Punjab

Nawanshahr

CC/65/2015

Arun Kumar - Complainant(s)

Versus

Bajaj Allianz Insurance Company Ltd - Opp.Party(s)

Baldeep

15 Jan 2016

ORDER

DISTRICT CONSUMER DISPUTES   REDRESSAL FORUM, SHAHEED BHAGAT SINGH NAGAR

 

Consumer Complaint No.   65 of 18.06.2015

Date of Decision            :   15.01.2016

 

Arun Kumar Madaan S/o Chand Lal R/o Backside Vishavkarma Mandir Nawanshahr, District Shaheed Bhagat Singh Nagar.

….. Complainant

Versus

1. M/s Bajaj Allianz Life Insurance Company Limited, GE Plaza, Ground Floor, Airport Road, Pune - 411006.
2. M/s Bajaj Allianz Life Insurance Company Limited, Plot No.271, Phase-2, Industrial Area, Panchkula – 131015, Haryana.
3. M/s Bajaj Allianz Life Insurance Company Limited, Branch Office Chandigarh Road Nawanshahr.

Opposite parties

 

(Complaint U/s 12 of the Consumer Protection Act, 1986)

 

QUORUM:

SH.G.K. DHIR, PRESIDENT

MS.SUSHMA HANDOO, MEMBER

COUNSEL FOR THE PARTIES:

For complainant                      :         Sh.Baldeep, advocate.

For OPs                                   :         Sh.A.K. Sareen, advocate

 

Per G.K. DHIR, PRESIDENT

 

1.       This complaint has been filed by Arun Kumar Madaan under Section 12 of the Consumer Protection Act, 1986 (hereinafter referred as Act) against the OPs by claiming that one Joginder Pal, an agent of Op at Balachaur persuaded complainant to get himself insured with Ops by getting issued Bajaj Allianz Capital Gain policy for 20 years with annual premium of Rs.1,00,000/-, but for insured cover of Rs.10,00,000/-.  Complainant paid first installment of Rs.1,00,000/- on 19.07.2007, but due to change of circumstances he could not continue with the said policy and failed to pay further premium installments.  Complainant approached Op No.3 time and again for refund of surrender value of the policy after deduction as per instructions of IRDA, but OP No.3 did not agree to initiate action.    On account of deficiency in services, complainant claims Rs.20,000/- i.e. Rs.10,000/- on account of damages due to mental pain and suffering, but  Rs.10,000/- as litigation expenses. Even directions sought to OPs to pay the surrender value to complainant alongwith interest @12% P.A. 

2.       OPs on appearance filed joint written statement for claiming that complainant failed to discharge his contractual obligations by paying the due annual premium from 24.07.2008 onwards.  The policy bearing No.0057810771 lapsed w.e.f. 24.07.2008.  Complainant was offered revival period of two years as per terms and conditions of the contract, but complainant did not get the policy revived and ultimately the same expired on 24.07.2010.  Due to termination of contract of insurance, nothing is payable to complainant.  Besides it is claimed that complainant estopped by his own act and conduct because he availed the benefits under the policy after submitting proposal form dated 19.07.2007 and paying yearly premium of Rs.1,00,000/- on policy of term of 20 years.  The above numbered policy was issued after acceptance of proposal form submitted by complainant.  Terms and conditions of the policy never disputed for about 8 years.  Complainant never availed the option of review of cancellation of the policy or variation of the terms thereof within 15 days free look in period of receipt of the policy documents.  Besides it is claimed that the complaint is barred by limitation because no man of ordinary prudence will wait for 8 years for issue of the policy.  Complaint also alleged to be bad for non-joinder or mis-joinder of necessary parties. No relationship of principal and agent exists between insurance company and agents licensed by IRDA.  The terms and conditions of the insurance policy already have got approval of the Insurance Regulatory and Development Authority.  A false story alleged to be cocked up for shirking the contractual obligations.  Question of promising to pay fixed amount or any interest on single premium payment policy does not arise because the funds invested in the units always are subject to market conditions.  The performance of the fund in the market is beyond the control of OPs and as such making of any commitment to pay the surrender value does not arise, particularly when the policy has not acquired any surrender value as per terms and conditions of the policy.  None payment of the premium entails consequences of termination of the policy and as such the policy has been terminated.  Complainant has no locus standi to file the complaint.  Policy documents to be read as whole and parties to remain bound by terms and conditions of the contract of insurance.  This forum has no jurisdiction because the policy was purchased with intent to earn profit.  This Forum has no jurisdiction to entertain the complaint because of the complicated questions involved and bar of jurisdiction.  Each and every other averment of complaint denied.     

3.       Counsel for complainant to prove his case tendered affidavit Ex.CW1/A of complainant alongwith Photostat copies of documents as Ex.C-1 to Ex.C-5 and then closed the evidence.

4.       On the other hand, affidavit Ex.OPA of Manu Kumar alongwith Photostat copies of documents i.e. Ex.Op-1 and Ex.OP-2 tendered and thereafter, counsel for OPs also closed the evidence.

5.       Written arguments by any of parties not submitted.  Oral arguments of both the counsel for the parties were heard and records gone through minutely. 

6.       Ex.C-1 is the policy schedule, whereas Ex.C-2 is first premium receipt and Ex.C-3 is the initial unit statement, but proposal form is Ex.C-5. Ex.OP-2 alongwith annexure are the policy documents submitted by OPs.  From this documentary evidence produced on record by both the parties, and from pleading and evidence of both the parties, it is made out that unit linked policy for assured sum of Rs.10,00,000/- was purchased by complainant on payment of first premium of Rs.1,00,000/- on 24.07.2007.  So the policy was to come to an end on 24.07.2027 as per these documents.  In view of the fact that the policy is to come to an end on 24.07.2027 and in view of the fact that OPs have not sent any statement of fund value to complainant at any stage, it is obvious that complainant continued to have got recurring cause of action for knowing as to what is the fund value or unit fund value of the amount invested by him.  Being so complaint is not barred by limitation at all. 

7.       As per Regulation-11 of Insurance Regulatory and Development Authority (Linked Insurance Products) Regulations-2013 (hereinafter referred as IRDA), all the linked insurance products shall have a lock in period of 5 years from the date of inception of policy and as such the fund/surrender value after deduction of discontinuance charges in this case were payable after 18.07.2012, but those have not been paid as per IRDA Regulations and as such also complainant has recurring cause of action.

8.       As per Regulation-13 of IRDA Regulations, where the policy discontinued, the insurer is under obligation to send a notice within a period of 15 days from the date of expiry of grace period envisaged by Regulation-12 for calling upon policyholder to exercise the option of revival of policy within 15 days from receipt of such notice.  Copy of that notice sent to complainant has not been produced on record and nor the date of dispatch of such notice mentioned anywhere in the written statement or through the produced evidence and as such OPs remained at fault in not acting in accordance with regulation 12 & 13 of IRDA Regulations.  As per Regulation 15 of IRDA Regulations, where the policyholder does not exercise the option of revival of policy in terms of proviso to sub Regulation (i) of Regulation 13-A, the fund value/policy account value of the policy shall be credited to the discontinued policy fund in the policy account.  In this case also complainant has not exercised the option required to be exercised as per proviso to regulation-13 (a) (i) of IRDA Regulations because of non-sending of any notice by OPs and as such it was the duty of OPs to credit the fund value of the policy account value to the discontinued policy of complainant.  However, refund of such credit to the fund value to take place only on completion of lock in period of 5 years as envisaged by Regulation-11 of IRDA Regulations.  As OPs failed to perform the duty of intimating complainant the fund value of discontinued policy and as such OPs cannot get benefit of their own wrong of not complying with requirement of issue of notice.

9.       It is contended by counsel for Ops that complaint in respect of the claim under Unit Linked Insurance Policy is not maintainable under the Act.  Reliance for the purpose is placed on case titled as Ram Lal Aggarwalla Advocate and Notary Vs Bajaj Allianz Insurance Co. Ltd. & Ors. Decided on 23.04.2013 through R.P. No.658 of 2012 by Hon’ble National Consumer Disputes Redressal Commission, New Delhi.  After going through that case, it is made out that when number of policies purchased at commercial scale for earning profit only, then the concerned complainant will not be a consumer.  However, Hon’ble National Consumer Disputes Redressal Commission, New Delhi in case titled as Life Insurance Corporation of India Vs Sudhi P.P. and another 1 (2014) CPJ 326 assumed jurisdiction for deciding case of Unit Linked Policy on merits by holding that surrender value payable will be fixed value of units held by policyholder.  So the litmus test will be as to whether the policyholder purchased policies at commercial scale for earning profit or not.  In this case complainant is not habitual of purchasing Unit Linked Policies for carrying commercial transactions, so he is a consumer within the meaning of Consumer Protection Act.

10.     In case of Jayantilal Keshavlal Chauhan V. The National Insurance Co. Ltd. 1994 (1) CPR 396, it has been held that if fraud is alleged, then it is desirable that the complainant should be directed to approach Civil Court because investigation about fraud required to be done by that Court.  In view of the deep investigation being required qua allegations of fraud, the complainant, if advised may approach the Civil Courts.

11.     The policy in question was duly licensed by IRDA as per contents of written statement of OPs. So IRDA Regulations of 2013 to come to the rescue of complainant, because payment after due deduction has not been made as per these regulations.  Deficiency in service is to this extent alone.   As per Regulation-13 of Insurance Regulatory & Development Authority (Linked Insurance Products) Regulations -2013, insurer on discontinuance of policy is under obligation that the charges levied on the date of discontinuance (as a percentage of one annualized premium) do not exceed the specified limits given in Regulations.  For policies having single annualized premium above Rs.25,000/-, deduction at lower of 1.5% (SP or FV/policy account value) subject to maximum of Rs.2,000/- is permissible, where the policy is discontinued during Second year of policy.  That discontinuance took place in Second year of policy in this case because one premium alone paid.   So, complainant entitled to refund of the amounts with deduction charges as per Regulation 13 read with Regulation-15 of IRDA Regulations-2013.  

12.     It is submitted by the OPs in written statement that the policy terms and conditions specifically provides for a free look period of 15 days, during which period the policyholder is entitled to review the policy’s terms and conditions or can request for a cancellation, if dissatisfied with the same.  We find that the complainant never raised any question regarding the said policy within that period.  Non-raising of question on the policy after payment of first premium proves fatal to case of complainant because of rule of estoppel. Thus, the complainant cannot wriggle out of the valid contract between him and the OPs. So, the claim for the refund of the amount deposited by the complainant under the terms of the policy is unsustainable in the eyes of law.  However, the complainant is entitled for surrender value only, as per specifications of IRDA, 2013.

13.     Certainly, the terms and conditions of the policy are binding and as such they are to govern the case of the parties, even if the terms of the policy may be somewhat unreasonable.  It is so because nothing can be added or subtracted to the terms and conditions of the contract as per law laid down in cases of Indo Swift Limited Vs New India Assurance Company Ltd and others IV (2012) CPJ 148 (NC); United India Insurance Company Ltd Vs Harchand Rai Chandan Lal IV (2004) CPJ 15 (SC) and Deokar Exports Pvt. Ltd Vs New India Assurance Co. Ltd 1(2009) CPJ 6 (SC). So, submissions advanced by counsel for Ops has force that case of parties governed by terms of contract.  However, as contractual obligations as per contents of written statement itself brought into force after approval from IRDA and as such Rules and Regulations framed by IRDA has to be given precedence over the contractual obligations because it is well settled that terms of the contract, which is in violation of the legal regulations to be taken as void to the extent of inconsistency.  So, even if clause -5 of the Term of the policy contract Ex.OP-2 provides that in the event of policyholder failing to make payment of regular premium by due date, the policy to lapse alongwith cover benefits, despite that the complainant entitled to surrender value after deduction of discontinuance charges as per IRDA Regulations.  Lapse of insurance cover benefits is a different thing than that of refund of surrender value because the insurance cover benefits includes providing of death benefits, maturity benefits etc, but the refund of the surrender value does not include any of these benefits.  Clause-5(b)(2) of terms and conditions of Ex.OP-2 also provides that policyholder may revive the policy within revival period of two years from the due date of unpaid regular premium subject to Section 5 (d).  As per this sub clause on failure to get the policy revived, the contract shall be terminated and 100% value of accumulation units in respect of regular premium, the policy will terminate immediately provided non-payment of premium was during the first three policy years.  As in this case non-payment of the premium took place in the second year of policy itself and revival of the policy has not been got done by complainant within period of two years from the date of first unpaid premium and as such it is vehemently contended by counsel for OPs that policy in question stood terminated, due to which complainant not entitled to any accumulation value of units.  Accumulation units is defined in clause-1 of the terms and conditions of the policy as a unit allocated in respect of regular premium payable after the first policy year.  So, on payment of first premium itself, accumulation of units was to start.  If such accumulation to start on payment of first premium itself, then it was responsibility of OPs to send the statement of fund value or unit fund value to complainant, but that is never sent or claimed to be sent to complainant.  The statement of policy account has to be sent to the complainant/policyholder at least once a year as per Regulation-4 (vii) of IRDA Regulations.  Non-sending of such statement by OPs to complainant is an unfair trade practice and as such even if the policy has lapsed or terminated due to non-payment of the second and subsequent premiums, but despite that complainant is entitled for refund of amount equal to surrender value minus the deduction charges leviable as per regulation-13 read with 15 of IRDA Regulations.

14.     Therefore, as discussed above, the present complaint is disposed of and the OPs are directed to pay due amount to complainant after deduction of discontinuance charges as per IRDA Regulations-2013.  No order as to costs.

15.     Let copies of the order be sent to the parties, as permissible, under the rules.

Dated 15.01.2016                                                         

 

                        Sd/-                                                                                    Sd/-

(Sushma Handoo)                                                        (G. K. Dhir)

Member                                                               President