State Consumer Disputes Redressal Commission
Aegon Religare Life Insurance Co.Ltd., ... vs S.Venugopalan S/O S.Sankaran on 10 September, 2013
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD F.A.No.334 OF 2013 AGAINST C.C.NO.995 OF 2011 DISTRICT FORUM-I HYDERABAD Between: 1. The Branch Manager, Aegon Religare Life Insurance Co.Ltd., OZone Complex, First Floor, Above Bajaj Electronics, Punjagutta, Hyderabad-082 AP 2. Aegon Religare Life Insurance Co.,Ltd., 2nd Floor, Paranjpe B Scheme, Subhash Road Near Garware House, Vileparle (East) Mumbai-057 Appellants/opposite parties A N D S.Venugopalan S/o S.Sankaran aged about 58 years, Occ: Training Officer R/o 4/10, ATI Staff Quarters, Shivam Road Vidyanagar, Hyderabad-007 Respondent/complainant Counsel for the Appellants M/s IV Radhakrishna Murthy Counsel for the Respondent M/s Nisaruddin Ahmed Jeddy QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
AND SRI THOTA ASHOK KUMAR, HONBLE MEMBER TUESDAY THE TENTH DAY OF SEPTEMBER TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The opposite parties are the appellants. The opposite party no.1 is the first appellant and the opposite party no.2 is the second appellant and the appellant no.1 is the branch office of the appellant no.2-insurance company. The District Forum allowed the complaint and awarded a sum of `2,75,000/- with interest @ 9% per annum together with costs of `2,000/-.
2. The respondents wife submitted another proposal bearing number 0270210 on 8.08.2009 to the appellant no.1 for taking insurance policy for a sum of `2,00,000/- under Protect Gain Plan. The respondents wife had also submitted another proposal form bearing number 0028178 on 10.10.2008 for obtaining insurance policy under Investor Maximize Plan for a sum of `75,000/-. The appellants issued insurance policies bearing numbers 090810682202 and 091010932729 as per the insurance plan chosen by the insured and as per the nomination clause her husband, the respondent was nominated as nominee of insurance policy under Section 39 of the Insurance Act.
3. The insured died on 19.02.2011 and after her death, the respondent lodged claim with the appellants. The appellants repudiated the claim on 16.08.2011 on the premise that the insured suppressed the fact that she suffered from Mitral Stenosis and Diabetes Mellitus prior to taking the insurance policy. The respondent submitted that his wife was an active and healthy lady at the time of taking the insurance policy and she died suddenly due to medical negligence of the doctors on account of administration of overdose of anaesthesia for which the respondent has been prosecuting criminal case against the doctors.
4. The appellants resisted the claim on the premise that the respondent is not a consumer and he suppressed material facts and he twisted the facts to suit his convenience and mislead the District Forum. The appellants submitted that on the basis of the proposals submitted by the insured, they issued the two insurance policies in her favour and the proposal form contains instructions and declaration as to the responsibility of the insured to furnish correct information to the appellants and the truthful answers given by the respondent would be the basis for acceptance of the proposal.
5. The appellants submitted that the insured replied in negative to the questions in Clause No.9 of the proposal form bearing No.0270210 and Clause No.10 of the proposal form no.0028178 which deal with medical information of the insured. It is submitted that the claim investigation revealed that the insured deliberately misled the appellants by concealing that she was suffering from Mitral Stenosis and underwent Closed Mitral Valvotomy in 1991 and she was a patient of Type2 Diabetes Mellitus which had direct nexus with the cause of her death. The appellants submitted that the repudiation of the claim was based on medical evidence and there was no deficiency in service on their part in repudiating the claim of the respondent.
6. The respondent in support of his claim, filed his affidavit and the documents, Exs.A1 to A7. On behalf of the appellants, its Head Legal & company Secretary filed his affidavit and the documents, Exs.B1 to B8.
7. The District Forum allowed the complaint on the premise that the appellants failed to conduct medical test before issuing the insurance policies in favour of the insured and that they failed adduce evidence to show that after 18 years of the insured undergoing CMV, her death occurred in the year 2011 had direct nexus with the CMV.
8. Aggrieved by the order of the District Forum, the opposite parties have filed appeal contending that they had issued the two insurance policies believing the information furnished by the respondents wife to be true and correct in all aspects and through the proposal form it was made clear to the insured that truthful answers to the questions in the proposal form are of immense importance for accepting life insurance proposal and in the event of answers to the questions in the proposal form turn out to be false or misleading the contract of insurance is liable to be declared null and void.
9. It is contended that the insured concealed her health status and furnished incorrect answers in the proposal forms and that she suffered from CMV with Diabetes Mellitus Type-II with ARF and Septicaemia and that the respondent being a nominee is not beneficiary under life insurance policy and as such he is not a consumer.
10. Counsel for both parties have filed written arguments.
11. The points for consideration are:
i) Whether the respondent is consumer and being nominee of the insured can maintain the complaint?
ii) Whether the appellants rendered deficient service by repudiating the claim of the respondent?
iii) To what relief?
12. POINTS NO.1 & 2: The learned counsel for the appellants has questioned maintainability of the complaint on the premise that the respondent is not a consumer and being a nominee for the purpose of insurance policy amount, he has no beneficial interest and as such he cannot maintain the complaint. The learned counsel for the respondent supported the order of the District Forum and contended that the respondent can maintain complaint before the Consumer Forum in the capacity of nominee of the insured. Both counsels have relied upon certain decisions in support of their contentions. We have given our thoughtful consideration to the respective contentions of the counsel.
13. There is no disputing the fact that the respondents wife during her life time obtained two life insurance policies bearing numbers 090810682202 and 091010932729 on 20.08.2009 and 15.10.2009 for sum assured of `2 lakh and `75,000/-
respectively. The insured appointed her husband, the respondent herein her nominee. The learned counsel for the appellants has contended that the respondent had not declared the legal representatives of the insured nor did he bring them on record and the District Forum failed to appreciate the preliminary objection specifically raised by the appellants. He has relied upon the decision of the Honble Supreme Court in the following decisions.
i) Smt.Sarabati Devi and another vs Smt.Usha Devi reported in (1984) 1 SCC 424.
ii) Vishin N Khanchandani & another vs Vidya Lachmandas Khanchandani and another (2000) 6 SCC 724.
14. The learned counsel for the respondent has submitted that being the nominee, the respondent is entitled to claim the insurance sum assured under the insurance policy. He has relied upon the following citations.
i) 1992(2) CPJ 493.
ii) Ii)2005(2) CPR
593.
iii) 2010(3) SCJ 454.
15. Section 2(1)(d) of the Consumer Protection Act confers status of consumer on the person who avails service or purchases goods not for any commercial purpose and in case the service is availed or goods are purchased for commercial purpose it is subject to the condition that such commercial purpose is meant for his eking out his livelihood by means of self-employment. Definitions of words consumer and service under Sections 2(1)(d) and 2(1)(o) which are as under:
Section 2(1)(d):
Consumer means any person who,
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person (but does not include a person who avails of such services for any commercial purpose).
Explanation: for the purposes of this clause, commercial purpose does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.
service means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying a news or other information (but does not include the rendering of any service free of charge or under a contract of personal service).
From the aforesaid definitions it can be held that
(a) a person is a consumer who buys any goods for consideration and also include user of such goods;
(b) who hires any services for consideration and includes beneficiary of such services.
To this wide definition there are exclusions:
(i) It excludes a consumer who obtains such goods for resale or for any commercial purpose;
(ii) It also excludes a person who avails of services of any description
(i) free of charge; or
(ii) under a contract of personal service; and
(iii) for any commercial purposes.
16. Thus, in order to maintain complaint on the premise of deficiency in service by the insurance company or any service provider under the provisions of the Consumer Protection Act, the respondent should meet the requirement of Section 2(1)(d) read with Section 2(1)(o) of the Consumer Protection Act. The respondent is a nominee and the interest of the person who purchased the insurance policy should pass on to the beneficiary in order to make him competent to maintain complaint before Consumer Forum.
17. Now the question to be addressed is whether the respondent in the capacity of nominee can maintain the complaint. Honble Supreme Court, in Smt.Sarabati Devi(supra) has considered the aspect whether a nominee would acquire beneficial interest in terms of Section 39 of the Insurance Act. Their lordships held that nominee would not get any beneficial interest and it is the legal heirs of the deceased insured who only would be entitled to receive the sum assured under the insurance policy. It was observed :
Moreover there is one other strong circumstance in this case which dissuades us from taking a view contrary to the decisions of all other High Courts and accepting the view expressed by the Delhi High Court in the two recent judgments delivered in the year 1978 and in the year 1982. The Act has been in force from the year 1938 and all along almost all the High Courts in India have taken the view that a mere nomination effected under section 39 does not deprive the heirs of their rights in the amount payable under a life insurance policy. Yet Parliament has not chosen to make any amendment to the Act. In such a situation unless there are strong and compelling reasons to hold that all these decisions are wholly erroneous, the Court should be slow to take a different view. The reasons given by the Delhi High Court are unconvincing. We, therefore, hold that the judgments of the Delhi High Court in Fauja Singh's case (supra) and in Mrs. Uma Sehgal's case (supra) do not lay down the law correctly. They are, therefore, overruled. We approve the views expressed by the other High Courts on the meaning of section 39 of the Act and hold that a mere nomination made under section 39 of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy, The amount; however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.
18. The Supreme Court held the ratio laid in Sarbati Devis decision (supra) to hold the field in Vishin N.Khanchandani (supra) and observed:
The Court further held that Delhi High Court committed mistake in not properly appreciating the judgment in B.M. Mundkur v. Life Insurance Corporation of India [AIR 1977 Mad. 72]. The Court found that the reasons given by the Delhi High Court were not tenable. It was held that a mere nomination made under Section 39 of the Insurance Act did not have the effect of conferring on the nominee any beneficial interest in the amount payable under the insurance policy on the death of the assured. The nomination only indicated the hand which was authorised to receive the amount on the payment of which the insurer got a valid discharge of its liability under the policy. The policy holder continued to have interest in the policy during his lifetime and the nominee acquired no sort of interest in the policy during the lifetime of the policy holder. On the death of the policy holder, the amount payable under the policy became part of his estate which was governed by the law of succession applicable to him. Such succession may be testamentary or intestate. Section 39 did not operate as a third kind of succession which could be styled as a statutory testament. A nominee could not be treated as being equivalent to an heir or legatee. The amount of interest under the policy could, therefore, be claimed by the heirs of the assured in accordance with law of succession governing them.
19. In view of the aforementioned decisions, it becomes clear that a nominee is not beneficiary under life insurance policy. Unless beneficial interest is passed on to him on the death of the purchaser of the life insurance policy, nominee of the life insurance policy cannot file complaint under the provisions of C.P. Act. It is the legal heirs of the deceased insured who only are empowered to file complaint invoking provisions of C.P. Act.
20. The appellant had raised specific objection as to maintainability of the complaint by the nominee of life insurance policy and despite of such objection, the respondent had not impleaded the legal heir of the deceased Smt Vijaya Lakashmi Sekarathil. In view of the admitted position of the facts of the case that the respondent on the premise that he is entitled to claim the amount in terms of the insurance policy, he proceeded with the complaint before the District Forum which has reached this Commission in the shape of appeal filed by the opposite parties.
21. In the aforementioned circumstances, this Commission is of the considered view that to meet the ends of justice, the respondent can be given opportunity to implead all the legal heirs of the deceased Smt Vijaya Lakshmi Sekarathil. As such this Commission is inclined to set aside the order of the District forum and remit back the matter to the District Forum for impleadment of all the legal heirs of the insured Smt Vijaya Lakshmi Sekarthil as per the provisions of Succession Act applicable to them. In such an event it is needless to say that both sides have to be given opportunity to lead evidence/further evidence. In order to avoid waste of time and hardship to the claimant, this Commission feel that the District Forums have to scrupulously abide by the aforementioned decision of the Supreme Court and not to entertain such complaints except those filed by the nominee unless he/she is the legal heir within the meaning of provisions of the Succession Act applicable to him/her as also to entertain the complaints in respect of life insurance claims filed by all the legal heirs of the deceased insured.
22. POIN NO.3: In the result the appeal is allowed setting aside the order passed by the District Forum. The matter is remitted back to the District Forum giving opportunity to the respondent/complainant to implead legal heirs of the insured, Smt Vijaya Lakshmi Sekarthil. There shall be no separate order as to costs. The office is directed to circulate copy of this order to all the District Forums in the State.
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MEMBER Dt.10.09.2013 కె.ఎం.కె*