of complainant that the opposite party No.1 bank committed mistake while mentioned the name of complainant instead of her husband name. The complainant alleged deficiency of service and negligence on the part of opposite parties and prays to direct the opposite parties to clear the loan amount out an assured sum of Rs.14,00,000/-. But admittedly the said above loans are already closed after the death of her husband. Hence the complainant for recovery of amount after the closure of loan account is not maintainable under Consumer Protection Act, 1986. Basing on the evidence available on record facts and circumstances of the case we are not found negligence or deficiency of service on the part of opposite parties. Hence the complainant is not entitle for as relief as prayed in the complaint.

9.         In the result, the complaint is dismissed without costs.”

15.       There are concurrent findings of both the fora below against the Petitioner herein. We are broadly in agreement with the findings of foras below. As regards prayer of Petitioner-Complainant for insurance claim is concerned, as husband of the Petitioner-Complainant was not insured, in view of foregoing discussion and agreeing with the findings of foras below, we hold that Petitioner-Complainant is not entitled to any insurance claim under the policies in question. However, in view of our observation in para 12, we hold that Petitioner-Complainant is entitled to some compensation on account of misleading statement on the policy, depicting Bank as the agent of Insurance Company, but now both Bank and Insurance Company denying the same, and Bank wrongly stating the occupation and income of the Petitioner-Complainant in the proposal form. Accordingly, we direct the Respondent No. 1 Bank to pay a compensation of Rs.75,000/- and Respondent No. 2 Insurance Company to pay a compensation of Rs.25,000/- to the Petitioner-Complainant within 30 days of date of this order failing which, it will carry interest @9% p.a. till the date of actual payment.    The Revision Petition is disposed off accordingly.    

16.       The pending IAs in the case, if any, also stand disposed off.