BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION : HYDERABAD
F.A.No.594/2013 against C.C.No.489/2011, Dist. Forum-III, Hyderabad.
Between:
V.Bhaskar Rao,
S/o.V.Kishan Rao,
Aged 47 years, Occ:Business,
R/o.H.no.4-6-167/1, Bhuktapur Ward-25,
Near Veterinary Hospital,
Adilabad – 504 001. …Appellant/
Complainant
And
1.HDFC Standard Life Insurance,
Rep. by its Manager, 101 & 102,
1st Floor, Lala 1- Landmark,
Opp:Ranigunj Bus Stop,
5-4-94, M.G.Road,
Secunderabad – 500 003.
2. Union Bank of India,
Rep. by its Manager,
Adilabad Branch, Ambedkar Chowk,
Adilabad – A.P. … Respondents/
Opp.parties
Counsel for the Appellant : Mr.P.N.Murthy
Counsel for the respondents : Mr.S.Gopal Singh
QUORUM:SRI R.LAKSHMI NARASIMHA RAO,HON’BLE MEMBER ,
SRI T.ASHOK KUMAR, HON’BLE MEMBER,
AND
SRI S.BHUJANGA RAO, HON’BLE MEMBER.
MONDAY, THE TWENTY FOURTH DAY OF FEBRUARY,
TWO THOUSAND FOURTEEN.
Oral Order: (Per Sri S.Bhujanga Rao, Hon’ble Member)
****
The unsuccessful complainant filed appeal against the order dt.25.06 .2013 of the District Forum-III, Hyderabad, in C.C.No.489/2011 whereunder, the Consumer Complaint filed by the appellant/complainant alleging deficiency in service against the respondents/opp.parties, was dismissed.
The brief case of the complainant as set out in the complaint is that the complainant has opted for one time premium policy by paying Rs.5 lakhs through opposite party no.2 a corporate agent of opposite party no.1 HDFC Standard Life Insurance. Originally the complainant washolding deposit of Rs.8 lakhs in S.B.Account in opposite party no.2, Union Bank of India. The said amounts were kept and maintained by the complainant solely for the purpose of his daughter’s marriage. The complainant, with an intention to get more interest, he thought of converting the S.B. Account (part balance) to FDR and proposed the same to opposite party no.2.
While so, the Manager of opposite party no.2 convinced the complainant to opt an alleged Unit Linked Pension Plus Plan with opposite party no.1 for a period of three years and with the assurance of the opposite party no.2, the complainant decided to opt for the proposed Unit Linked Pension Plus Plan for Rs.5 lakhs towards one term investment. Under the influence of Manager of opposite party no.2 bank, the complainant conceded to the said policy, at the cost of Rs.5 lakhs towards single premium payment. The complainant submitted application to the opposite party no.2 along with signed voucher for Rs.5 lakhs which in turn forwarded to opposite party no.1 on 08.02.2008. The complainant received his policy bearing no.11612365 dt.19.03.2008.
Subsequently, the complainant received an intimation of policy lapse letter dt.26.02.2009. It is stated in the said letter that the policy has lapsed, as a result of non payment of premium on or before the time period mentioned and that however the policy can be revived within two years from the date of lapse or within 3 years from the date of inception. Then the complainant personally approached both the parties. The opposite party no.2 advised the complainant to pay minimum sum of Rs.10,000/- per year to keep the policy alive. The opposite party no.2 hastaken a letter from the complainant for change in policy premium from Rs.5 lakhs to Rs.10,000/-. The complainant received a replydt.22.04.2009 stating that change in premium cannot be accepted, because the policy has already lapsed and only on revival of policy, change in premium can be accepted. Thus the complainant was asked to pay Rs.5 lakhs, even to change the policy premium to Rs.10,000/- from Rs.5lakhs, as alleged by opposite party no.1.
The complainant submits that in the policy application, he has stated that his entire income from all sources is Rs.2 lakhs and hence he cannot save or invest any amount more than Rs.20,000/- to Rs.40,000/- per year under all probabilities. Therefore, the complainant requested for cancellation of the policy and return back the money vide his letter dt.08.06.2009 and on repeated pursuance, opposite party no.1 sent a letter dt.27.07.2009 stating that they have conducted detailed investigation and concluded that they have given all the details of the policy before giving the policy to the complainant and that they cannot treat it as mistake in sale. The opposite party no.2 has purportedly concluded that they cannot do anything other than reviving and requested the complainant to opt for reviving the policy. When the complainant demanded opposite party no.1 to refund an amount of Rs.5 lakhs, the opposite party no.1 sent a cheque for Rs.2,01,621-45 ps. dt.01.03.2011 to the complainant, out of Rs.5 lakhs, after three years against his Unit Linked Pension Plus Plan policy. Thus there is deficiency in service on the part of the opposite parties.
The complainant further stated that his daughter attained 21 years and he kept Rs.5 lakhs for his daughter’s marriage and he was defrauded by opposite party no.1 and at present he cannot perform his daughter’s marriage because of paucity of funds. Even if he attempts to perform his daughter’s marriage, he has to raise necessary funds by taking loan on huge rate of interest. Due to deficiency in service on the part of the opposite parties 1 and 2, the complainant sustained huge damage and he has been undergoing several mental agonies. Thecomplainant submits that the opposite parties 1 and 2 are jointly and severally liable to pay him the entire sum of Rs.5 lakhs along with compound rate of interest. Hence the complainant filed the complaint seeking direction to the opposite parties 1 and 2 to pay him the entire policy amount of Rs.5 lakhs against Unit Linked Pension Plus Plan policy, to pay an amount of Rs.5 lakhs towards compensation and damages and to pay Rs.10,000/- towards costs of the litigation.
The opposite party no.1 filed written version denying the material allegations made in the complaint and contended that considering the benefits of unique features of the policy (Unit Linked Pension Plus Plan) and after careful understanding of the unique features of the policy, which were explained to the complainant orally and after reading the terms and conditions of the unique features of the policy, the complainant took the said policy. The complainant agreed to pay premium of Rs.5 lakhs per year for a term of 10 years. The complainant has to pay the premium of Rs.5 lakhs per year for minimum lock in period of 3 years.
This opposite party further contended that after taking the policy, the complainant had the statutory period of 15 days, to raise the objections to the terms and conditions of the policy as stated under Sec.6(2) of IRDA (Policy Holder Interest) Regulations, 2002. Thecomplainant has never come back to this opposite party making any allegations or objections against the terms and conditions of the policy neither within the said “Free Look” period that expired after 15 days from the date of receipt of the policy. As the complainant has not come to it with any objections during the “Free Look Period”, it was thus legally presumed that contract of the life insurance between them and the complainant was legally concluded. As the contract of life insurance was thus legally concluded, it is binding upon the parties thereto namely the complainant and this opposite party. This opposite party further contended that the complainant signed the proposal form dt.09.02.2008 for Unit Linked Pension Plus Plan policy and paid the premium amount of Rs.5 lakhs on yearly basis, to be paid for a period of 10 years. The said proposal is accepted by the opposite party and the policy was issued to the complainant. The complainant is supposed to pay the premium of Rs.5 lakhs every year for a period of 10 years. The last premium shall be payable on 09.02.2017. If any premium remains unpaid 15 days after the due date, that policy will become lapsed or paid up as described in provision 5, however the policy can be revived maximum within two years from the date of lapse or within three years from the date of inception whichever is later. Since the second premium has not been paidby the complainant, the policy had attained paid up status and cancelled. This opposite party further contended that as per the terms and conditions under Clause 5(iii)(d) in page 6 of the insurance policy document in favour of the complainant, if the value of the units in paid up policy falls below the minimum fund value as specified in the policy schedule , the policy will be cancelled and the utilised fund value after deduction of the surrender charges as specified in the schedule shall be payable along with other details, the terms and conditions of the policy document mentions about the minimum fund value to be maintained in page 2 of the policy document , which being Rs.2,01,621.45 ps. On 01.03.2011 thefund value of the complainant’s policy had gone below the specified amount to be maintained and as such the paid up policy amount was paid to the complainant accordingly. This opposite party further contended that the complainant has chosen his fund to be allocated in growth fund. Due to market recession there had been a fall in his fund value which is also a reason for his loss of fund as per the terms of the policy. This oppositeparty further contended that since the complainant failed to pay the premiums and at the request of the complainant to cancel the policy, the opposite party has returned an amount of Rs.2,01,621.45 ps. through DD as per the terms and conditions of the policy. The complaint is therefore liable to be dismissed.
The opposite party no.2 bank filed written version denying the material allegations made in the complaint and contended that the complaint is not maintainable against this opposite party bank as this opposite party bank is not a party to the transaction/communications held in between the complainant and the opposite party no.1 and the question of deficiency in service as alleged by the complainant does not arise and therefore the complaint is liable to be dismissed against this opposite party bank. There is no privity of contract in between the complainant andthis opposite party bank. Therefore, the complaint is liable to be dismissed against this opposite party bank.
This opposite party bank further contended that this opposite party was corporate agent to the opposite party no.1. Whenever any customer is willing to take insurance policy from the opposite party no.1, this opposite party bank being a corporate agent introduces its customers to the representative of opposite party no.1. After obtaining the details from representative of the opposite party, it is the customers to decide whether to take or not take the policy. Similarly, the complainant being a customer of this opposite party bank, requested to take insurance policy from the opposite party no.1. Accordingly, this opposite party bank introduced the complainant to the representative of the opposite party no.1, who furnished all the details of the policy and its terms and conditions thereof to the complainant. Except introducing the complainant to the representative of the opposite party no.1, this opposite party bank has no role in taking or obtaining the policy from opposite party no.1. Therefore, the complaint is liable to be dismissed against this opposite party with exemplary costs.
During the course of enquiry, in order to prove his case, the complainant filed his evidence affidavit and got marked Exs.A1 to A11. Both the opposite parties have filed their respective evidence affidavits reiterating the contents of their written versions. They have not filed any documents in support of their respective contentions.
Upon hearing the counsel for both the parties and on consideration of material on record, the District Forum came to the conclusion that there is no deficiency in service, on the part of the opposite parties and consequently dismissed the complaint.
Aggrieved by the said order, the complainant preferred this appeal urging that the District Forum ought to have understand that the opposite party no.1 must have been produced the original application, signed by the complainant, to establish their case. That the District Forum ought to have appreciated that insurance companies cannot give policies without looking annual income of applicant and particularly when the complainant declared his annual income as Rs.2 lakhs from all sources, there cannot be any possibility to any applicant to pay Rs.5 lakhs p.a. That the District Forum ought to have understood that the complainant requested for cancellation of the policy, which was declined by stating that they cannot treat the annual policy given to the complainant as a mistake of sale and they cannot do anything except to revive the policy after collecting Rs.5 lakhs P.A. without any basis. That the District Forum ought to have seen that the question of free look period would not arise at all, when fraud and cheating was attributed to the opp.parties and particularly when opposite party no.1 failed to produce the original policy application signed by this appellant/complainant. The appellant finally prayed to allow the appeal setting aside the impugned order of the District Forum allowing the complaint filed by him as prayed.
We heard the counsel for both the parties and perused the entire material placed on record.
Now the point for consideration is whether the impugned order of the District Forum is vitiated for misappreciation of fact or law?
Admitted facts are that on being recommended by opposite party no.2 bank and on proposal form submitted by the complainant, opposite party no.1 insurance company issued Unit Linked Pension Plus Plan policy bearing no.11612365 dt.19.03.2008, copy of which is marked as Ex.A2. The said policy was received by the complainant and the said policy was lapsed for non payment of second premium of Rs.5 lakhs on or before the time period mentioned and the opposite party no.1 intimated the same to the complainant by letter dt.26.2.2009 vide Ex.A4. Then the complainant approached both the opposite parties and gave a letter for change in policy premium for Rs.10,000/- p.a. instead of Rs.5 lakhsp.a. Under lr. dt.22.4.2009, Ex.A5 and lr.dt.27.4.2009 Ex.A6, the opposite party no.1 informed the complainant that the change in premium cannot be accepted, as the policy was already lapsed and only on revival of the policy, change in premium can be accepted. Thus, the complainant was asked to pay Rs.5 lakhs even to change the policy premium from Rs.5 lakhs to Rs.10,000/-. Unable to pay Rs.5 lakhs and as the policy was incorrectly sold to him, the complainant requested the opposite party no.1 for cancellation of the policy itself and return back the money vide his letter dt.8.06.2009. The opposite party no.1 sent letter dt. 27.07.2009, Ex.A7 informing the complainant “ As we have not received your cancellation request within this 15 days free-look period, we regret to inform you that we are unable to process a refund of premium(s) paid towards this policy.” The opposite party no.1 further informed the complainant that as of that day the policy was in lapsed status due to non payment of renewal premium, which was due on February,2009 and requested the complainant to revive the policy by paying the outstanding premium of Rs.5 lakhs. The opposite party no.1 informed the same matter to the complainant under Ex.A8 letter dt.24.02.2010.
The case of the complainant is that originally he was holding deposit of Rs.8 lakhs in S.B. Account in the bank of opposite party no.2, which he got after selling his agricultural land, for the purpose of his daughter’s marriage. With an intention to get more interest, the complainant thought of converting S.B.Account (part balance) to FDR and proposed the same to the opposite party. The Manager of the opposite party no.2 convinced the complainant to opt the alleged Unit Linked Pension Plus Plan policy with the opposite party no.1 for a period of 3 years. Under the influence of the manager of opposite party no.2, the complainant conceded to take Unit Linked Pension Plus Plan policy on single premium payment of Rs.5 lakhs. The complainant never agreed to pay Rs.5 lakhs per year, for a term of 10 years. The opposite parties never explained the terms and conditions of the policy.
The case of the opposite party no.1 is that considering the benefits and the unique features of the policy and after careful understanding the unique features of the policy, which were explained to the complainant orally and after reading the terms and conditions of the unique features of the policy, the complainant took the said policy and that the complainant agreed to pay the premium of Rs.5 lakhs per year for a term of 10 years. After taking the policy, the complainant had the statutory period of 15 days to raise the objections, to the terms and conditions of the policy as stated under Sec.6, Sub-Sec.2 of IRDA ( Policy Holders Interest) Regulations 2002. The complainant has never approached thisopposite party making any allegations or objections against the terms and conditions of the policy, neither within the said ‘Free Look’ period that expired after 15 days from the date of receipt of the policy. Therefore, the contract became concluded contract, between the complainant and opposite party no.1 and it is binding on the parties.
Both the opposite parties 1 and 2 have not denied in their written versions the fact that the complainant was originally holding deposit of Rs.8 lakhs in S.B.Account in opposite party no.2 bank, which he got after selling his agricultural land for the purpose of his daughter’s marriage. The contention of the complainant is that his entire life savings were around Rs.8 lakhs, by the time of opting the subject policy. This contention of the complainant is also not denied or disputed by the opposite party no.1.
In the written version and also evidence affidavit filed on behalf of the opposite party no.1 insurance company, it is stated that the complainant signed the proposal form dt.09.02.2008 for Unit Linked Pension Plus Plan policy and paid premium amount of Rs.5 lakhs on yearly basis for a term of 10 years and that the said proposal is accepted by the opposite party no.1 and the policy was issued to the complainant.
In the complaint as well as in his evidence affidavit , the complainant has stated that in the application to obtain the policy, he has specifically stated that his entire income from all sources is only Rs.2 lakhs p.a. The contention of the complainant is that his application for one time premium policy which was signed on every paper was replaced by the opposite party no.1 and the complainant was thus cheated tactfully.
In view of the above contention of the complainant, the opposite parties ought to have produced the proposal form dt.9.02.2008 signed by the complainant, to disprove the said case of the complainant and to prove that the complainant signed the proposal for Unit Linked Pension Plus Plan policy and paid a premium amount of Rs. 5 lakhs on yearly basis for a term of 10 years.
In the appeal grounds also the appellant/complainant urged that he declared his annual income as Rs.2 lakhs from all sources in the proposal form submitted to the opposite party no.1. Even in this appeal the opposite party no.1 did not choose to file the proposal form submitted by the complainant for obtaining the policy. The said proposal form is an important piece of evidence to disprove the contention of the complainant and to support the contention of the opposite party no.1. Opposite party no.1 did not choose to file the said proposal form. Noexplanation is offered by the opposite party no.1 as to why they could not file the proposal form in this case. Therefore, an adverse inference is to be drawn against the opposite party no.1 to the effect that because the complainant declared his annual income at Rs.2 lakhs and he opted one time premium policy, opposite party no.1 intentionally withheld the proposal form.
It is the contention of the appellant/complainant, that the insurance companies cannot give policies without looking into the annual income of the applicants and particularly when the complainant declared his annual income as Rs.2 lakhs from all sources, there cannot be any possibility to any applicant to pay Rs.5 lakhs p.a. for a period of three years or 10 years. This fact is not considered by the District Forum. The fact that insurance companies look into the annual income of any applicants who submits proposal, for obtaining any type of policy, particularly the policy which requires payment of premium in lakhs.
In Ex.A8 letter dt.24.02.2010 addressed to the complainant by opposite party no.1 wherein the Grievance Redressal Officer of the opposite party no.1 has categorically mentioned “As per the Anti Money Laundering guidelines you also need to submit an income proof, address proof and an identity proof along with the above request”. Under Ex.A10 letter dt.11.01.2011 addressed to the complainant by the Vice President, Operations of the opposite party no.1 insurance company on the reverse of the letter, it is mentioned that for the policies that have lapsed more than one year, it is mandatory to submit income proof (Note: where annual premium is equal to or greater than Rs.1 lakh per policy) as per the guidelines pertaining to prevention of money laundering applicable to insurance companies effective from 01.08.2006. From the above said letters it is clear that the insurance company has to collect necessary documents regarding income proof of the applicant where annual premium is equal to or greater than Rs.1 lakh per policy, either at the time of issuing the policy or at the time of revival of the policy. It is not the case of the opposite party no.1 that they have collected the documents from the complainant herein regarding his income proof at the time of issuance of the subject policy as per the Anti Money Laundering guidelines. Had they collected the documents regarding income proof, they would have not issued the subject policy in favour of the complainant or the complainant would have withdrawn the proposal for obtaining the policy. Under these circumstances, there can be no doubt that there was negligence on the part of the opposite party no.1 in collecting the documents in proof of income of the complainant as per Anti Money Laundering Guidelines. Except the interested averments in written version and the evidence affidavit filed on behalf of the opposite party no.1, the opposite party no.1 has not placed any cogent evidence, to prove that considering the benefits and unique features of the policy and after careful understanding the unique features of the policy which were explained to the complainant orally and after reading the terms and conditions of the unique features of the policy, the complainant took the subject policy. In this case, the complainant attributed fraud and cheating to opposite party no.1, when opposite party no.1 failed to produce original policy application/proposal form signed by the appellant/complainant. In view of the said contention of the complainant, the question of raising objections against the terms and conditions of the policy by the complainant as per Sec.6(2) of IRDA (Policy Holders Interest) Regulations 2002, within the ‘Free Look’ period that expired after 15 days from the date of receipt of the policy does not arise. Under these circumstances, the contract of insurance between the complainant opposite party no.1 cannot be held to be valid contract.
For all the afore said facts, we are of the view that there is not only deficiency in service but also unfair trade practice on the part of the opposite party no.1. Therefore, the complainant is entitled to the refund of entire amount of Rs.5 lakhs, admittedly paid by him to the opposite party no.1 at the time of submitting the proposal form.
It is an admitted fact that the complainant is the customer of opposite party no.2 bank and that the opposite party no.2 bank introduced the complainant to the representative of the opposite party no.1 insurance company. The allegations of the complainant that the Manager of opposite party no.2 instigated him to take the policy from opposite party no.1 is denied by opposite party no.2. Except the interested allegations made in the complaint, the complainant has not placed cogent evidence on record, to show that he was induced by the agent of opposite party no.2 bank to obtain the subject policy from opposite party no.1 insurance company. Under these circumstances, the complainant failed to prove that he was induced by opposite party no.2, to take the subject policy from opposite party no.1. We hold that there is no privity of contract between the complainant and opposite party no.2 bank with regard to obtaining the subject policy from opposite party no.1. Therefore, the question of deficiency in service on the part of the opposite party no.2 does not arise. Hence, the complaint is liable to be dismissed against opposite party no.2 bank.
In the result, the appeal is allowed. The impugned order of the District Forum is set aside. The complaint filed by the appellant/complainant in C.C.No.489/2011 is allowed in part directing the opposite party no.1 to pay a sum of Rs.5 lakhs after deducting Rs.2,01,621-45 rounded of to Rs.2,02,000/- that was paid by the opposite party no.1 to the complainant, when the complainant applied for cancellation of the policy, along with interest at 9% p.a. from the date of the complaint i.e. 20.05.2011 till realisation. In view of the facts and circumstances of the case, there shall be no order as to costs. The respondent no.1/opposite party no.1 is directed to comply with the order within four weeks from the date of this order. The appeal against the respondent no.2/opposite party no.2 is dismissed without costs.
MEMBER
MEMBER
MEMBER
Pm* Dt.24.02.2014
