Date of filing:02.12.2021

                                                       Date of Disposal:12.01.2023

BEFORE THE III ADDITIONAL BANGALORE URBAN

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, BENGALURU – 560 027.

DATED THIS THE 12^TH DAY OF JANUARY, 2023

CONSUMER COMPLAINT NO.450/2021

PRESENT:

SRI.RAJU K.S,

SMT.REKHA SAYANNAVAR:MEMBER

Smt. M Rajalakshmi

W/o C. Mahadevan

Aged about 53 years

Residing at No.48/1,

Gavipuram, HBCS Layout,

Near Mangalore PU College

Ullal Main Road

Ph:9845931931                                         …  COMPLAINANT

(Complainant represented by Sri. Amruth B.R Adv.)

Axis Bank Ltd.,

Having registered office at

“Trishul’, 3^rd Floor

Opp. Samartheshwar Temple

Law Garden, Ellisbridge,

Ahmedabad 380 006.

Having Branch Office at

NO.19, 60 Feet Road

Sahakaranagar, Koti Hosahalli,

Bangalore 560 092

Represented by its

Branch Manager                 …      OPPOSITE PARTY No.1

TATA AIG Insurance Company Ltd.

Having registered Office at

Peninsula Business Park,

Tower A, 15^th Floor,

GK Marg, Lower Parel,

Mumbai 400 013

Represented by its CEO        …  OPPOSITE PARTY No.2

(Opposite party No.1 represented by Sri Jai M Patil Adv.)

(Opposite party No.2 represented by Sri Prashanth T Pandith Adv.)

//JUDGEMENT//

BY SRI.SHIVARAMA K, PRESIDENT

The complainant has filed this complaint U/s 35 of the Consumer Protection Act, 2019 seeking for a direction to the opposite party No.1 to waive off of outstanding principal loan amount due as on 27.05.2021  i.e. as on the death of Mr. M Jeyendran and for a direction to refund EMI paid by the complainant from June 2021 along with interest @ 18% per annum from the date of remittance till the date of receipt of payment and for other reliefs as this commission deems fit in the circumstances of the case.

2.     It is not in dispute that the complainant and her son late M Jeyendran  had availed a housing loan for a sum of Rs.39,55,800/- from Opposite party No.1 bank on 05.07.20218 under a Power Home Loan sanction scheme.  Further it is not in dispute that the complainant’s deceased son had obtained insurance issued by 2^nd Opposite party. 

3.      Further after availing the housing loan from 1^st Opposite party, complainant’s son died and it was informed to Opposite party No.1 and it was requested to adjust the loan amount and to issue no objection certificate but 2^nd Opposite party had repudiated the claim as it was only a ‘Critical Illness’ policy.  Further it is not in dispute that late M Jeyendran passed away due to COVID-19 on 27.05.2021.

4.      It is the further case of the complainant that Opposite party No.1 had instructed the complainant and her son that it was mandatory under clause 1 of the  Terms and Conditions pertaining to home loan  in the Power Home Sanction letter to procure a  property insurance.  Further it was also suggested by Opposite party No.1 to procure   a Life Insurance on the pretext that loan would be waived off in case of death of the insured.  Further at the time of execution of the loan agreement opposite party No.1 had informed the complainant and her son that only life insurance would suffice and opted only for life insurance in the name of Late M.Jeyendran who was only the bread winner of the family. Further as per the intimation of the Opposite party No.1 the proposal form was signed and a sum of Rs.97,091/-  was paid towards the premium for the said insurance. Subsequently certificate of insurance was issued by Opposite party No.2 with policy period from 05.12.2018 to 04.12.2023.  Further when the complainant had filed a claim report with the  2^nd Opposite party claiming the life insurance amount in order to close the housing loan, to her shock and surprise  she came to known that the claim was repudiated by 2^nd Opposite party and it was brought to the knowledge of the complainant  that the insurance procured was not a life insurance policy but  a Group Credit Secure Plus policy  which is a General Insurance policy that only covers ‘Critical Illness’  and ‘Accident Death’.

5.      Further the Power Home Sanction  letter issued by the 1^st Opposite party  only contains four options with regard to housing loan amount and property insurance,  but Group Credit Secure Plus policy does not contain life insurance. Hence, Opposite party No.1 has missold the said policy to the complainant and her son by misrepresentation under the guise that the said policy was that of a life insurance policy.  Hence, Opposite party No.1 has disobeyed by the guidelines made by the Reserve Bank of India. Further the complainant has been paying the monthly instalments under protest by borrowing money from her son-in-law. Further on 14.07.2021 the complainant written a letter to Opposite party No.1 seeking to waive off the outstanding loan amount and Opposite party No.1 failed to respond. Thereafter, the complainant got issued legal notice dated 10.08.2021 and Opposite party No.1 has given untenable and vague reply to the said notice. Hence, there is misrepresentation on the part of the Opposite parties. Therefore, the complaint came to be filed.

 6.     It is the further contention of Opposite party No.1 that, complainant and her son have availed the financial facilities from Opposite party No.1 and they are liable to discharge the liabilities and role of the 1^st Opposite party  is limited to granting financial assistance in the form of housing loan and the complainant and her son were aware of the policy and they have taken the policy and for the repudiation made by the 2^nd Opposite party, 1^st Opposite party cannot be made liable for the same. Since the complainant had obtained the insurance issued by 2^nd Opposite party bank has no role in issuing the policy. Hence, it is sought to dismiss the complaint.

7.      It is the further case of the Opposite party No.2 that the insured did not suffered from any of the named critical illness covered under the policy. Hence, Opposite party No.2 rightly repudiated the claim as per the terms of the policy.  Further the policy procured by the insured was not a Life Insurance Policy and it is a Group Credit Secure Plus policy.  It covers for only 15 named critical illnesses, but medical condition in which insured was suffering was not one of them.  Further the insurance policy has to be construed strictly as per the terms and conditions of the policy document which binds the parties. Hence, sought to dismiss the complaint.

8. To prove the case, the complainant (PW1) has filed affidavit in the form of her evidence in chief and got marked EX.P1 to P15 documents. The manager legal (RW-1)of Opposite Party No.1 bank has filed affidavit in the form of his evidence in chief  and Senior Manager (RW-2) of Opposite Party No.2  has filed affidavit in the form of his evidence in chief and got marked Ex R1 to R4 documents.

9. Counsel for the complainant and Opposite party No.1 have filed the written arguments. Counsel for Opposite party No.2 has filed synopsis of written arguments.  

10.    Heard arguments.

11. The points that would arise for consideration are as under:

i) Whether the complainant proves that Opposite party No.1 has mis-sold the policy to the complainant and unfair trade practice against her son by misrepresentation on the guise that the said policy was that of a Life Insurance Policy?

ii) Whether the complainant proves the deficiency of service on the part of the Opposite parties?

    ii) Whether the complainant is entitled for the  

         relief as sought?

     iii) What order?   

  12.   Our findings on the aforesaid points are as follows:

Point No.1 & 2:  In affirmative

Point No.3 :  Partly in affirmative    

Point No.4 :  As per the final order for the following;

REASONS

13. POINT NO.1 & 2:- Complainant (PW-1) and RW-1 and 2 have reiterated the facts stated in their respective pleadings in the affidavit filed in the form of their evidence in chief. It is contended by the learned counsel for the complainant that on perusal of the loan application cum loan sanction letter it could be seen that the object of  obtaining the loan was to purchase a property and the insurance was mandatory to it. Further, Opposite party No.1 bank in collusion with Opposite party No.2 insurance company had issued Group Credit Secure  Plus Policy which does not cover the Life of the assured.  Hence there was mis-selling of the policy. Contrary to that it is the contention of the learned counsel for the Opposite parties that there was free look period for verification of policy by the complainant and the complainant could have taken the said opportunity to get the policy cancelled and even though the policy was issued on 05.07.2018 for the period of 05.12.2018 to 02.12.2023, the complainant had raised dispute over the policy only after the death of the insured and insured died on 27.05.2021. Hence there is no water in the contention of the learned counsel for the complainant.

14.        It is the further contention of the learned counsel for the complainant that even though complainant did not avail free look period for verification of policy documents produced, the Opposite party shall not take benefit of the same and the act of the Opposite party amounts to unfair trade practice.  In support of the contention counsel for the complainant relied Judgment reported in 2018 SCC NCDRC 1631 – Max New York Life Insurance Co. Ltd. Vs United Enterprises and others. The facts in the said case is that the representative of the insurance company informed the complainant that they would have to pay the premiums for first two to three years only. Upon such representation and assurances two polices were taken by the complainants. In the policy received by the complainants it was mentioned us the tenure was for 100 years of age which was alleged to be not informed while filling the proposal form and while filling the form the complainant’s have not at all mentioned the tenure of the policy.   The complainants have enjoyed the benefits of insurance for four years and thereafter opted for refund of the premiums.  The contention of the complainants was that Opposite party fraudulently issued the policy.  In the circumstances, the Hon’ble Court has held that as to how the tenure of 100 years of age of premium shall be justified when the proposal form was itself has silent, wherein the complainants kept the relevant space blank in the proposal form.  In the circumstances, it is held that the Opposite party shall not be allowed to get benefit, that the complainant failed to avail free look period  for verification of documents and it was a misspelling of a policy by Opposite party and it amounts to unfair trade practice  from Opposite party.

15.        Further the counsel for the complainant has also relied the judgment rendered by the Hon’ble State Consumer Disputes Redressal commission, West Bengal dated 20.05.2015, in which it is observed that it is an open secret that agents of insurance companies are loath to the idea of explaining each and every aspect of a policy to a prospective customer, nor it is practically feasible for a person to gloss over the voluminous terms and conditions of a policy within the short span of time.  Further in terms of clause 6(2)  of the Insurance Regulatory and Development Authority Regulations, 2002, it is obligatory for an Insurer to apprise the Insured on the feature of ‘free look’ through a forwarding letter, which is required to be sent along with the policy bond.

16.        The complainant has availed housing loan for a sum of Rs.39,55,800/-. Further a power home sanction letter was also issued by Opposite party No.1 in favour of the complainant and her son. Ex P1 is the copy of the Power loan sanction letter, in which it is written as property and life insurance.  According to PW-1, Opposite party No.1 had suggested to procure a life insurance on the pretext that loan would be waived off in case of death of the insured.  It was at this assurance the complainant and her son decided to secured both property insurance and Life insurance.  The said say of PW-1 in her evidence supports his Ex.P1.  Further the Opposite party No.1 has represented the complainant and to her son that it was one of the corporate agents of the 2^nd Opposite party  and proposed to help them in procuring the insurance from the 2^nd Opposite party to which complainant and her son agreed.  Accordingly upon the intimation of the 1^st Opposite party the proposal form was signed and a sum of Rs.97,091/-  was paid towards the premium for the said insurance.   In the loan restriction letter produced by the complainant in Page 41 the amount of loan is mentioned at Rs.39,55,800/- and a tick mark  is made on the column that ‘Life insurance only’ and other columns is left blank.  The complainant and her son had signed the said form.  Counsel for Opposite party No.2 has produced Ex. R2 Group Credit Secure Plus Certificate of Insurance  issued in favour of Complainant’s deceased son. As per the said policy the name of the deceased is shown as insured. There is no dispute with regard to one time premium amount of Rs.97,091/- paid. This policy covers only for critical illness (category ‘B’) to the extent of sum insured amount of Rs.39,55,800/- and the said amount is the loan amount.  Further it covers loss of job, monthly EMI benefit. It does not cover the life of the insured.

17.        It is not in dispute that the complainant obtained the policy through Opposite Party No.1 bank. In Ex P1 Power Home Sanction letter property and life insurance is mentioned and in loan restriction letter it is specifically made a tick mark that the loan shall only be with life insurance.  Hence on perusal of the above said documents, presumption could be drawn that the complainant and deceased were intended to obtain life insurance policy. As observed in the judgment rendered by Hon’ble National Consumer Disputes Redressal Commission stated above, we feel the insurance agent are very much eager in getting the policies.  Therefore, a misrepresentation has been taken place while issuing the policy in favour of the complainant’s deceased son.  As per Ex R2 policy the deceased (insured) is entitled only for reimbursement of medical expenses or sum assured whichever is less. Further in case of loss of life due to motor vehicle accident, the deceased’s LRs are entitled for assured amount. The assured amount is shown loan amount only. It is surprise as to why for reimbursement for critical illness the loan amount alone is shown.  He it been only meant for critical illness, sum round figure of assured amount would have been mentioned instead of loan amount. It is the contention of the learned could for the Opposite party No.1 that the Opposite party No.1 is the bank and not an insurance company.

18.        Therefore, the contract entered in between the complainant and Opposite parties is an voidable contract and the complainant has an option either to continue the  contract or to cancel it.  Since there is misrepresentation, complainant is entitle for the benefit and Opposite party No.1 and 2 are liable for the act.  Hence the act of Opposite party No.1 and 2 amounts to unfair Trade practice. According we answer Point No.1 and 2 in affirmative.

POINT No.3:

19.        Complainant claimed an order directing the Opposite party No.1 to waive off the outstanding principal amount due as on 27.05.2021. According to the complainant as on the said date the outstanding loan was about Rs.36,71,811/-. The outstanding loan to that extent has not been denied by Opposite party No.1.  Ex P4 Death Certificate indicates that M.Jayendran was died on 27.05.2021.  Since there was misrepresentation by Opposite party No.1 and 2 both are liable to make good the outstanding loan amount. Further, since the loan was borrowed in the month of July 2018 the certificate of insurance issued by Opposite party No.2 through Opposite party No.1 was with effect from 05.12.2018 to 04.12.2023. Opposite party No.2 has to pay outstanding loan to Opposite party No.1.  Further the complainant claimed a direction to refund the EMI’s a sum of paid by the complainant  along with interest at 18% per annum form the date of remittance of such installaments till receipt of payment.  According to PW-1, Opposite party No.1 bank has been demanding for the monthly instalments and her son was only a bread winner of the family  and the complainant has no source of income and are financially incapable to pay the monthly instalments.  Further due to the demands of Opposite party No.1 and to avoid the loan account from being converted to Non-Performing Asset, she has been paying monthly instalments under protest by borrowing money from her son-in-law. Further the daughter issued a letter dated 14.07.2021 vide Ex.P10 to the Opposite party No.1 to waive off the outstanding loan amount. Further since Opposite party No.1 failed to respond to the said letter and complainant got issued a legal notice dated 10.08.2021  vide Ex.P11 calling upon Opposite party No.1 to pay a sum of Rs.45,00,000/- towards damages and Rs.25,00,000/- towards mental agony. Had it been the policy issued by Opposite Party No.2 in favour of deceased was a Life Insurance policy, the complainant need not pay the EMI’s belongs to the insured.  Therefore, we feel Opposite party No.1 shall refund the EMI’s paid by the complainant after the death of the insured with  interest at 9% per annum from the date of remittance till payment. Further the complainant sought a direction to pay to Opposite party No.1 for a sum of Rs.20,00,000/- towards deficiency of service and a sum of Rs.20,00,000/- towards mental agony and a sum for Rs.5,00,000/- towards cost of proceedings.  We feel that, according to the PW-1, she had undergone mental harassment due to the demand made by Opposite party No.1 of the outstanding loan and as there was misrepresentation by Opposite party No.1 and there was issuance of the wrong policy she has undergone mental trauma. Hence, we feel that the complainant is entitle for Rs.30,000/- towards mental agony.  Further the Opposite parties made the complainant to approach this commission for the relief in question. Hence Opposite parties to pay a sum of Rs.10,000/- towards litigation cost. Hence, we answer Point No.2 partly in affirmative. 

20. POINT NO.4:- In view of the discussion made above, we proceed to pass the following;

The complaint is allowed in part.

The Opposite party No.2 is directed to pay the outstanding loan to Opposite party No.1 as on the death of the insured i.e. 27.05.2021 to the Opposite party No.1.  Further Opposite party No.1 and 2 shall pay a sum of Rs.30,000/- towards damages and mental agony and Rs.10,000/- towards litigation expenses to the complainant.

Further Opposite party No.1 shall refund the EMI’s paid by the complainant after the death of the insured with interest at 9% per annum from the date of respective EMI remittance till payment. 

The opposite party No.1 and 2 shall comply the order within 30 days. In case, the opposite parties fail to comply the order within the said period, the above said amount of Rs.30,000/- carries interest at the rate of 9% per annum from the date of order till realization.

Supply free copy of this order to both the parties and return extra copies of the pleading and evidence to the parties.

Applications pending, if any, stand disposed of in terms of the aforesaid judgment.

  (Dictated to the Stenographer, typed by him, the transcript corrected, revised and then pronounced in the open Commission on 12th day of January, 2023)                                            

• REKHA SAYANNAVAR)    (RAJU K.S)    (SHIVARAMA. K)    
•  

//ANNEXURE//

Witness examined for the complainants side:

Smt M Rajalakshmi (PW-2), who being Complainant has filed her affidavit.

Documents marked for the complainants side:

1. Copy of power home sanction letter dt.07.07.2018.
2. Copy of the loan agreement.
3. Copy of the certificate of insurance.
4. Copy of the death certificate of complainant’s son
5. Copy of the statement of loan account.
6. Copy of computer downloaded email correspondence.
7. Copy of the RBI guideline dt.15.01.2015.
8. Copy of the Computer downloaded email correspondence.
9. Copy of the computer downloaded email correspondences.
10. Copy of the letter dt.14.07.2021.
11. Copy of the legal notice dt.10.08.2021.
12. Copy of the reply notice dt.21.08.2021.
13. Copy of the complaint filed before IRDA.
14. Copy of the complaint filed before RBI.
15. Certificate u/s 65(B) of Indian Evidence Act.

Witness examined for the opposite party side:          

Ex R1: Anukthi Shetty, Manager Legal of Opposite party No.1.

Ex R2: Vinay Kumar S, Senior Manager- Legal of Opposite party No.2.

Documents marked for the opposite party side:

Ex R1: Letter of authorization dt:27.09.2022

Ex R2: Policy copy.

Ex R3: Terms and conditions of the policy

Ex R4: Repudiation letter dt. 15.06.2021.

• REKHA SAYANNAVAR)    (RAJU K.S)         (SHIVARAMA. K)    
•  

*RAK