Chandigarh

DF-I

CC/434/2022

Mrs. Kusum Lata - Complainant(s)

Versus

PNB Met Life India, Insurance Co. Ltd. - Opp.Party(s)

Mashwinder Singh

01 Jan 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION-I,

U.T. CHANDIGARH

                                     

Consumer Complaint No.	:	CC/434/2022
Date of Institution	:	18/04/2022
Date of Decision	:	01/01/2024

Mrs. Kusum Lata w/o Sh. Ramesh Kumar Garg, House No.2011, Sector 45-C, Chandigarh.

… Complainant

V E R S U S

1. PNB Met Life India Insurance Co. Ltd., First Floor, Techniplex 1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon West, Mumbai 400062, Maharashtra through its Chairman.

2^nd Address :

SCO 68-69, Sector 17B, Chandigarh

2. Punjab National Bank, SCO No.809, NAC, Manimajra, UT, Chandigarh.

… Opposite Parties

 

CORAM :	SHRI PAWANJIT SINGH	PRESIDENT
	MRS. SURJEET KAUR	MEMBER
	SHRI SURESH KUMAR SARDANA	MEMBER

 

                                                                               

ARGUED BY	:	Sh. Mashwinder Singh, Advocate for complainant
	:	Sh. Rajesh Sabharwal, Advocate for OP-1
	:	OP-2 ex-parte

 

Per Pawanjit Singh, President

1. The present consumer complaint has been filed by Mrs.Kusum Lata, complainant against the aforesaid opposite parties (hereinafter referred to as the OPs).  The brief facts of the case are as under :-

1. It transpires from the allegations as projected in the consumer complaint that Ramesh Kumar Garg, deceased husband of the complainant had taken loan of ₹9,97,300/- and ₹30.00 lacs from the Punjab National Bank (OP-2) and he was included for insurance coverage under the Met Loan & Life Suraksha Policy No.00000299 (Group Policy) (hereinafter referred to as “first policy”) with sum assured of ₹9,97,300/- and policy No.0000653 (Group Policy) (hereinafter referred to as “subject policy”) with sum assured of ₹30.00 lacs and copies of the insurance certificates are Ex.C-1 and Ex.C-2 respectively. On 5.12.2020, husband of complainant was admitted to Govt. Medical College & Hospital, Sector 32, Chandigarh where he was tested and found COVID positive and on 13.12.2020 he died in the said hospital. Copy of the death certificate and certificate of cause of death are Ex.C-3 & Ex.C-4. Immediately after death of her husband, complainant informed the OPs about the same and requested for settlement of claim.  OP-1 processed the claim and made payment of claim pertaining to first policy, but, denied the claim with respect to the subject policy on the ground of non-disclosure of essential facts qua suffering from Leukemia by the deceased before obtaining the policy. Copies of the repudiation letters are Ex.C-5 & Ex.C-6. Thereafter the complainant applied for re-examination of claim (Ex.C-7), but, the same was also denied by the OP (Ex.C-8).  At the time of issuance of the policy, deceased life assured, Ramesh Kumar Garg was hale and hearty and the OP has wrongly denied the claim of the complainant. The complainant had also approached the office of the Insurance Ombudsman vide application (Ex.C-9) who has also rejected the claim vide order dated 3.12.2021 (Ex.C-10).  Till date, OP has failed to give any proof that the husband of the complainant was having any pre-existing ailment. The complainant has regularly been paying the monthly installments of ₹30,500/ since the death of her husband. Even the OPs did not get the husband of the complainant medically examined through the authorised doctor which was otherwise compulsory and the repudiation of the claim of complainant at this stage by OP-1/ insurer amounts to deficiency in service and unfair trade practice.  OPs were requested several times to admit the claim, but, with no result.  Hence, the present consumer complaint.
2. OP-1 resisted the consumer complaint and filed its written version, inter alia, taking preliminary objections of maintainability, concealment of facts and cause of action.  However, it is admitted that the subject policy was obtained by the deceased husband of the complainant in addition to another policy regarding which her claim was settled.  It is further alleged that the present claim of the complainant was denied on account of concealment of material facts by the deceased life assured (DLA) as he was suffering from various ailments prior to the purchase of the subject policy and the investigator found during investigation that the DLA was suffering from cancer since 3-4 years and was also diabetic from a long time before the issuance of the subject policy.  It is further alleged that the complainant has also approached the Insurance Ombudsman where her claim was also rejected. As the DLA has not disclosed about the pre-existing disease which he was suffering even at the time of purchasing the subject policy, the claim of the complainant was rightly repudiated by the answering OP. On merits, the facts as stated in the preliminary objections have been reiterated. The cause of action set up by the complainant is denied.  The consumer complaint is sought to be contested.
3. OP-2 did not turn up before this Commission, despite proper service, hence it was proceeded against ex-parte vide order dated 31.1.2023.
4. In replication, complainant re-asserted the claim put forth in the consumer complaint and prayer has been made that the consumer complaint be allowed as prayed for.

2. In order to prove their case, contesting parties have tendered/proved their evidence by way of respective affidavits and supporting documents.
3. We have heard the learned counsel for the contesting parties and also gone through the file carefully, including written arguments.
   1. At the very outset, it may be observed that when it is an admitted case of the parties that the deceased husband of the complainant namely Ramesh Kumar Garg (hereinafter referred to as “DLA”) had obtained two loans from OP-2/bank which was got insured by OP-2 from OP-1/insurer vide insurance policies Ex.C-1 (i.e. the first policy) and Ex.C-2 (i.e. the subject policy) with sum assured of ₹30.00 lacs  and on 13.12.2020 the DLA had died at the Govt. Medical College & Hospital, Sector 32, Chandigarh due to cardio pulmonary arrest and COVID-19, as is also evident from the copy of death certificate (Ex.C-3) and the medical certificate cause of death (Ex.C-4) and out of the two policies, qua the first policy, claim of the complainant has already been settled by the insurer/OP-1 whereas the claim qua the subject policy has been repudiated by OP-1, as is also evident from the letters (Ex.C-5 & C-6), the case is reduced to a narrow compass as it is to be determined if OP-1 is unjustified in repudiating the genuine claim of the complainant and she is entitled to the reliefs prayed for in the consumer complaint, as is the case of the complainant, or if OP-1/insurer has rightly repudiated the claim and the consumer of the complainant, being false and frivolous, is liable to be dismissed, as is the defence of the OPs.
   2. In the backdrop of the foregoing admitted and disputed facts on record, one thing is clear that the entire case of the parties is revolving around the terms and conditions of the subject policy, medical record and the repudiation letter and the same are required to be scanned carefully in order to determine the real controversy between the parties.
   3. Perusal of medical certificate of cause of death (Ex.C-4) issued by the Govt. Medical College & Hospital, Sector 32, Chandigarh clearly indicates that the cause of death of DLA is “Cardiopulmonary arrest” and “COVID 19”. The medical record obtained by OP-1/insurer through the investigator (attached with Ex.R-7 at page 121) indicates that the DLA was earlier suffering from Leukemia. Thus, one thing is clear on record that even Leukemia, of which the DLA was alleged to be taking treatment prior to purchase of the subject policy, was not the cause of death of the DLA as it stands proved on record from Ex.C-4 that the DLA died on account of “Cardiopulmonary Arrest” and “COIVD 19” making further clear that there is no nexus of even the alleged pre-existing ailment with the actual cause of death of the DLA.
   4. As per the defence of OP-1/insurer, as the complainant has not disclosed about the pre-existing ailment at the time of purchasing the subject policy, the claim was rightly repudiated by it on account of violation of the terms and conditions of the subject policy.  However, from perusal of the subject policy (Ex.C-2/Ex.R-3) it is clear that there is no exclusion clause in the subject policy that on account of non-disclosure of any pre-existing disease, DLA will not be entitled for the claim.  The ‘Exclusions’ clause is reproduced below for ready reference :-

“9. Exclusions:

a)     If an Insured Member commits suicide, whether sane or not at the time, within one year from the Effective Date of Coverage then the liability of the Company shall be limited to a refund of 80% of the Premium(s) provided the coverage for such Insured Member is in-force, or

b)     If an Insured Member commits suicide, whether sane or not at the time, within one year from the date of the last reinstatement of his or her coverage then the liability of the Company shall be limited to refunding the higher of 80% of the unexpired premium (defined as the total premiums paid multiplied by [Balance number of months to the maturity date divided by total number of months in the policy term]) or the surrender value at the time of death.

c)     In case if one of the Co-borrower commits suicide, the risk coverage will continue on the life of the surviving Co-borrower.

d)     The Company shall not be liable to make any payment under the Group Policy on the occurrence of the Insured Event during the waiting period of 30 days, unless the Insured Event occurs due to an accident.”

 

5. Moreover, when it has come on record that, in fact the subject policy was obtained by OP-2 in order to secure the loan amount, it was incumbent upon OP-1 before issuing the subject policy to get the loanee (DLA in the present case) medically examined. In this regard, learned counsel for the complainant has relied upon the judgment of the Hon'ble Punjab and Haryana High Court in the case of Aviva Life Insurance Company India Limited Vs. Sarita Tripathi & Anr., CWP No.14892 of 2015 decided on 17.10.2022 in which it has been held that the insurer ought not to rescind the claim as it had option not to rely on such declaration and to satisfy itself about the medical and health conditions and also held that where the cause of death has no proximity to health, the said information would only be a relevant information. The relevant paragraphs of the said judgment are reproduced below for ready reference:-

 “30. If the Insurance Company chose not to subject the insured to medical examination before issuing the policy, it ought not rescind the claim as it had options not to rely on such declaration and to satisfy itself about the medical and health conditions. Having exercised its commercial prudence, it should not be permitted to escape its liability. Once it chose to not subject the proposer to medical examination, it can be safely assumed that such information was not grossly material to its decision or that the cost of medical examination to ascertain the health condition was not worth the risk to be covered. 1231

37. Taking into consideration the circumstances referred to above as well as the alleged suppression of material facts and the undisputed factual aspect that the cause of death was neither directly nor indirectly related to any health issues, ailment, sickness or disease and was altogether an independent, unrelated risk i.e. the motor vehicular accident, this Court is of the opinion that the fact of suppression of coronary angiography would have been a material information in case the cause of death was directly or indirectly linked to health. However, since the cause of death has no proximity to health, the said information would only be a relevant information. The insurance policies intend to provide respite to the family upon occurrence of an unfortunate event, the interpretation to be adopted should advance the object of law. The legislative intent of information to be “material” cannot be completely ignored and to deprive an insured of all benefits treating all information to be material.”

6. Further, the Hon’ble National Commission in the case titled as Neelam Chopra Vs. Life Insurance Corporation of India & Ors., IV (2018) CPJ 321 (NC) while dealing with the question of suppression/ non-disclosure of material facts has held as under :-

     12. In the present case, clearly the cause of death is cardio respiratory arrest and this disease was not existing when the proposal form was filled. Clearly, there is no suppression of material information in respect of this disease, which is the main cause of death. The other disease of LL Hansen, which was prevailing for five weeks on the date of admission on 1.8.2003 was also not existing when the proposal was filed by the DLA. The fact of DLA having been treated in the year 2002 for LL Hansen is not supported from any direct evidence though PGI Chandigarh in its certificate has mentioned that disease was treated in 2002. Moreover, this disease does not have any correlation with the cause of death in the present case. Hon’ble Supreme Court in Sulbha Prakash Motegaonkar and Ors. v. Life Insurance Corporation of India, Civil Appeal No.8245 of 2015, decided on 5.10.2015 (SC) has held the following:

        “We have heard learned Counsel for the parties.

                It is not the case of the Insurance Company that the ailment that the deceased was suffering from was a life threatening disease which could or did cause the death of the insured. In fact, the clear case is that the deceased died due to ischaemic heart disease and also because of myocardial infarction. The concealment of lumbar spondylitis with PID with sciatica persuaded the respondent not to grant the insurance claim.

                We are of the opinion that National Commission was in error in denying to the appellants the insurance claim and accepting the repudiation of the claim by the respondent. The death of the insured due to ischaemic heart disease and myocardial infarction had nothing to do with this lumbar spondylitis with PID with sciatica. In our considered opinion, since the alleged concealment was not of such a nature as would disentitle the deceased from getting his life insured, the repudiation of the claim was incorrect and not justified.”

7. In view of the foregoing discussion and the ratio of law laid down above, it is clear that the OP-1/insurer has not been able to connect the previous diseases/ailments with the cause of death of the DLA.  Hence, it is unsafe to hold that OP-1/insurer was justified in repudiating/rejecting the claim of the complainant qua the subject policy and the present consumer complaint deserves to succeed. 
8. Now coming to the quantum of relief, admittedly the subject policy (Ex.C-2/Ex.R-3) was valid w.e.f. 23.8.2018 to 23.8.2028 with sum assured of ₹30.00 lacs against home loan account No.118300ND00000043 i.e. the loan sanctioned in favour of the DLA by OP-2.  As per Annexure I of the subject policy (Ex.R-3 at page 43), the manner in which the benefit is payable on the death of the DLA has also been explained and the relevant portion of the same is reproduced below for ready reference :-

“Note

• The death benefit payable under this policy shall be applied firstly to offset any Outstanding Loan Amount of the Insured Member(s) to the Group Policy holder. Where the actual Outstanding Loan amount on the date of death of the Insured Member is less than the Scheduled Outstanding Loan Amount the difference between the Scheduled Outstanding Loan Amount and the actual Outstanding Loan Amount shall be paid by the Group Policy Holder to the nominee/legal heir of the Insured Member.x”
  9. Similarly, OP-1 has also produced credit account statement form (attached with Ex.R-4 at page 75) showing outstanding loan balance amount as on the date of death of the loanee (DLA) as ₹20,61,189.64 and balance claim amount (difference of sum assured and outstanding amount as on date of death) as ₹9,38,810.36.
  10. In this manner the present consumer complaint deserves to succeed partly and OP-1/insurer is liable to pay the total sum insured of ₹30.00 lacs out of which ₹20,61,189.64 will go to OP-2/bank whereas the balance amount of ₹9,38,810.36 will be paid to the complainant, being nominee of the DLA alongwith interest and compensation etc.

4. In the light of the aforesaid discussion, the present consumer complaint succeeds, the same is hereby partly allowed and OP-1 is directed as under :-

1. to pay the sum insured of ₹30.00 lacs out of which ₹20,61,189.64 will be paid to OP-2/bank whereas the balance amount of ₹9,38,810.36 will be paid to the complainant alongwith interest @ 9% per annum from the date of repudiation of the claim i.e. 17.3.2021 onwards
2. to pay ₹50,000/- to the complainant as compensation for causing mental agony and harassment;
3. to pay ₹10,000/- to the complainant as costs of litigation.

5. This order be complied with by OP-1 within forty five days from the date of receipt of its certified copy, failing which, the payable amounts, mentioned at Sr.No.(i) & (ii) above, shall carry interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above.
6. Since no deficiency in service or unfair trade practice has been proved against OP-2, the consumer complaint against it stands dismissed with no order as to costs.
7. Pending miscellaneous application(s), if any, also stands disposed of accordingly.
8. Certified copies of this order be sent to the parties free of charge. The file be consigned.

01/01/2024 hg			Sd/- [Pawanjit Singh] President
			Sd/- [Surjeet Kaur] Member
			Sd/- [Suresh Kumar Sardana] Member