CONSUMER RIGHTS
Keep contract papers safe
Pushpa Girimaji

Almost all credit cards these days come with an assurance that in case of accidental death of the cardholder, the family will be eligible for a specified sum under an insurance cover. Flt Lt Amar Deep Bharadwaj had a similar cover under the Visa card that he got from ANZ Grindlays bank. The policy guaranteed his family Rs 2 lakh in case of accidental death and Rs 4 lakh in case of death due to accident while undertaking an air journey.

On August 18, 1994, Flt Lt Bharadwaj, who was employed with the Indian Air Force as a pilot, met a tragic end — he died in an air crash. Subsequently, when his mother made a claim, the insurance company rejected it. Quoting Clause 5 of the group insurance policy, the insurer said it specifically excluded aviation accidents, except where the cardholder was travelling as a passenger and in this case, the cardholder was piloting the aircraft.

Clause 5 of the policy, enumerating exceptions to the contract, said: "Payment of compensation in respect of death, injury or disablement of the insured person (a) from intentional self-injury, suicide or attempted suicide, (b) whilst under the influence of intoxicating liquor or drugs (c) whilst engaging in aviation or ballooning, whilst mounting, and dismounting from or travelling in any balloon or aircraft other than as a passenger (fare- paying or otherwise) in any duly licensed standard type of aircraft anywhere in the world, (d) directly or indirectly caused by venereal diseases, AIDS or insanity, (e) arising or resulting from the insured person committing any breach of law with criminal intent."

Bharadwaj’s mother then filed a complaint against the bank as well as the insurance company, claiming a total amount of Rs 5,65,235. The New India Assurance company’s defence before the consumer court was that

(a) the benefit of the group insurance policy was available to Bharadwaj free of cost and, therefore, he was not a consumer under the Consumer Protection Act.

(b) the contract of insurance was executed between the insurance company and the bank and there was no contract between the insurer and the consumer

(c) as per clause 5 of the policy the risk was not covered as he was piloting the aircraft.

The State Consumer Disputes Redressal Commission rejected all these arguments. It pointed out that the cardholder was paying an annual fee and the insurance policy was an additional benefit accruing from that.

It was therefore not a free service. It also rejected the argument that the cardholder had no contract with the insurance company. As a beneficiary of the group insurance scheme provided by the bank and the insurance company, the card holder was a consumer and after his death, the family had every right to seek redress of their grievance. The service providers, therefore, cannot escape liability by arguing that they were not party to the contract, the State Commission said.

The insurance company then filed an appeal before the National Consumer Disputes Redressal Commission. In deciding the case, the apex consumer court referred to the ‘addendum’ sent by the bank to the customer. The ‘addendum’ gave all the details of the insurance policy, including the exclusion clauses. However it made no mention of clause 5 (c) which excluded aviation or ballooning.

Observed the apex consumer court: what is relevant here is whether the deceased was informed about the exclusion clause or not. Though the bank and the insurance company entered into a contract with these exclusion clauses, in the addendum sent to the cardholder, no such clause existed. Now the parties to the contract cannot escape from the fact that this information of the exclusion clause had been completely omitted for reasons best known to them.

The bank was fully aware of the profession that Bharadwaj was in and despite that knowledge the card was given without specifying the exclusion clause. The bank and the insurance company cannot now bring up the issue of this particular exclusion clause as an afterthought and deny the accident policy amount to the mother. (The New India Assurance company Vs Smt. Shakuntala Bharadwaj, first appeal no 348 of 2001).

This is an extremely important order from the point of view of consumers because it ensures that service providers in general and insurance and credit card companies in particular do not come up with conditions that were not part of the original deal or contract to defeat a claim of the consumer. This is also a reminder to consumers to keep all papers pertaining to a contract, absolutely safe.

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