Supreme Court of India
ANJU KALSI versus HDFC ERGO GENERAL INSURANCE COMPANY LIMITED AND OTHERS on 21 February 2022
[2022] 2 S.C.R. 287
ANJU KALSI
v.
HDFC ERGO GENERAL INSURANCE COMPANY LIMITEDAND OTHERS
(Civil Appeal Nos. 1544-1545 of 2022)
FEBRUARY 21, 2022
[DR. DHANANJAYA Y CHANDRACHUD ANDSURYA KANT, JJ.]
Consumer Protection – Insurance Policy – Special conditionsof the policy – Notice of the special conditions under policy to theaccount holder – The bank-second respondent, obtained aninsurance cover from first respondent-insurer – Under the insurancepolicy, all debit card holders were the beneficiary of the insurancecover – The appellant’s son was an account holder with the bankand had also availed debit card from the bank – Appellant’s sondied in an accident – Appellant as mother of the deceased andnominee made a claim under the insurance cover – District Forumallowed consumer complaint and awarded Rs. 5 lakhs with interest– The SCDRC held that the deceased had failed to use the debitcard with a non-ATM transaction during the period of three monthsimmediately prior to the date of the accident and hence, the conditionprecedent for a claim under the insurance policy was not fulfilled –The order of the SCDRC was affirmed by the NCDRC – Thecontention of the appellant was that save and except for the coveringletter which indicated that an insurance cover against personalaccident was being provided to the account holder, neither theinsurer nor the bank had ever furnished the insurance policy, itsterms and conditions or any document related to the insurance coverto the account holder – Before the Supreme Court, the genesis ofthe dispute lies in whether the Special Conditions of the policy whichwas issued by the bank to the insurer were drawn to the notice ofthe account holder – Held: The terms of the insurance cover had tobe specifically communicated to the account holder – The accountholder had to be put on notice that the insurance cover would becomeavailable only after a transaction took place of the nature spelt outin the special conditions of the insurance policy – Insistence on
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Acommunication to the account holder is necessary because the policywas issued to the bank by the insurer – The account holders arebeneficiaries of the policy – In the present case, the bank did notchoose to defend the proceedings – Insurer belongs to the samegroup as of the bank, it could have summoned for production ofdocuments as to as to whether the debit card usage guide was madeBavailable to the account holder – In absence of such exercise, thecase of the appellant as set out in the complaint remaineduncontroverted – Respondents were not able to establish on a cogentbasis that special conditions of the policy were drawn to the noticeof the account holder – Accordingly, the judgment of the NCDRCCset aside and the judgment of the District Forum restored.
Allowing the appeals, the Court
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Conclusion
Allowing the appeals, the Court
HELD: 1. The insurance cover was governed by a policybetween the first and the second respondents. The terms of theinsurance cover had to be specifically communicated to theDaccount holder. The account holder had to be put on notice thatthe insurance cover would become available only after atransaction took place of the nature spelt out in the specialconditions of the insurance policy. Insistence on communicationto the account holder is necessary because the policy was issuedEto the bank by the insurer. The account holders are beneficiariesof the policy. In the present case, the bank did not choose todefend the proceedings at all. The insurer who also belongs tothe HDFC group could well have applied for a summons to beissued to the bank for production of its records in the course ofthe evidence which would establish as to whether the debit cardFusage guide had been made available to the account holder. Inthis backdrop, and in the absence of such a course of action beingadopted, the case of the appellant as set out in the complaintremained uncontroverted. Consequently, unless the respondentswere able to establish on a cogent basis that the special conditionsGof the policy which was issued by the first respondent to the secondrespondent were drawn to the notice of the account holder forwhose benefit the insurance cover extended, the claim ought notto have been rejected. [Para 12][292-H; 293-A-D]
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CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1544-1545 of 2022.
From the Judgment and Order dated 24.03.2017 of the NationalCommission Disputes Redressal Commission, New Delhi in RevisionPetition No. 2974-2975 of 2016.
Ms. N. Annapoorani, Adv. for the Appellant.
Rajeev Maheshwaranand Roy, Adv. for the Respondents.
The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, J.
1. Leave granted.
2. These appeals arise from a judgment of the National ConsumerDisputes Redressal Commission[1] dated 24 March 2017 in the exerciseof its revisional jurisdiction against an order of the State ConsumerDisputes Redressal Commission[2], Chandigarh.
3. On 3 September 2013, the appellant’s son obtained the benefitof an insurance cover under a policy called the “Cardsure PackagePolicy”. The appellant’s son was an account holder with HDFC BankLimited and had availed of a debit card from the bank. The bank, whichis the second respondent, obtained an insurance cover on 3 September2013 from the first respondent. The insurance cover was to commencefrom 25 August 2013 and was to end on 24 August 2014. Against thepayment of premium by the bank to the insurer, the insurer provided aninsurance cover for card holders of the bank. For ‘Platinum’ card holders,the base cover was in the amount of Rs 5 lakhs. In addition, the coverwould stand increased by five times of every rupee spent on purchasesthrough the debit card, extending up to an accelerated cover of Rs 5lakhs, thus making up a total sum insured of Rs 10 lakhs. The appellant’sson died in a road accident on 30 October 2013. The appellant as themother of the deceased and nominee made a claim under the insurancecover. The claim was repudiated by the insurer on 17 December 2013on the ground that the deceased had not undertaken a “non-ATMtransaction” in the period of three months immediately preceding thedate of the accident.
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A4. The appellant instituted a consumer complaint before the DistrictConsumer Disputes Redressal Forum[3], Bhatinda upon the repudiation ofthe claim under the policy. The complaint was allowed by the DistrictForum on 16 July 2014 in the amount of Rs 5 lakhs together with interestat 9% per annum from 1 February 2014 and compensation and costsquantified at Rs 20,000/-. The order on the consumer complaint wasBchallenged both by the appellant and by the first respondent. The SCDRCdismissed the appeal for enhancement of compensation and allowed theappeal by the insurer. The SCDRC held that the deceased had failed touse the debit card with a non-ATM transaction during the period ofthree months immediately prior to the date of the accident and hence,Cthe condition precedent for a claim under the insurance policy had notbeen fulfilled. The order of the SCDRC was affirmed by the NCDRCby its judgment dated 24 March 2017.
5. We have heard Ms N Annapoorani, counsel appearing on behalfof the appellant through the Supreme Court Legal Services CommitteeDand Mr Rajiv M Roy, counsel for the insurer.
6. The issue which arises for determination in the present casefalls within a narrow compass. The SCDRC reversed the award of theclaim by the District Forum on the ground that a mandatory condition ofthe insurance policy, namely, that there has to be a non-ATM swipeEtransaction within a stipulated period prior to the date of the event hadnot been fulfilled. The two conditions which have a bearing on this issueare respectively, conditions 5 and 9 of the ‘Special Conditions’ forming apart of the insurance cover. The insurance cover was provided by thefirst respondent to the second respondent, but the debit card holders ofthe bank were beneficiaries of the cover of insurance. Special ConditionsF5 and 9 of the insurance policy which was issued by the first respondentto the second respondent read as follows:
“5.Non ATM swipe (transaction) is mandatory i.e. on or before6 months from the date of loss for claims eligibility.
G9.For accidental death coverage the following conditions shouldbe fulfilled – Under Platinum card only:
Step I: Base cover – Rs 50,000 per card by doing onePOS transaction in the last three months.
H3 “District Forum”
ANJU KALSI v. HDFC ERGO GENERAL INSURANCE COMPANYLIMITED AND OTHERS [DR. DHANANJAYA Y CHANDRACHUD, J.]
Step II: Accelerated cover up to Rs 5,00,000/- (Total of upto Rs 10,00,000/-) for over Rs 1 spent on purchasethrough the Platinum Debit Card, sum assuredincreases by five times the spent amount (subjectto minimum spends of Rs 20,000) in the last 12months as per the latest bank statement of thecustomer.”
7. The genesis of the dispute lies in whether the Special Conditionsof the policy which was issued by the bank to the insurer were drawn tothe notice of the account holder. Before the District Forum, the appellant,in her consumer complaint made the following averments:
“That the opposite party no.1 and 2 never issued any insurancepolicy or its terms and condition or any document related to theinsurance ever issued to the account holder or complainant tilldate except the said covering letter in which it is mentioned thatPersonal Accident insurance Cover upto Rs.10.00 lacs and alsomentioned that when the account holder on every Rs.1/- spent onpurchased through this card, the same increased the sum insuredby 5 times. The opposite parties ‘also did not disclose any PolicyNumber to the complainant or account holder till date.”
8. The second respondent who were the bankers of the deceaseddid not appear in the proceedings.
9. A reply to the consumer complaint was filed by the firstrespondent, who is the insurer, in which it was stated that:
“That in reply to para No.4 of the complaint it is submitted thatthe opposite party No.2 had purchased a insurance policy fromthe replying opposite party named as Cardsure Package Policybearing No.2999200570315100000 and the replying opposite partysent the entire terms and conditions along with the policy to theopposite party no.2 and it is pertinent to mention here that the saidgroup insurance policy purchased by opposite party no.2 to protectits account holders who were interested to avail the benefits ofplatinum debit card, gold debit card, women advantage card, worldcard, business card etc. It is further pertinent lo mention here thatthe opposite party no.2 at the time of issuing the said card asdescribed above the opposite party no. 2 also provide a debit cardusage guide with the said card and this fact is clearly mentioned AB
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Ain the covering letter on which the complainant herself relied upon,there is specifically mentioned i.e. “For Details and Terms andConditions, Please Refer to the Usage Guide Enclosed”and there is further specifically mentioned that “ConditionsApply”. Rest of para is incorrect, hence denied.”
B10. The contention of the appellant was that save and except forthe covering letter which indicated that an insurance cover againstpersonal accident was being provided to the account holder, neither theinsurer nor the bank had ever furnished the insurance policy, its termsand conditions or any document related to the insurance cover to theaccount holder. The deceased was a customer of the bank and it wasCfor the bank to establish that when it dispatched the debit card to itscustomer, both the covering letter as well as the debit card usage guidehad been furnished to the deceased. The bank remained away from theproceedings. The insurer could not possibly have adduced any evidencein regard to whether the debit card usage guide had been actuallyDfurnished to the deceased account holder.
11. The evidence which was tendered by way of an affidavit onbehalf of the insurer by its Manager (Legal), does not displace the burdenwhich was cast on the bank, whose customer the deceased was, ofestablishing that the debit card usage guide containing the requisite termsEand conditions had actually been furnished to the deceased account holder.The NCDRC upheld the decision of the SCDRC by holding that therewas no specific averment in the complaint that the debit card usageguide was not enclosed to the forwarding letter. This finding proceedson a misreading of the averments in the complaint. The NCDRC alsoheld that the forwarding letter referred to the usage guide and if theFguide had not been furnished, the deceased account holder would in theordinary course of human conduct have written to the bank complainingthat usage guide had not been made available. The specific averment ofthe appellant in the consumer complaint was that save and except forthe covering letter, neither the insurance policy nor its terms and conditionsGwere furnished to the account holder or the appellant. It was also averredthat no document relating to the insurance cover was issued to theaccount holder or the appellant by the insurer or the banker.
12. The insurance cover was governed by a policy between thefirst and the second respondents. The terms of the insurance cover hadHto be specifically communicated to the account holder. The account holder
had to be put on notice that the insurance cover would become availableonly after a transaction took place of the nature spelt out in the specialconditions of the insurance policy. Insistence on communication to theaccount holder is necessary because the policy was issued to the bankby the insurer. The account holders are beneficiaries of the policy. In thepresent case, the bank did not choose to defend the proceedings at all.The insurer who also belongs to the HDFC group could well have appliedfor a summons to be issued to the bank for production of its records inthe course of the evidence which would establish as to whether thedebit card usage guide had been made available to the account holder.In this backdrop, and in the absence of such a course of action beingadopted, the case of the appellant as set out in the complaint remaineduncontroverted. Consequently, unless the respondents were able toestablish on a cogent basis that the special conditions of the policy whichwas issued by the first respondent to the second respondent were drawnto the notice of the account holder for whose benefit the insurance coverextended, the claim ought not to have been rejected.
13. Mr Rajiv M Roy, learned counsel appearing on behalf of theinsurer made an attempt to support the findings by urging that the debitcard usage guide was suppressed by the appellant. We are unable tosubscribe to this contention since, as a matter of fact, the case of theappellant was that save and except for the covering letter no furtherdocumentation had been furnished to the account holder. Learnedcounsel for the insurer has submitted in the alternate that the deficiencyof service, if any, would be on the part of the bank and that there wasno deficiency on the part of the insurer. We are not inclined to go intothis aspect of whether or not there was deficiency of service on thepart of the bank. The deficiency of service on the part of the insurerlies in the wrongful repudiation of the claim under the policy. The insurerwould however be at liberty to work out its remedy against the secondrespondent – bank.
14. For the reasons which we have indicated, we find that thecase which was set up by the appellant has not been displaced. Hence,the appellant was validly entitled to the award of the basic claim in theamount of Rs 5 lakhs together with interest as directed by the DistrictForum. The appellant would not be entitled to the claim under theenhanced cover since it was linked to purchases made against the debitcard.
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A15. For the above reasons, we allow the appeals and set aside theimpugned judgment of the NCDRC dated 24 March 2017. The judgmentof the District Consumer Disputes Redressal Forum, Bhatinda shallaccordingly stand restored and the appellant would be entitled tocompensation in the amount of Rs 5 lakhs together with interest from 1February 2014 at 9% per annum. The appellant would also be entitled toBcompensation and costs quantified at Rs 20,000/- as awarded.
16. Payment in terms of the present order shall be made over tothe appellant by a demand draft drawn in her name within a period ofone month from the date of the present judgment.
C17. Pending applications, if any, stand disposed of.
Ankit Gyan
Appeals allowed.
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