COMPLAINT FILED ON: 09.02.2010
DISPOSED ON:24.11.2011
BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE (URBAN)
24th DAY OF NOVEMBER 2011
PRESENT:- SRI. B.S. REDDY PRESIDENT
SMT. M. YASHODHAMMA MEMBER
SRI. A. MUNIYAPPA MEMBER
COMPLAINT NO.270/2010
Complainant | K.S. Manjula, 393, 11th Cross, 5th Main, RMV Extension, 2nd Stage, Bangalore – 560 094. In Person V/s. |
OPPOSITE PARTY | ICICI Prudential Life Insurance Company Limited, EVP – Customer Service and Technology, ICICI Prudential Life Insurance Co. Ltd., ICICI Prulife Towers, 1089 Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025. Attention: Ms. Anita Pai. Advocate: Ms. S. Shanta Kumari |
O R D E R
SRI. B.S. REDDY, PRESIDENT
The complainant filed this complaint, seeking direction against the Opposite Party (herein after called as O.P.) to return full funds expecting of Rs.16.34 Lakhs, on the allegations of deficiency in service and unfair trade practice on the part of the OP.
2. The case of the complainant is to be stated in brief is that:
On 25.02.2008 she was sent a life pension policy in the form of annuity for 10 years by OP for an initial premium of Rs.12 Lakhs and two further annual premiums. The said policy was not acceptable to her for the following reasons:
1. Her husband K.S. Ramesh negotiated this policy in his name in Bangalore, whereas the policy was sent in her name after taking her signature on fresh application form – not the one signed by her husband – when he was in Udupi – all the time making her husband believe that she was only a co-signatory.
2. Her husband 71 years old pensioner at that time, wanted only lump sum returns at the end of 3 years – not 10 years annuity as the policy sent to her indicated. He did not seek any life insurance coverage either.
3. A whopping premium allocation charge of Rs.1.68 Lakhs was deducted, which was not disclosed while selling the policy. This reduced the initial investment severely right in the beginning.
4. Her husband has emphasized that he wanted an investment that was immune to market fluctuations – in fact, initially he went to ICICI Bank, Jayanagar for investment in their one year Rupee Plus Plan, but for unknown reasons was directed by them to ICICI Prudential agent in the same office. But the policy sold was completely exposed to market fluctuations. The first premium was already discounted by the time the policy documents were received by them.
Within 15 days from the receipt of the documents – the free look period allowed by the company – representations were made to the company asking for clarifications. Full clarifications were never furnished for months and hence they could not exercise their option of withdrawing the policy within the free look period. The company disallowed withdrawal of the policy after 15 days free – look period without severe penalties. Many representations followed – even to the top ICICI Prudential authorities – highlighting unethical conduct of the ICICI sales agent, but they always got a stock reply – the policy was not mis-sold to them and they had no recourse as they did not exercise their option of withdrawing within the free look period. After the initial premium of Rs.12 Lakhs was paid on 25.02.2008, they have already paid Rs.1 Lakh annual premium last February so as not to jeopardize, further their investment. Another Rs.1 Lakh premium (last one) is due on 25.02.2010. Their intention was to park their funds for a short period until the house construction started. Now that the house construction has already started, they cannot lay their hands on their funds as the funds will be severely discounted if withdrawn now for two reasons: Firstly, the market value of the funds has gone down very severely and secondly, only reduced amount – surrender value which is discounted amount from the cash value – will be returned. Thus, an investment of Rs.13 Lakhs will hardly yield Rs.8.5 Lakhs after 2 years. Thus the complaint seeking for refund of the amount.
3. On appearance, OP filed version contending that the complaint does not raise any consumer dispute, the complaint is liable to be dismissed. The complainant is bound by the terms and conditions of the subject policy. The complainant failed to demonstrate that there was any breach or violation of the any terms of the conditions of the subject policy and thus there was no deficiency or negligence on the part of the OP. As per the terms and conditions of the policy, the policy holder may review/cancel/discontinue/change the policy within free look period after the receipt of the policy. Free look period means a period of 15 days is available to the policy holder during which the policy can be reviewed. The complainant after receipt of the policy and policy document did not cancel the policy within free look period thus, she is not entitled for cancellation of her policy or refund of the premium amount. The policy would be surrendered after payment of full premium for the first year but, said surrender would be payable only after completion of 3 policy years and not before as per clause4 of the terms and conditions of the policy. The complainant or her husband have never stated in their correspondence/letter or e-mail about cancellation of this policy but always insisted on clarifying the discrepancies in the policy. The complainant after depositing the first premium of Rs.12,000/- on 25.02.2008, under the policy continued to pay further renewal premium of Rs.1,00,000/- each. Had the policy was mis-sold, there was no need for the complainant to pay the renewal premium. The payment of renewal premium ipso facto shows that the complainant accepted the subject policy and its terms and conditions. The complainant had also done intricate transactions with respect to the policy like Fund Switch on 18.02.2009, implying that the complainant wanted to continue the subject policy and had no grievance with it.
4. OP received proposal form duly filled and signed by the complainant on 23.02.2008 seeking a policy under ‘Premier Life Pension “Plan”. The complainant also signed the Standard Benefit Illustration on 23.02.2008. Considering all information given in the above proposal form to be true and correct in all aspects, the OP issued policy to the complainant under ICICI Prudential (Premier Life Pension) on 26.02.2008. It is denied that the husband of the complainant Sri.K.S.Ramesh negotiated policy in his name. The complainant has not disputed or denied the signature made in the proposal form and the Standard Illustration Benefit on the basis of which the subject policy was issued. The complainant opted the policy for 10 Annuity years. It is denied for want of knowledge that the husband of the complainant is 71 years old pensioner and he wanted lump sum return at the end of 3 years. It is denied that Rs.1.68 lakhs was deducted. It is denied that the complainant is entitled for full funds along with 6% annual return and she is entitled for Rs.16.34 lakhs. The complainant is not entitled for any reliefs. Hence, it is prayed to dismiss the complaint with exemplary costs.
5. The complainant filed rejoinder to the version filed by OP contending that the Free Look Period features merit only if it is explained with all pros and cons before the contract forms are signed. Once the contract form is signed, the free Look Period does not offer any slack to the policy holder. The policy document says that if the policy is cancelled within the Free Look Period, the premium paid will be refunded after deducting the charges like Proportionate risk premium for the period covered, Stamp duty on the policy, Any expenses borne by the Company (ICICI-Pru)on the medical examination and amount equal to the reduction (when market is going down) in value of the units in the market at the time of return of the policy. This clearly establishes that once the initial form is signed, the buyer of the policy is trapped as he/she may incur huge losses due to the above factors even if the policy is returned within the Free Look Period. It is precisely for this reason the husband of the complainant asked for clarification about the exact amount they would get back if the policy was returned. This was never answered-neither within the Free Look Period nor afterwards. The questions with regard to the policy were raised in writing with Ms.Anita Pai, policy issuing authority in Mumbai within four days of receipt of the policy, but no response was ever received. As no brochures or documents explaining the features and terms and conditions of the policy were shown before signing despite asking for them, imposing the conditions afterwards is tantamount to ensnaring the customer through concealment of facts-an unfair trade practice. The complainant was reluctant to pay further premiums and did ask questions about the repercussions of not paying further premiums but again never got any response. Then she made decision to pay up the premiums out of fear of more unknown financial losses-not due to acceptance of the policy. One Ms.Nilesh Gauthankar who negotiated policy with the complainant’s husband pledged his personal provident fund to make up for losses at the end of 3 years. OP lured complainant into the policy contract through misrepresentation, concealment of facts, deceitful practice and, after the signing of documents, entrapping and stonewalling efforts at seeking redressal by not responding to communications to remove grievances.
6. The complainant in order to substantiate the complaint averments filed affidavit evidence and got filed affidavit evidence of her husband Ramesh K.S. Further she filed additional affidavit in reply to the affidavit evidence of OP. The Senior Manager-Legal working in OP-Company filed her affidavit evidence in support of the defence version.
7. OP filed written arguments.
8. Arguments on both sides heard. Points for consideration are:
Point No.1:-Whether the complainant proved unfair trade practice and deficiency in service on the part of
the OP?
Point No.2:- Whether the complainant is entitled
for the relief’s now claimed?
Point No.3:- To what Order?
9. We record our findings on the above points:
Point No.1:- Affirmative
Point No.2:- Affirmative
Point No.3:- As per final Order.
R E A S O N S
10. The complainant after receipt of Life Pension policy in the form of annuity for 10 years by ICICI Prudential (OP) for an initial premium of Rs.12 Lakhs and two further annual premiums came to know above the terms and conditions of the policy. The complainant claims that her husband Sri.K.S.Ramesh had negotiated the policy in his name at Bangalore, he wanted only lump sum returns at the end of 3 years-not ten years annuity as the policy sent to indicated. He did not seek any life insurance coverage either. When the complainant was at Udupi her signatures were obtained by the representatives of OP on the fresh application form and the policy was issued in her name. An amount of Rs.1.68 lakhs was deducted towards allocation charges out of Rs.12,00,000/- premium collected. The terms and conditions of the policy were not explained before obtaining her signature on the application. Her husband wanted an investment that was immune to market fluctuations, in fact, initially he went to ICICI Bank in Jayanagar for investment in their one year Rupee Plus Plan, he was directed to ICICI Prudential agent in the office. The policy sold was completely exposed to market fluctuations. Within 15 days of receipt of the documents, the free look period allowed by the OP, representations were made to the Op for clarifications. Full clarifications were never furnished for months and hence the complainant could not exercise option of withdrawing the policy within the free look period. OP disallowed withdrawal of the policy after the 15 days free look period without severe penalties.
11.In the affidavit evidence filed the complainant has sworn to the facts that after paying first premium of Rs.12,00,000/- she has also paid subsequent premiums of Rs.1,00,000/- each on February 25, 2009 and February 25, 2010. The Life Pension Policy No.07933156 sold in the form of 10 years annuity, on 25/02/2008 by Op through misrepresentation and unethical tactics, the policy was at total variance with their requirements spelt out during negotiations. The complainant claims that without making known the terms and conditions of the policy her signatures were obtained on the proposal form and she has put her signature as per the instruction of her husband and the policy was issued in her name instead of her husband’s name who actually negotiated the policy with the representative of OP at Bangalore.
12.The husband of the complainant Sri.K.S.Ramesh filed affidavit evidence in support of the complainant and produced documents marked as Annexures 1 to 20 explaining in detail as to how the representative of OP misrepresented at the time of negotiation of the policy on 22.02.2008 and obtained D.D for Rs.12,00,000/- initial premium. From his affidavit evidence it becomes clear that on 22.02.2008 he visited the Jayanagar Branch of ICICI Bank with the intention of reinvesting the proceeds of the previous Rupee Plus Plan, in another Rupee Plus Plan at the same branch for one more year. At that time he was alone as his wife (complainant) was away in Udupi, the official of the said Branch directed him to meet another official in the same office by name Sri.Nilesh Gauthankar who took him to a conference room to discuss the investment. The said official stated that investment of funds in the Rupee Plus Plan was a bad idea as it offered only 2-3% returns that year and that he had better 0ptions to suggest. Then he showed him performance graphs over the years of various funds and suggested one of them for him, holding out the promise of 15-18% minimum annual returns, if not more. Then he realized that he was not an employee of ICICI Bank but a sales representative of ICICI-Prudential and that he was trying to sell some money market funds. At the end of the meeting-he emphasized to the representative that he was interested in funds with one year maturity like the Rupee Plus Plan, he was a retiree and at his age of 71-72 years, he was not interested in any funds that were severely exposed to the vagaries of the market and that he was looking for guaranteed returns, even if they were modest. He asked to see brochures of various funds which descried the features of the funds instead of just graphs he was shown. The representative Sri.Gauthankar made the assertions, he has the expertise to bring about the returns that he mentioned even in a bad economy, he himself would manage the account, he would put him in a fund where exposure to the market was only 15%, as the rest 85% would be automatically transferred by the Funds Manager to safe funds. He did not have any funds with one year maturity but could invest him in a fund with three year horizon. He did not have any brochures to give, at that time and would make sure that he got one official documents and that he is to be trusted. His assertion about only 15% exposure of funds to market forces, absence of one year maturity funds, prospects of only 2-3% returns in Rupee Plus Plan prompted him to trust Sri.Gauthankar’s assertions and invest in a fund suggested by him. Accordingly he signed a form prepared by him, even without the benefit of a brochure. Sri.Gauthankar explained that he needed to invest only Rs.12 Lakhs right away and Rs.1 lakh each in the beginning of second and third year respectively. Accordingly he signed a demand draft challan for Rs.12 Lakhs to be withdrawn from their NRE account, based on assurances that all proceeds from the ICICI-Prudential funds would go back to their NRE account as the funds were drawn from this account (funds in NRE account are repatriable and exempt from taxes).
Further it is stated that Sri.Gauthankar then mentioned that he would need his wife’s signature also, which meant to him that she would be either a cosignatory or a nominee. On mentioning that she was in Udupi at that time and was not expected back for another 2 weeks, Sri.Gauthankar offered to have his representative in Udupi call on his wife and get her signature on the faxed form signed by him. Accordingly, he called his wife stating that he had just negotiated a policy with ICICI Prudential and that she had only to sign a form that would be brought to her by local representative of ICICI-Prudential’s. She signed the form brought to her on 22.02.2008.
Further it is sworn to the facts that they received policy document from ICICI Prudential on March 20, 2008. On review of the documents, he realized that the policy was at total variance from what he had negotiated. The copy of the application form included in the document had only his wife’s signature and did not include mine, indicating that the form signed by him was replaced by a new one. The policy was issued in his wife’s name. Their consent was not taken for this switch. The policy was an annuity for 10 years instead of one yielding lump sum returns after three years. The policy was a life insurance policy which was never discussed nor required. The policy deducted a hefty allocation charges of Rs.1.68 Lakhs which was not disclosed during the negotiations. The premiums for the beginning of second and third year were stated, impliedly, as Rs.12 Lakhs each instead of Rs.1 Lakh mentioned at the negotiation stage. The document included a clause on 15 days Free Look period in which the policy could be returned. However this was subject to certain deductions. None of this was mentioned during the negotiations. The invested amount of Rs.12 Lakhs had already dwindled by Rs.2.25 Lakhs when they received the documents. Immediately he called Sri.Gauthankar and expressed his shock at the policy document in the form it was received. Sri.Gauthankar replied that he switched the form from him to his wife as due to the age bar. Although the annuity extended to 10 years, he could still claim his funds back in three years but at a reduced rate called surrender value. He promised that with him personally managing the funds, he was confident of getting him hefty annual returns of 12-18% in three years, even with surrender value and allocation and other charges. He could still pay Rs.1,00,000/- towards annual premium instead of Rs.12 Lakhs implied in the policy document. On March 24, 2008 he wrote objections to Smt.Anita Pai from Mumbai Branch who had issued the policy document. He stated in his letter that their staying in the policy was predicated upon their obtaining satisfactory resolution to the objections raised in his letter (Annexure-3). He never received a pointed oral or written reply from ICICI-Prudential nor any suggestion for modification/ correction in the policy. Subsequently, ICICI-Prudential officials including Sri.Gauthankar, Sheikh Gani and Atanu Mandal called him at various times but never furnished the clarifications he had asked for ICICI-Pru (in Annexure 4). As no clarifications were received nor any resolution to his objections was offered, he had no option but to continue the policy while he continued to make efforts to get the issues resolved. He could not escape getting the feeling of being trapped by the OP. All correspondence and conversation with ICICI Prudential subsequent to receipt of the policy document were carried out by him-not by his wife as she was never involved in any negotiations. Sri.Gauthankar has promised in that he would personally manage his funds (Annexure 7) which never happened. Later ICICI-Prudential stated that the company does not offer this kind of service (Annexure-8). Sri.Gauthankar even pledged his personal/provident fund in case the policy did not earn minimum 3% annual returns (Annexure-9). However this was contradicted by ICICI-Prudential later (Annexure 8 and 10). There was no provision for transferring 85% of his funds to safe funds as promised at the negotiation. Due to non-resolution of the issues raised by him, he was reluctant to pay the annual premium and asked ICICI-Prudential about the repercussions and consequences of non-payment (Annexure 11). However, he drew blank there. In order not to further jeopardize his investments due to non-payment of premiums, he paid the annual premium and thus fulfilled his legal obligations, although reluctantly. Even though he has raised objection in his first letter to Rs.12 Lakh premium in the second and third year and was assured by Sri. Gauthankar that he could pay Rs.1 Lakh instead, the notices issued by ICICI-Prudential still demanded Rs.12 Lakhs premium (Annexure 12). He had to move from pillar to the post to get it reduced to Rs.1 Lakh-finally he succeeded after needless anxiety and running around, which could have been avoided if ICICI-Prudential had acted proactively in resolving the issues. It was Smt.R.Roopa of ICICI Prudential at M.G.Road Office to whom had gone to get the annual premium reduced, who suggested that he switch his funds to a safer fund and helped him to do it. Although this fund turned out to be only marginally better than the previous fund, it is a clear testimony to the fact that the original fund he was signed into by Sri.Gauthankar was inherently unsafe-an example of misrepresentation by the OP’s agent. Through all the efforts to seek resolution, twice he got a cryptic communication from the OP saying that nothing could be done as he did not cancel the policy within the Free Look Period (Annexures 17 and 18). These communications completely ignored all the facts, evidence and documents submitted by them and never responded to his e-mails sent to them questioning their decision (Annexures 19 and 20). He represented to the top echelons of ICICI Company), namely, Smt.Chanda Kochar, Shrimathi Madhabi-Puri and Sri.K.V.Kamath (Annexure 14) but drew blank. Subsequently he approached the Insurance Ombudsman (Annexure 15) but did not get any response. Only after exhausting all avenues of getting fair resolution to the issues arising out of ICICI-Prudential’s unscrupulous conduct, did him and his wife decide to approach this Hon’ble Forum. He has been a victim of unconscionable act like duping and fraud committed by OP ICICI-Prudential in selling their product through misrepresentation, suppression of information, unethical means like switching of forms without consent, entrapment, harassment, non-response and non-cooperation which is threatening to cause him to suffer heavy losses. Thus it is prayed to impose exemplary punitive damages on the OP so as to prevent future victimization by them of vulnerable people like him. Further prayed for full return of their investment funds with modest interest which these funds could have earned elsewhere since Feb 25, 2008 and adequate compensation for their suffering severe anxiety and mental agony. Annexure 21 shows the calculations of the funds to be returned with interest.
13.We have gone through the affidavit evidence of the complainant and her husband K.S.Ramesh, the contents of e-mail correspondences marked as Annexures-1 to 20. There is no reason to disbelieve the unchallenged affidavit evidence of the complainant and her husband. On the basis of these materials it becomes clear that the Sales Representative of OP by name Mr.Nilesh Gauthankar negotiated the policy with K.S.Ramesh husband of the complainant. The policy negotiated was a lump sum payment at the end of three years but the policy issued is payment of annuity after maturity which has been shown as 10 years. The sales representative Mr.Nilesh Gauthankar has not filed affidavit evidence denying the negotiations made with K.S.Ramesh with regard to the policy. In case the negotiations with regard to the policy was not made as stated by the complainant and her husband, nothing prevented the OP to get the affidavit of Mr.Nilesh Gauthankar filed in support of the defence version. The policy documents were received by the complainant and her husband on 20.03.2008, within 4 days of receipt of the documents, the husband of the complainant had sent E-mail dt.24.03.2008 as per Annexure-3 to Miss.Anita Pai narrating the details as to how the policy has been missold and the same has been issued in the name of the complainant who has not at all negotiated and simply she had put her signature for the documents. Thus it cannot be said that the complaint is after thought, the complainant after knowing fully the terms and conditions has put her signature to the documents required for issuing the policy. The representative of OP who obtained the signatures of the complainant at Udupi for the documents required for issuing policy has not filed affidavit in support of the defence version that the complainant was made known the detailed terms and conditions of the policy and after explaining the same her signature were obtained on the required forms. The complainant and her husband never intended to invest the funds in any annuities, they wanted to invest funds for a short period and to get lump sum. Accordingly the husband of the complainant at the time of the negotiation of the policy agreed to invest the funds for a period of three years and to get lump sum after maturity, as there was no short term maturity Scheme of one year. The policy negotiated with the complainant’s husband was for a term of three years paying in lump sum but the policy issued in the name of complainant is all together different as it is 10 years annuity plan. In case if there was bar of age of complainants husband for issuing policy, the Sales representative would have informed the same at the time of negotiations. Without informing the husband of the complainant, without his consent the form signed by him for issuing the policy has been replaced with the form signed by the complainant. Thus it becomes clear that Op issued the policy in the name of the complainant by playing fraud, misrepresentation, the same amounts to unfair trade practice and deficiency in service on the part of the OP.
14. OP though in the version and affidavit evidence of Senior Manger refers to documents as Annexures-A to E but no documents are produced. We are unable to accept the defence that the complainant signed the proposal form and standard illustration form after she was fully explained the terms and conditions of the policy. The representative of OP has not filed any affidavit evidence in support of the said defence. The complainant was at Udupi at the time when her signatures were obtained for the required documents. She had put her signature only on the instruction of her husband who had negotiated the policy at Bangalore on 22.02.2008. When she was informed by her husband that the policy negotiations are already made at Bangalore she had simply put her signatures for the documents taken to her by the representative of the OP. The other two yearly premiums of Rs.1,00,000/- each were paid on 23.02.2009 and 23.02.2010 by the complainant and her husband as they could not get the required clarifications with regard to the policy within free look period of 15 days. Later they were informed that after the free look period, the policy cannot be cancelled, even if it is cancelled they could not get the entire amount paid. In order not to further jeopardize investment due to nonpayment of premiums the subsequent two premium amounts were paid each of Rs.1,00,000/-. From that itself it cannot be presumed that the policy issued in the name of the complainant was as per the negotiations of the policy made by her husband with sales representative Mr.Nilesh Gauthankar. Further the complainant done intricate transaction with respect to the subject policy funds switch On 18.02.2009, as per the suggestions of R.Roopa of ICICI Prudential at M.G.Road Office, Bangalore. The fund turned out marginally safer than the previous fund, only on that basis it cannot be taken that the complainant accepted the policy as per the negotiations after knowing the terms and conditions of the policy. Under these circumstances, we are of the view that the complainant proved unfair trade practice and deficiency in service on the part of the OP. The complainant has paid initial premium of Rs.12,00,000/- and subsequent yearly premiums of 2 years each Rs.1,00,000/-. Thus totally an amount of Rs.14,00,000/- has been paid by the complainant. She is entitled for refund of the entire amount with interest at 6% p.a. from the respective date of payments till the date of realization along with litigation costs of Rs.5,000/-. Accordingly we proceed to pass the following:
O R D E R
The complaint filed by the complainant is allowed.
OP is directed to refund an amount of Rs.14,00,000/- with interest at 6% p.a. from the date of respective payments till the date of realization and pay litigation costs of Rs.5,000/- to the complainant.
This order is to be complied within four weeks from the date of its communication.
Send the copy of this order to both the parties free of cost.
(Dictated to the Stenographer and typed in the computer and transcribed by her, verified and corrected, and then pronounced in the Open Court by us on this the 24th day of November 2011.)
MEMBER MEMBER PRESIDENT
Cs.
