DATE OF FILING : 18.11.2010

BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM, IDUKKI

Dated this the 30^th day of March, 2011

Present:

SRI.LAIJU RAMAKRISHNAN PRESIDENT

SMT.SHEELA JACOB MEMBER

SMT.BINDU SOMAN MEMBER

C.C No.243/2010

Between

Complainant : Pushpachandran,

Kandavath House,

East Kadathi P.O.

Muvattupuzha, Ernakulam District.

(By Adv: K.M. Sanu.) And

Opposite Party : 1. The Manager,

ICICI Prudential Life Insurance Company Ltd.,

Thomson Tower, 3^rd Floor,

M.G. Road, North End, Cochin – 682035,

Ernakulam District.

2. The Manager,

ICICI Prudential Life Insurance Company Ltd.,

Pala Road, Thodupuzha,

Thodupuzha P.O.,

Idukki District.

(Both by Adv: Sudha Sharma)

3. The Manager,

ICICI Prudential Life Insurance Company Ltd.,

Cherumattathil Plaza,

Muvattupuzha P.O.,

Ernakulam District.

(By Adv: Lissy M.M.)

O R D E R

SRI. LAIJU RAMAKRISHNAN (PRESIDENT)

The husband of the complainant availed a loan of Rs.5,15,018/- from the 3^rd opposite party bank in the month of July, 2008 in order to purchase a vehicle. The repayment was 60 monthly instalments of 11,614/- each. Unfortunately, her husband expired on 27.11.2009 due to heart disease. At the time of availing the loan, for the security of the loan, 1^st and 2^nd opposite parties issued an insurance policy to the husband of the complainant and received a single premium of Rs.20,000/- from him. It was issued as per the master policy with the bank and the insurance company. The term of the loan was upto the repayment of the loan. It is also assured by the opposite party that if the loanee dies within the period, the payment of the future instalments will be avoided. After the death of the husband, the complainant filed the policy claim. But the opposite party repudiated the same stating that the complainant’s husband did not disclose the real facts at the time of availing the policy. They have deliberately dragged the proceedings and compelled the complainant to repay the instalments. The complainant is not entitled to pay further instalments after the death of her husband and the premium of Rs.20,000/- was received by the opposite party after assuring the same. The 1^st, 2^nd and 3^rd opposite parties deliberately issued the policy and cheated the complainant. Hence the petition is filed for getting direction to avoid the payment of the car loan after the death of her husband and also for getting the amount paid with interest after the death of her husband.

2. As per the written version filed by the 1^st and 2^nd opposite parties, there is no cause of action against the 1^st and 2^nd opposite parties. Under the contract of insurance, the insured is under solemn obligation to disclose all the material fact to the insurer at the time of taking the insurance policy failing which the policy is rendered void-ab-initio, illegal and unenforceable. In the present case, the life assured was a known case of liver cirrhosis and was under treatment for the same since July, 2005. This history prior to the proposal was not disclosed in the proposal for insurance by the life assured. The life assured has concealed the said material fact which was necessary to disclose at the time of submitting the proposal form in order to assess the Risk factor under the proposal for insurance, thereby rendered the contract of insurance void-ab-initio and inoperative. The life assured had died within 2 years from the date of commencement of the subject policy and as such the replying opponent No.1 and 2 company has rightly repudiated the claim raised by the complainant, so the complaint is liable to be dismissed. In the proposal form which was duly filled by the life assured submitted to the 1^st and 2^nd opposite parties, it is written:

	Question	Answer
H(4)	Have you consulted any doctor for surgical operations or have been hospitalised for any disorder or been advised to undergo any medical investigations/treatment for any medical condition other than for minor cough, cold or flue during the last 5 years	No
H(5)	Have you ever suffered or are suffering from any of the following: (iv) Ailments relating to liver, reproductive system	No

During the claim process, it was revealed a medical certificate from Nirmala Medical Centre, dated 18.3.2010 that Mr.K.V. Chandran 53 years old patient was on treatment in this Hospital since 2005 July, for liver cirrhosis, as OP No.10206. He had brought in casualty on 24.11.2009 with history fall and head trauma and was then referred to major centre. A death summary from Amrita Institute of Medical Sciences and Research Centre dated 27.11.2009 as cause of death is Multiple Intracranial Haemorrhage. History and physical finding as known case of chronic liver disease, referred from Lissie Hospital following a list H/O fall at home 23.11.2009. So the claim was repudiated due to non-disclosure and suppression of material information by the life assured and it was repudiated by a letter dated 31.8.2010. Further the life assured has an opportunity to look in to the details filled in the proposal form and revert the same if found any discrepancy during free look period. However the life assured did not approach the replying opposite party meaning thereby he agreed with the contents filled there in and with the terms and conditions of the policy. So the complainant is not entitled for any amount as compensation.

3. As per the written version filed by the 3^rd opposite party, loan number L.A COC 00013838927 was availed by Sarath. C, and the loan amount was Rs.5,15,018/- from the 3^rd opposite party Bank by executing a loan agreement between him and the Bank for purchasing a Maruti SX-4 car No.KL-17F-1742. He had agreed to repay the loan amount with interests in 59 monthly instalments of Rs.11,641/- each. The loan period was from 5.9.2008 to 5.7.2013. The avarements that he was not in need of a loan but availed the same upon the instigation and compulsion of the agents of this opposite party is highly unfounded and hence denied. The customer himself approached the bank and applied for the loan and availed the same after fully complying with the entire formalities of the bank. The allegation that the opposite parties made him join in the insurance scheme is totally false and hence denied. Joining the scheme was purely optional for the customers of this opposite party. The loanee Mr. Sarath. C himself had opted for taking the insurance at his own will. The 3^rd opposite party never had instigated or compelled him to join in the insurance scheme. The policy was not taken for securing the repayment of the loan, as alleged. The dispute is regarding the repudiation of insurance claim and hence this opposite party is not at all a necessary party in this case. The complaint is bad for misjoinder. The opposite party is a separate company and legal entity and is not a part of the 1^st and 2^nd opposite parties. The opposite party is not bound by the conditions of the insurance contract between the petitioner and the 1^st and 2^nd opposite parties. No complaint has been lodged before this opposite party on 17.6.2010 or on any other date as alleged. The petitioner was a deliberate and continuous defaulter of payments of the loan. The post dated cheques issued were dishonoured for want of sufficient funds in his account. As per the statement of accounts, an amount of Rs.3,49,230/- is due from the petitioner towards instalments overdue, as on 24.1.2011 and the complainant is legally and contractually bound to pay the same. So the petition is not at all maintainable.

4. The point for consideration is whether there was any deficiency in service on the part of the opposite parties, and if so, for what relief the complainant is entitled to?

5. The evidence consists of the oral testimony of PW1 and Exts. P1 to P6(series) marked on the side of the complainant and Ext. R1(series) marked on the part of the opposite party.

6. The POINT :- The son of the complainant deposed as PW1. The terms and conditions of the policy issued by the opposite party and the 1^st premium receipt issued by the opposite party at the time of availing the policy by the father of PW1 from the opposite party are marked as

Ext.P6(series). The father of the PW1 availed the loan amount of Rs.5,15,018/- from the 3^rd opposite party in the month of July, 2008. The repayment of the loan was in 60 monthly instalments of Rs.11,641/- each. At the time of availing the loan, the 1^st and 2^nd opposite parties issued Ext.P6 insurance policy for the security of the loan and received a premium of Rs.20,000/- for the same. They assured the complainant that it was a master policy of the company and the 3^rd opposite party and also told that if the loanee dies, it is not needed to pay the balance premium amount. Unfortunately, the father of PW1 died on 27.11.2009 at Amrita Hospital due to heart disease. The copy of the death summary from the Amrita Hospital is marked as Ext.P5. The copy of the death certificate of PW1’s father is marked as Ext.P3. The opposite party issued a repayment chart which is marked as Ext.P2. After the death of the father, PW1 and the complainant applied for the claim, but it was repudiated and the repudiation letter is marked as Ext.P1. A letter was issued by the opposite party on 17.6.2010 to settle the claim and it is marked as Ext.P4. On cross examination of the learned counsel for the opposite parties, PW1 deposed that the father of PW1 was having liver disease at the time of availing the policy and he was undergoing treatment from 2005 for liver disease. The treatment was done at Nirmala Medical Centre, Muvattupuzha and the matter was disclosed at the time of availing the policy. PW1 was also with the father at the time of availing the policy. The opposite parties told that it was an additional security for the loan. Now the loan is changed in the name of PW1. The copy of the statement of account of the complainant’s loan is marked as Ext.R1 which is produced by the opposite party. As per the opposite party, they have admitted that the policy was issued to the father of PW1 at the time of availing the loan. But the claim was repudiated because at the time of availing the policy, the father of PW1 never disclosed the material fact that he was undergoing treatment for liver cirrhosis. As per the Clause 6 (2) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002, every policy document sent by it is accompanied by a forwarding letter which clearly mentions that in case Policyholder is not satisfied with the features or the terms and conditions of the policy he can withdraw / return the policy within 15 days that is under the ’Free Look period’. The policyholder never did like that so it means that he agreed all the terms and conditions mentioned therein. In the question claim whether have you consulted any doctor for surgical operations or have been hospitalised for any disorder or been advised to undergo any medical investigations / treatment for any medical condition other than for minor cough, cold or flue during the last 5 years as H(4) question in the proposal form, the answer is ’No’ in the proposal form signed by the disclosed person. For the H(5) question of the proposal form, have you ever suffered or are suffering from any of the following : (a) ailments relating to liver, reproductive system the answer is written as ’No’. The life assured expired on 27.11.2009 due to multiple intracranial haemorrhage, chronic liver disease, aspiration pneumonia, ARDS, Hepato renal syndrome, hyponatremia and bleeding diathesis and in the medical certificate issued from the Nirmala Medical Centre dated 18.3.2010, it is written that K.V. Chandran 53 years old patient was on treatment from this hospital since 2005 July, for liver cirrhosis as OP No.10206. So it is clear that the life assured was having liver disease that results in the progressive destruction and deterioration of the liver resulted in the death of the patient. The life assured was under solemn obligation to disclose all the facts truly and correctly in the proposal form. So the policy was issued by suppression of material facts.

On going through the 1^st premium receipt of the master policy No.09566699 issued by the opposite party, as in Ext.P6(c), it is written that as condition

3. benefits subject to the life cover being in force:

1. Benefit on death of the Member provided the death has occurred after the loan is disbursed:

   in case of level cover, the company shall pay the life cover and in case of reducing cover the company shall pay the reduced life cover, as specified in the Credit Assure statement, to the beneficiary as on the date of the death of the Member.

    

2. Benefit on Full prepayment : in case of the full prepayment of the loan or restructuring of the loan resulting in full prepayment the life cover shall cease and surrender value be paid provided the same is at least Rs.250/-.

    

And as per clause 3 (4) Maturity Benefit : there is no benefit payable on the survival of the Member on the date of cessation of the term of the Life Cover.

So it is very clear that if the loan is already repaid by the loanee, the policy will seize and there will be nothing beneficial to the holder and the policy is absolutely for the security for the loan availed by the loanee and it is also written that it is a master policy type “Credit Assurance” in Ext.P6(b). So the policy availed by the husband of the complainant is for the security of the loan availed by him. As per the opposite party, they have argued that, in the proposal form in which the complainant signed, it is written that no chronic disease or liver disease and he is not undergone treatment for the last 5 years and he was not hospitalised for the last 5 years for any surgical operations or any other disease other than minor disease like cough, cold and flue. But the opposite party never produced evidence to show that, in the proposal form which was filled by the diseased Chandran, it is written in the claim of the questionnaire H(4) and H(5), the answer as ’No’ for the treatment of any disease for the last 5 years and suffering from any ailments relating to liver, reproductive system as ’No’. They have never produced any copy of the proposal form before this Forum to show the same. As per PW1, the father of PW1 was at the age of 50 years when availing the policy and he told that he was suffering from liver cirrhosis and so that the opposite parties compelled the husband of the complainant to avail this policy for the security of the loan.

So we think that there is nothing to disbelieve the version of PW1 and it may be true that the policy was issued for the security for the loan. Otherwise it was the duty of the opposite party to conduct a medical examination on the 50 years old person while issuing the policy. There should be a medical board in the opposite party company for the same. But it was not done by the opposite party at the time of availing the policy and it is a gross deficiency from the part of the opposite party to repudiate the claim after the death of the husband of the complainant without closing the loan. As per 1^st, 2^nd and 3^rd opposite parties, they have separate legal entity and no way connected to each other. But if they are not connected to each other, why the 1^st and 2^nd opposite parties issued the policy to the 3^rd opposite party and it is a master policy between the bank and the insurance company. So the insurance company is bound to make good or compensate for the loss against the member who is a policyholder of the bank. So we think that the complainant is not entitled to repay the loan amount after the death of the husband of the complainant as per the Life Cover Schedule issued by the opposite parties in Ext.P6(a). It is clearly mentioned that the benefit payable on each month and tenure at the end of each month. In this case the policy was availed on 30.7.2008 and the policy holder died on 27.11.2009, after 16 months of availing the policy. It is written in the Ext.P6(a) schedule that the benefit payable in the case of death after 16 months, that is for 17 months, is Rs.4,08,943/-. And if the complainant has paid any amount after the death of her husband, that amount should be returned.

Hence the petition allowed. The opposite parties are directed to settle the claim of the complainant’s husband’s vehicle loan as per the Ext.P6(a) schedule issued by the opposite party, and if any amount is paid by the complainant after the death of her husband, that amount should be returned to the complainant, within 30 days. The opposite parties are also directed to pay Rs.2,000/- to the complainant as cost of this petition within one month of receipt of a copy of this order, failing which the amount shall carry

Pronounced in the Open Forum on this the 30^th day of March, 2011

Sd/-

SRI. LAIJU RAMAKRISHNAN (PRESIDENT)

Sd/-

SMT. SHEELA JACOB (MEMBER)

Sd/-

SMT. BINDHU SOMAN (MEMBER)

APPENDIX

Depositions :

On the side of the Complainant :

PW1 - Sharath. C.

On the side of the Opposite party :

Nil.

Exhibits :

On the side of the Complainant :

Ext.P1 - Letter from the opposite party to the complainant dated 31.8.2010.

Ext.P2 - The repayment chart issued by the opposite party to the complainant.

Ext.P3 - Copy of the death certificate of the husband of the complainant.

Ext.P4 - Copy of the letter from the complainant to the opposite party dated 17.6.2010.

Ext.P5 - Copy of the death summary of the husband of the complainant from

Amrita Institute of Medical Sciences and Research Centre.

Ext.P6(series) - Insurance policy, 1^st premium receipt and terms and conditions of the policy.

On the side of the Opposite party :

Ext.R1(series) - Copy of statement of account issued by the opposite party.