Judicial Analysis Court Copy Headnote Facts Arguments Court observation

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
K.S. Chaudhari, Presiding Member, Prem Narain, Member
SBI Life Insurance Co. Ltd. —Appellant
versus
D. Srinivas and Ors. —Respondents
First Appeal No.560 of 2012
(Against the Order dated 16/07/2012 in Complaint No. 63/2011 of the State Commission Andhra Pradesh)
Decided on 3.2.2017

Counsel for the Parties:
For the Appellant:Mr. Rakesh Malhotra, Advocate
For the Respondent No.1:Ms. Deepa Chacko and Ms. Anu Gupta, Advocates
For the Respondent No.2 and 3:Mr. A.V. Rangam and Mr. Buddy Ranganandhan, Advocates

IMPORTANT POINT
It cannot be said that acceptance of premium before mandatory medical examination amounts to unfair trade practice.

Headnote:(A) Consumer Protection Act, 1986—Section 2(1)(r)—Insurance—Unfair trade practice— 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—In absence of basic ingredient of unfair trade practice, it cannot be said that acceptance of premium before mandatory medical examination amounts to unfair trade practice. (Para 9)
       (B) Consumer Protection Act, 1986—Sections 17, 19 and 21—Insurance—Concluded contract—Mere delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offer or—General rule is that contract of insurance will be concluded only when party to whom an offer has been made accepts it unconditionally and communicates his acceptance to person making offer—Whether final acceptance is that of assured or insurers, depends simply on the way in which negotiations for an insurance have progressed.
       Held: Learned counsel for the respondent further claimed that Sub-Clause 6 of Clause 4 of Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002, mandates all Insurance Companies that proposals shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposal by the insurer. However, in the present case, the proposal was not processed for more than two years. Learned counsel also referred to the case of SBI Life Insurance Company Ltd. Vs. Asha Lata Parida & Anr., III (2010) CPJ 228 (NC).
       (C) Insurance Regulatory and Development Authority, 1999—Sections 26 and 27—Power to make regulations—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—Complainant has failed to show that regulations issued vide notification dated 26.04.2002 were placed before Parliament and have been approved by both Houses—14 years have gone by, therefore, notification has elapsed for want of confirmation by Parliament—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. (Paras 13 and 14)
       Result: Appeal allowed.

ORDER

12.08.2016

Prem Narain, Member—The order dated 16.07.2012 passed in CC No.63 of 2011 by A.P. State Consumer Disputes Redressal Commission, (in short ‘the State Commission’) has been challenged by way of this First Appeal No.560 of 2012 before this Commission by SBI Life Insurance Company Limited the appellant.

2. In short the case of the complainant/respondent No.1 is that respondent No.1 D.Srinivas along with his wife Smt. D.Suguna and son Mr. D. Venu Gopal, obtained a housing loan of Rs.30,80,000 from the respondent Nos.2& 3 vide loan A/c No.62071944332 in the month of September, 2008 for construction of House on Plot No.8 & 11, admeasuring 448.85 sq. mtr., situated at Pragathi Nagar, Ramanthapur, Hyderabad. On 29.09.2008 a sum of Rs.78,150/- was debited from their loan A/c towards SBI Life Insurance Cover under Group Insurance Scheme for Home Loan Borrowers, through Master Policy Holder, i.e., the State Bank of Hyderabad, covering the life of Respondent No.1’s son Mr. D.Venu Gopal, who was one of the Joint loanees. The proposal form dated 29.9.2008 was accompanied by the good health declaration by the insured. Respondent No.1’s son, Mr. D. VenuGopal expired on 17.12.2009 at Hyderabad, due to a massive heart attack, consequently the said life insurance obtained in his name, came into force, obligating the appellant to pay the outstanding amounts in their loan A/c. The respondent No.1 approached the appellant and respondent Nos.2 & 3 informing them about the demise of his son and requesting them to settle the insurance claim and to discharge the outstanding loan amount in their housing loan A/c. The Consumer Complaint Case No.63 of 2011was filed on 18.07.2011 before the State Commission.

3. The opposite party/appellant contested the complaint on the ground that the proposal for the policy was never accepted by the appellant as the insured did not present himself for medical examination inspite of repeated requests made by the appellant.It was further asserted that the amount of premium was refunded vide cheque No.120772 dated 10.12.2008 to the State Bank of Hyderabad amounting to Rs.78,150/-. Thus, the opposite parties pleaded no deficiency in service and no liability in connection with the payment in respect of the insured.

4. State Commission vide its order dated 16.07.2012 allowed the complaint as under:-

“In the result the complaint is allowed in part directing OP3 insurance company to pay the entire amount due under home loan account and discharge the debt and on such discharge, opposite parties 1 & 2 are directed to issue ‘No Due Certificate’ to the complainant. In view of latches on the part of OP3 insurance company, we direct it to pay Rs.25,000 towards compensation for mental agony and Rs.10,000/- towards costs. Time for compliance four weeks.”

5. Aggrieved with the order dated 16.07.2012 of the State Commission, the present appeal has been filed by the appellant/opposite party No.3.

6. Heard the learned counsel for the parties and perused the records.

7. Learned counsel for the appellant stated that the policy was a Group Insurance Policy for Housing Loanees and for a loan more than Rs.7.5 lakh, the policy requires additional medical examination of the insured apart from his signing the declaration of good health. The insured did not present himself for medical examination inspite of repeated requests sent by the agency appointed by the appellant for ensuring medical examination. The ‘Health India’ appointed for this purpose sent a letter dated 18.11.2008 stating that proposed Member/ Sri D. Venu Gopal missed more than three appointments for conducting his medical examination. Learned counsel stated that the proposal of the purposed Member was pending for medical examination and as the same was not being completed by the proposer, the premium was refunded during the life time of the deceased by way of cheque No.120772 dated 10.12.2008, which was sent to the bank vide letter dated 16.12.2008 and thus the propos

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IMPORTANT POINTIt cannot be said that acceptance of premium before mandatory medical examination amounts to unfair trade practice.

Cases Referred (3)

IMPORTANT POINT
It cannot be said that acceptance of premium before mandatory medical examination amounts to unfair trade practice.