STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

                                    U.T., CHANDIGARH 

                                    (Additional Bench)

LIC of India Ltd. SCO 343-344, Sector 34-A, Chandigarh.

                                                                             … Appellant

V E R S U S

1. Avtar Singh #5306 A, Sector 38 West Chandigarh.
2. The Insurance Ombudsman, SCO 101-103, Batra Building, Sector 17-D, Chandigarh

                                                                         ..... Respondents

Appeal under Section 41 of the Consumer Protection Act, 2019 against order dated 24.07.2023 passed by       District       Consumer Disputes Redressal Commission-I, U.T. Chandigarh in Consumer Complaint No.690/2021.

BEFORE:       MRS. PADMA PANDEY, PRESIDING MEMBER

                       Mr.PREETINDER SINGH,MEMBER

Argued by:      Ms.Malvi Verma, Advocate, proxy for Sh.Rajneesh                               Malhotra,   Advocate for the  appellant .

                         Sh.Avtar Singh, respondent No.1/complainant in person.

                         Respondent No.2 ex parte.

 PER PREETINDER SINGH,MEMBER

                   This appeal is directed against the order dated 24.07.2023, rendered by the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (hereinafter to be referred as “the Ld. Lower Commission”), vide which, it allowed the  complaint as under;

“13.In view of the above discussion, the present consumer complaint succeeds and the same is accordingly allowed. OP No.1 is directed as under:-

1. to pay Rs.41,922/- (Rs.91248/- minus Rs.49326/-(already paid))  to the complainant with interest @9% P.A. from the date of payment already made to the complainant till realization
2.    to pay Rs.8000/- to the complainant as compensation for causing mental agony and harassment to him;
3.   to pay Rs.7000/- to the complainant as costs of litigation.

               This order be complied with by the OP No.1 within thirty days from the date of receipt of its certified copy, failing which, they shall make the payment of the amounts mentioned at Sr.No.(i) & (ii) above, with interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above.”

2.     Before the Ld. Lower Commission, it was case of the complainant/respondent  that  he purchased one LIC policy bearing No.165189416-Jeevan Saral Policy (165)  in the year 2012 from Opposite Party No.1/appellant  commencing from 28.7.2012. The maturity sum assured was Rs.91248/- and death sum assured was Rs.2,00,000/-. It was averred that due to personal reasons the complainant  surrendered the policy on 3.12.2020 and requested the LIC to pay the amount of premium paid upto the date of surrender. It is alleged that the LIC transferred a sum of Rs.49,326/- only to the complainant in full and final settlement on 8.12.2021 whereas the updated premium amounting to Rs.81700/- was paid. The complainant then  made representation vide letter dated 9.12.2000 (Annexure A-2) and thereafter sent repeated reminders.  When nothing was heard from the LIC, the complainant also approached the Insurance Ombudsman but it wrongly rejected the claim without giving any valid reasons. Hence, alleging  deficiency in service and unfair trade practice on the part of the Opposite Parties, a consumer complaint was filed before the Ld. District Commission seeking the balance amount alongwith interest, compensation and costs.

3.              Pursuant to issuance of notice, Opposite Party No.1/appellant appeared before the Ld. District Commission and contested the complaint. In its written reply,  while admitting the factual matrix of the case  it was stated that  the complainant was duly informed regarding the loss in amount that he would suffer in case of surrender but he still insisted for surrender of the policy and gave the same in writing vide surrender letter dated 4.12.2020.  The surrender value as per the surrender value quotation was Rs.49326/- which was transferred to the complainant. The complainant himself vide letter dated 4.12.2020 insisted for surrender of the policy knowing fully the loss in case of withdrawal. It was pleaded that  the insurance policy is a legal contract between the parties and is governed by the terms and conditions approved by IRDAI. There was no promise whatsoever made to return the complete premium. It was further stated  that the amount under the policy cannot be refunded as mortality charges, administrative expenses alongwith taxes to the government have already been paid by the answering OP. It was further stated  that the complainant has utilized the policy in question and risk for death stood covered during the currency of the policy in question. Certain preliminary objections were taken  and it was pleaded that there was no deficiency in service. Denying  all other allegations made in the complaint, a prayer was made for dismissal of the complaint. 

 4.            Opposite Party No.2 also sent short reply through post wherein it was stated that the Insurance Ombudsman had carried out his duties as per the rules  and as per power conferred in such Insurance Ombudsman under the Rules of Government of India and as such Opposite Party no.2 is not a necessary party and prayed that its   name be deleted from the array of Opposite Parties.  Since OP No.2 neither  turned up before the Ld. Lower Commission, nor filed  evidence by way of affidavit, hence, it was proceeded against ex parte.

5.                  On appraisal of the complaint, and the evidence adduced on record, Ld. Lower Commission allowed the complaint, as stated in the earlier part of the order. 

6.                Aggrieved against the  aforesaid order passed by the Ld. Lower Commission, the instant Appeal  has been filed by the Appellant/Opposite Party No.1   for setting aside the impugned order.

7.                  We have heard Counsel for the appellant, respondent/complainant in person, and have gone through the evidence and record of the case with utmost care and circumspection.

8.                  In the appeal, the ground taken by the appellant is that the Ld. Lower Commission while passing the impugned order has failed to take into consideration that the respondent/complainant had paid premium of Rs.81700/- in 8 years and also misread the clause 7(a) of the terms and conditions of the policy. The Ld. Lower Commission has also failed to take into consideration that no deduction was made by the LIC for surrender amount  whereas it granted the sum assured of Rs.91248/- by assuming that the premium paid was for 17 years whereas the premium was paid only for 8 years. Thus, the Ld. Commission had mixed the terms, surrender value with maturity amount  while passing the impugned order.  Further the respondent/complainant was informed regarding the loss in amount that he would suffer in case of surrender but he still insisted for surrender of the policy and gave the same in writing vide surrender letter dated 4.12.2020 and accordingly surrender value was paid to him as per terms and conditions of the policy which was a legal contract between the parties governed by the terms and conditions approved by IRDAI. By making reference to judgments of Hon’ble  National Consumer Disputes Redressal Commission, New Delhi, titled as Life Insurance Corporation of India & Ors. Vs Siba Prasad Dash (Dr) & Ors. IV(2008) CPJ 156 (NC) and Mohan Lal Benal Vs ICICI Prudential Life Insurance Co. Ltd. IV(2012) CPJ 690 (NC)  it was stated on behalf of the appellant that the respondent/complainant is not entitled to refund of maturity amount as it was held by the Hon’ble National Commission that the insured had enjoyed protection of insurance cover for the period he paid premium  and had he died during this period, insurer would have had to pay full assured sum to the nominee under the policy or legal heir of the insured.  Further held that when life insurance policies are surrendered, pre-mature, and withdrawals are applied for, the money which is paid  to account of surrender value is normally less than the aggregated amount paid towards periodical premium. On the other hand, it was contended on behalf of  respondent No.1/complainant that the order passed by the Ld. Lower Commission is quite just and reasonable and  does not call for any interference.

9.                   We have given our thoughtful consideration to the contentions of the parties and critically examined the material available on record and grounds of appeal.

10.                  The main question involved in this appeal is whether the appellant is liable to pay Rs.91248/- as ordered by the Ld. Lower Commission or the amount of Rs.49326/- was rightly paid to the respondent No.1/complainant.  The Ld. Lower Commission while holding   respondent No.1 entitled to an amount of Rs.91248/-  relied on Clause 7(a) of the Terms and conditions of the Policy, which reads as under ;

           “7 Surrender Value xxxxxxx

                xxxxxx

     xxxx

1. discounted value or accumulated value as the case may be  of the following:

80% of maturity sum Assured if less than 4 years premium have been paid, 90% of the maturity sum Assured, if 4  or more years but less than 5 years premium have been paid and 100% of the maturity sum assured, if 5 or more years premiums have been paid.
The maturity sum assured for this para will be maturity sum assured corresponding to the terms  for which premiums have been paid under the policy. If the premiums have been paid for a fraction of a year, the maturity sum assured shall be worked out way of at mathematical interpolation.

xxxx xx

                   xxxxx

In the above para the maturity sum assured  will be maturity sum assured corresponding to the terms for which premiums have been paid under the policy and not maturity sum assured of original term of policy. It is an admitted fact that the LIC policy was for a term of 17 years whereas respondent No.1 surrendered the policy after 8 years and 5 months. As per terms and conditions of the policy, the appellant has calculated the surrendered value as under ;

Calculation of surrender value under Policy No.165189416

Maturity sum assured as per policy=Rs.91248 for a term of 17 years

Duration of policy at the time of surrender: 8 years 5 months

Factor as per chart given in circular at age 53 years

For 8 years= 5837 per 100 monthly premium

For  years=6626 per 100 monthly premium

6626-5837=789(1 year)

789/12x5=328.75 (for five months)

Total monthly sum assured at the time of surrender=5837+328.75=6165.75

Therefore monthly sum Assured =6165.75x8=49326/-

As 100% of monthly sum assured is payable, thus Rs.49326/- stood paid without any deduction.

11.               It is also not disputed that the term of the policy was 17 years. Thus, the maturity value of Rs.91248/- was payable on the maturity date after 17 years if all the periodical premiums were paid by the policy holder. Respondent No.1 had not paid all the premiums of 17 years and the policy had run only for 8 years and 5 months and respondent No.1 paid premium for 8 years, so respondent No.1 was not entitled to get the maturity amount of Rs.91248/-, which otherwise was payable on maturity of the policy after 17 years on payment of all  the premiums.

12.              Further, it is respondent No.1/complainant who wanted to surrender the policy in question. He wrote letter to the appellant dated 3.12.2020 (R-3) that he wants to surrender the policy and requested to release the surrender value.  Thereafter, vide letter dated 4.12.2020     (R-4) he again wrote to the appellant that he has understood that there is loss in case of withdrawal still he wished to surrender the policy. Thus, the respondent was totally aware that if he surrendered the Policy at that time he would incur loss.  The appellant refunded the amount of surrender value as per  terms and conditions of the Policy which was a binding contract between the parties. Further, respondent No.1/complainant enjoyed life cover for the period, he paid premium to the appellant. Thus, the surrender value of Rs.49326/- already paid by the appellant to respondent No.1/complainant appears to be quite justified as per terms and conditions of the policy. The appellant has also rightly pointed out about the clause of free-look period in the Policy which as per IRDAI guidelines if the policy holder is not satisfied with the terms and conditions mentioned in the Policy, he has an option to return the Policy to the LIC.  The respondent in the present case did not opt for free look cancellation of the Policy within the free-look period.

13.                 The appellant has rightly  quoted and relied upon the judgment of Hon’ble Supreme Court in case titled Vikram Greentech(I) Ltd. & anr. Versus New India Assurance Co. Ltd. II(2009)CPJ34  and LIC of India Vs Smt. S.Sandhu, CA No.4492 of 2000 decided on 4.5.2006(SC).

14.                   For the reasons recorded above, the appeal is accepted and the  impugned order is set aside.  The parties are left to bear their own costs.

15.                 Miscellaneous application, if any, stands disposed of as such.

16 .           Certified copies of this order be sent to the parties free of charge.

17.                     The file be consigned to Record Room, after completion.

                                                                                         Sd/-

                                                                             (PADMA PANDEY)

PRESIDING  MEMBER

                                                                                                                                                                                                                                                                                        Sd/-                                                                                    (PREETINDER SINGH)

                                                                                 MEMBER

Pronounced

 31^st Jan.,2023

Js 

                                                                                     (PADMA PANDEY)

PRESIDING MEMBER

(PREETINDER SINGH)

MEMBER

  STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

                                    U.T., CHANDIGARH 

                                    (Additional Bench)

LIC of India Ltd. SCO 343-344, Sector 34-A, Chandigarh.

                                                                             … Appellant

V E R S U S

1. Avtar Singh #5306 A, Sector 38 West Chandigarh.
2. The Insurance Ombudsman, SCO 101-103, Batra Building, Sector 17-D, Chandigarh

                                                                         ..... Respondents

Appeal under Section 41 of the Consumer Protection Act, 2019 against order dated 24.07.2023 passed by       District       Consumer Disputes Redressal Commission-I, U.T. Chandigarh in Consumer Complaint No.690/2021.

BEFORE:       MRS. PADMA PANDEY, PRESIDING MEMBER

                       Mr.PREETINDER SINGH,MEMBER

Argued by:      Ms.Malvi Verma, Advocate, proxy for Sh.Rajneesh                               Malhotra,   Advocate for the  appellant .

                         Sh.Avtar Singh, respondent No.1/complainant in person.

                         Respondent No.2 ex parte.

 PER PREETINDER SINGH,MEMBER

                   This appeal is directed against the order dated 24.07.2023, rendered by the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (hereinafter to be referred as “the Ld. Lower Commission”), vide which, it allowed the  complaint as under;

“13.In view of the above discussion, the present consumer complaint succeeds and the same is accordingly allowed. OP No.1 is directed as under:-

1. to pay Rs.41,922/- (Rs.91248/- minus Rs.49326/-(already paid))  to the complainant with interest @9% P.A. from the date of payment already made to the complainant till realization
2.    to pay Rs.8000/- to the complainant as compensation for causing mental agony and harassment to him;
3.   to pay Rs.7000/- to the complainant as costs of litigation.

               This order be complied with by the OP No.1 within thirty days from the date of receipt of its certified copy, failing which, they shall make the payment of the amounts mentioned at Sr.No.(i) & (ii) above, with interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above.”

2.     Before the Ld. Lower Commission, it was case of the complainant/respondent  that  he purchased one LIC policy bearing No.165189416-Jeevan Saral Policy (165)  in the year 2012 from Opposite Party No.1/appellant  commencing from 28.7.2012. The maturity sum assured was Rs.91248/- and death sum assured was Rs.2,00,000/-. It was averred that due to personal reasons the complainant  surrendered the policy on 3.12.2020 and requested the LIC to pay the amount of premium paid upto the date of surrender. It is alleged that the LIC transferred a sum of Rs.49,326/- only to the complainant in full and final settlement on 8.12.2021 whereas the updated premium amounting to Rs.81700/- was paid. The complainant then  made representation vide letter dated 9.12.2000 (Annexure A-2) and thereafter sent repeated reminders.  When nothing was heard from the LIC, the complainant also approached the Insurance Ombudsman but it wrongly rejected the claim without giving any valid reasons. Hence, alleging  deficiency in service and unfair trade practice on the part of the Opposite Parties, a consumer complaint was filed before the Ld. District Commission seeking the balance amount alongwith interest, compensation and costs.

3.              Pursuant to issuance of notice, Opposite Party No.1/appellant appeared before the Ld. District Commission and contested the complaint. In its written reply,  while admitting the factual matrix of the case  it was stated that  the complainant was duly informed regarding the loss in amount that he would suffer in case of surrender but he still insisted for surrender of the policy and gave the same in writing vide surrender letter dated 4.12.2020.  The surrender value as per the surrender value quotation was Rs.49326/- which was transferred to the complainant. The complainant himself vide letter dated 4.12.2020 insisted for surrender of the policy knowing fully the loss in case of withdrawal. It was pleaded that  the insurance policy is a legal contract between the parties and is governed by the terms and conditions approved by IRDAI. There was no promise whatsoever made to return the complete premium. It was further stated  that the amount under the policy cannot be refunded as mortality charges, administrative expenses alongwith taxes to the government have already been paid by the answering OP. It was further stated  that the complainant has utilized the policy in question and risk for death stood covered during the currency of the policy in question. Certain preliminary objections were taken  and it was pleaded that there was no deficiency in service. Denying  all other allegations made in the complaint, a prayer was made for dismissal of the complaint. 

 4.            Opposite Party No.2 also sent short reply through post wherein it was stated that the Insurance Ombudsman had carried out his duties as per the rules  and as per power conferred in such Insurance Ombudsman under the Rules of Government of India and as such Opposite Party no.2 is not a necessary party and prayed that its   name be deleted from the array of Opposite Parties.  Since OP No.2 neither  turned up before the Ld. Lower Commission, nor filed  evidence by way of affidavit, hence, it was proceeded against ex parte.

5.                  On appraisal of the complaint, and the evidence adduced on record, Ld. Lower Commission allowed the complaint, as stated in the earlier part of the order. 

6.                Aggrieved against the  aforesaid order passed by the Ld. Lower Commission, the instant Appeal  has been filed by the Appellant/Opposite Party No.1   for setting aside the impugned order.

7.                  We have heard Counsel for the appellant, respondent/complainant in person, and have gone through the evidence and record of the case with utmost care and circumspection.

8.                  In the appeal, the ground taken by the appellant is that the Ld. Lower Commission while passing the impugned order has failed to take into consideration that the respondent/complainant had paid premium of Rs.81700/- in 8 years and also misread the clause 7(a) of the terms and conditions of the policy. The Ld. Lower Commission has also failed to take into consideration that no deduction was made by the LIC for surrender amount  whereas it granted the sum assured of Rs.91248/- by assuming that the premium paid was for 17 years whereas the premium was paid only for 8 years. Thus, the Ld. Commission had mixed the terms, surrender value with maturity amount  while passing the impugned order.  Further the respondent/complainant was informed regarding the loss in amount that he would suffer in case of surrender but he still insisted for surrender of the policy and gave the same in writing vide surrender letter dated 4.12.2020 and accordingly surrender value was paid to him as per terms and conditions of the policy which was a legal contract between the parties governed by the terms and conditions approved by IRDAI. By making reference to judgments of Hon’ble  National Consumer Disputes Redressal Commission, New Delhi, titled as Life Insurance Corporation of India & Ors. Vs Siba Prasad Dash (Dr) & Ors. IV(2008) CPJ 156 (NC) and Mohan Lal Benal Vs ICICI Prudential Life Insurance Co. Ltd. IV(2012) CPJ 690 (NC)  it was stated on behalf of the appellant that the respondent/complainant is not entitled to refund of maturity amount as it was held by the Hon’ble National Commission that the insured had enjoyed protection of insurance cover for the period he paid premium  and had he died during this period, insurer would have had to pay full assured sum to the nominee under the policy or legal heir of the insured.  Further held that when life insurance policies are surrendered, pre-mature, and withdrawals are applied for, the money which is paid  to account of surrender value is normally less than the aggregated amount paid towards periodical premium. On the other hand, it was contended on behalf of  respondent No.1/complainant that the order passed by the Ld. Lower Commission is quite just and reasonable and  does not call for any interference.

9.                   We have given our thoughtful consideration to the contentions of the parties and critically examined the material available on record and grounds of appeal.

10.                  The main question involved in this appeal is whether the appellant is liable to pay Rs.91248/- as ordered by the Ld. Lower Commission or the amount of Rs.49326/- was rightly paid to the respondent No.1/complainant.  The Ld. Lower Commission while holding   respondent No.1 entitled to an amount of Rs.91248/-  relied on Clause 7(a) of the Terms and conditions of the Policy, which reads as under ;

           “7 Surrender Value xxxxxxx

                xxxxxx

     xxxx

1. discounted value or accumulated value as the case may be  of the following:

80% of maturity sum Assured if less than 4 years premium have been paid, 90% of the maturity sum Assured, if 4  or more years but less than 5 years premium have been paid and 100% of the maturity sum assured, if 5 or more years premiums have been paid.
The maturity sum assured for this para will be maturity sum assured corresponding to the terms  for which premiums have been paid under the policy. If the premiums have been paid for a fraction of a year, the maturity sum assured shall be worked out way of at mathematical interpolation.

xxxx xx

                   xxxxx

In the above para the maturity sum assured  will be maturity sum assured corresponding to the terms for which premiums have been paid under the policy and not maturity sum assured of original term of policy. It is an admitted fact that the LIC policy was for a term of 17 years whereas respondent No.1 surrendered the policy after 8 years and 5 months. As per terms and conditions of the policy, the appellant has calculated the surrendered value as under ;

Calculation of surrender value under Policy No.165189416

Maturity sum assured as per policy=Rs.91248 for a term of 17 years

Duration of policy at the time of surrender: 8 years 5 months

Factor as per chart given in circular at age 53 years

For 8 years= 5837 per 100 monthly premium

For  years=6626 per 100 monthly premium

6626-5837=789(1 year)

789/12x5=328.75 (for five months)

Total monthly sum assured at the time of surrender=5837+328.75=6165.75

Therefore monthly sum Assured =6165.75x8=49326/-

As 100% of monthly sum assured is payable, thus Rs.49326/- stood paid without any deduction.

11.               It is also not disputed that the term of the policy was 17 years. Thus, the maturity value of Rs.91248/- was payable on the maturity date after 17 years if all the periodical premiums were paid by the policy holder. Respondent No.1 had not paid all the premiums of 17 years and the policy had run only for 8 years and 5 months and respondent No.1 paid premium for 8 years, so respondent No.1 was not entitled to get the maturity amount of Rs.91248/-, which otherwise was payable on maturity of the policy after 17 years on payment of all  the premiums.

12.              Further, it is respondent No.1/complainant who wanted to surrender the policy in question. He wrote letter to the appellant dated 3.12.2020 (R-3) that he wants to surrender the policy and requested to release the surrender value.  Thereafter, vide letter dated 4.12.2020     (R-4) he again wrote to the appellant that he has understood that there is loss in case of withdrawal still he wished to surrender the policy. Thus, the respondent was totally aware that if he surrendered the Policy at that time he would incur loss.  The appellant refunded the amount of surrender value as per  terms and conditions of the Policy which was a binding contract between the parties. Further, respondent No.1/complainant enjoyed life cover for the period, he paid premium to the appellant. Thus, the surrender value of Rs.49326/- already paid by the appellant to respondent No.1/complainant appears to be quite justified as per terms and conditions of the policy. The appellant has also rightly pointed out about the clause of free-look period in the Policy which as per IRDAI guidelines if the policy holder is not satisfied with the terms and conditions mentioned in the Policy, he has an option to return the Policy to the LIC.  The respondent in the present case did not opt for free look cancellation of the Policy within the free-look period.

13.                 The appellant has rightly  quoted and relied upon the judgment of Hon’ble Supreme Court in case titled Vikram Greentech(I) Ltd. & anr. Versus New India Assurance Co. Ltd. II(2009)CPJ34  and LIC of India Vs Smt. S.Sandhu, CA No.4492 of 2000 decided on 4.5.2006(SC).

14.                   For the reasons recorded above, the appeal is accepted and the  impugned order is set aside.  The parties are left to bear their own costs.

15.                 Miscellaneous application, if any, stands disposed of as such.

16 .           Certified copies of this order be sent to the parties free of charge.

17.                     The file be consigned to Record Room, after completion.