State Consumer Disputes Redressal Commission
Hemant Garg vs Kotak Mahindra Life Insurance Company ... on 10 August, 2023
First Additional Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH.
Consumer Complaint No.555 of 2019
Date of institution : 24.07.2019
Reserved on : 17.07.2023
Date of Decision : 10.08.2023
1. Hemant Garg S/o Late Sh.Santosh Garg, R/o House No.723-B,
Aggar Nagar, Ludhiana, Punjab-141001.
2. Arpana Garg Wd/o Late Sh.Santosh Garg R/o House No.723-B,
Aggar Nagar, Ludhiana, Punjab-141001.
....Complainants
Versus
1. Kotak Mahindra Life Insurance Company Limited (Formerly known
as Kotak Mahindra Old Mutual Life Insurance Company Limited)
through its Managing Director, having its registered office at 2nd
Floor, Plot No.C-12, G Block, BKC, Bandra East, Mumbai-400051,
India.
2nd Address:
Corporate Office at 7th Floor, Kotak Infinity, Building No.21, Infinity
Park, W.E. Highway,General, A.K. Vaidya Marg, Malad (East),
Mumbai-400097, India.
2. Kotak Mahindra Life Insurance Company Limited (Formerly known
as Kotak Mahindra Old Mutual Life Insurance Company Limited)
through its Branch Manager, Office at SCO No.120, 6th Floor,
Feroze Gandhi Market, Ferozepur Road, Ludhiana-141002
(Punjab).
3. Kotak Mahindra Bank Limited through its Managing Director,
having its Registered Office at 8th Floor, TVH Agnitio Park, 141,
Old Mahabalipuram Road, Kandanchavadi, Chennai-600096,
India.
4. Kotak Mahindra Bank Limited through its Branch Manager, having
its Registered Office at SCO No.120, 6th Floor, Feroze Gandhi
Market, Ferozepur Road, Ludhiana-141002 (Punjab).
Consumer Complaint No.555 of 2019 2
5. Mr.Deepak Kapoor, Branch Manager, Employee of Kotak Mahindra
Bank Limited, Office at SCO No.120, 6th Floor, Feroze Gandhi
Market, Ferozepur Road, Ludhiana-141002 (Punjab).
6. Mr.Gaurav Sharma, Relationship Manager, Employee of Kotak
Mahindra Bank Limited, Office at SCO No.120, 6th Floor, Feroze
Gandhi Market, Ferozepur Road, Ludhiana-141002 (Punjab).
7. Mr.Dikshit Kumar, Employee of Kotak Mahindra Life Insurance
Company Limited, Office at SCO No.120, 6th Floor, Feroze Gandhi
Market, Ferozepur Road, Ludhiana -141002 (Punjab).
Email Address: Opposite party No.1,2 & 7 : [email protected]
Opposite party No.3,4,5 & 6: [email protected]
....Opposite Parties
Consumer Complaint under Section 17 of
the Consumer Protection Act, 1986.
Quorum:-
Mr. Harinderpal Singh Mahal, Presiding Judicial Member
Present:
For the complainant : Sh.Mukand Gupta, Advocate For opposite parties No.1,2&7: Sh.K.S.Cheema, Advocate For opposite parties No.3 to 6 : None HARINDERPAL SINGH MAHAL, PRESIDING JUDICIAL MEMBER The complainants - Sh.Hemant Garg & Anr. have filed this complaint under Section 17 of the Consumer Protection Act, 1986, (in short "C.P. Act") seeking following directions to the opposite parties:-
(i) to direct opposite parties No.1 & 2 to repay the entire outstanding of the loan amount to opposite parties No.3 & 4 with immediate effect.
(ii) To direct opposite parties No.3 & 4 not to raise demand for payment of any amount against the complainants and consequently, issue No Dues Certificate and also release Consumer Complaint No.555 of 2019 3 the original documents to the complainants which were deposited by them as a security against the loan, in question.
(iii) To restrain opposite parties No.3 to 7 not to take any coercive action against the complainants during the pendency of the complaint;
(iv) To direct the opposite parties to pay an amount of Rs.50,000/- on account of travelling expenses spent by the complainants for redressal of their grievances;
(v) to pay Rs.5,00,000/- on account of punitive damages;
(vi) to pay Rs.10,00,000/- jointly and severally on account of mental agony and harassment;
(vii) to pay Rs.55,000/- as cost of litigation And/Or any other order which this Commission may deem fit be also passed.
2. Brief facts culminating to the institution of the present complaint are that late Sh.Santosh Garg along with the complainants applied for the home loan facility of Rs.56,00,000/- in September, 2017. Before sanctioning of the said loan, opposite parties No.5 & 6 i.e. officials of opposite party No.4 informed late Sh.Satosh Garg and now being the borrower of opposite party No.4 asked him to take the Group Life Insurance Policy, just to secure the loan liability after death of any member. Opposite parties No.5 & 6 asked to inform late Sh.Santosh Garg that in the event of not taking the policy the loan against property would not be sanctioned. Opposite parties No.5 & 6 have also informed to late Sh.Santosh Garg that in case of death of any member, Consumer Complaint No.555 of 2019 4 the entire outstanding amount as on date of mishap would be directly paid by opposite parties No.1 & 2 to opposite parties No.3 & 4 and other co-borrower need not to pay anything. Keeping in view the assurances given by the officials of the opposite parties and regarding the nature of benefits of the policy, late Sh.Santosh Garg had no choice except to proceed further with the subscription of the Life Insurance Policy, otherwise the loan applied would not have been sanctioned and disbursed. A copy of the Certificate of Insurance is Ex.C-1. After issuance of the policy, home equity loan agreement had been executed between the late Sh.Santosh Garg, the complainants and opposite party No.4 on 26.09.2017. The complainant had also mortgaged two properties in consideration of grant of said loan with opposite party No.4 and said fact is admitted by opposite party No.3 by issuing letter dated 30.09.2017. Accordingly, amount of Rs.56,32,115/- has been sanctioned to the complainants and late Sh.Santosh Garg by opposite party No.4 and the said fact had been acknowledged by opposite party No.4 by issuing the sanction letter dated 07.11.2017 in favour of late Sh.Santosh Garg. A copy of the loan Sanction Letter is Ex.C-2 to Ex.C-4. The premium amount of Rs.4,41,898/- was also deducted directly from the sanctioned loan for providing Insurance Policy. Under the garb of loan documents, number of documents were got signed from late Sh.Santosh Garg by opposite parties No.5 & 6 as well as by the officials of opposite parties No.1 & 2. No medical examination of late Sh.Santosh Garg was conducted, which is otherwise mandatory as per the norms of IRDA. Suddenly, on 22.05.2018, late Sh.Santosh Garg had expired and the complainants Consumer Complaint No.555 of 2019 5 immediately informed about the death of late Sh.Santosh Garg to the opposite parties telephonically. After the death of their father- Sh.Santosh Garg, the complainants filed the claim with opposite parties No.1 & 2 in July, 2018 with the request to repay the entire outstanding loan amount to opposite party No.4 in terms of the Group Insurance Policy, availed by late Sh.Santosh Garg. To utter shock, a letter was received dated 12.09.2018 from opposite party No.2, whereby the claim of the complainants under Policy No.GA000148 was repudiated on the ground of concealment of facts that Sh.Santosh Garg did not give the true declaration about his health in the application form. As per Clause 14(2)(i) of (Protection of Policy Holder's Interests) Regulation, 2017, opposite parties No.1 & 2 under legal obligation to decide the claim of the beneficiary in 30 days from the date of receipt of the claim but much longer time was taken by opposite parties No.1 & 2 for repudiating the claim of the complainants. Copy of repudiation letter is Ex.C-5. After receiving the repudiation letter on 12.09.2018, the complainant No.1 approached opposite party No.2 and opposite parties No.5 & 6 with the request to entertain the genuine claim as no declaration about health was ever signed by late Sh.Santosh Garg. The proposal form for Insurance was filled and signed by the official of opposite parties No.1 to 4. The complainant No.1 immediately met with opposite parties No.5 & 6 with the hope that they would resolve the grievances but they informed that only opposite parties No.1 & 2 would resolve the grievances of complainant No.1. After not getting any satisfactory response from opposite parties No.1 and 2 and opposite parties No.3 to 6, the Consumer Complaint No.555 of 2019 6 complainant lodged the complaint with IRDA on 26.05.2019 to look into the matter. A detailed communication was also sent via email to IRDA on 26.05.2019, copy of which is Ex.C-6 & Ex.C-7. In response to email, reply was received from Consumer Affairs Department of IRDA on 30.05.2019 informing that the complaint has been registered, vide token No.05-19-018550 and it can be attended by opposite parties No.1 & 2 within a reasonable time. The response was received from opposite parties No.1 & 2 with the same stand taken by them in repudiation letter. Copy of email dated 30.05.2019 and letter dated 07.06.2019 as Ex.C-8 & Ex.C-9. The complainant No.1 also received a letter dated 07.06.2019 from opposite parties No.1 & 2 asking the complainant to reply to their email within 8 weeks otherwise they would close the complaint of the complainants. Accordingly, the complainant sent an email to opposite parties No.1 & 2 mentioning that no satisfactory response has been given by opposite parties No.1 & 2. Copy of letter dated 07.06.2019 and email dated 08.06.2019 is Ex.C- 10 & Ex.C-11. The opposite parties No.1 & 2 has failed to repay the outstanding amount of loan to opposite parties No. 3 & 4 even after charging a huge amount of premium of the policy from late Sh.Santosh Garg. Rather, opposite parties No.3 & 4 instead of helping the complainants, opposite parties No.5 & 6 started threatening the complainants that they would be dispossessed from the property, which is a gross negligence. No declaration was ever got signed from late Sh.Santosh Garg at the time of issuance of the Insurance Policy, which clearly shows that from the beginning late Sh.Santosh Garg has been kept in dark by the opposite parties, which is totally illegal. All Consumer Complaint No.555 of 2019 7 the opposite parties are jointly and severally liable to settle the loan account of the complainant. It is further pleaded that declaration of medical health and life insured is not material as the group insurance scheme operates on a different footing other than life insured in a life insurance policy for a term and medical claim policy for a particular term. The opposite parties No.1 & 2 has repudiated the claim of the complainants on the ground that late Sh.Santosh Garg was suffering from Type 2 diabetes, hypertension, dyslipidemia and diabetic nephropathy, whereas, late Sh.Santosh Garg died due to heart attack, which has no relation with this disease. In this way, the complainants have become the victim of aggressive marketing and assurances of the opposite parties which turned out to be false and ambiguous. By not settling the loan account of the complainants, the opposite parties are deficient in rendering their service and have indulged in highly unfair trade practice, which compelled the complainants to file the present complaint seeking the above said reliefs.
3. Upon notice, opposite parties No.1 & 2 filed their joint reply taking preliminary objections that the complaint is not maintainable as the complainant has given the misguided facts. They admitted that the answering opposite parties have an arrangement with Kotak Mahindra Bank whereby any person taking a loan from Kotak Mahindra Bank, covered under the group policy i.e. Kotak Group Assure Plan and Kotak Mahindra Bank and the life to assured becomes the Member. In the group Insurance Policies, as per the policy contract, the policy holders availing loan from the policy holder for specific purposes as specified in Schedule of the policy contract may be covered by the Consumer Complaint No.555 of 2019 8 respondents under the group insurance policy for the period and amount as specified in the Certificate of Insurance issued to each such specified member, subject to the terms and conditions of the policy. The premium amount shall be received by the respondents from the policy holders on behalf of the members seeking subscription to the said cover for the specified period for specific number of members. It is further required under the policy that a member has to provide the duly signed Declaration of Good Health (in short 'DOGH') thereby assuring the insurer that the member is medically fit for availing the said insurance cover. According to the policy terms and conditions and to join the pool of members, the deceased late Sh.Santosh Garg provided a DOGH dated 21.09.2017 with the plea that pre-requisite for availing a group insurance cover assuring the respondents that he was medically fit to avail the said policy and was not suffering from any ailment/diseases. As the information provided by the assured in the form of DOGH was established to be incorrect by the Company so the company was well within the rights to repudiate the claim of the complainants and the act of opposite parties No.1 & 2 is according to the statutory provisions of law and there is no case of deficiency in any manner.
4. The repudiation was made by speaking order by giving the specific reason for the decision and that cannot be termed as deficiency in service. The complainant was required to visit the Civil Courts qua the same. The member late Sh.Santosh Garg, deliberately disclosed the wrong facts about his health and he has also not disclosed this fact that he was suffering from Hypertension Consumer Complaint No.555 of 2019 9 Dyslipidemia, Diabetic Nephropathy and Type 2 Diabetes much prior to the issuance of the Insurance Policy and he was taking the treatment for the same. This fact is further substantiated by the Medical Certificate issued by Max Super Specialty Hospital in 2014 and OPD papers issued by Dr. Gurpreet Singh in 2015. The medical documents of PGI also reveal the same. This medical history is much prior to availing of the policy, which was not intentionally disclosed by late Sh.Santosh Garg. The member Sh.Santosh Garg passed away within eight months from the date of commencement of the policy, so the company has rightly repudiated the claim preferred by the complainants. As per the contract, the insurer is bound to honour the claim under the policy, provided that the member at the time of signing the DOGH had correctly disclosed all relevant information about his health. Since the information provided by the member was incorrect so the contract became void and not executable. Since the payment of group insurance policy is paid from the pool of funds of several policy holders so honoring an illegitimate claim is injustice for other members. Further, as per the provisions of Regulation 11(1) and Regulation 11(3) of the IRDA (Protection of Policyholders' Interests) Regulations, 2002 insured was under bounden obligation to disclose all material information to the company at the time of proposal. As insurance is a contract and the member being a party to the contract is bound to disclose all the material facts known to him at the time of signing of the DOGH. The doctrine of 'Uberrimae Fide' is the basis of the said contract. Since the complainants are the guilty of concealment of the material facts, so they deserve no relief in the present complaint Consumer Complaint No.555 of 2019 10 also. The answering opposite parties also relied upon the following judgments in support of their contentions:
i) Satwant Kaur Sandhu Vs. New India Assurance
Company Ltd., SC 2776 of (2006);
ii) Life Insurance Corporation of India & Ors. Vs. Smt. Asha
Goel & Anr. (2001) ACJ 806
iii) P.C. Chacko and Anr. Vs. Chairman, Life Insurance
Corporation of India and Ors. - AIR 2008 SC 424; and
iv) Life Insurance Corporation of India Vs. Manish Gupta in Civil Appeal No.3944 of 2019 - SLP (C) No.5001/2019.
5. On the other side, opposite parties No.5 & 6 filed their joint written statement denying all the pleas taken by the complainants in their complaint. They alleged that they are employees of opposite party No.4- Kotak Mahindra Bank Limited and is governed by the rules and regulations as framed by the Reserve Bank of India from time to time. Opposite party No.5 is working as Branch Manager and opposite party No.6 is working as Relationship Manager with Kotak Mahindra Bank Limited at Ludhiana. They admitted that the complainants availed the loan facility against the property. The complainants were offered facility of loan against property with special features and he was made clear all the terms and conditions of the said loan. The loan facility was granted to the tune of Rs.79,41,898/-, vide sanction letter No.LP07445028/748806 dated 06.09.2017, which was duly accepted by them. Out of this amount, Rs.53,32,115/- was disbursed, which included Rs.32,00,000/- towards (BT) and Rs.1,99,0217/- towards (BT) and Rs.4,41,898/- towards insurance opted by the borrowers. Consumer Complaint No.555 of 2019 11
6. Further, it is alleged that the complainants have nowhere contended or averred that opposite parties No.5 & 6 in any manner breached or violated the provisions of the contract and the present complaint filed by the complainants is frivolous. The matter is of complicated in nature and cannot be decided in summary manner before the District Commission and the same is required appreciation and evidence in detail. They denied that policy was given to late Sh.Santosh Garg, without his knowledge because it is also clear from the terms and conditions signed by the borrower, wherein it has been mentioned that they have opted the insurance cover of Rs.50,00,000/-. In this manner, the complainant has not approached with the clean hands and has concealed the material facts from the Court. On merits, they reiterated the stand taken in the preliminary objections and denied all the averments alleged by the complainants.
7. Opposite parties No.3 & 4 did not file their written statement and adopted the written statement of opposite party No.5 by making their statement dated 18.11.2019, whereas opposite party No.7 adopted the written statement of opposite parties No.1 & 2 by suffering its statement on 11.10.2019.
8. In support of their contentions, the complainants filed their attested individual affidavits dated 23.07.2019 along with photocopies of documents, Certificate of Insurance dated 30.09.2017 as Ex.C-1, Home Equity Loan Agreement dated 26.09.2017 as Ex.C-2, Loan Sanction Letter dated 07.11.2017 as Ex.C-3, Letter dated 30.09.2017 as Ex.C-4, Letter dated 12.09.2018 as Ex.C-5, Claim Form along with complaint dated 26.05.2018 as Ex.C-6, Email dated 26.05.2019 as Consumer Complaint No.555 of 2019 12 Ex.C-7, Email dated 30.05.2019 as Ex.C-8, Letter dated 07.06.2019 as Ex.C-9, Letter dated 07.06.2019 as Ex.C-10 and Email dated 08.06.2019 as Ex.C-11.
9. On the other hand, the opposite parties No.1 & 2 filed the attested affidavit of Shakil Ahmad, Deputy Vice President-Legal along with photocopies of documents i.e. Authority Letter dated 26.08.2019 as Ex.OP-1/1, Copy of Declaration of good Health and Certificate as Ex.OP-1/2 & Ex.OP-1/3, Claim Intimation Form dated 10.07.2018 as Ex.OP-1/4, Medical Record of as Ex.OP-1/5 , Letter dated 12.09.2018 as Ex.OP-1/6 and Letter dated 07.06.2019 as Ex.OP-1/7, whereas opposite parties No.5 & 6 did not file any evidence.
10. I have heard the contentions of complainants and opposite parties No.1, 2 & 7 as none has appeared on behalf of opposite parties No. 3 to 6 at the time of final arguments. I have also carefully gone through the complaint, written statement, evidences as well as written arguments filed by the parties. I have also given my thoughtful consideration to the same.
11. Learned counsel for the complainants filed the written arguments and also addressed orally averments as made in the complaint itself. Learned counsel for the complainants at the very outset contended that the complainants have suffered a lot of harassment and mental agony from the hands of the opposite parties because even after charging the huge amount of premium to the tune of Rs.4,41,898/- by opposite parties No.1 & 2 they have not indemnify the insured after death of late Sh.Santosh Garg, which is totally in violation of the terms and conditions of the Insurance Policy and they Consumer Complaint No.555 of 2019 13 are also liable to compensate the complainants on this score. He also referred to clause -2 of Certificate of Insurance, issued by opposite parties No.1 & 2, wherein the beneficiary has been defined. He also referred to Clause 14(2)(i) of (Protection of Policy Holder's Interests) Regulation, 2017 and alleged that it was duty of the insurer to disclose all the material information about the Insurance Policy to the subscriber and they have to certify also that all the terms and conditions have been duly disclosed by them to the subscriber at the time of providing the Insurance Policy, however, in the present case, no such terms and conditions were ever disclosed to late Sh.Santosh Garg by opposite parties No.1 & 2 or opposite parties No.5 & 6 who facilitate late Sh.Santosh Garg to raise the loan and take a Group Insurance Policy. He further pleaded that in view of these facts, the repudiation of the request for claim by opposite parties No.1 & 2 is totally illegal and against the provisions of the policy amounting to deficiency in service.
12. Per contra, learned counsel for opposite parties No.1 & 2 urged that the repudiation of the claim of the complainants was due to the fact that true facts were never disclosed by late Sh.Santosh Garg at the time of signing of DOGH form and by not providing the true facts at the time of signing the agreement, it amounts to violation of the terms and conditions of the agreement which renders the contract as ultra vires. He further alleged that once the contract has been found as ultra vires then automatically the claim of the complainants falls to the ground and they are not entitled for any claim or refund of the policy. He further reiterated that as per IRDA (Protection of Policy holders' Consumer Complaint No.555 of 2019 14 Interests) Regulations, 2002, the proposal form was to be filled by the proposer for the Insurance by furnishing all the material information required by the insurer in order to enable them to decide whether to accept it or decline it and the concealment of this information leads to misconduct and against the provisions of IRDA regulations. Meaning thereby, making the insured ineligible for the claim under the policy.
13. On the other hand, the opposite parties No.3 to 6 in the written arguments filed by them submitted that they have no role to play either accepting the insurance claim of the complainants or in declining of the insurance. The opposite party No.4 just offered the loan facility to the complainants against their property with special features. The complainants were made aware of the terms and conditions of the said loan. Opposite parties No.5 & 6 are employees of opposite party No.4 and they have just given the Insurance Policy to late Sh.Santosh Garg on his approaching the concerned officials regarding the policy. There is no deficiency in service on the part of opposite parties No. 3 to 6 and if there is any claim, for that opposite party No.1 may be liable.
14. The opposite parties No.5 & 6 raised an objection that the present complaint involves disputed and complicated questions of facts, therefore, the remedy, if available to the complainants is only to file a civil suit.
In this regard, it is mentioned that late Sh.Santosh Garg along with the complainants availed a loan facility of Rs.79,41,898/- and along with that an Insurance Policy was issued to them to secure their loan, vide Policy No.GA000148, wherein late Sh.Santosh Garg was insured. The policy, which is a contract containing various terms and Consumer Complaint No.555 of 2019 15 conditions and it is only the interpretation of terms and conditions of the Policy document and then to see whether there is any deficiency in service on the part of the opposite parties? We do not see that any complicated questions of law and facts are involved, which cannot be adjudicated by this Commission. In this regard, we are fortified by the judgment of 'Dr.J.J.Merchant and Ors. V. Shrinath Chaturvedi' 2002(6) SCC 635, wherein it was held that the State Commission and District Forum are headed by retired High Court Judges and Officers of District Judge level and in our view, this is not such a case which cannot be decided by the 'Consumer Fora' after obtaining evidence and if need be after getting an expert opinion. Therefore, the objection raised is not tenable.
15. As per the averments made by the complainants in the complaint and as per the submissions made by the opposite parties in their written statements and during the course of arguments, it is amply clear that the complainants along with late Sh.Santosh Garg applied for a loan facility to the tune of Rs.79,41,898/-, in September, 2017, vide Ex.C-2 and at the time of sanctioning of loan he was allotted a Kotak Group Assure Policy, vide Ex.C-1. Unfortunately, Sh.Santosh Garg, the 1st applicant in the loan agreement, expired on 22.05.2018 due to the heart attack and after the death of Sh.Santosh Garg, the complainants filed a claim with opposite parties No.1 & 2 under the policy, in question, for refund of the loan amount.
16. Now, the question only which is to be decided whether the complainants are entitled for the claimed amount or not? To proceed further, it is very important to see the terms and conditions of the Consumer Complaint No.555 of 2019 16 policy, which was allocated to the borrowers at the time of sanctioning of the loan, which is exhibited as Ex.C-1. The careful perusal of the policy reveals that it is a Group Insurance Policy to secure the loan, which was availed by late Sh.Santosh Garg along with the present complainants jointly and this fact is also incorporated in the loan agreement mentioned at Clause 3.4, which is reproduced as under:
"3.4 Insurance for the Security
a) The Borrower at his risk, responsibility and expense, shall keep in good condition and fully insured, the Property(ies)/ assets described in the schedule and offered as security for the repayment of the Loan, against fire and other customary risks and hazards for the full value of the Loan as may be required by the Bank, with an insurance company acceptable to the Bank and the Bank shall be made a sole beneficiary of such policy. In the event of failure by the Borrower to insure the property to the satisfaction of the Bank, the Bank shall be entitled to, though not under any obligation to, cause the property to be insured with an insurance company for all risks that the Bank may in its sole discretion, deem fit and to debit the insurance charges to the Loan account of the Borrower.
b) As sole beneficiary of the policy in the event of loss/ damage to the security, the Bank shall be entitled to receive all moneys payable under any such insurance or under any claim made thereunder and to give a valid receipt thereof and the Borrower shall not dispute any decision of the Bank for his liability for the balance remaining due and payable by him, after receipt of such insurance proceeds."
17. A perusal of above said clause clearly reveals that such policies are for securing the loan granted by the Banks in case of any unseen happening and a hefty premium amount for the same is also charged, as happened in the present case also.
Consumer Complaint No.555 of 2019 17
18. Now I come to the repudiation letter; as per repudiation letter Ex.C-5, the claim of the complainants was repudiated by making the following observations:
"Upon investigation and assessment of the above mentioned claim, we have received documents which prove that the Member was suffering from Type 2 Diabetes, Hypertension, Dyslipidemia and Diabetic Nephropathy. The Member was under
treatment for the aforesaid ailments prior to the date of signing of the DOGH.
XX XX XX XX XX XX It is noted that the above mentioned information was not disclosed by the Member in the DOGH. Had such information been disclosed, we would not have issued the Cover at the existing terms and conditions.
In view of the cited facts, we hereby repudiate the subject Claim due to non-disclosure of the material facts by the Member in the DOGH"
However, all these diseases, as mentioned in the repudiation letter are not corresponding with the death of Sh.Santosh Garg, which as per Medical Certificate of Cause of Death, due to Refractory Septic Shock, which is the immediate cause of death. The untimely death of late Sh.Santosh Garg, cannot be attributed to the diseases as mentioned by the opposite parties in their repudiation letter. Further, diabetes and hypertension are life style diseases which can be controlled by regular medication. It is not necessary that cardiac disease/ renal failure can occur in diabetic patients only, it can also occur in non-diabetic. Therefore, plea of the appellant/Insurance Company for repudiating the claim is not in order.
Consumer Complaint No.555 of 2019 18
19. I also fortified with the judgment of the Hon'ble National Commission in the case reported in 2016(1) CPJ 613 titled Satish Chander Madan Vs. Bajaj Allianz General Insurance Ltd. wherein it has been held as under:
"9. We do not find merit in the above contention. On perusal of the copy of the medical report of the petitioner dated 04.06.2010 issued by Dr.David P Lipkin as also the letter of the doctor dated 07.06.2010 addressed to Dr.M.Fertleman of Wellington Hospital would show that as per the observations of Dr.David P. Lipkin, the petitioner had a previous history of hypertension and he was on BP medicine Telmisartan. The above referred reports do not mention that the petitioner disclosed any previous history of heart problem. Therefore, the only fact established by the above reports is that the petitioner prior to obtaining insurance policy was having history of hypertension. This, however, does not lead to conclusion that petitioner was also having previous history of heart problem. Therefore, the insurance claim submitted by the complainant for treatment of his heart problem cannot be termed as a claim in respect of a pre existing disease. Thus, repudiation of insurance claim by the respondent opposite party is not justified.
10. Learned counsel for the respondent has contended that it is established on record that the petitioner was having a previous history of hyper tension and since hypertension can lead to heart problem, the respondent was justified in repudiating the claim on the ground of heart problem suffered by the petitioner was caused by the pre existing hypertension. There is no merit in this contention. Hypertension is a common ailment and it can be controlled by medication and it is not necessary that a person suffering from hypertension would always suffer a heart attack. Therefore, the argument advanced by the respondent is far fetched and is liable to be rejected."Consumer Complaint No.555 of 2019 19
20. In view of this, it is very clear that the disease mentioned in the repudiation letter has no effect on the person dying of some other reason. Further, as per clause 3.5 of the proposal form Member's Cover commences on : "Later of: DOGH date or Premium payment date or Date of loan approval/Deposit account opening date (as applicable) (Subject to medical test and acceptance of KLI)". Meaning thereby, the DOGH and medical examination was to be prepared and procured by the opposite parties. As per this, it was the prime duty of the opposite parties to get the DOGH form filled up and got signed from late Sh.Santosh Garg, whereas the perusal of DOGH form attached by opposite parties No.1 & 2 as Ex.R-2 is totally blank and it does not bear the signatures of deceased Sh.Santosh Garg. This shows that this is totally a frivolous document produced by the opposite parties alleging to be DOGH signed by the deceased otherwise it is not an authenticated document being blank and cannot be considered in this case for any purpose.
21. Similarly, there is requirement in the proposal form to get the deceased medically examined before issuing the policy to him as per clause 3.5 of proposal form, reproduced as under:
"3.5 Member's Cover commences on : Later of : DOGH date or Premium payment date or Date of loan approval/ deposit account opening date (as applicable) (Subject to medical Test and acceptance of KLI)."
However, as admitted by the learned counsel for the opposite parties during the course of arguments as well perusal of the file shows no medical examination was got conducted by the opposite parties at the time of issuing the policy, therefore, they cannot attribute Consumer Complaint No.555 of 2019 20 the fault of the complainants that late Sh.Santosh Garg did not disclose about his pre-existing disease at the time of filling up the proposal form or at the time of filing of DOGH form, which actually was not signed by him. When the main condition of the proposal form has not been fulfilled by the opposite parties themselves then how they can attribute the concealment of pre-existing disease to late Sh.Santosh Garg, who never died of any pre-existing disease. No doubt, as per the medical record he was getting treatment from the hospital but that was not any fatal disease. As per the documents available on the record, the deceased Sh.Santosh Garg was suffering from only diabetes and hypertension which are the life style diseases and can be controlled by proper medication and that cannot be attributed to the death of late Sh.Santosh Garg. Moreover the opposite parties have failed to prove any correlation of the pre-existing disease with the cause of death in the present case. The Hon'ble Supreme Court in Sulbha Prakash Motegaonkar And Ors. Vs. Life Insurance Corporation of India, Civil Appeal No.8245 of 2015, decided on 05.10.2015 (SC) has held the following:-
"We have heard learned counsel for the parties. It is not the case of the Insurance Company that the ailment that the deceased was suffering from was a life threatening disease which could or did cause the death of the insured. In fact, the clear case is that the deceased died due to ischaemic heart disease and also because of myocardial infarction. The concealment of lumbar spondylitis with PID with sciatica persuaded the respondent not to grant the insurance claim. We are of the opinion that National Commission was in error in denying to the appellants the insurance claim and accepting the repudiation of the claim by the respondent. The death of the Consumer Complaint No.555 of 2019 21 insured due to ischaemic heart disease and myocardial infarction had nothing to do with this lumbar spondylitis with PID with sciatica. In our considered opinion, since the alleged concealment was not of such a nature as would disentitle the deceased from getting his life insured, the repudiation of the claim was incorrect and not justified."
22. I also relied upon the judgment of Hon'ble Supreme Court passed in Civil Appeal No.2216 of 2018 titled "D.Srinivas Vs. SBI Life Insurance Co. Ltd. and Ors." wherein it has been observed as under:
"If the medical examination was compulsory for such cases it should have been done along with filing of the proposal form before the payment of the premium."
23. Similar view has been taken by the Hon'ble Supreme Court in another judgment titled "Gokal Chand (D) THR. LRS. Vs. Axis Bank Ltd. & Anr." wherein the above judgment D.Srinivas (Supra) has also been relied upon and has observed as under:
"In this case, the pre-condition for the home loan as stipulated by the respondents was that life of the borrower will have to be insured. Only after assessment of the applicant's credentials, the loan was approved. When the loan amount was sanctioned, the premium amount was kept aside and was credited to the insurance company and the insured was subjected to a medical test which showed normal health status. Thus, premium was accepted and retained for the life insurance and no change of this position was found necessary even after the treadmill test result of the insured. This entire procedure would suggest, at least from the insurer's perspective, that the insurance process was complete & all mandatory requirements were met. Significantly, there was no contrary communication by the respondent No.2 indicating otherwise as well. Moreover, when Consumer Complaint No.555 of 2019 22 the death information was conveyed to the respondents, most surprisingly, that was the trigger that led to the insurance company to issue a back dated letter deferring the insurance company to issue a back dated letter deferring the insurance process, which was followed by refund of the premium a few days later, and then the repudiation after that.
26. The case at hand shows clear malafide on the part of respondent No.2 in the manner they dealt with the insurance policy, after learning of the death of the insured person on intimation from the affected persons. The way the issue was addressed by the respondent No.2 following the information conveyed does fail, in our opinion, the test of Reasonable Conduct. On top of that, to cover up their late reaction, most tellingly, the ante dated letter under the garb of an unfounded medical reason was dispatched. These in our opinion, amount to a clear case of deficiency of service and a non-bonafide conduct by the respondent No.2. The contrary finding in the impugned order do not pass our judicial scrutiny."
24. This is a general practice on behalf of the Insurance Companies that they shown green pastures at the time of issuance of the policy but at the time to repay the claim they sort different excuses one after another as has been done in the present case by the appellants/opposite parties by taking the ground that the deceased Sh.Santosh Garg, was suffering from any pre-existing disease.
25. The co-joint reading of the facts of the present case and the law laid down in the above said cases by the higher courts, it has been amply clear that the opposite parties that they have never complied with the terms and conditions of the policy, such as DOGH or not got signed from the deceased late Sh.Santosh Garg and his medical examination was also not got conducted as per requirement of their Consumer Complaint No.555 of 2019 23 own conditions. Once the opposite parties themselves not get the medical examination conducted then at this stage they have no right to raise objection that the deceased or complainants concealed the material facts from them and solely on this ground they repudiated the claim of the complainants.
26. So far as the liability of opposite parties No. 5 to 7, it is clarified that opposite parties No.5 to 7, are the employees of opposite parties No.1 to 4, who are working under the instructions and guidance of their institutions. Moreover, no grievance has been alleged by the complainants against opposite parties No.5 to 7. Therefore, no liability is required to be fastened upon opposite parties No. 5 to 7.
27. Sequel to the above discussions, the complaint filed by the complainants is allowed against the opposite parties No.1 to 4 and dismissed qua opposite parties No.5 to 7. The following directions are issued to opposite parties No.1 to 4:
i) Opposite parties No.1 & 2 are directed to clear the total loan amount which was outstanding at the time of death of late Sh.Santosh Garg, in accordance with the terms and conditions of the policy;
It is made clear to opposite parties No.3 & 4 that no interest amount shall be charged by them on the outstanding loan accrued after the death of late Sh.Santosh Garg.
ii) Opposite parties No.1 & 2 is also directed to pay Rs.31,000/- as compensation on account of mental agony and harassment as well as litigation expenses.
Consumer Complaint No.555 of 2019 24
28. The opposite parties No.1 to 4 shall comply with the above said directions within a period of 30 days from the receipt of the certified copy of the order.
29. Since the main case is decided, the pending applications, if any, are also disposed of.
30. The complaint could not be decided within the statutory period due to heavy pendency of court cases.
(HARINDERPAL SINGH MAHAL) PRESIDING JUDICIAL MEMBER August 10th 2023 parmod