KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No. 541/2016

JUDGMENT DATED: 17.03.2020

(Against the Order in C.C. 848/2013 of CDRF, Ernakulam)

PRESENT:

SRI.T.S.P. MOOSATH                                                       : JUDICIAL MEMBER

SRI.RANJIT. R                                                                   : MEMBER

SRI. K.R. RADHAKRISHNAN                                        : MEMBER

APPELLANT:

Sanal Kumar K.R., Kakkadayil House, Near Telephone Exchange, Thodupuzha-685 584.

           (By Advs. Rajesh Vijayendran & V.K. Prasanth)

                                                Vs.

RESPONDENTS:

1. HDFC ERGO General Insurance Company Ltd., Corporate Office, 6^th Floor, Leela Business Park, Andheri-Kurla Road, Andheri (East), Mumbai-400 059 represented by its Manager-Claims.

(By Adv. Sreevaraham G. Satheesh)

2. HDFC Bank Ltd., Palarivattom Branch, Cochin-682 025, Ernakulam.

3. HDFC Bank Ltd., Kandirickal Oliver Castle, Vengalloor, Thodupuzha P.O.

JUDGMENT

SRI.RANJIT. R: MEMBER

The complainant has filed this appeal aggrieved by the order dated 12.02.2016 in C.C. No. 848/2013 on the file of the Consumer Disputes Redressal Forum Ernakulam, for short the District Forum, dismissing his complaint. 

2.  Case of the complainant is that Smt. Ushadevi had purchased a Maruti Ritz car by availing a car loan from the 2^nd and 3^rd opposite parties of Rs. 5,00,000/- under hypothecation of the car to the 2^nd opposite party.  The repayment of the loan was to be made in 50 instalments of Rs. 10,866/- each starting from 05.02.2013 and ending on 05.01.2018.  At the time of availing the loan Smt. Ushadevi had also taken ‘HDFC ERGO Sarv Suraksha Plus Comprehensive Insurance Policy’ on the advice of the staff of the 3^rd opposite party after remitting one time premium amount.  The terms and conditions of the above said policy covered critical illness, accidental hospitalization, personal accident, death and permanent disability, credit shield, dependent child education benefit, house holder’s benefit against theft/burglary loss of job, garage cash and lost card liability.  The monthly instalments were being paid by Smt. Ushadevi through post dated account payee cheques.  While so on 15.07.2013 Smt. Ushadevi had suffered a massive heart attack at her residence and she passed away even before being taken to the hospital.  After the sudden and unexpected death of Smt. Ushadevi the outstanding loan amount of Rs. 4,58,667/- was not paid by the 1^st opposite party insurance company stating the reason that the insured person has to survive a minimum period of 30 days from the date of diagnosis.  In the instant case Smt. Ushadevi had an instantaneous death.  Therefore the claim under the policy was repudiated by the 1^st opposite party insurance company, even though claim was preferred under ‘credit shield insurance policy’ by the complainant.  The complainant therefore rushed to the offices of opposite parties 2 & 3 with request to reconsider the claim under the head ‘credit shield insurance policy’.  But the opposite parties declined the request of the complainant.  The act of the 1^st opposite party insurance company in repudiating the genuine claim of the complainant amounted to deficiency in service and unfair trade practice.  Hence the complainant filed this complaint.

3.  The 1^st opposite party filed version contending that the complaint is not maintainable either in law or on facts and the complainant has no locus standi to file this complainant.  It is true that late Smt. Ushadevi had taken a Sarva suraksha policy and the insured died of heart attack on 15.07.2013 as on which date there was a valid policy.  But the terms of the policy does not assure indemnification for the contingency that had occurred in this case, that the coverage of ‘critical illness’ is not available to the case as per the terms of the policy.   ‘Credit shield insurance’ also cannot be extended in view of the policy terms and conditions.  Credit shield insurance coverage is available to accidental death or permanent total disability of the insured subject to the maximum sum insured as specified in the schedule.  There was no deficiency in service on the part of the 1^st opposite party and hence the complaint is ought to be dismissed. 

4.  2^nd & 3^rd opposite parties filed separate version in which they contended that they are unnecessarily dragged into this case, that they are in no way responsible for the rejection of the claim by the 1^st opposite party.  It is true that late Smt. Ushadevi had availed loan of Rs. 5,00,000/- for purchasing Maruti Ritz car from the 2^nd & 3^rd opposite parties.  The repayment of the loan was scheduled to be made in 50 monthly instalments of Rs. 10,866/- from 05.02.2013 to 05.01.2018.  Smt. Ushadevi had taken a comprehensive insurance policy by name ‘HDFC Ergo Sarvasuraksha Plus’ to cover the car loan and to avail other benefits under the policy.  The staff of the 3^rd opposite party had never compelled her to take the above said policy.  Smt. Ushadevi had repaid the loan instalments without any default until she died on 15.07.2013 due to heart attack.  There was no deficiency in service on the part of the 2^nd & 3^rd opposite parties.   

5.  The evidence in the case consists of documentary evidence marked as Exts. A1 to A5 on the part of the complainant and Exts. B1 & B2 marked on the side of the opposite parties.  No oral evidence was adduced by either parties. 

6.  The District Forum on the basis of the materials produced and after considering the rival contentions found that the insurance company has rightly repudiated the claim of the complainant and accordingly dismissed the complaint.  Aggrieved by the order of dismissal the complainant has come out in appeal. 

7.  The learned counsel for the appellant contended that one Smt. Ushadevi purchased a Maruti car by availing loan from the 2^nd & 3^rd opposite parties for Rs. 5,00,000/-.  The complainant is the legal representative of the said Smt. Ushadevi.  At the time of availing loan for purchasing the car the HDFC Bank advised to take a comprehensive insurance policy by name ‘HDFC Ergo Sarv Suraksha plan’ in order to cover the car loan in the event of critical illness, accidental hospitalization, personal accident, death, permanent disability etc.  The tenure of the policy was for 5 years.  The said Smt. Ushadevi was repaying the car loan monthly by paying an amount of Rs. 10,866/- per month.  While so Smt. Ushadevi suffered a massive heart attack and she died before reaching the hospital.  After the sudden and unexpected death of Smt. Ushadevi the monthly installments could not be repaid.  As per the terms and conditions of the insurance policy, she was exempted from paying the outstanding loan amount after her death and so claim was preferred on 02.09.2013 before the insurance company by the complainant on her behalf.  The claim was preferred under Sec. 5 under the head ‘credit shield insurance policy’.  By preferring the claim it was reasonably expected that as per the said policy conditions the representatives will be exempted from paying the balance outstanding loan amount of the car.  But the opposite party repudiated the claim stating that the claim is not tenable for ‘critical illness’ under which the claim was processed.  The 1^st respondent/1^st opposite party had processed the claim under the head ‘critical illness’ instead of processing under the head ‘credit shield insurance policy’ as applied by the appellant.  Even though the appellant approached the respondent with a request to reopen the claim under the head ‘credit shield insurance policy’, they refused to do so.  As per the terms and conditions of Sarv Suraksha plus policy availed by Smt. Ushadevi she was exempted from paying the outstanding loan amount after her death.  It was stipulated under Sec. 5 under the head ‘credit shield insurance policy’ that in the event of accidental death or permanent total disability of the insured person during the policy period, the company will pay the balance outstanding loan amount.  Since Smt. Ushadevi had suffered a sudden death, she will come within the ambit of Sec. 5 of the ‘credit shield insurance policy’.  The insurance company unilaterally and wrongly categorized the claim and processed under ‘critical illness’ whereas the appellant has preferred the claim under the head ‘credit shield insurance policy’.  As the death of Smt. Ushadevi was a sudden death no claim will lie under the head ‘critical illness’.  Hence they preferred their claim under ‘credit shield insurance’ which covers sudden death.  Accident or accidental has been defined in the said policy as sudden, unintended fortuitous external and visible event.  Since Smt. Ushadevi had suffered a sudden death she would come within the ambit of ‘credit shield insurance policy’.  The claim was repudiated because of the reason that it was wrongly processed under the head ‘critical illness’ instead of processing the same under the head ‘credit shield insurance policy’ as applied by the complainant. 

8.  The learned counsel for the respondent, on the other hand, contended that the insured Smt. Ushadevi died of heart attack and hence the claim was processed under the head ‘critical illness’.  The claim could only be processed under the head ‘critical illness’ since in the claim form it is stated that the insured had died due to cardiac arrest at her residence.  There was no mentioning of accidental death or permanent total disability in the claim form which alone would have entitled the legal heirs of insured to prefer the claim under ‘credit shield insurance policy’. Hence the claim was processed under ‘critical illness’ and found not payable.  Under the ‘critical illness’ cover the insured must survive for a minimum of 30 days from the date of diagnosis of critical illness.  Since in the instant case this condition was not fulfilled the claim was repudiated.  Even under the ‘credit shield insurance policy’ it will be allowed only in the event of accidental death or permanent disability of the insured person during the policy period.  There has not been any accidental death or permanent total disability of the insured person in the instant case.  The death was due to heart attack.  Such death is not accidental death.  Accidental death means a sudden unforeseen and involuntary event caused by external and visible event.  Thus the death in the instant case is not accidental death as envisaged under the policy.  Hence the benefits under ‘credit shield insurance policy’ also would not be available to the insured in the present case.  The claim would not fall both under ‘critical illness’ and ‘credit shield insurance’ and hence the insured or legal heirs are not entitled to any amount as per the terms of the policy. 

9.  We have considered the arguments canvassed by both the counsel and perused the records.  The basic facts are not in dispute.  Therefore it is only necessary to determine the correctness of the basis of repudiation of the insurance claim by the insurer.  According to the respondent/insurer since the claim was processed under ‘critical illness’, the insured person has to survive a minimum period of 30 days from the date of diagnosis.  In the present case the said criteria was not fulfilled and hence the claim was repudiated.   The specific contention of the appellant/complainant is that as per the terms and conditions of Sarv Suraksha Policy availed by Smt. Ushadevi at the time of availing the car loan, she was exempted from paying the outstanding loan amount after her death.  It was stipulated as per credit shield insurance policy (sec. 5) that in the event of accidental death or permanent total disability of the insured person during the policy period, the company will pay the balance outstanding loan amount.  But unfortunately there was no reference by the insurance company in the repudiation letter on ‘credit shield insurance policy’ under which head the claim was preferred by the complainant.  The claim was repudiated since it was processed under the head ‘critical illness’ instead of processing under the ‘credit shield insurance policy’.  Perusing the policy it can be seen that the policy provides the following coverage and benefits.  (1) Loss of job (2) Accidental death, permanent total disability/permanent partial disability, accidental hospitalization, critical illness, credit shield insurance, garage cash, household coverage.  Admittedly as per the terms and conditions of policy at the time of availing the car loan she was exempted from paying the outstanding loan after her death.  This was covered under the ‘credit shield insurance policy’.  The credit shield insurance policy will apply if the death occurred due to accident or permanent total disability of the insured person during the policy period and that the company will pay the balance outstanding loan amount in the manner agreed in the name of the insurance person and the claim will be directly paid to the bank to the extent of outstanding loan amount.  In the instant case since it is a case of death due to heart attack and thus the claim should have been processed under ‘credit shield insurance policy’.  Only then the company will make payment to the bank to clear the loan amount.  However, it is seen that the company has processed the claim under the critical illness coverage.  According to the opposite party/insurer they processed the claim under the head ‘critical illness’ since there was no mention of accidental death or permanent disability in the claim form.  This contention of the 1^st respondent/1^st opposite party is not satisfactory, as the claim was made to cover the balance outstanding loan amount.  However if the claim is to be processed under credit shield insurance policy, then the claim has to fulfil certain criteria.  Sec. 5 states that it must be due to accidental death or permanent disability of the insured person during the policy period.  Only then the company will make payment to the bank for the balance outstanding loan amount.  The accident or accidental has been defined under Sec. 5 as ‘sudden, unintended and fortuitous external and visible event’.  ‘Accident’ is defined in ‘Oxford’ Dictionary as unforeseen event that occurred by chance or accidental from natural or manmade forces on which an affected person has no control.  Death caused due to heart failure may be sudden, but it will not come under the purview of accident or accidental mentioned under the credit shield insurance policy.  The death should happen due to sudden, unforeseen, involuntary event and is caused by external and visible event.  The death in the instant case is not accidental death as envisaged under the policy as there is no external or visible or violent event which attributed for the cause of death.   Even though in the instant case the death was sudden, it cannot be termed as accidental.   Death due to heart failure is natural death and not accidental death.  Hence the benefit under credit shield insurance policy will not be available to the insured in the present case. 

10.  We are annoyed to note that natural death due to any disease is not covered under this policy.  We fail to understand why natural sudden death due to disease is not covered under credit shield policy and only accidental death is covered under credit shield policy, especially since there is special cover for “accident” under the policy.  Policy holders like Smt. Ushadevi are hoodwinked by the insurer and are induced to take the policy believing that their genuine claims will be honoured.  However we are bound by the well settled legal position that the policy is a contract between the parties and both parties are bound by terms of the contract. 

11.  In the light of the above, the District Forum has rightly found that the repudiation of the claim of the complainant by the 1^st respondent/1^st opposite party is correct and dismissed the complaint.  There is no infirmity or legal error in the order of the District Forum for this Commission to interfere with.    The appeal fails.

In the result, the appeal is dismissed.  Parties to suffer their respective costs. 

T.S.P. MOOSATH    : JUDICIAL MEMBER

RANJIT. R    : MEMBER

                                                                        K.R. RADHAKRISHNAN  : MEMBER

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