Chandigarh

DF-II

CC/633/2012

Jyoti Agarwal - Complainant(s)

Versus

HDFC Standard Life Insurance Co. Ltd. - Opp.Party(s)

Deepak Aggarwal,Adv

28 Jul 2015

ORDER

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

======

Consumer Complaint  No	:	633 of 2012
Date  of  Institution	:	12.12.2012
Date   of   Decision	:	28.07.2015

 

 

 

 

 

Smt.Jyoti Agarwal, resident of H.No.956,   Sector 21, Panchkula 134112

 

             …..Complainant

 

Versus

 

1]  HDFC Standard Life Insurance Company Limited, through its Director Registered Office at Ramon House, H.T.Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai 400020

 

2]  Branch Head HDFC Standard Life Insurance Company Limited, SCO No.119-120, First Floor, above IDBI Bank, Sector 43-B, Chandigarh.

 

….. Opposite Parties

 

BEFORE:  SH.RAJAN DEWAN                 PRESIDENT

         SH.JASWINDER SINGH SIDHU       MEMBER

         MRS.PRITI MALHOTRA             MEMBER

 

Argued By:  Sh.Deepak Aggarwal, Counsel for the complainant.

Sh.Puneet Tuli, Proxy Counsel for Sh.Sandeep Suri, Counsel for OPs.

 

 

PER JASWINDER SINGH SIDHU , MEMBER

 

 

          As per the case, briefly stated, allured by the rosy pictures shown by the agent of the Opposite Parties, to invest in their company to get the handsome returns, the Complainant decided to purchase one insurance policy of single premium from the Opposite Parties. As a sequel thereto, believing on the projections made by the OPs to be true, the complainant signed the blank proposal form document and deposited single premium of Rs.2.5 lacs (Ann.C-1 & C-2). However, after waiting sufficiently, when the complainant visited the OPs to check the status of his investment, to his utter dismay it transpired that the amount invested by him in the scheme floated by the OPs instead of increasing, the policy No.11478961 has been lapsed without value and further that the complainant is not entitled to even a single penny.  It is averred that when the complainant received the policy document, the same was not based on the actual figures given to the officials at the time of signing of the blank proposal form.  That the annual income shown in the same is Rs.Eight Lacs, whereas the income of the complainant is much less than the quoted figure.  Further, the frequency of the premium @Rs.2.5 lacs shown to be quarterly, meaning that the complainant, whose income is less than 6 lacs has to pay Rs.10 lacs per annum to the Opposite Parties, hence binding contract is not formed and the same is directly hit by vitiating elements under the Indian Contract Act.  It is pleaded that once it is established on record that the agreement between the parties is no agreement in the eyes of law or a contract which is void abinitio, there is no question of free look period because the same condition of free look period will also be part of above said agreement, which is not agreement in the eyes of law.  Further also that the form of source of fund declaration has also not filled by the complainant but by the OPs in order to make an agreement between the parties to be a contract.  Addendum to Unit Linked Plan Proposal has also not been filled by the complainant or has clicked the ‘yes’ or ‘no’ option.  It is pleaded that the complainant took this matter with the OPs and also sent a legal notice in this regard, but to no avail.  It is also pleaded that the OPs have also not followed the regulations issued by IRDA with regard to discontinued policies whereby they can put a maximum absolute cap of Rs.6000/- in case a policy is discontinued in the first year and the charges are capped at Rs.2000/- at the fourth year.  Therefore, the present complaint has been filed the above acts & conducts of the OPs as gross deficiency in service and unfair trade practice     

 

2]       Opposite Parties in their joint reply stating therein that the complainant is not a consumer as the investment so made was in the share market as per the policy applied for and that the complaint is time barred. The issuance of policy in question and payment of one premium is admitted. It is submitted that the complainant has herself put her signatures on the proposal forms and has admitted the contents thereof and the complainant cannot be permitted to say that the contents as mentioned in the proposal form were wrong.  It is also submitted that the details were filled in the proposal form by the complainant and in case she has failed to fill-in the same, she cannot be permitted to take the benefit of the same now. It is submitted that the complainant, as per policy, failed to avail the option to review and seek refund of the premium if she disagreed with the terms & conditions of the policy within 15 days of its receipt. Denying all other allegations and stating that there is no deficiency in service on their part, Opposite Parties have prayed for dismissal of the complaint.  

 

3]       Parties led evidence in support of their contentions.

 

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

 

5]       The complainant who had subscribed for a Unit Linked Policy preferring a One Time Premium as claimed by her in her complaint by paying a premium of Rs.2.5 lacs. The said policy commenced from 28.12.2007 and the complainant raised this issue when the Opposite Parties informed her about the policy having terminated. The complainant raised this matter through her communication dated 10.8.2011 duly received by the Opposite Parties. Furthermore, the Opposite Parties preferred not to pay even a single penny after the termination of the policy, thus causing much hardship to the complainant.  During this period, the matter remained unresolved compelling the complainant to file present complaint in the year 2012.

 

6]       The Opposite Parties while contesting the claim of the complainant have raised numerous preliminary objections namely limitation, maintainability as well as the terms & conditions of the policy.

 

7]       Dealing with every single objection individually, we prefer to deal with the issue of limitation at the very onset.  The complainant having subscribed for the policy in Dec., 2007 was well within her knowledge about the three year’s lock-in period, as per Clause No.5, Page 25 of the complaint, placed on record by herself.  The said policy was lying in a lapsed mode for the next two subsequent years of unpaid premiums and after the expiry of the revival period in the year 2010, the Opposite Parties preferred to declare the same as Auto-Foreclosed and making their own calculations, preferred not to pay anything to the complainant. Thus giving a fresh cause of action against the Opposite Parties to file the present complaint.  The communication dated 19.8.2011 received by the complainant from the OPs about the status of her policy, was admittedly intimated to her and for the purpose of limitation, this date is to be construed and not the date of commence of the policy.  Therefore, the present complaint filed on 12.12.2012 is well within the limitation period of 2 years from 19.8.2011. Hence, the objection of the Opposite Parties with regard to limitation is out rightly rejected.  

                     

8]       The second issue that comes up before us is with regard to the maintainability of the present complaint in view of the quoted judgment Smt.Abanti Kumari Sahoo vs. Bajaj Allianz Life Insurance Company Ltd.  While dealing with this issue, it is necessary to dwell in the facts of the present complaint and also the contents of the judgment quoted above. 

 

9]       We have perused the judgment of the Hon’ble National Commission, New Delhi, which had dismissed the revision petition filed against the orders of Hon’ble Orissa State Commission, which had upheld the order of District Forum, Cuttack in which the District Forum while detailing the matrix of the case had opined that the complainants, who were husband & wife, were highly literate individuals and the husband himself was a leading Advocate & Notary Public and his wife was the agent of the Insurance Company with Agent Code No. 1000093544 of Opposite Party–Bajaj Allianz. The ld.District Forum, Cuttack while pointing out the huge quantum of money totaling to nearly Rs.4.50 lacs of premium, which was being renewed as well as a top up amount was also being added to them, had declared that this investment was being done by the complainants for the purpose of investment into shares for speculative gains, declaring them as not covered under the preview of Consumer Protection Act. 

 

10]      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.

 

11]      With utmost humbleness and with due regards to the opinion expressed by Hon’ble Orissa State Commission, in the captioned judgment of the Opposite Parties, we deem it proper that it is necessary to dwell at length about the differences in investment made in share market and the subscription of an insurance policy. 

 

12]      Any person, who prefers to invest in shares, has to open a D-mat account with a bank and can trade (buy & sell) any number of shares of any listed company with the SEBI (Security and Exchange Board of India), which is the Apex Body that controls such transaction.  A person making such investment(s), can trade more than once even in a single day.

 

13]      However, contrary to this, insurance is a matter of solicitation and is not an act of purchase or sale and a policy is only issued by an Insurance Company after having looked into the proposal of the proposer and the same is issued under the provisions of the Insurance Act applicable to it.  All these policies issued by the Insurance Companies are governed by Insurance and Regulatory Development Authority.

 

14]     A person making investments in a share market is free to take back all his money at any point of time by selling his entire stock of shares, whereas no such liberties are available with the person who had subscribed for an insurance policy, leave aside his demand of entire money, he is not in a position to demand his/her money before the prescribed lock-in period.  In case of insurance and insured is only required to maintain a savings bank account for the purpose of receiving his refund from the insurance company by way of cheque. Whereas, there is a compulsory necessity of having a D-mat account with the bank giving such services in case of a person dealing in buying & selling of shares.

 

15]      The Opposite Parties while claiming that the amount of premium is invested in the share market, is false for the reason that no such proof has been placed on record by the Opposite Parties in support of such contentions.  However, it is only the movement of the share market, which is taken as a datum to decide about the growth or fall in the value of the fund value, meaning thereby that it is only for the purpose of calculating the fund value of the premium deposited with the Opposite Parties, the movement of share market is considered and there is no direct investment or buying or selling of shares by the Opposite Parties. 

 

16]      In view of the aforementioned discussion, there is no similarity between solicitation of an insurance policy and investments in a share market, therefore, the case of the complainant cannot be considered to be an investment in share market.  Rather, it is a pure solicitation of an insurance policy as governed by IRDA and certainly falls under the purview of Consumer Protection Act, 1986.  Therefore, the objection of the Opposite Parties about the maintainability of the present complaint is also dismissed. 

 

17]      While dealing with the merits of the complaint, the complainant is aggrieved about the non-payment of even a single rupee from the premium amount deposited by her, by the Opposite Parties citing the terms & conditions of the policy in question.  It is necessary to quote here that all insurance policies are issued as per the IRDA guidelines applicable at the point of issue and further such policies do also stands modified in terms of any IRDA regulations that comes thereafter and has a bearing on such policies. The Condition No.19 Insurance Legislation at Page No.28 of the complaint reads as under:-

         19.  Insurance Legislation

This policy is subject to the Insurance Act, 1938, as amended by the Insurance Regulatory and Development Authority Act, 1999, such amendments, modifications as may be made from time to time and such other relevant regulations as may be introduced thereunder from time to time by that Authority.

It is required to obtained prior approval from the Insurance Regulatory and Development Authority or any successor body before making any material changes to these Provisions.”

 

18]       In view of the aforementioned clause of the terms & conditions of the policy issued to the complainant, 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, for the reason that while issuing the letter dated 19.8.2011, 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.

 

19]      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.

20]      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 09.5.2013, 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 ignored the genuine refund that was due towards her, have acted in a deficient manner and the same tantamounts to deficiency in service.

 

21]     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, along with interest at the rate of 9% p.a. till the such amount is paid.

 

[b]      To pay Rs.20,000/- to the complainant as consolidated amount of compensation for causing mental agony and harassment on account of deficiency in service.

[c]     To pay Rs.10,000/- 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.20,000/- from the date of filing of the complaint till it is paid, apart from paying litigation expenses of Rs.10,000/-.

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

Announced

28^th July, 2015            

                                                                             Sd/-

 (RAJAN DEWAN)

PRESIDENT

 

 

Sd/-

 (JASWINDER SINGH SIDHU)

MEMBER

 

 

Sd/-

PRITI MALHOTRA

MEMBER

Om                                                                                                                        

 

 

DISTRICT FORUM – II

CONSUMER COMPLAINT NO.633 OF 2012

PRESENT:   None   Dated the 28th day of July, 2015

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