IN THE CONSUMER DISPUTES REDRESSAL FORUM, PATHANAMTHITTA,

Dated this the 25^th day of May, 2012.

Present : Sri. Jacob Stephen (President)

Sri. N. Premkumar (Member)

Smt. K.P. Padmasree (Member)

C.C.No.81/2011 (Filed on 19.03.2011)

Between:

1.      Sam John,

       Puthenpalathu Thekkethil,

       Kallimel Post, Mavelikkara,

       Alapuzha District, Pin – 690 101.

2.       Sherlymol,

        W/o. Sam John

        -do.  –do-                                                                                                    …..  Complainants

(By Adv. C.M. Binoy)                                                           

And:

1.     Aviva Life Insurance Co. India Ltd.,

Aviva Tower, Sector Road,

Opposite Golf Course, DLF Phase V,

Sector 43, Gurgoan,

Haryana – 122003.

2.     Aviva Life Insurance Co. India Ltd.,

2^nd Floor, Kizhakkethil Arcade,

Nagampadom Post, Kottayam Dist.,

Kerala – 686001,

Rep. by the Branch Manager.

3.     The Branch Manager,

Aviva Life Insurance Co.,

Lord’s Arcade,Thiruvalla – 689 101.                                                    …..  Opposite parties.

(By Adv. Mohammed Mustapha)

O R D E R

Sri. N. Premkumar (Member):

         Complainant filed this complaint against the opposite parties for getting a relief from the Forum.

                     2. Facts of the case in brief is as follows:  Complainants are husband and wife.  The 2^nd complainant took a Life Insurance Policy from the 2^nd opposite party the branch of 1^st opposite party.  The commencement date of the policy was 05.12 2007.  1^st complainant was paying the premium for the 2^nd complainant.  The premium payment mode was half yearly.  The premium amount is ` 70,000.  The due dates of premium were 5<sup>th</sup> of December and June.  There is a grace period of 30 days for remitting premium.  In this policy, there was a facility to reduce premium in the subsequent years, if the policy holder chooses to.  The minimum premium shall not be less than ` 15,000.  The complainant choose to reduce the premium into `15,000 from 2^nd year onwards.

         3. The 1^st complainant sent a cheque for  ` 7,500 being the 1<sup>st</sup> half yearly premium of 4<sup>th</sup> years in between 15<sup>th</sup> and 20<sup>th</sup> of December.  The due date of remitting premium was on 05.12.2010 and the grace period ends on 04.01.2011.  The cheque sent to Kottayam branch was cleared from Ernakulam on 05.01.2011, one day after the grace period.  There is considerable delay in presenting the cheque for collection.  1stopposite party sent a letter dated 05.01.2011 intimating to reinstate the policy, since the last premium is not received.  The non-receipt of the premium in time was due to the delay in production of the cheque.  Opposite parties collected the amount covered under the cheque on 05.01.2011.  They could have appropriated the said amount as premium, even if there is delay in paying premium.  Instead of that opposite parties terminated the policy and the 1<sup>st</sup> year premium of ` 70,000 was returned by cheque dated 19.01.2011.  On 28.02.2011 with a covering letter dated 20.01.2011 informed that since the surrender value of the policy is less than the 1^st year premium, the policy is auto for closed.  After the time of taking the insurance policy, the term auto foreclosure was not explained properly.  Even the policy document does not contain it in plain language understandable by a common man.

            4. The opposite parties collected the cheque on 05.01.2011 and keeping that amount with them.  The policy was terminated without notice to the complainants.  As per the policy condition, if the surrender value falls below the 1^st year premium, the policy will cease to exist and 1^st year premium will be returned.  The fact that the policy is about to be terminated is not informed to the complainants.  The complainants have no way to know the daily surrender value, since it was a ULIP.  This is denial of natural justice.  The complainant ought to have given a notice regarding foreclosure.  The opposite parties collected the cheque on 05.01.2011.  Instead of utilizing the amount and keep the policy alive the opposite parties purposefully close to terminate the policy ` 7,500 collected by the opposite parties was not repaid with 1<sup>st</sup> year premium.  They have repaid the money only after two months.  Complainant received the cheque only on 12.03.2011.  Hence this complaint for getting compensation for ` 25,000 for unfair trade practice by not disclosing the details of auto-foreclosure and the condition in plain and simple language, ` 25,000 as compensation for the loss of insurance cover of the 2<sup>nd</sup> complainant, ` 2,000 for delay in sending the cheque of ` 70,000 to repay ` 30,000 with interest and for getting 12% interest for two month on ` 7,500 with cost. 

                    5. 1^st opposite party entered appearance and filed version.  Opposite parties 2 and 3 had not yet appeared.  Hence they were declared as exparte.

                  6. According to 1^st opposite party, 2^nd complainant took a ‘Life Saver Plus’ policy from them.  The sum assured of the policy is ` 3,50,000, the premium amount is ` 35,000 and term is 10 years.  The date of commencement of the policy is 05.12.2007.  The said policy contained a notice on Free-Look whereby the policy holder has a right to reconsider the decision to purchase the policy within 15 days of the receipt of the policy.  The said policy was due for premium on time and the policy lapsed which was reinstated on 23.09.2008 on receipt of the renewal premium.  As per the request of 2^nd complainant a reduction of the premium from ` 70000 to ` 15,000 annually from the complainant.  Accordingly the sum assured under the said policy was decreased to ` 75,000.  The same was communicated to the complainant.

                 7. According to them, policy was lapsed on 09.01.2009, 11.07.2009.  However on receipt of the declaration of good health along with the premium due, the policy was reinstated on 18.02.2009 and 14.09.2009 respectively.  Complainant again defaulted in paying the premium which was falling due on 05.12.2010 as a consequence the said policy lapsed.  The same was also communicated to the complainant dated 05.01.2011 and also requested to reinstate the policy.  But complainant failed to reinstate the policy and the surrender value under the policy fell below the 1^st year premium, the said policy was auto-foreclosed as per Article 2(c)III(a) of the terms and conditions of the policy and a surrender amount of ` 70,000 was sent to the complainant.  They also informed the reason for the policy being auto-foreclosed.

                 8. After the termination of the said policy and payment of the surrender value amounting to ` 70,000 opposite parties realized that the complainant had made the payment of the renewal premium by an outstation cheque amounting to ` 7,500.  On receipt of the said cheque the opposite parties returned the same to the complainant.

                 9. According to them, the delay in clearing the cheque for renewal premium which was due on 05.12.2011 is not intentional.  It has occurred due to the technical error in the system.  The opposite parties realized the same and proposed to complainant to reinstate the said policy by paying the renewal premium along with the declared good health or to accept an amount of ` 30,000 paid under the said policy.  The complainant had rejected the said offer.  The 1^st opposite party did not have any malafide intention to auto-foreclose the said policy.  The policy was auto-foreclosed as the renewal premium deposited by the complainant could not be reflected in the system by 04.01.2011 and the surrender value paid under the policy went below the premium paid in the 1^st commencement year.  The policy was auto-foreclosed and the surrender value was paid to the complainant.  Hence 1^st opposite party canvassed for the dismissal of the complaint with cost.

                10. From the above pleadings, the following points are raised for consideration:

(1)   Whether the complaint is maintainable before the Forum?

(2)   Whether the reliefs sought for in the complaint are allowable?

(3)   Reliefs & Costs?

     11. Evidence of the complaint consists of the oral deposition of PW1 and marked as Exts.A1to A7 and Ext.B1 to B8.  After the closure of evidence, both parties were heard.

                 12. Point Nos.1 to 3:- In order to prove the complainant’s case, 2^nd opposite party filed proof affidavit along with certain documents.  She was examined as PW1 and the documents produced were marked as Exts.A1 to A7.  Ext.A1 is the policy document issued by 1^st opposite party.  Ext.A2 is the mini statement of the bank account of the 1^st complainant.  Ext.A3 is the letter dated 05.01.2011 intimating the complainant to reinstate the policy by 1^st opposite party.  1^st year premium of ` 70,000 returned to complainant by cheque dated 19.01.2011 by opposite parties, its copy is marked as Ext.A4.  Covering letter dated 20.01.2011 attached Ext.A4 is marked as Ext.A5.  Premium of ` 7,500 is returned to complainant by cheque dated 04.03.2011 and its copy is marked as Ext.A6.  Covering letter dated 03.03.2011 attached to Ext.A6 is marked as Ext.A7.

                 13. In order to prove the opposite parties contention, 1^st opposite party filed proof affidavit along with certain documents.  Documents produced were marked as Exts.B1 to B8.  Exts.B1 and B2 are the copies of key feature document and proposal form.  Ext.B3 is the copy of standard terms and conditions of the policy.  Ext.B4 is the copy of request of complainant for reduction of the premium from ` 70,000 to ` 15,000 annually dated 22.12.2008.  Ext.B5 is the copy of reply of Ext.A4 dated 27.12.2008 from opposite parties.  Ext.B6 is the copy of letter dated 05.01.2011 issued to complainant to reinstate the policy.  Ext.B7 is the copy of letter dated 20.01.2011 informing the complainant that regular premium falls below an amount equivalent to one year’s regular premium at any time during the reinstatement period, the policy will automatically terminate and get only surrender value.  Ext.A8 is the copy of cheque of ` 7,500 dated 03.03.2011 and the letter dated 04.03.2011.

                  14. On the basis of the contention and argument of the parties, we have perused the entire material on record.  The fact of the case is that 2^nd complainant had taken a life insurance policy from 1^st opposite party and has been paying regular premium.  Her 1^st half yearly premium of ` 7,500 of 4<sup>th</sup> year has sent by cheque in between 15<sup>th</sup> and 20<sup>th</sup> of December.  The due date of remitting premium was on 05.12.2010 and the grace period ends on 04.01.2011.  Therefore, complainants sent the said cheque within the due date.  But the cheque sent to Kottayam Branch was cleared from Ernakulam only on 05.01.2011, the day after the grace period.  There is considerable delay in presenting the cheque for collection.  This fact is not considered by opposite parties, and they terminated the policy and the 1<sup>st</sup> year premium of ` 70,000 returned.  Since the surrender value of the policy is less than the 1^st year premium, the policy is auto-foreclosed.  At the time of taking the policy, opposite parties not disclosed the term auto-foreclosure.  They also not intimated the termination of the policy.  This caused mental agony, financial loss and lost the insurance coverage.

                  15. 1^st opposite party’s contention is that complainant was defaulted in paying the premium which was falling due on 05.12.2010.  The same was also communicated to complainant and also requested to reinstate the policy.  But complainant failed to reinstate the policy.  As per Article 2 (c) III(a) of the terms and condition the surrender value under the policy fell below the 1^st year premium was auto-foreclosed.  Opposite parties proposed to reinstate the policy by paying the renewal premium along with the declared good health or to accept an amount of ` 30,000 paid under the policy.  But complainant rejected the offer.  Hence the policy was auto-foreclosed and the surrender value paid to the complainant.

                  16. On a perusal of Exts.A1 to A7 and B1 to B8, it is revealed that the complainant is a policy holder and she has to pay the premium amount within due date.  If any due occurred, the policy holder has the right to reinstate the policy by paying the renewal premium along with the declared good health condition as per terms and condition.  Ext.B6 shows that opposite parties intimated the complainant to reinstate the policy.  Since she has not reinstated the policy, opposite parties hold ` 30,000 and not yet returned. 

                  17. The specific contention of complainant is that, they sent a cheque of ` 7,500 in between 15^th and 20^th December.  The due date of remitting premium was on 05.12.2010 and the grace period of one month’s ends on 04.01.2011.  It is revealed that cheque sent to Kottayam Branch was cleared from Ernakulam on 05.01.2011.  To this aspect 1^st opposite party’s reply is that the delay in clearing the cheque submitted for renewal premium which was due on 05.12.2011 is not intentional, the same had occurred due to technical error in the system.

                   18. From the overall fact and circumstances and the available evidence on record, it is seen that delay in clearing the cheque on or before 04.01.2011 had occurred due to the technical error of the system.  Therefore, complainant cannot be blamed for delay in payment of premium.  Since cheque is accepted on between 15^th and 20^th of December 2010, it is deemed as premium amount has remitted.  Therefore complainant is no way responsible neither the technical error in the system nor the delay in clearing the cheque.  Hence the termination and auto-foreclosure on the part of opposite parties is unjust, illegal, arbitrary, irrational unscrupulous and against all the cannons of justice.  It is a clear deficiency of service and complaint is maintainable and allowable.  Therefore, opposite parties has to repay ` 30,000 with compensation and cost.

                   19. In the result, complaint is allowed, thereby opposite parties are directed to repay ` 30,000 (Rupees Thirty thousand only) with ` 10,000 (Rupees Ten thousand only) as loss of life cover with a compensation of ` 8,000 (Rupees Eight Thousand only) and a cost of ` 5,000 (Rupees Five Thousand only).  The opposite parties are jointly and severally liable to pay the said amount within 15 days from the date of receipt of this order, failing which the whole amount will follow 9% interest from this date till the realization of the whole amount.

                        Declared in the Open forum on this the 25^th day of May, 2012.

       (Sd/-)      

                                                                                                                        N. Premkumar,

                                                                                                                               (Member)

Sri. Jacob Stephen (President)                                   :           (Sd/-)

Smt. K.P. Padmasree (Member)                    :           (Sd/-)

Appendix:

Witness examined on the side of the complainant:

PW1    :  Sherly Sam.

Exhibits marked on the side of the complainant:

A1       :  Policy Schedule issued by 1^st opposite party to the complainant. 

A2       :  Photocopy of the statement of bank account of the 1^st complainant.

A3       :  Photocopy of letter dated 05.01.2011 sent by the 1^st opposite party to the  

                complainant.

A4       :  Photocopy of payment details dated 19.01.2011for ` 70,000.

A5       :  Photocopy of letter dated 20.01.2011 sent by 1^st opposite party to the  

                complainant.

A6       :  Photocopy of letter dated 04.03.2011 sent by 1^st opposite party to the  

                complainant.

A7       :  Photocopy of payment details dated 03.03.2011 for ` 7,500.

Witness examined on the side of the opposite parties:  Nil.

Exhibits marked on the side of the opposite parties:

B1        :  Photocopy of key feature document

B2        :  Photocopy of proposal form. 

B3        :  Photocopy of standard terms and conditions of the policy. 

B4        :  Photocopy of letter dated 22.12.2008 sent by 2^nd complainant to

                2^nd opposite party.

B5        :  Photocopy of reply of Ext.A4 dated 27.12.2008 sent by 1st opposite party. 

B6        :  Photocopy of letter dated 05.01.2011 issued by 1^st opposite party to  

                complainant. 

B7        :  Photocopy of letter dated 20.01.2011 issued by 1^st opposite party to the       

                complainant.

A8       :  Photocopy of letter dated 04.03.2011 issued by 1^st opposite party to the

                complainant.  

                                                                                                                         (By Order)

                                                                                                                             (Sd/-)

                                                                                                              Senior Superintendent.

Copy to:- (1) Sam John, Puthenpalathu Thekkethil, Kallimel Post, Mavelikkara,

                         Alapuzha District, Pin – 690 101.

                 (2) Aviva Life Insurance Co. India Ltd., Aviva Tower, Sector Road,

                           Opposite Golf Course, DLF Phase V, Sector 43, Gurgoan, Haryana – 122003.

                    (3)Branch Manager, Aviva Life Insurance Co. India Ltd., 2^nd Floor, Kizhakkethil Arcade,

                          Nagampadom Post, Kottayam Dist., Kerala – 686001.

                   (4)The Branch Manager, Aviva Life Insurance Co.,Lord’s Arcade,

                         Thiruvalla – 689 101.

                   (5)The Stock File.