This case has arisen out of application U/s 35 of the Consumer Protection Act, 2019.
The case of the complainants is that Chitra Pada Roy, a school teacher, holder of savings S.B A/c No:11879953496 took home loan of Rs.22,97,850.00 from O.P.No:2 being home loan A/c No:39455115675 & under advice of the then Branch Manager (O.P.No:2) purchased SBI Life RINN Raksha insurance policy by paying premium of Rs.1,78,862/- on 06.08.2020 with the view that if the borrower dies before the repayment of the loan then Insurance Company shall be responsible to repay the same and he got acknowledgment receipt issued by O.P.No:3.
That Chitra Pada Roy died on 12.08.2020 due to heart attack leaving behind the complainants as legal heirs & after his death necessary information was given to the Bank Authorities and despite repeated notice and written complaint dated 03.12.2020 no response came. Thereafter, complainant came to know that the Insurance Company cancelled the insurance policy on 26.09.2020 which is no way legal or ethical. An application under RTI Act, 2015 was submitted by the complainants but no reply was received from O.P.No:2 & 3. O.P.No:2 & 3 are cancelling the policy in planned conspiracy whereby they are suffering from mental pain and agony. Complainants pray for adjustment of dues of home loan against insurance policy, directing O.P.No:1 & 2 not to realize the same from the complainants, compensation of Rs.1,00,000/- & litigation cost of Rs.50,000/-.
O.P.No:3 & 4 contested the case by filing W.S stating that it issued a master policy in favour of State Bank of Hyderabad (Now SBI) vide Master Policy No:700000018311 (Annexure-A) and had received a membership form bearing No:7012135024, dated 06.08.2020 in name of Chitra Pada Roy for RINN Raksha Group Insurance Scheme under loan A/c No:39455115675 with initial proposal deposit of Rs.178862/- for a sum assured/loan amount to be covered for Rs.21,00,000/- (Annexure-B), during assessment of the proposal O.Ps called for medical requirement as well as to submit annexure to RINN Raksha Electronic application (Annexure-C) but Chitra Pada Roy did not comply with the said requirements, the O.Ps cancelled the proposal & the proposal deposit amount of Rs.178862/- was refunded on 25/09/2020 to direct credit through A/c No:11879953496. The instant case is a case of unconcluded contract, hence they are not liable to pay any insurance benefits of whatsoever nature towards the death claim benefits on the life of the deceased Chitra Pada Roy who died on 12.08.2020 as demanded by the complainants. They pray for dismissal of the case.
O.P.No:1 & 2 contested the case by filing W.V stating that there is no customer-service provider relationship, complainants are not consumer, bank is a mediator to purchase the policy, bank provided a platform to purchase the policy. Mere submission of proposal form and payment of premium does not lead to insurance cover automatically, the Insurance Company needs opportunity to assess the risk and in that place the process of assessing was not properly done due to the death of Chitra Pada Roy, so no Insurance certificate was granted and the proposal was cancelled and policy was not accepted and before being acceptance he died. The case is filed so that O.P.No:1&2 cannot initiate the process of recovery of loan of deceased Chitra Pada Roy and their exits no deficiency of service and they also pray for dismissal of the case.
Points for consideration
- Whether there was/ is any deficiency in service on the part of the O.Ps which gives rise cause of action to file the case?
- Whether the complainants are entitled to get relief (s) as prayed for?
D e c i s i o n w i t h r e a s o n s
Admittedly, Chitra Pada Roy, a school teacher, holder of S.B A/c No:11879953496 and his wife Smt. Padma Roy (Complainant No:1) jointly applied for home loan (application ID 19456261) & O.P.No:1 sanctioned and issued arrangement letter dated 30.06.2020, break up i. Home Loan Rs.21,00,000/- ii. funding of Home loan Insurance cover (if requested) Rs.197850, total Rs.22,97,850/- being Home Loan A/c No:39455115675 & the then Branch Manager of SBI, Lakhipur Branch (O.P.No:2) advised him to purchase SBI Life-RINN Raksha Insurance policy, the conception of the policy is “if a borrower after purchasing the same breathed his last insurance company will pay off his entire loan liability” and when Chitra Pada Roy agreed with the advice Rs.1,78,862/- was debited on 06.08.2020-Debit transfer-TFR to 1187 9953496 from Home loan A/c No:39455115675.
It is also admitted that O.P.No:3 & 4 had received a Membership Form bearing No:7012135024, dated 06.08.2020 in the name of Chitra Pada Roy for SBI Life-RINN RAKSHA, a Group Credit Life Insurance Plan (Master Policy No:700000018311-Annexure-A) from SBI, Lakhipur Branch against loan A/c No:39455115675 with initial proposal deposit of Rs.1,78,862/- for a sum assured, loan amount to be covered for Rs.21,00,000/- (Annexure-B). In page-2 of Membership Form all the questions regarding health of Chitra Pada Roy were answered as “No”.
According to O.P.No:3&4 during the assessment of the proposal they called for medical requirement as well as to submit annexure to RINN RAKSHA Electronic Application (Annexure-C) of customer Chitra Pada Roy, customer ID:56350044, requirement date:07.08.2020, description of requirements:Tread Mill Test (TMT), HbA1C, Category:A (CBC, ESR, Lipid profile), Category:B (RFT, LFT Billirubin, S.Protein, S.Albumin, HbsAg), Category:C (FBS), RUA, Category:D (HIV) and FMR, TPA-Health India Insurance TPA Services Pvt. Ltd.
O.P.No:1&2 stated that after submission of Membership Form with initial premium deposit Chitra Pada Roy sustained medical tests prescribed by O.P.No:3 & 4 but in reality he did not sustain medical test.
O.P.No:3 & 4 stated that Chitra Pada Roy did not comply with said requirements & when the process of assessment of risk was going on Chitra Pada Roy breathed his last on 12.08.2020.
We are of the opinion that mere submission of the Proposal Form and proposal deposit amount does not lead to insurance cover automatically. In the Proposal Form, Point No:10 it was declared by the proposed life assured/deceased that “I hereby understand and agreed that no life insurance cover will commence until the risk is accepted and requisite premium has been remitted to SBI Life by the Master Policy holder and SBI Life conveys its written acceptance of this application for life insurance cover. In the Master policy also insurance cover start date is defined as “the insurance cover start date for member will depend on the date of underwriting acceptance of proposal and date of receipt of premium. Therefore, O.P.No:3 & 4 cancelled the proposal and the proposal deposit amount of Rs.1,78,862/- was refunded on 25.09.2020 in direct credit to A/c No:11879953496 (Annexure-D).
Ld. Advocate for the complainant referred Section 8 of the Indian Contract Act which runs as:-
Acceptance by performing conditions or receiving considerations-performing of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.
We reiterate that required conditions were neither performed by the insured Chitra Pada Roy nor accepted by the insurer/O.P.No:3&4 only initial proposal deposit was remitted to the insurer by its Agent/Bank/O.P.No:1 & 2 i.e proposal was not accepted by insurer, so Section 8 of the Indian Contract Act do not attract here.
Ld. Advocate for the complainant referred citation Re: Gokal Chand (D) THR. LRS. Vs Axis Bank Ltd & Anr reported in [2023] CJ 185 (SC) where Para:12 runs as:-
‘opting for the loan amount along with life/property insurance in the loan downsize letter shall be considered as the written intent of the customer to avail the insurance. Such selection shall be considered to be explicit instruction from the borrower to the bank in writing to disburse the premium to the Insurance Company directly and will become effective only on the borrower complying with the all formalities as required by the Insurance Company….’
(Emphasis Supplied)
Though O.P.No:1 & 2 bank debited/remitted the premium to Insurance Company but the borrower did not comply the formalities as required by the Insurance Company.
In above referred judgment decisions in LIC Vs Raja Vasi Reddy Komalavalli Kamba and Others (1984) 2 SCC 719 which was considered by the Hon’ble Supreme Court in D. Srinivas Vs SBI Life Ins. Co. Ltd & Ors (2018) 3 SCC 653, which stressed on considering the unique facts of the case to determine whether there is a presumption of acceptance of the policy by the insurer. The son of the complainant who was covered under the Insurance policy died of a heart attack and only after the death, the Insurance Company informed that the policy was not accepted and this was followed by refund of the premium amount. In other words, case of D. Srinivas relates to concluded contract.
Ld. Advocate for the complainant also referred a citation Re: Gita Devi Aggarwala Vs LIC & Ors where citation of LIC Vs. Anuradha & LIC Vs Smt. Asha Goyel were relied, all relate to concluded contract.
This is a case of unconcluded contract, as no insurance cover was granted on the life of deceased Chitra Pada Roy. Since no insurance cover was granted there was/is no contractual obligation on the part of O.P.No:3&4 to pay any amount towards the claim on the life of Chitra Pada Roy.
In Appeal No:2197 of 1970 Re: LIC of India Vs RajaVasi Reddy, the Hon’ble Supreme Court has observed “a contract concludes only when the party to whom an offer has been made accepts it unconditionally and communicate his acceptance to the person making offer. Similarly the mere receipt and retention of premium until after the death of the applicant or mere preparation of the policy document is not acceptance and doesn’t give rise to contract-acceptance must be signified by some act or acts agreed on by the parties or from which the law rises a presumption of acceptance” and thus there was no insurance cover on the life of the deceased as on the date of his death.
Hon’ble NCDRC in the case of LIC Vs Gurnam Singh IV (2007) CPJ 53 (NC) observed that as the contract of insurance not finalized, the repudiation is justified. Hon’ble NCDRC in case of LIC Vs Mala Goyal, Revision Petition No:941 of 2008, LIC Vs Bimala Routray, First Appeal No:126 of 92, LIC Vs Smt. K. Aruna Kumari RP No:533 of 94, Avtar Singh Vs SBI Life Insurance Co. Ltd RP No:2680 of 2012, Insurance Corporation Vs Rajendra Maheshwari 2000 Law Suit (CO) 340:2000(3) CPJ 41 upheld the repudiation action on the ground of unconcluded contract.
The written complaint dated 03.12.2020, application under RTI Act of the complainants, consequently of no avail.
Under above facts and discussion, we find that this case has been filed so that the Bank cannot initiate the process of recovery of loan of deceased Chitra Pada Roy but as there exists no deficiency in service on the part of O.P.No:1&2(Bank) and/or O.P.No:3&4 (Insurance Company), the complainants are not entitled to get relief as prayed for.
In the result the case fails.
Hence, it is
O R D E R E D
that the C.C-27/2021 be and the same is dismissed on contest against the O.Ps but without any cost.
Let a copy of this order be given to the parties free of cost.
