RESERVED
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
UTTAR PRADESH, LUCKNOW
COMPLAINT CASE NO. 64 OF 2013
Sunita
W/o Late Sri Bijender Singh
R/o 16/260/3
Sector-16, Vasundhra
Ghaziabad, U.P.
...Complainant
Versus
01.Tata AIG Life Insurance Company Limited
Registered and Corporate Office at Delhi
B Wing, 2nd Floor, Orchard Avenue,
Hiranandani Business Part, Powai
Mumbai
Through its Competent Authority
02. The Tata AIG Life Insurance Company Limited
A-6, 2nd Floor, Sector-IV, Noida., U.P.
Through its Manager
03. The PNB Housing Finance Limited
Vasundhra, Sector-3, Ghaziabad, U.P.
Through its Manager
...Opposite Parties
BEFORE:
HON'BLE MR. JUSTICE VIRENDRA SINGH, PRESIDENT
HON'BLE MR. RAM CHARAN CHAUDHARY, MEMBER
HON'BLE MR.JUGUL KISHORE, MEMBER
For the Complainant : Sri Sarvesh Kumar Sharma, Advocate.
For the Opposite Party : None appears.
Dated : 30-09-2014
JUDGMENT
PER HON'BLE MR. JUSTICE VIRENDRA SINGH, PRESIDENT
This complaint case has been filed on 15.05.2013 by the complainant challenging the letter dated 19.3.2013 by means of which the life insurance claim to the tune of Rs 26,13,223.00 of the complainant have been rejected by the insurer opposite party on the ground of impersonation and cheating alleged to have been committed by the insured thereby taking the treatment of Kidney Disease in the name
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of another person.
This complaint case was admitted and notice was issued to the opposite parties to file their written statement. The case was listed on 09.07.2014 on which date the counsel for the opposite party no. 1 and 2 sought time to file written statement. Although the time to file written statement prescribed under the Consumer Protection Act, 1986 was over, yet this commission granted last opportunity to the counsel for the opposite party to file written statement as well as evidence up to 12.8.2014 fixing for final hearing of the complaint case.
The case was taken up on 12.08.2014 but no one appeared on behalf of opposite parties. The counsel for the complainant appeared and filed evidence as well as written arguments. The opposite parties chose to abstain from the proceedings and no one appeared from their side nor written statement and evidence is filed by them. Thus the case has been heard ex-parte
At the very threshold the counsel for the complainant argued that the opposite parties right to file written statement is restricted in view of the mandatory provision prescribed under Section 13 (2) (ii) of the Consumer Protection Act, 1986 and in support of his argument reliance have been placed on the judgments of the Hon’ble Apex Court in Dr. J.J.Merchant and others versus Srinath Chaturvedi reported in (2002) 6 SCC at page 635, Fairgrowth Investment Limited versus Custodian reported in (2004) 11 SCC at page 472, Kajpipla Co-operative Housing Society Limited versus Magic Properties Private Limited and another reported in 2014 (1) CPC at page 197, Rajeev Hitendra Pathak versus Achyut Kashinath Karekar reported in IV (2011) CPJ 35, Revision Petition No. 2049 of 2014 M/s Accanoor Associates versus Akansha Co-operative Housing Society decided on 16.7.2014, Consumer Complaint No. 382 of 2013 Bhupendra Bhandari versus Kolte-Patil Developers Limited decided on 31.7.2014.
Perusal of the aforesaid judgments shall reveal that the period of 30 days as provided under the Consumer Protection Act for filing written statement can be extended for another 15 days and no more. However the Hon’ble National Commission in the case of Kolte-Patil Developers (supra) had rejected the application for condonation of delay in filing the written statement. There may be no denial of the legal position on the basis of above principles of Law laid down by the Hon’ble Apex Court that the written statement should be filed within the stipulated time period and if
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there is a delay the same should be accompanied by a delay condonation application. Despite the above proposition of law this commission in the interest of justice have already granted time to the opposite parties vide order dated 09.07.2014 but they did not avail this opportunity too and did not file any written statement as well as any evidence. Hence the case is liable to be decided on the basis of facts on record as well as the evidences available on record.
The facts on record are that the husband of the complainant namely late Brijendra Singh in order to purchase a house approached the opposite party no. 3, the financer for sanction of loan and accordingly loan was sanctioned by the said financer. In pursuance of the internal arrangement with the TATA AIG Life Insurance Company/opposite party no. 1 and 2, the O.P. no. 3 financer purchased a policy of insurance covering the risk of the life of the Borrower/Late Brijendra Singh. In this regard insurance certificate no. 0000012844 effective from 31.5.2011 to the tune of Rs.26,13,623/- was issued for which premium of Rs.70,175.61 was paid and complainant was recorded as nominee of the insured. This cover of insurance was equivalent to the loan sanctioned by the bank/financer to late brijendra singh. The insured was died on 25.7.2011 in village Sirsali, District Baghpath. Accordingly the complainant being nominee under the policy informed the death of the insured to the financer as well as to the insurance company and claimed the sum insured. Since the claim was not settled by the insurance company despite reminder letters dated 2.1.2012, 20.1.2012 and 4.2.2012 issued by the complainant, a Legal Notice dated 20.8.2012 was sent by the complainant to which the opposite party no. 1 and 2 replied that the claim of the complainant is under investigation. Another legal notice dated 17.10.2012 was further sent by the complainant, in reply whereof the opposite party no. 1 and 2 informed through letter dated 21.12.2012 that the claim of the complainant have been decided to be settled and the cheque towards the same shall be sent very soon, but instead of making the payment of the claim the insurance company by means of letter dated 19.3.2013 repudiated the claim on the ground that impersonation and cheating was committed by the insured at the time of taking the insurance policy as the insured had taken the treatment of kidney disease in the name of another person and this fact was concealed by the insured.
Affidavit in support of the facts of the complaint case has been filed specifically stating that the insured neither was suffering from any diseas, nor any treatment of kidney was taken by the deceased in the name of any other person. The
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allegations of impersonation and cheating have been specifically denied. It has been asserted by the complainant that the insurance coverage was granted by the company after getting the Medical Examination of the insured and the financer remained pivotal in getting the coverage just to safeguard its loan hence the stand of the insurance company in repudiating the genuine claim of the complainant is not justified.
In support of her allegation the complainant have filed the following documentary evidences:
- Sale Deed of House No. 260/4, situated ay Sector-16, Vasundhra Ghaziabad.
- Certificate of Insurance covering the life of the borrower/insured to the extent of Rs.26,13,623/-.
- Death Certificate dated 2.8.2011 issued by the Government of Uttar Pradesh.
- Letter of intimation of death of the borrower sent and received by the financer dated 3.9.2011.
- Letters issued by the complainant demanding the insurance claim dated 2.1.2012, 20.1.2012, 4.2.2012.
- Legal Notice issued by the complainant dated 20.8.2012.
- Reply of the insurance company to the Legal Notice dated 27.8.2012.
- Letter dated 1.10.2012 and second Legal Notice dated 17.10.2012.
- Letter dated 21.12.2012 issued by the insurance company informing the complainant that the claim has been settled and the cheque shall be sent soon.
- Letter dated 19.3.2013 issued by the insurance company by means of which the claim of the complainant has been repudiated.
It is also submitted by the complainant that during the pendency of the complaint case an application dated 1.4.2014 was moved by the complainant praying for stay of the attachment proceedings initiated by the financier for recovery of the loan allowed to insured/borrower stating therein that the bank is instrumental in purchasing the insurance policy from the opposite party nos. 1 and 2 and on account of nonpayment of the insurance amount the complainant is being put to harassment while the policy of insurance was issued at the behest of financer and after medical checkup of the insured and therefore it is the legal and moral responsibility of the bank to co-operate the complainant in getting her genuine claim instead of the financer proceeding to attach the property mortgaged in their favour. The application for stay of the
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attachment proceedings was rejected by this commission vide order dated 7.4.2014 saying thereby that this commission have no jurisdiction to stay the SARFAESI Proceedings.
At this juncture we are only posed with the question pertaining to deficiency in service committed by the insurer opposite parties in not making the payment of the insured sum and as to test the validity and veracity of the letter of repudiation dated 19.3.2013 on the touch stone of the documentary evidences available on record.
It is borne out from the record that loan of Rs.25,50,000/- was sanctioned by the financer opposite party no. 3 towards the housing loan on 20.5.2011 and on 31.5.2011 an amount of Rs.70176/- was paid to the opposite party no. 1 and 2 towards premium for the Life Insurance Policy. A perusal of the certificate of insurance dated 25.5.2011 bearing no. 0000012844 shows that the Policy Holder is PNB Housing Finance Limited and Insured Member name is Brijender Singh. Period of insurance was effective from 31.5.2011 to 30.5.2021. The sum assured is Rs.26,13,623/- and the nominee of the insured is the complainant. A perusal of the death certificate dated 2.8.2011 proves that the insured died on 25.7.2011 in his village Sirsali, District Bagpath. Information to the financer as well as to the insurance company regarding the death and for payment of the death claim was given on 3.9.2011. The important aspect of the case is the letter dated 27.8.2012 wherein the opposite party nos. 1 and 2 requested the complainant to wait till 15.9.2012 for disposal of her claim. Another peculiar feature in this case is a letter dated 21.12.2012 issued by the opposite party nos. 1 and 2 by means of which they informed the complainant regarding settlement of her claim. The relevant passage of the letter is as follows:
“….we wish to inform you that we have duly evaluated the claim and we have accepted to settle the claim. The payment of claim amount is in process and accordingly, the claim settlement cheque along with the claim settlement letter shall be dispatched to you shortly”
By means of this letter the complainant was informed that the cheque is being sent to her shortly. Since the complainant was under outstanding of loan of the bank, hence the assurance of the company was duly communicated to the financer. However in subsequent letter dated 19.3.2013 the insurance company repudiated the claim on the basis of alleged impersonation and cheating by the insured. The relevant passage of
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that letter is as follows:
“….We may, however, state that from the medical information available with us, it is established that the life insured was under treatment of kidney disease prior to application of insurance. According to our records, such information was not disclosed in reply to the specific questions in the application dated 24 May, 2011 for the above policy. After careful evaluation of all facts documents submitted and circumstances in this case, we have come to conclusion that the replies to the aforesaid questions in the application form are incorrect. Had such information been disclosed, our underwriting decision(s) would have different.
We also wish to inform you that the insured had taken treatment related to Kidney Disease under another person’s name which clearly proves that there was impersonation and cheating committed on our company for not disclosing the correct information while taking the policy.
We, therefore regret that we are unable to honour the claim and have to rescind the above member’s coverage from inception accordingly. The premiums paid are also being forfeited as there is alleged fraud committed by impersonation at the time of taking treatment prior to policy……”
It is borne from the records that the complainant sent letters dated 6.9.2013, 4.10.2013, 11.4.2014 informing the financer to co-operate in getting the insurance claim from the opposite party nos. 1 and 2 as the same have been illegally repudiated in pursuance thereof a letter of June, 2013. Financer/opposite party no. 3 informed the complainant that the claim of the Borrower/Late Brijendra Singh have been repudiated by the insurance company. The financer demanded the immediate payment of the loan amount else they shall proceed under SARFAESI Act. Further the record discloses that a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was issued demanding Rs.31,65,194/- from the complainant.
A crucial question for determination is that whether in the instant case there was impersonation or fraud committed by the insured and whether any material fact regarding the treatment of kidney disease prior to the proposal of policy have been
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concealed by the insured.
Our attention have been drawn to the document of policy certificate issued by the opposite party nos. 1 and 2, in which the policy holder is being mentioned as PNB Housing Finance Limited and the plan was AIG Life Group Single Premium Mortgage Reducing Term Insurance Plan. According to the Learned Counsel for the complainant this plan was obtained at the behest of the financer in order to secure the loan sanctioned to the complainant. A onetime premium was also paid and the medical examination of the insured was duly conducted by the panel of doctors of the opposite party no. 1.
The provisions of Regulation 8 of the IRDA (Policy Holders Interests) Regulations, 2002, reads as under:
Claims procedure in respect of a Life Insurance Policy:
8(2). A life insurance company upon receiving a claim, shall process the claim without delay. Any queries or requirement of additional documents, to the extent possible, shall be raised all at once and not in piece-meal manner, within a period of 15 days of the receipt of the claim.
(3) A claim under a life policy shall be paid or be disputed giving all the relevant reasons, within 30 days from the date of receipt of all relevant papers and clarification required. However, where the circumstances of a claim warrant an investigation in the opinion of the insurance company, it shall initiate and complete such investigation at the earliest. Where in the opinion of the insurance company the circumstances of a claim warrant an investigation, it shall intimate and complete such investigation at the earliest, in any case not later than 6 months from the time of lodging of the claim.
The counsel for the complainant submitted that in utter disregard of the statutory provisions, the opposite party nos. 1 and 2 repudiated the claim on 19.3.2013 in spite of the fact that the claim was lodged on 3.9.2011 with the opposite parties which are acting and working under collaboration with each other. More than 2 years and 3 months were taken by the opposite parties no. 1 and 2 to take a decision. This inordinate delay committed by them constitute grave deficiency in service entitling to the complainant not only the insurance claim with interest rather the punitive damages
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to against the insurer. Moreover since the loan amount was secured by the opposite party no. 3/financer by taking the policy from the opposite party nos. 1 and 2 therefore it was their onerous duty to have co-operated with the complainant but leaving apart it a letter in June, 2013 was issued by the Bank, demanding the outstanding dues and a threat was given for initiation of Recovery Proceedings and which were initiated simultaneously by the financer. The agony and woes of the complainant were left unheard and she being a widow was left to suffer on account of latches and inaction on the part of the opposite parties.
The counsel for the complainant vehemently pleaded that not only the insurance company but the financer is also liable for deficiency in service as well as Unfair Trade Practice and accordingly since the complainant is entitled for the insured sum of Rs.26,13,623/- along with 24% interest, the bank may also be restrained from charging any interest on the loan amount after the death of the insured. Demand of the award of punitive damages have also been made by the complainant.
Learned Counsel for the complainant relied on the following case laws in support of his submissions:
- Life Insurance Corposration of India and Others versus Asha Goel and others, reported in I (2001) SLT 89.
- Standard Chartered Bank Limited versus Dr. B.N.Raman reported in III (2006) CPJ 1 (SC).
- Ghaziabad Development Authority versus Balbir Singh reported in I (2007) CPJ 4 (SC).
- Balram Prasad versus Kunal Shah reported in (2014) 1 SCC at page 384.
- Life Insurance Corporation of India versus Gurinder Kaur reported in III (2012) CPJ (NC) at page 597.
- Sundaram BNP Paribas Home Finance Limited and another versus Consumer Guidance Society and another reported in I (2013) CPJ 115 (NC).
After taking into consideration the oral submissions of the counsel for the complainant and perusal of the documentary evidences on record and after examination of the principles of law laid down by the Hon’ble Apex Court as well as by the Hon’ble National Commission, the point which is to be determined is as to whether the opposite parties are guilty of deficiency in services and Unfair Trade
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Practice and whether the complainant is entitled for the relief claimed.
A careful examination of the policy document in the instant case reveals that the Policy holder is the Bank and the life of the Borrower/Late Brijendra Singh was insured to the sum of Rs.26,13,623/-. The complainant was a nominee of the life assured and the risk was effective from 31.5.2011. Further the death certificate enclosed along with the complaint case also reveals that the insured/Borrower was died in his village on 25.7.2011. Thus the policy was in force at the time of death of insured. The opposite parties under the joint venture obtained the policy so that the housing loan sanctioned by the financer/bank/opposite party no. 3 may be secured. Claim was also lodged with the financer/bank as well as with the insurance company by means of separate letters dated 3.9.2011 and 2.1.2012. Thus the claim in view of Regulation 8 (3) of the IRDA (Policy Holders Interests) Regulations, 2002, should have been decided by the opposite party nos. 1 and 2 within a period of 30 days and not more than 6 months i.e. latest by March, 2012. A perusal of the letter dated 27.8.2012 reveals that the complainant was asked by the opposite party nos. 1 and 2 to wait till 15.9.2012. However by another letter dated 21.12.2012 the opposite party nos. 1 and 2 assured the complainant that the claim have been settled and the claim cheque shall be sent to her soon. Thereafter a letter of repudiation was sent dated 10.3.2013 repudiating the claim. Apparently the opposite parties no. 1 and 2 are guilty of violating the mandatory provisions prescribed under Regulation 8 (3) of the IRDA (Policy Holders Interests) Regulations, 2002. This amounts to deficiency in service on the part of the opposite parties no. 1 and 2.
A perusal of the letter of repudiation dated 19.3.2013 shows that the claim after inordinate delay was repudiated saying thereby the concealment of kidney disease and on account of impersonation and cheating by taking treatment of the disease in the name of another person. Strange enough, the complainant was not informed the name of the person in whose name the insured took the treatment and the basis of the information on which it is alleged that the insured took treatment of kidney disease prior to proposal of insurance. The insurer’s letter does also advice the complainant to approach the insurance ombudsman in case of dissatisfaction of the repudiation. This letter in this regard is per se bad since the insurance company is required to disclose the evidences as well as the contents of impersonation without which even the complainant could not invoke the door of insurance ombudsman. Law did not permit the authorities to conceal material facts from the consumers whose legal rights are
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being denied. Thus the letter dated 19.3.2013 being in complete contravention of the settled principles of law as well as provisions of IRDA (Policy Holders Interests) Regulations, 2002 is liable to be quashed and is hereby quashed accordingly.
Now coming to the role of the opposite party no. 3/bank/financer in the instant case, it has been argued on behalf of the complainant that under the collaboration the bank in order to safeguard its loan have purchased the insurance policy at the behest of the complainant and to that effect the name of the bank/financer have been recorded in the certificate of insurance as a Policy Holder. A perusal of the materials placed on record reveals the fact that PNB Housing Finance Limited tied up with TATA AIG (now TATA AIA), regarding the customers of the bank who opt for a housing loan from the bank are bound to take Policy from the opposite parties no. 1 and 2. It is submitted that the Bank/financer and opposite party nos. 1 and 2 are equally rendering services to the complainant regarding finance and insurance therefore financer in the instant case cannot avoid its liability and since the policy holder was the bank/financer itself and the insured member under the policy was the Borrower, therefore in the instant case the bank/financer is also liable for deficiency in service and thus the bank is precluded from claiming any interest on the loan advanced to the complainant. We are not convinced with the above submission of the complainant because where the insurance claim is claimed with interest, the interest on the money financed to the insured can not be waived, otherwise it will amount double benefit to the complainant.
The complainant have demanded punitive damages, compensation and interest on the insured amount, regarding which we are convinced that a reasonable compensation pertaining to sum assured by the insurer to the insured is worth to be awarded with interest which is denied with no excuse by the insurer. In the instant case since the nominee is a widow lady having kids and the opposite parties committed inordinate delay in settlement of the claim and denied the genuine claim to her leading opportunity to the bank/financer to initiate recovery proceedings which caused acute mental agony, trauma and harassment to her, therefore, the complainant is entitled to punitive damages also.
Hence looking in to the factum of mental agony and trauma which cannot be brushed aside in the instant case since the sister concern of the bank denied the claim
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to the complainant and the bank/financer took up the recourse of recovery proceedings against the complainant who is a widow and thus looking into the delay committed by the opposite parties in settlement of the claim and mental harassment caused to the complainant we deem it fit and appropriate to award a sum of Rs.2 Lakh towards Punitive Damages.
ORDER
The complaint case is hereby allowed. The opposite parties no. 1 and 2 are directed to pay to the complainant the sum assured to the tune of Rs.26,13,623/- along with interest at the rate of 9% with effect from 3.5.2012 till the date of payment. A sum of Rs 200,000.00 as punitive damages and a sum of Rs.15,000.00 is further ordered to be paid by the insurer to the complainant as litigation charges.
( JUSTICE VIRENDRA SINGH )
PRESIDENT
( R C CHAUDHARY )
MEMBER
( JUGUL KISHORE )
MEMBER
Pnt.
