National Consumer Disputes Redressal
Sbi Life Insurance Co. Ltd. vs Geeta Kunwar on 16 May, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 786 OF 2021 (Against the Order dated 21/09/2021 in Appeal No. 97/2021 of the State Commission Rajasthan) 1. SBI LIFE INSURANCE CO. LTD. ...........Petitioner(s) Versus 1. GEETA KUNWAR 2. STATE BANK OF INDIA SADULGANJ,BIKANER RAJASTHAN - 334001 ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE SUDIP AHLUWALIA,PRESIDING MEMBER
For the Petitioner : MR. KAPIL CHAWLA, ADVOCATE For the Respondent : MR. VIZZY AGARWAL, ADVOCATE.
Dated : 16 May 2023 ORDER
JUSTICE SUDIP AHLUWALIA, MEMBER
This Revision Petition has been filed by the Petitioner/Opposite Party No. 2 against Respondent No.1/Complainant and Respondent No.2/Opposite Party No. 3 challenging the impugned Order dated 21.09.2021 passed by the State Consumer Disputes Redressal Commission, Circuit Bench, Bikaner, in Appeal/97/2021 (1066/2019). Vide such order, the State Commission had allowed the Appeal while setting aside the Order dated 23.09.2019 passed by the District Consumer Dispute Redressal Forum, Bikaner, in Consumer Complaint No. 2/2017.
2. The brief facts of the case are that Complainant's husband, Late Sh. Hanuman Singh had taken a housing loan from the Opposite Party No. 3 for a sum of Rs.16,00,000/- on 22.12.2014 and the said amount was insured with Opposite Party No.1 and 2 vide Policy bearing No. 70000011107 from 23.12.2014 to 23.03.2030, wherein the Complainant stood as the nominee in the Policy. The Complainant's husband passed away on 30.06.2016 and hence, the claim was filed by the Complainant on 26.07.2016. A premium amount of Rs.30,958/- was paid till 16.01.2015 and on the date of death, the claim payable was Rs.15,40,434/-. It was averred by the Complainant that the Policy was issued after medical check-up of the deceased husband. It was further averred that the Complainant through her Counsel issued a Legal Notice to the Respondent and in reply to the same, the Respondents stated that they had repudiated the claim and the premium amount of Rs.55,104/- vide cheque bearing No. 359307 dated 06.09.2014 had been refunded. It was further stated that the deceased husband was healthy at the time of insurance and he had neither stated any deliberate lie nor he had suppressed any material information. It was also averred that the deceased was examined by the Doctor appointed by the Respondent and on the basis of his report, the Policy was issued and home loan was secured. It was further contended that the Opposite Party No.3 pressurized the Complainant for payment of claim and the Complainant was threatened that her house worth Rs.60,00,000/- would be auctioned. Hence, it was contended that the repudiation of the claim was arbitrary and such conduct of Respondents amounted to deficiency in service. Hence, the Complaint was filed before the Ld. District Forum seeking payment of Rs.15,40,434/-, refund of amount collected by the Bank after death of her husband, compensation of Rs.2,00,000/- and litigation costs of Rs.5,100/-.
3. The Opposite Parties No.1 and 2 appeared before the District Forum and resisted the Complaint and denied all the allegations thereby denying deficiency in service on their part. It was submitted that the DLA had applied for insurance cover through membership No. 7003661899 and the risk commenced on 16.01.2015. It was contended by the Opposite Parties No.1 and 2 that the Complaint was not maintainable for want of territorial jurisdiction. It was further averred that a Life Insurance Contract is a contract of 'Utmost Good Faith' wherein the proponent is duty bound to disclose everything concerning his/her health, habits and other related matters within his/ her knowledge at the time of making the proposal, and even before the commencement of Policy, failing which Insurer has every right to repudiate the claim. In the present case, the Deceased Life Assured had committed breach of the principle of Utmost Good Faith by suppressing material fact that he was suffering from Liver disease and Hydronephrosis prior to the date of submission of the Proposal Form. It was further averred that the DLA failed in his duties to disclose the material facts in the Proposal Form; hence, the contract is void ab initio in terms of Section 17 of the Indian Contract Act, 1872. Hence, it was alleged that there is no deficiency in service on their part and the DLA himself was guilty of suppression of material facts and the claim was repudiated in view of Non-disclosure clause of the Master Policy. It was also contended that the Complaint does not fall within the definition of Section 2(1)(c) and 2(1)(g) and the Complainant does not fall within the definition of 2(b) of the Consumer Protection Act. Therefore, the Opposite Parties prayed for dismissal of the complaint with costs.
4. The Ld. District Forum vide its Order noted the contentions of the Opposite Party No. 3 that the deceased took a loan of Rs. 16,00,000/- on 14.11.2014 and it is the duty of his Legal Heir(s) to repay this amount, and the repudiation of claim by Opposite Party No. 1 & 2 has nothing to do with it.
5. The Ld. District Forum vide its Order dated 23.09.2019 dismissed the Complaint and held that there is no deficiency of service or unfair trade practice on the part of the Opposite Parties.
6. Aggrieved by the above Order, Appeal/97/2021 (1066/2019) was filed by Appellant/Complainant against the Respondents/Opposite Parties before the State Consumer Disputes Redressal Commission, Circuit Bench, Bikaner.
7. The Ld. State Commission vide impugned Order dated 21.09.2019 allowed the Appeal while setting aside the Order of Ld. District Forum and observed that -
"As far as decision of the district forum is concerned it is prima facie evident that pre-existing disease of lever and other diseases were not mentioned while filling up the proposal form. But as per citations submitted by the appellant the principle of utmost good faith is equally applicable on both the parties i.e. the insured and the insurer. It is not mentioned in point 8 that in which language the life proposed was informed about the terms and the conditions. Apart from that there is difference of date in filing the proposal form. Part 8 and 9 were filled on 9.12.2014 and part 6 and 7 were filled on 22.12.2014. Hence, it is clear that agent Manju Saharan has just completed the formalities and the regulations have not been followed in letter and spirit. Hence, insurer has not acted with utmost good faith. Hence, it can't be accepted that husband of the appellant has violated the condition of disclosure of material fact. Agent has not explained the conditions in Hindi to the proposer. Proposer has signed as per instruction given to him. Hence, order dated 23.9.2019 passed by the district forum can't be upheld. Hence, appellant is entitled for Rs. 15,40,454/- alongwith 9% interest from the date of death of her husband till payment. Once respondent no.1 and 2 deposit the balance. amount due to respondent no.3 then respondent no.3 shall refund the amount of EMI deposited after death of the husband of appellant with corresponding interest. The appellant is also entitled for compensation of Rs.50,000/- and litigation cost of Rs.15,000/- from respondent no.1 and 2.
Appeal is decided accordingly."
8. Hence, the present Revision Petition has been filed by the Petitioners/ Opposite Party No.2 against the above-mentioned impugned Order of the Ld. State Commission.
9. Vide Order dated 21.10.2021, operation of the impugned Order was stayed.
10. Heard the Ld. Counsel for Petitioner and Respondents. Perused the material available on record.
11. Reliance of the Petitioner is on a decision of the Hon'ble Supreme Court in "Reliance life Insurance Co. Ltd. & Anr. vs. Rekhaben Nareshbhai Rathod, Civil Appeal No. 4261 of 2019". In this judgment, the Apex Court held that the defence raised on behalf of the insured to the effect that his signature on the Proposal Form had been obtained without explaining the terms and conditions of the Policy or the ramification thereof, is untenable. The Apex Court had specifically observed as under:-
" 31. Finally, the argument of the respondent that the signatures of the assured on the form were taken without explaining the details cannot be accepted. A similar argument was correctly rejected in a decision of a Division Bench of the Mysore High Court in VK Srinivasa Setty vs. Messers Premier Life and General Insurance Co. Ltd.21 where it was held:
Now it is clear that a person who affixes his signature to a proposal which contains a statement which is not true, cannot ordinarily escape from the consequence arsing therefrom by pleading that he chose to sign the proposal containing such statement without either reading or understanding it. That is because, in filling up the proposal form, the agent normally, ceases to act as agent of the insurer but becomes the agent of the insured and no agent can be assumed to have authority from the insurer to write the answers in the proposal form.
If an agent nevertheless does that, he becomes merely the amanuensis of the insured, and his knowledge of the untruth or inaccuracy of any statement contained in the form of proposal does not become the knowledge of the insurer.
Further, apart from any question of imputed knowledge, the insured by signing the proposal adopts those answers and makes them his own and that would clearly be so, whether the insured signed the proposal without reading or understanding it, it being irrelevant to consider how the inaccuracy arose if he has contracted, as the plaintiff had done in this case that his written answers shall be accurate.
32. For the reasons which we have adduced, we are of the view that the SCDRC was in error in reversing the judgment of the District Forum. The NCDRC has similarly erred in affirming the view of the SCDRC. We, accordingly, allow the appeal and set aside the impugned judgment and order of the NCDRC dated 20 February 2015. The consumer complaint filed by the respondent shall stand dismissed".
12. Ratio of the aforesaid decision would undoubtedly appear to impeach the version of the Complainant's side in the present case that the signature of the Life Assured/and her deceased husband on the Proposal Form had been obtained by the Agent of the Petitioner Insurance Company without explaining the contents or ramifications thereof to him.
13. However, when scrutinized a little more carefully, it transpires that there were certain glaring infirmities in the manner of explaining the relevant contents to the Proposer/Life Assured which were in direct contravention of the procedure for that purpose, specifically prescribed in the Proposal Form itself. This would become clear from Clause 11 in the said Proposal Form which specifies:-
"Instructions for filing the form for applying Insurance on life of borrower (member to be insured).
1) In case of co-borrowers, each co-borrower is required to fill a separate form and all forms should be attached together.
2) This form is to be filled by the member himself/herself or their representative in BLOCK LETTERS in BLACK INK. Strokes of the pen, dots and dashes will not be accepted as responses. Please leave a space blank between each part of the name.
3) Please tick a box thus where appropriate, if any part of the form is left blank, this form will not be considered for grant of insurance.
4) Please answer all questions. If any question is not applicable, please mention the same.
5) Any cancellation or alteration must be authenticated by the member.
6) Insurance is a contract of utmost good fair which requires the member to disclose all the material facts. All the facts irrespective of whether it is material or not, should be disclosed.
7) As the statements in this bond constitute warranties, complete and accurate information must be given.
8) The facility of Nomination is available in Section 4 and Section 5. Please use this facility.
9) All documents submitted with this membership form must be self-attested.
10) The Member must read this form carefully and sign only after having fully understood its contents and their significance. In case any member cannot read English, he/ she must seek assistance to get the same translated.
11) In case this form contains the signature of the Member in a language other than English or Thumb impression of the Member, the "Additional Declaration" portion (please refer to Section of this form must be duly completed, in order for this form to be valid. If this is not done, no insurance can be provided by SBI Life, if any money (ies) have been paid towards procuring such Insurance.
12) SBI Life branches and its sales team are not authorised to collect cash from its customers".
14. Now, the declaration required to be given by the Agent concerned, along with the signature of the Proposer/ Life Assured goes to show that the latter had put his signature by the name of "Hanuman Singh", in Hindi/Devanagari script. But the Certificate which was required to be issued/signed by the Agent in this regard did not specify the language in which the relevant contents were explained to the Proposer, and in fact, had left the relevant space reserved for specifying the language concerned as entirely blank, in the Certificate.
15. To make matter worse, the date of issuance of the Certificate by the concerned Agent happens to be 09.12.2014. On the other hand, perusal of the Proposal Form actually signed by the Life Assured, and accepted by the Insurance Company goes to show that it is dated 22.12.2014, which was therefore 13 days after the Agent had allegedly explained the contents to the proposer in the unspecified language, which is chronologically just not possible, since the relevant Certificate is required to be issued after the contents of the Proposal Form have been allegedly explained and thereafter accepted by the Proposer/Life Assured.
16. Furthermore, it transpires that the Agent concerned was one Ms. Manju Saharan, who was herself an employee of the State Bank of India (original OP No.3 in the Complaint) Sadulganj Branch, Bikaner. In the Policy document itself, the details of the intermediary, through whom the Policy in question was applied for, has been described as "Corporate Agent", which clearly was on behalf of the same Opposite Party, i.e. the State Bank of India.
17. Such conduct of the "Corporate Agent" who was admittedly the own employee of Opposite Party No. 3/State Bank of India of which the Petitioner-SBI Life Insurance Company Ltd. is itself a subsidiary/sister organisation, although having a separate legal entity would clearly go to indicate manifest irregularity in following the specific procedure provided under Clause 11 of the Proposal Form, as applicable to a person signing on the said Form in a language different from English. The omission of the concerned Agent, Ms. Manju Saharan, in even specifying the language in which she had allegedly explained the terms and conditions for the Insurance coverage to the Proposer, as also the fact that she herself signed on the Certificate by claiming that the terms and conditions were explained to the Proposer on 9.12.2014, which was actually 13 days before the Proposal Form was actually submitted by him on 22.12.2014, clearly would have the effect of bringing her conduct in the exceptional situation as contemplated in the aforesaid decision in "Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod" (supra), more specifically in relation to the following observations extracted from the said decision -
...."If an agent nevertheless does that, he becomes merely the amanuensis of the insured, and his knowledge of the untruth or inaccuracy of any statement contained in the form of proposal does not become the knowledge of the insurer..."
18. It can thus be concluded that in view of such non-adherence to the specified procedure regarding explanation of the terms and conditions of Insurance to the Proposer, in the manner as specified in the relevant Clause No. 11, the concerned Agent, who was admittedly an employee/"Corporate Agent" of the Opposite Parties, could not have been presumed to have become the Agent of the Insured/Proposer. The Ld. State Commission was, therefore, eminently justified in allowing the Appeal filed on behalf of the Complainant by specifically taking note of these minute factors, which had been ignored by the Ld. District Forum, in dismissing the complaint.
19. This Commission, therefore, finds no grounds to interfere with the proper and well-reasoned Order of the Ld. State Commission. The Revision Petition is, therefore, dismissed.
20. Parties to bear their own costs.
21. Pending application(s), if any, also stand disposed off as having been rendered infructuous.
...........................J SUDIP AHLUWALIA PRESIDING MEMBER