National Consumer Disputes Redressal
D. Padma vs Branch Manager, State Bank Of Hyderabad ... on 1 March, 2023
Author: R.K. Agrawal
Bench: R.K. Agrawal
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 3635 OF 2017 (Against the Order dated 18/08/2017 in Appeal No. 14/2016 of the State Commission Telangana) 1. D. PADMA W/o. Late Sh. D. Saikumar, R/o. H.No. 16-9-945, Old Malakpet, Hyderabad - 500 036 Telangana ...........Petitioner(s) Versus 1. BRANCH MANAGER, STATE BANK OF HYDERABAD & 2 ORS. Jillelaguda Branch, Karmanghat, Saroornagar, Hyderabad - 500 079 2. SBI LIFE INSURANCE CO. LTD. Central Processing Unit, Kapas Bhavan, Plot No. 3 A, Sector-10, CBD Belapur, Navi Mumbai - 400 614 3. SBI LIFE INSURANCE CO. LTD. 6th Floor, United India Towers, Opp. Police Commissionerate, Basheerbagh, Hyderabad - 500 029 ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE R.K. AGRAWAL,PRESIDENT HON'BLE DR. S.M. KANTIKAR,MEMBER For the Petitioner : Mr. K. Visweswara Rao, Advocate For the Respondent : Mr. Aditya Vikram, Advocate for Mr. S.L. Gupta, Advocate for R-1 Mr. Bharat Malhotra, Advocate for R-2 & 3 Dated : 01 Mar 2023 ORDER R.K. AGRAWAL, J., PRESIDENT
1. The present Revision Petition has been filed by the Original Complainant, the Petitioner herein, under Section 21 of the Consumer Protection Act, 1986 (hereinafter referred to as the Act), against the Order dated 18.08.2017, passed by the Telangana State Consumer Disputes Redressal Commission at Hyderabad (hereinafter referred to as the State Commission) in First Appeal No.14/2016. The Appeal before the State Commission had been filed by SBI Life Insurance Co. Ltd., Navi Mumbai and it's Office at Hyderabad, arrayed as Respondents No. 2 and 3 in the present Revision Petition (hereinafter referred to as the Insurance Company), against the Order dated 30.11.2015, passed by the District Consumer Disputes Redressal Commission, Ranga Reddy (hereinafter referred to as the District Commission) in Consumer Complaint No. 204 of 2013, whereby the District Commission had allowed the Complaint, preferred by the Complainant/Petitioner herein, and directed the Insurance Company to pay an amount of Rs.14,46,314/- with interest @ 9% p.a. from the date of the claim, i.e. 03.01.2013, till the date of realization as also costs of Rs.5,000/-. However, by the Impugned Order, the State Commission has allowed the Appeal, preferred by the Insurance Company, and set aside the Order passed by the District Commission. Consequently, the Complaint has also been dismissed.
2. The facts, in brief, are that one D. Sai Kumar, husband of the Complainant/Petitioner herein (hereinafter referred to as the Insured), had taken a housing loan from State Bank of Hyderabad, Opposite Party/Respondent No.1 herein (hereinafter referred to as the Bank) and obtained risk cover of his life as a member through Group Insurance Scheme under Master Policy No. 93000001610 issued by the Insurance Company to the Bank and paid the single premium of Rs.1,02,300/- on 19.07.2010. The risk commenced from 17.08.2010 for an assured sum of Rs.15,85,300/- at inception. The Insured was issued a Certificate of Insurance with the said details. The Doctors of the Insurance Company had medically examined the Insured before granting insurance coverage and he was found to be in good health. The Insured died on 24.11.2012, leaving behind his wife (Complainant/Petitioner herein) and 3 daughters and the outstanding loan amount of Rs.14,46,314/- as on the date of his death. The Complainant/Petitioner being the nominee under the insurance policy applied to the Insurance Company for settlement of death claim of the Insured. However, the claim was repudiated on 28.02.2013 on the ground that the Insured had not disclosed the material facts with regard to his health. On 22.03.2013, the Complainant/Petitioner made a complaint/representation before the Review committee for reconsideration of the claim, whereupon the matter was referred to the Insurance Ombudsman, who also dismissed her complaint on 13.06.2013 without considering the medical record properly. This prompted the Complainant/Petitioner to file the afore-noted Complaint before the District Commission, inter alia, praying for a direction to pay the claim amount of Rs.15,85,300/- along with interest at the market rate and compensation of Rs.4,00,000/- in lieu of physical pain, mental agony and trauma caused to her and three daughters.
3. Upon notice, the Bank filed the Written Version, admitting that the Insured had taken the housing loan and had also obtained risk cover of his life through Group Insurance Scheme from the Insurance Company and had paid the premium therefor. However, it was contended on behalf of the Bank that it had no liability to pay any compensation and the Complainant/Petitioner had to approach the Insurance Company, as there was no deficiency in service on the part of the Bank. The Insurance Ombudsman had also dismissed the complaint made by the Complainant/Petitioner.
4. The Insurance Company had also filed the Written Version, admitting that the deceased Insured had taken a housing loan from the Bank and had applied for Group Insurance Scheme under Master Policy issued to the Bank through Membership Form dated 12.07.2010; the risk commenced from 17.08.2010 for sum assured of Rs.15,85,300/- at inception; as per Clause-C, the death benefit of schedule-1 of the Master Policy, in the event of death of a member, the sum assured is payable; the sum assured is the loan amount outstanding for the month during which the death occurs as specified in the Certificate of the Insurance issued to each member on his admission; and in the instant case, the outstanding loan amount upon death is Rs.14,46,314/- since the Insured had died on 24.11.2012. Further, it was, inter alia, contended on behalf of the Insurance Company that the District Commission had no territorial jurisdiction to entertain the Complaint. The life insurance contract is a contract of "utmost good faith", wherein the proponent is duty bound to disclose everything concerning his health habits and other related matters, which are within his knowledge at the time of making the proposal for insurance cover, failing which the insurer has every right to repudiate the claim. In the instant case, the Insured had committed breach of the principle of utmost good faith by suppressing the material fact that he was suffering from liver disease prior to the enrolment into the insurance cover. The Insured had submitted declaration of good/sound health, stating that he was not suffering from any illness or critical illness. The policy resulted in a claim in 2 years 3 months and 7 days and hence the Insurance Company enquired into the matter and found that the Insured was suffering from liver disease prior to issuance of the insurance cover. In the discharge summary of Yashoda Hospital, Secunderabad, it was noted that the Insured was admitted in the Hospital on 18.07.2009 for Cirrhosis with Portal Hypertension. In the past history, it was also noted that the Insured was a known case of chronic liver disease with portal hypertension on regular treatment. The death summary of the said Hospital dated 24.11.2012 disclosed that the Insured was diagnosed for ARF with Sepsis, CLD with Decompensation, UGI Bleed, Refractory Septic Shock and the primary cause of death was shown as Cardiac Arrest and Cirrhosis of Liver. Prior to the enrolment into the Scheme, the Insured was suffering from liver disease and had suppressed his past medical history and gave a false declaration at the time of applying for insurance cover and, therefore, the Claim was repudiated.
5. On appreciation of the material placed on record and the evidence adduced by the Parties, the District Commission, while negating the contentions raised by the Insurance Company that the District Commission had no territorial jurisdiction to entertain the Complaint and that the Complaint was barred by the principle of res judicata, as the complaint made by the Complainant/Petitioner before the Insurance Ombudsman had already been dismissed, for the reasons recorded in the Order, allowed the Complaint and issued the aforesaid directions to the Insurance Company, inter alia, observing thus:
"Coming to the facts of the present case, the deceased was a government employee and he had to join in the scheme as a member for the purpose of taking house loan from Opposite Party No.1. It is not a case whether the deceased had taken the policy by himself. Evidently, his banker was only shown as the policy holder. Hence, we cannot attribute malafides against the deceased nor presume that he had willfully suppressed any material facts with regard to his death for the purpose of getting wrongful gain. Admittedly, the deceased died after two years period and comes within the purview of Sec.45 of Insurance Act. No doubt, the medical record produced by the Insurance Company discloses the primary cause of death as Cardiac Arrest and Cirrhosis of liver. The previous medical record which is marked as Ex.B6 only shows that the deceased was treated for the above disease only for four days, i.e. from 18.07.2009 to 22.07.2009. Evidently, he died only on 24.11.2012, i.e. after three years of the above treatment. ...
XXX XXX XXX XXX In view of the above rulings, we must conclude that the Insurance company failed to discharge its burden to show that the deceased must have known at the time of making the declaration that it was false or that he suppressed facts which it was material to disclose. Therefore, we hold that there was no justification in rejecting the claim of the complainant who is the widow of the deceased borrower.
For the reasons stated above, we find 'deficiency in service' on the part of the Insurance Company when they repudiated the claim of the complainant illegally."
6. Feeling aggrieved with the Order passed by the District Commission, the Insurance Company filed the afore-noted Appeal before the State Commission. The State Commission, for the reasons recorded in the Impugned Order as also placing reliance on various Judgments and Orders of the Hon'ble Supreme Court, including in the Case of Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, allowed the Appeal and set aside the Order passed by the District Commission. Consequently the Complaint was also dismissed. Hence, the present Revision Petition by the Complainant/Petitioner.
7. Heard learned Counsel for Parties and gone through the material on record, including the medical papers relating to the Insured.
8. Learned Counsel for the Complainant/Petitioner stated that the State Commission did not consider that the Insured was hale and hearty and was subjected to a detailed medical examination and pathological tests etc. by the Doctors of the Insurance Company and only thereafter he was enrolled for the insurance scheme and the insurance cover was given to him. The State Commission was, therefore, not justified in holding that there was suppression of material facts on the part of the Insured. An Application, being IA No. 3653 of 2018 has also been filed by the Complainant/Petitioner, seeking a direction to the Insurance Company to produce the pathological lab reports and diagnostic test reports of the Insured.
9. Learned Counsel for the Bank stated that in any case the Bank was not liable to pay any compensation to the Complainant/Petitioner. The insurance cover was given by the Insurance Company and for any claim in pursuance thereof the Complainant/Petitioner was required to approach the Insurance Company.
10. Learned Counsel for the Insurance Company reiterated the stand taken before the State Commission that the Insured had suppressed the past medical history and had submitted a false declaration at the time of obtaining the insurance cover of life. The State Commission was, therefore, justified in dismissing the Complaint and the Impugned Order passed by it needs no interference.
11. The question to be decided in this matter is as to whether there is suppression of material facts or not. It is not in dispute that the Insured had taken a housing loan from the Bank. Being a Borrower, he had applied for Group Insurance Scheme under the Master Policy, issued to the Bank, through Membership Form dated 12.07.2010. The risk commenced from 17.08.2010 for sum assured of Rs.15,85,300/- at inception and as per Clause-C, the death benefit of schedule-1 of the Master Policy, in the event of death of a member, the sum assured, which is equal to the loan amount outstanding for the month during which the death occurs, is payable. In the present case, the said amount comes to Rs.14,46,314/- since the Insured had died on 24.11.2012. It is true that before enrolling the Insured under the Group Insurance Scheme, taken by the Bank, he was subjected to thorough medical examination and pathological/diagnostic tests by the Doctors of the Insurance Company, wherein he was found to be in good health and accordingly the insurance cover was given and the Certificate of Insurance was issued to him. But the said examination and tests do not ipso facto absolve a person, taking insurance, from making a true and correct declaration regarding his health habits, whether he suffered with the specified diseases/ailments and whether he had undergone any treatment therefor during the period specified, if any. In view of the insurance coverage to be extended by the Insurance Company to the Insured, the questions, reproduced by the State Commission in Para-15 of the Impugned Order, were indeed relevant/material, in respect of which the Insured had answered in negative whereas he was required to correctly state about the diseases/ailments specified in the said questions and the treatment, if any, taken therefor as also health habits vis-à-vis consumption of alcohol. As per investigation carried out, information gathered by the Insurance Company and from a perusal of medical record of the Insured, it is evident that he was suffering with Liver Cirrhosis. Cirrhosis is usually a result of liver damage from conditions such as Hepatitis-B or C or chronic alcohol use. In other words, constant consumption of alcohol is directly connected with the said disease/ailment. This fact is fortified from the "personal history", as reflected in the death summary of the Insured prepared by Yashoda Hospital (page 144 of the paper-book), wherein the word "alcohol" has been written. In this view of the matter, there is possibility of a close nexus between chronic use of alcohol and the death of the Insured.
12. In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316 , it has been observed by the Supreme Court that the expression "material fact" is to be understood in general terms to mean as any fact which would influence the judgment of a prudent Insurer, in deciding whether to accept the risk or not. If the proposer has knowledge of such fact, he is obliged to disclose it, particularly while answering questions in the proposal form. Any inaccurate answer will entitle the Insurer to repudiate their liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, which is based on the principle of utmost faith - uberrima fides. Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. (See: United India Insurance Co. Ltd. Vs. M.K.J. Corporation [(1996) 6 SCC 428]. It has also been emphasized that it is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. Coming to the facts at hand, it cannot be said that at the time of taking the insurance coverage, the Insured was not aware about his diseases. It is evident from the material on record that the Insured was suffering with the aforesaid disease and was also taking treatment therefor before taking the insurance cover and, therefore, the contention of the Complainant/Petitioner that the Insured was hale and hearty at the time of taking the insurance cover is of no significance. Had the Insured given correct declaration or answers to the aforesaid questions, the Insurance Company may have taken an informed decision as to whether he should be enrolled as a Member under the Group Insurance Scheme of the Master Policy, taken by the Bank, or not and if he has to be enrolled what should be the altered terms and premium therefor. However, in the present Case, on account of suppression of material information by the Insured, the Insurance Company has been deprived from taking an informed decision.
13. Once we have held so, it is not necessary for us to consider the aforesaid Application, filed by the Complainant/Petitioner, seeking a direction to the Insurance Company to produce the pathological lab reports and diagnostic test reports of the Insured, and the same stands disposed of.
14. In view of the aforesaid discussion and respectfully applying the law laid down by the Hon'ble Supreme Court in the Case of Satwant Kaur Sandhu (Supra), we are of the opinion that there is suppression of material facts by the Insured and, for the reasons recorded in the Impugned Order, the State Commission is justified in holding that the Insurance Company is not liable to pay the sum assured to the Complainant/Petitioner. Accordingly, the Revision Petition fails and is dismissed.
......................J R.K. AGRAWAL PRESIDENT ...................... DR. S.M. KANTIKAR MEMBER