SBI LIFE INSURANCE CO. LTD. Vs. SHANTHA

JUDGEMENT

(1.) This Revision Petition under Sec. 21(b) of the Consumer Protection Act, 1986 challenges the order date 24.4.2013 passed by Karnataka State Consumer Disputes Redressal Commission, Bangalore (State Commission) in First Appeal No. 120 of 2011.

(2.) Facts as per respondents/complainants are that the deceased Shri Hulgayya Guttedar (DLA) had availed a housing loan of Rs. 4,95,000 from the respondent No. 3/opposite party No. 1-State Bank of Mysore. At the time of availment of loan, the Bank had insured the loan for which one time premium of Rs. 23,010 had been debited from the account of the DLA. Regular instalments were paid till 30.9.2009. Upon the DLA's unfortunate demise on 26.10.2009, the respondent complainant approached the Bank and were asked to submit requisite documents for filing the insurance claim. These were duly submitted. However, vide the Bank's letter dated 13.3.2010, they were advised that their claim had been rejected on the ground of "false good health declaration" in the proposal. This rejection, on top of the unfortunate demise of the only earning member, was a shock. The respondent complainants allege that the rejection was "not proper and correct", and that DLA's death was "natural death" and not due to "any heavy and incurable disease" as alleged. As a result, the respondent complainants, claiming deficiency in service on the part of the opposite parties, the Bank and the Insurance Company, have sought settlement of the housing loan of Rs. 4,49,974 with accrued interest, along with Rs. 25,000 for mental agony, from them, in their complaint before the District Forum.

(3.) The petitioner/opposite party 2 contested the allegations, submitting that in a group insurance scheme, they depend upon the Group Policy Holder or the Bank, in the present case, to submit a proposal on behalf of all eligible individuals under the master policy issued by the Insurance Company. In order to enrol under such a group scheme, the individual has to submit a declaration of good health (DGH) and answer a questionnaire. Based upon these two documents, the insurance cover is extended. If it is found later that there has been a suppression of material facts, then the insurer is well within his rights to repudiate a claim.