BEFORE THE TELANGANA STATE CONSUMER DISPUTES REDRESSAL COMMISSION : HYDERABAD

FA NO.256 OF 2014 AGAINST CC NO.274 OF 2012

ON THE FILE OF DISTRICT FORUM-III, HYDERABAD

Between:

1)       HDFC Standard Life Insurance Co., Ltd.,

          Represented by its manager,

          5-4-94 to 97, Lala-1 Land Mark,

          M.G. Road, Rani Gunj, Secunderabad- 500 017.

2)       HDFC Standard Life Insurance Co., Ltd.,

          Represented by its Managing Director,

          19^th floor, Lodha Ecel Us, Apollo Mills

          Compound, NM Josshi Mahalaxmi,

          Mumbai – 400 011.

…Appellants/Opposite parties

And

K.Hemanth Kumar S/o K.V.Chalapathi Rao,

Aged 30 years, Occ: private service,

R/o H.No.10-148/31/2, Plot No.4,

Sainagar, Balanagar, Hyderabad.

…Respondent/Complainant

Counsel for the Appellants      :         M/s S.Gopal Singh & Associates

Counsel for the Respondents   :         Sri G.L.Prasada Rao

Coram                  :

Hon’ble Sri Justice B.N.Rao Nalla   …      President

and

Sri Patil Vithal Rao … Member

Tuesday, the Twenty First day of March

Two thousand Seventeen

Oral Order : (per Hon’ble Sri Justice B.N.Rao Nalla, Hon’ble President)

***

          This is an appeal filed by the Opposite parties aggrieved by the orders of District Consumer Forum-III, Hyderabad dated 04.12.2013 made in CC No.274 of 2012 in allowing the complaint and directing the Opposite parties jointly and severally to pay a sum of Rs.1,15,500/- to the complainant; Rs.10,000/- towards compensation for mental agony and physical harassment caused to the complainant and Rs.2,000/- towards costs and the same shall be complied within 30 days from the date of receipt of order, failing which, it shall carry interest @ 12% p.a. from the date of filing the complaint i.e., 08.05.2012 till its realization.

2)       For the sake of convenience, the parties are referred to as arrayed in the complaint.

3)       The case of the complainant, in brief, is that the complainant has taken three policies from the Opposite parties covering the period for 20 years, the details of which are as below:

4)       The Ops failed to send the intimation letters regarding payment of premia, as such, the complainant could not pay the subsequent premium.  When enquired as to non-receipt of premium intimation letters and expressed to pay the premium, the Ops refused to accept the premiums, upon which, the complainant asked to refund the amount paid by him together with interest.  To his surprise, the Ops informed that all the amounts paid by the complainant are adjusted towards charges and nothing remains to pay and this action on the part of the Ops amounts to deficiency in service.  Hence the complaint with a prayer to direct the Ops to refund the amount of Rs.1,56,000/- along with interest @ 24% p.a. from the date of payment till realization; to pay an amount of Rs.10,000/- towards compensation; to pay Rs.10,000/- towards mental agony; to pay Rs.10,000/- towards costs of the complaint.

5)       The complainants approached Lok Adalat vide PLC No.915 of 2013 before the District Legal Services Authority, Karimnagar wherein the complainants were directed to approach proper court for seeking redressal.  The OP neither replied to the complainants nor submitted a plausible explanation in the court of law.  This act of on the part of the Ops amounts to deficiency in service and negligence.  Hence the complaint with a prayer to direct the Ops to pay the assured sum of Rs.5,00,000/- covered by the policy together with interest @ 18% p.a. from the date of death of policy holder; to pay Rs.50,000/- towards compensation and costs of Rs.5,000/-.

6)       Opposite parties filed their written version contending that the complaint is not maintainable in law or on facts and they have committed no deficiency in service.  They admitted the taking of three policies by the complainant on 17.03.2008, 25.06.2008 and 14.06.2008 and the mode of payment of premium was readily available on the proposal form signed and also on the policy document.  Considering the unique features and after careful reading of the terms and conditions of the policy, the complainant took the three policies.  The complainant was having statutory period of 15 days to raise objections as contemplated under Section 6(2) of IRDA (Policy Holders Interest) Regulations, 2002.  The complainant never complained or objected against the terms and conditions of the policy neither within the “free look” period.

7)       The complainant is a sales development manager of the Ops and had self-sourced the policies in his name and he was well aware of the terms and conditions of the policy and also payment of premiums, as such, the present complaint is only an after-thought.  As the complainant failed to pay the subsequent premium, the policies have reached the status of “lapse terminated”.  As per the provisions “schedule of charges” in the policy document, the premium paid for the one or two terms as applicable has been adjusted/appropriated towards the charges as per the agreed terms and conditions of the policies and no amount is lying to be refunded in all the three policies.  Hence, prayed to dismiss the complaint with heavy costs.

8)       During the course of enquiry before the District Forum, in order to prove their case, the Complainant got filed his evidence affidavit and Exs.A1 to A6; on behalf of the Opposite parties they got filed the evidence affidavit and Ex.B1 to B3.

9)       The District Forum after considering the material available on record, allowed the complaint bearing CC No.274/2012 by orders dated 04.12.2013, as stated, supra, at paragraph no.1.  

10)     Aggrieved by the above orders, the Appellants/Opposite parties preferred this appeal contending that the forum below (a) passed orders contrary to law and material available on record; (b) ought to have seen that insurance contract is basically a contract made in good faith and as per policy, suppression of any fact will disqualify the respondent from making any claim; (c) ought to have seen that the Respondent being Sales Development Manager with the appellant, had self sourced all the policies on his own name and therefore, the respondent is well aware of policy terms and conditions; (d) ought to have seen that the policies does not fall under the ambit of IRDA Regulation, 2010 as the policies were sourced in 2008; (e) erred in awarding compensation for physical and mental agony which is unjustifiable.  Hence, prayed to allow the appeal by setting aside the orders of the forum below.

11)     The point that arises for consideration is whether the impugned orders as passed by the District Forum suffer from any error or irregularity or whether they are liable to be set aside, modified or interfered with, in any manner?  To what relief ?

12)     It is not in dispute that the Respondent obtained three policies from the Appellant insurance company and paid the premium for the first time and thereafter, he discontinued the same.  The reason assigned for discontinuance is that the appellant failed to send the intimation letters.  As against the said claim, the Appellant would contend that the Respondent as a Sales Development Manager obtained the policies and hence, question of policy intimation does not arise.  However, they sent the intimations from time to time. 

13)     Be that as it may, the forum below passed orders holding deficiency of service on the part of the Appellant insurance company in not refunding the amount as sought by the Respondent.  We find no wrong in the view taken by the forum below when there is a specific request from the Respondent to refund the amount.  However, it is to be stated that the refund in such a case is governed by Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010.  Section 7 of the said Regulations deals with obligations of an insurer upon discontinuation of a policy.  As per the said regulation, for the discontinued policies of one year, the maximum discontinuance charges for policies having annualized premium upto and including Rs.25,000/- is mentioned as lower of 20%, subject to a maximum of Rs.3,000/- and for the policies having annualized premium above Rs.25,000/-, it is mentioned as lower of 6%, subject to a maximum of Rs.6,000/-.

14)     Admittedly, the Respondent paid the premium of Rs.1,00,000/- towards policy No.11704085; Rs.20,000/- towards policy No.12031479 and Rs.1500/- towards policy No.11917990, altogether Rs.1,21,500/-.  On making applicability of the above provision, the refund on policy No.11704085 comes to Rs.94,000/-; policy No.12031479 comes to Rs.16,000/- and policy No.11917990 comes to Rs.1,200/-, whereby the appellant is entitled to deduct an amount of Rs.10,300/- altogether on the above three policies.  The act of the Appellants in not making refund of the above amount even after written request amounts to deficiency of service and negligence on their part, which cannot be denied.  The Respondent is equally responsible for his own wrongs.

15)     Having failed to make payment of the above amount in terms of the Regulation referred to supra, the Appellants cannot turn round and contend that there is no deficiency of service on its part.  As explained above, the Appellants are liable to refund the amount of Rs.1,11,200/- to the Respondent. As against the same, the forum below awarded an amount of Rs.1,15,500/- which is illegal and requires interference.  In so far as granting of compensation is concerned, the same is against the material placed on record and hence set aside.  In so far as granting interest @ 12% is concerned, it too requires interference and accordingly reduced to 9% per annum.  For the aforesaid reasons, we feel it just and proper to modify the orders of the forum below and accordingly answer the point framed for consideration at paragraph No.11, supra.

16)     In the result, we allow the appeal in part and modify the orders dated 04.12.2013 of the forum below made in CC No.274/2012 and direct the Appellant/Opposite party to pay a sum of Rs.1,11,200/- towards the three policies in question, together with interest @ 9% p.a. from the date of complaint i.e., 08.05.2012 till payment together with costs of Rs.2,000/-.  Time for compliance : four weeks.

PRESIDENT                       MEMBER

Dated 21.03.2017