DISTRICT CONSUMER DISPUTES REDRESSAL FORUM,

BATHINDA (PUNJAB)

CC No. 402 of 07-09-2010

Decided on : 13-12-2010

Rabinder Singh aged about 37 years S/o Jagjit Singh, R/o H. No. 296, Phase-I, Urban Estate, Model Town, Bathinda.

.... Complainant

Versus

1. Aviva Life Insurance Company India Limited, Branch Office, The Mall, Bathinda, through its Manager.

2. Aviva Life Insurance Company India Limited, Registered Office, 2^nd Floor, Prakashdeep Bulding, 7 Tolstoy Marg, New Delhi, through Managing Director & CEO.

3. Aviva Life Insurance Company India Limited, Aviva Tower, Sector Road, opp. Golf Course, DLF Phase V, Sector 43, Gurgaon through its MD.

   ..... Opposite parties

Complaint under Section 12 of the Consumer Protection

Act, 1986.

 

QUORUM

Ms. Vikramjit Kaur Soni, President

Dr. Phulinder Preet, Member

Sh. Amarjeet Paul, Member

For the Complainant : Sh. Gurpreet Singh, counsel for the complainant.

For the Opposite parties : Sh. Sanjay Goyal, counsel for the opposite parties.

O R D E R

VIKRAMJIT KAUR SONI, PRESIDENT

1. The complainant has filed this complaint under Section 12 of the Consumer Protection Act, 1986 (Here-in-after referred to as 'Act'). The complainant purchased Insurance policy No. WLG1577733 from the opposite parties through their agent Centurion Bank of Punjab, Bathinda Branch now emerged in HDFC Bank and at the time of purchase the agent of the opposite parties allured the complainant that there is no maturity date and if the complainant paid three installments regularly and thereafter if he did not want to continue the said policy, then the amount so paid by the complainant would be refunded to him alongwith interest and other benefits and as such, under the allurement of the agent of the opposite parties, the complainant paid three annual installments to the tune of Rs. 15,000/- regularly. The opposite parties have not issued or cleared any terms and conditions to the complainant. Due to non-payment of 4^th installment of premium, the opposite parties closed the policy of the complainant with the remarks 'auto-fore closure' for which they have sent a cheque No. 233598 dated 12-08-2010 to the tune of Rs. 15,000/- in favour of the complainant and withheld the remaining amount of the complainant. The complainant has filed the present complaint for the remaining amount of Rs. 30,000/- alongwith interest and other benefits which were to be given to the complainant besides Rs. 50,000/- as compensation and Rs. 10,000/- as cost.

2. The opposite parties have pleaded that there was no restrictive trade practice or unfair trade practice on their part. The Insurance Regulatory and Development Authority (IRDA) constituted under the Act of Insurance Regulatory and Development Authority Act, 1999, has been empowered to regulate, remote and ensure orderly growth of the insurance business and has, inter-alia, the powers to control and regulate the rates, advantages, terms and conditions that may be offered by insurers and protection of the interest of the policy holders in respect of matters concerning assigning of policy, nomination by policy holders, insurance interest, settlement of insurance claim, surrender value of policy, and other terms and conditions of contracts of insurance. Article 15 of the Standard Terms and Conditions with respect to deductions to be made from the Surrender Value by way of Early Redemption Charge cannot be held as restrictive trade practice or unfair trade practice. The insurance contract was entered into between the parties upon the agreed terms and conditions as detailed in the Standard Terms and Conditions. As per these conditions, a right has been given to the insurer to cancel his policy within 15 days from the date of receipt of policy document and if he cancels the policy, the premium would be refunded after adjusting for adverse movement in unit prices less charges incurred on account of stamp duty and medical expenses, if any. The proposal form bearing No. NUP10766244 dated 25^th May, 2007 was received by the opposite parties which was duly signed by the complainant after going through the 'key feature document' sample illustration of the maturity value and understanding the scope, meaning and contents of the proposal form. The complainant also signed the declaration wherein at Clause (a) he declared and stated that “I/we fully understand the meaning and scope of the proposal forms and the questions in it and am/are submitting the completed proposal on my/our own accord, and I/we confirm that I/we have not been induced by anyone to make the proposal.” The opposite parties issued a Life Long Unit Linked Policy bearing No. WLG1577733 to the policy holder on 5^th June, 2007 and the salient features of the policy were as stated below :-

   a. Commencement date 5^th June, 2007.

   b. Sum assured Rs. 2,77,500/-

   c. Premium Frequency Annual

   d. Regular Premium amount Rs. 15,000/- (RP).

   The policy documents were despatched to the complainant vide Overnite courier docket No. 539435234 on 6^th June, 2007 and delivered on 9^th June, 2007. The policy documents included the policy schedule, the 'Right to Reconsider' notice, the standard terms and conditions, copy of proposal form and the first premium receipt. Thereafter, premium notices were sent regularly to the complainant for depositing the premium. The complainant paid 2 regular premiums of Rs. 15,000/- each under the policy. As the 4^th premium amount was not received under the policy, the policy was auto-foreclosed as per the terms and conditions and IRDA guidelines and an auto-foreclosure cheque was sent to the complainant.

3. The parties have led evidence in support of their respective pleadings.

4. We have heard the arguments at length and have gone through the record and perused written submissions submitted by the parties.

5. The complainant purchased Insurance policy No. WLG1577733 dated 5^th June, 2007, sum assured Rs. 2,77,500/-, premium frequency was annual and the regular premium amount was Rs. 15,000/-. The complainant submitted that he purchased this policy on the allurement of the agent of the opposite parties that there is not maturity date and if the complainant would pay three installments regularly, he can discontinue his policy at any time and get the refund of the deposited amount alongwith interest and other benefits. The complainant paid three annual installments to the tune of Rs. 15,000/- each and had not paid the 4^th installment. For the non-payment of 4^th installment of premium of policy, the policy had been foreclosed and the complainant has been issued a cheque for Rs. 15,000/- by the opposite parties.

6. The opposite parties have submitted that as the complainant had failed to pay 4^th installment of premium, his policy was auto foreclosed and he has been sent a cheque No. 233598 dated 12-08-2010 accordingly to the tune of Rs. 15,000/-. Now the complainant is not entitled for any amount as alongwith policy document vide Overnite courier docket No. 539435234 dated 6^th June, 2007 delivered on 9^th June, 2007, policy schedule, the right to reconsider notice, the standard terms and conditions were also sent to the complainant. As per the 'Right to Reconsider' notice the complainant had the option to get the policy cancelled within 15 days of receipt of policy documents in case he was not satisfied with any of the terms and conditions of the policy. As per the 'right to reconsider' notice the complainant had the option to get the policy cancelled within 15 days of receipt of policy document in case he was not satisfied with any of the terms and conditions of the policy but the complainant has not availed the right of reconsideration.

7. A perusal of Ex. C-2 shows that complainant had deposited Rs. 45,000/- from 5^th June, 2007 to 16^th August, 2010. The complainant had been issued cheque dated 12-08-2010 of Rs. 15,000/- on account of foreclosure. The complainant had specifically pleaded that the opposite parties have not issued and cleared any terms and conditions to the complainant. It seems that no explanation regarding auto foreclosure of policy was given to the complainant. The opposite parties have placed on file Aviva Standard Terms & Conditions Ex. R-3. These terms and conditions are not signed by any of the parties or by the complainant which means that these terms and condition are never supplied to the complainant. However, 'Article 15 of the aforesaid terms and conditions i.e.' Full surrender' is reproduced hereunder :-

   “15.2 The surrender value is equal to the surrender value of Initial Units, which is equal to the value of all initial units less an Early Redemption Charge determined at the time of surrender, and the value of all Accumulation Units in respect of Regular Premiums.”

   “15.4 A surrender penalty deduction in accordance with the company's Surrender Penalty Chart as published from time to time will be applied to the value of Units allocated in respect of Additional Single Premiums where they are surrendered within three years of the date of allocation.”

8. The opposite parties have not produced company's surrender penalty chart as published from time to time. As the policy has elapsed, the complainant is not entitled to any other benefit or interest. A perusal of policy document Ex. C-1 reveals that there is no maturity date. Clause 8 of Insurance Regulatory and Development Authroity (Standarization of terms & conditions of ULIP Products and treatment of lapsed policies) Regulations, 2010 reads as under :-

   “8. Surrender Charges :

   It is observed that Insurers apply different surrender charges while paying the surrender value to the insured. After due consideration of various practices, the Authority orders that the surrender charges (as percentage of fund value) shall not exceed the limits specified below :-

   Year Policy Period

   Less than 10 years More than 10 years

   1^st year 12.50% 15%

   2^nd year 10.00% 12.50%

   3^rd year 7.50% 10%

   4^th year 5.00% 7.50%...........”

    

9. As no maturity date of policy has been mentioned, period of policy cannot be assessed. Thus, deduction cannot be made according to aforesaid clause 8 of IRDA, as alleged by the opposite parties. Since terms and conditions were not signed by the complainant as well as the opposite parties, these terms and conditions were neither supplied nor conveyed to the complainant and as such, opposite parties are not entitled to make deduction on any count. Hence, there is deficiency in service and unfair trade practice on the part of the opposite parties in not refunding the premium amount to the complainant and the complainant is entitled for the remaining amount of premium of Rs. 30,000/-.

10. In view of what has been discussed above, this complaint is accepted with Rs. 10,000/- as compensation and Rs. 2,000/- as cost. The opposite parties are directed to pay to the complainant Rs. 30,000/- with interest @9% P.A. from the date of deposit of last premium i.e. 16-08-2010 till realisation alongwith compensation to the tune of Rs.10,000/- and cost of Rs. 2,000/-. The compliance of this order be made within 45 days from the date of receipt of copy of this order. A copy of this order be sent to the parties concerned free of cost and the file be consigned to record.

Pronounced

13-12-2010 (Vikramjit Kaur Soni)

President

(Dr. Phulinder Preet)

Member

(Amarjeet Paul) Member