BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 07^TH DAY OF FEBRUARY 2023

ORDER

SMT.M.SHOBHA, PRESIDENT

1. The complaint has been filed under Section 35 of C.P.Act (hereinafter referred as an Act) against the OP for the following reliefs against the OP:-
   1. To direct the OP1 to recover the outstanding loan amount of Rs.25,84,470/- by the policy obtained from OP2 and credit the balance amount to the complainants.
   2. To direct the OP2 to pay a sum of Rs.25,84,470/- to the OP1 and
   3. Grant such other reliefs.

2. The case set up by the complainant in brief is as under:-

The husband of the complainant is the absolute owner of site No.40, situated at Avlhalli village, Bangalore South Taluk.  The husband of the complainant had availed a long term loan of Rs.26,00,000/- on 31.05.2019 by equitable mortgage of the title deed from the OP1.

3. As per the instructions of OP1, the husband of the complainant obtained the insurance policy from OP2 bearing No.PP000053 valid from 31.05.2019 for a period of five years, for a sum of Rs.26,00,000/- by deduction of an insurance premium amount of Rs.78,572/- towards security and towards recovery of the loan amount in case of death of the borrower during the tenure of loan period.

4.  The husband of the complainant has been paying the EMI to OP1 regularly without any default. The husband of the complainant was admitted to Rajeev Gandhi Institute of Chest disease as an outpatient as he was suffering from post covid like illness and was expired on 30.09.2021 due to covid 19 leaving behind the complainant to succeed to his estate.

5. The OP1 has issued notice to the complainant on 31.01.2022 calling her to repay the outstanding loan amount.

6. It is further case of the complainant that in the bottom of the policy issued by the OP2 it is specified that in the event of any claim under this insurance cover from OP2, the claim will be directly paid to the OP1 in case of group personal accident and on such receipt of the claim amount the OP1 shall release the document subjected to full and final settlement of entire outstanding loan amount.  The death of the husband of the complainant due to covid 19 lies within the terms and conditions, limitations and exceptions of the policy with OP2.

7. It is further case of the complainant that after death of her husband the policy of the OP2 comes into force and the OP1 are at liberty to recover the outstanding loan amount from the insured sum of Rs.26,00,000/- from the policy obtained by the OP2 and return the balance amount to the account of the husband of the complainant for the medical charges incurred by the complainant.

8. The complainant has made a claim to the OP2, the OP2 has committed deficiency of service by refusal of the payment of the insured amount and repudiated the claim on 13.12.2021 stating that the husband of the complainant had been suffering from diabetic mellitus and hyper tension prior to the issuance of the policy. The OP2 have further directed the complainant to approach OP3.  In this regard the same representation was made to the OP3 and the OP3 had guided the complainant to approach OP2 and instead of rendering services they had been harassing the complainant.  The complainant is an uneducated and house wife and is unable to pay the outstanding amount to OP1.

9. The OP1 instead of recovering the outstanding balance amount from the policy obtained from OP2 and return the balance amount to the account of the husband of the complainant.  Have issued legal notice to the complainant to repay the outstanding loan amount. The OP1 has affixed a possession notice dated 18.05.2022 at the property of the complainant. Hence the complainant has filed this complaint.

10. In response to the notice, OP1 appears and files version. OP2 and 3 are remained absent hence placed exparte.

11. OP1 has filed their version admitted about the loan borrowed by the husband of the complainant of Rs.26,00,000/- by mortgaging the property bearing site No.40, by way of deposit of title deeds.  After that the complainant husband deposited the title deed such as sale deed dated 10.03.2016 and as per the sale deed the complainant is the absolute owner and not her husband.  

12. OP1 has further admitted that they have instructed the complainant that there is an option of life insurance and as per the instruction of the husband of the complainant this OP1 have deducted the insurance amount and credited to OP2.  The premium insurance amount is paid on loan amount.  The OP2 issued certificate of insurance with coverage details wherein the OP1 is the master policy holder with some assured for Rs.26,00,000/- as the policy is insured in the name of the complainant’s husband Mr.Syed Arif Ali.

13. It is further case of OP1 that the complainant is the co-borrower to the loan availed by her husband and the complainant is jointly and severally liable to repay the loan.  On default committed by the complainant the OP1 have issued notice with demand to pay the outstanding dues.  The complainant instead of complying the demands has approached this Commission.  When the complainant has committed default the OP1 company on classifying the accounts belongs to complainant as NPA got issued notice u/s 13(2) prescribed under SARFACIE Act issued possession notice with caution to public not to deal with the secured property.

14. The OP1 with no option initiated surfacie proceedings and filed sec 14 petition before the Hon’ble Magistrate in Criminal Misc No.737/2020 and obtained a favourable order on 02.08.2022 to take physical possession of the secured property through Court Commissioner with the assistance of jurisdictional police.

15. It is further case of the OP1 that there is a policy insured by the deceased husband of the complainant and as per the terms specified therein the complainant with all requisite documents applied for insurance claim but OP2 refused to accept the same on the ground that the husband of the complainant was suffering from diabetic mellitus and hyper tension prior to the issuance of the policy and instructed to represent the claim. The complainant neither approached or represented the claim. As this OP1 is the master policy holder but still as per the terms the complainant as nominee have to approach the OP2 for the claim.  This OP1 has no locus-standi to make claim on insurance policy. On approach of the complainant the insurance amount will be credited to OP1 towards recovery of the loan amount.

16. It is further contention taken by OP1 that there is no allegations made against this OP1 relating to deficiency of service or unfair trade practice or defects made by this OP1.  The allegations made only on OP2.  This OP 1 who is the loanee to the complainant and her husband and on default this OP1 is entitled to take appropriate legal action against the complainant for recovery of the loan.  This OP1 is made as party in proceedings for no reasons.  Hence the complaint against this OP1 is not at all maintainable and liable to be dismissed.

17. The complainant has filed his affidavit evidence and relies on 11 documents.  Affidavit evidence of OP has been filed but not produced any documents.

18. Heard the arguments of advocate for the complainant.   Perused the written arguments filed by both the parties.

19. The following points arise for our consideration as are:-

1. Whether the complainant proves deficiency of service on the part of OPs?
2. Whether the complainant is entitled to relief mentioned in the complaint?
3. What order?

20. Our answers to the above points are as under:

Point No.1:  Affirmative

Point No.2: Affirmative in part

Point No.3: As per final orders

REASONS

21. Point No.1 AND 2: These two points are inter related and hence they have taken for common discussion.  We have perused the allegations made in the complaint, version, affidavit evidence of both the parties and documents filed by the complainant and written arguments filed by complainant and OP1. Inspite of issue of notice the OP2 and 3 remained absent and they were placed exparte.
22. The husband of the complainant and the complainant have together availed long term loan of Rs.26,00,000/- on 31.05.2019 after executing equitable mortgage of the title deed from OP1.  As per the direction of the OP1 the husband of the complainant No.1 have also obtained the policy from OP2 for the said amount and also paid insurance premium amount of Rs.78,572/-.  The deceased husband of the complainant was paying EMI to the OP1.  
23. The husband of the complainant was suffering from covid-19 like illness and expired on 13.09.2021 due to covid 19, leaving behind the complainants as his legal heirs.
24. After the death of the husband of the complainant the OP1 has demanded for refund of the outstanding loan and also issued notice.  The complainant No.1 as per the terms of the policy in the event of any claim under this insurance cover from OP2, the claim will be directly paid to the OP1 in case of group personal accident and on such receipt of claim amount the OP1 shall release the documents subject to full and final settlement of the entire outstanding loan amount. The OP2 has repudiated the claim made by the complainant on the ground that as per their investigation the deceased insurer was suffering from diabetic mellitus and hyper tension prior to issuance of the policy, the said vital information was not provided and hence they have repudiated the claim made by the complainant.  
25. The complainant again approached the OP3 and the OP3 have instructed the complainant to approach the OP2 and also closed her complaint and both the Ops have made the complainant to run from piller to post, even though the policy was valid and it was in force at the time of death of the insurer. 
26. In support of her claim the complainant has relied on 11 documents i.e., Document No.1 is the copy of sanction letter, Document No.2 is the memorandum of deposit of title deeds, document No.3 is the copy of the policy, document No.4 is the copy of the account statement, document No.5 is the OPD records, report and death certificate of the deceased husband of the complainant No.1, document No.6 is the notice issued by OP1, document No.7 is the claim rejection letter, document No.8 is the representation made by the complainant to OP3, document No.9 is the copy of the possession notice issued by OP1 under SURFAESI Act, document No.10 is the copy of the legal notice and document No.11 is the copy of the aadhar card.
27. In order to prove their contention the authorized representative of OP1 has filed his affidavit evidence and not produced any documents.  
28. Even though the OP2 is the insurance company have issued the policy and rejected the claim of the complainant remained absent and they have not at all challenged the allegations made in the complaint and also evidence laid by the complainant.
29. The OP1 have also clearly taken the contention that the complainant has to approach the OP2 and made them to release the amount to this OP1.  They have also stated about the actions taken by them under SURFAESI Act proceedings.  It is clear from the claim rejection letter sent by the OP2 that they have rejected the claim since the husband of the complainant has failed to give the vital information that he was suffering from diabetic mellitus and hyper tension prior to issuance of policy and hence they have repudiated the claim.  
30. On this back ground, we have gone through the decision of the Hon’ble NCDRC, in Neelam Chopra –vs- LIC.
31. While disposing of this appeal the Hon’ble NCDRC has referred to the case of Hari Om Agarwal –vs- Oriental Insurance Co. Ltd., 2007 SCC Online DEL 1278 and observed that insurance claim cannot be denied on the ground of life style deceases that are so common. The Commission further observed that even though insurance claims cannot be denied on the ground of life style diseases, but that does not give the insured a right to suppress the information from the insurance company and if the person does so, then he must suffer in the form of reduced claims.  
32. The Commission also referred to the case of Sulbha Prakash Motegaonkar –vs- LIC of India, Civil A.No.8245/2015 and observed that suppression of information regarding any pre-existing disease if it has not resulted in death or has no connection to the cause of death would not disentitle the claimant for the claim.  
33. The facts and circumstances in the above decision is clearly applicable to the facts and circumstances in this case.  
34. On perusal of the entire medical report relied on by the complainant i.e., document NO.5 it is clear that the deceased died due to covid-19 and it is not at all anyway related with the diabetics mellitus and hyper tension.  Under these circumstances, the OP2 would not have rejected the claim of the complainant on the ground as stated in the claim rejection letter.
35. In view of the rejection made by the OP2 the complainant No.1 were unable to clear the loan amount and she was forced to face the proceedings under the SURFAESI ACT raised by the OP1.  The complainant and her children were made to suffer due to the rejection made by the OP2 and they were made to suffer for no fault on their part.  Even though the policy was in force and the complainants are entitle for the claim the OP2 has rejected the claim and failed to made the payment to the OP1.  Under these circumstances the OP2 has committed deficiency of service and also negligence and unfair trade practice on their part.  Therefore, the complainant is entitled for the relief.  Hence we answer point No.1 in affirmative and point No.2 partly in affirmative.
36. Point No.3:- In view the discussion referred above the complaint is liable to be allowed in part with a direction to OP2 to pay the outstanding loan amount of Rs.25,84,470/- and further directed to credit the balance amount to the account of the complainant.  The complainant also entitled for compensation of Rs.1,00,000/-  and litigation expenses of Rs.10,000/-. Hence we proceed to pass the following;

O R D E R

1. The complaint is allowed in part.
2. OP2 is directed to pay the outstanding loan amount of Rs.25,84,470/- and also to credit the balance amount to the account of the complainants.
3. OP is directed to pay compensation of Rs.1,00,000/-  and litigation expenses of Rs.10,000/- to the complainants.
4. The OP shall comply this order within 60 days from this date, failing which the OP shall pay interest at 8% p.a. after expiry of 60 days on Rs.25,84,470/- till final payment.
5. Furnish the copy of this order and return the extra pleadings and documents to the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 07^TH day of FEBRUARY, 2023)

Documents produced by the Complainant-P.W.1 are as follows:

Documents produced by the representative of opposite party – R.W.1;

NIL