Punjab

StateCommission

A/332/2015

M/S Kotak Mahindra Old Mutual Life Insurance Company Ltd. - Complainant(s)

Versus

Gurcharan Dass - Opp.Party(s)

Karandeep Singh Cheema

20 Jul 2016

ORDER

2^nd Additional Bench

 

STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB

DAKSHIN MARG, SECTOR 37-A, CHANDIGARH

 

First Appeal No.332 of 2015

 

                                                           

                                                              Date of institution: 24.03.2015

                                                                Date of Decision:  20.07.2016

 

 

1.      M/s Kotak Mahindra Old Mutal Life Insurance Ltd., 7th Floor    Kotak Infinity Building No.21, Infinity Park, Off WE Highway,        General AK Vaidya Marg, Malad (E), Mumbai 400 097,        Corporate and Registered Office at : 4th Floor, Vinay Bhavya           Complex, 159-A, C.S.T Road, Kailna Santacruz (East) Mumbai        400 098 through it Managing Director/Director.

 

2.      M/s Kotak Mahindra Old Mutual Life Insurance Ltd., having its          Branch Office at Mall Road, Ludhiana through its Branch     Manager.

 

                                                            …..Appellants/Opposite parties

                                      Versus

 

Gurcharan Dass Bhardwaj S/o Sh. Rattan Lal, resident of House No.320, Central Town, Pakhowal Road, Post Office Daad, District Ludhiana.

 

…..Respondent/Complainant

 

First Appeal against the order dated 31.10.2014 passed by the District Consumer Disputes Redressal Forum, Ludhiana.

 

Quorum :-

 

              Shri Gurcharan Singh Saran, Presiding Judicial Member

              Shri Jasbir Singh, Member

              Shri Harcharan Singh Guram, Member

Present-

 

 

          For the appellant          :         Sh. K.S Cheema, Advocate.

          For respondent            :         Sh.Rajeev Abhi, Advocate.

 

Gurcharan Singh Saran, Presiding Judicial Member

ORDER

The appellants/OPs (hereinafter called ‘the opposite parties)  have filed the present appeal against the order dated 31.10.2014 passed by the District Consumer Disputes Redressal Forum, Ludhiana (hereinafter called “the District Forum”) in consumer complaint No.673 of 10.09.2013 vide which the complaint filed by the complainant was allowed with a direction to OPs to refund the surrender value, as per guidelines of IRDA dated 01.07.2010 after deducting Rs.3600/- from the premium paid by the complainant, which he sought for on 22.07.2013 and also to pay Rs.5,000/- as compensation and cost of litigation.

2.                The complaint was filed by the respondent/complainant (hereinafter referred as ‘the complainant’) under Consumer Protection Act, 1986 (for short ‘Act’) against the OPs on the averments that OPs through their agent Mr. Prince Sood had approached the complainant at Ludhiana stating that they are in business of life insurance and offered the policy and also assured that investment would be double after expiry of three years period. In case, he paid Rs.40,000/- per annum or in two half yearly instalments for continuous three years, then he would be get insurance coverage of Rs.2,50,000/- for whole life. Further, as and when he wanted to discontinue and surrender the policy, he can do so and the double amount will be paid to him. On the basis of this advice the complainant agreed and paid Rs.20,000/- on 17.07.2010 at Ludhiana, through cheque, which was credited on 21.07.2010 and opted for premium on half yearly basis. OPs issued policy no. 02060862 to the complainant. The complainant paid premium for three years i.e. total sum of Rs. 1,20,000/-.  After expiry of three years, complainant visited the branch office of OPs at Ludhiana on 29.07.2013 and stated that he is no longer interested to continue with the policy and surrendered the policy and requested that  they should refund the amount and the refund be credited in his saving bank account no.30026583546 in State Bank of India PAU Branch Ludhiana. However, OPs had credited an amount of Rs.76,298.72 on 05.08.2013 being part of the surrender refund of policy in his account.  No details were provided, as to how OPs had calculated the amount of Rs.76,298.72 against the premium paid as Rs.1,20,000/-. Immediately, the complainant sent emails dated 09.08.2013, 12.08.2013, as well as, registered letter dated 13.08.2013, that the amount was received by him under protest and reserve his right to recover the balance amount through court of law. It was further requested to pay the amount as per IRDA notification dated 01.07.2013. According to that, the maximum deduction could be Rs.3600/- but that amount was not paid; which amounted to clear-cut deficiency in service on the part of OPs. Hence the complaint, with direction to OPs to pay balance amount according to IRDA notification dated 01.07.2010, to pay Rs.50,000/- as compensation and Rs.22,000/- as litigation expenses.

3.                Complaint was contested by the OPs who filed their written reply taking preliminary objections that complaint is not maintainable, as Prince Sood was not impleaded as a party. The complaint is not maintainable, because as per terms of the policy, after receiving policy documents, the complainant had 15 days (free look period) to cancel the policy and in that event his premium would have been paid to him, but no such option was exercised by the complainant and now he is estopped by his act and conduct and as per terms and conditions of the policy to demand back the premium amount. Complaint is false, frivolous and vexatious to the knowledge of the complainant; therefore, complaint was liable to be dismissed under Section 26 of the Act. The complaint did not raise any consumer dispute. The complaint is liable to be dismissed, as complainant had come to the District Forum with a vague averment with regard to refund of the amount, as per IRDA Notification dated 01.07.2010. The complainant has misinterpreted the definition of 'Discontinuance' and 'Surrender'. As per IRDA Regulation 2010, 'Discontinuance' means the state of a policy that could arise on account of non-payment of the contracted premium due before the expiry of the notice period. Whereas, in the present case,  the complainant had paid premium for three years and voluntarily made a request to surrender the policy from 29.07.2013, therefore, policy was not in a 'discontinued status' and is not covered under the IRDA Regulation dated 01.07.2010. It was admitted by the OPs that complainant had applied for policy i.e. 'Kotak Super Advantage' through insurance broker policy no.2060862 on 22.07.2010 and its term was 20 years, premium Rs.20,000/-, half yearly sum assured was Rs.2,50,000/- and he had paid premium for three years i.e. Rs.1,20,000/- and surrendered the policy on 29.07.2013 and status of the policy was as under :-

Policy No.	02060862
Fund Name	FFLF
Units	6735.20151
NAV per Unit	11.86145
Fund Value as on surrender date 29 July 2013	79889.26
Less - Penalty @ 4%	3195.57
Less:- Service Tax @ 12% on penalty	383.47
Less :- Edu Cess @ 0.36% on penalty	11.5
Surrender Value	76298.72

 

The above-said amount was paid to the complainant. Similar pleas were raised in para-wise reply. Whatever amount was due to the complainant that was paid and nothing was due. The complaint was filed on wrong facts. There was no merit in the complaint; therefore, it was liable to be dismissed.

4.                The parties were allowed by the learned District Forum to lead their evidence.

5.                In support of his allegations, the complainant had tendered into evidence affidavit of complainant Ex.C-A, postal receipts Ex.C-1 and Ex.C-2, legal notice Ex.C-3, e-mail Ex.C-4 to Ex.C-7, registered notice Ex.C-8, letter dated 23.07.2010 Ex.C-9, first premium certificate Ex.C-10, policy document Ex.C-11, premium certificates Ex.C-12 to Ex.C-14, letter dated 02.07.2012 regarding discontinuation of payment of premium through ECS System Ex.C-15, policy deposit receipt Ex.C-16, voucher dated 14.08.2012 Ex.C-17, receipt Ex.C-18, partial withdrawal form Ex.C-19, letter dated 12.09.2013 regarding surrender of policy Ex.C-20. On the other hand, OPs tendered in evidence affidavit of Priti Sawant Chief Manager Legal Kotak Mahindra Old Mutual Life Insurance Company Ltd Ex.R-A, Notification dated 1.07.2010 Ex.R-1, surrender form Ex.R-2, OTC Proposal Form Ex.R-3, Kotak Mahindra Benefit Illustration Ex.R-4, copy of letter dated 23.07.2010 Ex.R-5.             

6.                After going through the allegations in the complaint, written statements filed by the OPs, evidence and documents brought on the record, the complaint was disposed of, as referred above.

7.                Aggrieved with the order, the appellants/OPs have filed the present appeal.

8.                We have heard counsel for the appellant Sh. K.S Cheema, Advocate and counsel for the respondent Sh. Rajeev Abhi, Advocate and have carefully gone through the grounds of appeal and record of the District Forum.

9.                It has been argued by counsel for OPs that order passed by the District Forum is incorrect and is liable to be set aside on the ground that OPs were directed to refund surrender value, as per guidelines of IRDA Notification dated 01.07.2010 after deducting Rs.3600/- from premium paid by the complainant as on 22.07.2013 as per IRDA Notification dated 01.07.2010. This notification has been placed on the record as Ex.R-1. According to this notification "Discontinuance" means the state of a policy that could arise on account of non-payment of the contracted premium due before the expiry of the notice period  and "Discontinued Policy Refund" means the segregated fund of the insurer that is set aside and is constituted by the fund value of all discontinued policies determined in accordance with these regulations and "Discontinuance charges"  a charge that does not exceed the limits specified in these regulations. The policy purchased by the complainant in this case has been placed on the record, as Ex.R-5. According to the terms and conditions of this policy Clause 7, the policy can be surrendered after completion of three years and if premium for firsts three policy years was paid in full. The surrender value applicable will be the fund value in main account less surrender charges and the fund value in Top-up Accounts (if any). The surrender charge as applicable on the date of surrender will be applied to calculate the surrender value. Once the surrender value is paid, the policy shall stand terminated and no further benefits are provided. Therefore, on surrender of the policy, the policyholder is entitled to surrender value minus surrender charges. The surrender charges have been mentioned as in 4th years 4%, 5th years 2% and 6th onward 0%. Since the policy of the complainant had entered into 4th year, therefore, 4% surrender charges were applied in this case, which have been calculated as Rs.3195/- less than Rs.3600/- as pleaded in his complaint. Even according to the IRDA Notification dated  01.07.2010, the charges in case of discontinued policy have been referred and surrender charges in case of surrender of the policy have not been mentioned. In case, matter does not fall in any notification, then the charges are governed by the terms and conditions of the policy. Therefore, surrender charges have been deducted according to the policy terms and conditions. Therefore, we do not see any illegality with regard to deduction of the surrender charges.

10.              However, the contention raised by the counsel for the complainant is that OPs have not made it clear, how they have calculated this amount of the fund value. They have mentioned fund value as on 29.07.2013 as Rs.79889.26, without any basis. In case they have calculated this amount, then its statement should have been furnished to the complainant. He has further contented that after payment of the surrender value the complainant had written letters Ex.C-3, Ex.C-4, Ex.C-6 and letter Ex.C-7, was received from  OPs, in which it has been mentioned that first year premium was set aside and contributed towards guaranteeing Assured Additional Advantage, which comes to fixed advantage benefit plus dynamic advantage benefit. Fixed Advantage has been referred as assured value guaranteed at the end of your policy term. This benefit is calculated as a percentage of your first year premium  and it was further stated that percentage of the fixed advantage benefit in your policy was 200% of your first year premium. Dynamic Advantage has been  mentioned as 3% of average of the fund value on the last three policy anniversaries and is added to the fund value at the end of the policy term. Therefore, no statement of account has been referred that after the adjustment of the first policy premium what was assured additional advantage under the policy of the complainant and how his premium was invested under any investment plan. There is no statement as to in which plan it was invested and what was the NAV of the amount, so invested by the complainant. Those details have not been given by the OPs. Therefore, OPs are under obligation to give proper information, how the funds, so invested by the complainant, were utilized and what was its value. But at the same time, the order so passed by the District Forum, is not legally sustainable, in which the District Forum observed the fund value after deducting Rs.3600/- from the premium paid by the complainant, because that cannot be the fund value. Therefore, order so passed by the District Forum required modification.

11.              In view of the above discussion, we dispose of the appeal, so filed by the appellants/OPs, with modification in the order passed by the District Forum with the direction to OPs to give statements of the accounts to the complainant with regard to investment of the amount so deposited by the complainant in view of their letter dated 14.08.2013 Ex.C-7 within a period of two months from the date of receipt of order, so passed by this Commission. In case the complainant is not satisfied with the accounts statements so furnished by the OPs to the complainant, the complainant will have right to file fresh complaint against OPs.

12.              The appellants had deposited an amount of Rs.25,000/- with this Commission at the time of filing the appeal and further deposited Rs.25,000/- in compliance of the order of this Commission, vide receipt dated 27.04.2015. Out of these amounts, a sum of Rs.5,000/- (awarded by the District Forum) as compensation and costs be remitted to the complainant and remaining entire amount along with interest which had accrued on the above said two amounts be remitted to the appellants/OPs, by way of a crossed cheques/demand drafts after the expiry of 90 days from the despatch of order to the parties.

13.              The arguments in this appeal were heard on 18.07.2016 and the order was reserved. Now the order be communicated to the parties as per rules.

14.              The appeal could not be decided within the statutory period due to heavy pendency of Court cases.

 

                                                (GURCHARAN SINGH SARAN)

                                                  Presiding Judicial Member

 

          

                                           (JASBIR SINGH GILL)

                                                              Member

 

 

                                             (HARCHARAN SINGH GURAM)

                                                             Member

 

July 20, 2016

 Ravi