STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UNION TERRITORY, CHANDIGARH.

APPEAL NO.636 OF 2009

Sh. Santokh Singh Dhanwa son of Lt. Sh. Hari Singh, Aged 64 years (Senior Citizen), resident of H.No.3025, Phase 7, SAS Nagar, Mohali.

                                                …Appellant.

Versus

1.      The Manager, Birla Sun Life Insurance Company Limited, 6^th Floor, Vaman Centre, Makhwana Road, Off-Andheri Kurla Road, Near Marol Naka, Andheri (E), Mumbai 400059.

2.      The Customer Care Manager, Birla Sun Life Insurance Company Limited, Customer Care Unit, Indiana Business Centre, “B” Wing, First Floor, Marol Naka, Makhwana Road, Andheri (E), Mumbai 400059.

3.      The Regional Manager, Birla Sun Life Insurance Company Limited, S.C.O. No.149-150, Sector 9-C, Madhya Marg, Chandigarh.

…Respondents.

BEFORE:            HON’BLE MR. JUSTICE PRITAM PAL (RETD.), PRESIDENT.

HON’BLE MAJ. GEN. S. P. KAPOOR (RETD.), MEMBER.

                        HON’BLE MRS. NEENA SANDHU, MEMBER.

Argued By:            Sh. Ramneek Vasudeva, Advocate for the appellants.

                        Sh. Sandeep Suri, Advocate for the respondent.

MAJ. GEN. S. P. KAPOOR (RETD.), MEMBER.

1.                     This is an appeal against the order of District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (for short hereinafter to be referred as District Forum) dated 9.10.2009 passed in complaint case No.500 of 2009 : Sh. Santokh Singh Dhanwa Vs. The Manager, Birla Sun Life Insurance Company Limited and others.

2.                     Briefly stated the case of the complainant is that in the month of October 2004, he was approached by the representative of OPs for life insurance policy, which the complainant applied for on 28.10.2004 and the policy namely ‘Classic Life Insurance Policy’ was issued to the complainant on 21.1.2005 against which the complainant paid initially an amount of Rs.4 Lacs. It was further averred that the sum insured was to the tune of Rs.20 Lacs, which as per the offer of OPs, was further extended to Rs.40 Lacs on paying a further sum of Rs.1,12,260/- by the complainant to the OPs. Thus, as per the complainant, he paid a total sum of Rs.5,12,620 to the OPs, who assured him that they would invest this of Rs.5,12,620/- in units and funds and the same would grow with the span of time. It was also assured to the complainant that he would get the principle amount of Rs.5,12,620/- after four years. The case of the complainant is that when he approached OP No.3 in the month of June 2008, he was shocked to know that the said amount of Rs.5,12,620/- had been adjusted by the OPs as the cost of insurance policy and he was told to reduce the sum assured from Rs.20 Lacs to Rs.25,000/-, otherwise, the policy would lapse. The complainant, having no option left with him, opted for reduction of the sum assured to Rs.25,000/- but was shocked to see that OPs had cancelled the earlier policy on 25.9.2008 and instead, issued a new policy with sum assured of Rs.5 Lac showing the premium amount to be Rs.4,28,155/-. It was next averred by the complainant that when he requested the OPs for the policy account statement, it came to his notice that the amount of Rs.5,12,620/- had been reduced to Rs.54,020/-. As per the complainant, it was told to him by the OPs that he had lost the entire amount of Rs.5,12,620/- and the policy would lapse after the entire amount was deducted. Finally, the complainant served a legal notice dated 23.10.2009 upon the OPs claiming the refund of total amount of Rs.5,12,620/- along with interest but to no avail. Alleging the acts of OPs as deficiency in service as well as unfair trade practice on their part, the complainant had filed complaint before the learned District Forum.

3.                     The version of OPs is that the policy issued was not a single premium policy and the complainant had approached the OPs for changing his option from ‘Builder’ to ‘Enhancer’ vide letter dated 3.8.2005 and thereafter for reducing the sum assured from Rs.20 Lacs to Rs.25,000/- vide his letter dated 21.8.2008. It was submitted that the complainant was sent letter dated 2.9.2008 by the OPs informing that reduction in the sum assured below Rs.5 Lacs was not possible and on the request of the complainant vide his letter dated 9.9.2008, the sum assured was reduced to Rs.5 Lacs and his modal premium was also reduced to Rs.4,28,155/- (annually) effective from 1.12.2008. OP stated that the policies were changed in accordance with the instructions of the complainant and prior to the issuance of the legal notice, no plea regarding misrepresentation or defect in the service was ever raised by the complainant. As per OPs, the policy was a unit linked policy and regular statements were provided to the complainant who failed to deposit the annual premium and thus, the amount was being adjusted from the available amount through adjustment of the units. Pleading no deficiency in service and unfair trade practice on their part, OPs prayed for dismissal of the complaint.

4.                     The learned District Forum, in its analysis of the complaint, recorded in the impugned order that since, the complainant had himself in para 3 of the complaint written that he was assured by the OPs that they would convert/invest the amount of Rs.5,12,620/- in units and funds and the amount paid by him would grow with the span of time, hence, the policy opted for by the complainant was surely a unit linked policy plan. The learned District after perusing the Policy Account Statement (C-7) was of the view that it was clear that instruments were subject to market risks and accordingly, the net asset value could go up or come down. As per the learned District Forum, the complainant should have read the offer document before investing his money and the contention of the complainant as regards refund of his entire money was turned down by the learned District Forum. The learned District Forum also placed reliance on the judgment of Hon’ble National Commission in the case of Unit Trust of India Vs. Iqbal Chand Arora, 2006 CTJ 347 (CP) (NCDRC). As per the learned District Forum, the act of OPs in recovering and adjusting the annual premium, which the complainant failed to pay, from the available amount through adjustment of the units, was justified. Referring to the judgment of Hon’ble National Commission in the case of Unit Trust of India Vs. Sabitri Devi Aggarwal, II (2000) CPJ (NC), the learned District Forum observed that the transaction involved in the matter was speculative in nature, which did not fall under the purview of Consumer Protection Act. It also referred to another judgment  of Hon’ble National Commission in the case of Delhi Transport Corporation Employees Provident Fund Trust Vs. Orissa Small Industries & Anr. III (2007) CPJ 316 (NC) wherein it was held that investment made by a person only to earn higher rate of interest is not a consumer under the Act. In view of its above observations, finding no merit in the complaint, the learned District Forum dismissed the same.

5.                     Aggrieved by the said order of learned District Forum, the complainant has filed the present appeal. The appeal having been taken on board, notices were sent to respondents and record of complaint case was summoned from the District Forum concerned. Sh. Ramneek Vasudeva, Advocate appeared on behalf of the appellant whereas Sh. Sandeep Suri, Advocate represented the respondents.

6.                     Sh. Ramneek Vasudeva, Advocate learned counsel for the appellant (complainant) first submitted that no terms and conditions of the policy document had been supplied to the complainant by the OPs. He reiterated that initially, the complainant had been asked to pay a one time premium amounting to Rs.5 Lacs and was subsequently asked to pay another amount of Rs.1,12,260/- for extending the amount of insurance cover from Rs.20 Lacs to Rs.40 Lacs. In this connection, he also referred to Pages 39 and 40 i.e. Annexures A-2 and A-3. The learned counsel emphatically submitted that in spite of repeated requests, policy document was not even produced before the learned District Forum. The next submission of learned counsel was that the amount paid by the complainant as one time premium, as per OP,  had been adjusted against allegedly due subsequent premiums but no intimation of this statement of account annexed at Pages 41 to 33 of the appeal had been intimated to him in due course of time but this information had been supplied to him only when he requested the OPs to give him the statement of his account. He emphatically submitted that the OPs had by unfair trade practice usurped the amount of Rs.5,12,620/- paid by the complainant to the OPs as the one time premium. He also submitted that in the interim order, the learned District Forum had not taken the cognizance of the fact that no terms and conditions of the policy had been made known to the complainant and thus, the impugned order is illegal and not sustainable in the eyes of law. He, therefore, prayed that the impugned order be set aside and the complaint be allowed.

7.                     In response, Sh. Sandeep Suri, Advocate learned counsel for the respondents (OPs) first referred to Annexure C-1 where in the first column itself, it has been stated that the amount of Rs.5,12,620/- was towards the payment of the first premium and further in this document under the heading “Policy Information”, it has been stated that the amount of Rs.5,12,620/- was only policy premium and the policy amount was payable annually.

8.                     At this juncture, the learned counsel for the complainant intervened and pointed out to the Bench that if this contention of OPs is accepted, it would mean a payment of Rs.2 Crores by the complainant over a period of 40 years, which was the span of the policy and no sane person would make such a commitment of payment against a policy, which only provided cover of Rs.40 Lacs only.

9.                     The learned counsel for the OPs again referring to the document at Annexure C-1 submitted that it was a “Classic Life” coverage policy for the face amount of Rs.40 Lacs and this document had been duly signed by the complainant himself and therefore, it cannot now lye in the mouth of the complainant to say that he was unaware of the fact that it was an annual premium payment policy. The learned counsel thereafter referring to Page 9 of the reply filed by the OPs in the complaint case submitted that the complainant had vide this document sought continuation of this policy, which he had earlier requested for cancellation. Further referring to the issue with regard to additional payment of Rs.1,12,620/-, the learned counsel pointed out Annexure C-2 of the complaint where it has been stated that the company would extent the face amount of Rs.40 Lacs only if he paid extra loading amount of Rs.1,12,620/- as the same was required on medical grounds and it had also been stated in this document that this amount would be counted in the premium, which becomes Rs.5,12,620/-. The learned counsel further referred to Pages 11 and 12 of the written reply, which are letters vide which the complainant himself had requested the company to extend the cover of insurance from Rs.20 Lacs to Rs.40 Lacs. The learned counsel thereafter referred to Pages 13 and 14 of the written statement, which are letters indicating that the complainant wanted to reduce the policy sum assured from Rs.20 Lacs to Rs.25,000/- only and he was subsequently told by the OPs that under the rules, it was not permissible to reduce the sum assured below Rs.5 Lacs. The learned counsel also submitted that since the complainant had failed to pay the subsequent only premium, this amount of premiums due from him was deducted from the amount paid by him as per the transaction details placed on file as Annexure C-7 at pages 40 and 41 of the complaint. In the end, the learned counsel submitted that the impugned order was well reasoned and justified and it should be upheld.

10.                   We have gone through the record on file as well as the impugned order and have heard the learned counsel for the parties.

11.                   At the outset, it needs to be mentioned that the basis of the entire controversy are the terms and conditions, which allegedly had been agreed to between the parties and which should have been enumerated in the policy document. However, when the learned counsel for the OPs was asked whether he has any policy document relating to the policy in question, his answer was in the negative. It is the catetgoric contention of the complainant that no policy document containing the terms and conditions of the policy were ever provided to him. The only document on record is Annexure C-1, which is only an application for insurance on own life/another life.  As per this document, it is stated that its base cover is “Classic life” and the face amount is Rs.40 Lacs. Under the heading “Life Insurance Coverage” in this document, in front of “Benefit Period” and “Paying period”, 40 has been indicated without indicating whether it is months or years. This document also does not indicate at all as to what is this “Classic Life Base Coverage” all about. Admittedly, the contention of OPs is that the complainant had been given a policy cover of Rs.40 Lacs for which he was to pay annually a sum of Rs.5,12,620/- for a period of 40 years. It stands to no logic as to why would the complainant pay such a heavy premium totalling up to over Rs.2 Crores for an insurance cover of only Rs.40 Lacs. Furthermore, this contention of OPs that the premium was to be paid anually is belied by their own document, which is the transaction details vide which they had been debiting the account of the complainant regularly from 21.3.2005 by an amount approximately Rs.9,000/- to Rs.10,000/- per month, which as per the OPs had been debited towards the non payment of annual premium by the complainant. Even if we go by the contention of the OPs that this was an amount towards the premium then the premium only comes to approximately Rs.1,10,000/- for a year, which is nowhere near the stated premium of Rs.5,12,620/-. OPs have miserably failed to produce the original or office copy of the policy document vide which this policy had been given to the complainant. The learned counsel further failed to enlighten the Bench about the terms and conditions of the policy other than merely stating that it was a Unit Linked policy. Even if that is taken to be true, then there is nothing on record to indicate as to for how much amount the units had been purchased for the complainant and at what value and what was the NAV of the unit at the time of filing the complaint. Further on a query as to why the policy in question was not cancelled in case the complainant was not paying the annual premium and why no intimation of the non payment of premium or the ramifications of such a non payment was communicated to the complainant, the learned counsel for the OPs had nothing to add. From the above, it is quite apparent to us that the OPs have indulged in unfair trade practice by not clearly clarifying to him the terms and conditions of the policy and to this extent, the complainant needs to be compensated.

12.                   The above notwithstanding, there is also contributory negligence writ large on the part of the complainant himself. Admittedly, he is an educated person and he should not have filled in the application for the policy without properly reading the document and understanding its contents. It is also seen that he has not been able to, by any cogent evidence, prove that the policy sold to him entailed payment of only a single premium amounting to Rs.5,12,620/-. It is also seen from record that the complainant himself was quite confused about his requirement of the insurance policy, which admittedly, was initially taken for an amount of Rs.20 Lacs and the insurance cover was subsequently extended to Rs.40 Lacs and further at one stage, the complainant wanted the insurance cover to be reduced to as low as Rs.25,000/- and which consequently, was reduced by the OPs to an amount of Rs.5 Lacs. Notwithstanding this, as per settled law, no terms and conditions of the policy, allegedly sold to a customer, are binding on the customer till such time, they have been communicated to him and he has agreed to the same. In the instant case, OPs, as stated earlier, have failed to produce the existence of any policy, terms and conditions of which, the complainant had agreed to. Thus, keeping in view the facts and circumstances of the case, it can be fairly concluded that the OPs are in possession of Rs.5,12,620/- paid by the complainant and have continued to enjoy the fruits of this amount without any agreement with the complainant with regard to the insurance cover etc and they are, therefore, liable to refund this amount to the complainant with due interest. As stated earlier, the complainant on his part is also responsible for the confusion due to his contributory negligence and therefore, he does not deserve to be granted any compensation etc. for physical and mental agony suffered by him as well as costs of litigation for which he himself was partially responsible.

13.                   In view of the foregoing discussion, the appeal is partly allowed and the OPs are directed to refund the amount of Rs.5,12,620/- along with interest @6% per annum from the date of receipt of the amount till payment. OPs are further directed to comply with these directions within a period of 30 days from the date of receipt of copy of this order failing which OPs will be liable to pay penal interest @9% per annum on the amount to be refunded from the date of receipt of the amount till actual payment.

14.                   Copies of this order be sent to the parties free of charge.

Pronounced.

19^th May 2010.

Sd/-

[JUSTICE PRITAM PAL]

PRESIDENT

Sd/-

[MAJ. GEN. S. P. KAPOOR (RETD.)]

MEMBER

Sd/-

[MRS. NEENA SANDHU]

MEMBER

Ad/-

APPEAL NO.636 OF 2009

Argued by:            Sh. Ramneek Vasudeva, Advocate for the appellants.

                        Sh. Sandeep Suri, Advocate for the respondent.

                                                …..

                        Vide our detailed order of even date recorded separately, this appeal filed by the complainant has been partly allowed.