BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD.
OF 2009 AGAINST C.C.NO.604 OF 2008 DISTRICT CONSUMER FORUM-III HYDERABAD
Between
State Bank of India,
Edi Bazar Branch
IS Sadan Cross Roads
Santoshnagar, Hyderabad
Rep. by its Branch Manager
Appellant/opposite party no.2
A N D
1. P.Padmavathi W/o late Ram Mohan Raju
aged about 41 years, Occ: Household
R/o H.No.8-50, Vidyuth Nagar,
Dilsukhnagar, Hyderabad
Respondent/complainant
2. Senior Divisional Manager
New India Assurance Co., Ltd.
D.O.120700, 8th Floor,
New India Center, 17/A
Cooperate Road, Madam Cama Road
Mumbai
Respondent /opposite party no.1
Counsel for the Appellant Sri N.Srinivasa Rao
Counsel for the Respondent No.1 Sri T.Ramanakar Raj
Counsel for the Respondent No.2 Smt S.N.Padmini
QUORUM: SRI SYED ABDULLAH, HON’BLE MEMBER
&
SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER
TUESDAY THE NINETH DAY OF NOVEMBER
TWO THOUSAND TEN
Oral Order ( As per R.Lakshminarsimha Rao, Member)
***
1. The opposite party no.2 is the appellant.
2. The factual matrix leading to filing of the appeal is that the complainant is the wife of late P.Ram Mohan Raju who worked as Senior Assistant with the opposite party no.2 Bank availed a home loan from his employer and the same was covered under the Group Personal Accident Insurance Policy Scheme issued by the opposite party no.1 vide policy No.1207004204500000033. The policy provides for coverage of the loan amount in the event of the death of the borrower due to accident in respect of home/car loans to the extent of the outstanding loan including interest thereon up to the date of death of the borrower. The husband of the complainant met with a road accident and died on 10.2.2005. The said fact was not informed to the opposite party no.1 by the opposite party no.2 immediately and even thereafter did not prefer the claim. The complainant was made aware of the scheme after a lapse of time and the necessary documents submitted to the opposite party no.2 were forwarded to the insurer. The insurer condoned the delay but paid only a sum of `49,898/- even though outstanding housing loan was a sum of `5,05,975.67 at the date of death as on 10.2.2005. The complainant alleging deficiency in service on the part of the opposite parties filed the complaint seeking direction to the opposite party no.1 to pay a sum of `6,93,158/- together with interest and costs.
3. The opposite party no.1 resisted the case contending that the complainant’s husband was covered under the Group Personal Accident Insurance Policy so as to cover the housing loan availed by him. The contract of insurance is between the opposite party no.1 and the opposite party no.2 vide master policy agreement dated 01.07.2003 and the nominee under the policy is the opposite party no.2. The complainant’s husband died on 10.2.2005 but the same was intimated to the opposite party no.1 only on 22.2.2007 i.e., after two years which was rejected due to inordinate delay. Upon further request of the opposite party no.2 to consider the loan to the extent of 50% it was re-considered and the claim was entertained. The opposite party no.2 had sent a claim on 2.10.2007 along with total outstanding of the loan amount as `1,08,589.67 ps as on the date of death of the loan account holder. Therefore the insurer settled the claim for `49,898/-.
4. The opposite party no.2 filed counter stating that as per the terms and conditions stipulated in the insurance policy the duty is cast on the opposite party no.1 to pay the claim amount i.e., loan dues of `5,05,975.67 under the housing loan account of late P.Ram Mohan Raju. On the death of P.Ram Mohan Raju a claim was lodged along with necessary documents for payment of loan outstanding mentioned by the complainant. The opposite party no.1 though accepted the documents and claim form submitted by the complainant, paid only an amount of `49,898/- out of `5,05,975.67. The insurance policy is bilateral agreement between the insurer and insured and the opposite party no.2 has no concern with the contract. The opposite party no.1 issued the policy in the name of the deceased P.Ram Mohan Raju in terms of the tie up with the opposite party no.2. The opposite party no.1 violated the terms and conditions of the policy to avoid to make payment of the remaining amount.
5. The complainant filed her affidavit and documents Exs.A1 to A6. Both the opposite parties filed their respective affidavits and documents Exs.B1 to B11.
6. The District Forum allowed the complaint directing the opposite party no.2 to pay the complainant a sum of Rs.5,05,975/- with interest @ 10% per annum from 10.2.2005. The complaint against the opposite party no.1 is dismissed.
7. Aggrieved by the order of the District Forum, the appellant bank has filed the appeal contending that the insurance facility was provided by it free of charge to the husband of the complainant and that the complainant had not informed the death of her husband within the stipulated time as also that the loan instalments were due by the date of the death of the complainant’s husband. It was contended that no relief was sought against the bank by the complainant and that the complainant is liable to pay the amount outstanding as on the death of her husband, `4,99,330/-.
8. The points for consideration are:
1) Whether the opposite party no.2 bank is liable to pay any amount to the complainant?
2) To what relief?
9. POINT NO.1 the complainant’s husband was an employee of the opposite party no.2 bank. During his life time, the husband of the complainant availed housing loan under loan A/c No.01597094079 from the branch office of the opposite party no.2 bank. The opposite party no.2 bank had entered into agreement with the opposite party no.1 insurance company for providing insurance coverage to its account holders who had obtained vehicle loan or housing loan. Master policy agreement dated 1.7.2003 was entered into, between the opposite parties in terms of which the loanee was insured against the loss of life due to accident, upto the amount of his outstanding loan including the interest thereon.
10. A circular was issued on 6.7.2006 in respect of the home and car loan borrowers who included the employees of the opposite party no.2 bank that they were covered under personal accident insurance cover in tie up with the opposite party no.1 insurance company whereof the extent of the outstanding loan including the interest thereon upto the date of death of the borrower was provided absolutely free of charge and obligation was cast on the branch which maintains the loan account of the deceased borrower to take steps to submit claim directly to the insurance company along with the relevant documents. The circular, however, relieves the branch office of the obligation of reporting the death of the deceased borrower to the insurance company till such death of the borrower has been reported and once the information has been received in regard to the death of the borrower, the circular obligates the branch office concerned to ascertain when the death was caused whether it was caused by the accident and then advise the insurance company to settle the claim.
11. The validity of the certificate of insurance issued in favour of the complainant’s husband is not disputed. Clause 2 of the certificate of insurance indicates that its validity is coextensive with the master policy agreement. Therefore, the terms and conditions in the master policy agreement play vital role in deciding the claim settlement in favour of the nominee under the insurance policy. The learned counsel for the opposite party no.2 bank has contended that in terms of the master policy agreement, the opposite party no.2 is the nominee to the extent of total outstanding loan amount including the interest as on the date of death of the husband of the complainant.
12. The husband of the complainant died on 10.2.2005. According to the opposite party no.2 bank the death intimation of her husband was given by the complainant on 22.2.2007 i.e., after a period of two years and immediately after receipt of the claim, the opposite party no.2 stated to have forwarded it to the opposite party no.1 insurance company. The opposite party no.1 had repudiated the claim on the ground that there was inordinate delay of two years in lodging the claim and as such the claim could not be settled. Thereafter on 9.5.2007, 21.7.2007 and 25.9.2007 the opposite party no.2 addressed letters with a request for settlement of claim to the extent of 50% of the loan account. The request for settlement of the claim to the extent of 50% of the loan account said to have been made by the opposite party no.2 at the request of the complainant. The opposite party no.1 had settled the claim for 50% of the outstanding loan amount and sent a cheque bearing NO.509931 dated 5.2.2008 for Rs.49,898/- towards full and final satisfaction of the claim in respect of the loan account. According to the opposite party no.1, the outstanding amount was `1,08,589.67 as on the date of death of the loanee. The opposite party no.2 has contended that the outstanding amount as on the date of death of the loanee was `5,05,975.67 and out of the said amount the opposite party no.1 has paid only `49,898/-.
13. The opposite party no.1 has condoned the delay in regard to the lodging of claim by the complainant. According to the opposite party no.1, on request of the opposite party no.2 to consider the claim for settlement on humanitarian grounds, it had settled the claim at `49,898/-. Once, the delay is condoned in filing the claim, the terms and conditions of the insurance policy comes into operation. The complainant is the beneficiary of the certificate of insurance issued by the opposite party no.1 in favour of her husband for coverage of risk on his life to the extent of outstanding amount with interest thereon. The letter dated 25.9.2007 issued by the opposite party no.2 supercedes the letter dated 21.7.2007 and in the latter, a request was made to reconsider the specific claim and for arrangement of settlement of the claim. There was no mention of any request for settlement of the claim to the extent of 50% of the outstanding loan amount. Yet, the opposite partyno.1 has sent a cheque for `49,898/-. The opposite party no.1 has contended that at the request of the opposite party no.2 to settle the amount @ 50% of the loan amount and in view of the amount shown as `1,08,589.67 in statement of account, the cheque was sent for `49,898/-.
14. The complainant states that the proposal for 50% scheme settlement forwarded by the opposite party no.2 to the opposite party no.1 is not binding on her as she is not a party to the proposal and it is her contention that once the opposite party no.1 has condoned the delay in filing of the claim, the amount of `4,99,330.67 outstanding to the credit of the loan account of her husband as on 28.2.2005 on which date he was expired, has to be paid by the opposite party no.1. The opposite party no.1 has adjusted the amount of `3,93,470/- from out of the emoluments paid on 16.6.2005 to the complainant. The opposite party no.2 has carried forward a sum of `1,08,589.67 as outstanding due amount of the complainant’s husband which according to the complainant is wrong and erroneous. According to the complainant the outstanding amount as on the date of death of the her husband is Rs.4,99,330.67 but Rs.1,08,589.67.
15. The adjustment if any from the emoluments paid to the deceased loanee of the opposite party no.2 bank cannot be reckoned for the purpose of ascertaining outstanding loan amount along with interest thereon as on the date of death of the complainant’s husband. Admittedly, the opposite party no.2 has adjusted the amount of `3,93,470/- paid to the deceased loanee towards his emoluments only after the death of the complainant’s husband. The outstanding loan amount along with interest on 28.2.2005 on which date the husband of the complainant died is `4,99,330.67. The opposite party no.1 as also the opposite party no.2 proceeded on the wrong premise that the outstanding amount after adjustment of the emoluments is the amount payable in terms of the certificate of the insraunce read with master policy agreement that was entered into, between the opposite parties no.1 and 2. This mistaken notion caused any amount of inconvenience and hardship to the complainant as the emoluments due to her were adjusted and such adjustment could not have been taken into consideration while calculating the outstanding loan amount.
16. The opposite party no.1 has contended that the opposite party no.2 being a nominee for the purpose of the loan account of the complainant’s husband requested for settlement of the claim to the extent of 50% of the outstanding loan amount and accordingly it had settled the loan amount at `49,898/-. The opposite parties no.1 and 2 had not acted in accordance with the terms and conditions of the master policy agreement. The question of request for 50% of outstanding loan amount by the opposite party no.2 does not arise as the complainant is the beneficiary and her amount towads the emoluments of her deceased husband were held up by the opposite party no.1, has not come up with any such request. The opposite party no.2 has adjusted the emoluments paid to the deceased husband of the complainant, towards the amount due to his housing loan account. By adjusting the amount due to its deceased employee, the opposite party no.2 cannot turn round and say that the complainant was at fault in passing on the intimation of death of her husband after a period of two years. Equally, the opposite party no.1 cannot take defence that it had acted on the request of the opposite party no.2 to settle the claim at 50% of the outstanding loan amount.
17. It is pertinent to note that the opposite party no.1 has not paid any exgratia nor any proposal for such settlement was made by the complainant as also the proposal so sent by the opposite party no.1 was under mistaken notion that the amount payable on the date of the death of the complainant’s husband was only `1,08,589.67. Therefore, once the opposite party no.1 has condoned the delay in submission of the claim and does not find any mistake on the part of the opposite party no.2, the terms and conditions of the master policy agreement comes into focus whereby the outstanding loan amount as on 28 .2.2005 on which date the complainant’s husband died would be `,05,975.67 but not `49,898.67. The opposite party no.2 has not charged any amount for the purpose getting issued the certificate of insurance in favour of the complainant’s husband and in the due course of processing of either the proposal or thereafter the claim, the opposite party no.2 has, for all practical purposes acted as the agent of th opposite party no.1. The contention of the opposite party no.1 that the opposite party no.2 is the nominee for the purpose of the benefits of the policy is not sustainable as the opposite party no.2 has paid the premium on behalf of the husband of the complainant and it is the complainant who has all the rights in the world in respect of the claim she has submitted for the benefits under the insurance policy particularly it was with reference to the amount that is outstanding amount to the credit of her deceased husband.
18. For the foregoing reasons, we are of the considered opinion that the opposite party no.1 insurance company is liable to pay the outstanding loan amount of `5,05,975.67 towards the outstanding loan amount as on the date of death of the loanee. The opposite party no.1 has already paid `49,898.67 and the balance amount payable is `4,56,077/-. After receipt of the amount by the opposite party no.2, it shall adjust a sum of `58,691.67 towards the balance amount due into the housing loan account of the deceased husband of the complainant and pay the balance amount of `3,97,385.33. The opposite party no.1 insurance company cannot be mulcuted with the liability of the payment of interest on the amount as awarded by this Commission. The learned counsel for the opposite party no.2 has relied upon the following decisions.
1) Eureka Estates Private Limited Vs. A.P.State Consumer Disputes Redressal Commission, Hyderabad and others, 2004 (6) ALT 46
2) Moron Mar Baseelos Cathollcos and another Vs Most Rev.Mar Poulose Athanastus and others, AIR 1954 SC, 526 Vol.41 (CN 125)
3) Gudapati Hanumaiah Vs Y.Laxmi Narasamma and others, 2009 (3) 281.
19. The facts of those and that of the case on hand are neither similar nor the principle laid therein has any application to the facts of the present case. The opposite party no.2 is liable to pay interest @ 7% per annum on the amount of `3,97,385.33 from 16.6.2005 for its inaction in making delayed intimation of the death of its customer who is none other than its employee, to the opposite party no.1 insruance company as also for the reason that it had unethically and against the terms of the insurance agreement, had adjusted the emoluments paid to its deceased employee whereby the complainant was deprived of her legitimate amount.
20. In the result the appeal is allowed. The order dated 9.1.2009 is modified. The opposite party no.1 directed to pay an amount of Rs. Rs.4,56,077/- to the opposite party no.2 and on receipt of the amount the opposite party no.2 shall adjust a sum of Rs. Rs.58,691.67 towads the amount due under housing loan account no.10115002471 of the deceased P.Rammohan Raju and pay the balance amount of Rs.3,97,385.33 with interest @ 7% per annum from 16.6.2005 till payment to the complainant. There shall be no order as to costs. Time for compliance four weeks.
MEMBER
MEMBER
Dt.09.11.2010
KMK*
