NEW INDIA ASSURANCE CO. LTD. vs Shikha Bhatia

APPELLANT Insurance Company which was opposite party Nos. 1 and 2 before the State Commission has filed this Appeal against the judgment and order dated 10.7.2006 passed by the State Consumer Disputes Redressal Commission, Delhi (in short, ''the State Commission '') in Complaint Case No. C-265/1997 wherein the State Commission allowing the complaint filed by the Respondent No. 1 has directed the Appellant to pay additional compensation of Rs. 3,00,000 towards insurance cover and Rs. 50,000 as compensation for mental agony, harassment and costs of litigations.

COMPLAINANT ''s/Respondent No. 1 ''s husband was holder of Citi Bank Diners Club Card issued by the Respondent No. 2, Citi Bank (Opposite Party No. 3 before the State Commission). Citi Bank had taken the Group Personal Accident Policy for the year 1995-96 from the Appellant Insurance Company covering the risk of its card holders in case of death by accident for Rs. 2 lakh and Rs. 15 lakh in case of death while in flight. Respondent No. 1 ''s husband died in a car accident on 24.1.1996. Respondent No. 1 being widow of the deceased filed a claim with the Appellant on 22.4.1996 along with the required documents. Appellant Insurance Company paid Rs. 2,00,000 against the claim of Rs. 5,00,000 in full and final settlement of the claim to the Respondent No. 1 and got the disbursement voucher signed from her. Complainant, being aggrieved, filed the complaint before the State Commission seeking balance claim amount along with interest of Rs. 1,70,000, compensation of Rs. 3,00,000 for mental agony and costs of Rs. 10,000. Appellant Insurance Company; on being served, entered appearance and filed its written statement resisting the complaint, inter alia, on the grounds that in terms of the policy the capital sum insured in case of accidental death was Rs. 2,00,000 and in case of air accident the capital sum insured was Rs. 15,00,000; that the period covered by the policy was between 1.12.1995 to 10.11.1996; that since the husband of the complainant died in a road accident, the Appellant paid a sum of Rs. 2,00,000 to the Complainant on 19.3.1997 in full and final settlement of the claim for which a disbursement voucher was also signed by her; that the complaint filed for the balance claim amount was not sustainable.

RESPONDENT Bank filed its separate reply stating that it had no role to play as the matter pertained to claim of insurance benefit and Bank was not responsible for any warranty or quality, delivery of the cover or claims processing etc.

STATE Commission, after considering the facts, pleadings and the evidence led by the parties, allowed the complaint holding that the Appellant Insurance Company had failed to substantiate that the insurance amount in case of death in accident other than air was Rs. 2 lakh in the year 1995-96. State Commission directed the Appellant to pay an additional compensation of Rs. 3,00,000 towards insurance cover and Rs. 50,000 as compensation for mental agony, harassment and costs of litigations. The relevant observations of the State Commission read as under: "If we go by the certificate which expired on 30.11.1994 and also by the contention of the OP Nos. 1 and 2 that every year they go on changing their policy, we find in the pamphlet produced by the OP Nos. 1 and 2 that the club member is insured against loss of life in air accident at Rs. 30 lakh and Rs. 2 lakh in any other accident. Such a differentiation is highly irrational and arbitrary and does not project that this was the policy of OP Nos. 1 and 2 in the year 1995-96. On the one hand they have increased the amount of compensation in case death in air accident to three times i.e. Rs. 10 lakh in the year 1994 to Rs. 30 lakh in the year 1995-96 whereas they have reduced the amount of Rs. 5 lakh in other accident to Rs. 2 lakh. Even otherwise Pamphlet produced before us shows as if it has been printed this year and does not appear to be as old as issued in 1995-96. Since the OPs have failed to produce any document or certificate showing that between 1995-96 the insurance amount in case of death in accident other than air was Rs. 2 lakh we do not perceive any reason by applying rule of produce in the context of certificate which was for the period upto 30th November, 1994 that the amount of insurance cover in case of death in any other accident continued to be Rs. 5 lakh whereas the amount of insurance in case of death by air accident rose to Rs. 30 lakh i.e. three times. "

WITH regard to the difference in the amount of insurance cover in respect of death by air accident or in any other accident, the State Commission observed as under: "By this order we issue fiat to all the Bank and Insurance companies by invoking provision of Section 14(1)(f) of the Consumer Protection Act, 1986 to the discontinuation of practice of different amount of insurance cover for death by air accidents and in any other accidents and advertise in the papers that holders of such cards shall be paid equal amount of insurance in case of death by accident irrespective of air accident or any other accident where premium amount is the same. Equals cannot be treated as unequals nor can death by accident be treated differently. "

Appellant, being aggrieved, has filed the present appeal. We have heard the learned Counsel for the parties at length.

LEARNED Counsel appearing for the Appellant Insurance Company contends that the State Commission has erred in awarding additional compensation of Rs. 3 lakh to the Respondent/Complainant; that the Capital Sum Insured (CSI) per insured person for member of Citi Bank Diners Club and diners NRI in case of accidental death was Rs. 2,00,000 and in case of accidental death whilst on flight was Rs. 15,00,000.; that the State Commission has committed a grave error in relying upon the letter dated 10.7.1997 purportedly issued by the Diners Club International on their letter head stating the personal accident insurance in the form of automatic accident insurance was covered upto Rs. 10 lakh while for other accident it was Rs. 5 lakh; that the policy was for the period from 1.12.1995 to 30.11.1996 while the letter was dated 10.7.1997; that the Complainant had accepted the claim amount of Rs. 2,00,000 in full and final settlement of her claim by signing the disbursement voucher and the complaint for the balance claim amount was not maintainable; that the State Commission has wrongly exercised its jurisdiction by directing the Banks and the Insurance Companies to pay the equal amount of insurance in case of death by accident irrespective of air accident or any other accident. As against this, learned Counsel for the Respondent No. 1 supports the order of the State Commission and submits that since the terms and conditions of the policy had not been supplied to the Respondent No. 1, the Respondent No. 1 is not bound by the limitation put by the Appellant for covering the risk of the Card Holders for Rs. 2 lakh only in case of death by accident. That the Appellant Insurance Company cannot adopt different criteria for compensation for accident by road and by air. That the death is death and it may happen either by road or accident by air. There is no rational for giving compensation of Rs. 15/10 lakh for accident by air and Rs. 5/2 lakh for accident by road. We find substance in the submissions made by the learned Counsel for the Appellant. A perusal of the policy issued to the Citi Bank Diners Club Card holders by the Appellant, would show that under the Heading of "Capital Sum Insured ", the Capital sum insured (CSI) was Rs. 2,00,000 in case of accidental death. However, the CSI in case of accidental death whilst on flight was Rs. 15,00,000. Insurance policy is a contract of faith and both the parties are bound by the terms and conditions of the policy. The plea taken by the learned Counsel for the Respondent No. 1 that the terms of the policy had not been supplied to the Respondent No. 1 has no force. In our view, CSI of Rs. 2,00,000 in case of accidental death was not a term or condition of the policy. Rs. 2,00,000 were provided as a insurance cover for the Members of the Diners Club in case of death by accident. CSI in case of accidental death while on flight was Rs. 15 lakh. The Insurance Company cannot be asked to pay more than the sum insured. The Consumer Court cannot by a Court fiat direct the Insurance Company or the Bank to treat the accidental death on the road and the death while in flight as equal for the purpose of payment of compensation. It was matter of contract between the Bank and the Insurance Company. At the instance of the complainant, Insurance Company cannot be asked to change terms of the policy or the coverage taken by the Bank under the policy. The contract was between the Bank and Insurance Company. There was no privity of contract between the Complainant and the Insurance Company as the policy was taken by the Bank for its Card Holders. Counsel for the Respondent/Complainant pleaded that the earlier policy for the year 1994-95 was for a sum of Rs. 5,00,000. This submission has no force as the policies are being changed by the Insurance Companies every year. We are also of the view that the State Commission has no power to interfere in the discretion of the Insurance Companies and to give directions to the Banks as well as to the Insurance Companies to pay the equal amount of insurance in case of death either in air accident or any other accident where premium amount is the same. For the reasons stated above, appeal is allowed and impugned order is set aside. Registry is directed to refund the sum of Rs. 35,000 deposited by the Appellant as statutory deposit along with accrued interest. Appeal allowed.