Chandigarh

DF-II

CC/348/2014

Gurpreet Kaur - Complainant(s)

Versus

HDFC SL Chandigarh - Opp.Party(s)

Prahlad Bhagat Vasudeva, Nitish Kumar Vasudeva, Deepark Arora, Adv.

15 Feb 2016

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

======

Consumer Complaint  No	:	348 OF 2014
Date  of  Institution	:	10.07.2014
Date   of   Decision	:	15.02.2016

 

 

 

 

 

Gurpreet Kaur wife of Harbhag Singh, H.No.55, Dhanas, Chandigarh 160014

 

             …..Complainant

Versus

 

1]  HDFC SL Chandigarh, 1^st & 2^nd Floor, SCO No.1A-120, Sector 43-B, Chandigarh 160022, through its Branch Head.

 

2]  HDFC Standard Life Insurance Company Limited, Regd. Office: Ramon House, H.T. Parekh, 169, Backbay Reclamation, Churchgate, Mumbai-400 020, India, through its Chief Executive Officer/Managing Director.

….. Opposite Parties

 

BEFORE:  SH.RAJAN DEWAN                 PRESIDENT

         SH.JASWINDER SINGH SIDHU       MEMBER

         MRS.PRITI MALHOTRA             MEMBER

 

 

For complainant(s)      :     Sh.Nitish Kumar Vasudeva, Advocate        

 

For Opposite Party(s)   :     Sh.Nitin Thatai, Advocate

 

 

PER JASWINDER SINGH SIDHU, MEMBER

 

 

          As per the case, the complainant, a housewife, being allured by the representation made by the representative of OPs, that there would be good return by investing the amount in the Fixed Deposits, signed the papers wherever tick marked by the Insurance Agent and invested Rs.2.00 lacs each in two FDRs on 31.7.2010 and Rs.4.00 lacs on 7.9.2010 and it was assured that the receipts would be issued later on.  It is averred that the complainant requested the agent of the Opposite Party insurance company as well as approached Opposite Party No.1 to get her FDRs but every time the matter was put off on one excuse or the other.  Ultimately, the complainant received one envelope through regd. post on 22.1.2013 containing three insurance policies, whereupon she felt cheated on account of unfair trade practice of the Opposite Parties as they issued insurance policies instead of FDRs (Ann.C-1 to C-4).  Thereafter, the complainant submitted written request to the OPs on 1.2.2013 to cancel the policies and refund the amount, but the same was rejected on the ground of being not approached for cancellation in free look period.  It is pleaded that the policies in question were received on 22.1.2013 vide envelope Ann.C-1 and request was submitted on 1.2.2013 (Ann.C-6). It is also pleaded that the OPs did not send any receipt for more than two years and ultimately sent insurance policies which were received on 22.1.2013.  It is further pleaded that the OPs did not adhere to the guidelines on Anti Money Laundering (Ann.C-7) by not obtaining the requisite documents from the complainant nor the proof of income has been obtained.  Furthermore, the Opposite Parties have misrepresented the complainant that it was one time deposit and then issued policies. Hence, this complaint has been filed alleging the said act & conduct of the OPs as deficiency in service and indulgence into unfair trade practice.

 

2]       Opposite Parties in their joint reply, while admitting the factual matrix of the case with regard to issuance of the policies in question, acceptance of premiums, has maintained that the Complainant had submitted three proposal/applications dated 28.7.2010, 28.7.2010 and 31.8.2010 (Exhibit R-2 to R-4), for the purchase of HDFC SL Endowment Supreme Suvidha, HDFc SL Endowment Supreme Suvidha & HDFc SL Pension Champion Plans respectively; the proposals were accepted, on the standard rates, based on the information provided and consequently, three policies (Ann.C-5 to C-7) were issued on 31.7.2010, 31.7.2010 and 7.9.2010 respectively. It is also asserted that before acceptance of the proposals by the Opposite Parties, the contents of the proposals/applications, illustration and the addendum forms were read and explained to the LA in the language best known to her (Ex.R-8 to R-10).  It is pleaded that the complainant has manipulated the envelop just to get her complaint within the period of limitation and just to avail the free look period otherwise, all the insurance policies, out of which two are of different dates and one is of different date, cannot be sent in one envelop.  Moreover, the complainant cannot be expected to keep mum for more than three years if she had not received the insurance policies.  It is also pleaded that no request was made by the complainant to cancel the policies vide letter dated 1.2.2013, but the Opposite Parties received an e-mail dated 3.12.2012 wherein the request was made to cancel the aforesaid policies, but the same was denied vide e-mail dated 14.12.2012 (Ann.R-14). It is further pleaded that Opposite Parties have complied with the provisions of Prevention of Money Laundering Act and has taken Voter ID of the complainant as ID Proof, Bank Account Statement as proof of residence as well as income proof and Metric Certificate as age proof (Ex.R-17 & R-18).  Denying all other allegations, Opposite Parties have prayed for dismissal of the complaint.

 

3]       The Complainant also filed replication thereby reiterating the averments as made in complaint and controverting that of the Opposite Parties made in the reply.

 

4]       Parties led evidence in support of their contentions.

 

5]       We have heard the ld. Counsel for parties and have also perused the entire record.

 

6]       The facts with regard to the solicitation of Three Unit Linked Policies by the complainant against which the premium receipts Ann.C-2 to C-4 are admitted.  The request for cancellation dated 1.2.2013, which was after the receipt of the policy documents on 22.1.2013, is not acknowledged by the Opposite Parties.  However, another request of cancellation according to the Opposite Parties dated 29.3.2013 was answered, but the same being beyond the free look period, no action was taken.  The third request dated 29.4.2013 (Ann.C-6) was not answered at all by the Opposite Parties.

 

7]       The Opposite Parties at the very onset have taken a preliminary objection with regard to the present complaint being highly time barred, as the matter pertains to 2010 and the present complaint has been filed in the year 2014.  In the present scenario, we are of the opinion that as the present policies Unit Linked Policies, which  were issued after 1^st July, 2010 i.e. on 31.7.2010 and 7.9.2010 and no proceeds, whatsoever, have been returned to the complainant, therefore, after the lapse of revival period in the year 2013, the Opposite Parties should have complied with the statutory guidelines as issued by the IRDA through its notification dated 1^st July, 2010 under the heading Treatment of Unit Linked Policies, IRDA Regulation 2010.  In the present case, leaving aside all other objections, the Opposite Parties should have proceeded under the aforementioned regulations by a written communication, as mandated under Regulation 9 of the aforementioned notification wherein they were required to disclose the fund value to the policyholder/complainant and seeking his/her choice of either to seek the refund of the same or wait for the completion of 5 years lock-in period and received an additional interest, as envisaged under Regulation 9 of above regulation dated 1.7.2010. In the given set of circumstances, the present complaint is within period of limitation, as the Opposite Parties are still retaining the proceedings of the policies of the complainant till date.  The objection with regard to the present complaint being barred by limitation is out rightly rejected. 

 

8]       The second objection with regard to the maintainability of the present complaint, as mentioned in Para No.21 of Preliminary Objections (Page 10) of the reply of the Opposite Parties, wherein they have referred to the citation of the Hon’ble National Commission, RP No.658 of 2012 – Ram Lal Aggarwala Vs. Bajaj Allianz Co. Ltd., decided on 23.4.2013 and CC No.96/2011- Smt.Paramjit Kaur Vs. Aviva Life Insurance Company (India) Ltd., decided on 4.7.2014.  We are of the opinion that the facts of the matrix of the complaints mentioned in the aforementioned citations are totally different from the case of the complainant for the reason that the complainant, who is a simple house wife, and does not have any regular perennial source of income and was cajoled, coaxed and sweet-talked by the agent of the Opposite Parties to subscribe for the policies in question, without following the IRDA Guidelines, which were very much in force at the time of issuance of the policies, since the year 2006.  The Opposite Parties failed to take on record the proof of income from the complainant, so as to satisfy themselves about the ability and capacity of the complainant to service the said three policies for the entire duration, for which, she had mentioned in her proposal form (15 years).  As per the Anti Money Laundering Norms as well as KYC Guidelines, mentioned in the IRDA Regulations, issued on 31^st March, 2006, it was incumbent upon the Opposite Parties to take genuine proof of income of the complainant along with proposals while entertaining her solicitation of these policies, when they were worth Rs.8.00 lacs.  In the absence of such valid/proper documents, the OPs ought not to have issued the policies in question and by citing, aforementioned judgment, the Opposite Parties have tried to hide their own mistakes, whereas no established law, grants any liberty or excuse, which they have tried show by quoting aforementioned judgments. 

 

9]       It is necessary to quote here other two set of judgments of the Hon’ble National Commission, New Delhi i.e. Life Insurance Corporation of India Vs. Smt.Sudhi P.P., R.P. No.2674 of 2013, decided on 15.01.2014 And Dr.Aditya Prasad Roy VS. Mr.Suresh Mahalingam & Ors., R.P.No.4351 of 2014, decided on 6^th Jan., 2015, wherein the Hon’ble National Commission, New Delhi, while dealing with similar set of Unit Linked Policies had decided them on merits, as in the present case, and has nowhere given its specific observation that the complainant did not fall under the definition of consumer and the dispute did not fall under the preview of Consumer Protection Act. It is also necessary to quote here that the complainant, in the present case has nowhere quoted that she had opted for the policy in question for the purpose of investment whereas her stand is that she was misguided by the officials of Opposite Parties. Therefore, it would not be appropriate for us to deviate from the merits of the present case, which has been contested by the Opposite Parties on merits as well as on its maintainability. Thus, we proceed further to decide the present complaint on its merits. 

 

10]      The Opposite Parties were duty bound to deal with the case of the complainant, as per the guidelines of Treatment of Discontinued Unit Linked Policies Regulations, 2010 issued by IRDA, effective from 1^st July, 2010, for the reason that at the time of issuance of the policy on 31.7.2010 and 7.9.2010, these regulations had already come into effect and were applicable to the case of the complainant.  The relevant extract of the said regulation is reproduced below:-

“Obligations of an insurer upon discontinuance of a policy

7.         The obligations of the insurer in this regard shall be as follows:-

i.          To impose discontinuance charges only to recoup expenses incurred towards procurement, administration of the policy and  incidental thereto.

ii.         To design the discontinuance charges to encourage the policyholder to continue with the contract for the full term;

iii.       To ensure that the discontinuance charges reflect the actual expenses incurred.

iv.        To structure the discontinuance charges within the statutory ceilings on commissions and expenses and

5. To ensure that the charges levied on the date of discontinuance (as a percentage of one annualized premium) do not exceed the limits specified below:-

 

Where the policy is discontinued during the policy year.	Maximum Discontinuance charges for the policies having annualized premium up to Rs.25000/-	Maximum discontinuance charges for the policies having annualized premium above Rs.25000/-
1	Lower of 20% (AP or FV) subject to a maximum of Rs.3000.	Lower of 6% (AP or FV) subject to maximum of Rs.6000/-
2	Lower of 15% (AP or FV) subject to a maximum of Rs.2000.	Lower of 4% of (AP or FV) subject to maximum of Rs.5000/-
3	Lower of 10% (AP or FV) subject to a maximum of Rs.1500.	Lower of 3% (AP or FV) subject to maximum of Rs.4000/-
4	Lower of 5% (AP or FV) subject to a maximum of Rs.1000.	Lower of 2% (AP or FV) subject to maximum of Rs.2000.
5 and onwards	NIL	NIL

 

 

 AP - Annualised premium

FV- fund value on the date of discontinuance

Provided that where a policy is discontinued, only discontinuance charge may be levied by the insurer, and no other charges by whatsoever name called shall be levied.

Provided that no discontinuance charges shall be imposed on single premium policies and on top ups.”

            8.         xxxxxxxxxxxxxx

9.         Every insurer shall send a statement of account, on a half yearly basis, within fifteen days, in respect of every policy in force including discontinued policies where the proceeds are yet to be paid to the policyholder or her nominee as the case may be, his last known address, which shall contain the following details :-

(i) The total premium paid by the policyholder

(ii) Next due date of the premium

(iii) Pattern of the investment chosen

(iv) Pattern of investment

(v) Status of the policy

(vi) Total fund value

(vii) Total units

(viii) Detail of charges recovered.

 

11]      The contents of Regulation-9 clearly indicate that these regulations are attracted even to the policies, which are in existence on 1^st July, 2010 and also to the policies, which are in the discontinued mode and the proceeds of such policies had not been paid to the insured.  Meaning thereby, that the case of the complainant is squarely covered under Regulation 9 of the IRDA Regulations, 2010, quoted above.

 

12]      Though for some reasons, insurance companies had not been adhering to these guidelines, but after the passage of IRDA Regulations, 2013, that came into effect on    16^th Feb., 2013, the Opposite Parties had sufficient time to once again think over the case of the complainant before filing their reply and affidavit on 07.10.2014, while contesting the claim of the complainant.  It is very unfortunate that the Opposite Parties do not have any respect for IRDA Instructions/Regulations/Guidelines, which are binding on them, but preferred to ignore them for the reasons best known to them alone. Therefore, in view of the IRDA Regulations, 2010 and 2013, governing the ULIP Policies and the case of the complainant, the Opposite Parties having treated the request of the complainant as per aforementioned regulations, have acted in a deficient manner and the same tantamounts to deficiency in service.

 

13]      In the light of above observations, we are of the concerted view that the Opposite Parties are found deficient in rendering proper service to the complainant. Hence, the present complaint of the Complainant is allowed qua OPs jointly & severally. The Opposite parties are jointly & severally directed as under:-

 

[a]      To release the fund value, as on the date of auto-foreclosure of the policy of the complainant, in terms of IRDA Regulation, 2010, referred to as above, along with interest at the rate of 9% p.a. till the such amount is paid.

 

[b]      To pay Rs.50,000/- to the complainant as consolidated amount of compensation for causing mental agony and harassment on account of deficiency in service.

[c]     To pay Rs.15,000/- towards litigation expenses to the complainant. 

         The above said order shall be complied within 45 days of its receipt by the Opposite Parties jointly & severally; thereafter, they shall be liable to pay an interest @18% per annum on the fund value, as on the date of auto-foreclosure of the policy of the complainant, till the such amount is paid and also on the compensation amount of Rs.50,000/- from the date of filing of the complaint till it is paid, apart from paying litigation expenses of Rs.15,000/-.

         The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

15^th February, 2016              

                                                                             Sd/-

 (RAJAN DEWAN)

PRESIDENT

 

 

          Sd/-

 (JASWINDER SINGH SIDHU)

MEMBER

 

 

          Sd/-

PRITI MALHOTRA

MEMBER

Om                                                                                                                       

 

 

DISTRICT FORUM – II

CONSUMER COMPLAINT NO.348 OF 2014

PRESENT:   None   Dated the 15th day of February, 2016

O R D E R                        Vide our detailed order of even date, recorded separately, the complaint has been allowed against Opposite Parties.                    After compliance, file be consigned to record room.

 

(Priti Malhotra)	(Rajan Dewan)	(Jaswinder Singh Sidhu)
Member	President	Member