KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
VAZHUTHACAUD, THIRUVANANTHAPURAM
APPEAL No. 656/2017
JUDGMENTDATED: 14.03.2023
(Against the Order in C.C. 671/2013 of CDRF, Ernakulam)
PRESENT :
HON’BLE JUSTICE SRI. K. SURENDRA MOHAN : PRESIDENT
SRI.RANJIT. R : MEMBER
SMT. BEENA KUMARY. A : MEMBER
SRI. RADHAKRISHNAN K.R. : MEMBER
APPELLANT:
Shahul Hameed, Flat No. 7E, Surya Enclave, Opposite Kendriya Vidyalaya, Kadavanthara P.O., Kochi-682 020.
(By Advs. Arun Valenchery & E.S. Amina Bhanu)
Vs.
RESPONDENT:
The Branch Manager, HDFC Standard Life Insurance Company Ltd., Kochi Branch, C/o HDFC Ltd., 5th Floor, HDFC House, Ravipuram Junction, M.G. Road, Kochi-682 015.
(By Adv. Saji Isaac K.J.)
JUDGMENT
SRI.RANJIT. R: MEMBER
The complainant in C.C. No. 671/2013 of the Consumer Disputes Redressal Forum, Ernakulam (District Forum for short) is the appellant. This appeal is filed against the order dated 30.11.2016 dismissing the complaint finding that the complaint was not maintainable. According to the appellant, the judgment of the District Forum is wrong and liable to be set aside.
2. For the sake of convenience, the parties are referred to herein in accordance with their status before the District Forum.
3. According to the complainant, he had taken a HDFC Unit Linked Young Star Plan Life Policy having number 10090868 on 30.11.2004 for a sum assured of Rs. 14,80,000/- from the opposite party. The period of the premium was 15 years and the complainant had to pay the premium for a minimum period of 3 years to keep the policy alive. The complainant had to pay Rs. 37,000/- as quarterly premium and the opposite party used to deduct an amount of Rs. 1,928.46 towards life risks charges and Rs. 15/- towards policy charges with tax. The complainant paid 14 quarterly premiums from the beginning without any break which amounted to Rs. 5,18,000/-. Thereafter the complainant had stopped payment of the premium due to the poor performance of the fund. On 17.09.2007 the complainant was informed by the opposite party that the policy was lapsed due to non-payment of the subsequent premiums and the policy had become paid up resulting in cancellation of all the benefits under the policy. On 30.11.2012 the complainant received a summary statement wherein it was stated that even after the policy had become paid up, the insurance company was deducting charges like mortality charges of Rs. 24,267.64, extra life benefit charges Rs. 14,497.33 and administrative charges Rs. 237.25 and with tax amounting to Rs. 4,494.26, the total of which amounted to 43,496.48 p.a. from the outstanding amount available in the above said policy which is against the terms and conditions of the policy and insurance claim. The complainant therefore issued a legal notice on 21.12.2012 to the opposite party calling upon them to rectify the mistake. But the opposite party replied that they had the right to deduct the same. The clauses relied on by the opposite party in the reply notice are applicable only to a live policy and not for a paid up policy. The complainant had earlier filed C.C. No. 119/2013, which was dismissed for default. Thereafter the complainant filed a fresh complaint as C.C. No. 671/2013 for the same relief.
4. The opposite party filed version contending that the complaint was not maintainable. The complaint was barred by law of limitation. The policy taken by the complainant was a speculative investment and was for speculative gain and hence the complaint would not lie before a Consumer Forum. The complainant had filled the proposal after going through the terms and conditions and understanding the same. The terms of the policy are binding on both parties. The complainant was liable to pay the amount under the policy under the terms and conditions, and the opposite party was entitled to deduct the charges as stated in the conditions of the policy. There was no cause of action for the complaint and the complaint was liable to be dismissed.
5. The District Forum heard the question regarding maintainability of the complaint. The opposite party in their version challenged the maintainability of the complaint on the following grounds.
- The complaint was barred by principle of resjudicata.
- The complaint was barred by limitation.
- Since the policy taken by the complainant was a speculative investment, the complaint was not maintainable.
6. The District Forum after hearing both the parties held that the complaint was maintainable. Thereafter evidence was taken. Complainant was examined as PW1 and his documents were marked as Exts. A1 to A5. Opposite party filed proof affidavit and their document was marked as Ext. B1. After the close of evidence, the matter was heard.
7. The District Forum again considered the question of maintainability and found that the complaint was not maintainable. It is this order that is under challenge. According to the complainant the District Forum failed to consider the fact that the opposite party has not challenged the earlier order regarding maintainability. According to the complainant, the cause of action arose only when he received Ext. A3 statement dated 30.11.2012. In Ext. A3 statement the opposite party had unauthorizedly levied charges under various heads like mortality charges, extra life benefit charges, administrative charges and tax amounting to Rs. 43,496.48 which is illegal since the policy had already become paid up.Since the cause of action arose only on 30.11.2012, the complaint filed on 28.09.2013 is absolutely maintainable. Further it is contended that since the first complaint was dismissed for default only, the second complaint was not hit by the principle of resjudicata. It is further contended that since the policy has already become lapsed and the challenge in the complaint is against the unauthorized deduction of amount from the lapsed policy, it is not a speculative investment.
8. We have carefully considered the contentions advanced before us and have perused the Lower Court Records. It is seen that the question regarding maintainability as regards to the principle of resjudicata, limitation and commercial transaction was heard by the District Forum and disposed of vide separate order dated 22.12.2014. Thereafter the issues were settled and while settling the issues the very same question as regards to the maintainability of the complaint was once again raised and the District Forum contrary to the earlier order found that the complaint was not maintainable as the complaint was hit by principle of resjudicata, barred by limitation and also found that since the complainant had invested in speculative transaction the complaint was not maintainable and dismissed the complaint as not maintainable. The evidence let in by the parties were not considered by the District Forum. The District Forum should not have reconsidered their own order without assigning any reason. This order is under challenge.
9. Now the question to be considered in this circumstance is whether the complaint is maintainable on the following points:
- Whether the complaint was barred by principle of res-judicata?
- Whether the complaint was barred by limitation?
- Whether the policy taken by the complainant was a speculative investment and as such whether the complaint was maintainable?
10. Admittedly, the complainant had earlier filed a complaint against the opposite party as C.C. No. 119/2013. It was dismissed for default. The complainant again filed a fresh complaint against the very same opposite party for the very same cause of action and relief as C.C. No. 671/2013 instead of filing a petition to restore the previous complaint. According to the complainant he has filed the complaint as there is no provision under the Consumer Protection Act for restoration of the complaint. Moreover, since the first complaint was dismissed for default and not on the merits, the second complaint is not hit by principle of resjudicata.
Sec. 11 of CPC defines resjudicata as follows:
“No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court”.
In the instant case admittedly the complaint was dismissed for default. It was not disposed of on merits. The complaint was not finally heard. Only if the complaint was finally heard and decided on merits the second complaint will be hit by principle of resjudicata. The Hon’ble Apex Court in New India Assurance Co. Ltd. Vs. V.R. Srinivasan [(2000)CPJ 19] held that though the first complaint was dismissed for default, the second complaint would lie. In the above circumstances it is held that the second complaint is not hit by principle of resjudicata.
11. Regarding limitation, the specific contention of the opposite party is that since the policy was issued in the year 2004 and the opposite party had sent letter dated 17.09.2007 intimating the lapse of the policy, the complaint filed in 2013 is hopelessly barred by limitation and is liable to be dismissed. From the complaint it is seen that the opposite party had sent a letter dated 17.09.2007 to the complainant intimating the lapse of the policy due to non-payment of premium and hence the policy had become paid up. The complainant again received a statement dated 30.11.2012 from the opposite party which is marked as Ext. A3, in which it is stated that the opposite party had deducted charges under various heads like mortality charges amounting to Rs. 24,267.64, extra life benefit charges amounting to Rs. 14,497.33 and administrative charges amounting to Rs. 237.25 and tax amounting to Rs. 4,494.26 from the above policy. These deductions are challenged in the complaint. Hence the cause of action to file the complaint arose only on 30.11.2012 and the complaint filed on 28.09.2013 was absolutely maintainable and not barred by limitation.
12. The learned counsel for the opposite party further contended that the policy taken by the complainant was a unit (market) linked policy and law is now well settled that such policies are speculative in nature and the same are taken for investment purpose and as such the policy holder of such policies are not consumers and dispute relating to such policies are not maintainable before the consumer forum and prayed for dismissal of the complaint.
13. The point to be determined is whether the investible premium under the unit linked policy which the complainant has taken is invested in units which are exposed to capital market, a speculative business, and whether it will come under the purview of commercial transaction or not.
14. The predominant feature of unit linked policy is the insurance cover which is dependent on human life and mere existence of additional investment factor cannot covert ULIP into mutual fund. It has a mandatory insurance cover and forms a vital inseparable part of every ULIP. Unlike share or mutual fund scheme the linked products are naturally linked with life of policy holder.
15. ULIP is an insurance contract falling within the ambit of life insurance business. Life insurance business is defined under Sec. 2(ii) of Insurance Act interalia to mean “business of effecting contracts of insurance upon human life” or “Happening of any contingency depending on human life”. The said definition indicates that the policy is dependent on happening or non-happening of an event linked to human life. Unit linked life insurance business is defined in IRDA Investment Regulations 2010. Regulation 3 (iii) states “Every insurer shall invest and at all times keep invested his segregated funds of unit linked life insurance business as per pattern of investment offered to and approval by the policy holders”. Unit linked business is defined in IRDA (Registration of companies) Regulation 2001 which means life insurance contract or health insurance contract under which benefits are wholly or partly to be determined by reference to the underlying assets or any approved index.
16. The project was launched after following appropriate procedures and obtaining unique identification number from IRDA which is the regulator in case of life insurance products.
17. The definition of Collective Investment Scheme under Sec. 11A (a) of SEBI Act recognized that there could be collective investment scheme outside the SEBI regulation including insurance products and company deposit. The investment component of ULIP is subject to investment risk associated with security markets which are entirely borne by the investor. There are two components of ULIP one is the insurance component where risk of life insurance portion vests with the insurer and the other is investment component where risk lies with the investor. This establishes that conclusively ULIPs are combination products and the investment component need to be registered and regulated by SEBI. It needs to be also kept in mind that the guideline issued by the competing regulator IRDA is sufficient to hedge out investment risks. Further it has been said that ULIP has a mandatory insurance cover which forms a vital and inseparable part of every ULIP.
18. Hence it can be concluded that it is unreasonable to hold that ULIP is a mutual fund product simply because the requirements under the SEBI guidelines are fulfilled. It is undisputed that ULIPs contain insurance and investment parts but it has also to be understood that both the insurance and investment parts are currently regulated by IRDA.
19. In the light of the above discussion, since the premium paid is invested or not invested in speculative business, the transaction cannot be considered as a commercial transaction.
20. In view of the above, we find that the complaint is maintainable. The District Forum, without considering the above aspects, wrongly dismissed the complaint holding that the complaint was not maintainable. The dismissal of the complaint holding that the complaint was not maintainable is wrong and is liable to be set aside. We do so.
21. The District Forum did not pass an order on the merits of the case, even though evidence was let in by the parties. There was no adjudication on the merits of the case.
In the result, the appeal is allowed and the order of the District Forum dismissing the complaint as not maintainable is set aside. The matter is remanded to the District Forum for fresh disposal of the complaint on its merits after giving opportunities to both parties to contest the matter.
Sd/-
JUSTICE K. SURENDRA MOHAN : PRESIDENT
Sd/-
RANJIT. R : MEMBER
Sd/-
BEENA KUMARY. A : MEMBER
Sd/-
RADHAKRISHNAN K.R. : MEMBER
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