Punjab

Ludhiana

CC/19/487

Mrs.Malkit Kaur - Complainant(s)

Versus

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

Narinder Chhibba Adv.

15 May 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:  487 dated 16.10.2019.                                                       Date of decision: 15.05.2024. 

 

1. Mrs. Malkit Kaur W/o. Sh. Gurbachan Singh, resident of Village Bhamian Khalan, Tehsil and Distt. Ludhiana.
2. Daljit Kaur W/o. late Sh. Lakhvir Singh S/o. Gurbachan Singh, resident of near Water Tank, Village Bhamian Kalan, Tajpur Road, Ludhiana.                                                                               ..…Complainants

                                                Versus

1. SBI Life Insurance Co. Ltd., Central Processing Centre, 8^th Level, Seawoods Grand Central, Tower 2, Plot No.8, R-1, Sector 40, Seawoods, Nerul Node, Navi Mumbai-400706.
2. State Bank of India through its Branch Manager, Opp. Hotel Park Plaza, Ferozepur Road, Ludhiana.

…..Opposite parties 

Complaint Under Section 12 of the Consumer Protection Act, 2019.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainants            :         Sh. Narinder Chhibba, Advocate.

For OP1                         :         Sh. Nipun Gupta, Advocate.

For OP2                         :         Sh. Rajeev Abhi, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                Shorn of unnecessary details, the facts of the case are that Lakhvir Singh S/o. S. Gurbachan Singh who was son of complainant No.1 and husband of complainant No.2 expired on 24.02.2019 at Ludhiana. During his life time Lakhvir Singh was having a housing loan account No.6250728004 with OP2 bank for which OP2 got a policy No.70000018310 in name of Lakhvir Singh from OP1 under RIN Raksha/UIN No.111NO78V03 on premium of Rs.21,760/- which was credited in account of OP1. The complainants stated that unfortunately, Lakhvir Singh expired on 24.02.2019 regarding which they lodged a claim with the OPs and they being class-I legal heirs of Lakhvir Singh are entitled to the benefits of the policy. But OP1 dislodged the claim by referring that son of complainant No.1 and husband of complainant No.2 had concealed material facts due to which no claim of Lakhvir Singh could be paid to them. According to the complainants, Lakhvir Singh has not concealed any facts but the OPs are avoiding the payment of claim amount on flimsy grounds which amounts to deficiency in service and this has caused harassment, mental torture, pain etc to the complainants for which they are entitled to compensation. The complainants sent legal notice dated 18.07.2019 to the Ops but no reply was received. Hence this complaint, whereby the complainants have prayed for issuing directions to the Ops to pay claim of policy No.70000018310 on life of Lakhvir Singh under RIN Raksha and to pay damages of Rs.5,00,000/- as well as litigation cost of Rs.1,00,000/-.

2.                Upon notice, OP1 appeared and filed written statement and assailed by complaint by taking preliminary objections on the ground of maintainability; lack of jurisdiction; lack of locus standi; lack of cause of action; concealment and suppression of material facts etc. OP1 stated that the contract of insurance contract is a contract of “UTMOST GOOD FAITH” and the insured is duty bound to disclose everything concerning his/her health, habits etc. at the time of filling the proposal for insurance cover failing which the insurer has every right to repudiate the claim.OP1 further stated that the Deceased Life Assured (DLA) Lakhvir Singh committed a breach of principle of Utmost Good Faith by suppressing the material fact that he was suffering from heart disease and was taking treatment for the same prior to date of submission of membership form for grant of insurance cover.

                   Under the column of Brief Facts of the Case, OP1 stated that the DLA Late Sh. Lakhvir Singh applied for insurance coverage with regard to his loan account No.62507288004  under SBI Life – Rinn Raksha Policy through membership form No.7008845330 dated 01.09.2017, on the basis of which he was granted insurance cover under Master Policy No.70000018310 with cover start date as 11.09.2017 for initial sum assured of Rs.13,44,190/-. The bank being the Master Policyholder, the Master Policy was issued to bank. According to OP1, the risk cover under the said group insurance scheme is of diminishing nature and the sum assured tapers down as per Annexure Schedule of the COI. Further as per point No.21, sub clause 1, Death Benefit of the COI, “In the event of death of the life assured during the policy term, the sum assured applicable for the month and year of death, as per the sum assured schedule (as mentioned in the Annexure) is payable, provided all premiums due up to the date of death have been fully paid. The death benefit will be payable irrespective of the actual outstanding loan amount or the amount outstanding as per the loan repayment schedule.” So as per Annexure, Table of Sum Assured Benefits of the COI, the applicable sum assured is Rs.13,17,500/- as the date of death is 24.02.2019. OP1 further stated that the DLA while filling up the membership form, replied in negative to the specific questions in the membership form such as point No.5-Medical Questionnaire, Question No.(1)  Have you consulted any doctor for surgical operation or have been hospitalized for any disorder other than minor cough, cold or flu during the last five years? (iii) Have you ever suffered from/been treated/hospitalized for or diagnosed to have (a) Diabetes raised blood sugar or high blood sugar (b) Chest pain, heart attack, heart disease or any other disorder of the circulatory system?” The proposer has to give true and correct answers to the questions and declaration in the membership form, which is a fundamental basis for assessment of risk and answer to each and every question asked for therein is vital for the underwriter to decide whether the proposed life is to be insured or not.

                   OP1 further stated that DLA died on 24.02.2019, resulting in a claim in 1 year 5 months and 13 days vide claim intimation dated 05.04.2019. During the claim assessment process, it was revealed that the DLA was suffering from Heart disease and was under treatment prior to date of membership form. As per the Color Doppler Echocardiogram Report dated 08.06.2017 of Deep Heart Centre, Ludhiana issued by Dr. R.K. Aggarwal, the DLA was diagnosed with Dilated Cardiomyopathy with Trivial MR, Mild Consentric LVH, AV Sclerosis & Large LV Size with poor LVEF of 28%. Further as per prescription dated 08.06.2017 issued by Dr. R.K. Aggarwal of Deep Heart Centre, Ludhiana it was noted that DLA was chronic alcoholic SOB (Shortness of breath), HT (hypertension) since 2 month & ECHO (echocardiogram) Dilated cardiomyopathy (DCM), LVH (Left Ventricular Hypertrophy), EF-0.28. As such, the DLA was having pre-existing illness of Heart disease, which he suppressed at the time of filling membership form. According to OP1, the claim was repudiated on legal and valid grounds on the basis of suppression of material facts and the premium amount of Rs.21,760/- was refunded vide direct credit on 24.05.2019 to the complainant’s bank account No.1341000003986 held with Punjab & Sind Bank and the same was intimated to the complainant vide claim repudiation letter dated 06.06.2019 as per clause 14.4 Non-disclosure, 14.4.2 of the terms and conditions of the Master Policy document. OP1 further stated that on the receipt of representation from the complainant, the case was referred to the Claims Review Committee Headed by a retired High Court Judge. However, as there was indisputable evidence that the DLA was suffering from Heart Disease prior to the date of commencement of the policy, the decision to repudiate the claim was upheld by Claims Review Committee (CRC) and the same was intimated to the complainant vide letter dated 26.07.2019. Even the legal notice dated 18.07.2019 of the complainants was replied vide letter dated 06.08.2019. As the DLA failed in his duties towards full disclosure of material facts and has committed breach of the doctrine of UTMOST GOOD FAITH, as such, the claim was lawfully repudiated.

                   On merits, OP1 reiterated the crux of averments made in the preliminary objections and brief facts of the case. OP1 has denied that there is any deficiency of service and has also prayed for dismissal of the complaint.

3.                OP2 filed separate written statement and assailed the complainant by taking preliminary objections on the ground of maintainability; lack of jurisdiction; the complainant being estopped from filing the present complaint against OP2; concealment of material facts; the complainant is not a consumer qua OP2 etc. OP2 stated that the relief in the present complaint has been sought against OP1 who had repudiated the death claim of Sh. Lakhvir Singh under policy No.70000018310 under Rin Raksha Home Loan Scheme LAN/PF No.62507288004 UIN No.111NO78V03 vide letter dated 06.06.2019 on account of suppression of material facts in the proposal form and also credited an amount of Rs.21,760/- to the nominee saving bank account held in Punjab & Sind Bank on 24.05.2019 towards the refund of premium as per the amended insurance laws as intimated by OP1 to OP2. Legal heirs of Lakhvir Singh lodged claim with OP1 who repudiated the claim after processing the claim. According to OP2, it being an independent body constituted under State Bank of India Act has no concern or connection with the issuance of insurance policy, lodging of claim, it’s processing and to decide the fate of death claim of Lakhvir Singh.

                   OP2 further stated that Sh. Lakhvir Singh had applied for and availed housing loan of Rs.13,38,000/- from State Bank of Hyderabad now merged with State Bank of India, the details of which is reproduced as under:-

Housing Loan	Rs.12,18,000/-
SBI Rinraksha	Rs.58,000/-
Total	Rs.13,38,000/-

 

He further executed loan documents in favour of the bank on 30.03.2017 such as SBH Housing Loan most important terms and conditions (MITC) as well as Housing loan agreement, with promise to repay the loan in 240 EMIs of Rs.12,000/- p.m. starting w.e.f. April 2017 along with interest @8.75% p.a. with monthly rests and in case of default the whole amount was to become recoverable in lump sum. Sh. Simarjit Singh S/o. Sh. Gurmeet Singh was surety for repayment of said loan. Sh. Lakhvir Singh mortgaged the original sale deed of his property i.e. residential plot measuring 150 sq. yards comprising Khasra No.26//8/2, 12/2, Khata No.201/204, 202/210 as per jamabandi for the year 2003-04 situated in Bhamian Kalan, HB No.185 in the vicinity of Bhamian Kalan, Tehsil and District Ludhiana. The mutation of said property was recorded in revenue record vide Rapat No.127 dated 30.10.2020. OP2 further stated that the original borrower Sh. Lakhvir Singh and the guarantor Sh. Simarjit Singh failed to adhere to the financial norms and discipline of OP2 due to which the account became irregular and even failed to regularize the loan account despite repeated requests and reminders sent by OP2 and as such, the account was classified as NPA i.e. Non-Performing Assets on 30.05.2019 having entire outstanding amount of Rs.15,53,918/- inclusive of interest calculated up to 21.02.2023 to be payable by legal heirs of Lakhvir Singh and Simarjit Singh to OP2 in lump sum. OP2 is entitled to recover the said amount by way of sale of mortgaged property as well as other movable and immovable assets owned and inherited by the legal heirs of Lakhvir Singh and Simarjit Singh. OP2 further stated that it had also invoked the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002 and served upon Smt. Daljit Kaur wife of Late Sh. Lakhvir Singh and Smt. Malkit Kaur wife of Sh. Grubachan Singh a notice U/s.13 (2) of the SARFAESI Act, 2002 on 20.08.2019 and possession notice on 15.11.2019 and had taken the symbolic possession of the property on 15.11.2019. OP2 has also moved an application before the District Magistrate, Ludhiana U/s.14 of SARFAESI Act for taking over the actual physical possession of the property owned by deceased borrower Sh. Lakhvir Singh. According to OP2, the complainants are not entitled to any discretionary relief as claimed.

                    On merits, OP2 reiterated the crux of averments made in the preliminary objections and facts of the case. OP2 has denied that there is any deficiency of service and has also prayed for dismissal of the complaint.

4.                In evidence, the complainants tendered their joint affidavit as Ex. CA and reiterated the averments of the complaint. The complainants also placed on record documents Ex. C1 and Ex. C2 is the copy of statement of account of account No.62507288004, Ex. C3 is the copy of death certificate of Lakhvir Singh, Ex. C4 is the copy of repudiation letter dated 06.06.2019, Ex. C5 is the copy of legal notice dated 18.07.2019, Ex. C6 and Ex. C7 are the postal receipts and closed the evidence.

5.                On the other hand, the counsel for OP1 tendered affidavit  Ex. RA of Ms. Neelam Singh, authorized representative of OP1 along with documents Ex. R1 is the copy of policy document, Ex. R2 is the copy of membership form, Ex. R3 is the copy of welcome letter, Ex. R4 is the copy of investigation report, Ex. R5 is the copy of Echocardiography & Color Doppler Report, Ex. R6 is the copy of prescription slip of Deep Heart Centre, Ex. R7 is the copy of repudiation letter dated 06.06.2019, Ex. R8 is the copy of intimation letter dated 26.07.2019, Ex. R9 is the copy of legal notice dated 18.07.2019, Ex. R10 is the copy of reply dated 06.08.2019 to legal notice and closed the evidence. 

                   The counsel for OP2 tendered affidavit Ex. RA as well as affidavit Ex. RB of Sh. Mela Ram Bhatia, Branch Manager, State Bank of India, RACPC, Fountain Chowk, Ludhiana along with documents Ex. R1 is the copy of account statement of account No.62507288004, Ex. R2 and Ex. R3 is the copy of repudiation letter dated 06.06.2019, Ex. R4 is the copy of Annexure-N, Ex. R5 is the copy of agreement to sell, Ex. R6 and Ex. R7 is the copy of jamabandi, Ex. R8 is the copy of affidavit, Ex. R9 is the copy of application for housing loan, Ex. R10 is the copy of Annexure-B, Ex. R11 is the copy of terms and conditions, Ex. R12 is the copy of Housing Loan Agreement, Ex. R13 is the copy of Letter of guarantee for housing loan, Ex. R14 is the copy of notice U/s.13(2) of SARFAESI Act dated 20.08.2019, Ex. R15 to Ex. R17 are the copies of postal receipts, Ex. R18 is the copy of possession notice, Ex. R19 to Ex. R23 are the copies of photographs, Ex. R24 is the copy of application under Section 14 of SARFAESI Act,   Ex. R25 is the copy of letter dated 22.06.2018, Ex. R26 is the copy of legal heir form, Ex. R27 is the copy of death certificate of Lakhvir Singh, Ex. R28 is the copy of civil suit, Ex. R29 is the copy of discharge quote statement and account statement and closed the evidence.

6.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents and written statements along with affidavits and documents produced on record by both the parties.

7.                Lakhvir Singh, son and husband of complainant No.1 and 2 respectively, availed housing loan facility of Rs.12,18,000/- from erstwhile State Bank of Hyderabad now merged with OP2 State Bank of India on 30.03.2017. He has also paid an amount of Rs.58,000/-  as insurance premium of the policy known as SBI Life - Rinn Raksha Policy. The loan was payable in 240 equated monthly installments of Rs.12,000/- each starting from April 2017 along with interest @8.75%. OP2 bank being Master Policyholder and corporate agent of OP1 enrolled Lakhvir Singh as a member of Group Insurance Scheme known as SBI Life – Rinn Raksha Policy on 01.09.2017 in order to grant insurance coverage of the entire outstanding loan amount. The membership form Ex. R2 was got filled and thereafter, based upon the information, certificate of insurance Ex. R1 was issued. Policy Schedule and Certificate of Insurance are the enclosed documents with the Welcome Letter Ex. R3. Unfortunately, on 24.02.2019, Lakhvir Singh expired and death claim was lodged with OP1. At the time of death of Lakhvir Singh, the amount of Rs.15,53,918/- was stated to be outstanding against him. On 06.06.2019, OP1 vide letter Ex. C4 = Ex. R7 repudiated the death claim of Lakhvir Singh, the operative part of which is reproduced as under:-

“This is with reference to claim under the above mentioned policy on the life of Late Lakhvir Singh. We are sad to note the unfortunate demise of Late Lakhvir Singh.

On scrutiny of claim documents, we have noted that in the proposal for insurance dated 01/09/2017, Late Lakhvir Singh had answered the questions in the proposal form as follows:-

Question No.	Question	Answer
Q 5 (i)	Have you consulted any doctor for surgical operations or have been hospitalized for any disorder other than minor cough, cold or flu during the last 5 years?	No
Q 5 (iii)            (b)	Have you ever suffered from/been treated/Hospitalized for or diagnosed to have – Chest pain, heart attack, heart disease or any other disorder of the circulatory system.	No

 

Life insurance contract is contract of utmost good faith. This policy was issued on the basis of the information disclosed in the proposal form believing the information           to be true. However, as per the medical treatment papers dated Jun-17 available with us, Late Lakhvir Singh was suffering from Heart disease and was taking treatment for the same prior to the date of commencement of policy i.e. 11/09/2017.

However, these material facts were not disclosed in the proposal form. The claim is hereby repudiated on the grounds of suppression of material facts.

Please note that the amount of Rs.21,760/- (Rupees Twenty One Thousand Seven Hundred Sixty only)        has been credited to nomine savings account xxxxxxxx3986 held in Punjab and Sind Bank on 24/05/2019, towards refund of premium as per the amended insurance laws.”

8.                Now the point of determination arises whether the OPs were justified in repudiating the claim of the complainant or not?

9.                At the very outset, it is noted that OP1 insurance company categorically mentioned in the preliminary objections of written version and its affidavit that OP1 had launched a Group Insurance Scheme for the borrowers of loan from State Bank of India where under the borrower-member is offered insurance subject to the terms and conditions incorporated in the Master Policy Annexure-A and the individual members are issued certificate of insurance as evidence of their membership of Group Insurance Scheme. It has been further mentioned that the terms and conditions of Master Policy are binding on the insured members but it is apparent that the individual members of the Master Policy are only supplied with certificate of insurance and not with the terms and conditions incorporated in the Master Policy. There is nothing on record to show that the copy of Master Policy was supplied to the deceased insured in order to bind him with those terms and conditions. Further the insurance policy was got issued by OP2 bank in order to sub serve its own ends, so to get the coverage of entire outstanding loan amount in case the borrower dies. In these circumstances, it cannot be said that the taking of insurance policy by Lakhvir Singh was voluntary and even he has to take a loan of Rs.58,000/- in order  to pay the first insurance premium. Further the membership form Ex. R2 must have been filled by the officials of the OPs and no such official has been examined so to prove that the contents of membership form were correctly filled at the instance of Lakhvir Singh.

10.              While repudiating the death claim of Lakhvir Singh, the OPs relied upon SBI Life Claims Investigation Report Ex. R4 stated to have been prepared by Dr. Kavinder Sharma of Sakshi Investigation and Detective Agency. The said investigator took medical record of one Lakhvir Singh from the Deep Heart Centre, Model Town, Ludhiana which has been exhibited as Ex.R5 and Ex. R6. Perusal of these medical records shows that no parentage and address of Lakhvir Singh has been mentioned therein. Further Dr. Kavinder Sharma, Investigator also did not step into witness box to corroborate the contents of investigation report or to further show that Lakhvir Singh patient as shown in Ex. R5 and Ex. R6 is the same person whose death claim was under investigation. Further the treating doctor was not produced as witness to support the assertion of the OPs. Even affidavit of treating doctor was not produce before this Commission. In this regard, reference can be made to Bajaj Allianz Life Insurance Co. Ltd. And others Vs Vinod Kumar Kaushik and others in 2021(4) C.P.J. 302 whereby the Hon’ble National Consumer Disputes Redressal Commission, New Delhi has made the following observations:-

“Consumer Protection Act, 1986 Section 21(b) Insurance – Surgery for hip replacement – suppression of previous illness alleged – Repudiation of claim – Insured slipped and fell down in bathroom due to which he sustained left hip joint fracture with periprosthetic – Surgery for total hip replacement was conducted at a cost of         Rs.2,10,954/- - Neither any Doctor was produced as witness nor      any affidavit filed to corroborate their assertion – Petitioner was rightly directed to pay Rs.2,10,954/- along with interest @9% p.”

 

So, there is no admissible evidence on record to conclude that there is any concealment on the part of the insured. As such, the repudiation of death claim by OP1 is not justified. It would be just and appropriate if OP1 SBI Life Insurance Co. Ltd. is directed to settle and pay the outstanding loan amount with respect to death claim of insured Lakhvir Singh to OP2 State Bank of India to adjust the house loan account, within 30 days from the date of receipt of copy this order. OP NO.1 is also burdened to pay composite costs of Rs.20,000/- to the complainants. The complaint as against OP2 Bank is dismissed.

11.              As a result of above discussion, the complaint is partly allowed with direction to OP1 to settle and pay the outstanding loan amount with respect to death claim of insured Lakhvir Singh to OP2 State Bank of India to adjust the house loan account, within 30 days from the date of receipt of copy this order. Further the OP1 shall also pay composite costs of Rs.20,000/- (Rupees Twenty Thousand only) to the complainants. Compliance of the order be made within 30 days from the date of receipt of copy of order. However, the complaint as against OP2 Bank is hereby dismissed. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.        

12.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

 

(Monika Bhagat)                              (Sanjeev Batra)               Member                                         President  

Announced in Open Commission.

Dated:15.05.2024.

Gobind Ram.