IN THE DISTRICT CONSUMERS’ DISPUTES REDRESSAL FORUM AT MYSORE<br /> PRESENT: 1. Shri.A.T.Munnoli<br /> B.A., L.L.B (Spl.) - President <br /> <br /> 2. Smt.Y.V.Uma Shenoi<br /> M.Sc., B.Ed., - Member<br /> 3. Shri. Shivakumar.J.<br /> B.A., L.L.B., - Member<br /> CC 477/09 DATED 18.03.2010<br /> ORDER<br /> <br /> Complainants 1. Smt.Gayathri.S., W/o Late Sathyanarayanacharya.V.N., <br /> 2. Thushar.S., Late Sathyanarayanacharya.V.N., <br /> Both complainants R/at No.228, 5th Cross, kandaya Ilake Employees Layout, Srirampura II Stage, Mysore.<br /> (By Sri.A.S.Nataraj, Advocate)<br /> <br /> Vs. <br /> Opposite Parties 1. The State Bank of India,<br /> Retail Assets and Small Enterprises Credit Center, Post Bag No.24, CH-29, 9th Main, 3rd Cross, Saraswathipuram, Mysore.<br /> 2. The State Bank of India,<br /> Life Insurance Company Limited, Branch Office at S.B.I., L.H.O. Campus, No.65, St.Mark’s Road, Bangalore-560001.<br /> (By Sri. B.T.Sreekantegowda, Advocate for O.P.1 and<br /> Sri C.M.Jageesh, Advocate for O.P.2)<br /> Nature of complaint : Deficiency in service<br /> Date of filing of complaint : 19.12.2009<br /> Date of appearance of O.P. : 04.01.2010 <br /> Date of order : 18.03.2010<br /> Duration of Proceeding : 2 MONTHS 14 DAYS<br /> <br /> <br /> PRESIDENT <br /> <br /> <br /> <br /> MEMBER<br /> <br /> <br /> MEMBER<br /> <br /> Sri. A.T.Munnoli,<br /> President<br /> <br /> 1. The complainants have filed the complaint Under Section 12 of the Consumer Protection Act, seeking direction to the opposite parties to pay insurance policy amount, compensation for unfair trade practice as well as for mental agony and deficiency in service, totally amounting to Rs.16,81,000/-.<br /> <br /> 2. It is alleged in the complaint that, the first complainant is the wife and the second complainant is the son of Late V.N.Sathyanarayanacharya. They are legal representatives of the deceased and are consumers. The deceased had approached first opposite party and availed housing loan of Rs.12,81,000/-. Loan was sanctioned on 19.09.2008. The first installment was released. Without a valid insurance of the borrower, the loan amount will not be released. One of the mandatory condition for grant of housing loan was that, the borrower should insure his life with the second opposite party in order to guarantee the repayment of the loan in enforcing circumstances and eventualities. The first opposite party undertook the responsibility of paying the premium out of the loan proceeds. When the loan was sanctioned to the deceased, the first opposite party took his signatures for purchasing life insurance policy from the second opposite party. Signatures were obtained without explaining the terms and conditions to the deceased as the documentation was too heavy. In good faith, the deceased signed in all the places shown by the first opposite party. On 20.09.2008, a sum of Rs.90,829/- was debited from the account of the deceased towards insurance premium. On 22.12.2008, another sum of Rs.3,565/- was debited towards payment of insurance premium. The first opposite party thus created an impression in the mind of the deceased that, his life had been validly insured and that there was a valid and enforceable life insurance policy. On 09.07.2009, the deceased died. Same was informed by the complainants to first opposite party and sought for invoking insurance policy. Thereafter, first opposite party stated that, the loan amount would be transferred in the name of first complainant. However, the opposite party concealed the fact about the validity and enforceability of the policy, thereby resulting in mis-representation and suppression of facts, which amounts to unfair trade practice. Subsequently, the complainants sought for release of further installments of the loan. The first opposite party after keeping silent over the matter for unreasonable time informed that the policy had lapsed. No reasons were cited. Thereafter, it appears that, the first opposite party in order to cover up their lapses, credited the premium amount into the account of the deceased. The opposite parties never informed regarding alleged lapse of policy. If, at all policy had lapsed, it is because of the negligence and carelessness of the first opposite party. The first opposite party informed the first complainant that, second opposite party did not accept application for purchase of the policy. There is deficiency in service on the part of the first opposite party in not disclosing the information regarding non-acceptance of policy. If at all said information was given in time, the deceased would have made arrangements to buy fresh policy. The deficiency in service on the first opposite party resulted in huge loss to the complainants. The complainants repeatedly asked first opposite party, but they did not furnish requisite information as to why the policy had lapsed. Then, an application for supply of information under RTI Act was filed. It appears, the second opposite party had written letter on 20.10.2008, requesting first opposite party to comply certain requirements and resend the proposal. In spite of it, the first opposite party failed to resend the proposal. Thereafter, legal notice was issued and first opposite party sent untenable reply. It is alleged that, the opposite parties are not only guilty of unfair trade practice for having made a false and misleading representation, but also, there is deficiency in service for not having informed the alleged lapses of policy. On these grounds, it is prayed to allow the complaint.<br /> 3. The first opposite party in the version has contended that, the complaint is not maintainable either under law or on facts. Relationship of the complainants with the deceased and that loan was sanctioned to the deceased, is admitted. Further it is admitted that, this opposite party took responsibility of paying premium out of the loan proceeds of the deceased. However, certain other allegations that, signatures of the deceased were obtained without explaining the terms and conditions etc., are denied. However, it is admitted that, a sum of Rs.90,829/- was debited in the account of the deceased towards insurance premium. It is stated that, when this opposite party got information of death of the deceased, an officer went to the residence of the first complainant to inform him to comply with the clarification sought and informed that the proposal sent, is not accepted. It is contended that, since proposal of the deceased was not accepted by the second opposite party for want of personal and medical information, the question of lapse of policy does not arise. The proposal was not accepted by the second opposite party as the deceased did not furnish the clarification. Hence, on the request of the first complainant, premium has been recredited into the account. Further it is alleged that, first opposite party informed the deceased over phone on number of occasions to furnish the clarification.I is contended that the complainants are not consumers. Other allegations made in the complaint, are denied. Hence, it is prayed to dismiss the complaint.<br /> <br /> 4. The second opposite party has filed version contending that, the complaint is pre-mature in respect to the claim cited in the complaint. Also, it is contended that, there is no cause of action. It is stated that, there was no subsisting contract between this opposite party and the deceased. This opposite party and the first opposite party are separate legal entities. For mis-joinder of this opposite party, the complaint is liable to be dismissed. It is contended that, there is no concluded contract between the deceased and this opposite party. There is no customer service provider relationship. Certain decisions are cited. Further, it is submitted that, the first opposite party is the master policy holder of housing loan insurance group scheme. The membership cum declaration of good health along with premium amount cheque was returned to the first opposite party. It proves that this opposite party did not accept the proposal. Thus, the complaint is vexatious in nature. Other allegations made in the complaint are specifically denied. Accordingly, it is prayed to dismiss the complaint.<br /> <br /> 5. To prove the facts alleged in the complaint, the first opposite party has filed her affidavit and produced certain documents. For the first opposite party, A.G.M. has filed his affidavit. Authorized representative of second opposite party has filed his affidavit. Affidavit of Assistant Manager of first opposite party also is filed. Certain documents are produced for the opposite parties. We have heard the arguments of learned advocates for the complainants and opposite parties and perused the records.<br /> <br /> 6. Now the points arises for consideration are as under:-<br /> 1. Whether the complainants have proved deficiency in service on the part of both opposite parties or any one of them and further, the act alleged amounts to unfair trade practice?<br /> 2. What order?<br /> <br /> 7. Our findings are as under:-<br /> Point no.1 : Partly in affirmative.<br /> Point no.2 : As per the order.<br /> <br /> <br /> REASONS<br /> <br /> 8. Point no. 1:- The complainants have claimed the insurance policy amount as the insured V.N.Sathyanarayanachary died and further, they have claimed compensation regarding deficiency in service as well as for unfair trade practice. Considering the contentions of the parties and the material on record, we would like to consider mainly the deficiency in service and the unfair trade practice alleged and incidentally, the policy amount.<br /> <br /> 9. It is true, as could be seen from the material on record, the first opposite party and the second opposite party are different and distinct legal entities. At the same time, however it cannot be ignored that both of them are sister concerns. The deceased had availed housing loan from the first opposite party bank. The second opposite party sister concern of the first opposite party deals with insurance business. As could be seen from the material on record, particularly mention of the fact in the version by the second opposite party, the second opposite party received the membership cum declaration of good health of the deceased from the first opposite party, who is the master policy holder of housing loan insurance group scheme. Also, there is mention that, in the group insurance contract, the privity of the contract is between insurer and the master policy holder. In the background that, both opposite parties are sister concerns and that the deceased insured, is not alive now, we have to appreciate the facts and the material on record.<br /> <br /> 10. At the end of fourth paragraph of the version, the first opposite party has admitted that, it took the responsibility of paying the premium amount out of the loan proceeds of the deceased. At the beginning of 6th paragraph of the version, further first opposite party has stated that, it debited a sum of Rs.90,829/- on 20.09.2008 into the account of the deceased towards the payment of insurance premium. Admittedly, the housing loan of Rs.12,81,000/- was sanctioned by the first opposite party. <br /> <br /> 11. It is the specific case of the complainants that, as per the terms and conditions of the housing loan to be advanced by the first opposite party bank, the borrower is required to insure his life under the group insurance scheme, so that, in case of death of the borrower, the loan amount is secured by the insurance amount. The complainants alleges that, insuring the life of the borrower is mandatory. The first opposite party has contended that, it is optional. The copy of the loan sanctioned letter dated 12.09.2008 issued by the first opposite party to the deceased, is on record at red ink page 83 of the file. In this letter, the terms and conditions are mentioned and it is stated, “payment of S.B. Life premium of Rs.90,8289/- (optional)”. It is to be noted that, payment of S.B. Life premium of Rs.90,289/- is one of the terms and conditions imposed on the deceased to avail the housing loan. In addition to it, at Sr.No.9 in the same letter, refers to home loan group insurance. It is stated therein that, “the advance should be covered by S.B. Life Surkasha Group Insurance Scheme for single elder applicant and the premium with service tax of 12.36% will be Rs.90,289/-. A health questioner would needs to be submitted for the elder applicant. Medical examination if required shall be intimated by S.B.Life”. Hence, apart from the fact noted above that, the word ‘optional’ is bracketed at 9th clause, there is separate specific particular clause that the advance would be covered by S.B. Life Surakasha Group Insurance Scheme. 11th Clause of the said letter pertains to documents to be executed by the borrower and amongst other documents, there is mention “letter in respect of S.B. Life – operation letter”. Taking into consideration of these terms and conditions mentioned in the letter of the first opposite party regarding sanction of the loan, the contention of the complainants that insuring of the life of the borrower was one of the condition, cannot be brushed aside.<br /> <br /> 12. Admittedly, the first opposite party debited a sum of Rs.90,829/- on 20.09.2008 out of the sanctioned loan towards payment of insurance premium. Along with the required documents, the first opposite party master policy holder forwarded the proposal to the second opposite party along with the premium amount. The second opposite party has admitted that, it received the membership of good health form of the deceased from the first opposite party, the master policy holder of the housing loan insurance group scheme and it’s copy is at Annexure-A of the version. Further, it is stated by the second opposite party that, in the scrutiny it was found that the deceased answered in positive to Q1 of health questioner. Hence, the proposal was returned to first opposite party for details of history any surgical operation or hospitalization of the deceased. Copy of the letter is at Annexure-B. This letter is dated 20.10.2008. As noted above, even though in the version, second opposite party has stated that, in the scrutiny it was found that the deceased had answered in positive to Q1 and hence, the proposal was returned to the master policy holder for details, in the second coloumn, there is mention that, “we sending back the proposal to you as requested by your branch office”. Hence, why the first opposite party requested the second opposite party to send back the proposal, no reasons are assigned and no explanation is forth coming. It was different aspect as contended by the second opposite party, if the proposal was sent back seeking certain clarification or explanation or particulars. But, as noted in the said letter, the proposal was sent back, as requested by the official of the first opposite party branch. Further, by the said letter, the second opposite party requested the first opposite party to comply the requirement and resend the proposal. As noted above, said letter is dated 20.10.2008, at the right site, there is seal of the second opposite party S.B.Life and in the middle, the date is 30th November 2009. Hence, we cannot make out, as contended when the said letter was of second opposite party dated 20.10.2008, why it’s seal dated 30th November 2009 is put. Let it be. Let us consider, what happened thereafter. <br /> <br /> 13. In the 7th paragraph of the version of the first opposite party, it is stated that, “the first opposite party got information of the death, when officer of the first opposite party went to the residence of first complainant to inform him to comply with the clarification sought for by the second opposite party and informed that the proposal sent to insure the life of deceased borrower V.N.Sathyanarayanachary, is not accepted.” Admitted date of death of the deceased is 09.07.2009. As noted above, according to the first opposite party when it got information of the death of the deceased, it’s officer went to the house of the complainants to inform to comply the clarification sought for by the second opposite party and further, informed that the proposal was not accepted. Hence, as stated, according to the first opposite party, it’s officer went to the complainants to inform to comply with the clarification sought for by the second opposite party, after the death of deceased. This is one thing. Secondly, at that time, officer of the first opposite party informed that the proposal was not accepted. At the cost of repetition, it was after death of the deceased. Hence, as noted above according to the second opposite party, it wrote to first opposite party through the letter dated 20.10.2008 seeking certain clarification, but as mentioned in 7th paragraph of the version, it’s officer went to the first complainant to inform to comply the clarifications sought after death of the deceased, that is after 09.07.2009. It is nearly after about 10 months. <br /> <br /> 14. However, in the 9th paragraph of the version, the first opposite party stated that, the second opposite party wrote a letter on 20.10.2008 returning the proposal and to resend the same. After receipt of the letter, the first opposite party called upon the deceased over phone on number of times to come and furnish the details regarding personal and medical information. Further, it is stated, finally the officer of the first opposite party called on the deceased on 20.03.2009 and 23.03.2009. Thus, as alleged, over phone on number of times, the officer of the first opposite party called upon the deceased to furnish the details. The said dates are not mentioned. However, two specific dates only are mentioned. It is true, in respect of these two dates, documents are produced. What made the first opposite party in not producing the documents in respect of earlier telephone calls, no reason is assigned and no explanation is forth coming. Under the circumstances, the contention that, number of times, officer of the first opposite party called upon the deceased to furnish the details, cannot be believed and accepted. Even otherwise, on the two dates, specifically mentioned on the documents, at the most, it can be said that, there were telephone contacts of the deceased and of the first opposite party. What was the conversion between both the numbers, there is no cogent evidence. The Assistant Manager of the first opposite party has filed his affidavit. Wherein also, it is stated that, number of times, he called upon the deceased to comply with the requirements and also, it is stated on 20.03.2009, also he tried to contact the deceased etc., The letter of the second opposite party to the first opposite party, is on record. There is note on the top right side that called up on 19.03 and 22.03. Except these two dates, contacting the deceased on the other dates, there is no mention. If really as contended and stated by the Assistant Manager, he had called upon the deceased number of times, in the natural course, those dates also could have been mentioned on the said letter. Hence, in view of the mention of only two dates on the said letter, the contention of the first opposite party that number of times, officer of the first opposite party called upon the deceased to furnish the details, cannot be believed. At the same time, further it is relevant to note that, the letter is dated 20.10.2008, but officer of the first opposite party has noted on the said letter called on 19.3 and 22.3, it is nearly after about 5 months. Why the first opposite party kept quite for a period of 5 months, no reasons are forth coming.<br /> <br /> 15. Copy of the covering sheet of the S.B. Life insurance is on record at red ink page 99 of the file. Inward date is mentioned as 07.10.2008, then D.D. number is mentioned, thereafter branch code and sum assured. Then, except remarks columns, all other columns or boxes are left blank, particularly, the boxes pertaining to form complete, send back date, reason for sending back are all blank.<br /> <br /> 16. The health questionnaire, copy is at red ink page 97 of the file. Against all the questions, ‘no’ is marked and only in respect of first question, ‘yes’ is marked. Thus, according to the opposite parties, the proposal was returned seeking clarification in respect of this first question. It is the definite and specific case of the complainants that, the first opposite party took signature of the deceased on all papers and documents and that the deceased did not read or know the contents of the same. In the absence of the cogent evidence, now, we cannot give specific finding as to whether the deceased read the all documents and the forms and then, signed or otherwise. But, the submission made for the complainants that the documents were bulky and the officer of the first opposite party took several signatures on various documents, cannot be brushed aside. As regards, documents particularly relating to group insurance policy, admittedly were and are in custody of first and second opposite parties, who are sister concern. It is claimed by the complainants that, they had to apply to the first opposite party to secure certain documents under the Right to Information Act. <br /> <br /> 17. On 20.09.2008, huge amount of Rs.90,829/- was debited in the loan account of the deceased by the first opposite party towards insurance premium. It has contended that, said premium has been credited into the loan account of the deceased. It is true, as could be seen from the account extract, that amount has been credited only on 27.07.2009, after death of the deceased. The complainants claim that, after the death of the deceased, they approached the first opposite party seeking details of the group insurance. Considering this, under the circumstances, the first opposite party credited the premium amount into the account of the deceased after the complainants started to put forth their claim in respect of the insurance amount. It was different aspect if that amount was credited soon after the proposal was received back or atleast within reasonable time, if at not, atleast before the death of the deceased. In the background of this and other circumstances particularly that both opposite parties are sister concerns, the contention put forth by the complainants that the acts of the opposite party amounts to unfair trade practice, shall have to be believed and accepted. <br /> <br /> 18. The facts, evidence and the discussion made above, clearly establish deficiency in service on the part of the first opposite party, particularly in non-calling upon the deceased to furnish the details within the reasonable time. Of course, we are not giving specific finding that the first opposite party called upon the deceased to furnish the required details in respect of the proposal. Assuming that, even as contended on the two dates noted on the letter of the second opposite party, the first opposite party had contacted the deceased or his family members over phone to furnish the information, it is clearly after about 5 months. Except the alleged telephone conversations, admittedly, first opposite party has not written any letter or issued notice to the deceased calling upon to furnish the details. No reasons are assigned, as to why no written communication was done in this regard. It is contended by the first opposite party that, deceased as negligent in furnishing the information. Considering the entire facts, particularly that huge premium amount more than Rs.90,000/- paid or debited, the alleged negligence on the part of the deceased, cannot be believed and accepted. Person paying such huge premium amount, certainly without delay if any information is required will furnish. Moreover, as could be seen from the regulations regarding protection of policy holders interest, it is provided that, proposal shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated in writing within a reasonable period, not exceeding 15 days. Of course, the second opposite party contend that, within the stipulated period, it returned the proposal. As regards, the date of receipt of the proposal and the return, except the document noted above, no cogent evidence is placed on record, such as inward or outward registers or other available documents in the office of both opposite parties. The first opposite party being the sister concern of the second opposite party and also, master policy holder, support the stand taken by the second opposite party regarding return of the proposal. But, as noted above, the first opposite party did not call upon required information from the deceased in writing.<br /> <br /> 19. As regards the insurance policy, the opposite parties particularly second opposite party contended that there was no concluded contract. It is true, the complainants have also in the complaint alleged regarding return of the proposal by the second opposite party to the first opposite party. In the absence of evidence, we are unable to accept the claim of the complainants so far concerned to policy amount. Whatever may be the reason, on record, complainants have failed to prove that the proposal was accepted by the second opposite party.<br /> <br /> 20. However, as noted above, the complainants have proved deficiency in service as well as unfair trade practice on the part of the first opposite party. Considering the premium amount paid, and the insurance amount, we are of the opinion that, compensation claimed by the complainants to the extent of Rs.2,00,000/- is just and reasonable. Accordingly, our finding on the point is partly in affirmative.<br /> <br /> 21. Point No. 2:- Considering the discussion made above and conclusion arrived at, we pass the following order:- <br /> <br /> ORDER<br /> <br /> 1. The Complaint is partly allowed against first opposite party.<br /> 2. The first opposite party is hereby directed to pay compensation of Rs.2,00,000/- to the complainants towards mental agony and other inconvenience caused to the complainants, within a period of one month from the date of the order, failing which the amount will carry interest at the rte of 12% p.a.<br /> 3. Further, first opposite party shall pay a sum of Rs.5,000/- to the complainants to the cost of the proceedings.<br /> 4. Give a copy of this order to each party according to Rules.<br /> <br /> (Dictated to the Stenographer, transcribed by her, transcript revised by us and then pronounced in the open Forum on this the day 18th March 2010)<br /> <br /> <br /> <br /> <br /> <br /> (A.T.Munnoli) <br /> President <br /> <br /> <br /> <br /> (Y.V.Uma Shenoi)<br /> Member<br /> <br /> <br /> <br /> (Shivakumar.J.)<br /> Member<br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />