DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, BATHINDA

CC.No.395 of 01-09-2010

Decided on 21-04-2011

Sewa Ram, aged about 37 years, son of Uggar Sain, House No.23952, St. No.16, Dhobianan Road, Preet Nagar, Bathinda. .......Complainant

Versus

1. India Bulls, Deep Appolo Hospital, Near Sagar Hotel, G.T.Road, Bathinda, through its Manager.

2. Max New York Life Insurance Co. Ltd., 12^th Floor, DLF Square, Jacaranda Marg, DLF Phase-II, Gurgaon, through Gary benett, Managing Director & CEO.

3. Max New York Life Insurance Co. Ltd., registered office Max House 3^rd Floor, 1 Dr. Jha Marg, Okhla New Delhi, through its Chairman/Chair Person.

4. Max New York Life Insurance Co. Ltd., The Mall, Bathinda, through its Manager.

......Opposite parties

Complaint under Section 12 of the Consumer Protection Act, 1986.

QUORUM

Smt. Vikramjit Kaur Soni, President.

Dr.Phulinder Preet, Member.

Sh.Amarjeet Paul, Member.

Present

For the Complainant : Sh.Sandeep Bansal, counsel for the complainant.

For Opposite parties : Sh.J.D.Nayyar, counsel for opposite party No.1.

Sh.N.K.Batta, counsel for opposite party Nos.2to4.

ORDER

VIKRAMJIT KAUR SONI, PRESIDENT

1. The present complaint has been filed by the complainant under Section 12 of the Consumer Protection Act, 1986 as amended up-to-date (here-in-after referred to as 'Act'). The brief facts of the complaint are that the complainant had purchased Policy No.328173265 from the opposite parties through opposite party No.1 being its agent on 14.07.2007 against annual installment of Rs.20,000/- as premium. The opposite party No.1 assured the complainant that in case he does not want to continue the policy, he could withdraw his premium amount paid by him. On 24.02.2010, the complainant moved an application to the opposite party No. 3 for cancellation of the Policy and for refund of the above said amount. The opposite party No.2 vide his letter dated 16.03.2010 withheld the amount with the remarks that “We would like to mention that in order to provide the customer an open and transparent basis for the relationship, even before the law mandated it, Max New York Life Insurance Co. Ltd., offered its customers, a 15 days free look period within which the policy could be returned by the customer and full premium refunded to the customer.” The opposite parties had failed to provide service to the complainant. Hence, the complainant has filed this complaint seeking directions of this Forum to the opposite parties to refund the amount of premium i.e. Rs.20,000/- alongwith interest @ 18% p.a. and to pay Rs.2 Lacs as compensation alongwith Rs.10,000/- as cost of litigation expenses.

2. The opposite party No.1 filed its written statement and pleaded that the complainant had taken loan from the opposite party No.1 not the Policy. The loan was disbursed to the complainant after completing the requisite formalities. The complainant had voluntarily signed all loan documents after reading and understanding the contents. The Insurance Policy had been obtained by the complainant voluntarily after signing the documents which included the Insurance Papers after thoroughly reading and understanding the same. The complainant himself had given the assignment deed in favour of the opposite party No.1 as collateral security.

3. The opposite party Nos. 2 to 4 have filed their separate joint written statement and pleaded that the complainant failed to return the Policy within the stipulated period of 15 days as per under the terms and conditions of the Policy documents. The opposite party Nos.2 to 4 taken the support of the case titled General Assurance Society Ltd. Vs. Chandmull Jain, (1966) 3 SCR 500 wherein it has been observed :-

   “In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves.

   Similarly in case titled Oriental Insurance Co. Ltd. Vs. Samayanallur Primary Agricultural Co-op. Bank AIR 2000 SC 10, it was observed :

   “The insurance policy has to be construed having reference only to the stipulations contained in it and no artificial farfetched meaning could be given to the words appearing in it.”

   Further, in case titled Polymat India Pvt. Ltd. and Anr. Vs. National Insurance Co. Ltd. and Ors. AIR 2005 SC 286, wherein it was observed :-

   “The terms of the contract have to be construed strictly without altering the nature of the contract as it may affect the interest of parties adversely.”

   The opposite party Nos.2 to 4 further pleaded that on 14.06.2007, after understanding all the terms and conditions of the Policy, the complainant filled up the Proposal Form bearing No.328173265 for a “Life Partner Plus Edowment to Age 75 Plan – 20 Pay” giving all relevant details and information in the prescribed Form for Sum Assured of Rs.2,89,562/- against annual premium of Rs.20,000.05. The due date of premium was 14^th of June every year till 2026. On the basis of the above said information, the opposite parties issued the said policy w.e.f. 14.06.2007. On 15.05.2008, the opposite parties duly sent a premium reminder to the complainant for the premium due on 14.06.2008 but he did not pay the premium. On 19.06.2008, they again sent a premium payment reminder. On 14.07.2008, the opposite parties sent a policy lapse notice since no premium was deposited by the complainant. On 03.03.2010, the opposite parties received a letter from the complainant to cancel the policy. The complainant filled up the Proposal Form only after understanding all the terms and conditions of the policy contract. Moreover, the complainant was well aware of the Free Look Period clause. The complainant failed to pay the premium for the year 2008 and 2009 despite repeated reminder notices being sent to him. On 16.03.2010, the opposite parties declined to cancel the policy and refund the premium amount since the request for the same was made much outside the free look period of 15 days within which the policy can be returned and the premium be refunded.

4. Parties have led their evidence in support of their respective pleadings.

5. Arguments heard. Record alongwith written submissions submitted by the parties perused.

6. The learned counsel for the complainant has submitted that the complainant is holder of Policy bearing No.328173265 purchased on 14.07.2007 and paid Rs.20,000/- as premium. The opposite party No.1 has not disclosed any terms and conditions of the Policy to the complainant but it assured the complainant that in case, he does not want to continue the policy, he could withdraw the premium amount paid by him. On 24.02.2010, the complainant moved an application to the opposite party No.3 for cancellation of the Policy and copy of this letter was sent to the opposite party No.2. The opposite party No.2 vide his letter dated 16.03.2010 withheld the amount with the remarks that “We would like to mention that in order to provide the customer an open and transparent basis for the relationship, even before the law mandated it, Max New York Life Insurance Co. Ltd., offered its customers, a 15 days free look period within which the policy could be returned by the customer and full premium refunded to the customer.” On receiving of this refusal letter, the complainant has filed this complaint.

7. The learned counsel for the opposite party No.1 has submitted that the complainant had taken the loan from it, not the Policy. The loan was disbursed to the complainant after completing the requisite formalities. The complainant had voluntarily signed all loan documents after reading and understanding the contents. The Insurance Policy had been obtained by the complainant voluntarily after signing the documents which included the Insurance Policy after thoroughly reading and understanding the same. The complainant himself had given the assignment deed in favour of the opposite party No.1 as collateral security.

8. The learned counsel for the opposite party Nos.2 to 4 has submitted jointly that the complainant failed to return the Policy within the stipulated period of 15 days as under the terms and conditions of the Policy documents. On 14.06.2007, after understanding all the terms and conditions of the Policy, the complainant filled up the Proposal Form bearing No.328173265 for a “Life Partner Plus Edowment to Age 75 Plan – 20 Pay” giving all relevant details and information in the prescribed Form for Sum Assured of Rs.2,89,562/- and under the said Policy, the premium of Rs. 20,000.05/- was to be paid. The due date of premium was 14^th of June every year till 2026. On the basis of information provided in the Proposal Form, the opposite parties issued the said policy w.e.f. 14.06.2007. On 15.05.2008, the opposite parties sent a premium reminder to the complainant for the premium due on 14.06.2008 but he did not pay the premium. On 14.07.2008, the opposite parties sent a policy lapse notice since no premium was deposited by the complainant. On 03.03.2010, the opposite parties received a letter from the complainant to cancel the policy. On 16.03.2010, the opposite parties declined to cancel the policy and refund the premium amount since the request for the same was made much outside the free look period of 15 days within which the policy can be returned and the premium be refunded. The complainant vide his letter dated 03.03.2010 i.e. after almost 3 years of taking policy, requested the opposite parties to refund the premium amount after enjoying the insurance cover for almost 1 year and the same has been declined by the opposite party as the request for the cancellation of the Policy and refund of initial premium paid was made by the complainant much outside the free look period.

9. The complainant had purchased the Policy on 14.07.2007 and moved an application on 24.02.2010 for cancellation of the policy and to refund the amount deposited by him. The Insurance is a contract which is binding on all the parties between whom this contract has been signed. But, in the present case no terms and conditions were supplied to the complainant. He was informed at the time of issuance of policy that in case he does not want to continue with this policy, the amount deposited would be refunded to him. Under such impression, he got the policy. In the present case, the complainant has paid only one premium and applied for surrender of the Policy after approximately 2-1/2 years. The opposite party Nos. 2 to 4 have taken a plea that the policy in question cannot be cancelled as the complainant had applied for its cancellation after free look period. As discussed above, when no terms and conditions were supplied to the complainant, the complainant is not bound by such terms and conditions. The opposite parties cannot garb the hard earned money of the consumer on such pleas. The complainant is not bound by the terms and conditions which were never supplied to the complainant. In these circumstances, the complainant is entitled as per Insurance Regulatory and Development Authority (Standardization of terms and conditions of ULIP products and treatment of lapsed policies) Regulation, 2010, which is reproduced hereunder :-

   “10....... The proceeds of the lapsed policies shall invariably be refunded to the policyholder after the expiry of the revival period or at any time after completion of 3 years term as and when demanded by the policyholder. In case there is no demand from the policyholder for refund, insurance company shall refund the amount on its own by means of a cheque/demand draft to be delivered to the insured/nominee at his last known address. However, Insurer may deduct charges on account of pre-closure and lapsation which should, in any case, not exceed the charges stated in regulation 8 above.

Regulation No. 8 i.e. Surrender Charges of Insurance Regulatory and Development Authority (Standardization of terms and conditions of ULIP Products and treatment of lapsed policies)Regulations, 2010, is reproduced hereunder :-

“It is observed that insurers apply different surrender charges while paying the surrender value to the Insured. After due consideration of various practices, the Authority orders that the surrender charges (as percentage of fund value ) shall not exceed the limits specified below :-

Year Policy period

Less than 10 years More than 10 years

------------- ----------------------- -----------------------

Ist year 12.50% 15%

2^nd year 10.00% 12.50%

3^rd year 7.50%

10%

4^th year 5.00% 7.50%

5^th year 2.50% 5%

6^th year Nil 2.50%

7^th year & onward Nil Nil

3. In view of what has been discussed above, this complaint is accepted with Rs. 3,000/- as cost and compensation against opposite party Nos.2 to 4, and dismissed qua opposite party No. 1. The opposite party Nos. 2 to 4 are directed to cancel the Insurance policy No. 328173265 of the complainant with effect from the date when he applied for cancellation i.e. 24-02-2010 and refund the amount of premium to the complainant, after deducting 10% amount from the deposited premium as the policy period is more than 10 years and three years period has already elapsed from the issuance of the policy.

   A copy of this order be sent to the parties concerned free of cost and file be consigned for record.

   Pronounced in open Forum

21-04-2011 (Vikramjit Kaur Soni)

President

(Dr.Phulinder Preet)

Member

(Amarjeet Paul)

Member