Tamil Nadu

StateCommission

FA/167/2012

Vasanthi & 3 others - Complainant(s)

Versus

State Bank of India,Rep by its Branch Manager & 2 others - Opp.Party(s)

S. Thangavel-Applt

29 Dec 2022

ORDER

IN THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI

 

BEFORE :       Hon’ble Thiru Justice R. SUBBIAH               PRESIDENT

                       Thiru R  VENKATESAPERUMAL                   MEMBER

                        

F.A.NO.167/2012

(Against order in CC.NO.486/2010 on the file of the DCDRC, Coimbatore)

 

      DATED THIS THE 29^th DAY OF DECEMBER 2022    

 

1.       Mrs. Vasanthi

W/o. Late R. Swaminathan

 

2.       Minor Priyanka

D/o.  Late R. Swaminathan

 

3.       Minor Kaviya

D/o.Late R. Swaminathan

                                                                               

4.       Mrs. Rangathaal                                                     

          W/o. Ramasamy Gounder      

 

Vadakku Thottam, Pulliyampalayam                             M/s. S. Thangavel

Chittambalam Post, Palladam Taluk                                 Counsel for

Tirupur District                                                     Appellants/ Complainants

 

                                                         Vs.

1.       State Bank of India

Rep. by its Branch Manager

Kethanur Branch, Kethanur Post

Palladam Taluk, Tirupur District

 

2.       State Bank of India

Rep. by its Regional Manager                                  

Region IV Network 2,

Coimbatore Kurinji Complex                                Mr. K. Kumaran                                   

State Bank Road,                                                  Counsel for

Coimbatore -18                             1&2 Respondents/1&2 Opposite parties

 

3.       The Manager (Claims)

SBI Life Insurance Co. Ltd.,

Central Processing Centre

Kapas Bhavan, Plot No.3A,                              

Section No.10, CBD Belapur

Navi Mumbai – 400 614                      3^rd Respondent/ 3^rd Opposite party

 

          The Appellants as complainants filed a complaint before the District Commission against the opposite parties praying for certain direction. The District Commission dismissed the complaint. Against the said order, this appeal is preferred by the Complainants praying to set aside the order of the District Commission dt.23.12.2011 in CC.No.486/2010.

 

          This appeal came up before us for hearing finally on 25.10.2022, upon hearing the arguments of the counsel appearing Appellant and R1 and R2 and on perusing the documents, lower court records, and the order passed by the District Commission, this commission made the following order:

 

ORDER

 

JUSTICE R. SUBBIAH,  PRESIDENT   

 

1.       This appeal has been filed as against the order of the District Commission, Coimbatore, dt.23.12.2011 in CC.No.486/2010 dismissing the complaint, filed by the Respondent/ complainant herein.

 

2.       For the sake of convenience, parties shall be referred as per the ranking before the District Commission.

 

3.       The case of the complainant before the District Commission in brief as follows:

          The 1^st complainant is the wife of the deceased Swaminathan, the 2^nd and 3^rd Appellants/ complainants are the daughters of the Late Swaminathan, while the 4^th complainant is the mother of the Late Swaminathan.  It is the case of the complainant that late Swaminathan was working as a conductor in the Tamil Nadu State Transport Corporation at Palladam Branch, Tiruppur.  While he was in service, he applied for a housing loan before the 1^st opposite party.  After careful scrutiny of the documents submitted by the deceased Swaminathan, the 2^nd opposite party had sanctioned loan on 19.8.2009 for a sum of Rs.9.69 lakhs under SBI Easy Home Loan scheme.  The said loan included the insurance for SBI life premium, which was a pre-condition for granting loan.  After execution of all necessary loan document, the loan was disbursed to the deceased Swaminathan on 1.9.2009, through Loan HTL A/c.No.30872086630, for a sum of Rs.6,30,000/-.  The 1^st payment of loan was disbursed on 1.9.2009, and the insurance coverage also starts from the 1^st disbursement of loan as per sanction letter dt.19.8.2009.  As per paragraph 7 of the sanction order the House should be insured in the joint names of the Bank and the applicant for full market value, covering all possible risks.  Therefore, it is the bounden duty of the 1^st opposite party to insure the House for full market value, as per the sanction order.  While so, all of a sudden the insured/Swaminathan died on 15.11.2009 due to cardiac arrest in Kovai Medical Centre and Hospital Ltd., The 1^st complainant had orally informed to the opposite party No.1 about the demise of Swaminathan.  The complainant had also requested the 1^st opposite party to waive the loan, and return the original documents to her, as per the insurance scheme.  As per paragraph 2 & 3 in the summary and features of the Group Insurance Scheme, the death benefit amount is payable to the group master policy holder, who is the 1^st opposite party herein.  When that being the position, the complainant was shocked and surprised to receive a letter from the 1^st opposite party on 4.1.2010, stating that the late Swaminathan was not eligible for the insurance claim, since the policy coverage starts only from 3.12.2009.  But actually the loan was sanctioned on 19.8.2009, so insurance coverage ought to have been started from 1.9.2009 itself i.e, the first disbursement of loan amount.  Whereas, Swaminathan died on 15.11.2009, after expiry of 75 days after the 1^st disbursement of loan amount.  On enquiry, the complainant came to know that an amount of Rs.62,711/- was deducted on 20.10.2009 and only after the information given by the complainant, the opposite party No.1 had submitted the insurance form to the insurance company/ opposite party No.3 on 25.11.2009.  The 2^nd opposite party is the higher authority of the 1^st opposite party, and the 2^nd opposite party has not properly followed the action of the 1^st opposite party.  Therefore the actions of both the opposite parties are clear deficiency in service.  The 1^st complainant had submitted the claim form alongwith necessary documents on 11.2.2010.  The 1^st opposite party had sent a letter dt.20.2.2010 stating the claim form had been forwarded to the 3^rd opposite party.  On 20.3.2010, the 3^rd opposite party had sent letter to the complainant stating that the 3^rd opposite party had refunded the amount to the 1^st opposite party, since the death of Swaminathan was prior to date of commencement of policy.  Therefore, there is no concluded contract on the date of death of Swaminathan.  But it was admitted that the 1^st opposite party should have deducted the premium amount on the date of disbursement of the loan amount.  In this regard, various correspondences were exchanged between the parties, since nothing fructified they filed a complaint before the District Commission praying for a direction to clear the loan account of deceased Swaminathan and return the original documents mortgaged by Swaminathan and also to pay a sum of Rs.5 lakhs towards compensation alongwith cost. 

 

4.       The allegation of the complainants was resisted by the 1 & 2 opposite parties by way of filing written version stating as follows:

          Though the housing loan sanctioned to  Swaminathan included an one time policy premium amount of Rs.62,711/-, the policy should be arranged only after the Account holder issuance of a draft for that purpose.  In the present case, the late Swaminathan signed the necessary debit voucher only on 20.10.2009.  On which date the Demand Draft was drawn by the 1^st opposite party, and the same was sent to the 3^rd opposite party in due course.  The policy was eventually issued by the 3^rd opposite party as per certificate dt.4.12.2009.  The term of the policy issued by the 3^rd opposite party clearly provides in Schedule III and clause 3 under the heading “45 days Exclusion”, that cover will not apply in case if death occurs within 45 days of cover.  In the instant case the death had occurred on 15.11.2009, i.e., within 45 days of the effective day, therefore the claim by the complainant is untenable.  The contention of the claim of the complainant is that since the 1^st instalment had been disbursed, the insurance must be deemed to have been commenced from that date is untenable in law, since there was no automatic insurance cover on the date of disbursement of the first instalment.  It could be considered that the cover is deemed to commence only on 20.10.2009, when the premium demand draft was applied for by the deceased   Swaminathan for availing insurance and drawn in favour of the 3^rd opposite party.  Consequently, the relief prayed for viz. clearance of the loan account and return of the title deeds and award of compensation are not legally sustainable.  Furthermore the applying of insurance is separate and wilful act of the borrower, which the borrower is required to comply, and these opposite parties have no role to play.  There is neither negligence of service nor deficiency on the part of the opposite party bank in the coverage of insurance.  Hence the complaint is liable to be dismissed. 

 

5.       The 3^rd opposite party had filed their written version stating that the group insurance scheme of 3^rd opposite party is optional and not mandatory to every borrower.  The borrower who is willing to insure may apply with separate membership form alongwith a requisite premium amount.  The 3^rd opposite party assesses each and every membership form separately and decides whether the risk cover can be granted or not.  The granting of insurance cover is not automatic and is always subject to its acceptance by the 3^rd opposite party.  Therefore the contentions of the complainants are totally irrational and not maintainable.  Further the opposite parties 2 & 3 are different legal entities and the 3^rd opposite party is not privy to what had transpired between the DLA and the opposite parties 1 & 2.  The issuance of insurance cover and lending a loan to the deceased, both are different contracts based on different terms and conditions.  The insurance cover starts only after acceptance of the risk by the 3^rd opposite party, and in the instant case, the application for insurance itself was dt.20.10.2009.  The complainant is trying to mislead the forum, and the complaint is frivolous.  Further it is not mandatory that the 3^rd opposite party should grant insurance cover automatically on sanction of a loan.  The 3^rd opposite party are well within their rights to decline insurance cover, if the member is not insurable as per the risk, despite a loan being sanctioned.  In the instant case Mr.Swaminathan was not covered under the said scheme during his life time and thus there is no question of settling any claim.  If the opposite party had received the intimation, immediately they would have received the certificate of insurance.  The insurance cover for a member shall commence only from the date of acceptance of proposal.  In the instant case, the proposal itself was on 20.10.2009.  As there was no concluded contract on the date of death of Swaminathan, the claim was repudiated.  Thus they sought for dismissal of the claim. 

 

6.       In order to prove the claim, proof affidavits were filed by the parties, alongwith documents, which were marked as Ex.A1 to A14 on the side of the complainant, and Ex.B1 & B2 by the 1^st and 2^nd opposite parties and Ex.B3 to B9 by the 3^rd opposite party.

 

7.       The District Commission after analysing the evidence had come to the conclusion that the borrower R. Swaminathan had signed in the debit voucher only on 20.10.2009 for obtaining the insurance cover.  A minimum of 10 days would have been required for processing and issuing the certificate of insurance.  The insurance certificate could have been issued only on 1.11.2009.  But unfortunately, the insured Swaminathan died on 15.11.2009.  As per Schedule II Group Insurance Policy, if an insured member dies during the first 45 days from the date of commencement of the cover, the company shall not be liable to pay any claim amount, except for a claim arising out of death due to an accident.  In this case, the death had occurred within 45 days due to heart attack.  Thus holding that there was no deficiency in service on the part of the opposite parties, had dismissed the complaint.  Aggrieved over the same, the present appeal has been filed by the complainant, praying to set aside the order passed by the District Commission, and allow the complaint as prayed for. 

 

8.       We have heard the submissions of the learned counsel for the appellants and 1^st and 2^nd Respondents.  The 3^rd Respondent though appeared through counsel, there was no representation for oral arguments.  Hence we have heard the appellants and 1 & 2 Respondents, perused the materials placed on record, written arguments filed by appellants, 1&2 Respondents and the 3^rd Respondent, and the order impugned.

 

9.       The learned counsel for the appellants/ complainants would contend that the loan was sanctioned on 19.8.2009 and the first disbursement of the loan amount was made on 1.9.2009, therefore the insurance cover also starts from 1.9.2009 itself, which is 45 days prior to the death of the policy holder R.Swaminathan.  Therefore, the complainants are entitled for the claim made by them in the complaint.  But without considering this aspect properly, the District Commission had come to the conclusion that risk commences only from the date of signing the debit voucher for issuing of a demand draft towards premium amount i.e., on 20.10.2009, which is not correct, since the risk had already commenced from the date of disbursement of the loan amount.   The District Commission had failed to note that the relevant date was the date when the amount had been debited from the account of the borrower and not the date of the demand draft.  It is mandatory on the part of the respondents to provide insurance cover in respect of all housing loans.  Therefore there is deficiency in service on the part of the opposite parties.

 

10.     Learned counsel for the 1^st and 2^nd Respondents had submitted that the persons who apply for loan using their discretion can take insurance cover, and the insurance cover may be either for the building for which loan is taken or for the life of the person who has availed the loan.  In the present case, the loan sanctioned to the deceased included an one time policy premium amount of Rs.62,711/-.  But the policy could be issued only if the complainant opted for payment of premium.  The complainant had opted for issuance of demand draft towards the premium only on 20.10.2009, and Mr. Swaminathan died on 15.11.2009, i.e., within 45 days of the effective date of insurance cover.  Therefore, that the policy cover will start from the date of disbursal of 1^st instalment of loan is untenable.  Thus there is no deficiency in service on their part.

 

11.     The learned counsel for the 3^rd Respondent/ 3^rd opposite party by way of written arguments would contend that the insurance cover shall be valid only from the date of acceptance of risk cover.  In the present case, the membership form was received on 25.11.2009 and being unaware of the death of the insured, the insurance cover was granted w.e.f. 3.12.2009.  Therefore, it is crystal clear that the contract remained un-concluded as on the date of death of R.Swaminathan.  It is also to be noted that both the proposal and the premiums were received after the death of R.Swaminathan, and hence there is no concluded contract, and consequently the claim stands inadmissible.  The learned counsel had also drawn our attention to Clause No.3 of the terms and conditions in Schedule III in the Master Policy, in which it is stated “45 days Exclusion: During the first 45 days from the date of commencement of cover for an insured Member, the Company shall not be liable to pay any claim amount except for a claim arising out of death due to accident”.  This clause clearly applicable to the present case, since the insured died due to natural cause. 

 

12.     Keeping the above submissions in mind we have carefully gone through the materials placed on record. 

 

13.     The main crux of the case of the complainant is that the policy period commences from the first date of disbursement of loan.

          In this regard, a careful perusal of Ex.B4, the pamphlet issued by the 3^rd opposite party about the Master Policy, under terms and condition clause 3 it has been mentioned as follows:  “45 days Exclusion: During the first 45 days from the date of commencement of cover for an insured Member, the Company shall not be liable to pay any claim amount except for a claim arising out of death due to accident”.

           

           As per the version of the 3^rd Respondent/ 3^rd opposite party, that no insurance cover will commence until the risk is accepted and requisite premium has been remitted to SBI Life by the Bank and the SBI Life conveys its written acceptance of this application for insurance cover.  In the present case the insurance cover commenced only from 3.12.2009, i.e., after the death of the insured. 

Even assuming that the cover commences from the date of issuance of the debit voucher i.e., the date of payment of premium, then also the insured is not  entitled for any claim and it is clear from the reading of exclusion clause as read above, that during the first 45 days from the date of commencement of cover, the insured is not entitled to any benefit except the claim made for death due to accident.  As seen from Ex.B1, the insured / Swaminathan, issued debit note for payment of premium only on 20.10.2009, whereas he succumbed to death on 15.11.2009 due to cardiac arrest.  Therefore this claim will definitely come under the exclusion clause i.e., within 45 days of the cover. Therefore, as was held by the District Commission, this claim was hit by exclusion clause.  Looking at any angle, we do not find any justification in the claim made by the complainants and we are of the opinion that there is no infirmity in the order of the District Commission.  Accordingly, the appeal deserves to be dismissed.

 

14.     In the result, the appeal is dismissed by confirming the order of the District Commission in CC.No.486/2010 dt.23.12.2011.  There is no order as to cost throughout.

 

         

          R VENKATESAPERUMAL                                                   R. SUBBIAH

                    MEMBER                                                                          PRESIDENT