IMPORTANT POINT
Claim cannot be allowed when there was no concluded contract between insurance company and deceased.

Dr. B.C. Gupta, Presiding Member—This revision petition has been filed under section 21(b) of the Consumer Protection Act, 1986 against the impugned order dated 28.01.2011, passed by the Karnataka State Consumer Disputes Redressal Commission (hereinafter referred to as ‘the State Commission’) in Appeal No. 3158/2010, “M/s Shriram Life Insurance Co. Ltd. vs. B.M. Pompapathy” vide which, while dismissing the appeal, the order dated 25.06.2010, passed by the District Forum, Bellary in consumer complaint No. 79/2008, allowing the said complaint, was upheld.

2. The brief facts of the case are that the complainant B.M. Pompapathy is the elder brother of one Kumari B.M. Gayathri, for whom a policy, “Sree Raksha” Insurance Policy was obtained from the petitioner insurance company for a sum assured of Rs.3 lakh by paying a premium of Rs.18,765/-. The complainant is the nominee under the said policy as per which, the OP insurance company is liable to pay double the insured amount in the event of death of the insured. The admitted facts are that the payment of Rs.18,765/- was made vide cheque No. 988302, drawn on HDFC Bank and the same was submitted on 29.04.2006, alongwith the proposal form, although the said cheque was dated 06.05.2006. The case of the complainant is that the insured Kumari B.M. Gayathri died on 27.05.2006, which was within one month of the presentation of the cheque to the insurance company. However, the case of the insurance company is that at the time of payment of premium amount, the deceased was asked to undergo medical check-up which was necessary for the acceptance of the proposal for issuance of the policy. The said medical check-up was done on 25.05.2006. Based on the information given in the proposal form and the medical check-up, the insurance company issued the policy with date of commencement as 28.05.2006, although the insured had already died on 27.05.2006. As per the insurance company, the factum of the death of the insured was not within their knowledge when the policy was issued. When the claim was submitted to the insurance company, the same was repudiated on the ground that the insured had already died, when the policy was issued and hence, the claim was not payable. The consumer complaint in question was then filed, seeking directions to the insurance company to pay the claim as per the terms and conditions of the policy alongwith bonus and 16% interest and also a sum of Rs.1 lakh as compensation for mental harassment.

3. In their reply to the consumer complaint, the insurance company stated that the factum of death on 27.05.2006 was not in their knowledge when the policy was issued. Further as per the investigation carried out by them, the deceased was having serious health problems before applying for the policy and she had tried to obtain the same, just to take the advantage of the policy benefits. In fact, she was not in a position to move freely from her bed for the past 2–3 years and had also been treated at Government Hospital Bellary. For her failure to disclose about the pre-existing health problems, the contract was void, unenforceable and not legally binding.

4. The District Forum after considering the averments made by the parties, held the OP Insurance Company liable to pay a sum of Rs.6 lakh to the complainant alongwith interest @6% p.a. from the date of complaint, i.e., 24.05.2008 till realisation. The District Forum observed that the insurance company should have processed the proposal and issued the policy within a period of 15 days of the proposal, and for their failure to do so, they were liable to pay the said sum. Being aggrieved against the order of the District Forum, the Insurance Company challenged the same by way of appeal before the State Commission and the said appeal having been dismissed vide impugned order, the insurance company is before this Commission by way of the present revision petition. The State Commission also observed that the insurance company should ha