The central legal point established in the judgment is that the terms of an insurance cover must be effectively communicated to the insured party, and claim rejection based on non-fulfillment of mandatory conditions requires clear evidence of communication of such conditions to the insured party.

JUDGMENT :

Dhananjaya Y Chandrachud, J.

1. Leave granted.

2. These appeals arise from a judgment of the National Consumer Disputes Redressal Commission [“NCDRC”]dated 24 March 2017 in the exercise of its revisional jurisdiction against an order of the State Consumer Disputes Redressal Commission [“SCDRC”], Chandigarh.

3. On 3 September 2013, the appellant’s son obtained the benefit of an insurance cover under a policy called the “Cardsure Package Policy”. The appellant’s son was an account holder with HDFC Bank Limited and had availed of a debit card from the bank. The bank, which is the second respondent, obtained an insurance cover on 3 September 2013 from the first respondent. The insurance cover was to commence from 25 August 2013 and was to end on 24 August 2014. Against the payment of premium by the bank to the insurer, the insurer provided an insurance cover for card holders of the bank. For ‘Platinum’ card holders, the base cover was in the amount of Rs 5 lakhs. In addition, the cover would stand increased by five times of every rupee spent on purchases through the debit card, extending up to an accelerated cover of Rs 5 lakhs, thus making up a total sum insured of Rs 10 lakhs. The appellant’s son died in a road accident on 30 October 2013. The appellant as the mother of the deceased and nominee made a claim under the insurance cover. The claim was repudiated by the insurer on 17 December 2013 on the ground that the deceased had not undertaken a “non- ATM transaction” in the period of three months immediately preceding the date of the accident.

4. The appellant instituted a consumer complaint before the District Consumer Disputes Redressal Forum [“District Forum”], Bhatinda upon the repudiation of the claim under the policy. The complaint was allowed by the District Forum on 16 July 2014 in the amount of Rs 5 lakhs together with interest at 9% per annum from 1 February 2014 and compensation and costs quantified at Rs 20,000/-. The order on the consumer complaint was challenged both by the appellant and by the first respondent. The SCDRC dismissed the appeal for enhancement of compensation and allowed the appeal by the insurer. The SCDRC held that the deceased had failed to use the debit card with a non-ATM transaction during the period of three months immediately prior to the date of the accident and hence, the condition precedent for a claim under the insurance policy had not been fulfilled. The order of the SCDRC was affirmed by the NCDRC by its judgment dated 24 March 2017.

5. We have heard Ms N Annapoorani, counsel appearing on behalf of the appellant through the Supreme Court Legal Services Committee and Mr Rajiv M Roy, counsel for the insurer.

6. The issue which arises for determination in the present case falls within a narrow compass. The SCDRC reversed the award of the claim by the District Forum on the ground that a mandatory condition of the insurance policy, namely, that there has to be a non-ATM swipe transaction within a stipulated period prior to the date of the event had not been fulfilled. The two conditions which have a bearing on this issue are respectively, conditions 5 and 9 of the ‘Special Conditions’ forming a part of the insurance cover. The insurance cover was provided by the first respondent to the second respondent, but the debit card holders of the bank were beneficiaries of the cover of insurance. Special Conditions 5 and 9 of the insurance policy which was issued by the first respondent to the second respondent read as follows:

“5. Non ATM swipe (transaction) is mandatory i.e. on or before 6 months from the date of loss for claims eligibility.

9. For accidental death coverage the following conditions should be fulfilled – Under Platinum card only:

Step I: Base cover – Rs 50,000 per card by doing one POS transaction in the last three months.

Step II: Accelerated cover up to Rs 5,00,000/- (Total of up to Rs 10,00,000/-) for over Rs 1 spent on purchase through the Platinum Debit Card, sum assured increa