D.O.F. 28.09.2012

                                            D.O.O. 21.01.2014

IN THE CONSUMER DISPUTES REDRESSAL FORUM KANNUR

Present:      Sri. K.Gopalan                   :                President

                   Smt. Sona Jayaraman K.  :               Member

                   Sri. Babu Sebastian         :               Member

Dated this the 21^st day of January, 2014.

C.C.No.302/2012

Laya C.H.

‘Lakshmi’, Chalode                                               :         Complainant

P.O.Edayannur, Kannur

(Rep. by Adv. T.V. Haridasan)

1. Aviva Life Insurance Co. Ltd.,

    JMD Regent Squire Pvt. Ltd.

    Gurgaon, Mehrauli Road,

    PIN : 122001                                          

2. P.V. Jayesh

    Aviva Life Insurance Co.Ltd.,

    Kalpar Control Agent, Grand Plaza Road,

    Kannur-1.

(OP No.1 & 2 rep. by Adv. Sajith Kumar Chalil)     :       Opposite Parties

3. Satheesan T.

    Sales Manager

    Aviva Life Insurance Co.Ltd.,

    Brands, Grand Plaza Road, Kannur-1

4. Nidheesh S.D.

    Sales Manager

    Aviva Life Insurance Co.Ltd.,

    2^nd Floor, Grand Plaza Road, Kannur-1

O R D E R

Sri. K. Gopalan, President

          This is a complaint filed under Section 12 of Consumer Protection

 Act for an order directing the opposite parties to pay balance amount of `3,03,591 and cost of litigation. 

The case of the complainant in nutshell is as follows :  Complainant is the policy holder vide policy No. JSG 1616610 plan Save Guard ‘Junior’ opted in the name of complainant’s daughter Lakshmi Swaroop. At the time of taking the policy the opposite parties made believe her the premium payment fund will carry growth fund value as per units in accordance with existing money value.  She was also assured that he is at liberty to withdraw from the scheme at any time, and at the same time the premium payments along with growth fund will be refunded as and when termination option handed over to the office of the opposite party.  The opposite parties failed to prevent the policy from loss.  They are legally bound to switch off when growth fund value reduce by adopting switch OFF and ON method.  They are bound to enlighten the progress periodically to the complainant, but they were negligent.  Complainant made three premium payments `3,00,000  and could not make further payments.  On lapse of premium opposite party purposefully omitted the growth fund value and other incentives and also deducted the service charge.  On 14.08.2012 opposite party issued a letter settling the claim for `2,12,783 and issued a cheque for the same. It is a gross negligence on the part of opposite parties.  They failed to enlighten the position of growth fund value periodically and unilaterally withdrawn from the terms and conditions of the policy agreement. Complainant is entitled to get `3,00,000 paid as premium with interest along with growth fund value for `23,458 per year.

          Pursuant to the notice sent by the Forum 1^st and 2^nd opposite party made appearance.  Notice to 3^rd and 4^th opposite party returned with the endorsement ‘left’. 1^st and 2^nd  opposite party failed to supply the present address of 3^rd and 4^th opposite party.  Application for substituted service was allowed and on production publication of 3^rd and 4^th opposite party declared exparte.  1^st and 2^nd opposite party filed version, the content of which is briefly stated below :

1^st and 2^nd opposite party denied the main allegations of complainant.  It is denied that complainant was assured by the opposite parties that complainant can withdraw the policy at any time.  It is also denied that opposite party assured the complainant that amount deposited by her and growth fund would be paid whenever the policy is withdrawn.  It was clearly mentioned in policy schedule that the said policy is a Save Guard Junior Policy and Date of final instalment is 08.08.2026.  The policy document duly dispatched to the complainant.  The policy is a long term policy and will not mature within three years.  Opposite party can switch the fund value only after a written request from the complainant.  Complainant failed to deposit the premium because of which the status of the said policy was changed to ‘Auto ForeClosure’ on 09.08.2012 and terminated the policy.  Pursuant to the said policy being converted into Auto Foreclosure mode, an auto foreclosure even passed in system and surrender value paid to the customer.  During the Auto Foreclosure mode, the policy holder can surrender the said policy and shall be entitled to the surrender value.  Pursuant to the said policy being converted into the Auto-Foreclosure mode, the surrender value calculated under the said policy amounting to `2,12,783 was sent to the complainant.  Since the surrender value paid to complainant as per the terms and conditions there is no deficiency in service.  Hence to dismiss the complaint.

          On the above pleadings the following issues have been taken for consideration.

1.  Whether there is any deficiency in service on the part of opposite parties?
2. Whether the complainant is entitled to get the remedy as prayed in the complaint.
3. Relief and cost.

The evidence consists of oral testimony of PW1 and Ext.A1 to A6 marked on the side of complainant.  No oral evidence adduced by the opposite party except marking Ext.B1 to B3 through PW1.

Issues No.1 to 3 :

          Admittedly complainant is a policy holder under 1^st opposite party, Aviva Life Insurance Company India Ltd.  The case of the complainant is that the complainant opted to be a policy holder since she was made believe that the policy premium payment fund will carry growth fund value as per units in accordance with money value and the fund value will have interest and complainant is at liberty to discontinue from the policy on payment of three initial premium payment.  It is also her case that opposite party made believe that on termination the amount will be refunded with growth fund value along with interest. Complainant alleged that opposite party legally bound to stop the policy from going in loss by adopting switch on and off methods. In short complainant’s case is that she opted to be a policy holder believing the words of opposite party and hoping security of her money and savings and getting growth fund value with interest.

          Complainant adduced evidence in tune with her pleadings by way of chief affidavit.  PW1 in his chief affidavit stated that at the time of taking the policy opposite party assured that if regular premium paid for a continuous period of 3 years the complainant will get Growth Fund Value as per units with interest in accordance with existing market value and the fund value would be maintained in profit level and keep preventing loss to complainant.

          Complainant paid a total amount of `3,00,000 as premium ie lakhs per year. Ext.A4 (1) to (3) proves that on 28.01.2007, 08.08.2008, 25.08.2009 complainant has paid `1,00,000 per year for three years.  PW1 stated that premium thereafter happened to be in default and on enquiry she understood that she can top up the policy on remitting the premium payment.  Complainant was told that the due amount of premium can be remitted together with the next premium payment. Then complainant agreed to pay the due Regular premium and to top up the policy. 

          Renewal premium receipt for 08.08.2009 dated 25.08.2009. (Ext.A5) goes to show that the total fund value as on 25^th August 2009 was `2,77,104.   So also policy account statement – JSG1616610 as on 15.08.2010 was `3,01,247.  Ext.A3 is the payment details that reveals the cheque amount was `2,12,783.  Ext.A6 dated 15.08.2006, the intimated fund value was `3,01,247.  The policy was terminated on 14.08.2012.  Complainant alleges that the policy was terminated when the complainant was making attempt to top up the policy.  Complainant never asked to close the policy.  Complainant’s case is that opposite party unilaterally terminated the policy without giving opportunity to complainant to revive the policy whereby caused heavy loss.

          Whether complainant was given opportunity to revive the policy or not is an important question.  Since it is unjust and unfair if termination is unilateral.  It is pertinent to note that complainant committed default in payment of premium but it is seen complainant did not cancel the policy.  Complainant did not surrender the policy.  Opposite party in their version did not say complainant had cancelled the policy. They have no case that complainant was given opportunity to receive the policy.  Article 2(C)(II) of the standard terms and conditions produced by opposite party goes to show that “If we do not receive the Regular premium due after 3 consecutive policy years from the commencement date, and provided you have paid Regular Premium due for the first three consecutive years, then- if the regular premium due is not received within the grace period of 30 days from the due date of unpaid regular premium then, the policy may be reinstated within two consecutive years from the due date of the first instalment of unpaid regular premium”.  Article 2 (C)(III) provides thus “you may exercise any of the 3 options during the 2 years reinstalment period.”

          Article 2(C)(III) makes it clear that there is 2 years reinstatement period if regular premium for the first three years paid.  Herein the complainant has paid three years premium as per Ext.A4 (1) to (3).  Hence she is entitled for 2 years reinstatement period in order to revive her policy.  The first question arose whether such fact of opportunity available for reviving the policy was intimated to complainant or not.  If the termination of policy is done without giving opportunity to revive the policy and even without giving any such intimation prior to cancellation,  it is a clear example of unfair trade practice amounts to deficiency in service.  It is pertinent to note that the policy in question provides switch off and on facility in order to safeguard the policy from loss.  But what happened in this case?  Can the Insurance Company sit idle when the policy going deep into loss embracing ‘switch off and on’ facility.  Don’t they have any obligation to bring the fact to their policy holders?  If not what is the use of switch off and on facility.  Company is having computerized office set up and if they don’t have such arrangement to inform the holders about the danger of loss to their investment how can it be claimed that company is safeguarding the best interest of their customers.  It reveals a sort of spread over of unfairness in the entire dealings of the company opening windows to protect the profit of the company ignoring the loss that may possibly arose to customers, even if company is fully equipped with all computerized facility to know the pulse of market every now and then.  There is no doubt that the facility of switch off and on might have very well used to impress customers to tell them that this facility is provided in order to protect them from loss.  But those facilities had been sleeping in between the lines under standard terms and conditions when the customers/ policy holders were plunged into loss to loss.  It is quite understandable that common people of our village is ignorant of share market.  Moreover, they have no experience of loss from insurance policy.  This might have been their first round experience getting loss out of their actual premium amount paid.  It is difficult to digest whether a scheme which is not capable of protecting even the premium amount paid can be called Insurance.

          The definite case of the complainant is that the policy was taken by her believing the explanations and assurances given by the opposite parties.  Complainant specifically alleged that opposite parties failed to prevent the policy from entering in loss, though they were legally bound to switch off when growth fund value reduces by adopting the method “switch off and on”.  It is also alleged that they are bound to enlighten the progress periodically to the complainant, which they failed.  PW1 deposed in the cross examination that he did not read the terms and conditions.  He further deposed that he did stop paying the premium on the basis of the advice of the agent.  PW1 further deposed that it is not correct to say that he did not seek option to continue the policy without paying premium PW1 deposes that “3 വർഷത്തിനു ശേഷം പ്രീമിയം സംഖ്യ അടക്കാതെ തന്നെ  policy continue ചെയ്യാനുള്ള opition ഉണ്ടായിരുന്നെങ്കിലും ഉപയോഗിച്ചില്ല എന്ന് പറയുന്നത് ശരിയല്ല.  ഞാൻ പല പ്രാവശ്യം ഓഫീസിൽ ബന്ധപ്പെട്ടിരുന്നു. Top up ചെയ്യാനുള്ള അവസരം ഓഫീസ് അടച്ചിട്ടിരുന്നതിനാലും എതിർകക്ഷി സ്വമേധയാ പണം മടക്കി തന്നിരുന്നത് കൊണ്ടും നടന്നില്ല. പോളിസി ഉടമ പ്രീമിയം തുടർച്ചയായി അടക്കാതിരുന്നാൽ സ്വമേധയാ പോളിസി   close  ചെയ്യുന്ന വ്യവസ്ഥ പ്രകാരമാണ്  ഈ പോളിസി close  ചെയ്തത്  എന്ന് പറഞ്ഞാൽ top -up -നു  ശ്രമിക്കുന്നതിന്റെ ഇടയിലാണ് അവർ പോളിസി close  ചെയ്തത്.”  Naturally certain questions arises here to be answered.  Whether the terms and conditions were explained to complainant and obtained consent to every terms?  Opposite party has the case that complainant read the condition herself and filled up the form and presented to opposite party. Canvassing to take insurance policy is a usual practice going on in our country side and agents are explaining the terms and conditions of every scheme to make believe the policy holders the advantage of the policy.  The way in which it is being presented is ofcourse important. The most important question is whether the negative side of the terms had been explained or not.  Complainant has definite case that it is on the assurance of opposite party that the complainant became the policy holder.  If it is not so opposite party should come forward and adduced evidence to rebut the allegations and evidence of complainant.  Natural justice cannot be assured ignoring the actual ground realities of common life.  No evidence adduced on the side of opposite parties.  No document goes to show that opposite party obtained consent of the complainant on the conditions negatively affect the interest of complainant.  It is relevant to examine whether opposite party has discharged the obligation to make assure that the policy holder was aware of the negative side of policy.  Hence such terms should be consented with the signature of the complainant, the absence of which the essential element of the contract ‘consensus ad idem’ cannot be made ascertained.  Opposite party can’t keep away from giving evidence.  It is their bounden duty to prove and establish that the policy borne out of free consent and perfect understanding.  Opposite parties are least bothered about establishing their case by adducing evidence.  Evenafter availing the opportunity to cross examine PW1 opposite parties did not feel it is necessary to come forward to adduce evidence so as to prove their case.  No attempt has been made by the opposite party to make available material facts on their side.  The very nature of conducting the case reveals the dealings of unfairness on the part of opposite party’s side. It is quite evident that opposite party has not taken care to make assure that policy holder is well aware of the terms and conditions at the time of taking policy, whereby absence of consensus ad idem shall hit the very validity of contract of insurance.  It is the opposite parties who are bound to prove that they have explained those things to policy holders which they ignored pretending that they are very much safe under the wings of terms and conditions.  In a way, a close scrutiny of the terms and conditions shall truly bring out the fact that in the ordinary course of business it is not possible for a man of ordinary prudence to read and understand the compound and complex sentences which had been printed in smallest letters, which itself make a tiresome job to read even for a well educated person.  Knowing English doesn’t mean he is having command over the language.  Only the Professors of English language can easily handle the terms and conditions filled with full of compound and complex sentences just can seen in the photocopy, Ext.B3 produced by opposite parties.  Practically it is a heavy burden imposed on the shoulders of policy holders intended to seek shelter, whenever they are bound to answer their dealings with the customers.  If these facts are taken into account non-intimation of opportunity of top up the policy is quite unfair and unjustifiable.

          It can be seen that the policy holder herein never demanded for termination of policy.  Opposite parties very urgently terminated the policy and sent the amount by means of cheque to complainant as if they have adopted dynamic style of dealing to do things then and there without causing delay to their customers.  The policy is terminated before the expiry of revival period denying the opportunity to revive the policy to complainant.  This is an unfair trade practice amounts to deficiency in service. If complainant demanded for termination of policy opposite party can very well prove it before the Forum.  If not that is quite enough to assume that the policy is terminated without request on the side of complainant, and it can be considered only as an act purposefully done in order to deny the opportunity to revive the policy, which is nothing but quite unfair and unjust.

          Complainant alleged that opportunity has not been given to revive the policy since it was terminated before the expiry of revival period even without giving notice to complainant. Since it is a question of loss and a crucial stage of the life of policy, opposite party has the obligation to give notice before terminating the policy.  Opposite party has no explanation why notice has not been issued to complainant regarding the question of termination.  It is pertinent to note that this is a policy, the life of which can be retained for the full period even without paying the premium in all cases wherein three years regular premium has been continuously paid.  In the case in hand complainant was denied the opportunities to exercise any of the options provided under the terms and conditions by terminating the policy before the expiry of the reinstatement period which is undoubtedly unfair and deficiency in service.  The purpose for which reinstatement period made available in this policy has been cunningly destroyed by terminating the policy and sending cheque to complainant without any sympathy to protect the interest of the policy holder under such turing point of dealings, supposed to cause heavy loss to him.  As provided under Article 2(e) complainant is entitled to revive the policy and given time to inform the intention upto 7 days prior to the end of the reinstatement period to reinstate the policy.  So the denial of opportunity to reinstate the policy is a crystal clear deficiency on service on the part of opposite party. It is pertinent to note that opposite party did not even take interest to inform complainant about the fund deposit and its details.  In the ordinary course the deposited amount would be increased two fold within 5 years. As pointed out above the policy holder can maintain the policy alive even without paying premium amount incase regular premium for the first three years had been paid. 

          In the light of the facts and circumstances of the case we have no hesitation to hold that there is deficiency in service on the part of opposite parties.  Thus opposite party is liable to pay complainant the premium amount paid by him and its growth with interest. As per the intimation dated 25.08.2009 and 15.08.2010 yearly growth is `241431.2.  Disregarding the question of revival in the interest of justice, opposite party is liable to pay the premium amount `3,00,000 together with the amount of average growth for the period of 3 years `72,429 along with interest `36000 (12000 x 3) deducting the amount `2,12,783 for which the opposite party sent cheque unilaterally to complainant.  Complainant is also entitled for compensation to the tune of `25,000 along with `1500 as cost of this litigation.  Thus issues No.1 to 3 are answered in favour of complaint.  Order passed accordingly.

          In the result, the complaint is allowed directing the opposite parties to pay an amount of `1,85,000 (Rupees One Lakh Eighty Five Thousand only) as insurance amount together with `25,000 (Rupees Twenty Five Thousand only) as compensation and sum of `1000 (Rupees One Thousand only) as cost of this litigation within one month from the date of receipt of this order, failing which complainant is entitled for interest on insurance amount awarded @ 10%  from the date of this order till the date of realization of the amount.  Complainant is also at liberty to execute the order after the expiry of 30 days as per the provisions of Consumer Protection Act.

          Dated this the 21^st day of  January, 2014.

                            Sd/-                     Sd/-              Sd/-

                       President               Member          Member   

APPENDIX

Exhibits for the Complainant

A1.   Premium receipt dated 08.08.2007.

A2.   Policy account statement dated 24.07.2012.

A3.   Payment details dated 14.08.2012.

A4.   Premium acknowledgment receipts (3  in numbers).

A5.   Premium renewal receipt dated 25.08.2009.

A6.   Policy account statement dated 15.08.2010.

Exhibits for the opposite party

B1. Policy document.

B2. Proposal form.

B3. Terms and conditions of the policy.

Witness examined for the complainant

PW1. C.H. Valsalan

Witness examined for opposite party

Nil

      /forwarded by order/

                                                                     SENIOR SUPERINTENDENT