Landmark judgements

SBI LIFE INSURANCE CO. LTD.—Appellant versus D. SRINIVAS & ORS.—Respondents

I (2017) CPJ 649 (NC)

NATIONAL CONSUMER DISPUTES

REDRESSAL COMMISSION, NEW DELHI

Hon’ble Mr. Justice Ajit Bharihoke, President, Hon’ble Mr. Justice K.S. Chaudhari, Presiding Member & Mr. Prem Narain, Member

SBI LIFE INSURANCE CO. LTD.—Appellant

versus

D. SRINIVAS & ORS.—Respondents

First Appeal No. 560 of 2012 against Order dated 26.7.2012 in Complaint No. 63/2011 of Andhra Pradesh State Consumer Disputes Redressal Commission—Decided on 3.2.2017

Justice Ajit Bharihoke (Majority view)

(i) Consumer Protection Act, 1986 — Sections 2(1)(g), 2(1)(r), 20(1)(iii) — Insurance — Housing loan — Death of loanee — Coverage under policy disputed — Proposal pending for medical examination — Claim repudiated — Alleged deficiency in service — Acceptance of premium before the mandatory medical examination not amounts to unfair trade practice — Non-compliance of 15 days period for processing of proposal by Insurance Company will not come in way of Insurance Company to repudiate insurance claim — Repudiation justified.

[Paras 9, 10, 14]

Case referred:

Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba & Others, 1984 (SLT SOFT) 240. (Relied)

[Para 10]

Justice K.S. Chaudhari (Majority view)

(ii) Consumer Protection Act, 1986 — Sections 2(1)(g), 21(a)(ii) — Insurance — Housing loan — Death of loanee — Coverage under policy disputed — Proposal pending for medical requirements — Claim repudiated — Alleged deficiency in service — State Commission allowed complaint — Hence appeal — No insurance policy was issued by appellant infavour of deceased — In absence of insurance policy, no concluded contract comes into force between deceased and appellant — Merely on basis of delay in considering proposal by appellant for want of medical check-up of deceased, liability cannot be fastened on appellant for payment of housing loan — Repudiation justified.

[Paras 11, 15, 17]

Result : Reference answered.

Cases referred:

1. Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba & Ors., 1984 (SLT SOFT) 240. (Relied)

[Para 12]

2. Ajay Singh Bhambri v. Axis Bank Ltd. & Anr., I (2014) CPJ 544 (NC). (Relied)

[Para 13]

3. LIC of India v. Bimala Routary, II (1993) CPJ 146 (NC). (Relied)

[Para 14]

4. SBI Life Insurance Co. Ltd. v. Asha Lata Parida & Anr., III (2010) CPJ 228 (NC). (Not Applicable)

[Para 16]

Counsel for the Parties:

For the Appellant : Mr. Rakesh Malhotra, Advocate.

For the Respondent No. 1 : Mr. Deepa Chacko, Ms. Anu Gupta, Advocate.

For the Respondent No. 2 : Mr. A.V. Rangam and Mr. Buddy Ranganandhan, Advocates.

ORDER

IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, BENCH NO. 2, AT NEW DELHI

In F.A. No. 560 of 2012, SBI Life Ins. Co. Ltd. v. D. Srinivas & Ors., arguments were heard on 6.5.2016 by the Bench comprising of Hon’ble Mr. Justice K.S. Chaudhari, Presiding Member and Hon’ble Mr. Prem Narain, Member. Judgment was dictated by Hon’ble Mr. Prem Narain, Member and sent for approval of Hon’ble Mr. Justice K.S. Chaudhari, Presiding Member. Hon’bleMr. Justice K.S. Chaudhari, Presiding Member dictated dissenting judgment. As Members of the Bench differed in their opinion, the matter may be placed before Hon’ble President, NCDRC under Section 20(1)(iii) of the C.P. Act for appropriate directions. The legal issue arose in this revision petition is as under:

Whether complainants are entitled to compensation from Insurance Company even without concluded contract between the deceased and Insurance Company?

 

In the circumstances of the case, in my view the following points of difference have arisen between the members

1. If medical examination is mandatory, then whether it should not be conducted before the payment of premium and whether asking the proposer to undergo medical examination after receipt of premium would not amount to unfair trade practice.

2. Under the agreement that if the proposal is not accepted, premium paid shall be deposited back to the bank account of the proposer, whether non deposit of premium in the proposer’sbank account for about two and a half years would not amount to deeming the proposal as having been accepted by the Insurance Company, so far as the proposer is concerned.

3. Whether the guidelines issued by IRDA that decision should be taken by the Insurance Company on the proposal of insurance within a period of 15 days from its receipt, is not a binding on the Insurance Company and if this provision is violated then, whether it would not amount to deficiency on the part of Insurance Company.

4. Whether complainant would be entitled to compensation if guidelines of IRDA are violated and policy is not actually issued to the proposer till proposer’s death, though the proposer died after about one year and three months after submitting the proposal form.

Per Justice Ajit Bharihoke, Presiding Member

The above noted appeal came up before the Bench comprising of Hon’ble Mr. Justice K.S. Chaudhari and Hon’ble Mr. Prem Narain. Hon’ble Members after hearing the arguments came to the different conclusions. Therefore, in terms of Section 20(1)(iii) of the Consumer Protection Act, 1986 (in short, the Act) matter has been referred to the third Member opinion on following point of differences:

Whether complainants are entitled to compensation from Insurance Company even without concluded contract between the deceased and the Insurance Company?

(Justice K.S. Chaudhari)

Member

1.

If medical examination is mandatory, then whether it should not be conducted before the payment of premium and whether asking the proposer to undergo medical examination after receipt of premium would not amount to unfair trade practice.

2.

Under the agreement that if the proposal is not accepted, premium paid shall be deposited back to the bank account of the proposer, whether non deposit of premium in the proposer’s bank account for about two and a half years would not amount to deeming the proposal as having been accepted by the Insurance Company, so far as theproposer is concerned?

3.

Whether the guidelines issued by IRDA that decision should be taken by the Insurance Company on the proposal of insurance within a period of 15 days from its receipt, is not binding on the Insurance Company and if this provision is violated the, whether it would amount to deficiency on the part of Insurance Company.

4.

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