Per Hon’ble DR. S.K. Kakade, Presiding Member. 

1)    This is a complaint filed by Mrs.Hemangi wd/o late Rohit Vaid and Ku.Naavinya d/o Rohit Vaid against the State Bank of India O.P.No.1 and State Bank of India Life Insurance Company Ltd. all from Nagpur, for repudiation of insurance claim in the name of deceased Rohit Vaid seeking direction to the O.Ps. to pay the home loan and also pay compensation for deficiency in service by the O.Ps.

2)    Brief facts for deciding this complaint are as follows.

3)      Late Shri Rohit Vaid was serving in Merchant Navy on the post of Second Officer and married to complainant No.1 Hemangi Vaid. In the said wedlock  they got female child name Ku.Naavinaya Rohit Vaid aged 3 years who is complainant No.2. Late Rohit Vaid had booked two apartments on 11/03/2013 with M/s Sandesh Infrastructure Pvt.Ltd., Engineers and Contractors having its registered office at Shivnarayan Bhavan, P.S. Agrawal Marg, Santra Market, Nagpur. The said apartments were under construction and late Rohit Vaid  entered into registered agreement with builder and contractor M/s Sandesh Infrastructure Pvt.Ltd. on 13/03/2013. After application for loan with the O.P.No.1 State Bank of India, RACPC Division, S.V.Patel Marg, Nagpur the loan was sanctioned, the loan amount to the tune of Rs.14,27,700/- per apartment. The sanction letter was issued by O.P.No.1 on 08/05/2013 and also issued arrangement letters to the loanee on 20/05/2013. As per the arrangement of the State Bank of India with State Bank of India Life Insurance Co.Ltd., which is O.P.No.1 and 2 respectively the said amount was insured by paying premium directly by O.P.No.1 to O.P.No.2. Hence the State Bank of India Life Insurance Co.Ltd issued the insurance policy in the name of Mr.Rohit Vaid. Meanwhile late Mr.Rohit Vaid was in the employment in the merchant navy after examination for medical fitness on 03/04/2013. Mr.Rohit Vaid for joining his duty left India on 15/04/2013. He was working as second officer at MTM Yangoon of MTM Ship Management Co.Pvt.Ltd Singapore on 17/04/2013. Meanwhile with the opening of the loan accounts with State Bank of India, Civil Lines Branch Nagpur the loan amount was disbursed as per the total sanctioned loan was Rs.28,55,400/-. The State Bank of India paid advance first instalment of loan to the builder was Rs.1,71,500/- on 14/06/2013 for  each apartments totally Rs.3,43,000/-. The State Bank of India, Civil Lines Branch Nagpur paid the premium to State Bank of India Life Insurance Co. Rs.5540/- as premium of each home loan, total payment of the premium of two insurance policies paid on 14/06/2013 was Rs.11,080/-. Accidentally Mr.Rohit Vaid expired on 04/09/2013 while on duty of Merchant Navy at Dumai in Indonesia. The accidental death of late Rohit Vaid was informed to State bank of India by Mrs.Vaid by letter dated 03/10/2013, initially the complainant No.1 visited personally the State Bank of India on 09/10/2013, to know about the details of insurance policies of Mr.Rohit Vaid, to her surprise she was told that the insurance policies of Mr.Rohit Vaid were not made as he did not submit health questionnaires within 35 days from the date of sending the questionnaires. The bank officials told her that the said health questionnaires were to be filed up personally so sent by ordinary post and also informed by e-mail. Complainant No.1 visited State Bank of India and State Bank of India Life Insurance office several times to know the further status of insurance policies and also came to know that such an e-mail with questionnaires was never sent by State Bank of India Life to Mr.Vaid. Late Mr.Rohit Vaid was treated as NRI and hence State Bank of India NRI (Non Residential Indian) home loan was offered to him with attractive offers like Hassle-free processing with minimum turn around time and Life cover from SBI Life at attractive rates of premium. After going through the same broacher Mr.Rohit Vaid decided to go for home loan from SBI and also SBI Life Insurance Cover.

4)      After receiving the information from SBI Life officials that the application for life insurance policy was cancelled by SBI life on non receipt of reply to the health questionnaires specifically made for NRI. Aggrieved by non availability of insurance policies inspite of deducting premium and that the negative reply from the bank officials the complainants approached this Commission against the SBI who sanctioned and disbursed first instalment of the home loan and SBI Life Insurance Co.Ltd., who even after receiving the premium of both insurance policies did not make insurance policies and thus rejected the possibility of claim on the accidental death of Mr.Rohit Vaid. The complainants prayed for paying of the home loan Rs.24,69,540/- and an insurance claim amount of Rs.28,00,000/- towards accidental death insurance by O.P.No.2 to the complainants. Complainants claimed interest @ 24% p.a. from 04/11/2013 till realisation and also prayed for refunding the amount of EMI’s collected and Rs.5,00,000/- towards mental agony and harassment amount alongwith litigation charges of Rs.1,00,000/-.

5)      O.Ps. opposed this complaint by filing written statements and evidence affidavit with written notes of argument and prayed for dismissal of complaint.

6)      Considering the rival contentions and submissions of both the parties, arguments advanced by learned advocates of both parties and documents filed by both the parties on record, following points arise for our consideration.   

As to Point No.1- (As to Complainants are the Consumer of O.Ps) - Late Mr.Vaid obtained the loan from SBI the same was sanctioned on scrutinization of his documents and eligibility to obtain loan. Since the banking services are working for the interest paid by the loanee on the amount of first loan sanctioned their exists “Consumer-service provider” relationship between the O.P.No.1 and late Mr.Rohit Vaid. The O.P.No.2 accepted the premium for both loan amounts alongwith the receipt of proposals for the insurance policies. Though in later steps of the processing O.P.No.2 had cancelled the proposal form, it was “unqualified acceptance” by SBI Life Insurance Company of the insurance liability. Further, since the widow and daughter of Mr.Rohit Vaid had the beneficial interest of Mr.Rohit Vaid’s obtaining loan and insurance cover and being legal heir of deceased Mr.Rohit Vaid both the complainants are consumers of both O.Ps. Hence we answer point No.1 in Affirmative.         

7)   Reasoning :- As to point No. ii  (Whether the O.Ps are deficient in service/unfair trade practice ?)-  The learned advocate for the complainants after narrating the facts as stated above invited the attention of this Commission to page No.83 to 90 which is SBI Life RINn Raksha Membership form which is proposal signed by Mr.Rohit Vaid also page No.97 and 98 of complaint compilation which are the letters sent by SBI Life Insurance Co. to Mrs.Vaid informing the complainants that the proposal for the insurance of the life of Shri Rohit Vaid could not be accepted due to non fulfilment of necessary requirements and hence these proposals were cancelled and the premium was refunded. This letter was dated 23/09/2013 means after the death of late Mr.Rohit Vaid. According to learned advocate for the complainants there was an unqualified acceptance of the proposals by SBI Life Insurance Co. as the SBI Life Insurance Co. accepted the premium after which the first installment of the loan was disbursed to the Builder, Developer and Promoter.

          Further according to them referring to the decision by State Consumer Disputes Redressal Commission of Hyderabad in first appeal No.334/2013 against consumer complaint No.995/2011 District Forum Hydrabad that the nominee/legal heir has beneficial interest on the death of the purchaser of the life insurance policy and hence the widow of Mr.Rohit Vaid being legal heir has legal right to file the complaint as well as receive the beneficial interest from the life insurance policy.

8)     According to learned advocate for the complainants the cancellation of proposal by SBI Life Insurance Company was not proper, he referred the Section 45 of the Insurance Act which reads as there are three conditions for application of second part of the Section 45 of the Insurance Act that material information need to be disclosed and the three conditions are :-

      (a)  The mis-statement must be on a material matter or must  

            suppress facts which it was material to disclose:

      (b)  the suppression must be fraudulently made by the policy

             holder,

      (c)  The policy-holder must have known at the time of making the

            statement that it was false or that it suppressed facts which it

            was material to disclose.

9)        Thus according to learned advocate for complainants none of the above Sections and conditions are applicable in the present case for the simple reason that death of Mr.Rohit Vaid was accidental death and that he was examined and declared physically fit by the Doctors of Medical Examination Board and only after that he went for the duty in Merchant Navy. Thus learned advocate vehemently argued that such cancellation can not be done by insurance company for immaterial facts. He also referred IRDA Regulation (Exh.-3) page No.318 states that the insurers need to adopt honest  and fair practices in advertisement and market place and other practices that tend to instill the confidence in the public and these are the guidelines to the insurance companies that reinforce the regulations on all promotional communications with policy holders. According to learned advocate the cancellation of proposal was not informed to late Mr.Rohit Vaid and that it is to be noted that the cancellation and refund of the premium was done after the death of Mr.Vaid. As per IRDA regulation 2002 issued by Insurance Regulatory and Development Authority para 4.6 states that the proposals shall be processed by insurer with speed and efficiency and all decisions thereof shall be communicated in writing within the reasonable period not exceeding 15 days from the receipt of proposal by the insurer. That the bank has in collusion with the SBI life Insurance Co. deducted the premium for both the insurance policies covering loans, but did not follow guidelines set by IRDA and cancelled the proposal for life insurance of the life of late Rohit Vaid. The said practice by O.P.No.1 as well as O.P.No.2 is unfair trade practice and also deficiency in providing service to the consumer Mr.Rohit Vaid. He further invited the attention of the Commission to the page No.90 that the proposal form was dated 14/06/2013 which was signed by proposer late Mr.Rohit Vaid but at that time he already had left the country in the month of April itself signing the proposal form in advance. Thus the signatures were made in the month of March but on the proposal form the date put was 14/06/2013. This again flouts the guidelines set by IRDA. To the surprise of the complainants further the SBI had communicated to the complainants that the SBI Life Insurance does not cover the accidental deaths.

10)      Inspite of answering the relevant question in the proposal form being NRI again the questionnaire seeking health information was allegedly signed by SBI Insurance company was forwarded by Insurance Company. Further para six of the proposal for authorization and good health declaration. Point No.3 states that, “I have understood  the terms and conditions of the plan and agree to which the same and join the plan for life insurance cover for the duration of the loan as per the prevailing EMI schedule”. The crystal clear meaning point No.3 is that the insurance policy was providing life insurance cover and hence the communication from the SBI Life Insurance Co. that there is no life insurance cover available is again unfair trade practice.

11)    In support of his contentions learned advocate for complainant referred number of judgments are as under :-

1. General Motors(I) Private …….V/s……Ashok Ramnik Lal Tolat and Another, decided on  09/10/2014 In Civil Appeal No.8072-8073 of 2009, decided by Hon’ble Supreme Court of India.
2. General Assurance Society Ltd. ….V/s……Chandumull Jain and other, decided on 07/02/1966, reported in 1966 AIR 1644, 1966 SCR (3) 500.
3. D.Shrinivas . ….V/s……SBI Life Insurance Co.Ltd, decided on 16/02/1918 in Civil Appeal No.2216 of 2018 (Arising out of SLP (C ) No.14021 of 2017), decided by Hon’ble Supreme Court of India.
4.  State Bank of India…..V/s……Nirmala and another, decided on 29/02/2012 in revision petition No.2315/2011 in appeal No.1540/2010, decided by Hon’ble National Consumer Commission.
5. Life Insurance Corporation of India…..V/s……Smt.Shahida Begum w/o Shri Saleemuddin, decided on 06/07/2011 in revision petition No.4502/2010 in appeal No.987/2008, decided by Hon’ble National Consumer Commission.

12)    Learned advocate for the complainants prayed for allowing the complaint by declaring both the O.Ps. as deficient in services while rejecting the claims of complainants and directing the O.Ps. to pay compensation as prayed for.

13)    Learned advocate for SBI/O.P.No.1 while opposing the contentions of the advocate for complainants submitted that it was not mandatory on the part of the complainants to have insurance and hence obtaining the insurance policy was purely voluntary. Further late Mr.Rohit Vaid was well qualified to understand the terms and conditions, he should have completed the necessary requirements and return back the health questionnaire by proper filling. Further it was the contentions of learned advocate for SBI that it was not obligatory on the part of the bank to inform Mr.Vaid about the cancellation of insurance proposal. The role of bank was to sanction and disburse the loan and not offer insurance services. Hence it was the duty of Mr.Vaid to fill the proposal form correctly and further follow up till the insurance policy was issued. Now in this process of obtaining insurance policy the bank has no role; hence according to the learned advocate the complaint should be dismissed as there is no deficiency in service by the SBI Bank.

14)    Learned advocate for O.P. No.1 referred the citation of this Commission First Appeal No.A/09/235, SBI Life Insurance Company Ltd……..V/s……Smt.Neha Wd/o. Diliprao Jadhav and others, passed on 13/01/2022 (in Consumer Case No.CC/178/2008 of District Consumer Forum Amravati)

15)      Learned advocate for O.P.No.2 i.e. SBI Life Insurance Co.Ltd. narrated the process that has taken place during the application for SBI Life Insurance policy. The SBI Life Insurance Co. Ltd. received the proposal form on 17/06/2013 and on receipt of the form company issued letter to get NRI form and this insurance cover promise by RINn Suraksha that only cover the loan and there is no availability of life insurance covering the life of the loanee. Since the necessary documentation in the form of health related questionnaire was not completed, finally the proposals were not accepted and cancelled. Learned advocate invited the attention of the Commission to Anx. No.D page No.93 and Anx. No.E  page No.95   by which the SBI Life Insurance Co. i.e. O.P.No.2 had already communicated with Mr.Vaid regarding asking for NRI details. As per Anx –D the letter and then Anx. E  letter dated 16/08/2013 that the proposals were cancelled due to non availability of the information and the amount is refunded. Thus it was already communicated to Mr.Vaid. In support of his contention learned advocate for O.P.No.2 referred to following judgments and rulings.

Filed by O.P.No.2

1. LIC of India and others……V/s……K.Aruna Kumari, reported in 1995 (2) CPC 516.
2. Avtar Singh and others……V/s……SBI Life Insurance Corporation of India, reported in 2013 (3) CPC 216.
3. Life Insurance Corporation of India……V/s……Raja Vasireddy Komalavalli Kamba and otheres, reported in (1984) 2 SCC 719.

16)      In view of the submissions of the learned advocate for O.P.No.2 he prayed for dismissal of the complaint since there was no deficiency in service provided to late Mr.Vaid.

17)      We have gone through all the documents on record and heard the rival contention of both the sides. In our opinion this is an unfortunate event when after completing certain documentation in the form of filling and signing of the proposal of the SBI Life Insurance claims late Mr.Vaid left the country for his duty in the month of April. According to the proposal submitted, the insurance premium for both future polices were deducted from the Bank loan account and insurance company accepted the premium. In our view acceptance of the premium itself is accepting the liability of the loan which is covered. We accept the contentions of learned advocate for the complainants that the proposal form (para No.6, point No.3) already has informed the proposal that the said insurance policy was providing life insurance cover. The guidelines given by IRDA that within 15 days the applications or proposals decision need to be taken by the insurance company. In the present case the SBI Life Insurance Company failed to comply this regulation of IRDA and though the first instalment of EMI disbursed in the month of April itself and proposals were submitted in the month of March while loans were applied for, accepting these proposals for further processing in the month of June is deficiency in service. We therefore have no doubt that there was deficiency in service provided by SBI as it s in collusion with SBI Life Insurance Company accepted the premium and finally rejected the proposals. Thus from the discussion above it is clear that the deficiency in service by O.P.No.1 as well as O.P.No.2 is proved beyond doubt and hence in this unfortunate event of the death of the loanee and proposal late Mr.Vaid, both O.P.Nos.1 and 2 are liable to pay the loan amount as well as provide life insurance claim. Thus the answer on point No.2 is Affirmative.   

As to point No.(iii) – Entitlement for compensation.

18)    Considering the discussions in para No.2 that has proved beyond doubt that O.P.No.1 as well as O.P.No.2 have provided deficient services and also followed unfair trade practice. We feel that the complainants are entitled for compensation as well as the returned of the loan amount. The concept of the insurance has social perspective. The insurance covers risk of unforeseen happening like sudden death of Mr.Vaid. Basic principle of insurance is that the premiums are collected from majority and claims are paid to the unfortunate minority, thus balancing the liability of minority on the majority in the society. Without following the guidelines and regulations of the policy established by IRDA the SBI Life Insurance Company tries to shrug off of the responsibility of compensating the loan of unfortunate individuals, is certainly unfair trade practice. We certainly think that in this particular unfortunate death of Mr.Rohit Vaid, his wife and daughter who are the complainants before us are entitled for reimbursing the loss in the form that the loan amounts to be paid to the Bank and should also get claim and compensation for life insurance cover. We answer point No.3 as Affirmative.  Hence we pass the following order. (Point No.iv) 

// ORDER //

i)       Complaint is partly allowed with cost of quantified to Rs.50,000/- to be paid by the both O.Ps. jointly and severally.

ii)    It is declared that there was deficiency in service provided by O.P.No.1 i.e. SBI Bank and O.P.No.2 SBI Life Insurance Co.Ltd., while providing service to late Mr.Rohit Vaid.

iii) O.P.No.2 is hereby directed to pay the outstanding loan amount alongwith the interest accumulated to O.P.No.1 i.e. SBI and O.P.No.1 to issue no due certificate in relation with the home loan obtained by late Mr.Rohit Vaid.

iv)   O.P.,No.2 is hereby directed to pay Rs.20,00,000/- towards the life insurance cover for the accidental death of late Mr.Rohit Vaid to the complainants alongwith interest @ 9% p.a. from the date of filing of proposal of insurance cover till its realisation.

v)    Both O.Ps. are hereby directed to pay Rs.1,00,000/- jointly and severally towards mental agony and harassment to complainants.

vi)    The above order to be complied within two months from the date of receipt of order else interest @ 12% p.a. will be levied on the amount which was not paid.

vi)  Copy of the order be furnished to both parties free of                    cost.