Chandigarh

DF-II

CC/325/2020

Surinder Kaur - Complainant(s)

Versus

SBI Life Insurance Co. Ltd. - Opp.Party(s)

Devinder Kumar

17 May 2022

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION-II,

U.T. CHANDIGARH

 

Consumer Complaint  No	:	325 of 2020
Date  of  Institution	:	07.08.2020
Date   of   Decision	:	17.05.2022

 

 

 

 

 

Surinder Kaur wife of Late Sh.Jeevan Kumar, aged about 58 years, R/o H.No.344, Phase-4, Mohali, Punjab.

             …..Complainant

 

Versus

1]  SBI Life Insurance Company Limited, Plot No.144, Industrial Area, Phase-II, Chandigarh 160 002 through its Branch Manager.

2]  State Bank of India, SCO 35, Phase-X, S.A.S. Nagar, Mohali 160055 the Branch Manager.

    2^nd Address:-

State Bank of India, SCO No.35, Opposite Verka Milk Booth, Phase X, S.A.S. Nagar, Mohali 160055 through its Branch Manager.

3]  State Bank of India, RACPC, SCO 99-107, Sector 8-C, Chandigarh 160009 through its Branch Head.

    2^nd Address:-

    RACPC, Sector Road, Sector 68, SAS Nagar, Mohali 160052

    ….. Opposite Parties

 

BEFORE:  SMT.PRITI MALHOTRA    PRESIDING MEMBER 

                                     SH.B.M.SHARMA              MEMBER

 

Argued by  : Sh.Devinder Kumar, Adv. for the complainant.

   Sh.Rajneesh Malhotra, Adv. for OP No.1.

   Sh.Vishal Gupta, Adv. for OPs No.2 & 3.

 

PER PRITI MALHOTRA, PRESIDING MEMBER

         Concisely put, the husband of complainant i.e. Sh.Jeevan Kumar, a Govt. Officer, availed ‘Home Loan’ of Rs.52.50 lacs as well as ‘Home Equity Loan’ of Rs.55.00 lacs, jointly with complainant from OP Bank.  It is averred that the sanction of loan was granted by the OP Bank with proviso that the loan will be covered under specific insurance policy of SBI Life Insurance Company Limited applicable for such loan to secure the outstanding amount of House Loan i.e. Rs.52.50 lacs in the event of death of borrower or co-borrower/co-applicant so that the legal heirs are not required to repay the loan amount.  The loan was disbursed by OP No.2 Branch and to secure the house loan amount of Rs.52.50 lacs, insurance premium of Rs.2,38,398/- was remitted by the said branch to Op No.1-SBI Life Insurance Company for covering the outstanding balance in the house loan accounts (Ann.C-1).  It is stated that after completing all the formalities, the OP Company issued policy document to the said branch.  It is submitted that all the payments/installments of the loan were regularly being deposited with the Bank, but unfortunately, on 18.6.2019, the husband of complainant i.e. Sh.Jeewan Kumar, loanee/insured expired while he was on Election Duty with Govt. of India, which was duly intimated to OP No.2 bank and on the asking of OP Bank, she also approached insurance company/OP No.1 and lodged the claim for settling the loan amount under the insurance cover (Ann.C-4 colly).   However, the OP Insurance Company, informed the complainant that the insurance policy has already been cancelled and the claim cannot be considered.  It is stated that the official of OP No.1 also handed over a letter dated 11.6.2019 to the complainant and alleged that the policy has been cancelled and refund was processed on 24.4.2019 (Ann.C-5).  It is submitted that the complainant was shocked to note that neither the OP No.2 Bank nor loan disbursing branch was aware about the cancellation of the policy nor any communication prior to 11.6.2019 was sent to complainant about alleged cancellation of policy.  It is pleaded that no intimation or letter was received from the Bank, loan disbursing branch or insurance company for cancellation of the policy and that the OPs are taking such false plea to avoid their liability under the policy.  The complainant raised the matter with OPs by sending letters followed by legal notice dated 26.8.2019, but still the OPs failed to settle the claim (Ann.C-8 to C-10) and instead initiated recovery proceedings, as the complainant was forced to pay the installments of loan to save the loan account from NPA Category and taking possession of the property by the Bank. Alleging the above act & conduct of the OPs as gross deficiency in service and unfair trade practice, causing harassment and loss to the complainant, hence this complaint has been preferred.

 

2]       The OP No.1- SBI Life Insurance Co. Ltd. has filed reply and while admitting the factual matrix of the case, stated that the deceased Mr.Jeevan Kumar had applied for insurance cover under ‘Group Insurance Scheme’ under Master Policy No.70000018311 vide Form No.701057776 dated 01.03.2019 along with proposal deposit of Rs.2,38,398/- under Loan Account No.38291177371 for Loan Amount of Rs.48 lacs (Ann.B).  It is submitted that OP Company advised Mr.Jeevan Kumar to undergo medical examination on submission of proposal form, but he did not do so, thus did not comply with the requirement of the policy and hence, the OP had cancelled the proposal/membership forms and refunded the deposit of Rs.2,38,938/- received under the proposal, which was intimated to Mr.Jeevan Kumar vide letter dated 25.4.2019 (Ann.C). It is also submitted that during the life time of Mr.Jeevan Kumar, the answering OP has never accepted any risk on his life under any insurance policy, so the company is not obliged to settle any claim on the life of deceased Mr.Jeevan Kumar.  It is further submitted that mere deposit of amount towards premium along with the proposal does not automatically result into policy.  It is stated that the deceased did not submit the mandatory medical requirements for proper assessment of risk and hence the answering OP did not grant any insurance cover to him.  It is also stated that mere deposit of amount towards premium along with the proposal does not automatically result into policy.   It is pleaded that deceased and complainant never attempted to know the status of his proposal for insurance nor did he comply with the essential medical requirements. Denying other allegations, the OP No.1 has prayed for dismissal of the complaint.

 

         The OPs No.2 & 3/Bank have filed joint reply and while admitting the factual matrix of the case, stated that the complainants were provided two separate Home Loans i.e. Home Loan amounting to Rs.52 lacs and another Home top Up loan amounting to Rs.55 lacs jointly in the name of complainant and her husband Sh.Jeevan Kumar vide Agreements Ann.R-2/2 & R-2/3 both dated 28.2.2019 as well as Arrangement Letters dated 28.2.2019 (Ann.R-2/4 & R-2/5).  It is submitted that at the time of availing the Home Loan facility from OP Bank, the husband of the complainant also opted to avail one SBI Life ‘Rinn Raksha’ Policy for the home loan.  It is also submitted that the husband of the complainant availed loan facility from OP Bank to pay the premium of SBI Life Rinn Raksha Policy to OP No.1 and as such, SBI Suraksha Account No.38298068886 was opened in the name of Sh.Jeevan Kumar.  It is further submitted that the application-cum- proposal form dated 1.3.2019 duly signed by Sh.Jeevan Kumar (ann.R-2/6) was sent to OP No.1 and the premium amount of said policy to the tune of Rs.2,38,398/- was paid by answering OPs from said SBI Suraksha Loan Account on 2.3.2019 to OP No.1 (Ann.R-2/7).  It is pleaded that the answering OPs have performed its duties diligently by forwarding the application form of late Sh.Jeevan Kumar to OP No.1 along with payment of premium of  Rs.2,38,398/-.  It is also pleaded that the husband of complainant had failed to comply with the necessary medical requirements for assessment of risk as demanded by OP No.1 for issuance of the insurance policy in his name, so Op No.1 refunded the premium amount by directly crediting it in the SBI Suraksha Loan Account on 24.4.2019 and also intimated this to the husband of complainant vide its letter dated 18.06.2019 further stating that the borrower is not covered under the Group Insurance Scheme (Ann.R-2/8).  It is also pleaded that the deceased husband of complainant was fully aware that he had voluntarily refused to comply with the medical requirements for SBI Life Rinn Raksha Policy as required by OP No.1.  It is asserted that no Certificate of Insurance was ever issued or sent by OP No.1 to the husband of complainant or to OP bank, so the claim of complainant is hypothetical and erroneous.  It is also asserted that the complainant being a co-borrower is liable to pay the outstanding loan amount to the OP Bank.  Pleading no deficiency in service or unfair trade practice and other allegations of complainant, the OPs No.2 & 3 have prayed for dismissal of the complaint.                  

 

3]       Parties led evidence in support of their contentions.

 

4]       We have heard the ld.Counsel for the parties and have perused the entire record including written arguments. 

 

5]       The admitted facts are that the complainant and her husband Jeewan Kumar jointly availed ‘Home Loan’ of Rs.52.50 lacs as well as ‘Home Equity Loan’ of Rs.55.00 lacs from OP Bank.  It is undisputed that to secure the outstanding amount of House Loan i.e. Rs.52.50 lacs in the event of death of borrower or co-borrower/co-applicant, an insurance premium of Rs.2,38,398/- was remitted by the OP Bank to SBI Life Insurance Company Limited.

 

6]       The loanee Jeewan Kumar expired on 18.5.2019 and when the claim was raised with OPs for settlement of loan account under the policy obtained by the deceased loanee against the home loan in question, it was encountered stating that no policy was ever issued in favour of the deceased loanee. 

 

7]       It is stated by the OP Insurance Company that the premium paid was refunded to the insured loanee during his life time and the amount of premium was credited in his account on 24.4.2019 as the deceased loanee failed to fulfill the requirement of getting medical examination done. Stated further that since the proposal of the complainant was not accepted, so no policy was ever issued.  The OP No.1 in order to justify its stand referred to letter dated 25.4.2019 (Ann.-C) issued by it to the complainant whereby the amount of premium was credited in the account of the loanee. 

 

8]       The thorough perusal of the record revels that the stand taken by the OPs is misconceived and the documents so referred by it seems to be manufactured & created one in order to defy the claim of the complainant.  It is the main contention of the OPs that as the loanee Jeevan Kumar failed to get his medical examination done, which is the basic requirement for getting the policy issued.  To verify this fact the proposal form filled by the loanee insured-Sh.Jeevan Kumar, has been perused, which reveals that there is no such  pre-requisite condition of undergoing medical examination for issuance of policy in question.   Further, it reveals that the proposer was supposed to fill certain columns in the proposal form as regards to his medical condition, which has duly been filled-in by the proposer-loanee Jeevan Kumar.  Therefore, the stand of the OPs that loanee Jeevan Kumar was not issued the policy for want of his medical examination, is not sustainable as it was not the requirement of the policy in question. 

 

9]       The record further reveals that the alleged document/letter dated 11.06.2019 vide which the complainant was allegedly intimated about the refund of the premium nowhere explains the specific reason for the refund as the stand has been taken by the OPs in the reply in the present complaint.  The OPs also failed to place on record any documentary proof regarding delivery of said letter to the loanee Jeevan Kumar.  There is also no letter ever issued by the OPs to the loanee Jeevan Kumar to complete the formalities regarding the medical examination.

 

10]      From the above discussion, it is amply clear that the loanee Jeevan Kumar during his lifetime was not made aware about the refund of policy premium nor was asked to complete the formalities of medical examination and he completely remained under impression that his loan has duly been secured/insured under the policy in question.  Had he been made aware, he would certainly have undergone medical examination/test being asked by the OPs as the loanee Jeevan Kumar was willing to avail the policy to secure his loan and as such he had paid hefty premium towards the policy.   

        

11]      Also it is gathered from the record that the premium amount so paid in the account of OP No.1 Insurance Company on 2.3.2019 and till 18.5.2019, when insured Jeevan Kumar died, nothing  was ever conveyed to Sh.Jeevan Kumar(since deceased) about the acceptance or rejection of the proposal form, raising a reasonable presumption that the loan account/amount was secured. 

 

12]      We are also guided by the latest judgment of Hon’ble Supreme Court of India in case of D.Srinivas Vs. SBI Life Insurance Co. Ltd. & Ors., Civil Appeal No.2216 of 2018 decided on 16.2.2018, wherein similar controversy, as in the present case, has been adjudicated and the case in hand is squarely covered under the referred judgment.  Relevant paras of the judgment ibid reads as under:-

“15.     It is an admitted fact that the premium was paid on 29.09.2008. That it was only in 18.01.2011 that the respondent insurance company informed the appellant that the policy was not accepted by them. We are unable to fathom the reason for such excessive delay in informing the appellant, which cannot be excused. We are of the opinion that the rejection of the policy must be made in a reasonable time so as to be fair and in consonance with the good faith standards. In this case, we cannot hold that such enormous delay was reasonable. Moreover, it is borne from the records that the premium was only re-paid on 24.02.2011, after a delay of more than one year five months. If we consider above aspects, it can be reasonably concluded that the insurer is only trying to get out of the bargain, which they had willfully accepted. From the aforesaid circumstances we can easily conclude that the policy was accepted by the insurer.

 

16.     In the circumstances, there is no reason to believe that there was no complete contract. There is clear presumption of the acceptance of the proposal in favour of the proposer. Therefore, the majority view of the Commission would not sustain”.

 

13]      From the above discussion and findings, we are of the opinion that the deficiency in service as well as unfair trade practice resorted to by the OPs is writ large. Therefore, the present complaint is allowed with direction to the Opposite Parties jointly & severally as under:-

a)  To credit the sum assured amount of Rs.48 lacs in the Home Loan Account No.38291177371  of the complainant as on the date of death of loanee Jeevan Kumar i.e. 18.5.2019 and thereafter work out the balance principal amount in the said Home Loan Account as on 19.5.2019;

b)  To deduct entire installments so paid by the complainant upto date in said Home Loan Account No.38291177371 from June, 2019 against the balance principal along with applicable interest arrived at on June, 2019, after deduction of sum assured amount, as directed above, and refund the balance excess amount, if any, to the complainant.

C)  To supply fresh/latest Account Statement to the complainant in respect of Home Loan Account No.38291177371 in question, showing the deduction of sum assured amount, as directed above, as well as balance principal amount along with interest arrived at in the said account as on June, 2019 and installments so paid by complainant upto date as well as refund, if any;

d) To pay an amount of Rs.One Lakh to the complainant towards compensation for causing her immense mental agony & harassment due to their gross deficient act as well as unfair trade practice resorted to by them, along with litigation expenses of Rs.25,000/-. 

         This order shall be complied with by the OPs jointly & severally within a period of 30 days from the date of receipt of copy of this order, failing which they shall also be liable to pay additional cost of Rs.50,000/- apart from above relief.

         Certified copy of this order be sent to the parties, free of charge. After compliance, file be consigned to record room.

Announced

17^th May, 2022                                                                      

 

Sd/-

 (PRITI MALHOTRA)

PRESIDING MEMBER

 

Sd/-

(B.M.SHARMA)

MEMBER