Wife of the petitioner/complainant took a home loan of Rs.4,25,000/-, inclusive of Rs.65,000/- towards margin money, from Respondent No.1 for purchase of a flat.  She, however, died before the construction of the flat could have been completed.  The insured had also taken an insurance policy called “SBI Life Super Suraksha” from Respondent No.1, in order to cover the risk of Respondent No.2.  Clause-5 of the Summary of Terms and Conditions of the Scheme under which insurance was taken by the wife of the petitioner/complainant reads as under :

“Benefits : In the event of death of the insured housing loan borrower due to any cause, the Sum Assured would become payable to the Group Administrator.  The Sum Assured will be equivalent to the outstanding loan amount including interest as per the original EMI Schedule.”

(2)     The wife of the complainant, having expired on 5.10.2010, a claim was lodged by the complainant with the Respondent No.1 company.  The said company made payment to the extent of Rs.2,61,786.13.  The wife of the complainant had committed default in payment of equated monthly instalments as per Schedule of Payment agreed by her with Respondent No.2.  The case of the complainant is that in terms of the policy taken by his wife he is entitled to the entire amount including arrears and interest on them, which was outstanding on the date his wife died.  On the other hand, the case of Respondent No.1 is that the complainant is entitled to only that much amount, which would have been payable by the deceased on the date of her death, had she continued to make payment of equated monthly instalments as per the Schedule of Payment agreed by her with Respondent No.2.

(3)     Being aggrieved from the stand taken by Respondent No.1, petitioner/complainant approached the concerned District Forum by way of a complaint.   The complaint was resisted by Respondent No.1 primarily on the ground that the loan amount under the Policy was Rs.3,81,000/- and, at the time of her death,  the outstanding loan amount was only Rs.2,61,786/-.  A copy of the EMI calculation was appended by Respondent No.1 as Annexure-E to its reply.  According to Respondent No.1, the sum assured means the outstanding home loan amount including interest in the name of the member in the book of grantees and calculated as per the original EMI repayment schedule.

The District Forum, vide its order dated 22.10.2012, agreed with Respondent No.1 and accordingly dismissed the complaint.

Being aggrieved from the order of the District Forum, the petitioner/complainant approached the State Commission by way of an Appeal.  Said Appeal having been dismissed vide impugned order dated 26.8.2013, petitioner/complainant is before us by way of this Revision Petition.

(4)     We have carefully perused Clause-5 of the Summary of Terms & Conditions of the Scheme, as extracted above.  On careful consideration of the aforesaid clause, we are of the opinion that the sum assured in terms of the policy would be the outstanding loan amount including interest on the date of death of the assured but the said outstanding loan amount and interest shall be calculated as per the original EMI schedule.  In our opinion, the policy which the wife of the complainant had taken proceeds on the assumption that the assured would make payment of the equated monthly instalments in time as per the schedule of payment agreed by him with the insurer.  It could not have been the intention of the insurer to give advantage of his own default to the insured.  If we accept the contention of the complainant, that irrespective of the default committed by his wife, the Insurance Company is liable to pay to him the entire amount outstanding in the loan account, including arrears and interest on them, that would amount to placing premium on an act of default in performance of the contractual obligations undertaken by the insured with the lender.  While issuing the Policy, the insurer could not have anticipated that the insured would commit default in payment of the EMIs agreed by her.  We are of the considered view that for the purpose of calculating the outstanding loan as on the date of death of the insured, the Respondent No.1 was fully justified in calculating the said amount on the assumption that the payment of the equated monthly instalments was made by the borrower as per the schedule of payment agreed by him with the lender.  Calculated accordingly the amount payable to the complainant in terms of the policy comes to Rs.2,61,786/-, as reflected in the statement Annexure-E to the reply filed by Respondent No.1 before the District Forum.  Therefore, we cannot find any fault with the view taken by the District Forum and the State Commission in this regard.  The next contention of the learned counsel for the complainant/petitioner is that even the payment of Rs.2,61,786/- was not made in time.  The same having been made on 25.9.2012.  In our view, the Respondent No.1 should have processed and disbursed the amount payable to the complainant within a reasonable time, which in our opinion would not be more than 6 months from the date the claim was lodged with them.  Therefore, we direct Respondent No.1 to pay interest to the complainant @ 10% per annum, with effect from six months from the date of lodging of the complaint for the first time till the time actual payment was made.

The Revision Petition stands disposed of accordingly.