Date of Filing :24.02.2011
Date of Disposal:07.07.2021
BEFORE THE KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH)
DATED:07th JULY 2021
PRESENT
Mr KRISHNAMURTHY B SANGANNANAVAR: JUDICIAL MEMBER
Mrs DIVYASHREE M: LADY MEMBER
COMPLAINT No.35/2011
1. Miss.Rubina Khatun A Mody
Aged about 23 years,
D/o. Late Akbarali Fatehali Mody,
Managing Partner of
M/s.Sabeel Enterprises.
2. Mrs. Zainab Akbarali Mody,
Major,
W/o Late Akbarali Fatehali Mody.
3. Mr.Azeem Mohammed A Mody
Son of Late Akbarali Fatehali Mody
Being minor, rep.by Mother,
Mrs.Zainab Akbarali Modi,
All are Presently at No.60 & 61,
S.J.P.Road,
Bangalore-560002.
(By Mr. C K Anice ) Complainants
-Versus-
- M/s.Kotak Mahindra Bank Ltd.
No.36-38A,Nariman Bhavan,
No.227, Nariman Point,
Mumbai-400021,
Rep.by its Managing Director/Chairman,
2. M/s .Kotak Mahindra Old Mutual
Life Insurance Ltd.
Registered Office at 9th Floor,
Godrej Coliseum, Behind Everard Nagar,
Sion(East),Mumbai-400022.
rep by its Managing Director/Chairman.
3. The Manager
Kotak Mahindra Bank Ltd,
No.10/7, Umiya Landmark,
Lavelle Road,
Next to Chancery Hotel,
Bangalore-01.
(By M/s Fx & Co. & R.H ) Opposite Parties
-:O R D E R :-
Mr.KRISHNAMURTHY B SANGANNANAVAR: JUDICIAL MEMBER
1. This is a complaint filed under section 17 of Consumer Protection Act, 1986 with a prayer to pay Rs.28 lakhs along with interest @ 18% per annum, grant compensation of Rs.4,15,500/- for the loss of payment of higher instalments at Rs.83,104/- per month from September 2010 until date, Rs.2 lakhs as compensation for mental agony and Rs.83,104/- per month for recurring loss for the deduction of increased amounts from the account of firm from the date of complaint till OP rectify the inaction.
2. The brief facts of the case of the complainant: That they are the legal heirs of late Akbarali Fatehali Mody, who was Managing Partner of M/s Sabeel Enterprises, availed financial facility from First OP through its Branch at M.G.Rod, Bengaluru, to an extent of of Rs.20,00,000/- on execution of loan agreement dated 24.07.2009 and availed another loan of Rs.1,00,72,420/- under coverage of Life Insurance from Second OP for Akbarali Fetehali Mody, the partner of M/s Sabeel Enterprises to protect the home loan liability availed by him. The insurance premium amount of Rs.65,631/- along with charge of Rs.6,760/- was promptly collected by the Second OP and they have issued to that effect an Insurance Certificate on 17.09.2009 with schedule of claim amount to be paid in the event of death of insured person. The policy certificate issued by the OP to the borrower member after evaluation of the health and age of the insured. The Insurance certificate is dated 17.09.2009, while Mr. Akbarali Fatehali Mody died on 10.04.2010 due to Liver Cirrhosis caused by Jaundice. They approached OPs with all reports, the OPs on proper verification of witnesses and other reports issued by the Doctors, treated the deceased have considered the policy claim and adjusted the claim amount of Rs.28 lakhs from the total loan liability. Accordingly, the claim amount of Rs.28 lakhs adjusted towards the total loan liability and the OP issued another fresh sanction letter dated 30.08.2010, through the OPs Branch at Banashankari, Bengaluru to enable them to pay revised EMI of Rs.1,27,835/- on the revised loan amount of Rs.80 lakhs, which is calculated after deduction of claim amount. The legal heirs of deceased being the Partners of M/s Sabeel Enterprises agreed the terms and conditions of revised sanction and submitted sanction letter with their signature as token of acceptance of the terms as required by the Bank to do the needful. Late Akbarali Fatehali Mody was paying an amount of Rs.2, 10,930 which was being deducted from the account of M/s.Sabeel Enterprises. Even after signing the terms and conditions of fresh loan sanction by the complainant, the first OP has not proceeded further in the matter to give deduction of claim amount to enable the complainant to pay the revised instalments at Rs.1,27,835/- as per the agreed terms and conditions of the sanction letter dated 30.08.2010. The firm is reconstituted and new partners are inducted in the Partnership who are the first Complainant, Managing Partner and other two partners, the wife of Late Akbarali Fatehali Mody, Smt. Zainab A Modi and minor son Azeem Mohammed A Mody. OPs have not acted in spite of repeated requests to act on the sanction letter as they are eligible for the claim amount. The deliberate act of the OPs and non co-operation of performing the contractual obligations and further denial of services to the complaint amounts to deficiency as defined in Section 2 (1) (g) of CP Act, 1986. It is therefore, cause of action arose to initiate consumer Complaint against OPs.
3. On service of notice, OPs entered appearance and submitted their version, admitted that loan of Rs.20,00,000/- was sanctioned and disbursed vide Loan Agreement dated 24.07.2009 and a loan of Rs.1,00,72,420/- was sanctioned and disbursed vide loan agreement dated 24.07.2009. They admitted that life insurance obtained from OP 2 by said Akbarali Fatehali Mody as offered. They admitted necessary premium was received by OP 2 and insurance certificate also issued by them. Further denied that the OP evaluated health and age of the insurer, but to the contrary, the insured issued a declaration of good health as to his evaluation of health and age and they admitted insured died on 10.04.2010 due to Liver Cirrhosis. They also admitted that complainant produced report from Hospital authorities for settlement of insurance claim but they also admitted that complainant produced report from hospital authority for settlement on insurance claim, but, they denied that OP considered the policy claim and adjusted the claim amount to Rs.28 lakhs from the total loan liability as alleged. There was no such adjustment of Rs.28 lakhs towards loan liability as alleged. They admitted that fresh sanction letter dated 30.08.2010 was issued by OP 3 and the same was subject to adjustment of the said Rs.28 lakhs in case of receipt of insurance claim from OP 2in the said insurance coverage. The said sanction letter was conditional provided a sum of Rs.80 lakhs would be disbursed towards closure of existing loan account. They denied that EMI’s were revised on Rs.1,27,835/- on the revised loan of Rs.80 lakhs as alleged. They admitted that in the said existing loan account a sum of Rs.2,10,939/- was being deducted from the account of M/s Sabeel Enterprises towards equated monthly instalments pertaining to loan agreements bearing No.LAP-242221 and APAC No.LAP-215203. No deduction can be made on the basis of revised instalments since the sanction letter dated 30.08.2010 was conditional one and not acted upon.
4. They would submit that insured had executed a declaration about his good health and specifically strong disease of Liver Cirrhosis concealed by him. Unfortunately within a period of 7 months from the date of availing the loan facility insured Akbarali Fatehali Mody died due to Liver Cirrhosis. There is no privity of contract with respect to insurance policy issued by OP 2 and therefore OP 1 and 3 are not necessary and proper parties to the complaint. OP 1 and 3 are not bound by sanctioned letter dated 30.08.2010, since the same was conditional one and was acted upon. They are not liable to pay any amount to complainant as prayed.
5. OP No.2 submitted that the complainants have not approached with clean hands and they concealed material information from pre-existing disease/ailment that the member had before signing of the said declaration of good health. They have submitted that insured was suffering from Diabetes Mellitus since last 4 years Hypertension since 12 years and chronic kidney disease since 4 years which apparently reveals that member was suffering from said disease much before signing the declaration of good health as such complainants not entitled for any of the reliefs sought in this complaint.
6. In view of rival contentions of the respective parties, Commission held an enquiry of this complaint, received affidavit evidence of Rubina Khatun A Mody, the Managing Partner of M/s Sabeel Enterprises and one of the legal heir of insured and received Ex-C1 to C8 documents. On the contrary received evidence of Vijay Duba, the Authorised Signatory of M/s. Kotak Mahindra Bank Ltd., for OPs 1 and 3 and affidavit evidence of Mr.R.Mahesh Kumar, Vice-President–Legal and compliance of Kotak Mahindra Life Insurance Ltd., namely OP No.2 and received Ex Annexure-R.
7. After closure of enquiry, the Commission heard learned counsels for respective parties.
8. Now, Commission has to decide, whether Complainants have made out a case of deficiency in service on the part of the OPs and their unfair trade practice as alleged and to decide whether OPs have made out a case that deceased insured was suffering from Liver Cirrhosis for the last 4 years before his death and had suppressed the material health records before he could obtained insurance policy from Ops ?.
9. The complainants are legal heirs of late Akbarali Fatehali Mody, admittedly he was the Managing Partner of M/s Sabeel Enterprises. It is not in dispute as to his avail of financial facility from OP1 to an extent of Rs.20 lakhs on execution of loan agreement dated 24.07.2009 and Rs.1,00,72,420/- also on the same date under coverage of life insurance from OP2 a sister concern of OP1 for Akbarali Fatehali Mody partner of M/s Sabeel Enterprises to protect the home loan liability availed by him. It is not in dispute that single premium amount was Rs.65,631/- along with service charge of Rs.6,760/- was collected by OP2 and to that effect issued an insurance certificate on 17.09.2009 with schedule of claim amount to be paid in the event of death of insured person.
10. According to legal heirs of insured, who are now raised their complaint before the commission, that certificate was issued by OP2 only after evaluation of the health and age of the insured and to that effect OP2 accepted the terms of payment of claim amount after evaluation of good health declaration and answers to medical questionnaire, attached to it. Thus, the policy obtained by Mr.Akbarali Fatehali Mody, the Partner M/s Sabeel Enterprises as per loan Agreement No. LAP 215203 dated 24.07.2009, were to cover the life insurance from OP2 which in fact, the sister concern of OP1 from whom the firm availed financial facility to the tune of Rs.20 lakhs and Rs.1,00,72,420/- as stated above to put up construction which according to legal heirs of insured at the instance of OP1, would play a vital importance, since they would submit categorically that OP2 accepted the terms of payment of claim amount after evaluation of Good Health Declaration and answers to Medical Questionnaire attached to it. However, they would submit, OPs deliberately not paid nor adjusted the policy claim amount and later on rejected their claim made to OPs. It is not in dispute that insured Akbarali Fatehali Mody died on 10.04.2010 due to jaundice, which caused Liver Cirrhosis. It is the contention of legal heirs of insured that the reason Liver Cirrhosis from jaundice for the death of Akbarali Fatehali Mody is not existed for the last 4 years before his death as stated by the OP2. In this regard, they would submit OP2, in their imagination, just to escape from their liability, stated in the their version that Late Akbarali Fatehali Mody was suffering from Liver Cirrhosis for the last 4 years before his death and to that effect they did not have any documents to prove the same.
11. The Commission carefully scrutinized the papers submitted by OP2, however, could not find any documents to show that late Akbarali Fatehali Mody- the insured was suffering from Liver Cirrhosis for the last 4 years before his death. It is unfortunate note herein that OP2 has taken such defense not only in version and but also submitted such argument, is nothing but misguiding the Commission for the reasons best known to them.
12. According to Complainants, OP2 is part of OPs 1 & 3 and OP1 Bank only insisted insured to take an insurance policy from the coverage of housing loan amount on satisfaction of good health declaration made by him, issued insurance certificate is now deviated from its obligation to pay claim amount and to find support their case submitted Ex-C1 insurance certificate issued by OP2, Ex-C2 certificate of death, Ex-C3 report of Doctor from Apollo Hospital, Ex-C4 report from BGS Global Hospital and Ex-C23 Discharge Summary issued by Apollo Hospitals. Further they have also produced sanctioned letter dated 30.18.2010 issued by OP3 with revised instalment amount as per Ex-C5, rest of the documents are copy of legal notice and reply thereon.
13. Contrary to the above such submissions, OP2 being insurer submitted documents, obtained from Apollo Hospital and BGS Global Hospitals. Besides, Group Insurance Claim Form for Credit Policies and Group Insurance Good Health Declaration Form. As per Annexure R4 and R2 documents discloses insured was born on 24.05.1960 and he joined group insurance w.e.f 24.07.2009 under cover commenced w.e.f 17.09.2009 and died on 10.04.2010, as certified by Chief Registrar of Birth & Death. He died due to Cardio Respiratory Arrest in BGS Global Hospitals, Bengaluru, the name of the account holder is M/s Sabeel Enterprises and insured is one of the partners. Thus these details submitted in Group Insurance Claim Form is not disputed except as to the cause of death on the ground that 4 years prior to his death was suffering from Chronic Liver cirrhosis which was not declared by him. In other words suppressed the material fact as to his health issue in the medical declaration form attached to the terms and condition of the policy before he could be obtain the policy from OP No.2.
14. The policy details could be seen from schedule is a term cover for group of borrowers (Reducing term cover for borrowers of Kotaka Bank –Home Finance Division).
Details of the members of the group
A member means who has availed of a loan from the policy whose loan as mentioned is still outstanding, the minimum age at the entry of the member: 18 years maximum age at the entry of the member:55 years, maximum ceasing age of the member: 60 years. Benefits payable based on the Member Data provided to the Company and updated from time to time and shall be subject, inter alia to the limits and all the terms conditions appearing herein.
The benefits of the description is Basic Life Cover (BLC) - Amount equivalent to the cover as per the cover schedule as on the date of the death - eligible persons are all the members.
15. Ex-R2 is Group Insurance Good Health Declaration Form, which was accepted by OP2, accordingly issued Certificate of Insurance as per Ex-R3 in the name of Mr.Akbarali Fatehali Mody to cover the loan amount of Rs.2,15,203/- on the payment of Rs.65,631/- towards premium amount, since the account holder availed loan of Rs.1,00,72,420/- to cover Rs.30,72,391/-, thereby extended life insurance cover to Mr. Akbarali Fatehali Mody.
16. It is found from enquiry records, OP2 repudiated the claim on the basis of CMO legal opinion, for non-disclosure of medical conditions before signing declaration of good health and this opinion could seen from internal page 135 from the documents Annexure submitted by OP2. Further to be noted herein from internal page 138 to 139, wherein could see substantial evidence which would rather establish the case of the complainant. It is opined by the team of OP2, namely, their claim department, observed that the life insured had taken a loan of over Rs.1,00,72,420/- but the cover amount taken was only Rs.30,72,391/-. The free cover limit for the policy was 1 Crore and hence, the policy was within FCL and hence, it was a non medical case. We could further seen from these papers, insured had past history of DM and HTN (duration not known). Declaration of Good Health (DOGH) was received which does not mention about DM and HTN. From the Hospital papers, it is evident that the life insured had associated complaints, since 2-3 months. However, the condition was diagnosed only during March 2010 in Apollo Hospital. He was managed with treatment on conservative line at Apollo Hospital and was referred to BGS Global Hospital for further management. At BGS Hospital, he was being worked upon for liver transplant but developed Acute Bacterial peritonitis and hepatic encephalopathy and acute of CRF and succumbed due to severe sepsis
17. Thus, from the above observations made from their claim department non-disclosure of Diabetes Millets and Hypertension could not be considered as one of the vital obligation which was not discharged by the insured before he could be obtain a insurance certificate. As already stated above, the policy was issued under FCL and insurer only received DOGH, which is not very strong document to support non-disclosure. The diagnosis of Cirrhosis of Liver and CKD was in March 2010 in the Apollo Hospital. Other conditions like Bacterial peritonitis and encephalopathy were acutely developed in the hospital during the course of treatment.
18. In view of the above such facts and documentary evidence available, Dr.Lakshmi Bansal, to whom this case was referred by OP2, along with discharge summary from Apollo Hospital and documents opined claim is admissible. As per reinsurance arrangements, the liability of RGA for the above claim is Rs.17,89,455/-. Yet, was not considered by OP2 and they simply proceed to repudiate the claim of nominees of insured as per letter dated 28.10.2010, which amounts not only deficiency of service but unfair trade practice defined under CPA.
19. No doubt, BGS Global Hospitals Consultant Radiologist passed impression Cirrhosis of liver with portal hypertension. Moderate to Gross Ascites.
MRI scan of abdomen dated 27.03.2010 with following impression:
Liver Cirrhosis with Focal Lesion in Segment ....... to Correlate with AEP Levels, Splenomegaly and Gross Ascites
Discharge summary could be seen at page 214, would play vital importance, wherein found, reason for his admission history of jaundice, since 2 months, is known case for DM/HTM. He was admitted on such complaints, on further evaluation found to have cirrhosis of liver with portal hypertension and managed accordingly, Nephrologists Dr.Shakuntala opinion taken as patient had mild renal dysfunction and managed accordingly.
20. Thus, even after thorough examination of all these medical records submitted by OP2, as Annexure-R, we could not find an iota of evidence to show that insured at the time of signing declaration of good health was suffering, either from Liver Cirrhosis or from any other diseases. Insured obtained policy in question not for his personal loan but for coverage of loan of Rs.30,72,391/- as against loan availed by him to an extent of Rs.1,00,72,420/-. In such circumstances, the contention of OP No.2 that they have repudiated the claim of the nominees on the ground of deliberate non-disclosure/concealment of materials based or information by the insured as stated in letter dated 11.11.2010 could be said deficiency of service and it amounts to unfair trade practice. In other words, the documents placed on record by OP2 did not make out a case of either playing fraud upon the insured by the insurer or otherwise to obtain insurance certificate. As already stated supra, since insured loan account was maintained by OP1 and on its insistence, he obtained insurance coverage from OP2 to cover an amount of Rs.30,72,391/- although availed loan amount of Rs.1,00,72,420/-. If his intention was otherwise he would have sought for coverage of insurance to the entire loan of Rs.1,00,72,420/-. It is therefore, this Commission repeatedly stated supra that the cover amount would play a vital importance, which in fact is also supported by their own medical team and the claim department, who have come to the conclusion, that all the facts and documentary evidence available would establish, claim is admissible.
21. Learned counsel for OP2 would submit that concealment of pre-existing disease is justified to repudiate the claim of legal heirs of insured and to find support place a reliance reported in III (2015) CPJ 341 (NC) in the case of Jagdeep Arora Vs Life Insurance Corporation of India and others wherein the ratio laid down by Hon’ble Supreme Court in the case of Satwant Kaur Sandhu Vs New India Assurance Co. Ltd., has been followed. In so far as the ratio laid in these decesions are concerned shall bind the commission or any other authorities but facts remained established herein, that the Insurer has miserably failed to establish late insured had pre-existing disease/ailment for 4 years prior to death, since the medical reports collected by the OP either establish he had jaundice or as found in the medical record of the BGS Apollo Hospital. The medical records would not establish that it was due to pre-existing disease of Liver Cirrhosis for 4 years and to find support such view Ex-C3, C4, C14, C15, C18 and C23 are placed on record. On the contrary OP2 failed to establish that he had pre-existed aliment for 4 years prior to his death.
22. As already stated above, the documents produced by OP2 as per ink Page No.136 to 139 Dr.Lakshmi Bansal, opined, as he has only received DOGH and it is not very strong document to repudiate the claim and said claim is admissible which goes against the defence case of the insurer to contend that the insured suppressed the material facts in respect of pre existing deceases. In this regard, it would be appropriate to place herein the decision in the case of D.Srinivas Vs SBI Life Insurance Co. Ltd., and others decided on 16.02.2018 by Hon’ble Supreme Court of India in Para 14 - From the aforesaid clause it may be seen that condition precedent for acceptance of the premium was to medical examination it shall be logical for a under right to accept the premium based on the medical examination and not otherwise. Thus keeping in mind the ratio the very fact herein the case on hand that insurer accepted the premium, on the basis of voluntary declaration of the health, which does mean the policy is a non-medical. Admittedly insured availed loan of Rs.20 lakhs and Rs.1,00,72,420/- respectively on 24.07.2009 from OP1 and he sought for coverage of Rs.30,72,391/- to his loan account No.215203, paying premium amount of Rs.65,631/- along with service tax of Rs.6,760/- and obtained certificate of insurance from OP2 under Group Insurance Scheme FCL (pre-cover limit), which would be issued without medical evidence/under life based on declaration of good health. In such circumstances, when once OP2 satisfied declaration of good health and accepted the terms of payment by collecting one time premium amount as per Annexure R3, the Policy came into force and thereafter it is not open for OP2, either to reject the claim or to repudiate the claim of the complainants, for non-disclosure of pre-existing diseases. In our view the claim department of insurer examined documents and opined as found in ink page 136 to 139, which would corroborate the case of the complainants to prove, as the claim is admissible under FCL which in fact at some point of time on proper verification of witnesses and other reports issued by doctors treated late insured has considered the policy claim and adjusted claim amount of Rs.28 lakhs from the total loan liability. This could be seen from sanctioned letter dated 30.08.2010 marked as Ex-C5 for Rs.80 lakhs to enable the complainants to pay revised EMI of Rs.1,27,836/- for a period of 96 months, since it is calculated after deduction of claim amount, subsequently was not given effect to the said letter, since complainants being LR’s of Late Akbarali Fatehali Mody as Partners of M/s Sabeel Enterprises are shown to have paying Rs.2,10,939/- towards EMI, which we have to hold incorrect. In other words, they have collected excess amount of Rs.83,104/ from the account of the firm required to be corrected as per sanctioned letter dated 30.08.2010 with terms and conditions marked as Ex-C5.
23. Learned counsel for OP2 placed a reliance reported in I (2015) COJ 670 NC in the case of Life Insurance Corporation of India Vs Mamata, wherein it was held Doctors were informed at the time of admission that patient had a history of diabetes mellitus for the last five years and was on insulin for the last three years – was held that concealment of material fact regarding previous ailment by life assured – repudiation justified could not applied on the basis of medical records and the records placed by insurer. Further another decision reported in III (2015) CPJ 474 NC in the case of M.Obaidur Rahman Vs National Insurance Co. Ltd., it was held Medical Expert’s evidence suggests that disease with which complainant was suffering would have started at least 4 or 5 years prior to his admission in hospital – Complainant suffered with myocardial infarction in year 1992 and was hypersensitive too- Answer given by complainant in proposal form was untrue to his knowledge – violation of condition of policy established. Further in another decision reported in III (2015) CPJ 426 NC in the case of Gurmeet Kaur @ Meeto and another vs Life Insurance Corporation of India held that Deceased had been suffering from diabetes for the last 14 to 15 years and suffered from chronic renal failure for last 4 to 5 years – No evidence on record to prove that information given by Doctor regarding health status of insured was in correct – violation of conditions of policy established. We have no quarrel with the ratios laid in these decisions, since they bind not only this commission but all the commissions, however, the facts herein the case on hand are shown to be entirely different, as such they did not come to the aid of OP to substantiate the repudiation of the claim.
24. It is unfortunate to place herein that OP2 has produced legible copy of Declaration of Good Health before Certificate of Insurance as per R3 could be issued at Ex-Annexure R2 which could not be read its text is again for the reasons best known to the insurer and find support their own office claim department as on 27.08.2010 itself stated is not a legible. We tried our level best to read the text could able to read KOTAK and Group Insurance Good Health Declaration form and remaining we could not since the whole document appears illegible and the reasons, best known to the said Department or OP2. As repeatedly stated at page 137 could see the letter addressed by Mike Rothenburg Claims Consultant RGA Reinsurance Company of South Africa Limited to Dr. Rekha while calling additional information in respect of Mr.Akbarali Fatehali Modi - Kotak Mahindra Bank Ltd., (Housing Finance) – mention “Can we see a legible copy of the DOGH”. It is therefore, Commission has to conclude that legible copy never sent to such consultant nor placed before the Commission, which would goes against the insurer to believe the case of the complainants.
25. In the above such conclusion, we are of the considered view that OP2 is not justified to repudiate the claim of the complainant, pursuant to the acceptance of Certificate of Insurance to cover amount of Rs.30,70,391/- in respect of loan amount of Rs.1,00,72,420/-. Thus, the act of OPs reverting back from Ex-C5 and excess collection of Rs.83,104/- towards EMI amounts not only unfair trade practice but also deficiency in service on their part.
26. Accordingly, Commission, proceed to allow the complaint filed under section 17 of CP Act, 1986 with costs.
Consequently, directed the OPs to settle the claim of Certificate No.KHL4867 in respect of loan account 215203.
Further, directed OP2 do pay Rs.28 lakhs along with interest charged by OP1 to the loan account No.215203 and if such amount is already collected, directed to refund such amount to the complainants along with interest at the rate applicable on such date.
Further, directed to pay Rs.50,000/- towards compensation for mental agony, in convenience and misery suffered by the complainants consequent upon repudiation of the valid claim and do pay Rs.50,000/- towards litigation charges.
Lady Member Judicial Member
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