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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
AVM J RAJENDRA AVSM VSM (Retd), PRESIDING MEMBER, MR. ANOOP KUMAR MENDIRATTA, MEMBER
India First Life Insurance Co. Ltd. – Appellant
Versus
Smt. Suman Soni – Respondent
FIRST APPEAL NO. 801 OF 2018
For the Appellants/Petitioners: Mr.Joydip Bhattacharya, Ms.Ipsita Biswal
For the Respondents: Mr.R.K. Bhawnani, Mr.Umesh Prasad
An insurance premium payment can create a binding contract, and failure to communicate policy rejection constitutes deficiency in service.
Headnote:(A) Consumer Protection Act, 1986 - Section 19 - Insurance contract - Claim repudiation - Appellant contended that premium was refunded and no valid policy existed. Respondent argued that acceptance of premium constituted acceptance of insurance. The State Commission held OP liable for not issuing certificate despite premium payment - In the absence of proper communication regarding policy cancellation, the insurer must honor the claim. (Paras 10, 21)
(B) Deficiency in Service - The insurer's failure to notify the insured about the necessity of actions for policy was determined as deficiency in service. The court upheld the finding that the insurance contract was concluded when premium was accepted. (Paras 19, 20)
Facts of the case:
The complainant’s husband availed a housing loan insured by the appellant. Following his death, the claim was denied based on policy cancellation that was not communicated.
Findings of Court:
The insurer must honor the claim due to failure to communicate the policy status timely.
Issues: Whether a valid insurance contract existed despite premium refund.
Ratio Decidendi: Failure to communicate policy requirements constituted a deficiency in service, establishing liability of the insurer.
Result: Appeal partly allowed; the insurer ordered to pay adjusted claim amount.
| Table of Content |
|---|
| 1. appellant filed to appeal against state commission's order on insurance claim. (Para 1 , 2 , 6) |
| 2. contention was made on the validity of the insurance based on premium payment. (Para 4 , 10 , 12) |
| 3. court found deficiency in service due to insurer's lack of communication. (Para 15 , 19 , 20) |
| 4. final directive to insurer to pay the adjusted claim amount. (Para 22) |
JUDGMENT
Air Vice Marshal J. Rajendra, AVSM, VSM (Retd.)
1. The present First Appeal has been filed by OP under Section 19 of the Consumer Protection Act, 1986 (“the Act”) against the Order dated 15.03.2018 passed by the Chhattisgarh State Consumer Disputes Redressal Commission, Raipur (“State Commission”), in CC No. 76 of 2017, wherein the Complaint was partly allowed.
2. For clarity, the parties involved in this matter are referred to as mentioned in the Complaint before the State Commission. “Suman Soni” is the Complainant ("Respondent No. 1 herein") and M/s. India First Life Insurance Co. Ltd. is Opposite Party (OP) -1 (Appellant). Andhra Bank is referred to as OP-2 (Respondent No.2).
3. Brief facts of the case, as per the Complainant, are that her husband, Late Shri Dilip Kumar Soni, was employed as an Assistant Engineer in the Chhattisgarh State Electricity Board. He had availed a housing loan of ₹21,00,000/- from OP-2 on 05.10.2013, which was insured by OP-1 under Master Policy No. G0000286 for 20 years period from 05.10.2013 to 05.10.2033 against a single premium of ₹1,56,431.10, while an additional single premium of ₹73,947.30 was also collected from the Complainant, Subsequently, OP-2 disbursed ₹23,41,614.40 including processing charges and taxes. The insured, Shri Dilip Kumar Soni, unfortunately died on 27.01.2017. Whereafter the Complainant submitted the claim form with requisite documents. Vide email dated 10.04.2017, OP-1 intimated her that the Group Insurance Policy with respect to Shri Dilip Kumar Soni was already cancelled in 2014 and a new policy issued only in the name of the Complainant. Thus, in the absence of any valid policy against the life of the deceased, OP-1 rejected the claim and refunded ₹1,21,729.70 which was towards the loan account, despite having already collected premium. By wrongfully cancelling the membership and failing to adjust the entire insured amount against the outstanding housing loan, the OPs acted in violation of RBI guidelines, committed cheating and deficiency in service, and thereby caused wrongful loss to the Complainant. Being aggrieved, filed Consumer Complaint No. 76 of 2017 before the State Commission seeking directions to the OPs to discharge the housing loan of ₹21,00,000/- with interest @ 24% per annum from the date of death of her husband, along with ₹1,00,000/- as compensation for financial loss and mental harassment, and ₹25,000/- as litigation costs.
4. On being issued notice, in its Written Version, OP-1 contended that the complaint is false, frivolous, and devoid of cause of action, as no policy was ever issued in favour of Late Dilip Kumar Soni due to non-fulfilment of mandatory requirements. Although the complainant and her husband had applied for coverage under the India First Group Credit Life Plan and premium was deposited, certain deficiencies were found in the proposal and membership forms, including incomplete details and mismatch of signatures. Despite reminders, the necessary requirements were never complied with, leading to the refund of Rs.1,21,729.70 to the joint loan account on 28.08.2014, which was duly reflected in the bank statement of the complainant. Consequently, no Certificate of Insurance was issued in the name of Late Dilip Kumar Soni and hence, at the time of his death, he was not covered under the policy. When once no policy existed, the claim of the Complainant had no scope for even consideration and was rightly repudiated. The complaint is liable to be dismissed as there was neither negligence nor deficiency of service on the part of OP-1.
5. In its written version,
