The West Bengal State Consumer Disputes Redressal Commission has reaffirmed that procedural fairness under the Consumer Protection Act cannot be sacrificed for expediency. An ex parte order against a life insurer was set aside not on merits, but because the complainant failed to establish proper service of notice on all respondents - a fundamental breach of natural justice.
Background & Facts
The Dispute
The dispute arose from the repudiation of two life insurance claims following the death of Rabindranath Ghosh, husband of the complainant Kalyani Ghosh. He had purchased two unit-linked policies from Bajaj Allianz Life Insurance Co. Ltd. (Appellant), with policy numbers 04193204867 and 0422009367, each carrying a sum assured of Rs. 10,00,000 and a premium of Rs. 1,00,000. The risk commencement dates were 06.10.2020 and 28.10.2020 respectively. The life assured died on 03.11.2020, just weeks after policy issuance. The insurer repudiated the claims on grounds of suppression of pre-existing lung cancer, which the complainant disputed.
Key Facts
- Policy number 04193204867: Risk commenced on 06.10.2020
- Policy number 0422009367: Risk commenced on 28.10.2020
- Death certificate issued by Dr. K.L. Das, MBBS, MS, cited acute myocardial infarction as cause of death
- Insurer’s investigation revealed the deceased had been suffering from lung cancer since June 2020, undisclosed in the proposal form
- Death claim submitted by complainant shortly after death
- Repudiation letters issued by Appellant on 23.04.2021
- Complaint filed before District Consumer Disputes Redressal Commission (DCDRC), Kolkata Unit-II on 18.01.2022 (Case No. CC/443/2021)
- Notice served on Opposite Party No. 2 (Bajaj Allianz) returned with postal remark 'refused'
- No service attempted on Opposite Parties Nos. 1, 3, and 4 via registered post
- Newspaper publication of notice ordered on 29.06.2022 as sole method of service
- No evidence of actual receipt or awareness by any appellant
- Ex parte hearing held on 17.07.2023
- DCDRC ordered payment of Rs. 20,00,000 (Rs. 10,00,000 per policy), Rs. 30,000 compensation, and Rs. 10,000 litigation cost
Procedural History
- 18.01.2022: Complaint admitted by DCDRC, Kolkata Unit-II
- 04.03.2022: Notice to OP No. 2 returned 'refused'; no service recorded on OP Nos. 1, 3, 4
- 29.06.2022: DCDRC ordered newspaper publication of notice for OP Nos. 1, 3, 4
- 17.07.2023: DCDRC passed ex parte order in favor of complainant
- 28.08.2023: Advocate Sanjib Mitra communicated the ex parte order to appellant via letter
- 30.08.2023: Appellant received notice of the order and obtained certified copies
- 17.07.2023 to 24.06.2026: Appellant filed First Appeal No. SC/19/A/350/2023 before State Commission
- 24.06.2026: State Commission heard appeal and delivered judgment
The Parties' Positions
For the Appellant (Bajaj Allianz Life Insurance Co. Ltd.)
- Argued that no notice was properly served on any of the four opposite parties
- Contended that service via newspaper publication is a last resort and cannot substitute personal service
- Highlighted that the insurer was unaware of proceedings until August 2023
- Asserted that the claim was repudiated on valid grounds of material non-disclosure of pre-existing illness
- Stated that the DCDRC failed to apply the principle of audi alteram partem
For the Respondent (Kalyani Ghosh)
- Maintained that notice was duly served through newspaper publication as directed by the DCDRC
- Argued that the insurer’s delay in responding to the complaint indicated waiver of right to contest
- Claimed entitlement to compensation for mental agony and delay in claim settlement
Relief Sought
The appellant sought:
- Setting aside of the ex parte order dated 17.07.2023
- Remand of the case for fresh adjudication with proper service and opportunity to defend
- Costs against the complainant for initiating proceedings without due diligence
The Legal Issue
The central question was whether an ex parte order passed by a consumer forum, where notice was not effectively served on any of the respondents except one who refused delivery, violates the principles of natural justice and warrants setting aside under the Consumer Protection Act.
Arguments Presented
For the Appellant
The appellant relied on the doctrine of audi alteram partem and the mandatory requirement of due process under Section 13 of the Consumer Protection Act, 2019. It cited State of U.P. v. Ramesh Kumar and K. S. Puttaswamy v. Union of India to emphasize that procedural fairness is non-negotiable, even in consumer forums. The insurer argued that newspaper publication, without proof of actual receipt or awareness, cannot constitute valid service. It further contended that the DCDRC’s failure to direct re-service after the 'refused' return of notice was a clear error.
For the Respondent
The respondent argued that the forum had followed the prescribed procedure under Rule 12 of the Consumer Protection Rules, 2020, which permits publication in newspapers when personal service fails. She maintained that the insurer’s failure to monitor its registered address or respond to notices was its own negligence. She further contended that the insurer’s belated challenge was an attempt to delay justice.
The Court's Analysis
The State Commission undertook a rigorous analysis of service compliance under the Consumer Protection Act. It observed that while newspaper publication is a recognized mode of service under Rule 12(3) of the Consumer Protection Rules, 2020, it is strictly a last resort. The Court emphasized that such publication must be preceded by diligent attempts at personal service, and its efficacy must be evaluated in context.
"The disposal of a case through ex parte hearing where the opposite sides did not receive the summons or beyond their knowledge about the case, cannot stand on same footing [as cases where notice was received but ignored]."
The Court noted that the DCDRC had recorded that notice to OP No. 2 was returned 'refused', yet took no further step to ensure service on OP Nos. 1, 3, and 4. No affidavit of service, no proof of publication in a widely circulated newspaper, and no evidence of actual knowledge by the insurer were placed on record. The Commission held that the insurer’s ignorance of the proceedings was not due to negligence but due to procedural failure by the complainant and the forum.
The Court further held that the merits of the repudiation - however serious the allegation of suppression - could not be adjudicated in the absence of a fair hearing. The insurer’s defense regarding pre-existing illness, medical history, and underwriting practices required examination through evidence and cross-examination. The Commission stressed that the Consumer Protection Act, while consumer-centric, does not permit injustice to any party.
The Verdict
The appeal was allowed. The ex parte order dated 17.07.2023 passed by the DCDRC, Kolkata Unit-II, was set aside. The case was remanded to the DCDRC for fresh adjudication. Both parties were directed to appear before the DCDRC on 14.07.2026. The complainant must supply copies of the complaint and annexures to the insurer by that date. The insurer must file its written version within 30 days of receipt. The appellant was directed to pay costs of Rs. 5,000 to the respondent. The DCDRC was directed to decide the matter afresh within three months of receiving this order, without being influenced by any observations made herein.
What This Means For Similar Cases
Service of Notice Is Not a Formality
- Practitioners must document every attempt at personal service before resorting to newspaper publication
- A 'refused' postal return mandates a second attempt - failure to do so invalidates the entire proceeding
- Affidavits of service and certified copies of newspaper publications must be filed as evidence
Ex Parte Orders Are Not a Shortcut
- Consumer forums cannot rely on ex parte hearings to dispose of complex disputes involving fraud or material non-disclosure
- The burden of proving service lies with the complainant; mere procedural compliance without actual notice is insufficient
- Courts will set aside ex parte orders even if the underlying claim appears strong, if due process is violated
Repudiation Claims Require Full Hearing
- Allegations of pre-existing illness in insurance claims cannot be decided without cross-examination of medical records and proposal forms
- Insurers must be given opportunity to present underwriting guidelines, medical reports, and internal investigation findings
- The absence of a contested hearing renders any finding on fraud or misrepresentation legally unsustainable
