Pratibha Sontak vs NATIONAL INSURANCE CO LTD

LATE Shri Pushkar Sontakke, husband of the complainant took a loan from Central Bank Home Finance Ltd., which sanctioned an amount of Rs.3,00,000/ - to him for the purpose. The aforesaid loan was insured under a Group Insurance Policy which the aforesaid financer Central Bank Home Finance Ltd. had taken from National Insurance Co. Ltd. The husband of the complainant died in an accident on 08 -10 -2004. Vide letter dated 22 -11 -2004 the complainant submitted documents to opposite party No.2 Central Bank Home Finance Ltd. for the purpose of discharge of the loan amount by the insurance company under the provisions of the aforesaid Group Insurance Policy. The opposite party No.2 forwarded the claim to the insurance company only on 10 -06 -2005. The claim was rejected by the insurance company on the ground that it was time barred since under the provisions of the policy it ought to have been preferred within 14 days from the date of the death of the borrower. Being aggrieved from rejection of the claim the complainant approached the concerned District Forum seeking a sum of Rs.7,18,721/ - along with interest on that amount from both, National Insurance Co. Ltd. and Central Bank Home Finance Ltd.

VIDE its order dated 15 -12 -2008, the District Forum rejected the complaint. Being aggrieved the complainant approached the concerned State Commission by way of an appeal. Holding that the condition requiring submission of the claim within 14 days from the death of the borrower was not mandatory, the State Commission allowed the appeal filed by the complainant in the following terms: "Accordingly we direct that respondent No.1 shall pay the amount under the policy to the Bank to mitigate the liability of loan obtained by the Bank under the Group Insurance to the extent of the coverage given by the policy. If any amount after satisfying the debt of the appellant is in balance, the same may be given to the appellant. There shall be no order as to costs."

BEING dissatisfied with the quantum of compensation awarded to her by the State Commission the complainant is before this Commission. Her prayer in the revision petition is that the opposite parties should be directed to pay the entire amount of Rs.7,18,721/ - claimed by her along with interest on that amount. It is an admitted position that the insurance policy covered the loan only to the extent of Rs.3,00,000/ -. It is also an admitted position that only a sum of Rs.2,90,000/ - was raised by the husband of the complainant as loan from Central Bank Home Finance Ltd. However, in terms of the order passed by the State Commission, which has not been challenged either by the insurance company or by Central Bank Home Finance Ltd., the insurance company is liable to pay the entire policy amount of Rs.3,00,000/ - to the complainant. In case the loan amount outstanding in the account of the husband of the complainant is less than Rs.3,00,000/ -, the balance amount left after discharging the amount outstanding in the loan account has to be paid to the complainant. If, however, the outstanding loan amount is Rs.3,00,000/ - or more the entire policy amount has to be paid to Central Bank Home Finance Ltd. What is material in this regard is that the outgo from the insurance company would be Rs.3,00,000/ - irrespective of how much of this amount goes to Central Bank Home Finance Ltd. and how much goes to the complainant. It is for the insurance company to verify the amount outstanding in the loan account and then make payment in terms of the order of the State Commission.

THE next question which arises for our consideration in this case is as to whether the complainant is entitled to any amount more than Rs.3,00,000/ - and whether the insurance company should pay any interest to her on the aforesaid policy amount. Considering all the facts and circumstances of the case including that there was a delay in submission of the documents even to Central Bank Home Finance Ltd. and consequently, had there been no delay on the part of the said company in forwarding the documents to the insurance company, that would have made no difference as far as the decision of the insurance company was concerned, we are not inclined to grant any compensation to the complainant over and above the amount of Rs.3,00,000/ - which was the sum assured as far as the husband of the complainant was concerned. However, considering that the aforesaid amount ought to have been paid by the insurance company within a reasonable time, we are of the view that the said insurance company should pay a reasonable interest to the complainant on the aforesaid amount of Rs.3,00,000/ -. We, therefore, modify the order passed by the State Commission to the extent that in addition to the policy amount of Rs.3,00,000/ - the insurance company shall also pay interest to the complainant at the rate of 9% per annum with effect from 10 -09 -2005, till the date of payment. We make it clear that the insurance company shall calculate the interest payable in terms of this order, add that amount to the policy amount of Rs.3,00,000/ - and discharge the outstanding in the loan account of the husband of the complainant. The balance amount, if any, left after discharging the outstanding in the loan account shall be paid to the complainant. This direction shall be complied by the insurance company within four weeks from today. The revision petition stands disposed of.