State Consumer Disputes Redressal Commission
Dr. Ajay Singh Bhambri vs M/S Axis Bank Limited & Anr. on 16 September, 2013
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB,
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
Consumer Complaint No.16 of 2011.
Date of Institution: 23.02.2011.
Date of Decision : 16.09.2013.
Dr. Ajay Singh Bhambri S/o Sh. Avtar Singh Bhambri, R/o House
No.1509, Phase-X, Mohali.
.....Complainant.
Versus
1. M/s Axis Bank Limited, The Mall, Ludhiana, through its Manager.
2. M/s Metlife Insurance Company Limited, 4th Floor, Kunal Towers
No.88, The Mall, Ludhiana through its Manager.
....Opposite Parties.
Consumer Complaint U/s 17 of the
Consumer Protection Act, 1986.
Before:-
Shri Inderjit Kaushik, Presiding Judicial Member.
Shri Vinod Kumar Gupta, Member.
.................................................... Present:- Sh. Mukesh Kumar Bhatnagar, Advocate, counsel for the complainant.
Opposite Party No.1 Exparte.
Sh. Karan Nehra, Advocate, counsel for opposite party no.2.
........................................................................... INDERJIT KAUSHIK, PRESIDING JUDICIAL MEMBER Dr. Ajay Singh Bhambri, complainant (hereinafter called "the complainant") has filed this complaint U/ 17 of the Consumer Protection Act, 1986.
Consumer Complaint No.16 of 2011 2
2. As per the complainant, a loan was sanctioned by opposite party no.1 for Rs.52,08,975/- to the complainant as well as his wife Smt. Vandana Bhambri. The said loan was to be paid in monthly installments for the period 01.12.2009 to 01.06.2031. As per the agreement executed between the complainant and opposite party no.1, opposite party no.1 agreed to get the complainant and his wife insured for the time period from opposite party no.2 and premium was also paid to opposite party no.2, by debiting from his account a sum of Rs.3,24,260/- on 28.11.2009. As per the terms and conditions of the insurance, if any person dies during the tenure of the loan, the rest of the payment with regard to the loan was to be borne by the insurance company.
3. The wife of the complainant Smt. Vandana Bhambri died on 09.12.2009 due to sudden and massive heart attack and it was brought to the notice of both the opposite parties. As per terms and conditions of the insurance, the complainant requested the insurance company to pay the rest of the loan amount to opposite party no.1. The complainant was shocked to know from the opposite parties that some medical examination with regard to the insurance policy was pending and due to that, the insurance policy was not issued and as the medical examinations were not conducted during the lifetime of the wife of the complainant, they cannot pay the insured amount. The above stand taken by the respondents is illegal and arbitrary on the following grounds:-
i) When the insurance policy was sold to the complainant, he was never told about the medical examinations. Premium was taken through the account of the complainant and nothing was due.Consumer Complaint No.16 of 2011 3
ii) It was the duty of the opposite parties to intimate the complainant as well as his wife about the medical examination before taking the premium. The opposite parties cannot deny their feet after the unfortunate death of the wife of the complainant, to pay the insurance amount.
iii) In the form of opposite party no.2, there was no mention of any medication examination. It is a clear cut case of deficiency in service.
4. A legal notice was also sent and reply dated 07.12.2010 was received in which the stand of the opposite parties was that the medical examination was not complete and there was no concluded contract of insurance. The premium has been refunded and the opposite parties have no liability, but the same is illegal and the opposite parties are liable to pay the insured amount with regard to adjustment of loan of the complainant. They are also liable to pay interest @ 18% p.a. and compensation to the tune of Rs.5.00 lacs.
5. It was prayed that the opposite parties may be directed to adjust the loan of Rs.48.70 lacs and pay interest @ 18% p.a. on the insured amount and Rs.5.00 lacs as compensation.
6. In the written version filed on behalf of opposite party no.1, preliminary objections were taken that the complaint is not maintainable without impleading the head office, being the principal. The complainant has not come to the Commission with clean hands and has suppressed the material facts. There is no deficiency in service on the part of the answering opposite party. The complaint is liable to be dismissed with special costs. The complainant is not a consumer qua the answering opposite party. The complainant has not hired any service of the answering opposite party and is not a consumer.
Consumer Complaint No.16 of 2011 4
7. On merits, it was admitted that the complainant was sanctioned a loan of Rs.52,08,975/- along with his wife Smt. Vandana Bhambri. The same was to be paid in monthly installments during the period 01.12.2009 to 01.06.2031. It was further submitted that the insurance claim was to be processed by opposite party no.2 and opposite party no.1 has nothing to do with the same. Opposite party no.2 was to complete the formalities and to get the medical tests done of borrower for issuance of the insurance policy, but in the meantime, Smt. Vandana Bhambri, co-borrower died and opposite party no.2 is processing for refund of the premium. All other allegations of the complaint were denied and it was prayed that the complaint may be dismissed with costs.
8. Opposite party no.2 did not appear and was proceeded against exparte vide order dated 04.07.2011. Later on, power of attorney was filed on behalf of opposite party no.2 and opposite party no.2 was allowed to join the proceedings henceforth vide order dated 27.09.2011. Opposite party no.2 did not file written version in spite of sufficient opportunities granted and, as such, the defence of opposite party no.2 was struck off vide order dated January 17, 2012.
9. Learned counsel for the complainant tendered affidavit of the complainant Dr. Ajay Singh Bhambri as Ex.CW-1 along with documents Ex.C-1 to Ex.C-14.
10. When the case was fixed for evidence of opposite party no.1, neither any evidence was led nor anybody appeared on behalf of opposite party no.1 and, as such, opposite party no.1 was proceeded against exparte vide order dated 21.05.2012.
Consumer Complaint No.16 of 2011 5
11. We have perused the written arguments filed on behalf of the complainant and opposite party no.2 and have gone through the entire record carefully.
12. In the written arguments filed on behalf of the complainant, pleadings were repeated. It was further submitted that the premium was paid to opposite party no.2 by debiting the account the sum of Rs.3,24,360/- on 28.11.2009 as per the bank statement of complainant Ex.C-1. If anyone of the loanees dies, then the loan amount is to be paid by the insurance company. Dr. Vandana Bhambri wife of the complainant died suddenly on 09.12.2009 and the complainant asked opposite party no.1 bank to pay the loan amount, but it was told that the medical tests were not carried out and the insurance amount cannot be paid. When the insurance was sold to the complainant, no mention of any tests was made and just to repudiate the claim, this is an afterthought version. It was the duty of the opposite parties to intimate about the medical tests before taking the premium. There is deficiency in service on the part of the opposite parties. A legal notice was served, copy of which is Ex.C-12, reply to which is Ex.C-13. Opposite party no.2 which is the main defendant failed to file written version and its defence was struck off and now it cannot raise any issue. Hon'ble Supreme Court has held that if the policy is cancelled after the accident, then the insurer is liable. Learned counsel for the complainant has relied upon the following authorities:-
i) "United India Insurance Co. Ltd. Vs Laxmamma & Ors.", 2012 (20 RCR (Civil)-834.
ii) "New India Assurance Co. Ltd. Vs Smt. Sita Bia", 1999(4) RCR (Civil)-644.
iii) "New India Assurance Co. Ltd. Vs Bhagwati Devi", 1999(4) RCR (Civil)-350.Consumer Complaint No.16 of 2011 6
iv) "New India Assurance Co. Ltd. Vs M/s Zuari Industries Limited & Ors.", 2009 (4) RCR (Civil)-864.
v) "M/s Peacock Plywood Pvt. Ltd. Vs The Oriental Ins. Co. Ltd.", 2006 (12) SCC-673.
vi) "Oriental Insurance Co. Ltd. Vs Inderjit Kaur", 1998 (1) RCR (Civil)-227.
vii) "Oriental Insurance Co. Ltd. Vs Mantora Oil Products Pvt. Ltd.", 2010 (10) SCC-26.
13. In the written arguments filed on behalf of opposite party no.2, it was submitted that an application for covering the complainant and his wife late Dr. Vandana Bhambri was received on 26.11.2009 through opposite party no.1. The complainant after understanding the terms and conditions of the 'Met Loan Assure Plan' filled the proposal form bearing no.660043938 and signed the same on 26.11.2009 and offered to take the policy. The premium amount of Rs.3,24,360/- was disbursed on 28.11.2009 to the opposite party towards the above policy. The policy term of the above mentioned policy was 22 years. The complainant and his wife were to undergo medical check-up before the policy is issued. Medicals were requested for both the complainants for 03.12.2009. In the absence of medical report, policy was not issued as on 09.12.2009 and the acceptance of the policy was pending for non-completion of medicals. The amount of deposit was not adjusted towards the premium.
14. Within 13 days of signing of the proposal form, opposite party received the death intimation of the co-borrower i.e. wife of the complainant, namely Dr. Vandana Bhambri. In pursuance of death intimation, opposite party no.1 requested opposite party no.2 to cancel the application and refund the initial deposit in the event of death of co- applicant on 09.12.2009 and accordingly, a letter dated 08.04.2010 was sent along with the cheque no.477443 for Rs.3,24,360/- dated Consumer Complaint No.16 of 2011 7 05.04.2010 drawn on Axis Bank towards refund of initial deposit. . The offer was yet to be accepted and there was no legally concluded contract between the parties. Learned counsel for opposite party no.2 has placed reliance on the following authorities:-
i) "Life Insurance Corporation of India Vs Raja Vasireddy Komalavalli Kamba & Ors.", 1984 (2) Supreme Court Cases-719.
ii) "ELSA Tony Phillip Vs LIC of India & Ors.", I (2009) CPJ-18(NC).
15. We have considered the respective written submissions submitted on behalf of the complainant and opposite party no.2 and thoroughly scrutinized the entire record and other material placed on the file.
16. The complainant and his wife Smt. Vandana Bhambri applied for loan for purchasing a house and opposite party no.1 sanctioned load of Rs.52,08,975/- in the name of the complainant and his wife Smt. Vandana Bhambri. The said loan was secured by the complainant through opposite party no.2 and a premium of Rs.3,24,260/- was debited from the account of the complainant on 28.11.2009. Smt. Vandana Bhambri died on 09.12.2009 due to sudden and massive heart attack and admittedly, by that time, the policy document was not issued, because as per version of opposite party no.1, certain formalities were to be completed by opposite party no.2, including the medical tests of the borrower. The proposal form is also on the record and the same is Ex.C-11 and it was signed on 26.11.2009. There is nothing on record to show that on the basis of this proposal form, any legal and valid contract came into existence by way of issuance of any acceptance letter etc. As stated above, the policy document was not issued before the death of Smt. Vandana Bhambri. Consumer Complaint No.16 of 2011 8
17. The question to be decided in the present complaint is whether by the deposit of premium in pursuance of the proposal form, the opposite party insurance company is liable to pay the share of loan of the insured, or not?
18. The learned counsel for the complainant has relied upon a number of authorities. In case "Oriental Insurance Co. Ltd. Vs Inderjit Kaur" (supra), the policy was issued without receiving the premium and the cheque was, later on, dishonoured and the Hon'ble Supreme Court held that the insurance company is liable to indemnify the third parties in respect of liability covered by the policy.
19. In case "New India Assurance Co. Ltd. Vs Bhagwati Devi" (supra), the facts were different and the Hon'ble Supreme Court held that the policy would be effected from the specific time mentioned in the policy at the time of issuance.
20. In case "New India Assurance Co. Ltd. Vs Smt. Sita Bia" (supra), similar question was answered by the Hon'ble Supreme Court, regarding the time of commencement of the policy.
21. In case "M/s Peacock Plywood Pvt. Ltd. Vs The Oriental Ins. Co. Ltd." (supra), the facts were altogether different and various clauses of the contract were interpreted, but in the present case, there is no concluded contract between the parties.
22. In case "New India Assurance Co. Ltd. Vs M/s Zuari Industries Limited & Ors." (supra), it was again held that in case there is ambiguity in the contract of insurance, then the ambiguity should be resolved in favour of the claimant.
23. In case "Oriental Insurance Co. Ltd. Vs Mantora Oil Products Pvt. Ltd." (supra), again facts were totally different and the only terms of the contract were interpreted.
Consumer Complaint No.16 of 2011 9
24. Hon'ble Supreme Court way back in case "Life Insurance Corporation of India Vs Raja Vasireddy Komalavalli Kamba & Ors." (supra) held that mere filling any proposal for insurance and depositing first premium with the LIC do not create a binding contract between the LIC and the proposer. In Para-17, it was observed as follows:-
"A perusal of the exclusion clause (g) shows that the main part of the exclusion clause which protects the insurer from liability under the policy covers loss of damage to any electrical machinery, apparatus, fixture or fittings including wireless sets, television sets, radio and so on which themselves are a total loss or a damage or damaged due to short circuiting, arcing, self heating or leakage of electricity. However, the proviso to the said clause through inclusion of any other machinery, apparatus, fixture or fitting being destroyed or damaged by the fire which has affected any other appliances such as television sets, radio, etc. or electrical machines or apparatus are clearly included within the scope of the Fire Policy for whatever damage or destruction caused by the fire. If for example the short circuiting results in damage in a television set through fire created by the short circuiting in it the claim for it is excluded under the Fire Policy. However, if from the same fire there is a damage to the rest of the house or other appliances, the same is included within the scope of the Fire Policy by virtue of the proviso. In other words, if the proximate cause of the loss or destruction to any other including other machines, apparatus, fixtures, fittings etc. or part of the electrical installation is due to the fire which is started in an electrical machine or apparatus all such losses because of the fire in other machinery or apparatus is covered by the policy."
25. Hon'ble National Commission in case "ELSA Tony Phillip Vs LIC of India & Ors." (supra) held that mere encashment of the cheque given towards the first premium is not enough to conclude that the contract came into existence between the parties. Relying upon the Consumer Complaint No.16 of 2011 10 above authority of the Hon'ble Supreme Court, observed in Para-4 (relevant portion) as follows:-
"4. Admittedly, neither acceptance of the proposal was communicated nor policy was issued to Tony Phillip by the respondent- Insurance Company. Considering the ratio of the said decision of Supreme Court, mere encashment of cheque given towards first premium, is not enough to conclude that a contract had come into existence between the parties."
26. From the above discussion and the law laid down, it is clear that no concluded contract has come into existence between the parties and in the absence of any contract between the parties, opposite party no.2-Insurance Company cannot be held liable to pay the loan amount of the share of Smt. Vandana Bhambri, who died just within 12 days of signing the proposal form and mere debiting the amount of premium by opposite party no.1 and sending it to opposite party no.2, is not sufficient to fix any liability on opposite party no.2.
27. Resultantly, the complaint filed by the complainant is dismissed. Parties are left to bear their own costs.
28. The arguments in this complaint were heard on 03.09.2013 and the order was reserved. Now the order be communicated to the parties.
29. The complaint could not be decided within the stipulated timeframe due to heavy pendency of court cases.
(Inderjit Kaushik) Presiding Judicial Member (Vinod Kumar Gupta) Member September 16, 2013.
(Gurmeet S)