Complaint filed on: 18-02-2012

                                                      Disposed on: 14-05-2014

BEFORE THE BENGALURU IV ADDITIONAL DISTRICT

CONSUMER DISPUTES REDRESSAL FORUM

BENGALURU URBAN DISTRICT, NO.8, 7^TH FLOOR, SAHAKARA BHAVAN, CUNNINGHAM ROAD, BENGALURU – 560 052    

C.C.No.376/2012

DATED THIS THE 14^th MAY 2014

PRESENT

SRI.J.N.HAVANUR, PRESIDENT

SRI.H.JANARDHANA, MEMBER

Complainants: -  

1.   Smt.Gangamma

W/o. Late Thimmaiah

Aged about 46 years

2.   Sri.Bharath,

S/o. late Thimmaiah,

Aged about 26 years,

Both residing at No.23,

8^th Cross, Srigandha Kaval,

Hoysalanagar,

Sunkadakatte,

Bangalore-91

V/s

Opposite parties:-        

1.   The Branch Manager,

State Bank of Mysore,

Yeshawanthapura Branch,

1/1, Tumkur Road,

Bangalore-22

2.   The Head Claims

SBI Life Insurance Co. Ltd,

Central Processing Centre,

Kapas Bhavan,

Plot No.3A, Sector No.10, CBD Belapur, Navi Mumbai-14

3.   The Insurance Ombudsman,

Office of the Insurance Ombudsman, 6-2-46, 1^st Floor, Moin Court, Lane Opp. Saleem Function palace, A.C.Guards, Lakdi-ka-Pool,

Hyderabad-04

ORDER

SRI.J.N.HAVANUR, PRESIDENT

        This is a complaint filed by the complainant against the Ops No.1 to 3, under section 12 of the Consumer Protection Act, praying to pass an order, directing the Ops to pay Rs,6,07,627=00 and award Rs.2,00,000=00 as compensation, in the interest of justice and equity. 

2. The brief facts of the complaint can be stated as under.

Late Thimmaiah, husband of the 1^st complainant and father of the 2^nd complainant was working in the BHEL Electro Porcelain Division, Malleshwaram Bangalore–05 till he died on 18-4-2011. Late Thimmaiah during his life time had approached the 1^st OP for grant of a personal loan and he was sanctioned a loan of Rs.5,90,000=00 in the month of Sept. 2010 & towards collateral security for repayment of the loan, the 1^st OP insisted that late Thimmaiah should obtain an insurance cover through a policy from State Bank of India Life Insurance Company Limited the 2^nd OP herein for an assured sum of Rs.6,07,627=00 Even though late Thimmaiah was not willing for this the 2^nd OP induced late Thimmaiah to avail this facility. Left with no other alternative with the help of the 1^st OP. Late Thimmaiah obtained Policy no.93000001708 from the 2^nd OP with an annual premium of Rs.22,627=00 which he paid through his bank Account no.64066074549 with the 1^st OP. Late Thimmaiah during his life time was repaying the loan amount in installments and also paid the life insurance premium amount through the said account to the 2^nd OP without any default. At the time of obtaining the life insurance policy the Ops no.1 and 2 took the signatures of late Thimmaiah in the prescribed forms without disclosing the contents thereof but assuring him that these forms were required for obtaining insurance policy from the 2^nd OP. Believing the words to be true late Thimmaiah affixed his signatures at all the places. At that time nobody for on behalf of 2^nd OP or the authorized doctor asked him about his previous medical history. Had they enquired about his previous medical history, he would have definitely informed that he was suffering from ISCHAEMIC HEART DISEASE. That Thimmaiah during his life time also paid second year’s premium amount of Rs.11,083=00 to the State Bank of India Life Insurance Co, Ltd. In respect of the policy. Thimmaiah died intestate on 18-4-2011 leaving behind the complainants as the only legal heirs to succeed his estate which included the assured sum under the insurance policy taken by him from the 2^nd OP. Upon the complainants coming to know about the insurance policy obtained by late Thimmaiah from State Bank of India Life Insurance Co. Ltd through the 1^st OP, they applied for settlement of the assured sum under the policy. In response to the claim made by the complainant the 2^nd OP sent their representatives to visit the complainants. The representatives from the insurance company visited the complainants and stealthily induced the complainants to deliver late Thimmaiah previous medical reports by holding out false assurance of speedy settlement of his claim. Believing the words of the said representatives to be true, the complainants made available to the representatives of the 2^nd OP the previous medical reports pertaining to late Thimmaiah in their possession. Instead of keeping up the promise of speedy settlement of the assured sum under the policy much to their shock and surprise, the complainants received letter dated 30-9-2011 from the 2^nd OP rejecting the claims made by the complainants on the ground that late Thimmaiah while applying for enrolment under the SBM Dhanraksha Plus LPPT scheme had signed declaration of Good health which mentioned that he was of sound health and was not suffering or had never suffered from any critical illness. The Deceased life assured had given a false good health declaration and had not disclosed material fact at the time of entry into the same & thereby the claim has been repudiated. The complainants were surprised and shocked to note the contents of letter which is nothing short of dishonesty and a case of plighted words on the part of the Ops no.1 and 2. Late Thimmaiah had never given false good health declaration in the prescribed form of his own accord. He was induced by the 1^st OP and the insurance agent of the 2^nd OP to sign on dotted lines in the prescribed form. Such being the case, Govt. organization like 2^nd OP should not stoop down to this level and deny the claim of the complainant by turning the table against them. Thereafter the complainant got issued a legal notice calling upon the 2^nd OP to settle the amount covered under the policy. The 2^nd OP gave suitable reply. The conduct of the Ops amounts to cheating, deficiency of service trade practice on their part within the meaning of the provisions of the IPC and CP Act. Hence the present complaint is filed.

3. After service of the notice, the Ops no.1 and 2 have appeared through their counsel and filed version separately.

4. The averments of version of the 1^st OP can be stated as under:

The complaint of complainant is not maintainable. The 1^st OP has acted as facilitator to assist and help borrower in procuring the policy of insurance from the 2^nd OP. The 1^st OP has acted only as agent of the 2^nd OP, so the 1^st OP cannot be held responsible for the acts of the 2^nd OP. The 1^st OP has entered into an arrangement with 2^nd OP in respect of life insurance for the benefit and in the interest of its borrowers. The insurance scheme is popularly known as Dhanaraksha plus Insurance Scheme & under this scheme on payment of yearly premium, the liability of the insured borrower will be covered to the extent the sum assured and in the event of the death of borrower the insurance proceeds will be credited to the loan account.  The borrower was sanctioned a personal loan of Rs.5.90 lakhs by 1^st OP on 14-9-2010 and it was released on the same day. When the insurance scheme and its benefits were brought to the notice of the borrower, he volunteered to become the member of the scheme and accordingly submitted an application for insurance in the prescribed format along with a declaration of good health. The borrower has suppressed a material and important fact that he suffered from serious heart ailment and was undergoing the treatment for the same, prior to the date of submission of the insurance application to the bank. The 1^st OP has no reason to disbelieve the representation made by borrower and forwarded the application to the 2^nd OP believing that the borrower was of sound health. A policy of insurance is a contract founded on good faith and any concealment of material fact and false declaration at the time of obtaining the policy will vitiate the policy and the contract is void ab-initio. The borrower deliberately with mala fide intention has given false declaration to the bank that he is of sound health. The complainant cannot blame and hold the 1^st OP for the conduct of borrower. The 1^st OP denies the averments made in the complaint para no.4 to 10. There is no negligence or deficiency of service on the part of the 1^st OP. Hence it is prayed to dismiss the complaint of complainant with cost.

5. The averments of version of the 2^nd OP can be stated as under:

The complaint of complainant is not maintainable and it is liable to be dismissed in limine. The Life Insurance contract is a contract of Utmost good faith wherein the proponent is duty bound to disclose correct facts concerning his age, health, habits and other related matters which are within his knowledge at the time of making the proposal failing which the insurer has every right to repudiate the claim. In the instance case the deceased life assured committed a breach of the principle of Utmost good faith by deliberately and intentionally suppressing the material facts. It is clear from the documentary evidence that Thimmaiah has been suffering from and was under treatment for Ischemic Heart Disease, acute Anterior, wall myocardial infarction, thrombolysed single vessel diseases and high blood sugar since 2003 and has undergone Angioplastry in 2003 which is prior to the date of singing the membership form. Thus the claim repudiation action by the 2^nd OP is just and legal. The deceased life assured committed a fraud with an intention to obtain the insurance cover by suppressing the history of surgeries and disease in the membership form which was very well within his knowledge. Thus in terms of Section 17 of Indian Contract Act the contract is void, hence there cannot be any enforcement of any right under a contract which is void ab-initio. In the membership form for Dhanaraksha plus LPPT group insurance Scheme, the DLA has signed the declaration for good health. Based on the membership form and believing the declaration to be true, the insurance cover was granted with effect from 8-2-2011 and a certificate of insurance was issued. The DLA is reported to have died on 18-4-2011, the policy resulted in an early claim in just 2 months 10 days and hence SBI life enquired into the matter and found that the DLA from and was under treatment for Ischemic Heart Disease, Acute Anterior Wall Myocardial Infarction, thrombolysed, Single Vessel Diseases and high blood sugar since 2003 and had undergone Angioplastry in 2003. As per the discharge summary of Fortis Hospital, Bangalore Thimmaiah was admitted on 19-12-2003 and was diagnosed to have Ischemic Heart Disease, Acute anterior Myocardial infarction-Thrombolysed, Single vessel diseases, rescue PTCA and stenting done to LAD re-opro cover.   As per the post mortem examination report, the cause of death is due to cardiac arrest as a result of coronary artery insufficiency consequent upon coronary artery disease. As per the terms and conditions of the document evidencing the contract, the DLA deliberately and intentionally suppressed the material facts in the proposal form and obtained the insurance fraudulently, so the contract of insurance is void for fraudulent suppression of material facts. The 2^nd OP denies the averments made in the complaint para no.1 to 14. There is no negligence or deficiency of service on the part of the OP in rejecting the claim of complainants. The complainants are not entitled to any relief, so the complaint of complainants be dismissed with cost.

6. So from the averments of the complaint of the complainants and objection of the Ops no.1 and 2, the following points arise for our consideration.

1.                  Whether the complainants prove that, the Ops no.1 and 2 are negligent and there is deficiency of service on the part of the OPs, in not making settlement of insurance of late Thimmaiah as stated in the complaint?

2.                  If point no.1 is answered in the affirmative, what relief, the complainants are entitled to?

3.                  What order?

7. Our findings on the above points are;

          Point no.1:  In the Negative

Point no.2:  In view of the negative findings on the

Point no.1, the complainants are not entitled to any relief as prayed in the complaint

          Point no.3:  For the following reason

REASONS

          8. So as to prove the case, the 1^st complainant has filed her affidavit by way of evidence and produced nine documents with list dated 18-2-2012. On the other hand, one Suresh.S.Nayak, Branch Manager working in the 1^st OP and one V.Srinivas, Head legal working in the 2^nd OP have filed their affidavit on behalf of the Ops no.1 and 2 respectively and produced copies of prescribed form filled and signed by one Thimmaiah and produced documents which are marked as Annexure-A to Z4. We have heard the arguments of both parties and we have gone through the oral and documentary evidence of both sides in between lines.

9. One Smt.Gangamma, who being the 1^st complainant has stated in her affidavit that, her husband Thimmaiah and father of the 2^nd complainant was working in the BHEL Electro Porcelain Division, Malleshwaram, Bangalore until died on 18-4-2011. Her husband during his life time had approached the 1^st OP for grant of a personal loan and he was sanctioned a loan of Rs.5,90,000=00 in the month of Sept. 2010 & towards collateral security for repayment of the loan, the 1^st OP insisted that late Thimmaiah should obtain an insurance cover through a policy from State Bank of India Life Insurance Company Limited the 2^nd OP herein for an assured sum of Rs.6,07,627=00 Even though late Thimmaiah was not willing for this the 2^nd OP induced her husband to avail this facility. Left with no other alternative with the help of the 1^st OP. Her husband late Thimmaiah obtained Policy no.93000001708 from the 2^nd OP with an annual premium of Rs.22,627=00 which he paid through his bank Account no.64066074549 with the 1^st OP. Her husband late Thimmaiah during his life time was repaying the loan amount in installments and also paid the life insurance premium amount through the said account to the 2^nd OP without any default. At the time of obtaining the life insurance policy, the Ops no.1 and 2 took the signatures of her husband in the prescribed forms without disclosing the contents, all the contents in the insurance policy were in English language whereas her husband did not even know how to read English and he did not even know how to sign in English so he used to put his signature in Kannada language. Believing the words of the 1^st OP and the insurance agent of 2^nd OP to be true her husband affixed his signatures at all the places in the prescribed forms for obtaining the insurance policy. At the time of obtaining the insurance policy nobody for and on behalf of 2^nd OP asked him about his previous medical history. Had they enquired about his previous medical history, he would have definitely informed that he was suffering from ISCHAEMIC HEART DISEASE. He husband during his life time also paid second year’s premium amount of Rs.11,083=00 to the OP. In respect of the policy & her husband died intestate on 18-4-2011 leaving behind herself and her son as the only legal heirs to succeed his estate which included the assured sum under the insurance policy taken by him from the 2^nd OP. Upon the complainants coming to know about the insurance policy obtained by late Thimmaiah from State Bank of India Life Insurance Co. Ltd through the 1^st OP, they applied for settlement of the assured sum under the policy. The 2^nd OP sent their representatives to visit their residence and induced them to deliver late Thimmaiah previous medical reports by holding out false assurance of speedy settlement of his claim. She made available to the representatives of the 2^nd OP the previous medical reports pertaining to her husband. Instead of keeping up the promise of speedy settlement of the assured sum under the policy much to her shock and surprise, she received letter dated 30-9-2011 from the 2^nd OP rejecting her claims on the ground that late Thimmaiah while applying for enrolment under the SBM Dhanraksha Plus LPPT scheme had signed declaration of Good health, but as per records available with the 2^nd OP late Thimmaiah was suffering from and under treatment for Ischemic Heart disease prior to the date of enrolment of the policy, and the deceased life assured had given a false good health declaration and had not disclosed material fact at the time of entry into the same & thereby the claim has been repudiated. Late Thimmaiah had never given false good health declaration, he husband was induced by the 1^st OP and the insurance agent of the 2^nd OP to sign on dotted lines in the prescribed form. So the 2^nd OP should not stoop down to his level and deny her claim by turning the table against them. The conduct of the Ops no.1 and 2 shows that they are out to cheat innocent persons, after inducing to avail the insurance policy. She got issued a legal notice dated 27-12-2011, the 2^nd OP has given reply. The said conduct of the Ops amounts to cheating, deficiency of service trade practice on their part within the meaning of the said IPC and CP Act. So, she prays to pass an order, directing the Ops to pay Rs.6,07,627=00 under the insurance policy, and award Rs.2.00 lakhs as compensation and grant such other relief. So the complaint be allowed and pass an order as prayed for.

10. Let us a have look at the relevant documents of the complainants. Annexure-A of the complainant is the copy of certificate of insurance issued in the name of Thimmaiah by SBI life insurance plus and cover details master policy number, master policy holder is stated as 93000001708 and sum assured is 607627 and amount paid is Rs.22,627=00. Premium certificate is also produced by the complainants wherein it is stated that, an amount of Rs.22,627=00 has been paid by Thimmaiah towards premium on 7-2-2011 and the said document is annexed with the terms and conditions of the policy. Annexure-C is the copy of SBI Life Saral Shield being blank proposal form produced by the complainants. Annexure-E is the copy of death extract of husband of 1^st complainant who died on 18-4-2011. Annexure-F is the copy of repudiation letter of SBI life insurance dated 30-9-2011 addressed to the complainant stating that late Thimmaiah had signed declaration of good health which mention that he was of sound health and was not suffering or had never suffered from any critical illness & as per the records available with them, late Thimmaiah was suffering from and under treatment for Ischemic heart disease prior to the date of enrolment of policy and had given a good health declaration and had not disclosed material fact at the time of entry into the scheme, so the claim has been repudiated. Annexure-G is the copy of legal notice of complainant addressed to the OP dated 27-12-2011 calling upon them to honour the claim of complainant under the insurance policy taken by late Thimmaiah and settle the assured sum immediately, failing which the complainants will be left with no other alternative to approach the consumer forum. Annexure-J is the copy of reply of Ops dated 11-1-2012 addressed to the complainant stating that, while submitting the membership form, late Thimmaiah suppressed these material facts and availed the insurance cover. The life insurance contract wherein the proposer is duty bound to disclose every fact regarding his health, habit and other pertinent matters, the company is not liable to settle the claim and if any legal proceeding is initiated against the company, the company shall defend the same.

11. Let us have a cursory glance at the material evidence of the 1^st OP. One Suresh.S.Nayak, Branch Manager of the 1^st OP has stated in his affidavit that, the late Thimmaiah had obtained the insurance policy from 2^nd OP and premium is also paid by the borrower to the 2^nd OP and there is no privity of contract between the Ops and borrower, so borrower is not a consumer. The 1^st OP has acted only as agent of 2^nd OP, so the 1^st OP cannot be held responsible for the acts of the 2^nd OP. The borrow was sanctioned a personal loan of Rs.5.90 lakhs by 1^st OP on 14-9-2010 and it was released on the same day, when the insurance scheme and its benefits were brought to the notice of the borrower, he volunteered to become the member of the scheme and submitted an application for insurance in the prescribed format along with a declaration of good health. The borrower has suppressed a material and important fact that he suffered from serious heart ailment and was undergoing the treatment for the same. The borrower deliberately with mala-fide intention has given false declaration to the bank that he is of sound health. It is absolutely false on the part of the complainants to allege that, the 1^st OP and the insurance agent of 2^nd OP took signature of the borrower without disclosing the contents thereof. The 1^st OP denies that the bank has induced the borrower to sign on the dotted lines and there is no deficiency of service on the part of the 1^st OP, so the complaint be dismissed with cost.

12. One V.Srinivas who being the authorized representative of the 2^nd OP has stated in his affidavit that, the life insurance contract is a contract of Utmost good faith wherein the proponent is duty bound to disclose correct facts concerning his age, health, habits and other related matters. In the instance case the deceased life assured committed a breach of the principle of utmost good faith by deliberately and intentionally suppressing the material facts. It is clear from the documentary evidence that, Thimmaiah has been suffering from and was under treatment for Ischemic Heart Disease, high blood sugar since 2003 and had undergone Angioplastry in 2003, thus the claim repudiation action by the 2^nd OP is just and legal. A person who has signed a documents cannot plead ignorance about the contents of the same. So the contention of the complainant in this regard is baseless and hence denied. Thus the action of SBI life insurance Company limited to repudiate the claim is as per the terms and conditions of the policy. There is no deficiency of service on the part of the 2^nd OP. The complainants are not entitled to any relief, so the complaint be dismissed with cost.

13. The Ops have produced SBI Life Insurance Proposal forum at annexure-B which was filled and signed by late Thimmaiah on 2-2-2011 wherein the nominee mentioned as the 1^st complainant who being the wife of Thimmaiah, loan amount taken was Rs.5.90 lakhs and form containing good health declaration by Thimmaiah and Thimmaiah has stated in that declaration that he never suffered diabetes, hypertension and he has not been hospitalization for any ailment or diseases and under medical questionnaire column the policy holder ticked as No column stating that he was not having blood sugar, high bold pressure, heart attack, chest pain. On the basis of said forum, the policy was issued in the name of Thimmaiah, and it is produced at annexure-C by OP. In the claim investigation report produced at annexure-D of the OP we found that, as per enquiry done by the OP the deceased had taken treatment from hospital for heart diseases since 19-12-2003 & in this regard discharge summary from Fortis Hospital dated 26-12-2003 is produced by the OP which is at annexure-E and that discharge summary disclose that, the policyholder by name Thimmaiah was admitted to hospital on 19-12-2003 and discharge on 26-12-2003 and in diagnosis column it is mentioned as Ischaemic heart disease and course in the hospital column it is stated that successful angioplasty and stenting done to LAD under reopro cover with good result. Annexure-F is the copy of Echocardiography report of Thimmaiah wherein it is stated in the impression column as coronary artery disease. Investigation report produced by the OP as mentioned above go to reveal that, late Thimmaiah was a sugar patient also as his sugar fasting was stated as 215.0 as per the report dated 20-12-2003.

14. The evidence of the employee of Ops as mentioned above that, the deceased Thimmaiah was ailing due to Ischemic heart disease and he took treatment in the Fortis Hospital earlier to taking the policy and he did not reveal this fact and took the policy by hiding the serious illness before the Ops stands corroborated by annexure-B to F produced by the Ops.

15. So making careful scrutiny of the oral and documentary evidence of both parties together with the relevant terms and conditions of the policy, it is vivid and clear that, at the time of taking the policy from the 2^nd OP i.e. on 2-2-2011. Late Thimmaiah has stated that, he was not having any illness or ailment like sugar, blood pressure, heart disease etc. and he gave printed pro-forma duly filled and put signature on 2-2-2011 by declaring that he is not having any disease and has taken the policy from the 2^nd OP as collateral security for loan available from the 1^st OP and he died on 18-04-2011. The complainants have submitted the claim on the basis of the policy taken by the husband of 1^st complainant and father of 2^nd complainant.

16. After making careful scrutiny of the claim papers of complainants, the 2^nd OP has rejected the claim of complainants stating that, the policyholder has hidden the material aspect of his heart disease at the time of taking the policy as he had taken treatment with the Fortis hospital on 19-12-2003 for Ischaemic heart disease and this fact has been concealed by him. Accordingly the 2^nd OP has repudiated the claim of the complainants on the ground of concealing the material fact by deceased while taking the policy. The rejection of the claim of complainants by 2^nd OP is strictly in accordance with the terms and conditions of the policy & the claim investigation report submitted by the Ops. There is no negligence or deficiency of service as such on the part of the Ops in rejecting the claim of the complainants. So under the circumstance, we are of the considered opinion that, the oral and documentary evidence of the Ops no.1 and 2 are more believable trustworthy and acted upon than the material evidence of the complainants, and as such, we are of the view that, the complainants who come to forum seeking relief have failed to prove this point with believable evidence that, the Ops are negligent and there is deficiency of service on their part in rejecting their claim, and accordingly, we answer this point in a negative.

17. In view of our negative finding on the point no.1, the complainants are not entitled to any relief as prayed in the complaint. So, we answer this point in a negative. In the result, for the foregoing reasons, we proceed to pass the following order.

ORDER

          The complaint of the complainants is hereby dismissed. No cost.

          Supply free copy of this order to both parties.  

          (Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open forum on this, the 14^th day of May 2014).

MEMBER                                 PRESIDENT