D.O.F. 01.03.2011

                                        D.O.O.16.05.2012

IN THE CONSUMER DISPUTES REDRESSAL FORUM KANNUR

       Present:   Sri. K.Gopalan                 :    President

             Smt. K.P.Preethakumari  :     Member

             Smt. M.D.Jessy                :     Member

Dated this the 16^th   day of  May  2012

C.C.No.77/2011

1. Mrs.Beena Vijaya Kumar,

W/o/Lae Vijayakuymar.

2. Naveen Vijaya Kumar,

S/o.Late Vijayakumar.

3. Vineetha Shyam,

D/o/Late T.Vijayakumar

“Sreedevi’,

Pappinissery West,

 Kannur 670 562

(Through PAH Complainant No1)

4. Padmini,

“Padmalaytam”,

Koovapuram,

Cherukunnu P.O.                                     Complainant

         (Rep. by  Adv.E.Sheeba) 

1. Manager,

    State Bank of India,

    Kannur Main Branch,

    Fort Road, Kannur 1.

    (Rep. by Adv.T.Ravindran)

2. The  Manager,

    SBI Life Insurance  Co.Ltd.,

    Thiruvananthapuram.

    Bajaj Allianz Life Insurane Co. Ltd.

    Kannur.                                                            Opposite parties

    (Rep. by Adv.C.K.Rathnakaran)  

O R D E R

Sri.K.Gopalan, President

          This is a complaint filed under Section 12 of Consumer Protection Act for an order directing the opposite parties to effect the cessations of the loan liability of T.Vijayakumar and complainant No.1 with effect from 30.12.10, the date of death of T.Vijayakumar and an amount of `5,000 as compensation together with cost.

          The case of the complainant in brief is as follows: The Complainant No.1 and her husband (deceased) availed of a housing loan from1st opposite party and opted to became member of the scheme SBI life which covers the out standing house loan.  They have completed all the procedures and fulfilled all the terms as required by the opposite parties. Relevant medical documents and treatment records of the complainant and the deceased were sent to 1^st opposite party. They were subjected to such medical examination arranged by the SBI life which was the name of the said scheme. Before 30.9.2005 all the procedures and formalities were completed by complaint No.1 and the said deceased. As such they are entitled for the benefit of the scheme SBI life. At the time of death of complainant’s husband the out standing loan was approximately 5 lakh. Since the aforesaid scheme of SBI life stood applicable in this case, the entire liability of the aforesaid total outstanding dues towards the said housing loan is to be assumed for repayment of the said SBI life scheme as intimated by the 1^st opposite party by their letter. The legal notice sent by the complainant was not responded by opposite party in any manner. Hence this complaint.

 Pursuant to the notice opposite parties made appearance and filed version separately. The brief contents of the version filed by opposite party is as follows: The second opposite party had floated the super  suraksha Group Insurance scheme for the benefit of the housing loan borrowers on payment of the applicable premium amount determined by the 2^nd opposite party including medical  tests. The working of the scheme and its terms and conditions are contained in the House Loan Insurance Master policy issued by the 2^nd opposite party. As per the said terms and conditions, in the event of death of the borrower at any time during the tenure of the loan the 2^nd opposite party will assume the labiality towards the repayment of the outstanding loan. For a housing loan amount exceeding 7.5 lakhs the borrower is required to sign a common health questionnaire and to undergo medical examination. The final premium amount payable is fixed thereafter and the same is payable to 2^nd opposite party. Every borrower insured under the scheme a premium receipt-cum-certificate of Insurance indicating the extent of Insurance cover, period of cover and the other terms and conditions of the scheme. The complainant and her husband T.Vijayakumar opted to become member of the scheme. As per the instruction of 2^nd opposite party they paid `35,381 and `8470 respectively towards premium amount with their consent letters to the 2^nd opposite party. After the medical test as stipulated in the scheme 2^nd opposite party fixed `46,051 as the total one time premium payable by vijaykumar and therefore 2<sup>nd</sup> opposite party through their letter dt.29.9.05 asked VijayaKumar to pay the balance premium amount of `10,670.As Vijayakumar failed to remit the balance premium amount 2^nd opposite party refunded the amount of `35,381 already paid by him towards the premium amount by DD No.360587 dt.12.1.2006.

1^st complainant’s proposal to become the member of the scheme as the co-borrower of the housing loan after her medical examination, the 2^nd opposite party found her medically unfit and hence her proposal was postponed on medical ground for 6 months and she was asked to submit fresh proposal along with fresh medical report and the amount of 8,470 paid by her towards premium was refunded to her by 2^nd opposite party by DD.346444 dt.8.12.2005 through this opposite party. But the 1^st complainant filed to resubmit fresh proposal as required by 2^nd opposite party.   Vijayakumar and complainant No.1 were not members of the Life insurance scheme since the premium was refunded to them more than 5 years ago.  The complainants have deliberately suppressed these material facts. They have not come with clean hands. Premium receipt-cum –certificate of Insurance was not issued to complainant. The outstanding housing loan liability does not get extinguished on the death of Vijaykumar. The complainants are jointly and severally liable to settle the liability. There is no deficiency in service on the part of this opposite party. Hence to dismiss the complaint.

Opposite party has taken the following contentions though their version filed separately. The SBI Life Insurance company Ltd. is a registered company carrying on insurance business. 2^nd opposite Party has issued a master policy infavour of SBI covering their existing or new home loan borrowers vide master policy No.83001000203. The crux of the complaint is against the 1^st opposite party, SBI. 2^nd opposite party is not liable for any alleged default on the part of the 1^st opposite party. Opposite parties are separate and different legal entities. 2^nd opposite party has issued such a master policy in favour of State Bank of India covering their existing or new home loan borrowers vide Master policy No.83001000203. On assessment of medical reports, an extra premium of `10,670 was charged and a letter requesting to remit the extra premium was sent to the Master policy holder vide letter 29.9.2005.The 2^nd opposite party has no privity to what has been  transpired between Sri.Vijaykumar/ compliant  and 1^st   opposite party. A mere deposit of amount does not automatically result in to policy. Depending on the sum assured and age, specific reports etc. would be called for and after the insurer is fully satisfied, the proposal is converted into a policy and the risk cover beings from the date of such  conversion. Till such time the amount lying in the proposal deposit remains as it is and it cannot be deemed to be a premium till the decision to accept the risk under the proposal is taken. As the proposal was pending for shortage of premium and the same was not submitted by the proposal, the proposal deposit was refunded on 16.1.2006 during the life time of Vijayakumar. Thus there was no concluded contract and thereby no contractual obligation. The proposer had never raised any issue about the non acceptance of the risk. The proposer was well aware that there was no insurance cover on his life because the initial deposit was refunded during his life time. The letter with DD towards refund was sent to the Master policy holder as the privity of contract is between the 1^st opposite party and the 2^nd opposite party. It is refunded during the life time of Sri.Vijaya Kumar. There is no liability on the part of the opposite party to settle the claim as there was no contract between Sri.Vijayakumar and the 2^nd opposite party. Hence to dismiss the complaint.

On the above pleadings the following issues have been taken for consideration.

1. Whether there is any deficiency on the part of opposite

     Parties? If so who is liable?

2. Whether the complainant is entitled for the remedy as

    prayed in the complaint?

3. Relief and cost.

The evidence consists of the oral testimony of PW1 and Exts.A1 to A6 marked on the side of complainant. Opposite parties 1 and 2 had no oral evidence but documentary evidence Exts.B1 to B9 marked on the side of opposite party.

Issue Nos.1 to 3

          Admittedly the complainant and her husband Sri.Vijaykumar had jointly applied for Group Loan Home Loan insurance cover under Master policy No.83001000203 along with a payment of `43,851 which was received on 5.9.2005.

          The case of the complainant is that the complainant and her deceased husband completed all procedures and formalities of insurance cover and thus the complainants being the legal heirs of the deceased Vijayakumar are entitled to get the benefit of the scheme.

          On the other hand opposite parties contended that complainant is not entitled for the benefit of the scheme since the proposal was pending for shortage of premium and finally proposal deposited was refunded during the life time of the Vijaykumar itself. 1^st opposite party also contended that as per the terms and conditions of the Master policy, incase of any claim arising out of the scheme, 2^nd opposite party as the insurer, alone is liable to settle  such claim. 1^st Opposite party further contended that the 1^st complainant is fully aware that the initial amount paid by her and Vijayakumar towards the premium was refunded to them by 2^nd opposite party.

          2^nd opposite party on the other hand contended that the 2^nd opposite party is not liable for any act or omission on the part of the 1^st opposite party and vice versa 2^nd opposite party has issued a Master policy infavour of state Bank of India covering the exiting or new home loan borrowers vide Master policy No.83001000203. On assessment of medical reports, an extra premium of `10,630 was charged and a letter requesting to remit the extra premium was sent to the Master policy holder vide letter 29.9.2005. But extra premium was not paid and as a result the proposal does not result into a policy as the proposal was pending for shortage of premium. The proposal deposit was refunded by means of DD (DD.No.3605897 at 12.1.2006 + DD No.346444 dated 8.12.2005) sent to the Master policy holder as privity of contract is between the opposite parties 1 and 2. Hence in the instant case the contract was never concluded.

          Complainant filed chief affidavit in tune with the pleadings. She has adduced evidence that opposite parties were introduced a new scheme by Ext.A1. Ext.A1 goes to show that 1^st opposite party, SBI wish to bring to the notice of Vijay Kumar a new facility in the form of life Insurance cover that SBI has arranged to bring for the benefit of its housing loan borrowers with hope that he and complainant would like to avail the facility.Ext.A1 4^th Para specifically informed that to avail the benefits they just need to complete a consent letter. The 5^th Para of Ext.A1 informs that SBI life requires a lump sum premium to be paid to cover them for the entire remaining tenure of the loan. It is also informed to give them a call to let them know the amount of premium payable based on the outstanding loan amount and their age. In case of need they would consider to provide an additional loan amount to meet the premium. Complainants’ adduced evidence that she and her husband completed all the formalities as per Ext.A1 and the scheme became applicable to them. PW1 further states by means of affidavit evidence that the documents as per Ext.A1 regarding health condition, details of ailments and treatment records and Medical documents were produced before the 1^st opposite party. Complainant further adduce evidence that  after submitting the medical  records SBI Life itself arranged for prescribed medical examination. Thus including medical examination all the entire formalities as per direction completed on 30.9.2005 by the complainant and her husband. Ext.B1 & B2 reveals that separate consent-cum-Good Health Declarations dated 18.8.2005 expressed their willingness to become a member of he insurance had been submitted before 2^nd opposite pary.1^st opposit party adduced evidence by way of chief affidavit that 1^st opposite party had on 23.8.2005 paid `61,923 to the opposite party No.2 through the single premium loan account maintained by 1<sup>st</sup> opposite party in the joint names of Vijaya kumr and 1<sup>st</sup> complainant. It is also stated that out of the said payment, later on 2<sup>nd</sup> opposite party adjusted `35,381 and `8,470 as estimated premium payable by Vijay Kumar and 1<sup>st</sup>  complainant respectively and refunded a sum of  `18,072 to them by DD and the said sum was credited in their single premium loan account on  1.9.2005. 1^st opposite party also adduced evidence that after completion of medical examination of Vijaya kuamr and 1st complainant,2^nd opposite party rejected the proposal of 1^st complainant as she was medically found unfit and  hence her proposal was postponed on medical ground for 6 months and she was asked  to submit fresh proposal along with fresh medical reports and the amount of  `8,470 paid by her towards premium was refunded to her by 2^nd opposite party by DD dated 8.12.2005 and the said amount was  credited in the joint housing loan account on 2.1.2006. The 1^st complainant thereafter failed to submit fresh proposal as required by 2^nd opposite party. Thus no insurance cover on the life of the 1^st complainant existed.

          It can be seen non existence of insurance cover on the life of 1^st  complaint has been alleged to be suppressed by the complainant. No complaint raised with respect to rejection of her life cover or regarding adjustment of premium amount and all whatever may be rejection of cover and adjustment of amount is within the knowledge of complainant or not is a question that has to be examined further.

          Opposite party mainly contended that the final premium amount would be fixed only after completion of the medical examination of both the 1^st complainant and Vijaya kumar. 1^st  opposite party adduced  evidence  by affidavit evidence that after medical test 2^nd opposite party fixed  `46,051 as the total one time premium payable by Vijaya kumar and therefore, 2<sup>nd</sup> opposite party through their letter dated  29.9.2005 with a copy to Vijaya Kumar asked 1<sup>st</sup> opposite party  to pay  the balance premium amount of  `10,670. Vijaya kumar failed to arrange or remit the balance amount either to this opposite party or to 2^nd opposite party and thereby his proposal was rejected by 2^nd opposite party and initial premium amount of `35,38 paid by him was refunded to him and the said amount was credited in his account on 31.3.2006. It is pertinent to note that even a remind letter has not been sent to complainant before refunding the initial premium. If complainant was expected to take initial initiative the letter showing the liability naturally expected to be sent to Vijayakumar and the copy to be forwarded to 1^st opposite party. However, the content of letter never told complainant, that it is he who has to pay the amount. No such information by any source sent to complainant.

          1^st opposite party contended that the husband of the complainant Vijaya Kumar was well aware of the fact that there was balance premium amount to be paid to 2^nd opposite party. Ext.A2 is the copy of letter dated 29.9.05 sent by 2^nd opposite party. It contained information with reference to Vijay Kumar wherein it was informed that the borrower can be admitted under the group Insurance Scheme for housing Loan Borrowers by paying a premium of `46051 inclusive of EMI extra. It was also informed that since they have already received `35,381 towards premium from the branch of 1^st opposite party it was asked to remit the balance amount of `10,670 by 1<sup>st</sup> opposite party. Neither 1<sup>st</sup> opposite party nor 2<sup>nd</sup> opposite party informed Vijayakumar directly to remit the balance amount of `10,670 to 2^nd opposite party. Vijayakumar received Ext.A2 which is only a copy of the letter and it was 1^st opposite party who was asked to remit the amount. 1^st opposite party is not asked to inform Vijaykumar or to collect the amount from him in order to make payment. 1^st opposite party did not send any amount from him in order to make payment. 1^st opposite party did not send any communication to the insured Vijaykumar with respect to the payment.

          The allegation of the complaint is that all the procedures and formalities were completed by complainant and VijayaKumar before 30.9.2005. It s a fact that Ext.A2 dated 29.9.2005 received by them. That was a letter with reference VijayaKumar for admission under the Group Insurance Scheme with request to remit the balance amount of `10,670 within 15 days by 1<sup>st</sup> opposite party. Complainant in her affidavit evidence stated that “  H¶mT FXr-I£n sam¯T AS-t¡­ kT-J-y-bpT H¶mT FXr-I£n bYmÀ°-¯n-e-S-¨n-«p-ff kT-J-y-bpT AS-¡m³ _m¡nsh¨ kT-J-y-bpT IqSn tcJ-s¸-Sp-¯n-bn-«p-­v. B _m¡n kT-Jy-bpT  H¶mT FXr-I-£n-Xs¶ AS-t¡-­-XpT R§Ä¡v B B\p-Iq-e-yT e`n-t¡-­-XpT BWv. ta {]Im-c-ap-ff bmsXmcp hn[ kT-J-y-bpT acn-¨p-t]mb hnP-b-Ip-am-tdm, Rmt\m -a-äp-f-f-htcm AS-¡-W-sa¶v Ext.A2hn  ]d-ªn-«n-Ã. thtd t\m«otÊm It¯m AXp kT-_-Ôn¨v hnP-b-Ip-am-dn-t\m- ]-cm-Xn-¡mÀt¡m e`n-¨n-«p-anà .” It is also stated that Ext.A2 is only a copy of the letter sent to 1<sup>st</sup> opposite party. Complainant also pointed out that the premium that was paid earlier by 1<sup>st</sup> opposite party was drawn out of the additional loan `61923 allowed to them. 1^st  opposite party in their chief affidavit admitted that they had on 23.8.2005 paid `61,923 to the 2<sup>nd</sup> opposite party and  out of the said payment 2<sup>nd</sup> opposite party adjusted  `35,381 and `8470 as estimated premium payable by Vijay Kumar and first complaint respectively. 1<sup>st</sup> opposite party has the case that the balance amount `18072 refunded to them by DD and the said sum was credited in their single premium loan account on 1.9.2005. Opposite party produced Ext.B3 and 4 to prove the same. Here arose a question whether or not any information passed on to complaint or Vijayakumar with respect to the payment of amount to 2^nd opposite party and refund by DD and its remittance? It can be seen that the DD is sent to 1^st opposit party and not to VijayaKumar 1^st opposite party or 2^nd opposite party has no case that DD is sent to VijayaKumar but it was in the name of Vijayakuar. Hence it can be seen that the DD in the name of Vijay Kumar without any information to Vijay Kumar sent to 1^st opposite party and 1^st opposite party credited the same in the account of Vijay Kumar without giving any information to him.

          Under the above said circumstances Ext.A2 will only create impression the said amount will be paid and accounted by 1^st opposite party. If 1^st opposite party expected that it should be done by complainant, 1^st opposite party should have been taken measures to make them aware that they have to pay the amount. It is 1^st opposite party who has credited the balance loan amount and they are aware that such mount is there. So if the payment is not made that is not because there is no money but because of the   absence of proper communication alone. It has to be taken into account that opposite party did not even inform the complainant or Vijaya kumar about the balance loan amount and   it was being credited in his account.  The amount to be paid is less than the loan amount sanctioned for payment of premium. The very purpose for which the addition loan of `61,923 was sanctioned was to pay the premium alone and not for any other purpose. If it is to be paid by part it is the bounden duty of 1^st  opposite party to make such arrangements. If a loan is sanctioned for a specific purpose that amount is expected to utilize only for that purpose. Bank has the duty to check whether the amount sanctioned by them for a particular purpose had been utilized for the very same purpose or not. Complaint has not taken the amount and left away. It is 1^st opposite party who has paid the initial premium amount to 2^nd opposite party and credited the balance amount. There is no document to show that anything of that sort had been communicated to complaint or Vijaykumar. So there is nothing wrong if they were under the impression that 1^st opposite party would make arrangement for payment of premium balance. That is the truth the complainant and Vijayakumar had been probably under the impression that it is 1^st opposite party who had to make arrangements for concerned payment, since they had the experience of earlier payment in such a way on the basis of the authority that they have given to 1^st opposite party. It is the bounden duty of the 1^st opposite party to intimate them what all they have done with the loan amount i.e. payment of amount and crediting the balance etc. No such communication sent by 1^st opposite party to complainant or Vijaykumar. In the cross examination PW1 deposed that “ Bank  t]mb-t¸mÄ Bank BWv AS-t¡-­-sX-¶p-T- A-hÀ- AS¨psIm-f-fp-sa-¶pT ]d-ªn-cp-¶p.”.  There is no wonder if the complaint and Vijayakumar was under the impression that it was the bank that has to make arrangements for the payment 2^nd opposite party asked 1^st opposite party to pay the amount. The copy of the letter merely marked in favour of Vijayakumar. There was no indication to take any initiative otherwise. 1^st opposite party also did not sent any communication to them regarding payment or of consent or complying any sort of formalities.

          At this juncture it is also warranted to examine what was being done by 1^st opposite party after getting Ext.A2. Ext.A2 evidently directed 1^st opposite party to remit the balance amount. The person to whom Ext.A2 was address is seen kept silence through out without any sort of initiative and now contended that Mr.Vijaykumar to whom the copy of the letter to 1^st opposite party sent was expected  to remit the amount. Here arose certain questions what was really done by 1st opposite party after getting Ext.A2 from 2^nd opposite party. What was done by them in order to protect the consumer safeguarding his interest from the consequence of possible loss? Whether 1st opposite party sent any communication asking Vijayakumar to make payment of any amount towards the balance premium. When did and how did Mr. Vijaya Kumar and complainant made known that they were liable to pay the balance premium? 2^nd opposite party took the contention that they have direction with 1st opposite party and not with Vijaya Kumar or complainant. It has to be taken in to account, even the DD in the name of Vijaya kumar was sent to 1^st opposite party and 1^st opposite party without any communication to Vijaya kumar credited the amount to him. It is not possible to say those things were within the direct knowledge of Vijaya Kumar and complaint. There is no evidence to that effect. 1^st opposite party has the liberty to communicate such transaction to the account holders. Whenever there arose a possibility of loss and liability it is the bounden duty of the 1^st opposite party to communicate the same to the concerned party, since he is the master holder of the policy.

More over PW1 in the cross examination answer to a direct question that “ Bank  t]mb-t¸mÄ Bank BWv AS-t¡-­-sX-¶p-T- A-hÀ- AS¨psIm-f-fp-sa-¶pT ]d-ªn-cp-¶p.”.There is no need to disbelieve the complainant. That is what is quite possible in the ordinary course of dealings which is being brought out in cross examination. In the final analysis the entirety of the available evidence and the existing circumstances evidently reveals that 1^st opposite party, to whom the letter/Ext.A2 asking particularly to remit the balance amount towards premium but kept silence ignoring the consequential loss to the customer definitely, committed the offence of deficiency in service The silence on the part of  1^st opposite party is undoubtedly the  ultimate cause of loss of benefit of the scheme under the above said policy. It is quite wonderful to see that 1^st posit party has not explained whether they have sent any reply to Ext.A2 to 2^nd opposite party. If so, what is the content of that letter? The real truth should have been reflected therein. If a letter is sent by 2^nd opposite party to 1^st  opposite party regarding the policy they are bound to give an answer.  If it was not replied that is also a part of deficiency. If it is sent, whatever may be the content with respect to the liability of remitting the amount, 1^st opposite party should have been stated that they had sent such and such reply unveiling their leading role in the transaction. If no reply was sent that is quite unjustifiable departing from the legal liability whereby concerned parties turned adrift.  It is not the lack of money but the proper communication gap on the part of 1^st opposite party discarding the leading role that caused to knock down the affairs. PW1 adduced evidence that they have entreated to adjust the entire additional loan amount `61923 with 1<sup>st</sup> opposite party for the purpose of remitting the amount towards premium. If that amount is not fully remitted it has to be informed to party then and there. PW1 adduced evidence that “ Ext.A1 proposal  form BWv. B form insurancesâ conditions ]d-ªn-¡p­v. Group Insurance F{X premiumAS-¡-WT F¶p ]d-ªXp 1<sup>st</sup> opposite party BWv. AXv Ext.A1sâ paragraph 5 ]dªn«p­v . Single premium amount `61923 cq]-bmWv.B ss]k additional  loan FSp-¯m aXn-sb¶v 1^st opposite party/Bank BWv ]d-ª-Xv.B amount F\n-¡pT `À¯m-hn-\p-T-Iq-Sn-bp-f-f-Xm-Wv.B amount apgp-h³ insurancet#se¡v AS-¡m³ H¸o«v sImSp-¯n-cp-¶p.-B-Xp-I -A-S-¨nà F¶p `À¯mhv can-¨-Xn-\p-ti-jT _m¦n t]mb-t¸m-gmWv And-bp-¶-Xp. Fs¶ Insurance te¡v DÄs¸-Sp-¯n-bn#nà F¶p AcpT F\n¡v letter Ab-¨n-«n-Ã. B hnh-cT And-bp-sa-¦n H¶p-IqSn AS.-¡p-hm³ {ian-¡p-am-bn-cp¶p”. 1^st  opposite party has no case that information regarding the non-payment and details of transaction with regard to payment of premium had been communicated to complainant or Vijaya kumar in time. Opposite parties 1 and 2 did not enter in witness box in order to adduce evidnce.Ext.B1 to B9 documents marked on the side of the opposite parties. Ext.B1 and B2 are SBI life Group Insurance scheme-Housing Loan protection consent-cum-authorization-cum-Good Health Declaration. These documents reveals that request had been made to 1^st opposite party to provide a loan amount of `61923 towards the single premium amount for the Insurance cover, at the same interest rate as applicable to the Housing loan and to disburse the amount to SBI Life Insurance co. Ltd. direct towards providing the cover as per the terms and conditions of the scheme. There was also an undertaking to repay the above loan amount in 120  EMIs along with EMIs  under the Housing loan. So the consent   cum authorization letter makes it clear that well settle arrangements have been made to remit the premium. The 1^st  opposite party is authorized to pay the same and there is also undertaking on the part of Vijaya kumar and  complainant to repay the amount with interest. Since the entrustment is for a specific purpose of remitting premium amount any deviation from the same, amounts to deficiency in service liable to meet the consequences. Ext.B3 and B4 statement of account shows the amount credited but no document produced or contended that the same has been intimated to the customers. It is also a question whether consent obtained from them to credit the amount in such a way. Whether there was any such direction or authorization by Vijaya Kumar or the complainant to credit the amount as done by 1^st opposite party. How did 1^st opposite party made known to Vijaya Kumar  and complainant the balance amount separately credited and it makes  liability on them to remit the premium  balance in  future by themselves. The mode of operation with the transaction by 1^st opposite party undoubtedly put the insured ignorant of entire dealings of his payment of premium for which 1^st opposite party alone is liable and any leniency towards 1^st opposite party with respect to this type of dealing would be a violation of natural justice.

          Opposite party relied on the case Life Insurance Corporation of India Vs. Rajbir Kaur & Ors. This is a case wherein Life Insurance Corporation is found to be free from liability since there was no concluded contract. The facts of the case in hand are much different from the above sited case. The main question that has to be discussed in the present case is not whether concluded contract is existing or not but whose act or omission happened to be caused for the non existence of contract. The act or omission on the part of complainant cannot be considered as reasons that caused for non existence of contract in the case in hand. The facts and circumstances of the case revealed that the negligence or omission on the part of  2^nd opposite party to pay the amount or to make arrangements to pay the  amount happened to be the cause of non existence of the insurance. The insurance company communicated 2nd opposite party to pay the amount. It was the copy of letter which the original sent by the insurance company to opposite party to pay amount had been sent to complainant for only information sake. Insurance company had not asked complainant to pay the amount. 2^nd opposite party did not sent any communications to complainant in respect of payment of balance amount. Complainant had not been directly asked neither by 1^st opposite party nor by 2^nd opposite party to pay the balance. Since the entire control with respect to the transaction of subject matter lies with 2nd opposite party there is legal obligation on the part of them to make assure that the balance amount is paid. 2^nd opposite party cannot sleep over the legal right of the complainant. Complainant adduced evidence that they went and met bank making enquiry about the payment and the 2^nd opposite party promised that everything would be done by bank. Why Insurance Company communicated 2nd opposite party to pay the amount if 2^nd opposite party has no liability to pay the amount. What is the purpose of sending that letter? Ext.A2  asked 2^nd opposite party to pay the amount. Why Insurance Company did not directly ask complainant to pay the amount? That only reveals that it is the liability of 2^nd opposite party to make arrangements to pay the amount. It is pertinent to note that this is a case wherein the entire premium amount liable to be paid by the complainant was specially arranged by raising a  separate loan which was practically dealt with  the Bank in its full sense. Under such a situation bank should have been cautions enough to make it assure that the balance amount is paid on the basis of Ext.A2. Thus the point arises for consideration in the above cited case and the present case is basically different and hence not applicable to this case. In the same manner the case Life Insurance Corporation of India Vs. Raja Vasireddly Komalavalli Kamba and others also is not applicable to this case. At the same time these principles laid down in those cases if raised by 2^nd opposite party there would have been substance in it. It is true that there is no concluded contract as far as Insurance Company and complainant is concerned. Herein, it is the 1^st  opposite party bank found to be responsible. That part of the omission and negligence on the part of 1^st opposite party resulted in non conclusion of contract, which created liability to 2^nd opposite party out of the loss sustained by the complainant.

In the light of the above discussion we have no hesitation to hold that there is negligence on the part of 1^st opposite party that resulted in loss of benefit of Insurance Scheme. Since there is no concluded policy with  2^nd opposite party they are exonerated from the liability 1^st opposite party is thus liable to compensate the loss of benefit of insurance scheme by effecting cessation of the loan liability of Sri.T.Vijaykumar and complainant No.1. The issues 1 to 3 are answered in favour of complainants. Order passed accordingly. 

          In the result, the complaint is allowed directing the 1^st opposite party to effect cessation of the House loan liability of Sri.T.Vijaykumar and the complainant No.1 to compensate the loss sustained from repudiating the claim for the benefit of the Insurance Scheme, with effect from 30.12.2010, the date of death of Sri.Vijay Kumar. The 1^st opposite party is also directed to pay `2000(Rupees Two thousand only) as cost and comply the order within one month from the date of receipt of this order, failing which the complainant is at liberty to execute the order as per the provisions of consumer protection Act.

                      Sd/-                         Sd/-                 Sd/-                   

President              Member                Member

APPENDIX

Exhibits for the Complainant

A1.Letter dt.9.8.05 sent by  the  1^st OP

A2.Letter dt.29.9.05 sent by  2^nd OP

A3. Copy of the lawyer notice sent to OP dt.24.1.11

 A4.Postal AD

 A5.Family Membership Certificate issued from Pappinissery Village

      Officer dt.23.12.10.

A6.Power of Attorney

A7. Pass books issued by 1^st OP

Exhibits for the opposite parties

B1& B2.Consent  cum authorization letter dt.18.8.2005 submitted by

             Vijayakumar and 1st complainant

B3.&B4.Copy of the statement of transaction with 1^st OP by

             complainant & her husband

B5. Copy of the details of the Insurance scheme

B6. Attested copy of the letter through which the deposit was

       refunded dt. 16.1.06.

B7. Copy of the master policy

B8. Copy of proposal form

B9.Copy of the medical examination report

Witness examined for the complainant

PW1. 1^st complainant

Witness examined for the opposite parties: Nil

                                                  / forwarded by order/

                                                                                                                                           Senior Superintendent