Dr Dhananjaya Y Chandrachud, J
1 Leave granted.
2 These appeals arise from a judgment of the National Consumer Disputes
Redressal Commission1 dated 24 March 2017 in the exercise of its revisional
jurisdiction against an order of the State Consumer Disputes Redressal
Commission2, Chandigarh.
Chetan Kumar
3 On 3 September 2013, the appellant’s son obtained the benefit of an
insurance cover under a policy called the “Cardsure Package Policy”. The
appellant’s son was an account holder with HDFC Bank Limited and had
availed of a debit card from the bank. The bank, which is the second
respondent, obtained an insurance cover on 3 September 2013 from the first
respondent. The insurance cover was to commence from 25 August 2013
and was to end on 24 August 2014. Against the payment of premium by the
bank to the insurer, the insurer provided an insurance 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 cover would stand increased by five times of
every rupee spent on purchases through the debit card, extending up to an
accelerated cover of Rs 5 lakhs, thus making up a total sum insured of Rs 10
lakhs. The appellant’s son died in a road accident on 30 October 2013. The
appellant as the mother of the deceased and nominee made a claim under
the insurance cover. The claim was repudiated by the insurer on 17
December 2013 on the ground that the deceased had not undertaken a “non-
ATM transaction” in the period of three months immediately preceding the
date of the accident.
4 The appellant instituted a consumer complaint before the District Consumer
Disputes Redressal Forum3, Bhatinda upon the repudiation of the claim under
3 “District Forum”
the policy. The complaint was allowed by the District Forum on 16 July 2014
in the amount of Rs 5 lakhs together with interest at 9% per annum from 1
February 2014 and compensation and costs quantified at Rs 20,000/-. The
order on the consumer complaint was challenged both by the appellant and
by the first respondent. The SCDRC dismissed the appeal for enhancement of
compensation and allowed the appeal by the insurer. The SCDRC held that
the deceased had failed to use the debit card with a non-ATM transaction
during the period of three months immediately prior to the date of the
accident and hence, the condition precedent for a claim under the insurance
policy had not been fulfilled. The order of the SCDRC was affirmed by the
NCDRC by its judgment dated 24 March 2017.
5 We have heard Ms N Annapoorani, counsel appearing on behalf of the
appellant through the Supreme Court Legal Services Committee and Mr Rajiv
M Roy, counsel for the insurer.
6 The issue which arises for determination in the present case falls within a
narrow compass. The SCDRC reversed the award of the claim by the District
Forum on the ground that a mandatory condition of the insurance policy,
namely, that there has to be a non-ATM swipe transaction within a stipulated
period prior to the date of the event had not been fulfilled. The two
conditions which have a bearing on this issue are respectively, conditions 5
and 9 of the ‘Special Conditions’ forming a part of the insurance cover. The
insurance cover was provided by the first respondent to the second
respondent, but the debit card holders of the bank were beneficiaries of the
cover of insurance. Special Conditions 5 and 9 of the insurance policy which
was issued by the first respondent to the second respondent read as follows:
“5. Non ATM swipe (transaction) is mandatory i.e. on or before
6 months from the date of loss for claims eligibility.
9. For accidental death coverage the following conditions
should be fulfilled – Under Platinum card only:
Step I: Base cover – Rs 50,000 per card by doing one POS
transaction in the last three months.
Step II: Accelerated cover up to Rs 5,00,000/- (Total of up
to Rs 10,00,000/-) for over Rs 1 spent on purchase
through the Platinum Debit Card, sum assured
increases by five times the spent amount (subject
to minimum spends of Rs 20,000) in the last 12
months as per the latest bank statement of the
customer.”
7 The genesis of the dispute lies in whether the Special Conditions of the policy
which was issued by the bank to the insurer were drawn to the 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 insurance
policy or its terms and condition or any document related to the
insurance ever issued to the account holder or complainant till
date except the said covering letter in which it is mentioned
that Personal Accident insurance Cover upto Rs.10.00 lacs and
also mentioned that when the account holder on every Rs.1/-
spent on purchased through this card, the same increased the
sum insured by 5 times. The opposite parties 'also did not
disclose any Policy Number to the complainant or account
holder till date.”
8 The second respondent who were the bankers of the deceased did not
appear in the proceedings.
9 A reply to the consumer complaint was filed by the first respondent, who is
the insurer, in which it was stated that:
“That in reply to para No.4 of the complaint it is submitted
that the opposite party No.2 had purchased a insurance
policy from the replying opposite party named as Cardsure
Package Policy bearing No.2999200570315100000 and
the replying opposite party sent the entire terms and
conditions along with the policy to the opposite party no.2
and it is pertinent to mention here that the said group
insurance policy purchased by opposite party no.2 to
protect its account holders who were interested to avail
the benefits of platinum debit card, gold debit card,
women advantage card, world card, business card etc. It is
further pertinent lo mention here that the opposite party
no.2 at the time of issuing the said card as described
above the opposite party no. 2 also provide a debit card
usage guide with the said card and this fact is clearly
mentioned in the covering letter on which the complainant
herself relied upon, there is specifically mentioned i.e.
"For Details and Terms and Conditions, Please Refer
to the Usage Guide Enclosed" and there is further
specifically mentioned that "Conditions Apply". Rest of
para is incorrect, hence denied.”
10 The contention of the appellant was that save and except for the covering
letter which indicated that an insurance cover against personal accident was
being provided to the account holder, neither the insurer nor the bank had
ever furnished the insurance policy, its terms and conditions or any
document related to the insurance cover to the account holder. The
deceased was a customer of the bank and it was for the bank to establish
that when it dispatched the debit card to its customer, both the covering
letter as well as the debit card usage guide had been furnished to the
deceased. The bank remained away from the proceedings. The insurer could
not possibly have adduced any evidence in regard to whether the debit card
usage guide had been actually furnished to the deceased account holder.
11 The evidence which was tendered by way of an affidavit on behalf of the
insurer by its Manager (Legal), does not displace the burden which was cast
on the bank, whose customer the deceased was, of establishing that the
debit card usage guide containing the requisite terms and conditions had
actually been furnished to the deceased account holder. The NCDRC upheld
the decision of the SCDRC by holding that there was no specific averment in
the complaint that the debit card usage guide was not enclosed to the
forwarding letter. This finding proceeds on a misreading of the averments in
the complaint. The NCDRC also held that the forwarding letter referred to the
usage guide and if the guide had not been furnished, the deceased account
holder would in the ordinary course of human conduct have written to the
bank complaining that usage guide had not been made available. The
specific averment of the appellant in the consumer complaint was that save
and except for the covering letter, neither the insurance policy nor its terms
and conditions were furnished to the account holder or the appellant. It was
also averred that no document relating to the insurance cover was issued to
the account holder or the appellant by the insurer or the banker.
12 The insurance cover was governed by a policy between the first and the
second respondents. The terms of the insurance cover had to be specifically
communicated to the account holder. The account holder had to be put on
notice that the insurance cover would become available only after a
transaction took place of the nature spelt out in the special conditions of the
insurance policy. Insistence on communication to the account holder is
necessary because the policy was issued to the bank by the insurer. The
account holders are beneficiaries of the policy. In the present case, the bank
did not choose to defend the proceedings at all. The insurer who also
belongs to the HDFC group could well have applied for a summons to be
issued to the bank for production of its records in the course of the evidence
which would establish as to whether the debit card usage guide had been
made available to the account holder. In this backdrop, and in the absence of
such a course of action being adopted, the case of the appellant as set out in
the complaint remained uncontroverted. Consequently, unless the
respondents were able to establish on a cogent basis that the special
conditions of the policy which was issued by the first respondent to the
second respondent were drawn to the notice of the account holder for whose
benefit the insurance cover extended, the claim ought not to have been
rejected.
13 Mr Rajiv M Roy, learned counsel appearing on behalf of the insurer made an
attempt to support the findings by urging that the debit card usage guide
was suppressed by the appellant. We are unable to subscribe to this
contention since, as a matter of fact, the case of the appellant was that save
and except for the covering letter no further documentation had been
furnished to the account holder. Learned counsel for the insurer has
submitted in the alternate that the deficiency of service, if any, would be on
the part of the bank and that there was no deficiency on the part of the
insurer. We are not inclined to go into this aspect of whether or not there was
deficiency of service on the part of the bank. The deficiency of service on the
part of the insurer lies in the wrongful repudiation of the claim under the
policy. The insurer would however be at liberty to work out its remedy
against the second respondent – bank.
14 For the reasons which we have indicated, we find that the case 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 the amount of Rs 5 lakhs together
with interest as directed by the District Forum. The appellant would not be
entitled to the claim under the enhanced cover since it was linked to
purchases made against the debit card.
15 For the above reasons, we allow the appeals and set aside the impugned
judgment of the NCDRC dated 24 March 2017. The judgment of the District
Consumer Disputes Redressal Forum, Bhatinda shall accordingly stand
restored and the appellant would be entitled to compensation in the amount
of Rs 5 lakhs together with interest from 1 February 2014 at 9% per annum.
The appellant would also be entitled to compensation and costs quantified at
Rs 20,000/- as awarded.
16 Payment in terms of the present order shall be made over to the appellant by
a demand draft drawn in her name within a period of one month from the
date of the present judgment.
17 Pending applications, if any, stand disposed of.
[Dr Dhananjaya Y Chandrachud]
[Surya Kant]
New Delhi; February 21, 2022 CKB