Madhya Pradesh

StateCommission

A/16/1931

SBI LIFE INSU.CO.LTD. - Complainant(s)

Versus

SMT.KAMALA PARASTE - Opp.Party(s)

SH.VIKAS RAI

23 Aug 2023

ORDER

M. P. STATE  CONSUMER  DISPUTES  REDRESSAL  COMMISSION,                         

                             PLOT NO.76, ARERA HILLS, BHOPAL

 

                                      FIRST APPEAL NO. 1931 OF 2016

(Arising out of order dated 11.11.2016 passed in C.C.No.03/2015 by District Commission, Dindori)

 

HEAD SALES & MARKETING,

SBI LIFE INSURANCE CO.LTD.

NATRAJ, 101,201,301, JUNCTION OF

WESTERN EXPRESS HIGHWAY AND

ANDHERI KURLA ROAD, ANDHERI (E)

MUMBAI-400 069                                                                                           … APPELLANT.

 

                        Versus

 

1. SMT. KAMLA PARASTE,

    W/O SHRI AMAR PARASTE,

    PUSHKAR VILLA, WARD NO.6,

    NEAR SARASWATI SHISHU MANDIR,

    TEHSIL & DISTRICT-DINDORI, M.P.

 

2. MANAGER, STATE BANK OF INDIA,

    MAIN BRANCH, KHANUJA COLONY ROAD,

    DINDORI, M.P.                                                                                         …. RESPONDENTS.   

                     

BEFORE :

            HON’BLE SHRI A. K. TIWARI                : PRESIDING MEMBER

            HON’BLE DR. SRIKANT PANDEY        :          MEMBER

                     

COUNSEL FOR PARTIES :

                Shri Nitin Jain, learned counsel for the appellant.

           Shri Shashank Pandey, learned counsel for the respondent no.1.

           None for the respondent no.2.

 

 O R D E R

(Passed On 23.08.2023)

                                The following order of the Commission was delivered by A. K. Tiwari, Presiding Member: 

           

                   This appeal by the opposite party/appellant-SBI Life Insurance Co. Ltd. (hereinafter referred to as ‘insurance company’) is directed against the order dated 11.11.2016 passed by the District Consumer Disputes

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Redressal Commission, Dindori (for short ‘District Commission’) in C.C.No.03/2015, whereby the complaint filed by the complainant/respondent no.1 (hereinafter referred to as ‘complainant’) has been allowed.

2.                Facts of the case in short that the complainant’s husband Late Shri Chandrakant Paraste (hereinafter referred to as ‘deceased-insured’) during his lifetime on 21.03.2014 had obtained an insurance policy from the insurance company through the opposite party no.2/respondent no.2-State Bank of India (hereinafter referred to as ‘bank’) for which he had transferred Rs.25,000/- to the insurance company through electronic fund transfer. The sum assured under the policy was Rs.2,50,000/-. Her husband died on 15.04.2014 in a vehicle accident. It is submitted that she being a nominee filed a claim along with necessary documents with the bank despite that the opposite parties did not pay the claim. Legal notice was also given to the opposite parties.  The complainant therefore alleging deficiency in service and unfair trade practice on part of the opposite parties approached the District Commission seeking relief.

3.                The insurance company in its reply before the District Commission denied of issuing any policy to the deceased. It is submitted that since no policy was issued to the deceased-insured therefore, the claim cannot be entertained. It is submitted that policy is issued after receiving the

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premium as per the proposal form but the deceased-insured on the basis of proposal no.50QH208839 had transferred the premium amount in the account of the insurance company through electronic fund transfer on 21.03.2014 but since the proposal form was not received within 15 days, the insurance company rejected the same and got transferred the premium amount in the account of deceased-insured through electronic fund transfer. Thus no policy was issued to the deceased-insured. The insurance company informed the bank in this regard on 30.04.2014 and since no name and address of the complainant is available with the insurance company therefore, no information was given to the complainant separately. In such circumstances, in absence of any insurance policy, the insurance company is not liable to pay any claim to the complainant. There has been no deficiency in service and unfair trade practice on part of the insurance company. The complainant is not entitled to any relief. It is therefore prayed that the complaint be dismissed.

4.                The opposite party no.2-bank in its reply admitted that the complainant’s late husband was having bank account no. 32723989903 with the bank from which a sum of Rs.25,000/- was debited on 21.03.2014 and credited the same to the account of the insurance company meaning thereby that the amount of premium was paid to the insurance company on 21.03.2014. The bank denying the other allegations submitted that on the

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instructions of the deceased-insured the bank had forwarded the premium amount to the insurance company.  There has been no deficiency in service on part of the bank and the bank was unnecessary impleaded as a party to the complaint. The insurance company had received the proposal on 30.03.2014 on the basis of which policy number 50 QH 208839 was issued. There has been no deficiency in service on part of the bank. It is therefore prayed that the complaint be dismissed with costs.

5.                The District Commission allowing the complaint directed the opposite party no.1-insurance company to pay sum insured Rs.2,50,000/- with interest @ 8% p.a. from the date of filing of complaint till payment to the complainant through the opposite party no.2-bank within a period of one month. Compensation of Rs.10,000/- and costs of Rs.1,000/- is also directed to be paid within one month failing which the amount shall carry interest @ 8% p.a.

6.                Heard learned counsel for the parties. Perused the record. 

7.                Learned counsel for the appellant-insurance company argued that the District Commission has wrongly observed that as the proposal deposit was refunded by the appellant after the death of the deceased-insured, the insurance company is liable to pay the claim amount. The District Commission failed to appreciate that the initial deposit paid by the deceased was only an approximate amount of premium, the correct amount

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of premium to be charged only after receiving the proposal form.  The District Commission has wrongly concluded that the proposal form was received by the insurance company on 30.03.2014. The District Commission has failed to observe that neither the complainant nor the bank has submitted copy of the proposal form or the policy document on record and hence there is no evidence that the deceased-insured was ever insured with the appellant. The District Commission failed to appreciate that mere deposit of amount towards premium does not automatically grant an insurance cover from the date of deposit. The District Commission failed to appreciate that there was no concluded contract between the deceased-insured and the insurance company. He therefore argued that the impugned order deserves to be set-aside and the appeal be allowed.

8.                In support of his contentions, he placed reliance on the decision of the Hon’ble Supreme Court in LIC Vs Rajavasi Reddy 1984 AIR 1014 SC, LIC Vs Gurnam Singh IV(2007) CPJ 53 (NC) and the decisions of the Hon’ble National Commission in Revision Petition No. 941 of 2008 (LIC Vs Mala Goyal) decided on 10.09.2012, LIC vs Bimala Routray II (1993) CPJ 146 (NC), Revision Petition No. 533 of 1994 (LIC Vs Smt. K. Aruna Kumari), Revision Petition No. 2680 of 2012 (Avtar Singh Vs SBI Life Insurance Co.Ltd.) decided on 2 August 2013, LIC Vs Bhoomikaben M. Modi 2011 CTJ 160 (CP) (NC), Kolla Vijayalaxmi Vs LIC 2010 CTJ 665

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(CP) (NC), LIC Vs Gita Sharma 2010 CTJ 785 (CP)(NC) in support of his contention.

9.                Learned counsel for the complainant/respondent no.1 supporting the impugned order argued that as soon as the premium was encashed by the insurance company, the insurance policy came into force and therefore the insurance company committed deficiency in service in repudiating the claim. He further argued that since the amount was encashed and the insurance company duly appropriated the amount and credited in the account towards premium payable by the deceased-insured, therefore, the deceased-insured had fulfilled his part of the insurance contract and the insurance company by its overacts of encashing the amount and crediting the same towards premium in its accounts amounts to acceptance of proposal of the deceased-insured. In any event, the insurance company received the premium amount, the insurance company must be deemed to have waived by its conduct the formality, if any, of sending communication of its acceptance of proposal. He further argued that the District Commission has rightly allowed the complaint holding the insurance company deficient in service and therefore this appeal being devoid of any merit deserves to be dismissed.

10.              The complainant has filed her affidavit along with documents P-1 to P-13 including FIR, Postmortem report, death certificate, bank account

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statement and legal notice. On behalf of opposite party no.1-insurance company, an affidavit of Ms. Dhanya K. P. Legal Manager along with letter dated 30.04.2014 addressed to the bank (D-1) has been filed. On behalf of opposite party no.2-bank an affidavit of R. B. Chandravanshi, Chief Manager along with documents D-2 to D-4 has been filed.

11.              It is submitted on behalf of complainant/respondent before the District Commission that as soon as the premium was encashed by the insurance company, the insurance policy came into existence, therefore, the contract of insurance was concluded between the parties and the insurance company is liable to pay the sum insured.

12.              It is an admitted fact that the bank on 21.03.2014 transferred the premium amount towards insurance policy of the deceased-insured to the insurance company. Thereafter the deceased-insured died on 15.04.2014. The contention of the insurance company is that they had received proposal deposit of Rs.25,000/- towards proposal no. 50QH208839 on 21.03.2014 vide Electronic Fund Transfer.  However, as the proposal form was not received even after considerable period, the proposal deposit amount of Rs.25,000/- was refunded on 22.04.2014 vide Electronic Fund Transfer to deceased-insured’s account being unaware about the death of deceased-insured. Thus, there was no concluded contract of insurance between the

 

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deceased-insured and the insurance company, and therefore, no death benefit is payable to the complainant.

13.              On perusal of letter dated 30.03.2014 (D-1) we find that in the said letter, the insurance company has informed the bank that since they have received funds through EFT from your branch on 21.03.2014, however, we observe that the original proposal form has not been received by us even after 15 days from transaction date and hence we are constrained to cancel the proposal and refund the amount. In the said letter it is further stated that please note as per Regulatory requirement the decision on a proposal needs to be communicated to customer within 15 days of receipt of premium consideration. We have processed refund of proposal deposit through direct credit on 22.04.2014 for Rs.25,000/- to Account No.32723989903 of Chandrakant Paraste from where funds have been credited to our account.  This fact has not been controverted by the complainant or the bank by way of producing any document or evidence that the insurance company has accepted the proposal and received the amount and the policy was issued.

14.              It is an admitted fact that after receipt of initial deposit the policy will be issued subject to the conditions mentioned in the proposal form and the initial deposit will be accounted as premium towards the policy. In the instant matter when the insurance company did not receive the proposal

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form had refunded the initial deposit towards premium for the insurance policy of Rs.25,000/- and the bank was informed as no details of the deceased-insured were available with the insurance company.

15.              Hon’ble Supreme Court in Raja Vasireddy Komallavalli (supra) has held “The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not acceptance.  Acceptance must be signified by some act or acts agreed on by the parties or from which the law raised a presumption of acceptance.” It has further held that “The allegation that there was assurance on behalf of the field officer and local agent to the deceased that the payment of first premium would amount to acceptance of the proposal cannot also be accepted firstly because factually it was not proved and secondly because there was no evidence that such could have been the deposition of law.”

16.              Hon’ble National Commission in Avtar Singh (supra) relying on the decision of Apex Court in Raja Vasireddy Komallavalli (supra) has held “Considering the ratio of the said decision of Supreme Court, mere encashment of cheque, given towards first premium, is not enough to conclude that the contract had become into existence between the parties.”

17.              The facts of the instant case are more or less similar to the case dealt with by Hon’ble Apex Court. In the instant matter also, it has not been

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proved that the proposal was accepted as no such evidence was produced neither by the complainant nor the bank and as such there was no concluded contract between the parties.

18.              The contract of insurance cannot be considered to be concluded in the instant case because the insurance company neither accepted the proposal nor issued any policy. By only depositing the amount towards premium that too was refunded later, the contract would not be concluded. Merely by deposit of premium amount along with the proposal form, did not automatically result into the issuance of an insurance policy. There is no contract of insurance unless the proposal for insurance is accepted by the insurer and further the acceptance is communicated by the insurer to the individual proposer or through which the proposal was made as in the instant matter is bank.

19.              Therefore, in view of the foregoing discussion, it is clear that proposal for insurance policy given by the deceased-insured was not received by the insurance company and therefore, initial deposit of Rs.25,000/- towards premium of insurance policy was also refunded. There

was no privity of contract between the deceased and the insurance company. In such circumstances, when there was no concluded contract between the deceased-insured and the insurance company and no policy was issued, the insurance company cannot be held liable to pay the sum

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insured to the complainant. It is also pertinent to mention here that though the complainant has mentioned the policy number but she failed to produce any such policy document on record.

20.              Having regard to the clear position in law about acceptance of insurance proposal and the evidence available on record, we are therefore of the opinion that there was no concluded contract of insurance between the deceased-insured and the insurance company. We thus conclude that the District Commission has erroneously passed the impugned order allowing the complaint, which cannot be sustained.

21.              In view of the aforesaid discussion, the impugned order deserves to be and is hereby set-aside. Consequently, the complaint is dismissed.

22.              In the result, the appeal stands allowed with no order as to costs.

 

                (A. K. Tiwari)                          (Dr. Srikant Pandey)

            Presiding Member                               Member