State Consumer Disputes Redressal Commission
Shri Bryan Vanlalrinawma vs 1. Sr. Branch Manager Lic Of India ... on 13 February, 2024
OFACE OF THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION
TUIKHUAHTLANG : MIZORAM : AIZAWL
SCC/2/2018
In the matter of Shri Bryan Vanlalrinawma
S/o B. Lalrinawma (L)
Tuikhuahtlang.
Vs
1.The Sr. Branch Manager UC of India, Divisional Office, Silchar
2.The Branch Manager, LIC of india, Silchar
3.The Chief Executive Officer Mizoram Cooperative Apex Bank Ltd Mizoram, Aizawl Advocate for the appellant Joseph Malsawmtluanga Advocate for the respondent : K.Laldinliana B.Lalramenga Before Hon'ble Interim President Dr.Lalthansangi Hon'ble Member Lalhmingmawia Hon'ble Member Sanny Tochhawng Hon'ble Member C.Lalrinkima Date of Order 23.2.2024 JUDGEMENTandORDER The case is a complaint under Section 17 of the Consumer Protection Act, 1986. That the deceased B. Lalrinawma was a member of LIC Group Mortgage Redemption Assurance (GMRA) Scheme bearing member ID No. 3286 under Master Policy No.65285 for the business loan he availed amounting to Rs.55,00,000/- from the Op No.3 M/s Mizoram Cooperative Apex Bank Ltd.The OP No.3 sanction a loan of Rs.55,00,000/- on 19.03.2014 and he applied for UC's Group Mortgage Redemption Assurance Scheme to be administered by M/s Mizoram Cooperative Apex Bank Ltd as Master Policy Holder on the same date Itself. The Loanee/Insured Member, unfortunately died on 08.12.2014. On the dead of the Insured Member, the Master Policy holder M/s Mizoram Co-operative Apex Bank Ltd. preferred a claim to the Sr. Branch Manager, UC of India, Silchar Divisional Office on 03.01.2015 wherein the OP No.3 submitted 1) GMRA Claim form 'B'; 2) Xerox copy of Death Certificate; 3) Xerox copy of Loan Ledger Sheet; 4) Application for membership of GMRA (Xerox copy); and 5) Cost and Benefits schedule of the deceased 2 Loanee (Xerox copy). A reminder was sent to the OP No.1 and OP No.2 on 20.11.2015 by the OP No.3.
2. The UC of India, P&GS Unit, Silchar while acknowledging receipt of death intimation of the Late B. Lalrinawma, have requested to furnish the following documents for further processing of the claim - 1) Original Death Certificate attested by the Class-I Officer of UC; 2) Claims form B - To be executed by medical attendant of the deceased of his last illness; 3) Claim Form 8-1-To be executed by the Hospital where the deceased was treated last; 4) Claim form "E": if the deceased was an employee, then this form to be executed through Employer of deceased; and 5) Treatment particulars of deceased (including prescriptions, clinical reports, etc) of last illness. The OP No.3 sent the requirement of Death Claim in favour of B. Lalrinawma on 18.03.2016 and additional requirement of Death Claim was submitted by the OP No.3 to the OP No.1. The OP No.1 in a reply to the Death Claim of B.Lalrinawma (Id 3286) Policy No.65285 on 20.03.2017 stated that they are constrain to settle the claim as the claim is not bonafide for the following reasons:
1) Primary condition of the scheme/Policy is that only those loanees/applicants are supposed to be enrolled who are in good health on the date of joining the insurance scheme for issuance and to declare by the applicant that they are not suffering or suffered from any critical illness. It is also declared by applicant that this declaration stands as "basis" for admission into the scheme and if any information is found to be untrue, his/her merbership to the scheme shall be treated as cancelled from date of joining the scheme and all monies paid in respect thereof shall stand forfeited.
2) From Medical reports procured by Aizawl Hospital & Research Centre that Mr. B. Lalrinawma was admitted In hospital vlde Regd. No.13518-13 on 28.11.2013 for undergoing treatment like pneumonia, pancreatitls and acute renal failure (ARF) and just within three months of his hospitalisation of such critical illness, he was enrolled on the basis of his untrue declaration that he did not suffer from any illness which is simply misleading and violates the primary terms of policy condition as referred In para (1).
3) The declaration given by the member was untrue & misleading, otherwise had he furnished the actual status of his health, his membership would have been void. He deceived both the Bank (Master Policy holder) as well as LICI by giving false statement of his health at the time of enrolment.
3. Mr. Bryan Vanlalrinawma, the nominee and the youngest son of the deceased/loanee/lnsured member filed a complained with this Commission under Section 17 of the Consumer Protection Act, 1986 for payment of compensation amounting to 3 Rs.55,00,000/- against 1) The Sr. Branch Manager, UC of India, Divisional Office, P&GS Unit, Silchar; 2) The Branch Manager, UC of India, Divisional Office, P&GS Unit, Silchar; and 2) The Chief Executive Officer, Mizoram Co-operative Apex Bank Ltd., Head Office, Aizawl, Mizoram. The complainant also claimed to pay interest at 12% per annum.
4. The complainant submitted that deceased was neither critically ill nor suffering any critical illness at the time of joining the scheme/policy. He was admitted to Aizawl Hospital & Research Centre on 28.11.2013 for treatment of Pneumonia, Pancreatitis and Acute Renal Failure (ARF) and these were not serious. The deceased enjoyed good health and had no health or medical problems thereafter. Thus, the deceased did not concealed or suffered from any critical illness alleged by the Opposite parties as per the medical certificate issued by the concerned Physician, Dr. H. Lalrinmawia M.D. of Aizawl Hospital & Research Centre at the time of joining the GMRA Scheme. The treating doctor further certified that with proper treatment Pneumonia, Pancreatitis with Acute Renal Failure are not of fatal or disabling conditions. These conditions were not present in the deceased and he was medically fit at the time of executing of the Membership into the GMRA Scheme.
5. The deceased had breathlessness and fever on 06.12.2014 at around 10:00 pm and he was taken to hospital where he died on 08.12.2014 at 4:10 am and he had suffered this illness just for one day as is evident in the Medical Attendants Certificate. The primary cause of death of deceased was Septicemia and MOF (Multiple Organ Failure) and the secondary cause was CCF (Congestive Cardiac Failure). The immediate cause of his death which took his life has no connection with the minor illness for which he had taken treatment prior to his application for joining the said scheme/policy.
6. The Respondents Nos.1 and 2 through their Alzawl Branch submitted in their written statement that the complainant failed to produce Birth Certificate and Heirship Certificate to prove that he is the youngest son and legal heir of the deceased. They also contended that the primary condition of the Scheme/Policy is to enroll only those Loanees/applicants who are in good health as on the date of joining the insurance scheme. In the instant case, the applicant declare that he is not suffering or suffered any critical illness and base on his declaration, the applicant entered Into the Scheme. As vide the Membership Form If any Information of the applicant is found to be untrue, then his membership to the Scheme shall stand forfeited. Mr. B. Lalrlnawma was admitted in Aizawl Hospital & Research Centre vlde Regn. No.1351813 on 28.11.2013 for undergoing treatment like Pneumonia, Pancreatltls and Acute Renal Failure (ARF) He was enrolled Into the Scheme based on his untrue declaration just after three months of his hospltalizatlon, that he did not suffer from any Illness which Is not only mlsleadlng, but also vlolate the primary terms of 4 policy condition. UC would not have granted coverage on the life of the member in the scheme ab initio had he disclosed the status of his health. He deceived both the Master Policy Holder as well as Life Insurance Corporation of India.
7. The OP Nos.1 & 2 further submitted that the complainant was neither critically ill nor suffering from critical illness based on the medical certificate issued by the treating doctor is not acceptable as it has no relevance and the certificate produced have no date of issue. On perusal of the papers submitted by the complainant revealed that the member was suffering from critical illness like Pneumonia, Pancreatitis and Acute Renal Failure (ARF) which he concealed during admission into the scheme. Admission into the scheme was accepted based on the declaration made by the applicant upon basic principle of Insurance, i.e. utmost good faith. The OP Nos.1 & 2 denied the claim of the complainant that no cause of action has ever arisen in favour of the Complainant and against the answering Opposite Parties and the Complainant has also failed to prove that he is a consumer.
8. The OP No.3 submitted that the complainant prayer to direct/order the Opposite Party to pay Rs.55 lakhs with interest as an insurance amount, the OP No.3 or the Mizoram Cooperative Apex Bank Ltd has no liability to pay any insurance amount to the Complainant or to any other person in respect of the loan availed by the deceased Mr. B. Lalrinawma. The OP No.3 further submitted that the deceased Mr. B. Lalrinawma passed away after finalization and acceptance of his insurance policy, the OP Nos.1&2 are absolutely liable to pay such insured amount to the Complainant.
9. The Complainant in his Cross Examination of Witness No.1 stated that his deceased father Mr. B. Lalrinawma was admitted in Aizawl Hospital & Research Centre on 28.11.2013 and was diagnosed with Pneumonia, Acute Renal Failure and Mnemonic Pancreatitis. He denied that his deceased father at the time of filing application concealed his actual health condition.
10. The treating physician Dr. H. Lalrinmawia also submitted in his Examination-in- Chief on Affidavit of Complainant's witness No.2 submitted that the deceased Mr. B. Lalrinawma was admitted on 28.11.2013 to Aizawl Hospital & Research Centre where he Is a Consultant and he was suffering from Pneumonia, Pancreatitls and Acute Renal Failure. The deceased after receiving proper medical treatment improved significantly and no traces of Pneumonia, Pancreatitis and Acute Renal Failure could be found. The deceased/patient was discharged on 03.12.2023. The treating doctor stated in the Cross Examination by PW No.2 the deceased has fully recovered at the time of discharge and has come to the hospital for check up without any symptoms of Pneumonia, Pancreatltls and Acute Renal Failure. On Cross Examination by Opposite No.3, he stated that 5 uncomplicated Pneumonia, Pancreatitis and Acute Renal Failure can be cured within a week. The deceased was fully recovered.
11. Mr. B.S. Chakma, Branch Manager UC of India, Aizawl Branch who is Witness No.1 for the OP Nos. 1 & 2 stated in Cross Examination of Witness No.1 that they did not conduct medical test in all the cases. LIC conduct medical test only in doubtful cases through their doctor. He admitted that the LIC did not feel it necessary to conduct medical examination in the present case.
12. We have heard the Ld. Counsels of the Complainant and Respondents No.1 & 2 and we also perused the documents and materials available on records. We have also gone through the written arguments submitted by both the Ld. Counsels of the Complaint and Respondents No.1&2.
13. The arguments of the Ld. Counsel of the Complainant that the Insured Member was having good health at the time of enrolment into the LIC GMRA Scheme cannot be established in spite of the testament of the treating doctor that the deceased was fully cured when he was discharged from Aizawl Hospital & Research Centre. The Certificate issued by the treating physician Dr. H. Lalrinawma that Pneumonia/ Pancreatitis with Acute Renal Failure are not of fatal or disabling conditions with proper treatment which at the time of execution of the insurance policy were not present in the person of the subject concerned who was accordingly considered medically fit for the purpose was undated which could not be relied upon. The opinions or other physicians were not insisted by none of the Ld. counsels, hence it could not be established that Pneumonia, Pancreatitis with Acute Renal Failure are not fatal.
14. The argument submitted by the Ld. Counsel of the Respondents No.1 & 2 that the Complainant failed to produce Birth Certificate and Heirship Certicate to proof that he is the youngest son and legal heir of the deceased. The Complainant is a nominee of the deceased in the GMRA Membership application and helrship certificate need not be insisted upon. Moreover, No Objection was submitted to this Commission which is signed by Mrs. R. Laltanpuii w/o B. Lalrinawma (L) and Mr. Steve Vanlalhruaia s/o B. Lalrinawma (L} and Ms. Melissa Vanlalngaihzuall d/o B. Lalrinawma (L}.
15. The Ld. Counsel of the Complainant In his submission of the Written Argument brought up that the sole witness of OP Nos. 1 & 2 stated in his cross examination, "We do not conduct Medical test of the insure~ in doubtful we conduct medical examination through our docto,; In the present case/ we did not feel it necessary to conduct medical examination': The Respondents No.1 & 2 in their statement of primary objection state that question of verification does not arise as the admission into the scheme was made on the basic principle of Insurance, I.e. on utmost good faith. The 6 Hon'ble Supreme Court reported in (1996) 6 sec 428 in the case of United India Insurance Co. Ltd Vs M.K.J. Corporation observed that -
''It is a fundamental principle of Insurance Law that utmost good faith must be obsetved by the contracting parties. Good faith forbids eitherparty from concealing (non-disclosure) what he privately knows, to draw the other into a bargain, from this ignorance ofthat fact and his believing the contrary. Just as the insured has a duty to disclose, ''similar!½ it is the duty ofthe insurers and their agents to disclose all material facts within their knowledge, since obligation ofgood faith applies to them equally with the assured."
16. The oral argument put forth by the Ld. Counsel of the complainant was objected by Ld. Counsel of the Respondents No:1 & 2 on grounds of no pleading in the complaint. The Ld. Counsel of the Respondents No.1&2 in his written arguments submitted that the declaration made by the deceased by way of the Application Form was the basis for admission into the said Scheme. This Commission is of the considered view that the declaration in the application was not explained to the Insured Member and none from Banks and the Insurance company has witnessed the submitted application. The Hon'ble National Consumer Dispute Redressal Commission, in the recent past, in a Revision Petition No.2895 of 2018 in the case of Oriental Insurance Co. Ltd. vs Karam Singh observed that -
''9. We are ofconsidered view that, onus ofprooflies upon OP Nos. 1 to 3 to prove that policy, along with terms and condition, was supplied to the Complainant OPs had not produced any cogent evidence In this regard."
In the instant case, the certificate to the effect that the declaration was explained fully to the applicant by the representative of the Bank or the Insurance Company is left blank, but sign by the Insured Member. No signature nor any name or address was written for the witness. The applicant declaration that the scheme was fully explained in the vernacular language again were not sign by the Bank and by the LIC.
17. Based on the MEMORANDUM OF UNDERSTANDING signed by the Life Insurance Corporation of India and the Mlzoram Cooperative Apex Bank Ltd (herein refer to as the Bank) on the "LIC's Group Credit Life Insurance Plan", the Bank is to promote the insurance plan to the existing/prospective loan borrowers who are likely satisfy the eligibility & other criteria as specified by the corporation. The Bank shall collect the Consent-cum-declaration letter for UC's Group Credit Life Insurance enrolment of the Loan Borrowers and provide the same to the Corporation along with the schedule of loans to be covered for the borrower. The primary terms and condition of the Scheme/Policy that the Loanees/appllcant who are In good health only are to be enrolled as mentioned 7 in the submission of the written objection of Respondents No.1&2 are not mention in the Memorandum of Understanding signed by the insurance company and the bank. This Commission noted that the bank is promoting the scheme/policy to their customer/loanees, the insurance company simply allow/repudiate the claim at the fag end when the claimy is preferred. This situation will make it difficult for the loanee to understand the primary terms and conditions of the insurance scheme/policy of the insurance company in absence of the representative from the insurance company. The observation of the Hon'ble Supreme Court in the case of United India Insurance Co. Ltd Vs M.K.J. Corporation (Supra) ''similarlt it is the duty of the insurers and their agents to disclose all material facts within their knowledge, since obligation ofgood faith applies to them equally with the assured"has to be taken into account. The application form for membership of the UC's Group Insurance of Outstanding Housing/Vehicle/Terms & Other Loans submitted by the deceased had no other option but to sign the declaration for membership. Had there been an option that he suffered/is suffering from any critical illness, etc would have made the prospective member with critical illness to shy away from admission into the GMRA Scheme/Policy.
18. Accordingly, based on careful perusal of material information and hearing the arguments of the Ld. Counsels, this Commission is of the considered view that the Life Insurance Corporation of India is liable to pay the entire liability of the deceased at the time of his demise. However, the liability and statement of the loan account of the deceased was never produced in this Commission, the liability of the Respondents No.1 & 2 is put to a limit of Rs.50,00,000/- (Rupees fifty lakhs only). The Respondents No.1 & 2 to pay the complainant within 60 days, falling which an interest at 9% per annum will be added to the amount from this date till the date of payment.
19. Parties to bear their own cost.
Sd/- Dr.LALTHANSANGI
INTERIM PRESIDENT
Sd/- LALHMINGMAWIA Sd/- SANNY TOCHHAWNG
MEMBER MEMBER
Sd/- C.LALRINKIMA
MEMBER