ORDER

BY SRI.H.R.SRINIVAS, PRESIDENT.

This is the Complaint filed by the Complainant U/S Section 12 of Consumer Protection Act 1986, against the Opposite Parties (herein referred in short as O.Ps) alleging the deficiency in service in not paying the insurance claim in respect of her husband late.Shiva Reddy and to adjust the said claim amount in respect of the loan obtained by him from OP1 and direct OP1 to return all the original documents given in respect of the loan obtained and also to issue No-due Certificate in that respect and for the compensation of Rs.1,00,000/- for causing mental agony, monitory loss and for the misdeeds committed by OPs and for other reliefs as the Commission deems fit.

2.      The brief facts of the complaint are that;

Complainant is the wife of one Mr.Shivareddy.  To meet the requirements and financial commitments husband of the complainant Shivareddy approached OP1 a non-banking financial company for a loan of Rs.8,50,000/-.  After completing the formalities and providing the documents and offering collateral security his site bearing NO.19A, property and Khata No.39/P5 of Halanayakanahalli Village, Varthur, OP1 disbursed the said amount of Rs.8,50,000/-.  OP2 is the sister concern of OP1 doing insurance business.  OP1 demanded the husband of the complainant to take life insurance with OP2 and accordingly he agreed for the same and obtained life insurance for the said amount by paying Rs.7,503/- as one time premium for the said insurance, termed as “Group Credit Protect Plus” with policy No.PP000060 vide membership No.OG33500 dated 01.08.2017 and the duration of the said policy period was from the date of sanction of loan till the clearance of the loan i.e., till  04.08.2022.  It is a tailor made policy for members to obtain loan and in the event of death disability or illness of the insurance member the same will protect the family from the burden of repaying the outstand loan granted by the financial institution.  

3.      As per the broucher issued by OP2 in respect of the policy issued it is mentioned that

1. A comprehensive benefit plan which offers financial protection in event of death, disability and critical illnesses.
2. Flexibility to choose plan options.  Option of decreasing and level cover.
3. Flexibility to choose loan cover term subject to a maximum of 30 years.
4. Just pay one time with single premium
5. Coverage available on single and joint life basis
6. A moratorium of 1 to 7 years wherein level cover is offered during the moratorium period
7. Member can opt for coverage term lesser than loan tenures
8. The bank offers to cover top-up loans through separate repayment schedule.

        In case of death of the insured, HDFC Life Group credit Protect Plus Insurance Plan covers the following benefits for the insured:

1. The sum assured stays at same level as at inception of the policy during the individual’s membership term.
2. Decreasing the sum assured decreases as per the repayment schedule selected by the member during the individual’s membership term.
3. Diagnose.

4.      It is further contended that on 20.09.2018 Shiva Reddy the husband of the complainant complained acute abdominal pain, loose tools and head ach.  He was taken to Manipal Hosptial on 24.09.2018 on the advice of the local doctors.  There he was diagnosed as having Jaundis.  He was given treatment for several days and he recovered from the same and discharged from the hospital and he continued to take medicines as per the doctor advise in the discharge summary.  Inspite of taking good care and medicine, his health did not improve and he was taken to Victoria Hospital on 08.10.2018 where his condition deteriorated and he stopped responding to the treatment and died on 23.10.2018.  Complainant made a claim after intimating the death of her husband to OP1 and 2.  On 28.02.2019 OP2 by informing through a letter rejected her claim on the ground that the “life assured was a chronic alcoholic from past five years” which is prior to issuance of the policy.  Husband of the complainant was not an alcoholic and he died due to jaundis, and failure of kidney functioning.  OP2 has not at all considered the hospital documents and come to the conclusion that he was an alcoholic and died due to the same, with an intention to deny the policy amount with a view to have the wrongful gain.  

5.      It is contended that she wrote a letter to OP2 seeking the entire documents of personal loan and the group credit protect plus insurance policy, which was not given to her.  She had to issue a legal notice to OP2 and after receiving the same, OP2 sent a reply stating that after review in respect of the claim by the review committee, there is no merit to revise the decision and hence stood by the decision of repudiation.  

6.      It is further contended that the complainant is an innocent lady and an uneducated person. She is also a cancer patient taking treatment. She is having children who are studying and not earning any money to the family.  Taking advantage of all these things, on flimsy grounds, OP 2 has repudiated the contract in order to make wrongful gain and also to knock of the immoveable property offered for security.  The act of OP2 amounts to unfair trade practice and deficiency in service which caused her mental harassment, mental agony and physical hardship, besides financial hardship. Hence the complaint.

7.      Upon the service of notice, OP1 and 2 appeared before the Commission and filed their separate version.  In the version filed by OP1, it is contended that the complaint is not maintainable either in law or on facts, lacks bonafide, liable to be dismissed.  It has admitted the sanctioning of the loan to the husband of the complainant and he executing the relevant documents and offering the property as collateral security.  It has denied that at its instance late Shivareddy obtained insurance policy from OP2.  Whereas, on his own, he obtained insurance policy from OP2 under plan “Group Credit Protect Plus” and admitted that a sum of Rs.7,503/- was deducted from his account towards paying the insurance policy premium.  It is not known whether the policy obtained by the husband of the complainant is a tailor made one, to cover the burden of loan in the event of his death or illness.  It is not within its knowledge regarding the terms and conditions of the policy and the benefits offered by OP2 in respect of the insurance obtained by the husband of the complainant.  It has also contended that the ailment of Shivareddy, admission to the hospital, not responding to the treatment and the death of Shivareddy was not within its knowledge.  It has admitted the intimation of the death of Shivareddy by complainant.  It is also not within its knowledge the reason for OP2 to repudiate the insurance claim.  It has denied all the allegations made against it in each and every para of the complaint and averred that the same is not within its knowledge. 

8.      It has further contended that the loan of Rs.8,50,000/- was granted to Shivareddy on his executing the loan agreement and offering the site as collateral security and further agreed to repay the said amount in 60 monthly installments of Rs.21,585/- starting from 04.09.2017 till 04.08.2022.  He is liable to pay the outstanding balance as per the loan agreement.  This complaint filed is only to harass the OPs to tarnish its reputation and image and hence prayed the forum to dismiss the complaint.

9.      OP2 by filing its version prayed the forum to dismiss the complaint on the ground that the complaint is filed without any basis, without any merits and complainant has deliberately suppressed the material facts. It has admitted that Shivareddy obtained policy from it and it is a matter of solicitation by informing the terms and conditions of the policy.  In the health details of the life to be assured Shivareddy has informed that he was not at all suffering from any diseases and also no doctors has attended the policy holder of any conditions, diseases or impairment other than the one mentioned in clause 1 to 6 of the proposal form.

10.    He has given a false information in the application form.  In fact Shivareddy was a chronic alcoholic for the last five years and was under medication for the liver problem which is evident from the documents of Manipal Hospital and Victoria Hospital.  The copies of the 2D real time abdominal sonological study conducted by Manipal Hospital and outpatient record of Institute of Nephrology along with the discharge/death summary reveals the same.  The claim of the complainant in respect of the death of her husband was referred to an independent agency to ascertain the facts and causes of the death and it was found that he was a chronic alcoholic for the last five years and diagnosed to have CLD in September 2018.  Based on the principle of atmost good faith and risk involved is ascertained on the basis of the information provided at the time of proposal form. He was suffering from liver disease at the time of issuing of the policy and the premium would have been calculated on the risk involved in selling the insurance policy to him. The policy holder was explained the terms and conditions and he agreed to avail the said policy upon the said terms and conditions and hence repudiation on the said grounds do not constitute the deficiency in service.  Complainant is not entitled for the claim made in respect of death of her husband. There is no cause of action for the complainant and the one made is false and baseless. There is no deficiency on its part and hence prayed the forum to dismiss the same.

11.    In order to prove the case, both the parties filed their affidavit evidence and produced documents. Arguments Heard. The following points arise for our consideration:-

1) Whether the complainant has proved deficiency in service on the part of the Opposite Parties?

2) Whether the complainant is entitled to the relief prayed for in the complaint?

12.   Our answers to the above points are:-

POINT NO.1:            In the Affirmative against OP2

POINT NO.2:            Partly in the affirmative against

OP2 for the following.

REASONS

13.   POINT No.1:-

   Perused the complaint, version, affidavit evidence and the documents produced by respective parties.  It is not in dispute that the husband of the complainant Shivareddy obtained loan to the extent of Rs.8,50,000/- from OP1 and offered his site as collateral security.  It is also not in dispute at the time of obtaining the loan husband of the complainant Mr.Shivareddy purchased insurance from OP2 under “Group Credit Protectplus scheme” for which the premium of Rs.7,503/- has been paid by OP1.  

14.   It is also not in dispute that the policy was from 01.08.2017 till the completion of 60 months from thereon.  It is also not in dispute that the husband of the complainant died on 23.10.2018.  It is also not in dispute that the complainant claim has been repudiated by OP2 on the ground that Shivareddy the husband of the complainant was a chronic alcoholic for the last five years.  Insurance Policy has also been filed. From the same it becomes clear that to cover the loan amount OP1 has obtained the insurance in the name of the loanee by paying Rs.7,503/- from the sanctioned loan amount.  It is a personnel loan and the repayment starts from 04.09.2017, with a monthly installment of Rs.21,585/-.  Repayment schedule is also produced.  The claim of the complainant was repudiated on the ground that, after investigation by them(insurance authority) it was established that the life assured was a chronic alcoholic five years prior to issue of policy and hence the claim was repudiated.  The sum assured in the policy was for Rs.8,50,000/-. 

15.   The only ground for repudiating the claim of the complainant is that the husband of the complainant was a chronic alcoholic for the last five years prior to issuing of the policy.  The base for which taking such a stand by OP2 is only the mentioning of the same by the institute of Nephrology in its outpatient record which is marked as R3, wherein it is mentioned as in the column examination chronic alcoholic X 5 years, abdominal distension 1½ months, lower limb swelling 1½ months, yellowish discoloration of eyes 1½ months etc., other than this, there is no mention of the complainant husband in the habit of consuming alcohol.  It is not made clear from the said document as to how the doctor in the Institute of Nephrology has come to the conclusion that he was a chronic alcoholic for the last five years. In Ex.R1 questions has been raised except regarding the alcohol.  If at all late Shivareddy was consuming alcohol prior to obtaining insurance, and if at all there was a question in that regard, he would have answered appropriately.  No such question has been posed to Shivareddy at the time of obtaining the insurance policy.  Hence OP2 was only intended in collecting premium rather collecting health details of the insured.

16.   Further this is not an health insurance policy, whereas the insurance was obtained by OP1 in order to cover the loan sanctioned to Shivareddy just to make doubly sure that it would not lose the money due to the death of the loanee and also probably the security offered as collateral may not fetch the amount equivalent to the loan amount disbursed along with interest.  Absolutely, there is no record placed before this forum to show other than Ex.R3 that the Shivareddy was a chronic alcohol consumer and that’s why his death has occurred.  No PM report has been produced to show that due to the chronic alcohol consumption his liver got damaged and death was due to the damage of the liver due to consumption of the alcohol from a long time. 

17.   There are many decisions to the effect that the insurance company has to prove on its own, independently the reasons for repudiating the claim of the complainant. Hence in this case as already mentioned there is no proof for OP2 to reject the claim of the complainant.  Hence we answer point No.1 in the affirmative against OP2 as OP1 has no role to play in either accepting or rejecting the claim of the complainant.

POINT NO.2:

18.   In view of our answers to Point No.1 as affirmative, the sum assured in the policy is for Rs.8,50,000/-, the complainant is bound to get the said amount of Rs8,50,000/- along with interest at 12% p.a., and to pay the outstanding loan amount with accrued interest to OP1, for which purpose, the insurance was obtained by Shivareddy. Due to the act of OP2 in repudiating the claim of the complainant, complainant was put to lot of hardship, mental agony and stress and strain, for which OP2 has to compensate by paying a sum of Rs.50,000/- as damages and Rs.10,000/- towards litigation expenses as she was forced to file this complaint by engaging advocate by paying him his professional fee as well as incurring expenses in conducting the case before this forum and also by incurring incidental and other expenses. Hence we answer point NO.2 partly in the affirmative and pass the following;

ORDER

1. Complaint is allowed in part with cost against OP2 only and the complaint against OP1 is dismissed.
2. OP2 is directed to pay a sum of Rs.8,50,000/- along with interest at 12% p.a., from the date of death of Shivareddy the husband of the complainant i.e., from 23.10.2018 till the payment of the entire amount.
3. The amount is to be paid to OP1 by OP2 and OP1 to appropriate the said amount towards the loan outstanding with accrued interest as on the date of the last payment made by either the complainant or the husband of the complainant to OP1 and in case if any amount is remaining the same has to be return to the complainant along with property documents and clearance/balance nil certificate.
4. Further OP2 is directed to pay a sum of R.50,000/- to the complainant towards damages and Rs.10,000/- towards litigation expenses.
5. The OP2 is further directed comply the above order within 30 days from the date of receipt of this order and submit the compliance report to this forum within 15 days thereafter.
6. Send a copy of this order to both parties free of cost.

Note:You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Forum on this 16^TH DAY OF APRIL 2021)

MEMBER                                PRESIDENT

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1: Copy of the Statement of loan

Ex P2: Copy of the letter issued by the 1^st OP Bank in favour of deceased Shiva Reddy

Ex. P3: Copy of the letter written by 2^nd OP Bank to the complainant

Ex P4: Copy of the Death Certificate of Shivareddy

Ex P5: Copies of Hospital records of Manipal Hospital

Es P6: Copy of the patient discharge details.

Ex P7: Copy of the Death summary issued by Victoria Hospital

Ex P8: Copy of the letter addressed to OP No.1 dated 30.03.2019

Ex P9: Copy of the claim review letter addressed to OP2 dated 12.04.2019

Ex P10: Copy of the death claim reconsideration letter dated 30.05.2019

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1: Mr.Vinay Prakash – OP1 and 2

Copies of Documents produced on behalf of Opposite Party/s

Ex R1: Copy of the proposal form duly signed by the complainant’s husband

Ex R2: Copy of the abdominal sinology report issued by the Manipal Hospital

Ex R3: Copy of the OP record issued by Nepro Neurology Institute, Victoria Hospital.

Ex R4: Copy of the death summary of Shiva Reddy

Ex R5: Copy of the Investigation Report.

MEMBER                                        PRESIDENT