The judgment establishes the principle that facilitators in insurance claims have limited liability and can be held responsible for negligence in claim processing. It also emphasizes the requirement of good faith in insurance contracts, as outlined in the Insurance Act, 1938, Section 45.

ORDER :

R. Lakshminarasimha Rao, Member

The opposite party No. 2 is the appellant. The husband of the respondent No. 1 and father of the respondent’s No. 2 opened savings bank account namely Abhaya Jeevan General with the appellant with account No. 029710100005899. The account has insurance coverage for assured sum of Rs. 1,00,000 from the respondent No. 4 Insurance Company. The husband of the respondent No. 1 died on 21.8.2011 leaving behind him the respondent Nos. 1 to 3 as his legal heirs. The respondent Nos. 1 to 3 made a representation and intimated the death of the account holder to the appellant and the respondent No. 4. The appellant issued a claim application and the claimants had submitted the same to the respondent No. 4 through the appellant. The respondent No. 4 had sent a letter dated 4.11.2011 that the claim was being repudiated in view of earlier treatment taken by the deceased in Durgabai Deshmukh Hospital. The husband of the respondent No. 1 did not take treatment for heart failure and he got his knee amputation done in Durgabai Deshmukh Hospital. The appellant and the respondent No. 4 had wrongly repudiated the claim.

2. The respondent No. 4 resisted the case contending that Chalamaiah Sastry had opened savings account AB Jeevan Abhaya Savings Bank Account with the appellant. He also applied for life insurance coverage provided under the account. It has group insurance coverage scheme and the assured sum is Rs. 1,00,000. As per the scheme no formal medical check-up and medical examination was required. The proposer has to submit health declaration form. The 2nd opposite party is the master policy holder. Individual policies were not issued. The period of insurance coverage was from 1st December to 30th November of succeeding year. Death intimation has to be given within 90 days and documentation can be completed within 180 days.

3. The 1st complainant is named as nominee for the sum assured under the insurance policy obtained by Chalamaiah Sastry. At the time of opening account the account holder had made a declaration inter alia stating that he was in sound health and not suffering from any critical illness or condition requiring medical treatment as on that date. The claim was repudiated on the ground that the account holder had deliberately concealed material facts with regard to his state of health and the membership of the deceased life assured was cancelled. There was no deficiency in service on its part and part of the respondent No. 4 prayed for dismissal of the complaint.

4. The appellant also resisted the case contending that the account holder did not disclose the medical condition in health declaration signed by him and that it was communicated to the respondent Nos. 1 to 3 through letters dated 24.10.2011 and 4.11.2011 that there was no deficiency in service on its part.

5. The respondent No. 1 filed her affidavit and the documents, Exs. A1 to A9. On behalf of the respondent No. 4 its authorized representative filed his affidavit and the documents, Exs. B1 to B7.

6. The District Forum allowed the complaint against the opposite party No. 2-bank on the premise that the officers of the appellant-bank at the time of the first respondent’s husband opening the account interviewed him and neglected to ask him about any ailment he was suffering from in the light of the fact that his limb was amputated due to uncontrolled blood glucose level and thereby deprived the father of the respondent No. 1 opportunity to obtain insurance policy from any other Insurance Company. The District Forum dismissed the complaint against the opposite party No. 2-Insurance Company.

7. Feeling aggrieved by the order of the District Forum, the opposite party No. 2-bank has filed appeal contending that the bank is a facilitator and having come to conclusion that the father of the respondent No. 1 had suppressed his ill-health at the time of good health declaration form, the District Forum ought to have dismissed the complaint against t