DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II U.T. CHANDIGARH Complaint Case No.: 403 OF 2010 Date of Institution : 01.07.2010 Date of Decision : 22.09.2011 Sushila Devi wife of Mohinder Singh Malik, R/o H.No.45, Sector 10, Panchkula. ---Complainant. V E R S U S 1] Aviva Life Insurance Co. , 5th Floor, JMD Regent Square Gurgaon-Mehraule Road, Gurgaon – 122001 through its Branch Manager. 2] Aviva Life Insurance Company Pvt. Ltd., Ground Floor, Madhya Marg, SCO 182,Sector 9-C, Madhya Marg, Chandigarh, 160009 through its Branch Manager ---Opposite Parties BEFORE: SHRI LAKSHMAN SHARMA PRESIDENT SMT. MADHU MUTNEJA MEMBER SH.JASWINDER SINGH SIDHU MEMBER Argued By: Sh.Mohinder Singh, Husband/Agent of the complainant. Sh.Arun Dogra, Adv. for the OPs. PER MADHU MUTNEJA, MEMBER 1] The instant complaint refers to a Unit Linked Insurance Policy issued to the complainant by the OPs. The Policy commenced on 27.7.2006 with an assured value of Rs.5.00 lacs. The regular premium amount was Rs.50,000/- payable annually. The complainant paid only the first installment premium of Rs.50,000/- and thereafter was not able to pay the subsequent installments. The complainant has alleged that he was asked by the agent of the OPs that even if the further installments of premium was not paid, the amount so deposited less the amount taken toward the insurance premium for first year would be invested in Mutual Fund and would be payable after completion of 3 years. The complainant only paid first premium at the time of commencement of the policy. The complainant then visited the OP on 20.1.2010 to know the status of the policy and the procedure to revive the same. The OPs vide e-mail dated 21.1.2010 informed that the policy had lapsed as due date for payment of premium was 27.7.2007. He was also informed that even the reinstatement period of 2 years from the first unpaid installment had since expired. He was informed that no amount was payable to him. The complainant made many attempts to meet the local agent of the OPs at Chandigarh Branch Office to get refund of his hard-earned money but could not get any relief. He even approached IRDA vide letter dated 6.3.2010 for redressal of his grievance but they have done nothing in the matter. As per the illustration benefits for the policy provided by the company to the complainant, it is clearly indicated that Rs.3005/- of total premium of Rs.50,000/- would be applied towards insurance cover and balance Rs.46,995/- would be invested in unit fund value. In view of these details, the complainant feels that Rs.46,995/- is definitely due to him. He has thus filed the instant complaint seeking issuance of directions to the OPs to refund outstanding fund value of Rs.46,995/- along with interest @10% or amount equal to NAV of Unit Fund (Growth) whichever is more and to pay compensation as well as cost of litigation. 2] After admission of the complaint, notices were sent to the OPs. The OPs in the reply have taken the preliminary objection that the present complaint is not maintainable as the complaint is a mature and educated person and has made the investment of his own free will. The complainant has also signed the declaration in the proposal form to the effect that “he has been given all information regarding the policy, which he has understood”. The OPs have issued the policy to the complainant on the basis of proposal form. The complainant was also given a Right to Reconsider the policy when it was sent to him, which states that ,“you have the right to review the policy terms and conditions and cancel your policy within a period of 15 days from the date of receipt of the policy document. If you cancel your policy, the premium you have paid will be refunded after adjusting for adverse movement in unit prices less charges incurred on account of stamp duty and medical expenses, if any.”, as per IRDA Regulation, 2002. The complainant did not opt out of the scheme. The OPs have further submitted that unit linked policies are market linked policies and are dependent on the market fluctuations and the investment risk is borne by the Policyholder depending upon the performance of the unit linked funds. The Policy Holder may gain or loose on his investment. The promise of the insurer to indemnify the insured is subject to the terms, conditions and exceptions of the policy. The terms of the agreement have to be strictly construed to determine the extent of the liability of the insurer, and the insured cannot be allowed to claim anything more than what is covered in the Policy. OPs have also taken preliminary objection that the complaint be dismissed on the ground of limitation as the disputed policy was issued on 27.7.2006 and the complainant has raised the disputed on 6.3.2010 i.e. more than 3 years after the policy elapsed. On merits, the OPs after giving the factual position, as mentioned above, gave parawise reply. In the Parawise reply, the OPs have reiterated that the complainant did not exercise his Right to Reconsider the policy within 15 days as per the policy, which has been placed on record by the complainant himself. The terms regarding payment of premium are clear and the complainant had the option to cancel the policy after commencement of 3rd policy year in accordance with the terms & conditions of the policy. The surrender value would be calculated accordingly. Also as per the Standard Terms & Conditions of the Policy, if the policy was not revived within 2 years of the date of lapse, the policy was terminated without value. As the OPs have only acted in accordance with the terms & conditions of the policy and the policy had lapsed without value, the complainant, according to them, is not entitled to receive anything. They have thus prayed for dismissal of the complaint. 3] Parties led evidence in support of their contentions. 4] We have heard the ld.Counsel for the parties and have perused the record. 5] The contention of the complainant is that out of the total premium amount of Rs.50,000/- paid towards the policy in question, Rs.3005/- would be payable towards the insurance cover and the balance amount of Rs.46,995/- would be invested in Mutual Fund, as per the details given in the illustration Chart annexed with the policy document at Page No.12. The further contention of the complainant that though he has not paid the premium after first installment, but for that his units allotted during the first year, cannot be deducted as a whole and he is entitled for the current value of said units. 6] The plea of the OPs is that since the complainant has failed to pay the premium after paying first installment, thus his policy lapsed and the same is terminated without value. 7] We do not find any merit in the plea of OPs. It is not the case of the OPs that they have given the life cover to the complainant for second year, third year or subsequent years, though he has not paid the premium. It is obvious that when the complainant/insured had not paid the premium after first year of the policy, he was certainly not provided any life coverage for those years, thereby covering his life risks for the sum assured, as has been done for the first year. His life cover automatically stood cancelled/terminated from the very next year of the policy when he had not deposited the life cover premium or any further amount towards his policy. However, the non-payment of premium from second year of the policy by the complainant, did not give any right to the OPs to encash/subtract all his units allocated during first year of his policy, though the OPs are entitled to deduct charges as per terms & conditions of the policy. The complainant has said that an amount of Rs.3005/- of the total premium was to be deducted towards insurance cover. The fund value of the amount lying with the OPs would allow deduction of this amount annually to keep the policy alive. However, the OPs have not stated that they have deducted this amount from the fund value annually, but have only proceeded to cancel the policy, which in our opinion would amount to deficiency in rendering proper service. The OPs should also have paid the complainant the fund value of his investment after the completion of the lock-in period of 3 years on demand by the complainant. 8] In view of the above findings, we allow the complaint and direct the OPs to pay the fund value of the balance units in the name of complainant immediately without deducting any surrender charges taking the NAV of today i.e. 22.09.2011. The OPs are also directed to pay Rs.20,000/- as compensation for the harassment caused to the complainant as well as Rs.7000/- as cost of litigation. The order be complied with by the OPs within a period of 30 days from the date of receipt of copy of this order. Certified copies of this order be sent to the parties free of cost. After compliance, The file be consigned to the Record Room. Announced 22.9.2011 (LAKSHMAN SHARMA) PRESIDENT (MADHU MUTNEJA) MEMBER (JASWINDER SINGH SIDHU) MEMBER
| | MRS. MADHU MUTNEJA, MEMBER | HONABLE MR. LAKSHMAN SHARMA, PRESIDENT | MR. JASWINDER SINGH SIDHU, MEMBER | | 
