ORDER

1.       This revision petition has been filed under Section 21(b) of the Act 1986 in challenge to the Order dated 12.03.2015 of the State Commission in appeal no. 273 of 2014 arising out of the Order dated 31.01.2014 of the District Commission in complaint no. 303 of 2009.

2.       We have heard the learned counsel for the finance co. (the petitioner herein) and have perused the record including inter alia the Order dated 31.01.2014 of the District Commission, the impugned Order dated 12.03.2015 of the State Commission and the petition.

No one appears for the complainants (the respondents herein).

3.  Briefly, the finance co. (M/s Mahindra & Mahindra Financial Service Ltd.) had advanced a loan of Rs. 5,00,000/- to the complainants’ father to purchase a vehicle (Mahindra Scorpio Car). One requirement from the end of the finance co. was for the borrower to obtain life insurance. The same was arranged for by the finance co. itself from an insurance co. of its own choice (Kotak Mahindra Old Mutual Life Insurance Limited). The loan agreement executed by the finance co. had an explicit condition that the life insurance cover will start from the date of disbursement of the loan. The relevant condition in the loan agreement is reproduced below, which makes the afore unambiguously clear:

Mahindra Finance has arranged for your loan to be protected through a group life insurance policy arrangement. (Policy Contract No. F1), with Kotak Mahindra Old Mutual Life Insurance Ltd. (Kotak Life Insurance) that will provide you with a life insurance cover to the extent of outstanding principal loan amount of loan taken from Mahindra Finance. In the unfortunate event of the death of an insured borrower during the tenure of the loan, there will be no burden of paying the outstanding loan on such borrower’s family. The aforesaid life insurance cover will start from the date of disbursal of loan to the borrower by Mahindra Finance.

The loan agreement was executed on 15.06.2007, and the loan was disbursed. Thereafter the borrower i.e. the complainants’ father expired on 13.07.2007 due to natural causes.

The insurance co. repudiated the claim vide its letter dated 21.12.2007 on ground that one condition in the insurance policy stipulated that if the death of the insured occurred due to natural causes (and not by accident) within three months from the date of commencement of the insurance cover the claim will not be admissible. The finance co. has not filed the terms and conditions of the insurance cover with its petition. However the relevant extract from the repudiation letter is reproduced below, which refers to the said condition and in the light of the same avers the claim to be inadmissible:

As per Clause 7 of the said Policy Contract titled ‘Death due to natural cause, suicides etc.’ (Para1), claims arising from the death of a member due to any cause other than an accident shall not be payable where such death occurs within 3 months from the date of his/her commencement of cover. However, unfortunately death of the Life Insured occurred due to natural cause on 13.07.2007 with 3 months from the date of commencement of the Risk (15.06.2007). Having regard to the above clause, we find that the subject claim is inadmissible.

The finance co. initiated recovery of its outstanding loan. And it collected an amount of Rs. 60,000/- from the guarantor to the loan towards partial recovery of the outstanding.

The widow of the deceased borrower filed a complaint case, being no. 753 of 2007, before the District Commission. She expired during the pendency of the case and her legal heirs i.e. son and minor daughters were substituted in her stead.

The District Commission vide its Order dated 12.12.2011 allowed the complaint with costs of Rs. 2200/-. It ordered the insurance co. to pay the outstanding loan amount to the finance co. and ordered the finance co. not to recover the outstanding loan amount from the complainant or her legal heirs and to refund the Rs. 60,000/