Landmark judgements

I (2017) CPJ 649 (NC) SBI LIFE INSURANCE CO. LTD.—Appellant VERSUS D. SRINIVAS & ORS.—Respondents (INSURANCE; DEATH OF LOANEE PENDING MEDICAL EXAMINATION :NO POLICY )

I (2017) CPJ 649 (NC)

SBI LIFE INSURANCE CO. LTD.—Appellant

VERSUS

D. SRINIVAS & ORS.—Respondents

(INSURANCE; DEATH OF LOANEE PENDING MEDICAL EXAMINATION :NO POLICY )

 

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

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.         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?

(Prem Narain)

Member

2. The facts giving rise to the subject appeal are not disputed. Late Sh. D. Venugopal s/o respondent complainant No. 1 had taken loan of Rs. 30 lakh from State Bank of Hyderabad. He purchased a life insurance policy, which covered the entire loan of Rs. 30 lakh in the event of his death or outstanding dues in case of eventuality. D. Venugopal died on 17.12.2009 due to cardiac arrest. When the complainant submitted insurance claim under the policy seeking discharge of outstanding housing loan taken by his son, the appellant Insurance Company repudiated the claim on the ground that insurance contract did not come into force because the proposal form could not be processed as a result of failure of the deceased to submit himself for mandatory medical examination.

3. The State Commission on consideration of the pleadings and evidence allowed the complaint. Being aggrieved of the order of the State Commission, Andhra Pradesh, the appellant approached the National Commission in appeal. The matter was heard by the above noted Coordinate Bench but the Members of the Bench did not come to an unanimous opinion and wrote separate judgments. As there was difference of opinion, the Members incorporated their point of difference, which has been referred for third Member opinion.

4. I have heard learned Mr. Rakesh Malhotra, Advocate for the petitioner Insurance Company and Ms. Deepa Chacko, Advocate for respondent No. 1 and Mr. Buddy Ranganandhan, Advocate for respondent No. 2 and 3.

5. Mr. Prem Narain, Member has formulated the following question on which he has differed with the Presiding Member Justice K.S. Chaudhari.

“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 theproposer’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 concerne?

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.         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?”

6. Hon’ble Justice K.S. Chaudhari has formulated the point of difference as under:

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

In order to arrive at a correct decision, it is necessary to answer the questions raised by Hon’ble Member Mr. Prem Narain.

Issue No.1

7. The question which needs determination is whether in the event of mandatory condition of medical examination, acceptance of premium before the medical examination would amount to unfair trade practice?

8. My answer to the above question is in the negative for the reasons enumerated as under:

The term Unfair Trade Practice is defined under Section 2(r) of the Act as under:

“unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely;—

(1) the practice of making any statement, whether orally or in writing or by visible representation which—

(i)         falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;

(ii)        falsely represents that the services are of a particular standard, quality or grade;

(iii)       falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;

(iv)       represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;

(v)        represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;

(vi)       makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;

(vii)      gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof;

            Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;

(viii)     makes to the public a representation in a form that purports to be—

(i)         a warranty or guarantee of a product or of any goods or services; or

(ii)        a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result, if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;

(ix)       materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;

(x)        gives false or misleading facts disparaging the goods, services or trade of another person.

                       

Explanation—For the purposes of Clause (1), a statement that is—

(a)        expressed on an article offered or displayed for sale, or on its wrapper or container; or

1.         expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or

2.         contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public,

            shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;

            (2) permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement.

Explanation — For the purpose of Clause (2), “bargaining price” means—

3.         a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or

4.         a price that a person who reads, hears or sees the advertise-ment, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;

            (3) permits—

5.         the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;

6.         the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest;

            (3A) withholding from the participants of any scheme offering gifts, prizes or other items free of charge, on its closure the information about final results of the scheme.

            Explanation—For the purposes of this sub-clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time, published, prominently in the same newspapers in which the scheme was originally advertised;

            (4) permits the sale or supply of goods intended to be used, or are of a kind likely to be used, by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods;

            (5) permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services.

(6)        manufacture of spurious goods or offering such goods for sale or adopts deceptive practices in the provision of services.

            (2) Any reference in this Act to any other Act or provision thereof which is not in force in any area to which this Act applies shall be construed to have a reference to the corresponding Act or provision thereof in force in such area.

9. On bare reading of the above, it is clear that Unfair Trade Practice is a trade practice which is done for the purpose of promoting sale, use or supply of any goods or for provision of any service by means of unfair method or deceptive practice. I fail to appreciate how acceptance of premium before the mandatory medical examination would be held in promoting the sale/business of the Insurance Company. Therefore, in absence of the aforesaid basic ingredient of unfair trade practice, it cannot be said that acceptance of premium before the mandatory medical examination amounts to unfair trade practice.

Issue No. 2

10. Second issue raised by Shri Prem Narain is also answered in the negative in view of the judgment of the Hon’ble Supreme Court in the matter of Life Insurance Corporation of India v.Raja Vasireddy Komalavalli Kamba & Others, 1984 (SLT SOFT) 240=AIR 1984 SC 1014, wherein Hon’ble Supreme Court while dealing with the question has observed as under:

When an insurance policy becomes effective is well-settled by the authorities but before we note the said authorities, it may be stated that it is clear that the expression “underwrite” signifies accept liability under:

The dictionary meaning also indicates that. (See in this connection The Concise oxford Dictionary Sixth Edition p. 1267.) It is true that normally the expression “underwrite” is used in Marine insurance but the expression used in Chapter III of the Financial powers of the Standing order in this case specifically used the expression “underwriting and revivals” of policies in case of Life Insurance Corporation and stated that it was the Divisional Manager who was competent to underwrite policy for Rs. 50,000 and above.

The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance.

See in this connection the statement of law in Corpus Juris Secundum, Vol. XLV page 986 wherein it has been stated as—

“The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offer or, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the company’s executive officers.”

Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal silence does not denote consent and no binding contract arises until 360the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offeror. The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed.

See in this connection statement of law in MacGillivray& Parkington on Insurance Law, Seventh Edition page 94 paragraph 215.

Issue Nos. 3 and 4.

11. The question is whether the failure of Insurance Company to process the insurance proposal submitted by deceased within 15 days in violation of Clause 4(6) of Insurance Regulatory and Development Authority (in short, IRDA) notification dated 26.4.2002 would amount to deficiency in service and whether the complainant would be entitled to compensation on account of the violation?

12. No doubt, by the above noted Clause 4(6) of IRDA guidelines issued vide notification dated 26.4.2002, the insurer is required to process the proposal form with speed and efficiency and take the decision within a reasonable period not exceeding 15 days from the receipt of proposal by the insurer but the question is whether this regulation/direction is mandatory and binding on the insurer. In this regard, Sections 26 and 27 of IRDA Act, 1999 assumes importance. Said Sections are reproduced as under:

“26. Power to make regulations

(1) The Authority may, in consultation with the Insurance Advisory Committee, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:-

(a)        the times and places of meetings of the Authority and the procedure to be followed at such meetings including the quorum necessary for the transaction of business under Sub-section (1) of Section 10;

(b)        the transactions of business at its meetings under Sub-section (4) of Section 10;

(c)        the terms and other conditions of service of officers and other employees of the Authority under Sub-section (2) of Section 12;

(d)       the powers and functions which may be delegated to Committees of the members under Sub-section (2) of Section 23; and

(e)        any other matter which is required to be, or may be, specified by regulations or in respect of which provision is to be or may be made by regulations.

27. Rules and regulations to be laid before Parliament

Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.”

13. On reading of the above, it is obvious that Section 26 confers powers on IRDA to make regulations consistent with the Act. However, Section 27 provides that rules and regulations framed by IRDA shall be laid as soon as possible before each House of Parliament while it is in session.

14. In the instant case, learned Counsel for the complainant has failed to show that regulations issued vide notification dated 26.4.2002 were placed before the Parliament and have been approved by both the Houses 14 years have gone by, therefore, notification in my view has elapsed for want of confirmation by the Parliament. Therefore, non compliance of 15 days period for processing of proposal by the Insurance Company will not come in the way of Insurance Company to repudiate the insurance claim.

15. In the light of the above noted observations, I agree with the view taken by Hon’ble Mr. Justice K.S. Chaudhari. Reference is answered accordingly.

16. Matter be placed before the concerned Bench for appropriate orders.

(Ajit Bharihoke, J)

Presiding Member

12.8.2016

PER JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER

1. This appeal has been filed by the appellant against the order dated 16.7.2012 passed by the A.P. State Consumer Disputes Redressal Commission, Hyderabad (in short “the State Commission) in Complaint No. 63 of 2011, D. Srinivas v. The Asst. G.M., State Bank of Hyderabad & Ors., by which, complaint was allowed.

2. Brief facts of the case are that Complainant/Respondent along with his wife and son late D. Venugopal obtained housing loan for Rs. 30 lakh from OP Nos. 1 and 2/Respondent Nos. 2 and 3 State Bank of Hyderabad in the month of September, 2008 for construction of a house. The bank had deducted Rs. 78,150 from their loan account on 29.9.2008 for insurance coverage with OP No. 3/Appellant. OP-3/Appellant SBI Life Insurance covering the life of late D. Venugopal who was one of the joint loanees. Thus D. Venugopal was insured for the entire loan amount of Rs. 30lakh or outstanding dues in case of eventuality. While so, his son Venugopal died on 17.12.2009 due to cardiac arrest. When the complainant claimed the amount covered under the policy and to discharge the outstanding housing loan amount by submitting death certificate etc., they did not settle. Contrarily OPs 1 & 2 pressurizing to clear the outstanding loan, despite the fact that the entire loan amount should be discharged in terms of insurance policy on the death of his son. They also sent a letter dated 18.1.2011 informing that OP3 had called for medical examination for coverage of life insurance of the deceased, and therefore the policy could not be completed pending medical examination, and that the proposal was returned, and that the amount was returned by way of cheque. It is clear that they had conspired together to deprive the insurance coverage. His son was never called for medical examination. They never received any cheque. On that he got issued legal notice to settle the claim for which they gave reply with false averments. Alleging deficiency on the part of OPs, complainant filed complaint before State Commission.

3. OP Nos. 1 and 2 resisted complaint and denied each and every averment made in the complaint however, admitted that the complainant, his wife and his son availed housing loan of Rs. 30 lakh. As an agent of OP3, they have informed about the insurance coverage under housing loan. They agreed to take insurance policy in the name of D. Venugopal. They had collected Rs. 78,150 towards premium from their loan account and paid it to OP3 along with application for issuance of policy. As an agent of OP3 it had attended the work as required. Later they learnt that OP3 had advised D. Venugopal to appear for medical examination. He failed to appear, and the policy could not be completed. They were not aware of the developments and ultimate refusal of the policy. On receipt of death intimation they have forwarded the same to OP3 which in turn informed that they could not provide insurance coverage as the medical examination was pending, and further they had refunded the premium amount. When they did not receive the cheque they wrote back to OP3 about it and then OP3 had sent duplicate cheque dated 23.2.2011. This fact was intimated to the complainant. Since there was no coverage of insurance, the question of deficiency in service will not arise and prayed for dismissal of complaint.

4. OP No. 3 resisted complaint, denied averments of complaint and submitted that deceased nominated his wife Smt. D. Shailaja as nominee and complaint is bad for non-joinder of parties. It was further submitted that mere deposit of amount towards premium along with proposal does not automatically result into policy. It all depends on sum assured, age, specific reports etc. Till such time the deposit amount remain as it is, and cannot be deemed as acceptance of risk under the proposal. Since the proposal was pending for medical requirements, and the same was not complied with by the proposer, the proposal deposit was refunded during the life time of the deceased by way of cheque dated 10.12.2008. The proposal was never concluded. On receipt of letter dated 3.1.2011 from the bank a fresh cheque was issued. Since there was no concluded contract during the life time of the proposer there was no obligation on it for payment of amount. The members who satisfy the eligible criteria will only be eligible for group insurance scheme. The proposer never complied with formalities, and therefore no policy was issued. Therefore, he would not fall within the definition of consumer. A contract of insurance comes into force only on issuance of policy. Denying any deficiency on their part, prayed for dismissal of complaint. Learned State Commission after hearing parties, allowed complaint and directed OP No. 3 to pay entire amount due under home loan and was further directed to pay Rs. 25,000 towards compensation for mental agony and Rs. 10,000 towards cost. OP Nos. 1 and 2 were directed to issue no dues certificate to the complainant against which, appellant filed appeal before this Commission.

5. Heard learned Counsel for the parties finally at admission stage and perused record.

6. Learned Counsel for the appellant submitted that inspite of the fact that there was no concluded contract between complainant and OP No. 3 for issuance of policy, learned State Commission committed error in allowing complaint; hence, appeal be allowed and impugned order be set aside. On the other hand, learned Counsel for the Respondent No. 1 submitted that order passed by learned State Commission is in accordance with law on account of deficiency on the part of appellant; hence, appeal be dismissed. Learned Counsel for the Respondent Nos. 2 and 3 supported appellant.

7. It is admitted case of the parties that complainant along with wife and son D. Venugopal obtained housing loan of Rs. 30 lakh from OP Nos. 1 and 2 in September, 2008 and D. Venugopalsubmitted proposal form to OP No. 3 for issuance of policy covering housing loan. It is also not disputed that OP Nos. 1 and 2 collected Rs. 78,150 towards premium from loan account of complainant and remitted this amount to OP No. 3 which was received by OP No. 3 on 13.10.2008. It is also not disputed that D. Venugopal one of the loanee died on 7.12.2009.

8. The core question to be decided in this appeal is whether OP No. 3 is bound to discharge loan amount on the ground of receipt of premium for issuing policy, though, proposal was neither accepted, nor policy was issued.

9. It is not disputed that D. Venugopal submitted form duly signed on 29.9.2008 titled SBI Life—Home Loan Insurance for Borrowers of State Bank Group” to OP No. 2. This form contains clause

Where the loan Amount Exceeds R. 7.5 lacs.

As I am willing to join for life insurance cover from SBI Life Insurance Co. Ltd. subject to my under-going the medical examination and satisfying the health underwriting criteria of the Company, I authorise the Bank to debit my account for the standard gross premium plus any additional premium that may be required by SBI Life based on medical underwriting.

I also note that in the event of SBI Life Insurance Co. Ltd. not being in a position to accept my life insurance for any reason whatsoever, the initial premium amount remitted by the Bank would be refunded and credited back to my account .

Good Health Declaration:

I declare that I am in sound health, do not have any physical defect/deformity, perform my routine activities independently and, that I have never suffered or have been suffering, or have been hospitalized for any critical illness @ or a condition requiring medical treatment for a critical illness, as on date.

@ Critical illness is defined as follows: The life to be insured should not<

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