Hansa Jain & Anr vs I.C.I.C.I Bank Ltd. & Anr

Sudip Ahluwalia,Presiding Member

The present Appeal under Section 19 of Consumer Protection Act, 1986 (hereinafter referred to as “Act”) has been filed by Smt. Hansa Jain (hereinafter referred to as “Appellant/Complainant No. 1”) and Mr. Avadhesh Jain (hereinafter referred to as “Appellants/Complainant No. 2”) against the impugned Order dated 30.10.2014 passed by the State Consumer Disputes Redressal Commission, Chhattisgarh (hereinafter referred to as “State Commission”) in Complaint Case No. 27/2013 vide which the Complaint filed by the Appellants  herein against I.C.I.C.I. Bank Ltd. (hereinafter referred to as “Respondent No. 1/Bank”) and I.C.I.C.I. Lombard General Insurance Co. Ltd. (hereinafter referred to as Respondent No. 2/Insurance Company”) was dismissed.

Brief facts of the case as per the Complaint are that the Bank granted a loan on constructed house situated at Satti Bazar, Raipur vide its loan account No. NHRPR00000746156 linked with Loan Account No. NHRPR00000728938. The father of the Respondent No. 2, Mr. Jagdish Jain, who was the debtor, died on 04.02.2013. The names of the Complainants are also mentioned in the loan account as co-applicants. It was informed by the Respondent No. 1 that the risk of the aforesaid House  Mortgage  Loan  was  insured  with  Respondent  No. 2  vide  its Insurance Policy No. 4065/ICIC-HSP/1814828/00/000 and Policy No. 4013/ICIC-HSP/225927/00/000 i.e. Home Safe Plus Secure Mind Policy, for the period from 15.09.2008 to 14.09.2013 for the sum assured of ₹80,88,000/-. The name of the Respondent No.1/Bank and loan account number is also mentioned in policy schedule.  The property on which  the loan amount was disbursed was in the name of Appellant No. 1.  The Insurance Policy was issued in the name of Appellant No. 2. The Insurance Policy was issued by Respondent No. 2 after verification of all the aforesaid facts and documents from the Bank. It was within the knowledge of the Respondent No. 2 that the owner of the said property was Appellant No. 1, and the loan amount was taken by Mr. Jagdish Jain who was paying the instalments. It is alleged by the Complainants that the Insurance Policy was issued without terms and conditions and hence the Respondent No. 2 is liable to indemnify the aforesaid amount.

During the lifetime of Mr. Jagdish Jain, the loan instalments were being regularly paid by him through his Saving Account at Vyavsaik Bank Ltd. and the Respondent No. 1 was taking the loan instalment amount through cheques from the aforesaid Bank account. The Respondent No. 1 also informed that in case of death of debtor, there will be no need to pay further instalments and the amount of loan shall be  recovered  from  the  Insurance  Company.  As  the  debtor  died  on 04.02.2013, there was no need to pay further instalments to the Bank as the risk of loan amount was secured by the Insurance Company. Despite this, the Bank did not claim the sum assured amount of ₹80,88,000/- from the Insurance Company. It came to the knowledge of the Complainants that after the death of debtor Mr. Jagdish Jain, the Bank had taken ₹2,33,000/- and ₹2,33,000/-, in total ₹4,66,000/- vide cheque no. 356067 dated 11.02.2013 and cheque no. 643681 dated 11.03.2013 from the aforesaid Bank account which amounts to unfair trade practice on the part of the Respondent No. 1/Bank.

The Bank was requested to return the amounts and the remaining cheques. As the debtor Mr. Jagdish Jain died on 04.02.2013, the remaining amounts of loan should have been claimed from the Insurance Company as the same was secured vide an Insurance Policy. The Complainants sent letters dated 10.05.2013, 11.05.2013 and 21.06.2013 regarding settlement of the loan amount through Insurance Company to both the Respondents. A copy of the letter dated 21.06.2013 was also sent to Insurance Regulatory & Development Authority (IRDA). Subsequently on 24.07.2013, a Legal Notice was sent to the Bank and a copy of the same was sent to Insurance Company as well, but none of them replied to the same.

Aggrieved by the acts of the Bank and the Insurance Company, the Complainants filed a Consumer Complaint before the State Commission praying for compensation of ₹80,88,000/- with 12% interest, refund of the amount of ₹4,66,000/- that was deducted, ₹5,00,000/- towards mental agony, ₹25,000/- towards litigation costs and return of the cheques which are in possession with the Bank.

The Respondents No. 1 and 2 appeared before the State Commission and resisted the Complaint. The Respondent No. 1 argued that the complaint is wholly misconceived being not maintainable in the eyes of law. The grant of loan and its mode of recovery cannot be termed as a service as defined in the Act. The matter substantially and directly involves a simple loan transaction and the Complaint suffers from misjoinder of different causes of action, as there are two different transactions entered into by the Complainants with two different parties. The Proposal Form for the Insurance was duly filled by Appellant No. 2 and the copy of policy was received by him accordingly. Therefore there was no need for anyone else to inform him about insurance of risk of loan amount. Further, the Bank was not informed about the death of the main borrower Mr. Jagdish Jain at any time before 10.05.2013 as evident on the face of documents filed by the Complainants themselves. The said borrower had availed of Electronic Clearing System and not cheques. The said borrower had given standing instructions with his banker for regular due payment of instalments.  As such there was no payment through cheques. No one ever told the Complainant that after the death of Mr. Jagdish Jain there would be no need for payment of further instalments. It was also submitted that for the security of loan various modes are adopted by the Bank – equitable mortgage on property, making of co-obligant and further securing the due payment of loan by appropriate insurance etc.

The Respondent No. 2 argued before the State Commission that the said Policy was issued in the name of Appellant No. 2 and Mr. Jagdish Jain, his father, was named as the nominee in the Policy. The Appellants did not inform the Respondents of the death of Mr. Jagdish Jain in any legal form which should have been submitted within 30 days. In Clause 4.1 of the Policy wording, the premium amount payable would depend on the age of the insured.  Persons aged between 20 years to 51 years have a different amount of premium, while Mr. Jagdish Jain was above the age of 51 years which would have resulted in a higher premium. The premium amount is about the double for age above 51 years.

After hearing both the parties, the State Commission dismissed the Complaint being devoid of merit. The relevant extracts of the Order of the State Commission dated 30.10.2014 are set out as under-

“24. The Complainants have not been able to prove that Late Jagdish Jain was main loanee and he was insured with the O.P. No. 2 (Insurance Company), therefore, after death of Jagdish Jain, the Complainants are not entitled to get benefit of the Insurance Policy and they are also not entitled to receive any compensation from the O.P. No. 2 (Insurance Company)

In view of the answers given to question nos. 1 & 2 hereinabove, the complainants are not entitled to get any benefit under the insurance policy and are also not entitled to get any compensation from the O.P. No. 2 (Insurance Company).

Therefore, the Complaint filed by the Complainants against the OPs, is liable to be dismissed, hence the same is dismissed. Parties shall bear their own cost.”

Aggrieved by the Order of the State Commission, the Complainants (Appellants herein) filed the present Appeal with the following prayer:

“Wherefore it is prayed before the Hon’ble Commission that the Appeal of the Appellants/Complainants may kindly be allowed and the Order passed by the C.G. State Consumer Commission may kindly be dismissed.”

In the Appeal, the Appellants raised the following key issues-

a. The Order passed by the State Commission is devoid of law and therefore is liable to be set-aside;

b. The State Commission has not perused the documents and affidavit filed by the Complainants properly and has passed Order which is against law;

c. The State Commission failed to take notice of the important fact that the Opposite Party No. 1 got the risk of loan amount secured through the Insurance Policy issued by Opposite Party No. 2. The said Insurance Policy was assigned with the Bank and also the said Policy was to indemnify the risk of loan amount in case of the death of the loanee. This important fact has been overlooked by the State Commission and the Complaint of the Complainant has been dismissed which is not according to law, thus the Order of the State Commission deserves to be set-aside;

d. The State Commission has failed to consider the fact that the premium for the Insurance Policy was paid by the Opposite Party No. 1/Bank through a cheque. The Complainants were never intimated regarding the terms and conditions of the Policy and the Policy that the Complainants received was having three pages only. The name of the Bank and the loan accounts no. were also mentioned in the Policy schedule. The property on which the loan amount was disbursed was in favour of husband of Complainant No. 1 and father of Complainant No. 2. The said property was in the name of the Complainant No. 1. These facts have been totally overlooked by the State Commission and the complaint was dismissed illegally.  Therefore the Order of the State Commission is liable to be set-aside;

e. The State Commission has erred in holding that the Complainants have not been able to prove that Late Jagdish Jain was the main loanee. The Opposite Party No. 1 has explicitly accepted the fact that Late Jagdish Jain was the main borrower, and this fact was never the matter of dispute. Thus the Order of the State Commission is not maintainable and is liable to be set-aside;

f. The State Commission has failed to verify the validity of the proposal form and erroneously relied on the Proposal form by failing to take notice of the fact that the Proposer’s signature contained in the Proposal Form was that of Mr. Jagdish Jain whereas the name of the Proposer entered in the form was that of the Complainant No. 2 and also that the date of sanction mentioned in the proposal form (29.08.2008) preceded the date of the proposal form (30.08.2008). These discrepancies in the Proposal form bring the validity of the document in question and reliance on this document is erroneous. Hence the Order passed by the State Commission by relying on this document is erroneous and liable to be dismissed;

g. The State Commission erred by stating that the Late Jagdish Jain was simply nominated as a nominee by Awadhesh Jain and Awadhesh Jain is applicant or loanee of the loan sanction by Opposite Party No. 1. The said observation of State Commission is erroneous and deserves to be set-aside;

h. The State Commission further erred by overlooking the important fact that the Bank has taken the amount of ₹4,66,000/- vide two cheques from the aforesaid Bank account of debtor Mr. Jagdish Jain. The debtor died on 04.02.2013 hence the amount taken from the account of Jagdish Jain was illegal;

i. The Appellant No. 2 has filed a written Complaint that the signature of Mr. Jagdish Jain is fake and forged after passing of Order by the State Commission in Police Station Devendra Nagar, Raipur vide Crime No. 168 of 2014 against the official of the Insurance Company under Section 420 of the Indian Penal Code. The Respondent No. 2 has failed to produce the original Proposal Form before the State Commission, and has also not produced the original Proposal form before the concerned Police Station. The copy of Proposal Form attached as at page no. 99 and 100 was never signed by Late Mr. Jagdish Jain;

j. The State Commission has unjustly held that the Complainants are not entitled to get benefits of the Insurance Policy and are also prevented from receiving any compensation. Hence the said observation as postulated by the State Commission is liable to be set-aside;

k. The State Commission has erred by not answering the specific questions/issues which were identified by it in its Order dated 18.09.2014, therefore the Order is liable to be set-aside;

l. The State Commission has relied on the judgments which are extraneous to the present case. Therefore the Order of the State Commission is not in accordance with law, and liable to be dismissed;

m. The Order of the State Commission has failed to answer important question of law framed by the Commission itself during the hearing of  the matter. Therefore it can be said that the matter has not received due consideration and is liable to be dismissed as unjust and unreasonable. The State Commission by overlooking the evidence which was before them has passed the Order merely on the basis of presumption. Therefore the Order of the State Commission is not maintainable.

The Ld. Counsel for Appellant argued that Late Mr. Jagdish Jain was the debtor who died on 04.02.2013. The name of the Complainants is also mentioned in loan account as co-applicants. The property on which the loan amount was disbursed was in the name of Appellant No. 1. The Insurance Policy was issued after verification of all the aforesaid facts and documents from the Bank. It was within the knowledge of the Insurance Company that the owner of the property was the Appellant No. 1, and instalments for the loans were also being paid by Mr. Jagdish Jain. The Insurance Company was duly informed of the death of Mr. Jagdish Jain. The State Commission has erred in holding that the Appellants have not been able to prove that Late Jagdish Jain was the main loanee. The Bank has expressly accepted the fact that Late Jagdish Jain was the main borrower and this fact was never the matter of dispute. The State Commission failed to verify the validity of the Proposal Form and has erroneously relied on the Proposal Form by failing to notice that the signature on the Proposal Form is that of Mr. Jagdish Jain while the name of the proposer is Appellant No. 2 and also that the date of sanction mentioned in the form precedes the date of the Proposal Form. The State Commission failed to answer the specific questions/issues that it had framed. The Ld. Counsel for the Appellants further argued that a First Information Report (FIR) has been filed with the Police regarding the forged signatures after the Order of the State Commission. The Ld. Counsel for Appellants has also placed reliance on the Orders of the Hon’ble Supreme Court in CCI Chambers Co-op Housing Society Ltd. v. Development Credit Bank Ltd., AIR (2004) SC 184, Sunil Kumar Maity v. State Bank of India & Anr. CA No. 432/2022, decided on 21.01.2022 and the Order of this Commission in Central Bank of India v. BYU Hazarika, 1 (2003) CPJ 178 (NC).

The Ld. Counsel for Respondent No. 2 has argued that it is an admitted fact that the Insurance Policy was issued by Respondent No. 2 in the name of Mr. Avadhesh Jain and as such Mr. Jagdish Jain, the deceased was simply a nominee. It is therefore abundantly clear that there was no privity of contract between Mr. Jagdish Jain and Respondent No. 2 and hence the Insurer is not liable to pay any sum to the erstwhile Complainants upon the death of the nominee, as is the case in this particular situation. Clause 1 of Part II of the Schedule clearly defines who is termed a nominee. It clearly says “Nominee – Means the person(s) nominated by the Insured to receive the insurance benefits under this Policy payable on the death of the Insured.”. It is thus clear that a nominee is merely someone who is entitled to the sum assured upon the death of the Insurer. In the present case, the Insurer is clearly alive and is the erstwhile Complainant, and hence the Policy cannot be availed in the case of non-expiry of the Insurer. The Ld. Counsel for Respondent No. 2 has also placed reliance on the Order of the Hon’ble Supreme Court in United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal, Civil Appeal No. 6277 of 2004 wherein it was held that:

“It is settled law that the terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of the policy and not with reference to the definition given in other laws. It is a matter of contract and in terms of the contract, the relation of the parties shall abide and it is presumed that when the parties have entered into a contract of Insurance with their eyes wide open, they cannot rely on the definition given in other enactment.”

The Ld. Counsel for Respondent No. 2 argued that the Proposal Form clearly reveals that Mr. Jagdish Jain was simply the nominee in the Insurance Policy. The said Proposal Form was wilfully signed by the deceased which makes the parties contractually bound by the terms of the Policy. The Appellants herein have also not raised any complaints with regards to the contents of the Insurance Policy, which the Appellants could have voluntarily done within 15 days of the Policy being issued to them. Reliance is placed on the Order of the Hon’ble Supreme Court in Bharathi Knitting Company vs. DHL Worldwide Express Courier Division of Airfreight Ltd., (1996) 4 SCC 704, the relevant portion being:

“it was stated that a person who signs a document containing contractual terms is normally bound by them even though he has not read them, and even though he is ignorant of their precise legal effect…The terms of the contract have elaborately been considered and decided. The details thereof are not necessary for us to pursue. It is seen that when a person signs a document which contains certain contractual terms, as rightly pointed by Mr. R.F. Nariman, learned Senior Counsel, that normally parties are bound by such contract, it is for the party to establish exception in a suit.”

In the instant case, the deceased, Late Jagdish Jain, himself submitted the Proposal Form and signed on the same.  In the Proposal Form, the name of Mr. Jagdish Jain was mentioned as nominee and name of Avadhesh Jain was mentioned as the proposer.  Therefore, the contents of the Proposal Form are binding on the Complainants. The Ld. Counsel for the Respondent No. 2 further argued that there was no privity of contract between the deceased and the Insurer. Reliance was placed on the Order of the Hon’ble Supreme Court in the case of Export Credit Guarantee Corp. of India Ltd. v. M/s Garg Sons International, 2013 (4) CPR 373 (SC), wherein it was held that “terms of the contract have to be construed strictly without altering the nature of the contract as the same may affect the interests of the parties adversely.” Thus, the Complainants failed to prove that Late Jagdish Jain was insured with the Insurance Company as he was simply a nominee.  Consequently, after his death, the Complainants are not entitled to get any benefit of the Insurance Policy and they are also not entitled to receive any compensation and hence this appeal deserves to be dismissed with exemplary costs. Further reference was placed on the Orders of the Hon’ble Supreme Court in The Chairman & Managing Director, City Union Bank Ltd. & Anr. V. R. Chandramohan, Civil Appeal No. 7289 of 2009 and Oriental Insurance Company Ltd. v. Munimahesh Patel, Civil Appeal No. 4091 of 2006.

Respondent No. 1/Bank has not filed Written Arguments/Synopsis till date in terms of Order dated 25.04.2022.

We have heard the Ld. Counsel of both parties and have gone through the material available on record.

As already noted by the Ld. State Commission in Paras 23 and 24 of the impugned Order, the Complainants had failed to prove that Late Jagdish Jain was the main Loanee and that he was insured with Opposite Party No. 2/Insurance Company, while in the Insurance Policy the name of the insured was mentioned as ‘Avadhesh Jain’ i.e. Complainant No. 2, with whom consequently there was no privity of contract between the Insurance Company and Jagdish Jain who was only the proposer for the Insurance Policy as seen from his signatures on the Proposal Form.  So much so, even the date of birth of the proposed insured Avadhesh Jain as being 24th September, 1982, which certainly could not have been the date of birth of his deceased father namely Jagdish Jain, is specified in such Proposal Form.

Elsewhere it is also the contention of the Insurance Company that in terms of the conditions of the Insurance Policy, Jagdish Jain in any case would have been ineligible to be the insured, at the low rates of premium prescribed, considering that he had already crossed the age of 51 years, so it was only natural that the Insurance was taken in the name of the co-applicant -Avadhesh Jain (son of Jagdish Jain) who was at the relevant time only about 26 years of age, and therefore had a much better life expectancy.

Ld. Counsel for the Appellants has, however, submitted that the matter ought to be remanded back to the Ld. State Commission since it had failed to record in findings on various questions noted by it in the zimini order passed on 18.9.2014, which were -

“a. Whether policy can be issued in the name of Avadhesh Jain?

b. Whether the policy which is issued in the name of Avadhesh Jain, if the policy was to be issued in the name of Jagdish Jain then whether any action has been taken to correct in the policy issued in the name of Avadhesh Jain and if no action has been taken then what will be effect?

c. When the proposal was in the name of Jagdish Jain then how the policy is issued in the name of Avadhesh Jain?

d. Whether proposal can be given by anyone?

e. Whether anyone can send the proposal form?

f.  Whether policy can be issued in anyone names?

It has since been categorically submitted by the Ld. Counsel for the Respondent/Insurance Company that there is no specific bar under any Rules to the effect that the proposer must have to be one and the same person to be actually got insured. We find no reason to disbelieve this submission, as the Appellants from their side have been unable to quote any Rule or Regulation which obligates an Insurer to issue an Insurance Policy strictly to a proposer alone, and not to anyone for whom he stands in a fiduciary capacity, such as guardian, husband or any other blood relative.

Furthermore, it transpires that after the Appeal was dismissed by the Ld. State Commission by holding that deceased Jagdish Jain was not the actual insured person, or that he was not the co-applicant for the loan, for all of which purposes such role has altogether been ascribed to his deceased father-Shri Jagdish Jain, the Appellant No. 2 himself lodged an FIR in the Devendra Nagar Police Station, District Raipur, on 3.12.2014 in which he alleged that the name and signature of his deceased father in the loan agreement were forged at the instance of the Bank staff concerned and a copy of such FIR was placed on record before us by the Appellants themselves.  This, in our view, is clearly an afterthought aimed at avoiding the logical consequences of the decision of the Ld. State Commission which has gone against the Appellants/Complainants. It would rather appear to be a belated attempt to create an altogether new story of forgery for the loan and insurance related documents, which was never alleged originally when the complaint was filed, and the anxiety of the Appellants therefore to have the matter got remanded back to the Ld. State Commission in these circumstances is understandable.

However, the earlier conduct of the Appellant/Complainant gives no indication whatsoever that they had at any stage prior to death of co-applicant-Jagdish Jain in the year 2013 raised any objection that the name of Appellant No. 2-Avadhesh Jain was wrongly mentioned as the Insured in the Insurance Policy, which was an old document, and computer-generated long back in the year 2008.  It was also never the categorical case of the Complainants that such Insurance Policy was not delivered to them.  On the other hand, in his letter to the I.C.I.C.I Bank-Respondent No. 1, dated 21.6.2013 which is on record at Pages 68 to 70 of the Paper Book, he has stated about his name being mentioned in the Insurance Policy as Insured, but never disclosed how he had come to know about his name being so mentioned, if at all, his case was that the same is a mistake, and why he had not raised the matter at any time during the preceding five years.

Considering the highly controversial nature of new facts being sought to be created by the Complainant by way of filing the FIR as mentioned earlier subsequent to dismissal of their Appeal, we recorded in our Order passed on 18.7.2023 that it was doubtful whether the matter involving such complicated issues of fact, leading upto the registration of criminal cases at the instance of the Complainants themselves would at all be entertainable by the Consumer Fora.

In response, the Ld. Counsel for the Appellants, in his wisdom, has relied on a decision of the Hon’ble Supreme Court reported in  ”Oriental Insurance Company Ltd.  Vs. Munimahesh Patel (Civil Appeal No. 4091 of 2006”, to assert that even in such situation, the Consumer Fora ought to entertain a complaint and not seek to get rid of it outright.

Consequently, in view of our detailed reasons mentioned in Para Nos. 17 to 23 earlier, we find no merit in the present Appeal which is therefore dismissed.

Parties to bear their own costs.

Pending application(s), if any, also stand disposed off as having been rendered infructuous.