JUSTICE V.K. JAIN, PRESIDING MEMBER, (ORAL)

          The complainant / respondent, who is a citizen of USA obtained a Unit-Linked Insurance Policy from the appellant, submitting a detailed application form dated 14.2.2008 for the purpose and paying an initial instalment of Rs.5.00 lacs.  The sum assured under the said policy was Rs.37,50,000/- and the annual premium payable by the complainant was Rs.5.00 lacs.  The policy commenced on 29.2.2008 and was to mature on 28.2.2023.  The complainant paid three instalments of Rs.5.00 lacs each to the appellant towards payment of the annual premium.  No premium having been paid thereafter, the appellant treated the policy as lapsed and automatically terminated.  The surrender value of Rs.5.00 lacs was sent to the complainant.  Being aggrieved, she approached the concerned State Commission by way of a consumer complaint, impleading not only the insurer but also the bank with which she had a saving account, as the opposite parties in the complaint. 

2.      The complaint was resisted by the appellant, primarily on the ground that the premium having not been paid, after the third instalments, the policy lapsed and consequently, the surrender value of the policy was duly paid to the complainant.  It was also stated in the written version filed by the appellant that the policy premium payable on 29.2.2011 had not been paid by the complainant and that due to market fluctuations and no payment of premium, the surrender value of the policy had decreased leading to auto-foreclosure of the policy on 27.7.2012.  It was also pointed out in the written version filed by the appellant that the policy contained a notice on free lookout whereby the policy holder could reconsider his decision to purchase the policy within fifteen days of receipt of the policy documents, in case he did not agree to the terms and conditions of the policy. 

3.      The State Commission vide impugned order dated 19.3.2013, allowed the consumer complaint and directed as under:

          “i)      Opposite Party No.1 is directed to pay Rs.14,96,000/- (Rs.15,00,000-4000) to the complainant.  The complainant shall return the uncashed cheque of Rs.5.00 lacs to opposite party No.1

          ii)       Opposite party No.1 is further directed to pay Rs.25,000/- as compensation for causing the complainant mental agony and physical harassment.

          iii)      Opposite Party No.1 is further directed to pay Rs.5,000/- as cost of litigation to the complainant.”        

4.      Being aggrieved from the order passed by the State Commission, the appellant is before this Commission by way of this appeal.

5.      Article 5 of the Standard Terms and Conditions applicable to the policy taken by the complainant reads as under:

          “5.     Surrender Value of Auto-foreclosure

1. After completion of the first three Policy Years, this Policy may be surrendered by the Policyholder and Surrender Value shall be payable provided the Regular Premium due for at least one Policy Year has been received by us.The surrender value will be equal to the value of units pertaining to regular premium less the surrender charges on units pertaining to regular premium, as mentioned in the Schedule, plus the value of units pertaining to Additional Regular Premium and Top Up Premium, if any.

2. After the policy holder has paid regular premium for at least three policy years, if the surrender value of units pertaining to Regular Premium becomes equivalent to the Regular Premium paid in the first policy year, then the policy shall automatically terminate and we shall send the policyholder a notice of termination and pay the surrender value calculated in accordance with Article 5)a).”

6.      It is not in dispute that the complainant did not pay any premium after the third premium.  The premium which fell due on 29.2.2011 was admittedly not paid by her.  Since on account of market fluctuation, the surrender value of the units had become equivalent to the regular premium paid in the first policy year, the policy stood automatically terminated in terms of Article 5(b) extracted hereinabove and the said surrender value was duly paid to her by the appellant.

7.      The case of the complainant is that the terms and conditions of the policy were never supplied to her.  The case of the appellant on the other hand is that the insurance policy along with the terms and conditions applicable thereto were duly dispatched to the complainant.  It is an admitted position that after issuance of the policy, the complainant paid two annual premiums to the appellant.  It is difficult to believe that the complainant paid second as well as the third annual premiums without even receiving the policy and / or the terms and conditions applicable to the said policy.  There is no evidence of the complainant having even sent a letter or an email to the appellant complaining that she had not received the policy and / or the terms and conditions applicable to the said policy.

8.      It is alleged in para 15 of the complaint when the complainant visited India in December, 2008 – January, 2009, she requested the appellant for the documents but the same were not provided to her.  Admittedly, the second instalment was paid by her at a later date the same having been paid vide cheque encashed from her account on 31.3.2009.  No prudent person will pay the second annual premium if the documents sought by her are not made available to her.  The least the complainant would have done, had the documents not been provided to her would be to send a letter or an email to the insurer informing it that the second premium was being paid by her without receiving the copies of the documents, sought by her. 

9.      It is alleged in para-17 of the complaint that the complainant again visited India during June-July, 2010 and issued a cheque of Rs.5.00 lacs, which was encashed from her account on 13.7.2010.  Had she requested the appellant to supply the documents to her and the appellant had failed to supply the said documents, despite having promised to do so, she would not have paid the third instalment, which she paid in July, 2010.  Therefore, it cannot be accepted that the complainant was not provided with the copy of the insurance policy and / or the terms and conditions applicable to the said policy.

10.    The State Commission allowed the consumer complaint relying upon a Regulation dated 01.7.2010 issued by Insurance Regulatory and Development Authority (IRDA).  It is clearly stated in the said Regulations that they would come into force on the date of their publication in Official Gazette and shall apply to all products of linked life insurance cleared by the Authority, thereafter.  The relevant Regulation reads as under:

          “Short title and commencement

1. These regulations may be called the Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010.

2. They shall come into force on the date of their publication in the Official Gazette and shall apply to all products of linked life insurance cleared by the Authority, thereafter.

          The product / policy which the complainant obtained from the appellant had been approved much prior to 01.7.2010, when the Notification came to be issued since the policy was obtained in the year 2008.  Therefore, the said Regulations would not apply to the policy taken by the complainant.  As a result, the terms and conditions applicable to the policy at the time it was issued, including Article 5 of the Standard Terms and Conditions governed the relationship between the parties.  The appellant therefore, was entitled to treat the policy as automatically terminated and pay the surrender value calculated in accordance with Article 5(a) of the terms and conditions to the complainant. 

11.    For the reasons stated hereinabove, the impugned order cannot be sustained and is hereby set aside.  The complaint is consequently dismissed, with no order as to costs.