IMPORTANT POINT
Non-settlement of death claim – Communication of Insurance company for postponing life insurance coverage by six months by adverting to treadmill test report and that too at a stage after intimation about death of insured to respondents, is a malafide act.

JUDGMENT :

Hrishikesh Roy, J.

Leave granted.

2. Heard Mr. Harshit Khanduja, the learned counsel appearing for the appellants. Also heard Ms. Suman Bagga, learned counsel representing the Max Life Insurance Corporation (respondent No. 2). The first respondent is represented by Mr. Devendra Kumar Singh.

3. The appeal arises out of a home loan secured by the appellants for which obtaining the life insurance in the name of Gokal Chand (now deceased) was a pre-requisite, as set out by the Axis Bank (respondent no.1).

4. The appellants project that respondent No. 1 bank acting as an agent for respondent No. 2 Insurance Company, on 25.7.2017 sanctioned home loan of Rs. 70,99,172/-. From the disbursed loan amount, insurance premium of Rs.6,24,172/- was paid on behalf of the insured Gokal Chand by the bank to the insurance company. The loan account has since been settled by the borrowers on 19.3.2020 during the pendency of the appeal.

5. Gokal Chand had faced a medical test on 30.7.2017 as a pre-condition for securing the home loan and although, he died of cardiac arrest soon thereafter on 8.8.2017, the respondent No. 2 refused to settle the loan account when the insurance claim was made. Consequently, a Consumer Complaint was filed by the appellants before the State Consumer Disputes Redressal Commission, Haryana (for short “State Commission”). The State Commission, however, dismissed the Consumer Complaint with the observation that there was no privity of contract between the insurer and the insured.

6. The resultant appeal was dismissed by the National Consumer Disputes Redressal Commission (for short “National Commission”) by the impugned order which has led to the present appeal before this Court.

7. In the impugned judgment, it was noted that the Complainant along with her husband, late Gokal Chand approached the bank for a home loan for which the respondent bank had insisted that a life insurance cover should be obtained from respondent No. 2 on the life of Gokal Chand. The bank accordingly deducted a sum of Rs.6,24,172/- on 25.7.2017 towards the insurance premium. The insured Gokal Chand was subjected to medical tests on 30.7.2017 and although he died on 8.8.2017, the insurance claim was repudiated by respondent No. 2.

Counsel’s Submissions

8.1. Mr. Harshit Khanduja, the learned counsel for the appellant would submit that the death of the insured Gokal Chand was intimated on 16.8.2017 with a request to process the insurance claim, however, instead of acting on the information furnished by the appellants, a letter (purportedly dated 3.8.2017) was served on the appellant with the information that the proposal for insurance cover for Gokal Chand is postponed by six months. The reason disclosed for postponement was “Treadmill Test Finding.”

8.2. The appellants have set up a specific case of the respondent no. 2 ante-dating the purported letter indicating postponement of the proposal and unilaterally reversing/refunding the insurance premium, much after the death of the insured was informed to the insurance company.

8.3. According to the appellants, both Forums failed to consider the fact that the insurance company retained the insurance premium for some time after the death of the insured on 8.8.2017 and returned the same only after the appellant, on 16.8.2017, visited the bank for giving information about the death of the insured. This was immediately informed by telephone by the bank to the insurance company and to the insurance company in the late evening of 16.8.2017 (date of death intimation), posted an ante-dated letter (bearing the date as 3.8.2017 on it) which was received by the appellant on 17.8.2017. In the said letter, it was mentioned that the proposal has been postponed for six months. On the next date i.e., on 17.8.2017, the amount debited towards insurance premium was unilaterally refunded and was adjusted in the loan account.

8.4. The contention here is that when the medical/treadmill test result of the insured was normal, ther