ADDITIONAL BENCH

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

PUNJAB, CHANDIGARH.

Consumer Complaint No. 164 of 2020 Date of Institution : 23.06.2020 Date of Reserve : 22.11.2022 Date of Decision : 08.12.2022

Manju Rani wife of Shri Jiwan Kumar son of Shri Atma Ram, resident of House No.67/2, Radha Rani Enclave, Sanghera Road, Barnala, Tehsil and District Barnala.

.….Complainant

Versus

1. HDB Financial Services, Pacca College Road, Barnala, Tehsil and District Barnala through its Branch Manager. E-mail:gro@hdbfs.com.

2. HDFC Life Insurance Company Limited, Registered Office at Lodha Excelus, 13^thFloor, Apollo Mills Compound, N.M.Joshi Marg, Mahalaxmi, Mumbai 400011.

E-mail:service@hdfclife.com.

3. HDFC Ergo General Insurance Company Limited, Registered Office at 1^stFloor, 165-166, Backbay Reclaiman, HT Parekh Marg, Church Gate, Mumbai 400020. E-mail:care@hdfcergo.com.

……Opposite parties

Consumer Complaint under Section 17 of the Consumer Protection Act, 1986 Quorum:-

Mr. H.P.S. Mahal, Presiding Judicial Member Mrs. Kiran Sibal, Member

Present:-

For the complainant : Sh.Abhinav Singla, Advocate For Opposite party No.1 : Sh.S.S.Sidhu, Advocate for Sh.Vipul Dharmani, Advocate

For Opposite party No.2 : Sh.Nitin Thatai, Advocate For Opposite party No.3 : Sh.Manjot Singh, Advocate for Sh.Vishal Aggarwal, Advocate

1

2

KIRAN SIBAL, MEMBER:-

The complainant has filed this complaint under Section 17 of the Consumer Protection Act, 1986 (in short "the Act"), against the opposite parties (in short "OPs") seeking following directions:-

i) To reimburse the claim amount of Rs.24,99,999/- to the complainant along with interest @ 12% p.a.;

ii) To pay a sum of Rs.22,50,000/- as balance loan amount;

iii) To pay compensation to the tune of Rs.1,00,000/- due to mental torture, agony, harassment and inconvenience suffered by complainant;

iv) To pay a sum of Rs.50,000/- as litigation expenses.

2. Brief facts, as set out in the complaint, are that the husband of the complainant (since deceased), during his lifetime, had availed a loan of Rs.25,00,000/- from OP No.1 and also got insured the said loan upto Rs.24,13,000/- from OP No.3 through OP No.1, vide insurance policy bearing invoice No. 202182351900000, certificate No.2111202182351900000 dated 13.04.2018. OP No.1 also purchased a Life Insurance Policy in the name of Jiwan Kumar from OP No.2 (HDFC Life Group Credit Protect Plus Insurance Plan UIN:IDIN096V02) having Master Policy No.PP000239 dated 01.04.2018 for the sum assured of Rs.24,99,999/-. The complainant was appointed as nominee by the insured and at the time of obtaining the said policies, OP No.1 got signatures of the insured on certain blank papers and forms. Unfortunately, on 02.07.2020, the husband of the complainant fell ill and was admitted to Dayanand Medical College and Hospital,

3

Ludhiana for his treatment, where he died on 03.07.2019. Thereafter, the complainant lodged the death claim with the OPs vide claim No.LAN No.PC144211/3871188 and submitted all the requisite documents. But the Ops failed to reimburse the amount of the insurance policy in favour of the complainant. The complainant also visited the office of OP No.1 at numerous times for settling of claim but all in vain. In the first week of January 2020, the complainant received letter dated 27.12.2019, vide which the death claim was rejected/repudiated on the false ground that the husband of the complainant was suffering from liver cirrhosis, which was prior to issuance of the policy. Alleging deficiency in service and unfair trade practice on the part of OPs, the complainant prayed for acceptance of the present complaint.

3. Upon notice opposite parties appeared and OPs No.1&2 filed their separate written statements, whereas opposite party No.3 did not appear and was proceeded against ex-parte vide order dated 09.09.2020. However, the opposite party No.3 was allowed to join the proceedings vide order dated 03.02.2021.

4. The complaint was contested by OPs No. 1 & 2, who filed separate written replies. In reply to complaint, OP No.1 raised certain preliminary objections, inter alia, that the present complaint is not maintainable in the eyes of law as against OP No.1, since it has no concern with the insurance policies having being purchased by the deceased life assured (hereinafter referred as "the DLA") from OPs No. 2 & 3 and therefore the DLA was not a

4

'consumer' of OP No.1 with regard to the insurance policies i.e. subject matter of the present consumer complaint. This Commission has no jurisdiction to try and entertain the present complaint against OP No.1 as there is no privity of contract of the complainant with OP No.1 with regard to the present dispute regarding non-settlement of the insurance claims. On merits, OP No.1 stated that the DLA along with his wife (complainant) and his son themselves approached OP No.1 and requested for availing financial assistance/loan facility in the shape of Working Capital for business purpose. In pursuance to the said request, OP No.1 sanctioned loan to the tune of Rs.25,00,000/- in favour of M/s Jiwan Jewellers, Proprietorship Firm of DLA as main applicant and others as co-applicants. A loan agreement dated 31.03.2018 was also executed between the parties, wherein all the terms and conditions governing the said loan transaction between the parties were specifically stipulated. The DLA further mortgaged his property being Kothi No.67/2, Sanghera Road, Radha Rani Enclave, Barnala in order to secure the said loan facility. A perusal of the said loan agreement would entail that the only loan transaction entered between the parties and there is no stipulation anywhere that the insurance policies have been got done by OP No.1 or that the said policies have been purchased by it. Moreover, OP No.1 never compelled the DLA to obtain insurance policies from OP No.2 or even OP No.3. The complainant has leveled false allegations against it to escape from the liability of

5

repayment of the loan. The grievance of the complainant, if any, is only against the insurance companies i.e. OPs No.2 & 3 and OP No.1 cannot be made liable for any alleged deficiency in service or unfair trade practice, with regard to an insurance transaction. After denying the other averments made in the complaint, OP No.1 prayed for dismissal of the present complaint qua to it.

5. In reply to complaint, OP No.2 also raised certain preliminary objections, inter alia, that the present complaint is liable to be dismissed as the complainant has attempted to misguide and mislead this Commission; the complaint is not maintainable as no cause of action ever arose in favour of the complainant and against OP No.2 to file the present complaint; the complainant does not fall within the definition of 'Consumer' under the Consumer Protection Act as the loan obtained by the DLA was for commercial purpose for running his business and the complainant in the entire complaint has nowhere pleaded that her husband availed the said loan for the purpose of earning his livelihood by means of self employment. On merits, OP No.2 stated that the DLA, who wanted to secure the loan availed from OP No.1, approached OP No.2 and after careful consideration agreed to buy the insurance policy namely "HDFC LIFE GROUP CREDIT PROTECT PLUS INSURANCE PLAN" and paid

Rs.59,177/- in single payment mode towards the premium. Accordingly, OP No.2, on the basis of the information furnished by him in the member enrollment form, insured the DLA under Master

6

Policy in question for the term of 5 years and basic sum assured in the policy was Rs.24,99,999/-. It is further stated that before acceptance of the enrollment form by OP No.2, adequate information with regard to the product, nature and its significance was given to the DLA. In the Member Enrolment Form(proposal), the DLA had answered as "NO" to the medical questionnaire regarding his health details. After the death of DLA, the complainant lodged the death claim with OP No.2 and submitted a group claim form dated 27.07.2019. However, while processing of death claim of DLA being an early death claim, OP No.2 hired an investigation agency namely Sakshi Investigation & Detective Agency to know about the past history of the DLA. The investigation agency submitted its report and it was established that the insurance was done of a chronic sick patient as the DLA was suffering from Chronic Liver Disease (CLD) with Cirrhosis of Liver with HCV, Hepatitis-C related Cirrhosis, Ascites, Hepatic Encephalopathy Grade-IV and Severe Metabolic Acidosis. The DLA was taking regular treatment from DMC Hospital in Ludhiana since January 2018 i.e. prior to the policy issuance. At the time of taking the policy, the DLA was suffering from the said Chronic disease but he with malafide intention, did not disclose the same in application/Membership form and concealed the material information regarding his pre-existing disease from OP No.2. However, the complainant herself admitted this fact and made a statement in this regard that in January 2018 the DLA had a

7

problem of Hepatitis-C for which he had taken treatment from DMC Hospital Ludhiana. Accordingly, in lieu of the procured medical documents and statement of the complainant, OP No.2 repudiated the claim of the complainant vide letter dated 27.12.2019. Had this information been provided to the insurance company at the time of application for insurance, it would have called for further medical tests, questionnaire and based on the reports only would have decided to offer insurance cover or not. Since vital information was not provided to OP No.2, at the time of application of insurance, therefore, no illegality has been committed while repudiation of the said claim. Moreover, it is established that there has been breach of one of the basic principles of the life insurance which is of "Utmost Good Faith".

Hence, OP No.2 had no other alternate but to repudiate the claim of the complainant after taking into consideration the provisions of Section 45 of the Insurance Act, 1938. There is neither any deficiency in service nor unfair trade practice on the part of OP No.2. After denying the other averments made in the complaint, OP No.2 prayed for dismissal of the present complaint qua to it.

6. Rejoinder to the written statement was filed by the complainant, wherein it has been mentioned that there was a typographic error in para no.6 of the complaint in which date

"02.07.2020" was mentioned instead of "02.07.2019". The complainant denied all the contentions as taken by the opposite parties No.1 & 2 in their written statement and reiterated the

8

averments made in the complaint and prayed to allow the complaint.

7. To prove her claim, the complainant filed affidavit, along with copies of documents i.e. loan account statement Ex.C-1, Insurance Policy of HDFC Ex.C-2, Insurance Policy of HDFC Ex.C-3, Death summary of Late Mr.Jiwan Kumar Ex.C-4, Death Certificate of Late Mr.Jiwan Kumar Ex.C-5, Rejection letter dated 27.12.2019 Ex.C-6.

8. On the other hand, opposite party No.1 in support of its contentions has filed affidavit of Sh.Amit Kumar, Legal Officer and Authorized Signatory along with photocopies of documents i.e. Loan Agreement dated 31.03.2018 Annexure R-1/1, statement of account Annexure R-1/2.

9. OP No.2 in support of its contentions has filed affidavit of Sh.Arpit Higgins, Sr.Manager Legal, HDFC Life Insurance Co. Ltd., alongwith photocopies of documents i.e. Authorization Letter dated 18.01.2018 Ex.OP-2/1, Member Enrollment Form Ex.OP2/2 dated 31.03.2018, Certificate of Insurance dated 01.04.2018 Ex.OP-2/3, Group Claim Form dated 27.07.2018 Ex.OP-2/4, Investigation Report Ex.OP-2/5, Medical documents alongwith statement 2018-2019 Ex.OP-2/6 , statement given by complainant 2018-2019 Ex.OP-2/7, Repudiation Letter dated 27.12.2019 Ex.OP-2/8.

10. We have heard learned counsel for the parties. We have further carefully gone through written submissions and perused the record of the case.

9

11. Learned counsel for the complainant contended that OPs are deficient in service as claim was rejected with vague reasons that illness was predetermined, not disclosed at the time of taking policy. It is clear that premium was paid on 31.03.2018 and insurance policy was issued on 01.04.2018. The complainant's husband died on 03.07.2019 after more than one year from issuance of insurance policy. The premium of the policy of Rs.59,177/- was charged from loan account and same was debited on 31.03.2018. The employees of the OPs every time assured Jiwan Kumar that his property, loan and life is insured with OPs and that if any mis-happening occurred in future, OPs would be liable to pay entire loan amount and also pay insurance to the nominee of Mr.Jiwan Kumar (deceased). The OPs failed to settle the claim as assured by them and without any reason rejected the claim of the complainant vide letter dated 27.12.2019. As per terms and conditions of the policy, claim is to be lodged with OP No.1 with required documents and OP No.1 is to pass the claim with OP No.2. The act of OP No.1 is acted between complainant and OP No.2. In these circumstances OP No.1 is also equally liable to such rejection and repudiation of claim. In support of his arguments learned counsel relied upon the judgments of Hon'ble National Commission (1) Future Generali India Insurance Company Ltd. Vs. Inderjit Singh, 2019(2) C.P.R. 623: 2019 (3) C.P.J. 22, (2) Abhishek Jain Vs. HDFC Standard Life Insurance Co. Ltd. and Anr., 2014 (3) C.P.C. 585.

10

12. The OP No.1 has also submitted written arguments as per the averments and pleas taken in the written statement. Orally, it is contended that complaint is not maintainable against OP No.1, the only privity of contract between the complainants and OP No.1 is the 'working capital-loan facility and the same is governed by terms and conditions agreed by the Borrowers and OP No.1 in the Loan Agreement. Pertinently, Clause 9 of Schedule 1 of the Loan Agreement, sspecifically provided that the Purpose/End Use of the loan is "Working Capital" for business purpose. Therefore, same being for "commercial purpose". The complainants are not

"consumers" as envisaged in Section 2(d) of the Consumer Protection Act, 1986. Therefore, it is clear that the complainants are not consumers. He relied upon the judgment of Hon'ble Supreme Court in case tilted as "Laxmi Engineering Works Vs. P.S.G. Industrial Institute", reported as 1995 AIR (SC) 1428.

Denying all the other allegations and prayed for dismissal of the complaint.

13. The OP No.2 has orally contended as per the averments and pleas taken in the written statement.

14. We have given our thoughtful consideration to the respective contentions raised by learned counsel for the parties.

15. It is an admitted fact that the husband of the complainant (since deceased), during his lifetime, had availed a loan of Rs.25,00,000/- from OP No.1 and also got insured the said loan upto Rs.24,13,000/- from OP No.3 through OP No.1, vide

11

insurance policy bearing invoice No. 202182351900000, certificate No.2111202182351900000 dated 13.04.2018 (Ex.C-3). OP No.1 also purchased a Life Insurance Policy in the name of Jiwan Kumar from OP No.2 (HDFC Life Group Credit Protect Plus Insurance Plan UIN:IDIN096V02) having Master Policy No.PP000239 dated 01.04.2018 for the sum assured of Rs.24,99,999/-. The complainant was appointed as nominee by the insured and at the time of obtaining the said policies. Unfortunately, on 02.07.2019, the husband of the complainant fell ill and was admitted to Dayanand Medical College and Hospital, Ludhiana for his treatment, where he died on 03.07.2019. As mentioned in the complaint, the OPs failed to reimburse the amount of the insurance policy in favour of the complainant. The complainant also visited the office of OP No.1 numerous times for settling of claim but all in vain. Aggrieved by the act of the OPs, complainant has filed the present complaint.

16. Rebutting the allegations of the complainant, OPs have contended that the present complaint is not maintainable because it is a case of the complainant herself that her husband Mr.Jiwan Kumar was in jewellery business and was a sole proprietor of firm M/s Jiwan Jewellers, Sadar Bazar, near Bhagat Singh Chowk, Barnala. This contention of OP is substantiated from perusal of Ex.C-3 i.e. Master Policy in which the name and address of the Member is mentioned as 'M/s Jiwan Jewellers' and the loan sanctioned to the tune of Rs.25,00,000/- is in favour of M/s.Jiwan

12

Jewellers, Properitorship firm of Mr.Jiwan Kumar as main applicant and others as co-applicants. The loan agreement dated 31.03.2018 is Ex.R-1/1 executed between the borrowers (supra) and the OP No.1 and the copy of statement of account pertaining to the said Working Capital-Loan Facility dated 18.08.2020 is Ex.R-1/2. A bare perusal of these documents would reveal that the said loan is 'loan against property' (LAP) and the end use of which could be for any requirement of the borrower e.g. it could be used for purchase/construction of house/flat or could also be used as a personal loan for business purposes. Moreover, the said Loan Agreement, also clearly states that the Purpose/End Use of the loan is working Capital for business purpose.

17. Without touching the merits of the case, we now proceed to decide the main issue which has come forward before this Commission is whether the complainant is a consumer under the Consumer Protection Act or not ? To determine this, it would be relevant to discuss the Clauses of the Loan Agreement, vide which the loan was sanctioned. Under Clause 9 of Schedule I, it has been specifically mentioned that the loan was business loan and it was for business purpose. Ex.R-2/1 specifically provides that the Purpose/End use of the loan is working capital for business purpose. Therefore the same being for 'commercial purpose'.

18. Now with regard to the status of the complainant as a consumer as quoted under the Consumer Protection Act, we have

13

to see the provision of Section 2(i)(d) of Consumer Protection Act, which defines the 'consumer', which envisages as under:

(d) "consumer" means any person who,—

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) [hires or avails of] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person [but does not include a person who avails of such services for any commercial purpose];

19. The bare perusal of the wording of Section 2(1)(d) of the Consumer Protection Act, it can be seen that emphasis is laid down on the purpose for which the goods are purchased though the use to which the goods are actually put would be helpful in deciding the purpose for which they have been purchased. Hence, in the present case, it is amply clear that the loan obtained by Sh.Jiwan Kumar was for commercial purpose.

14

20. Moreover, the complainant in the entire complaint has nowhere pleaded that her husband availed the said loan for the purpose of earning his livelihood by means of self-employment. Reliance is placed on the recent judgment of Hon'ble Supreme Court in the case titled as "Shrikant G.Mantri Vs. Punjab National Bank" reported in 2022(1)PLR 709, wherein it has been held as under:-

"A. Consumer Protection Act, 1986, Section 2(1)(d)- Dismissal of complaint on ground of maintainability- Whether consumer complaint filed by appellant seeking direction to Bank to return shares was maintainable- Whether services of the Bank were availed by appellant for a 'commercial purpose' and whether such services were exclusively availed for earning livelihood by means of self-employment?- Held, No- Relation between appellant and Bank was purely "business to business" relationship and transactions were for 'commercial purpose' thus, cannot be said that services were availed "exclusively for purposes of earning his livelihood", "by means of self employment"- Hence, consumer complaint not maintainable as appellant not consumer."

21. In view of the ratio of law laid down in the authority discussed above, we are of the opinion that the complainant is not a 'consumer' as defined under the Consumer Protection Act. There is no force in the contention raised by counsel for the complainant and the same is hereby rejected.

15

22. Sequel to the above discussions, the complaint filed by the complainant is hereby rejected being not maintainable.

23. Since the main case has been disposed of, so all the pending miscellaneous applications, if any, are accordingly, disposed of.

24. The complaint could not be decided within the stipulated period due to heavy pendency of Court cases.

(HARINDERPAL SINGH MAHAL)

PRESIDING JUDICIAL MEMBER

(KIRAN SIBAL)

MEMBER

December 08, 2022

Rupinder 2