DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, BATHINDA

CC.No.188 of 09-05-2011

Decided on 18-08-2011

1. Makhan Pal S/o Sh. Kulwant Rai, aged about 33/34 years;

    

2. Seema Rani Bansal W/o Sh. Makhan Pal S/o Sh. Kulwant Rai, aged about 30 years;

   both r/o H.No.7437-A, Kartar Basti, Backside Rajindra College, Bathinda.

   .......Complainant

Versus

1. Aviva Life Insurance Co. Pvt. Ltd., Aviva Tower, Sector Road, Opp. Golf Course, DLF-Phase V, Sector 43, Gurgaon-

   122003 (Haryana), through its Managing Director/Chairman/G.M.

    

2. Aviva Life Insurance Co. Pvt. Ltd., Branch Office: The Mall, Near Axis Bank, Bathinda, through its Branch

   Manager/Incharge/authorized signatory/Branch Heard.

......Opposite parties

Complaint under Section 12 of the Consumer Protection Act, 1986.

QUORUM

Smt. Vikramjit Kaur Soni, President.

Sh.Amarjeet Paul, Member.

Smt. Sukhwinder Kaur, Member.

Present:-

For the Complainant: Sh. Ish Kumar, counsel for the complainant.

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

ORDER

Vikramjit Kaur Soni, President:-

1. The present complaint has been filed jointly by the complainant under Section 12 of the Consumer Protection Act, 1986 as amended up-to-date (Here-in-after referred to as an 'Act').The complainants for seeking permission of this Forum to file the complaint jointly, moved separate application. The brief facts of the complaint are that the complainants purchased ULIP Policies of the opposite parties on the allurement of the agent of the opposite parties for a sum assured of Rs.2 Lacs for each complainant. They have to pay one time premium of Rs.5,000/- each in lumpsum at once and the opposite parties have to allot the units of Aviva Life Insurance Company. The units so allotted to the complainant, were under the plan of 'Aviva Section Century Plan – Unit Linked'. The agent of the opposite parties further allured the complainant that the life of the complainants shall be insured for a sum assured of Rs.2 lacs each till the withdrawal of the amount by the complainants or return/refund of the amount by the opposite parties to the complainants. The agent of the opposite parties assured the complainant that the expected annual return is 25-30% and on the completion of three years, the complainants shall get double amount of Rs.5,000/- each i.e. Rs.10,000/- each approximately (NAV of the unit allotted to complainant at the time of withdrawal/refund of the amount). The complainant had deposited Rs.5,000/- on 17.09.2008 and the Policy bearing No.SCG2282012, Bathinda (SB) was issued in the name of the complainant-Makhan Pal (in lieu of originally allotted Policy no.SCG2163533) and Policy No.SCG2163326 Bathinda (SB) was issued in the name of complainant-Seema Rani Bansal vide receipt dated 17.09.2008 whereby it revealed that the complainants were allotted 178.340 units each of Growth Fund at NAV (Bid price) 26.900 for a sum of Rs.4,619/- each. No Policy or terms and conditions have ever been supplied by the opposite parties to the complainants. The receipts issued by the opposite parties after a long delay of 3-4 months. The complainants have alleged that on receiving receipts, the complainants learnt about the date of maturity of the Policy as well as about the mode of premium. They started protesting the matter with the opposite parties but the opposite parties have been postponing the matter on one or the other pretext and asked them to wait till the receipt of Policies and they conveyed him that they shall take effective steps on the receipt of the Policies by the complainants. In the month of January, 2009, the officials of the opposite parties conveyed that they shall make an arrangement for the cancellation of both the Policies issued in the name of complainants and further allured to get one new policy with a premium of Rs.7,500/- one time and further allured the complainant-Makhan Lal to deposit Rs.7,500/- with them and they shall communicate all the happenings to the opposite party No.1 and new Policy shall be issued accordingly and the refund of earlier Policies shall be made to the complainants by canceling the earlier policies. On the aforesaid allurement, the complainant-Makhan Pal under bonafide impression, deposited Rs.7,500/- with the opposite parties for one time premium and the opposite parties will refund Rs.10,000/- for their earlier Policies. Despite, making the payments, the opposite parties did not cancel the earlier Policies and did not make the refund of those earlier policies. The opposite parties issued another receipt dated 04.02.2009 for new Policy bearing No.AYS2319486 for sum assured of Rs.1,50,000/- and by showing the premium to be paid half yearly to the tune of Rs.7,500/- and allotted units 273.588 @ NAV 20.816 for a total amount of Rs.5,695/- and even no policy has been issued regarding the aforesaid payment/new policy. The complainant-Makhan Pal approached the opposite party No.2 and protested for the unfair and adamant attitude of the opposite parties but the opposite parties did not pay any heed to his complaint. Ultimately, in the mid of June/July, 2010, the complainant wrote a letter to the opposite parties conveying the entire happening to which, the opposite parties vide letter dated 01.09.2010 tendered apology for inconvenience to the complainant regarding policy No.SCG2163533 (for which new policy No.SCG2282012 was allotted as per receipt) but no satisfactory reply was given regarding the remaining policies. Hence, the complainants aggrieved by the attitude of the opposite parties, filed the present complaint for seeking directions of this Forum to the opposite parties to refund the amount of Rs.17,500/- which they have deposited as premises towards the policies alongwith cost and compensation.

2. The notice was issued to the opposite parties, the opposite parties after appearing before this Forum, have filed their joint written statement. The opposite parties have pleaded in para no.5 of their preliminary objections that the opposite parties had issued the Policy on the basis of the Proposal Form submitted by the complainant. The Insurance contract was entered into between the parties upon the agreed terms and conditions. The complainant was also issued the Policy Schedule and Key Feature documents which clearly explained the charges applicable on the Policy and “Right to Reconsider” notice in which it has been mentioned 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” which is in the consonance with the IRDA (Protection of Policyholders interest) Regulations, 2002. The complainant had option to review and seek refund of the premium if he disagreed with the terms and conditions of the Policy within 15 days of the receipt of the Policy documents. The opposite parties have further pleaded that Mr. Makhan Pal, the complainant approached the opposite parties for issuance of two Insurance Policies. The Proposal Form bearing No.NNU12870343 and NNU128703256 dated 12.09.2008 was received by the opposite parties which was duly filled and 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 at the time of submitting the Proposal Form, signed a Consumer Declaration wherein at clause (a), he declares and states that “I/we fully understand the meaning and scope of the Proposal Forms on my/our accord and I/we confirm that I/we have not been induced by anyone to make the proposal.” On the basis of the aforesaid Proposal Forms and declaration, the opposite parties issued Aviva Sachin Century Plan having Policies bearing No. SCG2282012 and SCG2163326 to the Policyholder on 17.09.2008. The Policy documents alongwith both the policies were dispatched to the complainant on 20.09.2008 vide Airex Courier docket #132974505. 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. The complainant again approached the opposite parties for issuance of Insurance Policy. The Proposal Form bearing No.NUP12180594 dated 30.01.2009 was received by the opposite parties which was duly filled and 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. On the basis of the Proposal Form and declaration made there under, the opposite parties issued Policy bearing No.AYS2319486 to the Policyholder on 04.02.2009. The Policy was dispatched to the complainant on 11.02.2009 vide Overnite Courier No. #503389506 in which, the Policy documents including the Policy Schedule, the “Right to Reconsider” Notice, The standard terms and conditions, copy of Proposal Form and the First Premium Receipt, were enclosed. Thereafter, as regular premium was not received under the Policy, the Policy acquired early lapse status as per terms and conditions of the Policy. The complainant had never disputed the signatures in the Proposal Form, Premium Quotation and illustration Statement. The Proposal Form clearly states that this Proposal Form for Life Insurance Contract and not a Fixed Deposit. The Proposal Form clearly provides the policy details section where the complainant was requested for Aviva Sachin Century Plan and Aviva Young Scholar Plan with a term of 20 and 10 years respectively. The premium payment term had been mentioned within the policy schedule, the premium quotation and illustration statement which had been enclosed within the Policy documents. The opposite parties have further pleaded that the features of the policy were duly explained to the complainant at the time of commencement of the policy by way of key feature document. Even on commencement of the policy, the policy documents giving details of the terms and conditions of the policy was provided to the complainant. The Policy Documents also included a “Right to Reconsider” Notice as per which 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. The opposite parties have admitted that the complainant had deposited Rs.5,000/- each in the policy bearing No.SCG2282012 and SCG2163326 but the features of the said Policies were duly explained to the complainant at the time of commencement of the Policy by way of Key Feature Document.

3. Parties have led their evidence in support of their respective pleadings.

4. Arguments heard. Record alongwith written submissions submitted by the parties perused.

5. The complainants had purchased two Policies on the allurement of the agent of the opposite parties. These Polices so purchased by the complainant, were Unit Linked Insurance Polices under the plan of 'Aviva Section Century Plan – Unit Linked'. Each policy was for sum assured of Rs.2 lacs and the complainant had deposited Rs.5,000/- for each policy. The main contention of the complainants is that at the time of taking the Policy, the agent of the opposite parties assured the complainant that their expected annual return is 25-30% and on the completion of three years, the complainants will get almost double amount of Rs.5,000/- each i.e. Rs.10,000/- each. The receipts of amount deposited by the complainant was issued on 17.09.2008 regarding Policy bearing No.SCG2282012, Bathinda (SB) in the name of the complainant-Makhan Pal (in lieu of originally allotted policy no.SCG2163533) and receipt dated 17.09.2008 was issued regarding Policy No.SCG2163326 Bathinda (SB) in the name of complainant-Seema Rani Bansal. These receipts show the units issued, their Growth Fund, 178.340 units were allotted at NAV (Bid price) 26.900 for a sum of Rs.4,619/- each. No Policy or terms and conditions have ever been supplied by the opposite parties to the complainants. The receipts to the premium paid by the complainant have been issued after delay of 3-4 months. As soon as, the complainant came to know about the date of maturity of the policy, the mode of premium, they started protesting the matter with the opposite parties and requested for the cancellation of both the policies and at that time, the opposite parties again allured the complainant to purchase one new policy with premium of Rs.7,500/- paid in one time and told the complainant that they will refund the amount of Rs.10,000/- of their previous policies. Under bonafide belief, the complainant-Makhan Pal deposited Rs.7,500/- with the opposite parties. The opposite parties instead of cancellation of the earlier polices and making the refund of previous policies, had kept the policies as it is and issued a new receipt dated 04.02.2009 for new Policy bearing No.AYS2319486 for sum assured of Rs.1,50,000/-. In this receipt, the premium was to be paid half yearly to the tune of Rs.7,500/- and allotted units were 273.588 @ NAV 20.816 for a total amount of Rs.5,695/-. Again no policy has been issued to the complainant by the opposite parties.

6. On the other hand, the opposite parties have submitted that the complainant was issued policy schedule and key feature document which clearly explained the charges applicable on the Policy. The Right to Reconsider Notice stated 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”. The complainant had option to review and seek refund of the premium if he disagreed with the terms and conditions of the Policy within 15 days of the receipt of the Policy documents. The complainants have taken polices with their own free will. The Proposal Form bearing No. NNU12870343 and NNU128703256 dated 12.09.2008 was received by the opposite parties which was duly filled and 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 details of two premiums paid by the complainant, issued under Aviva Sachin Century Plan having Policies No.SCG2163326 and SCG2163326 dated 17.09.2008 and the salient feature of these polices as read under:-

(1)

a. Policy SCG2282012

b. Commencement dated 17^th September, 2008

c. Sum Assured Rs.2,00,000/-

d. Premium Frequency Half yearly

e. Regular Premium amount Rs.5,000/-

f. Premium paid till date Rs.5,000

g. Status of Policy Early Lapsed

(2)

a. Policy SCG2163326

b. Commencement dated 17^th September, 2008

c. Sum Assured Rs.2,00,000/-

d. Premium Frequency Half yearly

e. Regular Premium amount Rs.5,000/-

f. Premium paid till date Rs.5,000

g. Status of Policy Early Lapsed

1. These both policies were dispatched to the complainant on 20.09.2008 vide Airex Courier docket #132974505. 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, the complainant approached the opposite parties for purchasing another Insurance Policy. The Proposal Form bearing No.NUP12180594 dated 30.01.2009 was received by the opposite parties which was duly filled and 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. On the basis of the Proposal Form and declaration made there under, the opposite parties issued Policy bearing No.AYS2319486 to the Policyholder on 04.02.2009. The salient feature of the aforesaid policy is read as under:-

a. Commencement dated 04^th September, 2009

b. Sum Assured Rs.1,50,000/-

c. Premium Frequency Half yearly

d. Regular Premium amount Rs.7,500/-

e. Premium paid till date Rs.7,500/-

f. Status of Policy Early Lapsed.

The Policy was dispatched to the complainant on 11.02.2009 vide Overnite Courier No. #503389506, through which the Policy documents were sent including the Policy Schedule, the “Right to Reconsider” Notice, The standard terms and conditions, copy of Proposal Form and the First Premium Receipt. As the complainant has not paid regular premium, the Policy acquired early lapse status as per terms and conditions of the Policy.

7. Ex.R-3 and Ex.R-5 are the Proposal Forms submitted by the complainants on 10.09.2008. The receipts issued by the opposite parties were Ex.C-2 and Ex.C-3 on 17.09.2008. The next premium due date was 17.03.2009 in both the policies. The complainant has applied for cancellation of the Polices vide Ex.C-7 which is reproduced as under:-

“I have two Policies of Aviva Life Insurance, from which one is in my name, Makhan Pal and other is of my wife Seema Rani Bansal. Sir, I am facing problem from first day. Firstly it was not delivered to me as per given time by company representative. I discussed it with Sales Manager D.P.Singh, I shocked when he tells me that it is delivered at wrong address. However, with the help of them it is reissued and send on my exact address. During this period Aviva Sales Executive Mr. Nitin Lamba suggest me to take a new policy Aviva Young Scholar Policy, by canceling one or both of existing policy because it covers all terms plus extra benefits. So, he activates my new policy. But after a two or three months, he tells me that our old policy cannot be cancelled because it is too late from their side. No body came to me for its premium.

I have not received any documents or e-mail or phone call from Aviva Life Insurance regarding status of my policy. After a long time, I dial Aviva Toll free number 18001802266. I shocked when they said me that my policy is in Paid mode or it is not in working order.

I request to solve my problem because I am unable to continue these three policies at a time. Please adjust my payment of first two polices Rs.10,000/- (Rs.5,000/- for each) into Aviva Young Scholar Policy.”

According to this letter, the policies were sent on a wrong address and later on, sent to the complainant on his actual address. Thereafter, he got those, issued on correct address by the opposite parties. He requested the opposite parties to cancel his both Policies but on allurement of the opposite parties, he has purchased another Policy after paying the premium of Rs.7,500/- under bonafide belief, that earlier two policies will be cancelled and the amount of two previous policies will be adjusted in the premium of the third policy but the opposite parties refused to cancel the earlier two policies or to adjust the premium.

8. The terms and conditions have never been supplied to the complainant. A perusal of terms and conditions placed on file by the opposite parties Ex.R-6 and Ex.R-7 shows that these are not signed by the complainants. In such a case, the terms and conditions of the policies are not binding on the complainants.

9. The complainant had paid only one premium in each of three Policies i.e. Rs.5,000/-, Rs.5,000/- and then Rs.7,500/-. The complainant has not paid the second premium as the fact came to his knowledge that the Policies bearing Nos.SCG2282012 and SCG2163326 are of 20 years and the Policy No.AYS2319486 is of 10 years. The Policies were in lapsed condition due to non-payment of second premium. The complainant has requested the opposite parties to refund the premium paid by him. Further, nothing has been mentioned on these terms and conditions that these are of same agreement which has been executed between the complainant and the opposite parties. In such circumstances, the support can be taken from IRDA rules which are applicable on all the Insurance policies. Regulation No.8 i.e. Surrender Charges of Insurance Regulatory and Development Authority (Standardization of terms and conditions of ULIP Products and treatment of lapsed policies) Regulations, 2010, is reproduced hereunder :-

“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

Ist year 12.50% 15%

2^nd year 10.00% 12.50%

3^rd year 7.50% 10%

4^th year 5.00% 7.50%

5^th year 2.50% 5%

6^th year Nil 2.50%

7^th year & onward Nil Nil

10. As the Policy period has been mentioned in two Policies i.e. SCG2282012 and SCG2163326 as 20 years and in the third Policy bearing No. AYS2319486 as 10 years. So, these Policies falls under the period of more than 10 years. The complainants are entitled to get only the fund value of these Polices. They are not entitled to get the benefit of the policies as they have not deposited the second premium of these three polices. Hence, the amount deducted from the above mentioned policies is @ 12.50% as per IRDA Rules. Thus, the amount payable with regard to the Policy No.SCG2282012 in the name of complainant No.1-Makhan Pal is Rs.4,375/- (5,000 less 12.50% = 4,375), bearing Policy No.SCG2163326 is in the name of complainant No.2-Seema Rani Bansal is Rs.4,375/- (5,000 less 12.50% = 4,375) and Policy No.AYS2319486 in the name of complainant No.1-Makhan Pal is Rs.6,563/- (7,500 less 12.50% = 6,563) respectively.

11. Therefore, in view of what has been discussed above, this complaint is accepted with Rs.2,500/- as cost and compensation and the opposite parties are directed to refund the total amount of Rs.15,313/- (Rs.4,375 + Rs.4,375 + Rs.6,563 = Rs.15,313/-) to the complainant. Compliance of this order be done within 45 days from the date of receipt of copy of this order. In case of non-compliance, the interest @ 9% p.a. will yield till realization.

A copy of this order be sent to the parties concerned free of cost and file be consigned for record. '

Pronounced

18.08.2011

(Vikramjit Kaur Soni)

President

(Amarjeet Paul)

Member

(Sukhwinder Kaur)

Member