Sunita Bansal vs Axis Bank Limited & Anr

V.K.Jain, J

Late Sh. Tej Kumar Bansal and his wife complainant Sunita Bansal jointly took a home loan from OP No.1 Axis Bank Limited. In order to secure that loan, a Proposal-cum-Health Declaration Form was submitted by Late Sh. Tej Kumar Bansal to OP No.1 Axis Bank Limited, for taking an insurance cover on his life from OP No.2 Max Life Insurance Company Limited. In the Health Declaration Form, loan application number was filled up by the bank as 2828034 though the correct number of the application form was 2896412. As stated in the affidavit filed by Sh. Abhay Kumar, Chief Manager, Group Operations of OP No.2 Max Life Insurance Company Limited, they received premium amount of Rs.2,13,056/- on 12.05.2015 for application ID 2896412. Thus, correct application ID was provided to OP No.2 at the time premium was remitted to it on 12.05.2015. On 13.05.2015, an e-mail with an annexure was sent by OP No.1 to OP No.2 giving details of several such proposals including the proposal submitted by Late Sh. Tej Kumar Bansal. In the aforesaid annexure, the application ID was correctly recorded as 2896412. Loan account number of Late Sh. Tej Kumar Bansal was also correctly disclosed in the said document as PHR004301380504 alongwith his address and mobile number. Thus, by 13.05.2015, OP No.2 had the requisite particulars though, it did not have the Proposal-cum-Health Declaration Form with it. The Health Declaration Form was received by OP No.2 from OP No.1 on 14.05.2015. As noted earlier, the application number/application ID was wrongly given as 2828034 in the said Proposal-cum-Health Declaration Form.

On 27.05.2015, OP No.2 sent an e-mail to OP No.1 seeking correct application ID of Late Sh. Tej Kumar Bansal. It was stated in the said e-mail that the remittance application ID was 2896412 whereas, in the form, the application ID was 2828034. The bank was asked to clarify which one was the correct application ID. OP No.1 responded to the above referred e-mail on the same date and clarified that the correction application ID was 2896412. On 28.05.2015, OP No.2 sent a letter to the TPA for scheduling the medical appointment of the proposer. The medical letter was dispatched on 08.06.2015. However, Late Sh. Tej Kumar Bansal had expired before the said dispatch, he having died on 31.05.2015. The premium amount of Rs.2,13,056/- was credited in the bank account of Late Sh. Tej Kumar Bansal on 10.07.2015. Since the outstanding loan amount was not paid by OP No.2 which it would have done had the insurance policy been issued, the complainant is before this Commission alleging deficiency on the part of the OPs in rendering services to her deceased husband.

The complaint has been resisted by both the OPs. OP No.1 Axis Bank Limited has not disputed that the application ID was incorrectly filled in the Proposal-cum-Health Declaration Form though its case is that all the particulars had already been provided to OP No.2 on 13.05.2015 itself and thereafter, as soon as the said company sought a clarification on 27.05.2015, the said clarification was also provided on the same day.

OP No.1 has resisted the complaint taking the plea that there is no privity of contract between the parties since the proposal was never accepted by them. On merits, it has also been claimed that the representatives of the company had tried to contact at the mobile number provided in the proposal form between 29.05.2015 to 06.06.2015 but was asked to call later.

It is not in dispute that not only the name, address and mobile number of the proposer were available to OP No.1 by 13.05.2015, even the loan account number was available in the document sent to it by OP No.1. A perusal of the Proposal-cum-Health Declaration Form would show that the loan account number given on the aforesaid document is the same which was the loan account number given in the documents made available to OP No.1 on 13.05.2015. Therefore, if OP No.2 so wanted, it could easily have linked the Health Declaration Form received on 14.05.2015 with the premium received on 12.05.2015 by matching the loan account number, name and address of the proposer. Unfortunately, that was not done. If OP No.2 had to harbour some doubt on account of the application ID number given in the Proposal-cum-Health Declaration Form, it ought to have contacted OP No.1 immediately on receipt of the said Proposal-cum-Health Declaration Form instead of waiting for at least 13 days after the said form had been received. It would be appropriate to take Regulation 4(6) of the IRDA (Protection of Policyholders' Interests) Regulations, 2002 which reads as under:

4.(6) Proposal shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period, not exceeding 15 days from receipt of proposal by the insurer.

OP No.2 therefore, was required to process the proposal with speed and efficiency since the final decision on the proposal was required to be taken within 15 days from the date on which it was received. The proposal having been received on 14.05.2015, the final decision of the proposal was required to be conveyed latest by 29.05.2015. Therefore, it can hardly be disputed that the OP No.2 did not act with speed and efficiency when it sought clarification from OP No.1 only on 27.05.2015.

As would be seen from Regulation 4(6) of the IRDA (Protection of Policyholders' Interests) Regulations, 2002, the decision of the proposal was required to be communicated in writing within a period not exceeding 15 days from the receipt of proposal. Admittedly, the said decision was not conveyed within the above referred prescribed period of 15 days, the letter asking the proposer to undergo medical check-up having been dispatched on 08.06.2015, eight days after he had already died. Though its vaguely stated in an affidavit filed by OP No.2 that their representative had contacted at the mobile number of the proposer between 29.05.2015 to 06.06.2015, the said affidavit does not even disclose the name of the person who allegedly contacted at the above referred mobile number. This is also not the case of OP No.2 that the person who allegedly contacted at the mobile number of the proposer, had told the person at the other end that the proposal for insurance had not been accepted till date and that the proposer was required to undergo a medical examination before the said proposal could be accepted. Therefore, I have no hesitation in holding that OP No.2 did not convey any decision on the proposal to the proposer within 15 days of receiving the said proposal i.e. on or before 29.05.2015. OP No.2 therefore, was clearly negligent in rendering services which it was required to render as an efficient and reliable insurer. OP No.2 was clearly in breach of Regulation 4(6) of the IRDA (Protection of Policyholders' Interests) Regulations, 2002, it having not communicated its decision on the proposal within the prescribed period of 15 days.

As far as OP No.1 Axis Bank Limited is concerned, having filled up a wrong application number in the Proposal-cum-Health Declaration Form, it was also negligent in rendering services to the deceased, since it was this mistake which resulted in OP No.2 having some doubt in respect of the particulars of the proposer and seeking a clarification though the said clarification was not sought expeditiously and came to be sought after 13 days.

The next question which arises for consideration is as to what relief the complainant is entitled to in the above referred facts and circumstances. Relying upon the decision of the Hon'ble Supreme Court in D. Srinivas Vs. SBI Life Insurance Co. Ltd. & Ors. Civil Appeal No.2216 of 2018 decided on 16.02.2018. The learned counsel for the complainant states that in such circumstances, OP No.2 shall be deemed to have waived the condition of medical examination and shall be deemed to have accepted the proposal for grant of insurance. The learned counsel for OP No.2 on the other hand, relies upon the decision of the Hon'ble Supreme Court in LIC Vs. Raja Vasireddy Komalavalli Kamba & Ors. (1984) 2 SCC 719 wherein it was held that the acceptance of an insurance contract may not be completed by mere retention of the premium or preparation of the policy document, rather the acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance.

In D. Srinivas (supra), the Hon'ble Supreme Court did consider its decision in Raja Vasireddy Komalavalli Kamba (supra) and held that in the aforesaid judgment only laid down a flexible formula for the Court to see as to whether there was clear indication of acceptance of the insurance. Thus, the legal proposition appears to be that it would depend upon the facts and circumstances of a particular case to decide as to whether the insurer can be said to have accepted the proposal for grant of the insurance cover or not. In D. Srinivas (supra), the premium was deducted from the loan account on 29.09.2008. The proposal alongwith the premium was received by the insurer on 13.10.2008. The deceased proposer died on 17.12.2009, more than one year after the proposal and the premium had been received by the insurer. He was never called for any medical examination in his life-time. The premium was refunded only on 23.02.2011, about 2½ years after his death. It was in these circumstances, and on account of such an excessive and abnormal delay on the part of the insurer in taking any action in the matter despite having received the proposal and the premium that the Hon'ble Supreme Court held that the insurer had waived the condition precedent of medical examination, though the Hon'ble Supreme Court was also of the view that the premium ought to have accepted only after the medical examination in a case where medical examination was a condition precedent for acceptance of the proposal.

However, in the present case, though OP No.2 did not act expeditiously and efficiently, the delay on its part in processing the proposal was not so excessive and unreasonable that a presumption could be raised that the insurer had accepted the proposal. As noted earlier, on 29.05.2015 itself, OP No.2 had written to its TPA to schedule an appointment for the medical examination of the proposer though the letter to the proposer came to be dispatched on 08.06.2015. Even the premium was refunded and credited to the account of the proposer on 10.07.2015 within two months from the date on which the said premium was received. On the other hand, the premium in D. Srinivas (supra) was retained by the insurer for about 2½ years. Considering the above referred facts and circumstances, I hold that though both the OPs were deficient in rendering services to the complainant, it cannot be said that the proposal form for issuing an insurance cover on the life of Late Sh. Tej Kumar Bansal is deemed to have been accepted by OP No.2. I therefore, hold that though OP No.2 cannot be asked to re-imburse the entire loan amount to the complainant, both the OPs must pay appropriate compensation to the complainant commensurate with the extent of the deficiency on their part.

Considering all the facts and circumstances of the case, OP No.2 Max Life Insurance Company Limited is directed to pay a sum of Rs.20,00,000/- (Rs. Twenty lacs) whereas OP No.1 Axis Bank Limited is directed to pay a sum of Rs.5,00,000/- (Rs. Five lacs) as compensation to the complainant. The said amount shall be paid within three months from today failing which it shall carry interest @ 9% per annum from the date of this order.