Citibank N.A. vs G. JAYANTI

- THIS is an appeal against the order of State Commission, Tamil Nadu at Madras dated 1st September, 1993 in Opposite Party No. 506/92. The Citibank N.A., Citi Bank Cards Division, Dinners Club is the Appellant and Mrs. G. Jayanti wife of the late Gollapudi Srinivas is the Respondent herein. The Respondent is the widow of the late Shri Gollapudi Srinivas who was issued with a Dinners Club Citibank Card bearing No. 36559014010105 by the Appellant herein. The card carried a facility of insurance for a sum of Rs. 5.00 lakhs in the event of death of the card holder by accident. Unfortunately, Shri Gollapudi Srinivas died in an accident on 12.8.92 while shooting a film. His wife Mrs. G. Jayanti wrote to the Citibank for processing the case for payment of the insured amount of Rs. 5.00 lakhs as part of the terms and conditions of the Dinners Club credit card given to her later husband. It is her contention that this insurance cover was available to the Complainant''s husband from April 1991 to April 1993 and it was during this period that her husband died in an accident. On the other hand, the contention of the Citibank is that once the credit facility had been withdrawn, the other attendant facilities also stood withdrawn simultaneously, as in the event of suspension of the membership, no facility could be deemed to be in force. Hence, they informed the Insurance Company that the insurance cover for late Shri Gollapudi Srinivas will not be enforceable w.e.f. 30.6.92 which is earlier than the date of death viz. 12th August 1992.

THE State Commission, Tamilnadu after going through the record and hearing the parties came to the view that the contention of the Appellant herein regarding the withdrawal of the insurance cover with effect from 30th June, 1992, in view of outstanding dues not being cleared by the late Shri Gollapudi Srinivas is not legally correct and hence directed the Citibank to pay to Smt. G. Jayanti wife of the late Shri Gollapudi Srinivas, a sum of Rs. 5.00 lakhs, with interest at the rate of 18% per annum, from the date of the complaint, till the payment and also a compensation in the sum of Rs. 10,000/- alongwith costs of Rs. 2,000/- within one month from the date of receipt of the order. We have heard the learned Counsel for both the parties and gone through the records. We find that in a communication from the Insurance Co., it has been clearly stated "at the request of the Insured M/s. Citibank we hereby inform that we had covered under our Group Personal Accident Policy No. 42710700 00441 Dinners Club Card No. 3655 9014 010105 against loss of life due to accident till 30.6.92 when the above card was attrited as per monthly statement from Citibank for the period from 21.6.92 to 20.7.92 and the balance premium was refunded to the Citibank. Hence it is therefore to be understood that the above card is not valid and no claims would be admissible after 30.6.92". The argument given on behalf of the Respondent and accepted by the Tamil Nadu State Commission is that what was withdrawn was a charge facility available to the card holder, and that too temporarily, which did not automatically imply the cancellation of the insurance facility. In support of this, an endorsement on the bill-dated 24.6.92 sent by the Citibank to Shri Gollapudi Srinivas has been cited. This endorsement reads: "as indicated earlier payment on your card account in overdue for five months. The charge facilities on your card are temporarily withdrawn. Please do not use your card(s). Please send your payment immediately if not already done. We will then be pleased to review your account for restoration of charge facilities". Similar endorsement also appears a month later on the bill dated 24.7.92.

The contention of the Citibank is that even a temporary suspension of the credit card implies simultaneous suspension of all facilities attendant thereto. In this regard they referred to Clause 5.1 of the Card Member/Agreement which reads: "The privileges to the credit card may be withdrawn and the credit card cancelled by the Dinners Club at any time (in its absolute discretion and without giving notice thereof to the Member or assigning any reasons thereof) either temporarily or permanently: The Citibank also cited another condition which is : "Further the Member also agrees that even during the continuation of his Membership of Dinners Club, Dinners Club may at any time (in its sole discretion and without giving any notice thereof to its Member or assigning any reason thereof) suspend, withdraw or cancel the benefit of such insurance cover, and there will be no binding obligation on Dinners Club to continue this benefit."

THE Tamil Nadu State Commission accepted the plea of the Complainant that her husband did not sign any such declaration and stated that even the Citibank had admitted that no such declaration had been signed by him. However, it has been brought to our notice that it was Mr. Gollapudi Maruti Rao the father of the deceased Shri Gollapudi Srinivas, who has tendered the application to the Citibank requesting them to issue an additional card to his son Mr. Gollapudi Srinivas, wherein it was clearly mentioned that "it is my responsibility to obtain the terms and conditions applying to the issuance and use of the card from Citibank and read the same and have them read by the Additional Card Member. If this application is accepted, the Additional Card Member and I will be jointly and severally bound by the said terms and conditions and the use of the Card will be deemed to be an acceptance of those terms and conditions." THE card to late Shri Gollapudi Srinivas was issued on the basis of this application. It has also been brought to our notice that another condition of the card is: "THE member shall be deemed to have agreed to and accepted the terms of this Card member Agreement by incurring a charge on the Citibank Dinners Club Card and/or by acknowledging receipt of the card in writing."

It is clear that the late Shri Gollapudi Srinivas has incurred charge on his Citibank Dinners Club Card and therefore, according to the learned Counsel for the Citibank he had accepted the condition of the card as mentioned in the application signed by his father who had applied for the issue of additional card to his son.

WE have given very careful consideration to the issue involved in this case. After a perusal of agreement for the issue of this card as well as the circumstances of this case, we are of the clear opinion that there is a debtor and creditor relationship between the card holder and the Citibank. In all such relationships, it is the prerogative of the creditor to withdraw the facility based on their assessment of the credit worthiness of the debtor as also his past record in regard to clearing his dues in time. It is significant to note that the renewal fee of the card from May, 1992 to April, 1993 became due and was included in the statement dated 24.4.92 for immediate payment. This amount of renewal fee and other payments included in this bill have not been paid. WE are unable to accept the position that the Insurance coverage is independent of the facility to use the card. In our view, suspension of the membership automatically implies the suspension of all the privileges that a member enjoys. In this particular case, the agreement specifically provides for the withdrawal of such facilities at any time in the discretion of the card issuing authority without giving even a notice to the cardholder. The State Commission has opined that such a condition is arbitrary and monopolistic. However, such conditions are imposed by the creditors to safeguard their pecuniary interest and have to be upheld. WE cannot also lose sight of the fact that the insurance cover is a facility extended to a cardholder by way of a privilege and not for any consideration. As this facility is without any specific consideration, it is questionable whether it can be covered by the provisions of the Consumer Protection Act, but we do not decide this question in this case. Taking all these facts and also the provisions of the agreement as well as the circumstances of this case into consideration we accept this appeal and set aside the order of the Tamilnadu State Commission. There is no order as to costs throughout. Appeal allowed.