Insurance Company cannot refuse to process claim when all formalities was completed: SC

Gokal Chand (D) THR. LRS. Vs Axis Bank Ltd. & Anr. (Supreme Court of India)

Conclusion: The Hon’ble Supreme Court directed Insurance Company to process the complainant’s insurance claim and remit the payable sum as all formalities on behalf of deceased was completed. Further, a complete malafide intention was deciphered out from the sequence of events through which Insurance Company was trying to deny all benefits.

Facts: The appeal arises out of a home loan secured by the appellants for which obtaining the life insurance in the name of Gokal Chand (now deceased) was a pre­requisite, as set out by the Respondent no.1. The appellants project that respondent No. 1 bank acting as an agent for respondent No. 2 Insurance Company, on 25.7.2017 sanctioned home loan of Rs. 70,99,172/-. From the disbursed loan amount, insurance premium of Rs. 6,24,172/- was paid on behalf of the insured Gokal Chand by the bank to the insurance company. The loan account has since been settled by the borrowers on 19.3.2020 during the pendency of the appeal.

Gokal Chand had faced a medical test on 30.7.2017 as a pre-condition for securing the home loan and although, he died of cardiac arrest soon thereafter on 8.8.2017, the respondent No. 2 refused to settle the loan account when the insurance claim was made. Consequently, a Consumer Complaint was filed by the appellants before the State Consumer Disputes Redressal Commission, Haryana. The State Commission, however, dismissed the Consumer Complaint with the observation that there was no privity of contract between the insurer and the insured. The resultant appeal was dismissed by the National Consumer Disputes Redressal Commission (for short “National Commission”) by the impugned order which has led to the present appeal before this Court.

In the impugned judgment, it was noted that the Complainant along with her husband, late Gokal Chand approached the bank for a home loan for which the respondent bank had insisted that a life insurance cover should be obtained from respondent No. 2 on the life of Gokal Chand. The bank accordingly deducted a sum of Rs.6,24,172/- on 25.7.2017 towards the insurance premium. The insured Gokal Chand was subjected to medical tests on 30.7.2017 and although he died on 8.8.2017, the insurance claim was repudiated by respondent No. 2.

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