Punjab

Ludhiana

CC/15/88

Anil Bhardwaj - Complainant(s)

Versus

Kotak Mahindra Old Mutual Life Ins.Co.Ltd - Opp.Party(s)

M.S.Sethi Adv.

29 Mar 2017

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, LUDHIANA.

 

Consumer Complaint No.88 of 10.02.2015

Date of Decision          :   29.03.2017

 

Anil Bhardwaj s/o L.R.Bhardwaj r/o 10-A, Rakha Bagh, The Mall, Ludhiana.

….. Complainant

Versus 

1.Kotak Mahindra Old Mutual Life Insurance Limited, registered office 9^th Floor, Godraj Coliseum, behind Everard Nagar, Sion (East) Mumbai-400022 India through authorized signatory.

2.Kotak Mahindra Old Mutual Life Insurance Limited, 108, 5^th Floor, Surya Tower above Ebony, Mall Road, Ludhiana through authorized signatory.

 

..…Opposite parties

 

 (COMPLAINT U/S 12 OF THE CONSUMER PROTECTION ACT, 1986)

 

QUORUM:

SH.G.K.DHIR, PRESIDENT

SH.PARAM JIT SINGH BEWLI, MEMBER

 

COUNSEL FOR THE PARTIES:

For Complainant                     :         Sh.M.S.Sethi, Advocate      

For Ops                         :         Sh.P.S.Gumber, Advocate

 

PER G.K DHIR, PRESIDENT

 

1.                          Shorn of unnecessary details, the case of the complainant is that he earlier filed consumer complaint before the District Consumer Disputes Redressal Forum, Jalandhar, but the same was returned on the ground of lack of territorial jurisdiction and that is why, this complaint filed. As per allegations levelled in the complaint, market executive Ms.Anju Bala of OP succeeded in alluring the complainant to purchase the insurance cover by disclosing as if not only withdrawal from the policy after three years with benefits without deductions is permissible, but interest on short term policy will also be provided. On this allurement, complainant procured life insurance cover through market executive of OP by signing the proposal form bearing serial No.1038881/01861229 dated 17.1.2010 by paying the first installment of Rs.28,000/-. At the time of getting the insurance cover plan namely K.S.A.P. through proposal form, it was disclosed to the complainant that the policy along with terms and conditions was sent through post, but despite that policy not received by the complainant till date. However, Ops issued letter dated 23.1.2010 for disclosing as if policy No.01861229 issued. Though assurance for sending policy shortly was given through that letter, but despite that policy is not sent. Complainant initially was interested to keep the policy    on regular basis for three years and that is why he deposited next two yearly installments of Rs.28,000/- each on 21.10.2011 and 23.10.2012. When the complainant approached OP2 for surrender of the policy along with accrued benefits, then Ops refused to accept the request of the complainant for withdrawal of the amount after three years. That withdrawal not permitted. Non-payment of the amount along with benefit alleged to be an act of unfair trade practice on the part of Ops. The same also termed as amounting to rendering deficient/negligent services. Concealment of material facts also alleged. It is not denied in the complaint that policy was for 20 years, but at the same time, it is claimed that nowhere it is disclosed as if policy cannot be surrendered before 20 years. Present complaint alleged to be within limitation from the date of payment of Rs.28,000/- on 23.11.2012 as well as because of the fact that refund of the surrender value of the policy has not taken place till date. Prayer therefore, made for directing Ops to pay the surrender value of the policy along with interest @12% per annum against deposited amount of Rs.84,000/-. Rs.50,000/- as costs of litigation, but Rs.11,000/- on account of rendering deficient services even claimed by quoting that surrender value has to be paid by the Ops as per IRDA guidelines.

2.                In reply submitted by Ops, it is claimed that complaint is not maintainable because of Section 24A of the Consumer Protection Act(hereinafter in short referred to as ‘Act’) because of its being barred by limitation. It is claimed that policy was issued in January 2010, but after expiry of more than 4 years, complainant approached this Forum for seeking refund of this premium, due to which, complaint is barred being filed more than four years after the alleged accrual of cause of action. Besides, it is claimed that the complaint is not maintainable because the complainant failed to disclose the name of executive contacted by him. Complaint also alleged to be bad due to non-joinder of necessary parties. No allegation levelled in the complaint for attributing deficiency of service or of negligent service to Ops. No willful fault, imperfection, short-coming or inadequacy in service on the part of Ops is established and as such, there is no deficiency in service on the part of Ops as per section 2(g) of the Act. For obtaining the policy in question, complainant had availed the services of an independent insurance broker, which has an independent entity. Insurance company    do not enjoy any administrative control over the insurance brokers, because they are governed by the provisions of IRDA(Insurance Brokers) Regulations, 2002. Complainant has conveniently omitted to implead his own broker as an OP. Free look period option was given to the complainant to review by returning the policy, in case, the terms of the same were not suitable to him. On exercise of this option of review by returning the policy, the insurance company would have returned the premium to the complainant after making certain deductions. In this case, the complainant after receipt of the subject policy and the documents did not approach Ops and that is why he is bound by the terms and conditions of the policy now. Complainant estopped from raising any issue or grievance with respect to the refund of the premium of the subject policy. The policy documents were dispatched on 25.1.2010 through Overnite courier and same were received by the complainant on 29.1.2010, but despite that option during free look period not exercised and as such, the complainant is estopped by his act and conduct from seeking refund of the premium. Issue under the Unit Linked Insurance Policies can not be the subject matter of the Act as per settled legal proposition. Relief is claimed   by the complainant on the basis of allegations not supported by any documentary evidence. Besides, complaint alleged to be false, vexatious and frivolous. Complainant duly submitted the filled and signed proposal form. Admittedly, the proposal No.1861229 with proposal date 17.1.2010 was received on 21.1.2010 and thereafter, policy alleged to be issued on 23.1.2010. That policy in the name of complainant was having the assured sum of Rs.1,40,000/-. Term of the policy was for 20 years and frequency of the premium was annual. Admittedly, the complainant paid the premium amount of Rs.84,000/- owing to annual premium amount of Rs.28,000/-. After acceptance of the proposal submitted by the complainant, the policy in question was issued. While submitting the proposal form, complainant gave declaration that he has read over and understood the product features, benefits and risk factors etc. On the basis of information and declaration provided by the complainant in the application form, the proposal was accepted by the insurer at standard rates and the policy was issued. Complainant himself has produced the first premium certificate, which was the part of the original policy document. Even after the receipt of the policy document, complainant retained the same and did not approach the insurer with any discrepancies regarding premium payment, benefits, foreclosure or surrender etc. Even the complainant signed the benefit illustration after fully understanding the terms and conditions of the policy. In view of clause 6(2) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations 2002, every policy document on being sent to be accompanied by a forwarding letter for mentioning about the terms of free look period option within 15 days. Complainant even updated his contact details through online process by disclosing email ID and mobile number on 18.1.2013. Receipt of policy documents also reflected by this updating. Admittedly, complainant paid only  three yearly premiums as claimed in the complaint. After payment of premiums for  three full years, if the due premium not paid subsequently within the grace period, then insurance cover (basic sum assured) will continue for a period of two years from the date of first unpaid premium by liquidating such number of units at the prevailing unit price as are necessary to meet mortality and administration charges. However, in this case, premiums subsequent to 23.1.2013 remained unpaid and as such, policy in question being in ACM mode from 23.1.2013 has earned liability of surrender value after deducting charges as per clause 14 under the head of Surrender Charges. Complainant never submitted the surrender request. Complainant is entitled for the surrender value till the time the policy is under ACM mode and the available fund value based on the net asset value of the units available on the date of surrender after deducting surrender charges and the said amount will be paid to the complainant. The surrender amount will vary on the date of the request as the same is based on the net assets value of the units prevailing on the date of surrender. Unit Linked statements were regularly dispatched  to the complainant in this case. Complaint has been filed in the name of executive of insurer as a party and as such, the same is bad due to non joinder of necessary party. Other averment of the complaint denied.

3                 Complainant to prove his case tendered in evidence his affidavit Ex.CA1 along with documents Ex.C1 to Ex.C8 and thereafter, his counsel closed the evidence.

4.                On the other hand, counsel for OPs tendered in evidence affidavit Ex.RA of Ms.Priti Sawant, Assistant Vice President(Legal) along with documents Ex.R1 to Ex.R6 and then closed the evidence.

5.                Written arguments not submitted by any of the parties. Oral arguments alone addressed and those were heard. Records gone through minutely. 

6.                Perusal of Ex.C1 and Ex.C8 reveals that earlier complaint filed by the complainant before Learned District Consumer Disputes Redressal Forum, Jalandhar was ordered to be returned for presentation before the proper Forum having the territorial jurisdiction. Order dated 21.10.2014 passed in complaint No.124 of 2014 bearing title as Anil Bhardwaj vs. M/s Kotak Mohindra and others by the Learned District Consumer Disputes Redressal Forum, Jalandhar is placed on record as Ex.C1. In that order, it has been specifically held in para no.6 that complainant residing at Ludhiana and opposite company has its office at Ludhiana and application for purchase of the policy submitted at Ludhiana and even the policy issued at Ludhiana and as such, Forum at Ludhiana has jurisdiction. So, after return of the complaint by the Learned District Consumer Disputes Redressal Forum, Jalandhar, this complaint presented.

7.                Counsel for Ops has contended that complaint is barred by limitation because initially the complaint was filed on 16.4.2014 at Jalandhar. It is contended that date of commencement of the policy was 23.1.2010 as revealed by contents of policy schedule Ex.C6 and first certificate Ex.C3 and as such, complaint could have been filed by 22.1.2013 at the most. That submission of counsel for Ops has no force because it is admitted by Ops themselves that three premium   installments of Rs.28,000/- continued to be deposited up to 23.10.2012. Rather, after going through the written statement of Ops and affidavit Ex.RA of representative of Ops, it is made out that the policy in question entered into ACM mode w.e.f.23.1.2013, due to non-payment of the premium and as such, liability for surrender value after deducting charges as per clause 14 of the terms and conditions of the policy of the complainant is there. In view of this specific plea taken in the written statement, it is obvious that cause of action accrued to the complainant for getting the surrender value of the policy in question w.e.f.23.1.2013 onwards and if that be the position, then this complaint certainly is not barred by limitation because initially complaint before the Learned District Consumer Disputes Redressal Forum, Jalandhar was submitted in April, 2014.

8.                It is claimed through written statement and even borne from the contents of Ex.C6, the policy schedule that policy in question is a unit linked endowment assurance plan. So, the terms and conditions of the policy to be governed by the contract and even by the regulations called as Insurance Regulatory and Development Authority (Linked Insurance Products) Regulations, 2013(hereinafter in short referred to as ‘IRDA Regulations 2013’). Clause 1(c) of IRDA, Regulations 2013 provides that these regulations shall be applicable to all linked insurance products offered by Life Insurance Companies. As per Regulation 11 of above quoted IRDA, Regulations 2013, all linked insurance products shall have a lock-in period of five years from the date of inception of the policy. As inception of the policy commenced w.e.f.23.1.2010 is a fact borne from the contents of Ex.C6 as well as Ex.C3 and as such, in view of lock-in period of five years, surrender value could not have been claimed until 22.1.2015. Being so, cause of action for getting the benefit of surrender value was to accrue to the complainant w.e.f.22.1.2015 and not before that. So, even if period spent in prosecuting litigation before the Learned District Consumer Disputes Redressal Forum, Jalandhar excluded, despite that this complaint being filed on        10.1.2015 is within limitation, particularly when prayer made for directing Ops to pay the surrender value of the policy along with interest @12% against the admitted deposited amount of Rs.84,000/- through three premium installments. So, certainly, complaint is not barred by limitation at all and submission advanced by counsel for Ops to the contrary has no force.

9.                As the surrender value or the due amount to be paid by the insurance company and as such, Impleadment of Anju Bala, Marketing Executive not required at all. Submission of counsel for Ops in this respect qua complaint being bad due to non joinder of Anju Bala has no force at all.

10.              Certainly as and when the insurance policy issued after acceptance of the proposal form, then Welcome Letter like Ex.C2=Ex.R3 always issued. As the policy schedule Ex.C6 along with policy documents Ex.C4 and Ex.C5 produced by the complainant himself and as such, certainly submission advanced by counsel for Ops has force that the complainant got knowledge of terms and conditions of the policy in question after receipt of these documents.

11.              In Ex.C2=Ex.R3, it is specifically mentioned that in case, the provisions of policy not agreeable to the complainant, then he has the option of returning the policy by stating the reasons thereof within 15 days from the date of receipt of the policy. The cancellation request should be submitted to the nearest Kotak Life Insurance Branch or the same should be sent directly to the head office of Ops as per this (free look period clause) endorsed on Ex.C2=Ex.R3. That option of cancellation of policy not shown to be exercised within this free look period of 15 days and as such, certainly complainant bound by the terms and conditions of the policy. Submission of counsel for Ops in this respect has force.

12.              The terms of policy schedule Ex.C6 along with the terms of first premium certificate Ex.C3 and the terms of policy details Ex.R4, undoubtedly establishes that the policy term was 20 years. So, claim of the complainant not acceptable that he took as if three premiums alone were payable. Rather, mode of premium mentioned as annual in Ex.C3, Ex.C6 and Ex.R4 each and specific stipulation recorded therein as if the premium term is 20 years. So, it cannot be held that actually premium term was three years only and not 20 years. Even if that be the position, despite that IRDA Regulations 2013 to govern the case of the parties for finding as to whether after lapse of the policy, complainant entitled to any benefit or not?

13.              As per Regulation 12 of IRDA Regulations 2013(ibid), the policy holder on discontinuance of the policy during first five years has the option either to get the policy revived within a period of two years or seek complete withdrawal from the policy without any risk cover. Revival of the policy is not sought within two years, but withdrawal thereof virtually sought by filing this complaint and as such, the risk cover benefit not available to the complainant at all.

14.              Regulation 13(a)(i) of IRDA Regulations, 2013 provides that where a policy is discontinued, then insurer shall take  the following steps for enabling the policyholder to exercise the option stipulated in regulation 12(referred above) by sending a notice within a period of 15 days from the date of expiry of grace period for calling upon the policyholder to exercise the option of revival or complete withdrawal of the policy within a period of 15 days from the date of receipt of such notice. Such notice not claimed to be sent by Ops to the complainant  and as such, there is deficiency in service on the part of Ops to this extent.

15.              As after payment of three premiums up to 23.1.2012 of amount of Rs.28,000/- each, subsequent premium not paid and as such, present is a case of discontinuation of the policy before lock-in period of five years referred in regulation 11 of IRDA Regulations 2013. Discontinuance of the policy in this case took place in 4^th year of the policy because three premiums stood paid in time, but fourth premium not paid. Fund value for payment of surrender value has to be determined in such circumstances as on the date of institution of the complaint namely 16.4.2014 before the Learned District Consumer Disputes Redressal Forum, Jalandhar because through that complaint virtually withdrawal from the policy was sought.

16.              As per Regulation 15 of IRDA Regulations 2013, if the policyholder exercises the option of complete withdrawal from the policy as provided by Regulation 12(a)(ii) or he does not exercise the option available in terms of the proviso of sub section (i) of Regulation 13(a), then fund value/policy account value of the policy to be credited to the discontinued policy fund/policy account value. The proceeds of the discontinued policy to be refunded only upon completion of the lock-in period. That lock-in period of five years is over and complainant has sought the complete withdrawal from the policy by filing the initial complaint before the Learned District Consumer Disputes Redressal Forum, Jalandhar and as such, certainly complainant entitled to the fund value/policy account value as per Regulation 13 read with regulation 15 of IRDA Regulations referred above. Even Ops in their written statement have claimed that complainant entitled for the surrender value after deduction of the discontinuance charges and as such, after expiry of period of five years, it was the duty of Ops to credit the due amount after detailed calculations in the account of the complainant, but they  failed to do so and as such, complainant had to suffer a lot of mental harassment and pain. So, complainant entitled to some hefty amount of compensation on account of mental pain and harassment and litigation expenses because fault lay with Ops in not issuing the notice under Regulation 13 of the IRDA Regulations 2013 and crediting the amount after completion of lock-in period. Even if the complainant may have approached for cancellation of the policy after payment of premiums for three years, but it was the duty of Ops to credit the fund value amount as discussed above, but that has not been done and as such, Ops cannot be permitted to attribute their negligence to complainant for complaining of deficiency on the part of complainant. Rather, after lapse of lock-in period of five years, Ops were required to credit the due amount as per Regulation 15 of IRDA Regulations 2013 as discussed above.

17.              In case titled as Life Insurance Corporation of India vs. Shudhi P.P and another-I(2014)CPJ-326(N.C.), jurisdiction was assumed in matter of unit linked policy not only by the District Forum, but even by the Hon’ble State Consumer Disputes Redressal Commission,  and also by the                        Hon’ble National Consumer Disputes Redressal Commission, New Delhi. This reported case was decided on merits after finding that surrender value payable under unit linked policy subject to market variations. That surrender value payable will be fixed value of units held in policyholder account on the date of surrender. So, jurisdiction of this Forum is not at all barred.

18.              Therefore, as a sequel of the above discussion, complaint allowed in terms that OPs will treat the policy as discontinued in the fourth year of the policy and will pay the due amount as per regulations 13 read with 15 of the Insurance Regulatory and Development Authority (Linked Insurance Product) Regulations, 2013. Fund value will be ascertained as on the date of institution of the original complaint namely 16.4.2014 before the Learned District Consumer Disputes Redressal Forum, Jalandhar. Details of the calculations will be sent in writing by the OPs to the complainant within 40 days from the date of receipt of copy of this order and even payment of due amount as referred above will be made within 40 days from the date of receipt of copy of this order.  In case, amount is not paid within 40 days as stipulated above, then complainant will be entitled to interest @9% per annum on the adjudged due amount w.e.f. today onwards till payment. Compensation for mental harassment of Rs.10,000/- (Rupees Ten Thousand only) and litigation expenses of Rs.5,000/- (Rupees Five Thousand only) more allowed in favour of complainant and against OPs. Payment of these compensation and litigation expenses be made by OPs within 40 days from the date of receipt of copy of this order, failing which, complainant will be entitled to interest @8% per annum on these amounts of compensation and litigation expenses after lapse of period of 40 days. Copies of order be supplied to parties free of costs as per rules.

19.                        File be indexed and consigned to record room.

 

                      (Param Jit Singh Bewli)                        (G.K.Dhir)

                                  Member                                        President

Announced in Open Forum

Dated:29.03.2017

Gurpreet Sharma.