1.       Heard Counsel for both sides (Counsel for Petitioner/Insurance Company, Counsel for Respondent No. 5/State Bank of India and counsel representing Respondents No. 1 to 4, who are the Legal Heirs of the original complainant).  In compliance of order dated 15.01.2024 and 12.02.2024 of this Commission, Petitioner /Insurance Company has placed on record copy of the Master Insurance Policy taken by Respondent No. 5 SBI.  Respondent No. 5/SBI has also filed an additional affidavit dated 08.02.2024.

2.       Under the Master Policy, in case of death of the insured member who has taken loan from the Bank, the entire loan amount becomes the sum insured. This fact is not disputed by the Petitioner/Insurance Company.  However, the case of the Petitioner/Insurance company is that in pursuance to the Master Policy, the Bank is supposed to send Membership Form of each loanee to the Insurance Company alongwith Insurance Premium and thereafter the Insurance Company, after due verification issues the formal certificate of insurance (COI), which makes a mention of the various terms and conditions and sum insured.  It is contended by the Insurance Company that in this case, although they received the premium amount from the Bank on 30.12.2016, they received the Membership Form on 19.01.2017 only i.e. after the date of death which was on 11.01.2017. Hence, in this case, no certificate of insurance was issued in favour of the loanee till the date of death.  Accordingly, the insurance company returned the premium amount to the bank on 03.03.2017.  Counsel for Insurance Company further contends that as per IRDA guidelines they have 15 days’ time to process the proposals and in these 15 days they have right to even reject the proposals.  Even if t the proposal form was received on 29.12.2017/30.12.2016, the death took place on 11.01.2017 i.e. less than 15 days.

3.       Respondent No.5/SBI in their affidavit has stated that insurance proposal form was filled by the deceased with the help of the insurance agent of the Petitioner/insurance company at Respondent No.5 Bank’s branch on 29.12.2016 where-after even the premium amount of Rs.20,411/- was transferred to the Petitioner/Insurance Company on 29.12.2016 itself (receipt of premium by the Insurance Company is admitted although they state that it was received on 30.12.2016).  The Bank further states in their Affidavit that the said Insurance proposal form was duly collected/taken by-hand by the insurance agent after getting the Bank’s stamp on it on 29.12.2016 itself.  The Bank admits that the said insurance premium was returned by the insurance company on 02/03.03.2017.

4.       The insurance company on the other hand has placed on record a copy of the Membership Form which bears a stamp dated 19.01.2017.  Based on this stamp, the insurance company contends that they received this form only after death of the account holder and hence COI was not issued.  On this, the Counsel representing Respondent No.1 to 4 points out that the stamp bears the branch name of the  Petitioner/Insurance Company at Anantpuram  while Petitioner/Insurance Company to whom the form was sent by the Bank is located at Nandyal in Kurnool  District and Anantpuram is a place of about 200+ Kms away from Nandyal. both Anantpuram and kunnul   are two different districts.  Counsel for Respondents 1 to 4 also contends  that the SBI Nandyal (Noonepalli  Branch) and the insurance company branch  Nandyal to whom the Membership Form was sent by the Bank are located in the same building.  Counsel for the Insurance Company is not convincingly able to explain as to how the Membership Form has reached their Anantpuram branch, except  stating that the Anantpuram Branch is their under-writing office.  However, this contention does not appear to be correct as under-writing is always a third party other than the insurance company but in this case the stamp on the form is the issued by  SBI Life Insurance Company Ltd. itself with  Anantpuram as their Branch.

5.       In the light of the above facts, we have gone through the orders of the District Forum, State Commission and other relevant records and rival contentions of the parties.  The State Commission has duly addressed the various contentions raised by the parties in its order and has given a well-reasoned order.  The extract of relevant paras of the State Commission is reproduced below:

“11) As seen from Ex.B-1, statement of account of the deceased borrower, an amount of Rs.20,411/- was debited from his account on 29.12.2016. The opposite parties 2 and 3 issued Master policy, Ex.B-2 covering the members who obtained personal loans and other loans. The borrower died on 11.01.2017. The complainants submitted their claim form to the opposite parties, who in turn repudiated the claim and refunded the premium amount of Rs. 20,411/- in to the account of the deceased borrower on 02.03.2017. SBI RINn Raksha policy is a Master Policy obtained by the bank from the insurance company for all its borrowers. The 1st opposite party obtained the Master Policy from the opposite parties 2 and 3. The loanee borrower has to send several documents to the insurer through the Master Policy Holder for obtaining insurance cover. It is a settled principle of law that the contract of insurance is based on uberrima fides, i.e., utmost good faith. The principle of utmost good faith is equally applies to the proposer as well as the insurer. If that is contract of insurance, there is a contractual obligation on the part of the insurer to communicate the rejection of the proposal so as to enable him/her to comply him/her obligation in attending medical tests prior to issuance of the policy, after the death, it is not justified. SBI RINn Raksha life insurance policies are issued for all the borrowers of the 1st opposite party, but after any bad incident occurred, the Insurance Company refused to settle the claims with flimsy grounds.

12)         The insured obtained loan on 28.12.2016. As per the statement of account, premium amount of Rs.20,411/- was debited from his account on 29.12.2016. The complainant died on 11.01.2017. After submission of the claim form by the complainants, the opposite parties 2 and 3 refunded Rs.20,411/- to the account of the deceased borrower on 02.03.2017, after submitting claim forms, not settled the claim, reverse the amount to the account holder after death. As such, the opposite parties adopted unfair trade practice and without any lawful cause they are refusing the settlement of claim, which amounts to deficiency in service. Due to the acts of the opposite parties, the complainants suffered mentally and financially. The District Forum delivered well-reasoned order. There is no miscarriage of justice in the order of the District Forum. Hence, we are of the considered view that the appeal is liable to be dismissed.”

6.       We are in agreement with the observations/findings of the State Commission and District Forum and find no reason to interfere with the same.  As was held by the Hon’ble Supreme Court in Rubi Chandra Dutta Vs. United India Insurance Co. Ltd. [(2011) 11 SCC 269], the scope in a Revision Petition is limited. Such powers can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order. In Sunil Kumar Maity Vs. State Bank of India & Ors. [AIR (2022) SC 577]  held that “the revisional jurisdiction of the National Commission under Section 21(b) of the said Act is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity.”   

7.       We find no illegality or material irregularity or jurisdictional error in the order of the State commission, hence the same is upheld.  The receipt of the  premium by the insurance company from the Bank on 30.12.2016 i.e. before the death is not in dispute.  We are in agreement with the contentions of the Bank that they have sent the Membership form to the Insurance Company immediately,  i.e. on 29.12.2016. Considering that both the insurance company and Bank were located at the same station, Insurance Company has not been able to establish convincingly any evidence as to how the Membership form reached their Anantpur branch which is located far away from Nandyal. 

8.       Accordingly, the Revision Petition is dismissed. The pending IAs in the case, if any, also stand disposed off.