State Consumer Disputes Redressal Commission
Branch Manager, State Bank Of India vs Smt. Nisha Chaudhary on 4 October, 2017
STATE CONSUMER DISPUTES REDRESSAL COMMISSION UTTARAKHAND
DEHRADUN
FIRST APPEAL NO. 244 / 2016
Manager, Head - Claims, SBI Life Insurance Company Limited
Central Processing Centre, Kapas Bhawan
Plot No. 3A, Sector No. 10, C.B.D. Belapur
Navi Mumbai - 400614
......Appellant / Opposite Party No. 2
Versus
1. Smt. Nisha Chaudhary W/o late Sh. Sanjeev Chaudhary
R/o Mohit Vihar
G.M.S. Road, Dehradun
......Respondent No. 1 / Complainant
2. Branch Manager, State Bank of India
Zonal Office, Dehradun
3. Manager, Office of the Insurance Ombudsman
Jeevan Bhawan, Phase - 2, 6th Floor
Nawal Kishore Road, Hazratganj
Lucknow - 226001
......Respondent Nos. 2 and 3 / Opposite Party Nos. 1 and 3
Sh. S. Parashar, Learned Counsel for the Appellant
Ms. Anupama Gautam, Learned Counsel for Respondent No. 1
Sh. Ashish Chakravarty, Learned Counsel for Respondent No. 2
None for Respondent No. 3
AND
FIRST APPEAL NO. 252 / 2016
Branch Manager, State Bank of India
Zonal Office, Dehradun
......Appellant / Opposite Party No. 1
Versus
1. Smt. Nisha Chaudhary W/o late Sh. Sanjeev Chaudhary
R/o Mohit Vihar
G.M.S. Road, Dehradun
......Respondent No. 1 / Complainant
2. Manager, Head - Claims, SBI Life Insurance Company Limited
Central Processing Centre, Kapas Bhawan
Plot No. 3A, Sector No. 10, C.B.D. Belapur
Navi Mumbai - 400614
3. Manager, Office of the Insurance Ombudsman
Jeevan Bhawan, Phase - 2, 6th Floor
Nawal Kishore Road, Hazratganj
Lucknow - 226001
......Respondent Nos. 2 and 3 / Opposite Party Nos. 2 and 3
2
Sh. Ashish Chakravarty, Learned Counsel for the Appellant
Ms. Anupama Gautam, Learned Counsel for Respondent No. 1
Sh. S. Parashar, Learned Counsel for Respondent No. 2
None for Respondent No. 3
Coram: Hon'ble Mr. Justice B.S. Verma, President
Mr. D.K. Tyagi, H.J.S., Member
Mrs. Veena Sharma, Member
Dated: 04/10/2017
ORDER
(Per: Justice B.S. Verma, President):
These two appeals under Section 15 of the Consumer Protection Act, 1986 are directed against the order dated 18.11.2016 passed by the District Forum, Dehradun in consumer complaint No. 32 of 2016.
2. Briefly stated the facts giving rise to the appeal are that late Sh. Sanjeev Chaudhary, the deceased husband of the complainant - Smt. Nisha Chaudhary, had, during his lifetime, taken a home loan from State Bank of India R.A.C.P.C., 1, New Cantt. Road, Dehradun (opposite party No. 1) in the name of the complainant - Smt. Nisha Chaudhary on 18.07.2014 and the loan account number was 33933763151. The said loan was insured by SBI Life Insurance Company Limited (opposite party No. 2) on 18.07.2014 and the insurance policy was duly issued. Unfortunately, the husband of the complainant expired on 05.04.2015. The complainant lodged the claim for the insured amount, so that her loan account could be settled and submitted the entire documents for processing of her claim. The complainant was shocked to receive the information that her claim has been repudiated by the insurance company on the ground of false good health certificate. For the first time, the complainant came to know that there was a CT Scan report in the documents handed over for settlement of the claim, which showed that there was certain 3 finding suggestive of Calcified Granulomatous lesion Left Parietal region. The complainant's husband had died on account of intraparenchymal hemorrhage in right high fronto-parietal region, which has got no nexus with the finding suggestive of calcified granulomatous lesion left parietal region, which showed the same status on the date of the death of the deceased also. The claim repudiation letter dated 23.10.2015 was received by the complainant on 12.11.2015. On 04.11.2015, the bank had issued a notice under Section 13(2) of the SARFAESI Act, 2002 on account of default in payment of the loan installments. Through her application dated 04.12.2015, the complainant submitted that her husband did not hide any material fact. Vide letter dated 24.12.2015 of the insurance company, the complainant was informed that the decision regarding repudiation of her claim has been upheld by the Claims Review Committee. The complainant has challenged the said decision before the Insurance Ombudsman (opposite party No. 3), but no decision has been taken by them. The insurance company has wrongly repudiated the claim on false grounds. Thus, alleging deficiency in service, the complainant filed a consumer complaint before the District Forum, Dehradun.
3. The bank filed written statement before the District Forum and pleaded that a home loan exists in the complainant's name, which was disbursed by the bank on 18.07.2014; that the bank has issued a notice dated 04.11.2015 under Section 13(2) of the SARFAESI Act, 2002 for default in repayment of loan installments; that the outstanding loan amount against the complainant is Rs. 17,68,430/-; that no cause of action has arisen for filing the consumer complaint against the bank and that there is no deficiency in service on their part.
44. The insurance company filed written statement before the District Forum and pleaded that the contract of insurance is based on utmost good faith; that the deceased - life assured committed breach of the principle of utmost good faith by suppressing the material fact that he was suffering from brain disease and was under treatment for the same; that the deceased had availed housing loan from State Bank of India and had applied for SBI Life - RiNn Raksha Group Insurance Scheme under Master Policy No. 70000011107 through membership form dated 30.07.2014; that the risk commenced on 31.07.2014 for assured sum of Rs. 17,23,310/-; that as per the CT Scan report dated 02.02.2012 of the life assured, there was finding of Calcified Granulomatous lesion Left Parietal region, which was concealed by him; that the deceased life assured was suffering from brain disease from prior to the date of commencement of risk; that there need not be any nexus between the facts suppressed in the membership form and the cause of death of the life assured; that the claim has rightly been repudiated and that there is no deficiency in service on their part.
5. The Office of the Insurance Ombudsman (opposite party No. 3 to the consumer complaint) submitted an application dated 11.02.2016 before the District Forum, stating therein that the Insurance Ombudsman is a quasi-judicial authority constituted by the Ministry of Finance (Department of Economic Affairs) (Insurance Division) under Rule 13(3) of the Redressal of Public Grievances Rules, 1998 and prayed for deletion of their name from the array of parties to the consumer complaint.
6. The District Forum after perusal of the evidence on record allowed the consumer complaint vide impugned order dated 18.11.2016 and held that the insurance company is liable to pay sum of Rs. 17,05,380/- towards repayment of the loan in question and the 5 balance loan amount of Rs. 63,050/- is payable by the complainant. The complainant was also held entitled to compensation of Rs. 20,000/- and litigation expenses of Rs. 10,000/- from the opposite parties and the amount was directed to be paid within a period of 30 days' from the date of the order. Aggrieved by the impugned order, the insurance company has filed First Appeal No. 244 of 2016 and the bank has filed First Appeal No. 252 of 2016, thereby assailing the legality and propriety of the impugned order. Since both the appeals arise out of the same impugned order, therefore, these are being decided together by this common order.
7. None appeared on behalf of respondent No. 3 - Manager, Office of the Insurance Ombudsman, Lucknow. We have heard Sh. S. Parashar, learned counsel for SBI Life Insurance Company Limited; Ms. Anupama Gautam, learned counsel for respondent No. 1 - complainant Smt. Nisha Chaudhary and Sh. Ashish Chakravarty, learned counsel for State Bank of India and gone through the record. Applications dated 11.01.2017, 16.01.2017 and 31.01.2017 were sent by the Office of the Insurance Ombudsman, Lucknow through post in these appeals, praying therein that the name of Insurance Ombudsman, Lucknow, be deleted from the array of the parties to the memo of the present appeals.
8. There is no dispute with regard to the insurance of the deceased life assured and his death on 05.04.2015 during the subsistence of the insurance policy. The life assured died within a period of 8 months' and 5 days' from the date of commencement of risk under the insurance policy. The insurance company has repudiated the claim of the complainant through their letter dated 23.10.2015 (Paper No. 5kha/15 of the original record) on the ground that as per the CT Scan report dated 02.02.2012 of the life assured, there was finding of 6 Calcified Granulomatous lesion Left Parietal region, which was not disclosed by him in the proposal form and the deceased had given a false Good Health Declaration and had not disclosed the material fact at the time of entry into the scheme.
9. The life assured died on 05.04.2015. In the claim form submitted by the complainant with the insurance company, she has mentioned the cause of death of the life assured as brain hemorrhage. The insurance company has taken the stand that the life assured was suffering from brain disease from prior to the date of commencement of risk under the policy in question. In para 6 of the consumer complaint, the complainant has stated that her husband had died on account of intraparenchymal hemorrhage in right high fronto-parietal region. There is CT Scan report dated 03.04.2015 of the deceased issued by Shri Mahant Indiresh Hospital, Patel Nagar, Dehradun (Paper No. 5kha/11), wherein it is clearly written, "intraparenchymal hemorrhage in right high fronto-parietal region of size 3.9 x 3.1 x 2.4 cm with perifocal edema". In the said report, it is also mentioned, "there is calcified granuloma in left occipital region measuring 9 x 8 mm shows rim and eccentric mural calcification (calcified neurocysticercosis)". In the discharge summary dated 04.04.2015 of the deceased issued by Max Super Speciality Hospital, Malsi, Mussoorie Diversion Road, Dehradun (Paper Nos. 5kha/12 to 5kha/13), it is stated that the deceased was brought to the hospital with c/o sweating, seizures followed by left side weakness and fall from bed today early morning. We lay emphasis on the words "left side weakness". In the CT Scan report dated 02.02.2012 of the deceased life assured issued by Dr. Ahujas' Pathology and Imaging Centre, Astley Hall, Dehradun, it is clearly mentioned, "there is a nodular calcification of 9 x 8 mm size seen at left parietal region abutting the inner skull table". However, there was no perifocal 7 edema at that time, but the same might have developed with the passage of time. But the fact remains that the deceased life assured did not disclose the findings of the CT Scan report dated 02.02.2012 at the time of commencement of risk under the policy on 31.07.2014, when he was in full knowledge of the said fact as well as the findings recorded in the said report. Thus, it is abundantly clear that the deceased was suffering from brain disease much before the commencement of the policy, but he did not intentionally / deliberately disclose the same in the proposal form. The nexus between the disease / ailment / illness suppressed by the life assured at the time of taking the policy and the cause of his / her death is the secondary factor, but the core and important point to be considered is whether there has been concealment / suppression of any material fact with regard to health on the part of the insured at the time of taking the policy or not. In the present case, as is stated above, the life assured was having brain ailment and he was fully aware of the said ailment, but did not disclose the same in the proposal form. The life assured also died on account of brain ailment. There is nothing on record having been produced by the complainant to show that the ailment showed in the CT Scan report dated 02.02.2012 of the deceased life assured had subsided and was no more at the time of submitting the proposal form for the insurance policy in question and commencement of risk therein. When the deceased life assured was in the knowledge that he was suffering from the brain ailment, he ought to have disclosed the same in the proposal form, which, for the reasons best known to him, he did not mention.
10. On the question of nexus, learned counsel for the insurance company cited a decision of the Hon'ble National Commission in the case of Life Insurance Corporation of India and others Vs. Nita Bhardwaj; I (2014) CPJ 409 (NC), wherein it was held that it is 8 immaterial whether cause of death had any nexus or not with the disease suffered and suppressed by the insured. Learned counsel also cited another decision of the Hon'ble National Commission in the case of Life Insurance Corporation of India Vs. Kusum Patro; II (2012) CPJ 272 (NC). In the said case, the deceased had not disclosed the fact of his March, 1994 accident and subsequent in-patient treatment to the insurance company for third insurance policy taken in September, 1995. It was held by the Hon'ble National Commission that the deceased was guilty of knowingly withholding correct information about status of his health and the insurer was within his rights to repudiate insurance claim of nominee of the deceased.
11. The Hon'ble Apex Court in the case of Satwant Kaur Sandhu Vs. New India Assurance Company Limited; IV (2009) CPJ 8 (SC), has held that contract of insurance is based on uberrima fides (utmost good faith) and the insured is under obligation to make true and full disclosure of the information within his knowledge. In the case of Life Insurance Corporation of India Vs. Gulab Singh Chauhan; III (2015) CPJ 194 (NC), the lab report of the insured was received prior to making the proposal, but the insurer was not intimated about cancer. The repudiation of claim by the insurer was held to be justified by the Hon'ble National Commission. In the case of Bhagwati Prasad Borasi Vs. Life Insurance Corporation of India; II (2009) CPJ 19 (NC), the deceased was on long medical leave when the policies were taken and the policies had lapsed due to non-payment of premium. The policies were revived about 1½ months' prior to death of the insured. Questions regarding existence of ailment and taking of medical leave were answered in negative. It was held by the Hon'ble National Commission that there was deliberate and fraudulent concealment of material facts and the 9 repudiation of the claim was held to be justified. In the case of LIC of India and others Vs. Smt. Shashi Bala; IV (2003) CPJ 91 (NC), the life assured was suffering from diabetes mellitus and concealed the material information in the proposal form. The repudiation of the claim by the insurer on the ground of concealment of material information by the life assured, was held to be justified by the Hon'ble National Commission. In Revision Petition No. 3165 of 2005; Shashi Gangwar Vs. Branch Manager, Life Insurance Corporation of India and another, decided by the Hon'ble National Commission vide order dated 08.09.2009, the life assured was alcoholic at the time of taking the policy, which fact was concealed by him in the proposal form and he did not give a correct answer to the question in that regard given in the proposal form. In that case also, the repudiation of claim by the insurer was held justified.
12. Learned counsel for respondent No. 1 - complainant cited a decision of Rajasthan State Consumer Disputes Redressal Commission, Jaipur in the case of Mangej Kanwar Vs. Life Insurance Corporation of India and another; I (2006) CPJ 553 = 2006 (2) CPR 195. In the said case, the life assured had died due to heart attacked. It was held that non-mentioning of T.B. by the life assured in the declaration form not amounts to suppression of material fact and that there was no nexus between cause of death of the life assured and T.B. It was further held that repudiation of insurance claim can not be made merely on the ground of non-mentioning of chest disease in the declaration form especially when the death had occurred due to heart attack. The said decision does not hold good in view of the above latest law on the subject, as has been discussed above. Even otherwise, in the instant case, the life assured was suffering from brain disease at the time of commencement of risk under the policy, but he did not disclose the same and he, 10 unfortunately, expired on account of brain hemorrhage, as was duly mentioned by the complainant herself in the claim form submitted by her with the insurance company.
13. In view of the above discussion, we have no hesitation in coming to the conclusion that the deceased life assured was guilty of making misstatement in the proposal form with regard to his health and deliberately suppressed material fact with regard to his health in the proposal form and that he was suffering from brain disease from prior to the date of commencement of risk under the policy and the insurance company was fully justified in repudiating the claim of the complainant. The District Forum has erred in holding that the insurance company has resorted to deficiency in service by repudiating the claim of the complainant. Therefore, the order impugned passed by the District Forum against the insurance company can not legally be sustained and is liable to be set aside and the appeal filed by the insurance company bearing First Appeal No. 244 of 2016 is fit to be allowed.
14. So far as the appeal filed by the bank is concerned, we are of the view that there was no cause of action in favour of the complainant for filing the consumer complaint against the bank. The claim was to be paid by the insurance company, for which the bank had no concern. The bank has not advanced the housing loan and has got no concern with the payment of the insured amount in the event of the life assured. Even otherwise, it is important to mention here that in para 9 of the consumer complaint, the complainant has stated that the bank has issued a notice dated 04.11.2015 under Section 13(2) of the SARFAESI Act, 2002 against the complainant. The copy of the said notice is Paper Nos. 5kha/16 to 5kha/19. In view of the fact that the bank has already initiated action against the complainant under the 11 provisions of the SARFAESI Act, 2002, the consumer complaint was not maintainable against the bank. It is pertinent to mention here that the complainant has filed the consumer complaint before the District Forum on 04.02.2016, by which date, the bank has already initiated action against the complainant under the provisions of the SARFAESI Act, 2002 and has already issued the notice dated 04.11.2015 under Section 13(2) of the SARFAESI Act, 2002 to the complainant. The Hon'ble National Commission in the case of Standard Chartered Bank Vs. Virendra Rai; II (2013) CPJ 337 (NC), has held that the Civil Court or Forum can not interfere in the proceeding initiated under SARFAESI Act, 2002. The Hon'ble Apex Court in the case of Jagdish Singh Vs. Heeralal and others; 2013 STPL (Web) 895 SC, has held that the civil court jurisdiction is completely barred so far as the "measure" taken by a secured creditor under sub-section (4) of Section 13 of the SARFAESI Act, 2002, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal, to determine as to whether there has been any illegality in the "measures" taken. The Hon'ble National Commission in its decision dated 25.11.2013 given in Revision Petition No. 1653 of 2013; M/s India Bulls Housing Finance Ltd. Vs. Hardayal Singh, has held that the case pertains to SARFAESI Act, 2002 and neither the District Forum nor the State Commission had jurisdiction to try the case. In the said decision, the Hon'ble National Commission has placed reliance upon a decision of the Hon'ble Supreme Court given in Civil Appeal No. 1359 of 2013; Yashwant G. Ghaisas and others Vs. Bank of Maharashtra, wherein the Hon'ble Apex Court has held:
"The appellants challenged the action of the bank by filing a complaint under Section 21 of the Consumer Protection Act, 1986 (for short, 'the 1986 Act'). The National Commission referred to Section 34 of the 2002 Act whereby jurisdiction of all Courts 12 and authorities to entertain challenge to the action taken by the bank has been ousted and dismissed the complaint by recording the following observations:
The National Commission is not empowered to arrogate to itself the powers which come within the jurisdiction of Debt Recovery Tribunals. This matter is purely covered with the jurisdiction of DRT or DRAT. If there is any grievance against the notice under Section 13(2) of the SARFAESI Act that should be brought to the notice of the concerned authority. It is well settled that main creditor and the guarantors are equally responsible."
15. It is a settled law that a defaulter of the loan amount is not entitled to any relief. Since in the present case, the complainant has committed default in payment of the loan installments and hence she is not entitled to levy charge of deficiency in service upon the bank. This apart, as has been stated above, we do not find any deficiency in service on the part of the bank in the instant matter and the order impugned passed by the District Forum against the bank also can not legally be sustained and the appeal filed by the bank bearing First Appeal No. 252 of 2016 is also fit to be allowed.
16. For the reasons aforesaid, both the appeals are allowed. Order impugned dated 18.11.2016 passed by the District Forum is set aside and consumer complaint No. 32 of 2016 is dismissed. The statutory amount of Rs. 25,000/- deposited by the insurance company at the time of filing First Appeal No. 244 of 2016 as well as statutory amount of Rs. 15,000/- deposited by the bank at the time of filing First Appeal No. 252 of 2016, be released in their respective favour. Costs of the appeals made easy.
1317. Let the copy of the order be kept on the record of First Appeal No. 252 of 2016.
(MRS. VEENA SHARMA) (D.K. TYAGI) (JUSTICE B.S. VERMA) K