ORDER

BY SRI.H.R.SRINIVAS, PRESIDENT.

This is the Complaint filed by the Complainant U/S Section 35 of Consumer Protection Act 2019, against the Opposite Party (herein referred in short as O.P) alleging the deficiency in service in repudiating the claim due to the death of the husband of the complainant and for payment of Rs.50,09,700/- and direct OP to adjust the same towards the loan obtained her husband and for damages of Rs.50,000/- for causing inconvenience mental agony, hardship and physical strain and cost of litigation of Rs.5,000/- and for other reliefs as the Commission deems fit.

2.      The brief facts of the complaint are that;

The complainant’s husband one B.T.Nagaraj, obtained Rs.50,00,000/- as loan from India Infoline Housing Finance Ltd., which promoted and insisted the complainant’s husband to take a policy cover for payment risk of the said loan in the event of any unexpected incident that the policy holder may suffer and in such an event, nominee/legal heir would be entitle for the relief. The policy entitles the nominees or the legal heirs to collect the proceeds of the insurance in the event of death of the insured.

3.      The said insurance policy No.4005/M/IIFLGPA/144625520/00/000 was issued by OP2 to cover the loan amount and the sum assured in the policy issued for the period 23.02.2018 to 22.02.2023 was Rs.50,09,700/- which covers PA and PTD 100%.

4.      It is contended that the husband of the complainant B.T.Nagaraj was admitted to the St.John’s medical college Bangalore on 25.10.2020 due to covid 19. Inspite of providing him best treatment, he expired on 28.09.2020 in the hospital. They have spent about Rs.98,000/- towards medical bill of the hospital in addition to other expenses. The death of the insured was reported to the OPs and as a legal heir the complainant filed the claim petition requesting OPs to indemnify the loan amount as per the insurance policy issued or in the alternate to adjust the said amount towards loan obtained by her husband. Inspite of several request and demands OPs have not  take any decision and her claim is still pending. Hence she had to issue a legal notice to the OP to honor the claim. During the life time of the insured, he had paid Rs.1,94,000/- towards the premium for the said policy without any default.  The policy covers all types of illness i.e., the illness as defined in the policy and hence OP is liable to reimburse the amount for the sum insured to the loan account of the deceased B.T.Nagaraja.  Since OPs have not at all paid the claim amount, there is deficiency in service provided by OPs and hence the complaint.

5.      Upon the service of notice, OP4 remained absent and hence placed exparte while OP1, 2 and 3 appeared before the Commission through their advocate and filed its version contending that the complaint is not maintainable either in law or on facts. It is vexatious, frivolous malicious and baseless, no cause of action and the complaint deserves to be dismissed.  It is contended that OP1 to 3 have issued group personal accident policy bearing No.4005/M/IIFLGPA/144625520/00/000 for the period 23.02.2018 till 22.02.2023.  The said insurance covers the loan amount of OP4. Under the said policy, complainant had availed loan facility for a sum of Rs.50,09,700/-. The policy clearly mentions that it is a personal accident and permanent total disability. It has admitted having received the claim application regarding the death of the insured, which was due to covid-19 and the complainant had submitted all the medical documents along with.  It is found in the documents produced that due to covid 19 pneumonia, ARDS and type 1 respiratory failure the death has been caused, which is not an accidental death or death caused due to accident. The word accident mean sudden unforeseen and involuntary event caused by external and visible and violent means. Whereas the cause of death in this case is due to health condition and not due to external and visible and violent means. Clause 2.1 of the policy schedule explains regarding the insured in the event of death.  The sum insured is payable on the occurrence of the death of the insured person provided such death results solely and directly from the injury within 12 months from the date of accident resulting such injury.  Clause 2 and 2.1 mentions that;

2. Benefit Covers

2.1 Benefit: Insured Event – Death Resulting from Accident.

“The company hereby agrees, subject to the terms, conditions and exclusions applicable to this section 2.1 and the terms, conditions, general exclusions stated in the policy, to pay such sum insured as mentioned against Death Benefit under the schedule to this policy, on the occurrence of death of the Insured person, provided such death results solely and directly from an injury, within twelve months from the date of accident resulting in such injury, provided that the date of occurrence of the accident falls within the policy period/policy year.”

And since the reason of death of B.T.Nagaraja is not due to accident or external injuries the same fall outside the purview of the policy coverage and the same was repudiated on 22.07.2021, and hence complainant is not entitle for any of the reliefs as the repudiation is in accordance with the terms and conditions of the policy and hence there is no deficiency on their part and further there is no liability under the policy to pay the insured amount.  There is no unfair trade practice on their behalf. The claim of the complainant is unsustainable and hence prayed the forum to dismiss the complaint.

6.      In order to prove the case, both parties filed their affidavit evidence and produced documents. Arguments Heard. The following points arise for our consideration:-

1) Whether the complainant has proved deficiency in service on the part of the Opposite Party?

2) Whether the complainant is entitled to the relief prayed for in the complaint?

7.     Our answers to the above points are:-

POINT NO.1:            In the Affirmative

POINT NO.2:            Partly in the affirmative.

                                For the following.

REASONS

8.     POINT No.1:-

   Perused the complaint, version, affidavit evidence and the documents produced by respective parties.  It is not in dispute that the husband of the complainant borrowed Rs.51,00,194/- from IIFL Home loan agreeing to pay interest in 180 EMIs, of Rs.51,730/- each, under loan account No.809716 as per Ex.P3.  Ex.P4 is the medical certificate of cause of death issued by St.John’s medical college hospital, wherein it is specifically mentioned that the death of B.T.Nagaraja is due to covid-19 Pneumonia ARDS type 1 respiratory failure on 28.09.2020.  Ex.P5 is the death certificate and Ex.P1 is the risk assumption letter issued by OP to the diseased husband of the complainant wherein the sum insured is for Rs.50,09,700/- and the risk cover date from 23.02.2018 to 22.02,.2023.  During the said period of insurance, the husband of the complainant namely B.T.Nagaraja died due to covid. A claim has been made as per claim application to the OP as per Ex.R2 by the complainant.  Ex.R3 is the repudiation letter stating that the insurance issued is personal accident insurance and the nature of the claim is death and the death has not taken place due to accident and there is no evidence of any kind of accident or injuries noted leading to death, hence the claim false outside the purview of the policy terms and conditions and hence rejected the same.

9.     Ex.R1 is the policy certificate issued to the complainant husband, wherein the complainant is made as a beneficiary and nominee for the total sum insured.  Ex.P1 also includes the general terms and conditions stating as to what is the accident and what is the accidental death.

10.   It is clear from the medical records produced that the complainant’s husband died due to covid 19 which is not a death due to accident or an accidental death.

11.   However it is to be noted here the background of issuing insurance policy to the borrower of the loan. As per the IRDI rules and regulations the lender cannot and shall not insist for the insurance of the borrower for its due security. Inspite of it, the lending bank/financial institution in various cases have a sister concern doing business and insurance and to augment the business mutually provide business to each other and hence the lending bank insists the borrowers to purchase the insurance, so that the sister concern get the business. In a hurry to get the loan to meet the purpose, the borrower without seeking any explanation or clarification or and not knowing the terms and conditions of the insurance not reading the contents of the policy i.e., going to be issued, and even not knowing that what type of insurance that the insurance company would/has provide/provided merely agreed to get the insurance without verifying the nature of the insurance given to him or her and the consequences thereof.  He/she is only interested in getting the loan released. The rosy picture given by the agents or officers of the insurance lures the borrower. Mainly the agents and the officers inform the borrower that in the event of death of the original borrower the entire loan amount would be cleared from the insurance coverage, for which even the lending bank/financial institution provides loan to meet the exigencies of paying the insurance premium which they recover along with EMIs by adding the same to the principal amount. Believing the sweet words of the officer/agents the borrower and his legal representatives/heirs would be under the impression that in case any death is caused to the borrower the burden of discharging the loan would be taken care of by the insurance policy and believe that it is a policy issued for the life of the borrower.

12.   We have come across in so many cases including this case that the complainant and the borrower believed that it is a life insurance policy, whereas, the OPs have provided a accident policy. Even we have come across in many cases that the borrower was given Fire Peril Policy along with personal accidental policy, which according to us is a miss selling of the insurance by adopting, deceiving, decepting means, in order to attract the business of insurance without looking into the welfare and requirement of the policy holders.  The policy holders/borrowers were and usually under the impression that their life is secured by obtaining the insurance policy and in case of death happening to them, the policy would take care of the loan amount, which will not be a burden to his /her LRs. In view of this, we have to term this selling of Ex.P1 and R1 the insurance policies termed as Group personal accident is a clear misleading and deceptive trade of the insurance company in selling the insurance policy under the guice that in the event of death happening to the borrower, the entire loan amount would be paid by the insurance company.

13.   Having sold the said insurance policy by misrepresenting or in our view misleading and not informing the insured as well as his family members, OPs have adopted dubious method of selling the insurance policy thereby practicing unfair trade practice.  Hence even if the policy Ex.P1 and Ex.R1 (Both are one and same) is termed as Group personal accident policy, under the circumstance in which the said policy is sold has to be considered as Life Insurance policy and hence even though the husband of the complainant died due to covid -19, we are of the firm view that the same covers under the deemed life insurance policy.  Hence repudiation of the claim of the complainant amounts to unfair trade practice, misrepresentation mis-selling the insurance policy and denying the claim of the complainant on the ground that the death of the complainant’s husband is out of the purview of the terms and conditions of the policy issued, amounts to deficiency in service.

14.   OPs have not at all placed any material documents to show that the complainant’s husband has opted for group accident policy.  If at all he had opted for the same, OP ought to have produced the proposal form duly signed by him to establish that the sale of the insurance policy to the husband of the complainant under personal accident is not a mis-selling or misguiding, whereas, it is issued on the request of the insured. Hence we answer point No.1 in the affirmative.

15.   POINT NO.2:

In the result since the death of the complainant’s husband took place on 28.09.2020 which is within the policy coverage period and the sum assured is Rs.50,09,700/- and the claim has been made by the legal heir /wife of the deceased, OP is bound to pay the said amount along with interest at 8% p.a., from the date of the death of the complainant i.e., 28.09.2020.  Further act of OPs made the complainant to suffer physically, mentally and financially that to when her husband has died which added fuel to the fire. Hence we direct OPs to pay a sum of Rs.1,00,000/- as compensation for the sufferance caused by the OPs and Rs.10,000/- towards litigation expenses  and answer point No.2 partly in the affirmative.  OPs to pay the said amount as above either to the complainant or pay to IIFL Home loan account of complainant’s husband and discharge the loan and pay the balance/remaining certificate to the complainant and pass the following;

ORDER

1. Complaint is allowed in part with cost.
2. OP is directed to pay the insured amount of Rs.50,09,700/- along with interest at 8% p.a., from the date of the death of the complainant i.e., 28.09.2020 till the payment of the entire amount.
3. OPPOSITE PARTY is further directed to pay  a sum of Rs.1,00,000/- as compensation and Rs.10,000/- towards litigation expenses to the complainant.
4. OPPOSITE PARTY further directed to pay the said amount as above either to the complainant or pay to IIFL Home loan account of complainant’s husband and discharge the loan and pay the balance/remaining certificate to the complainant
5. OP is further directed comply the above order within 30 days from the date of receipt of this order and submit the compliance report to this forum within 15 days thereafter.
6. Send a copy of this order to both parties free of cost.

Note:You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order failing which the same will be weeded out/destroyed.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Forum on this 31^ST DAY OF MARCH 2022)

MEMBER                 MEMBER                PRESIDENT

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1: The risk assumption letter issued by OP

Ex P2: Insurance policy certificate standing in the name of my husband

Ex. P3: Loan sanction letter

Ex P4: Medical certificate issued by St.Johns Medical Hospital mentioning the cause of death of my husband

Ex P5: Death Certificate

Es P6: Copy of the legal notice sent to OP

Ex P7: Repudiation letter sent by OPPOSITE PARTY

Ex P8: two receipts for having paid Rs.85,242/- and Rs.280/-

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1: Smt. ASHWINI JAYARAJ – LEGAL MANAGER OF OPPOSITE PARTY COMPANY

Copies of Documents produced on behalf of Opposite Party/s

Ex R1: Policy certificate with terms and conditions

Ex R2: Claim form

Ex R3: Repudiation letter

MEMBER                 MEMBER                       PRESIDENT

HAV*