Case Law Details
Gokal Chand (D) Thr. Lrs. Vs Axis Bank Ltd. (Supreme Court of India)
Whether an insurance company even after receiving the insurance premium, can refuse to honour its contract when the insured person dies immediately after taking the home loan.
An interesting issue arose in this case when the insured obtained a home loan from Axis Bank and as part of the loan mandatory insurance was taken from Max NewYork Life and a premium of Rs 6.24 lacs was also debited.After such debit, tread mill test (TMT) test was conducted in which there was no abnormality and there was no adverse communication from either bank or the insurer. However, 15 days after TMT, the insured died of a heart attack and when the insurer was informed to honour the claim, the insurance company back dated a letter declining to take insurance policy on the pretext of adverse TMT Finding.
Moreover, when the death information was conveyed to the respondents, most surprisingly, that was the trigger that led to the insurance company to issue a back dated letter deferring the insurance process, which was followed by refund of the premium a few days later, and then the repudiation after that.
The case at hand shows clear malafide on the part of respondent No. 2 in the manner they dealt with the insurance policy, after learning of the death of the insured person on intimation from the affected persons.
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