THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MOGA.
C.C. No. 65 of 2016
Instituted on: 8.2.2016
Decided on: 24.05.2016
Nachhtar Kaur age 65 years, wife of Late Nathi Ram, resident of Ward no.5-6, Rajindra Road, Near Baba Jiwan Singh Gurudwara, Dharamkot, District Moga.
………. Complainant
Versus
1. The Manager, S.B.I. Life Insurance, 1st Floor, Above OBC Bank, Near Akalsar Road, G.T. Road, Moga - 142001
2. Head Claims, S.B.I. Life Insurance Company Limited, Central Processing Centre, Kapas Bhawan, Plot no.03A, Sector no. 10, CBD Belapur, Navi Mumbai - 400614.
………. Opposite Parties
Complaint under Section 12 of the Consumer Protection Act, 1986.
Quorum: Sh. Ajit Aggarwal, President
Smt. Vinod Bala, Member
Smt. Bhupinder Kaur, Member
Present: Sh. Sham Lal, Advocate Cl. for complainant.
Sh. Amrit Bansal, Advocate Cl. for opposite parties.
ORDER :
(Per Ajit Aggarwal, President)
1. Complainant has filed the instant complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter referred to as the 'Act') against the Manager, S.B.I. Life Insurance, 1st Floor, Above OBC Bank, Near Akalsar Road, G.T. Road, Moga and others (hereinafter referred to as the opposite parties) for directing them to pay Rs. 8,00,000/- alongwith interest @ 9% till the date of payment on account of insurance policy no.47003924404 and to pay Rs. 50,000/- on account of mental tension, harassment and deficiency in services and Rs. 11,000/- a litigations expenses to the complainant.
2. Briefly stated, the facts of the case are that complainant is the permanent resident of address mentioned in the head note of the complaint. In the month of August, 2013 one agent of OP Insurance Company came to Nathi Ram husband of the complainant and told him regarding insurance policy schemes of OP insurance company i.e. S.B.I Life Saral Shield Plan. On the assurance of agent of OPs company and goodwill of OPs company husband of the complainant availed insurance policy no.47003924404 from S.B.I Life Service, Branch Moga. The husband of the complainant paid first instalment of the policy of Rs.7720/- through cheque dated 28.08.2013. Further instalments was to be paid yearly for ten years and sum assured was Rs. 8,00,000/-. Complainant is the nominee in the said policy. Unfortunately, policy holder Nathi Ram husband of the complainant expired on 2.3.2014. Thereafter, complainant sent a letter alongwith original policy letter to the insurance company informing about the death of Nathi Ram and for claim of compensation, as she was nominee under the policy. On 22.05.2014, complainant received reply of her letter stating that while filling the form of policy, Nathi Ram husband of the complainant had mentioned 'NO' against the question no.11 of the Form which was indicating that he is not having any other individual life insurance policy and due to this reason compensation cannot be paid to the complainant. The said policy form was filled by OP's agent Sanjeev Kumar and he did not inform to Nathi Ram regarding question no. 11 as he was not much educated. Although the agent has marked 'NO' in Question no.11, but policy holder was paying the premium for all the policies, which does not bar the complainant to get the compensation. The complainant again approached to OPs company office in the month of August, 2015 to know the formalities to be completed for claiming the compensation, but no reply was given. Complainant also served a legal notice dated 30.09.2015 to OP-1, but to no effect. The complainant also approached to office of Insurance Ombudsman at Chandigarh on 3.11.2015, through her nephew. However, the Ombudsman office also rejected the claim on the same reason as Nathi Ram has not disclosed another policy. Claiming the above act as deficiency in service and unfair trade practice on the part of opposite parties, the present complaint has been filed.
3. Upon notice, opposite parties no.1 & 2 appeared through their counsel and filed their separate written reply taking certain preliminary objections, inter alia, that complaint is hit by Section 11 of Civil Procedure Code under the principle of Res Judicata. Further submitted that the Ombudsman is an institution established under the RPG Rules, 1998 and the issues raised in the complaint are well within the jurisdiction of Ombudsman. Thus, the jurisdiction of the Ombudsman and the Forum being similar in nature, both being summary proceedings in nature. Complainant should not be encouraged to raise multiple litigations over the same issue and should not be encouraged to switch from one forum to another having similar jurisdictions. The said RPG rules have not provided for any Appellate Authority nor have they vested the District Forum with Appellate jurisdiction over the Awards of the Ombudsman; that the address of OP-2 is at Navi Mumbai, but the complaint is filed before the Forum at Moga. Hence, the complaint is not maintainable for want of territorial jurisdiction of the Forum; that the complaint involves larger issues which are to be thoroughly investigated and enquired into. Only Civil courts are competent to handle such cases because the proceedings before Forum are summary in nature; that the case is fraught with fraud and need to be thoroughly tried in a Court of competent jurisdiction. The nature of the complaint and the nature of evidence produced on record are such that the complaints of this nature cannot be effectively dealt with in summary proceedings; that the OPs have no obligation to honour the claim as there was suppression of material facts by the DLA. There is no deficiency in service, as contemplated under section 2 (1) (g) of the Consumer Protection Act, can be alleged on the part of the opposite parties. Thus the complaint did not fall within the definition of "Complaint" under section 2 (1) (c) of the Consumer Protection Act. Further there was no locus for the complainant and she could not fall under the definition of "Complainant" as contemplated under section 2 (b) of the Consumer Protection Act and hence on this ground alone the complaint deserves to be dismissed.
Further in brief facts of the case submitted that the Deceased Life Assured, Mr. Nathi Ram (hereinafter referred to as the "DLA") had applied for SBI Life - Saral Shield Policy vide proposal no. 47QH749813 dated 23.08.2013 with an initial deposit of Rs. 7720/-. Accordingly based on the information furnished in the proposal form, policy bearing no.47003924404 was issued with date of commencement of 18.09.2013 for a basic sum assured of Rs. 8,00,000/-. Under point no. 11 of the proposal form, under question of "Do you have any other individual Life Insurance Policy or have you applied for One?" the DLA replied as negative i.e. "No". Under point no. 17 of the proposal, the DLA declared as follows: "I hereby declare that the foregoing statements and answers have been given by me after fully understanding the Questions and the same are true, accurate and complete in every manner and that I have not withheld or omitted to give any information. Further, I have not provided any false information in reply to any question. I understand and agree that the statements in this proposal constitute warranties. I do hereby agree and declare that these statements and this declaration shall be the basis of the contract of assurance between me and SBI Life Insurance Co. Ltd. (company) and that if there is any mis-statement or suppression of material information or if any untrue statements be contained therein the said contract shall be absolutely null and void and all moneys which shall have been paid in respect thereof shall stand forfeited to the Company". Based on said declaration and information furnished in the proposal form, the policy was issued. That the DLA was reported to have died on 02.03.2014. The policy resulted in a claim in just 5 months 12 days. During assessment of the claim, the Company enquired and found the DLA had applied for insurance cover on 19.08.2013 with HDFC Life Insurance Co. Ltd. for a sum assured of Rs. 10,00,000/-. However, the DLA did not state the details of the said HDFC proposal form in the proposal form of SBI dated 23.08.2013. The proposal form of HDFC Life Insurance Co. was of 19.08.2013 which is prior to the date SBI Life proposal form dated 23.08.2013, based on which, SBI Life, issued the policy bearing no. 47003924404. That the DLA has applied for policy from HDFC Life Insurance Co. Ltd. on 19.08.2013 and he applied for policy from SBI Life Insurance Co. on 23.08.2013 which is post proposing for policy in HDFC Life Insurance Co. Ltd. It is very clear from the proposal form that the DLA had suppressed his HDFC Insurance proposal details fraudulently while applying the policy with SBI Life Insurance Co. Ltd. As per the mail received from Bharti Axa Life Insurance Co., the DLA had applied for insurance policy with from Bharti Axa Life Insurance Co. on 9.9.2013 and the Risk commencement date was 10.9.2013 for a sum assured of Rs.4,00,000/-. The above said facts reveals that the DLA submitted proposal forms for taking insurance policies with HDFC, Bharti Axa and SBI Life Ins. within a very short span of one month. Further the DLA did not state the details of the HDFC proposal dated 19.8.2013 in the SBI Life proposal form dated 23.08.2013 deliberately. That the proposal form is the basis for assessment of risk. A proposer will be admitted into the scheme based on the details in the proposal form. In the instant case, the DLA committed a fraud with an intention to enter into the contract of Insurance. The DLA suppressed his previous insurance detail and thus committed fraud in terms of Section 17 of Indian Contract Act, 1872 with intent to deceive the Company. A contract induced or tendered by fraud is void. Thus, in the instant case the claim was declined by the company based confirmation mail received from HDFC Life Insurance Co. Ltd. and from Bharti Axa Life Insurance Co. which amply proves that the DLA suppressed his previous insurance details while procuring the insurance policy. Hence, it is clear that the DLA has procured the insurance cover fraudulently. Further as per point no.9.6 Non-disclosure clause, it is also mentioned as follows:
9.6.1 "We have issued your policy based on the statements in your proposal form, personal statement, medical reports and any other documents".
9.6.2 "If we find that any of this information is inaccurate or false or you have withheld any material information, we shall declare your policy null and void subject to section 45 of the Insurance Act, 1938".
9.6.3 We will not pay any benefits and we will also not return the amounts you have paid".
Further submitted that Section 45 of the Insurance Act 1938 is applicable in cases where the claim is repudiated after 3 years from the date on which it is affected. In the instant case, the claim was repudiated within 3 years of the date of acceptance of the risk. Hence the case does not come within the purview of Section 45 of the Insurance Act, 1938. Further as per section 20 of the Indian Contract Act, 1872, the agreement is void where both the parties are under mistake as to matter of fact. Thus, suppression of material facts regarding other insurance cover, still the contract is void. Hence, in any terms, the contract is void ab initio and nothing is payable. Further submitted that the company had received a representation from the complainant and the same was referred to Claims Review Committee. But as there was indisputable proof of that the DLA had suppressed his previous insurance details, the claim repudiation decision was upheld by the Claims Review Committee, headed by a retired judge of a High Court. The decision of the Claim Review Committee was intimated to the complainant vide letter dated 01.10.2014. Further submitted that the a person who signs a proposal form is totally responsible for the contents contained in the documents and he/she cannot plead ignorance of the same. A contract has to be interpreted as per the terms and conditions of the document evidencing the contract. In the instant case, the Policy Document is the evidence of the Insurance contract. It is clear that the DLA had committed a breach of doctrine of Utmost Good Faith by not giving the details regarding existing insurance proposal and thereby availing the insurance cover fraudulently. The decision of the company to repudiate the claim is just and legal. Hence, the complaint is liable to be dismissed. In parawise comments, the all other allegations made in the complaint have been denied.
4. In order to prove the case, complainant Nachhtar Kaur tendered in evidence her affidavit Ex. C1 and copies of documents Ex. C-2 to Ex. C-6 and closed the evidence.
5. In rebuttal, the opposite parties tendered in evidence duly sworn affidavit of Ms. Dhanya. K.P w/o Sh. Unnikrishnan.K.P. Ex. OPs-1, and copies of documents Ex. OPs-2 to Ex. OPs-8 and closed the evidence.
6. We have heard the learned counsel for the parties and have very carefully gone through record placed on file.
7. Ld. Counsel for complainant argued that husband of complainant purchased an insurance policy bearing no. 47003924404 for Rs.8,00,000/- from opposite parties and he paid first installment of Rs.7,720/- by way of cheque of State Bank of Patiala and as per policy, her husband had to make payment of installment yearly for ten years. Unfortunately, husband of complainant died on 2.03.2014 and thereafter, complainant duly informed regarding death of her husband to opposite parties and being his nominee, complainant completed all formalities and submitted requisite documents with opposite parties to get insurance claim on account of death of her husband. Complainant made several requests to opposite parties to make payment of genuine insurance claim on account of death of her husband. On 22.05.2014, complainant received a letter from opposite parties, vide which they repudiated the claim of complainant on the ground that her husband has concealed material fact from opposite parties as he had filled ‘No’ in answer to question no. 11, which indicates that her husband is not having any other individual life insurance policy. Complainant also served legal notice dt. 30.09.2015 to opposite parties, but all in vain. Complainant also appeared before Ombudsman, Chandigarh on 3.11.2015, but that also bore no fruit. Despite repeated requests, opposite parties have not made payment of her genuine claim, which amounts to deficiency in service and trade mal practice on their part. Being aggrieved due to these acts of opposite parties, complainant has suffered financial loss, harassment and mental agony. The complainant is entitled for insurance claim of her husband being his nominee alongwith interest and compensation. Ld. counsel for complainant prayed that the present complaint may be allowed with costs to opposite parties. He has stressed on documents Ex C-2 to C-6.
8. To controvert the arguments of complainant counsel, ld counsel for opposite parties asserted that all the allegations levelled by complainant are wrong and false and are concocted ones and there is no deficiency in service on the part of opposite parties. Ld. counsel for opposite parties submitted that complainant has concealed the material facts not only from opposite parties, but also from this Forum and therefore, they have rightly repudiated the claim of complainant. Ld. counsel for opposite parties further submitted that complainant applied for SBI Life – Saral Shield Policy bearing no. 47003924404 with an initial deposit of Rs. 7,720/-for a sum of Rs. 8,00,000/-. The date of commencement of policy was 18.09.2013. It is averred that under point no. 11 of proposal form, under question of “Do you have any other individual Life Insurance Policy or have you applied for one?” the complainant replied as “No”. Complainant died on 2.03.2014 and policy resulted in a claim in just 5 months 12 days and during the assessment of claim, Company enquired and found that complainant had applied for insurance cover on 19.08.2013 with HDFC Life Insurance Co. Ltd for a sum of Rs. 10 lacs, but complainant deliberately concealed this fact from opposite parties and did not state the detail of said HDFC proposal in SBI Life proposal form dated 23.08.2013. The date of proposal form of HDFC Life Insurance Co. was 19.08.2013, which is prior to the date of SBI Life proposal form dated 23.08.2013, based on which opposite parties issued him the said policy. Thus, complainant has suppressed the material facts from opposite parties. It is further averred that as per mail received from Bharti Axa Life Insurance Company, complainant had also applied for insurance policy from Bharti Axa Life Insurance Company on 9.09.2013 and risk commencement date was 10.09.2013 for a sum assured of Rs.4,00,000/-. From all these facts, it is clear that complainant submitted proposal forms for taking insurance policy of HDFC, Bharti Axa and SBI Life, within a very short span of one month and he intentionally did not state the details of HDFC proposal dated 19.08.2013 in SBI Life proposal form dated 23.08.2013. By suppressing the material fact from opposite parties, complainant has committed breach of principal of utmost good faith and therefore complaint is not maintainable. Complainant has done cheating to get an advantage and has played fraud with opposite parties. It is brought before the Forum that opposite parties have repudiated the claim of complainant rightly and reiterated that there is no deficiency in service on the part of opposite parties. Prayer for dismissal of complaint is made.
9. We have heard the ld counsel for parties and have also gone through affidavits, evidence and record placed on file.
10. The case of the complainant is that the deceased husband of complainant purchased an insurance policy from opposite parties securing his life. In that policy, the complainant was appointed as nominee. During the policy period, husband of complainant died and being nominee, the complainant applied for the insurance claim of her husband with opposite parties after fulfilling all the formalities, but opposite parties repudiated her claim on the ground that in the proposal form, her husband had concealed the material fact and answered to question no. 11 as ‘No’, which was that “whether you have any other insurance policy or applied for one”. Opposite parties have no right to repudiate the insurance claim of complainant on this ground. This act of opposite parties amounts to deficiency in service and trade mal practice. In reply, the opposite parties admitted that husband of complainant purchased an insurance policy from them. It is also admitted that they repudiated the claim of complainant on the ground that in the proposal form, insured suppressed the material facts from the opposite parties. In the proposal form, there was a question no. 11 that do you have any other Life Insurance Policy or have you applied for one and in reply to that question, he replied as ‘No’, but in fact the husband of complainant had already applied for another insurance policy for his life from HDFC Life Insurance Company prior to applying for the insurance policy from opposite parties and in proposal form, he did not disclose this fact which is suppression of material fact and as per clause 9.6 i.e. Non Disclosure Clause, the opposite parties have every right to declare the insurance policy as null and void subject to Section 45 of Insurance Act and are not liable to pay any benefit under the policy. The counsel for opposite parties argued that where there has been suppression of facts, the acceptance of insurance policy by the Insurance Company would not be binding upon it. Husband of complainant purchased the said insurance policy fraudulently by suppressing the aspect of moral hazard. The fact of purchase of insurance cover from HDFC Life should be disclosed at the time of proposal with SBI Life and the amount of earlier insurance would be considered at the time of grant of new insurance policy as per Financial Under Writing Guidelines issued by the insurance companies. If the insured disclosed this fact of his previous policy in the proposal form, the Insurance Company under Financial Under Writing Guidelines would not have accepted the proposal of husband of complainant for providing him life insurance cover advertently.
11. In reply the counsel for complainant argued that husband of complainant did not suppress any fact from opposite parties at the time of filling the proposal form of insurance policy. He did not suppress the fact for application of purchase of insurance policy from HDFC Life Insurance Company as at the time of filling the proposal form, the agent did not ask this question that if DLA has any other insurance policy. The insurance agent took his signatures on blank proposal form and filled the same at his own. He intentionally filled ‘No’ on the proposal form Ex C-2 and Ex OP-3. From the perusal of copy of proposal form, it is revealed that insured Nathi Ram only signed the proposal form and the entire proposal form was filled up by insurance agent Sanjiv Kumar and not by DLA. Ld counsel for complainant has put reliance on the citation 2015 (1) CLT 374 titled as Branch Manager Life Insurance Corporation of India and Ors Vs Heera Bai, decided by Hon'ble Chhattisgarh State Consumer Disputes Redressal Commission, Raipur, wherein it is held that Consumer Protection Act, 1986, Section 2(1)(g)-Insurance claim (Life)-Repudiation on the ground that insured not disclosed previous insurance policies in the proposal form-Two insurance policies were purchased by the insured on the same day and at the same time-Held-Not mentioning of description of all previous insurance policies does not amount to wilful concealment of the material facts while making proposal for the policy.(Para 11).
12. He further argued that as per Section 45 of Insurance Act the insurer can repudiate any Life Insurance Policy within two years from the date of commencement of policy on the ground that the statement made in the proposal form or any other report of Medical Officer shows fraud of insured or any other document leading to issuance of policy was inaccurate or false unless insurer shows that such statement was material matter or suppressed the facts fraudulently and the Policy Holder knew at the time of making it with them, statement was false and it suppressed facts which it were material to disclose. He further argued that under Section 45 of Insurance Act the three conditions for application of said section are imposed i.e. 1) The statement must be on material matter and must suppressed the facts which were material to be disclosed. 2) The suppression must be fraudulently made by policy holder and the policy holder must have known at the time of making statement that it was false and 3) it suppressed facts which were material to disclose and in the present case, the DLA did not suppress any material fact intentionally or fraudulently. Moreover, as per Financial under writing guidelines of the Company, a person of the age of above 51 years can take insurance policy multiple of 10 of average of last three years annual income and as per proposal form, at the time of purchasing the insurance policy, the age of deceased Nathi Ram was 51 years and his annual income was Rs.3,40,000/- which was duly verified by opposite parties themselves. So, as per financial under writing guidelines of the Insurance Company, Nathi Ram was eligible to purchase insurance policy up to the sum of Rs. 34 lacs and if the version of opposite parties that if the Nathi Ram had disclosed the fact of applying of his prior HDFC Life Insurance Policy, they could consider the same before issuing the insurance policy to him under Financial under writing guidelines. Then, in that case also, the complainant purchased insurance policy of HDFC Life Insurance Co. For Rs. 10 lacs and the insurance policy from OPs for Rs. 8 lacs totalling Rs. 18 lacs whereas he was eligible for insurance policy up to Rs. 34 lacs. As such, he got insured himself for very less amount than for which he was actually entitled. So, this plea is not of any help to opposite parties and non disclosure of fact of earlier insurance policy does not affect the rights of opposite parties. So, they have wrongly and illegally repudiated the claim of complainant on false grounds, which amounts to deficiency in service and trade mal practice.
13. From the above facts and circumstances, this Forum is of considered opinion that there is no force in the pleas taken by opposite parties and complainant has succeeded in proving her case. Therefore, complaint in hand is hereby allowed with direction to opposite parties to pay Rs. 8,00,000/- (eight lacs) to complainant alongwith interest @ 9% p.a. from 22.05.2014 i.e. the date of repudiation of claim by opposite parties till final realization. Opposite parties are further directed to pay Rs.10,000/- (Ten thousand only) to complainant as compensation for mental agony, tension and harassment suffered by her besides Rs. 3,000/- (Three thousand only) as litigation expenses. Compliance of this order be made within one month from the date of receipt of the copy of the order, failing which complainant shall be entitled to proceed under Section 25 and 27 of the Consumer Protection Act. Copy of order be given to parties free of cost as per rules. File be consigned to record room.
Announced in open Forum:
Dated: 24.05.2016
(Bupinder Kaur) (Vinod Bala) (Ajit Aggarwal)
Member Member President
