Order-17.

Date-03/09/2015.

In this complaint Complainant Dulal Chandra Naskar by filing this complaint has submitted that complainant intended to purchase one time premium payment policy and in this regard op no.3 the authorized agent of the op nos. 1 & 2 approached the complainant for purchasing the said policy as one time premium payment and after consultation with the op no.3, complainant was satisfied that on payment of one time premium, he shall have to get certain benefits and accordingly complainant relied upon the assurance of the op no.3 and issued one cheque for one time premium payment policy to the op no.2 through op no.3 and accordingly op no.3 collected the cheques and also blank proposal form with signature of the complainant.

Subsequently complainant received the entire document regarding the said policy being the policy Nos.02319672 dated 27.06.2011 of Rs.15,034/-, 02319692 dated 27.06.2011 of Rs. 15,029/-, 02319704 dated 15,043/- and 02403289 dated 25.11.2011 of Rs. 1,98,484/- and in total Rs. 2,43,590/-.But on going through the document complainant was surprised to know that all the policies were not against one time premium payment but it is regarding premium deposited for terms of 15 years under payment of huge amount and in fact complainant has such no financial capacity and he was not in a financial position to pay such an amount for years together and for 15 years in respect of 4 policies for which complainant returned back the said policies to the op no.3 with a request to cancel the same and op no.3 accepted the same and assured that it shall be cancelled.

After waiting for some period, complainant found that nothing is being refunded to him when the complainant wrote letter to the ops and there was no reply and thereafter complainant visited the office of the op no.2, but they did not reply but only stated that said policies are for 15 years and within Free Look Periodit should be cancelled.When complainant realized that op no.3 did not deposit the same and did not cancel it.

Subsequently op no.2 in reply of the said letter that there was within Free Look Period15 days for cancelling of one time premium payment and as because the said policy was cancelled by the op and after cancelling and to return back the deposited amount to the complainant.

On receipt of the said reply, complainant issued legal notice through his Ld. Lawyer to the ops but op did not pay any heed.In fact complainant has been deceived by the agent of the op nos. 1 & 2 and complainant has no financial capacity to continue such policies.But on good faith and relying upon the assurance of the op no.3, he purchased the 4 policies against one time premium payment and in the above circumstances, it is the deceitful manner of act and dishonest act on the part of the op nos. 1& 2 because op no.3 is the appointed agent of the op nos. 1 & 2 and for which op nos. 1 & 2 are also liable for such sort of deceitful manner of trade and for such sort of deceitful manner of trade, complainant has been deceived much and in the above circumstances, complainant prayed for redressal and also for compensation etc.

On the other hand op nos.1 & 2by filing written statement submitted that there was no deficiency on the part of the ops on the ground that op nos. 1 & 2 acted on the basis of the proposal form which was signed by the complainant and also receipt of payment by cheque and as because form was filled up and Forum was acted accordingly and issued policy and admittedly complainant admitted that policies were issued and he observed that policies after receipt of the same, but he did not file any application within Free Look Period i.e. on 15 days from the date of receipt of the said policy.

So, as per policy condition, complainant is not entitled to any relief as prayed for and there is no scope to refund the amount in the above circumstances and at the same time the complainant’s prayer for refund of premium is completely against the terms and conditions of the policy and established law in relation to that and already Hon’ble National Commission observed that if the Insured is not satisfied with the policy condition, then he would avail the option of the policy within 15 days and that is within the Free Look Period and this proposal has also been cleared laid down in other judgements of the National Commission.

So, under any circumstances, complainant’s claim cannot be entertained by that Forum and in fact op has no fault on their part and they have not acted in a deceitful manner or have not anyway harassed the complainant.So, question of refunding the amount as deposited premium cannot be entertained.In the result, complainant should be dismissed.

Anyhow in this case op no.2 the agent of the op nos. 1 & 2 are made party but notice was served upon him but he did not turn up to contest within or to continue the allegation as made by the complainant.In the above situation this Forum is entering into the merit of this case for final disposal.

Decision with reasons

On overall evaluation of the complaint and written version and also considering the material evidences on record and the question and answer made by both the parties including the details of the policy documents, it is clear that complainant paid premium total Rs.2,43,590/-as premium against 4 policies – 1) 02319672 dated 27.06.2011 of Rs.15,034/-, 2) 02319692 dated 27.06.2011 of Rs. 15,029/-, 3) 02319704 dated 15,043/- and 4) 02403289 dated 25.11.2011 of Rs. 1,98,484/- and in total Rs. 2,43,590/-.

Most interesting factor is that complainant put vital question to the ops no doubt as per IRDA guideline and particularly the Question No.11 whether before issuing any policy to the customer, ops checked the financial status of the customer or not.Against that the ops’ answer is .I am not the issuing authority..But peculiar factor is that policy was issued by the op nos. 1 & 2 that means ops are very well aware of the fact that as per IRDA guideline it is the duty of the Insurance Companies before accepting any policy to determine the financial status of the intended purchasers.But in this case that was not at all checked by the Insurance Companies.

          Another factor is that it is the mandatory provision and guideline of IRDA that before collecting any application form from any intended customer regarding purchase of policy consent letter shall be handed over to the intended purchasers and in the said letter some particular questions shall be there and details of the payment shall be there that is period of tenure, amount of premium, source of income of the complainant and whether he has his financial capacity to pay for certain period, whether it is one year or for 5 years or for 10 or 20 years tenure etc. and total sum assured.  Such a form shall be signed and written by the applicant and it must be first received by the Insurance Company, thereafter Insurance Company shall have to verify the financial status of the intended purchaser and after that application form shall be supplied to the intended candidate.  But that procedure and provision is not being followed by any Insurance Company or by Kotak Mahindra in the market for some years in Insurance business.

          Fact remains that complainant has specifically alleged that he put such questions to the op that is Question No.18 whether private Insurance Company by engaging agent collect proposal form, cheque etc. through their agents from customers and in this regard op answered .I am not aware of such practice..  If we consider this answer of the op, we are convinced that this private Insurance Company is not in the field, they are in the cold chamber at their office and in fact in India private Insurance Company shall be closed if the cheat agents do not loiter in the field on behalf of the ops.

          From the answers of the op, it is clear that they have no knowledge about the policy or about the customer or about intention of the customer and also they are not aware of their agents who stated to the complainant at the time of collecting the cheque and the collected blank form with only signature of the complainant.  At the same time the allegation as made by the agent of the op that is op no.3, there is no denial on the part of the ops.

          From the answers of the op and also from the evidence of the op, it is clear that op has tried to say that as because ops’ office received a filled up form along with cheque and found that the form was in order, so cheques were accepted and application form was accepted and document was issued.  It simply proves that there is no connection in between the customer and the seller, the present op and this complainant did not get any chance to talk with the ops about their policies and ops also did not enquire whether complainant knowing fully well about application form intended to purchase this present type of policy or not and what their agents supplied information to the complainant at the time of selling the product of ops.

          Another factor is that complainant again and again said that he intended to purchase policy against one time premium payment and op no.3 assured that the policy shall be for certain years but against payment of one time premium, that has not been denied by the ops, not even the allegation as made against the agent by the complainant is challenged by the ops.  Op had his scope to produce his agent and to submit such evidence in support of the Insurance Company denying the allegation of the complainant but that has not been done because it is proved fact in all the cases that such sort of Insurance Companies are running their business through their cheat agents, advisors who are in the field and their administrative staff and officers are in the cold room and they are collecting the same from the agent and issuing the policy when it is found that same is in order.  But IRDA guidelines are not followed by the Insurance Companies and that is the only procedure of the private Insurance Companies anyhow to collect premium, they bother for continuation of the policy by the intended purchasers or customers because they know very well that it would not be possible for the customer to know on receipt of the said policy document actually at what point of time it shall be submitted for cancellation and reason is that they are well aware as soon as the customer shall have to receive the policy document and within 15 or 16 days their agent shall knock at the door of the customer and ask whether they have received the same if it is found that if there is any allegation against that then their agent assured that it shall be cancelled.

          Practically this business is being run by the agent of the private Insurance Companies and in this case in fact complainant has been deceived by the op nos. 1 & 2 in view of the fact that their agents deceived the complainant but complainant has no intention to purchase such a policy by continuing the same for 15 days on yearly full payment of lakhs of rupees that is Rs.2,43,590/-.  We are well aware of the fact that if a person earns Rs. 10 lakhs yearly as his income, he shall also not be able to continue such a policy for 15 years on payment of Rs. 2,43,590/-.  But our experience is that even a person earns Rs. 10,00,000/- per month is also not able to pay Rs. 2,43,590/- per year against 4 policies and in the present case, complainant is a very middle class person having his total income per month within Rs. 25,000/-.  Then if it is found after calculation that his yearly income is Rs. 3,00,000/- and can such a person apply for 4 policies taking such burden of payment of Rs. 2,43,590/- per year and it is absurd theorization.

          Considering the whole aspect and materials we are confirmed that the entire sale is no doubt a mis-sale and the agent of the complainant no doubt mis-sold the same convincing the complainant that complainant shall not have to pay any further premium and relying upon the agent’s information complainant deposited the same, but he is deceived by the ops.

          Question is whether agent’s liability may fix the liability of op nos. 1 & 2.  In this regard as per provision of law, agent’s liability shall be treated as liability of the authority who has appointed him as an agent because the entire business of the Insurance Companies are being maintained through their agents and financial advisors and they are being paid commission and other fees that means agents are sellers in respect of the product of the op and if agent sells any product of the op stating something otherwise giving some false information about fate of the policy etc. in that case the appointing authority that is manufacturer of the product ops are equally responsible and they cannot anyway shift their liability only upon the agent and in the present case ops have not denied the allegation as made by the complainant against agent, then it is clear that it is nothing but mis-sale made on behalf of the op nos. 1 & 2 by the op no.3 and beneficiary is op nos. 1 & 2 not the agent.

          In view of the above findings we are convinced to hold that op nos. 1 & 2 have not denied the status of op no.3 and the relation amongst op nos. 1 & 2.  In fact if the ops deny the status of op no.3, in that case in future all the agents shall have to leave their company.  So, op nos. 1 & 2 are very silent in this regard and not denied the allegation as made by the complainant against op no.3 that means that allegation is against the op nos. 1 & 2 because op no.3 acted on behalf of the op nos. 1 & 2 being authorised. 

          So, about mis-salethe op nos. 1 & 2 are silent that means the entire allegation as made by the complainant is indirectly approved by the op nos. 1 & 2.  So, mis-sale by the op no.3 is well proved that means the present mis-sale was made by the op nos. 1 & 2 directly.

          Truth is that there is clause free look period but probably in Indian perspective the people at large that is consumers are not well aware of the policy conditions etc. and even many professional men having huge fund are not able to realise what are the conditions which are included in the form and fact remains that ops are also not in a mood to contact with the intended purchasers because they are well aware of the fact that it is their business anyhow to collect one premium and thereafter if the said policy is found lapsed or discontinued that is not their headache because they know after free look period if no cancellation application is filed in that case the amount shall be kept in their capital fund and that is their capital.  In Indian market, private Insurance companies are hunting for collecting premium through their agents to issue policy and to increase their capital by such way and for which already in India all the private Insurance companies have failed to continue their business and in this regard this Forum can say without any hesitation that Bajaj Allianz Insurance Company who are in the market with very sound business but they have already discharged more than 10000 employees all over India because their policy which has been sold by the agent are found mis-sale and public at large are deceived by them.  Some other Insurance companies’ conditions are also of such a nature. 

          But fact remains that if honest approach would be there, in that case the Insurance companies shall have to see the face of profit.  Anyhow LICI till today maintained the relationship with the customer well and about mis-sale exceptional one or 2 cases are being filed per year against LICI.  But with allegations of mis-sale thousands of cases are being filed against private insurance companies.  Reasons is that they are giving huge commission to their agent and those cheat agents are collecting premium along with one application, knowing fully well that this policy shall not be continued by the intended purchasers because the said consumer has no financial capacity to pay such a huge amount of premium per year.

          Already nobel laureto John Tirelo has observed by continuing research work all over World that private insurance companies are in the rural market only for collecting premium through their aged agent, but it shall be controlled with heavy hands and that is observation of John Tirelo in his article about control over the banking and insurance company must be very strict otherwise poorer people shall be deceived by them and after overall study of the consumer economy, we have gathered that in India 120 crores of people are all consumers because each and every people of India consume either medicines or food or any other articles daily.  But they are getting unhealthy food and other type of damaged foods from the market and they are being deceived but there is no control for which in rural area people are suffering from mal-nutrition and they are getting such sort of expiry medicines for which their diseases are not being cured and subsequently it is found that they are suffering from different type of diseases and it is a lack of control by the authority against the medical or food sellers.

          In the present case in India due to foreign direct investment (FDI) Govt. of India collects huge taxes for giving licenses to foreign countries establishment,companies’and business men to spread their business in India.  But against that there is no controlling authority for which due to implementation of FDI, foreign companies and countries are squeezing the rural people and also urban people.  Private insurance companies like Kotak Mahindra, Sunlife insurance, Bajaz Life Insurance, DLF insurance and others are in the rural market or urban market for squeezing money by appointing agents but they have their no connection with the consumer and for which consumers are being deceived by them through their agents.  This is the position of Indian people and fact remains that for want of such control private insurance companies are deceiving the intended purchasers through their agents and in the present case similar incident happened.  We are no doubt relied upon the ruling and as per said ruling prayer for cancellation of the policy within free look period is not made and consumer is not entitled to any relief.  But such theorization cannot be a sealed theorization because economy theorization changes with the practice of the business men and capitalist and for such reasons Indian Economic Policy, Insurance Policy and Banking Policy are being changed year to year to save the interest of the customers and IRDA already confirmed by an act to control the activities of the insurance companies as there are 1000 guidelines to save the consumer or customers.  But all the private insurance companies are showing their LTI to the Government of India or public or to the Forum or everyone.  Approach of the Forum is very scientific in view of the fact that Consumer Protection Act 1986 protects the consumers.  Legal technicalities must not be looked into with tearing eyes.  Already Supreme Court has observed in so many cases that social approach shall be there on the part of the Forum at the time of deciding any dispute and each and every case shall be dealt with in its perspective for which the complaint is filed but not on the basis of any particular idea or rules of contract. 

          In this case what we have gathered that prayer for cancellation as made tothe op no.3 is not denied, but op no.3 did not submit it.  Whencomplainant did not get any relief, he went to the office.  But they did not respond, thereafter he wrote a letter and informed that within free look period it was not submitted, may be it was not submitted within free look period but for that reason the amount deposited by the complainant cannot be forfeited by the insurance company on that ground IRDA 2014 issued such guideline that if it is found that after payment of premium, the insurance policy is found lapsed after one year or 2 years or 3 years, in that case the deposited amount shall be returned after deducting 5 percent to 10 percent as service charge.  Why the op did not follow this direction of the IRDA when complainant is not willing to continue it when the policy is already lapsed, that means anyhow or by hook or by crook the insurance policy wants to grab the deposited premium money but that is not the guide line of IRDA.

          In the light of the above observation, we are convinced to hold that no doubt op no.3 mis-sold this product by giving some false information about the future or status of the policy and in fact op nos. 1 & 2 in this regard did not contact with the complainant and did not collect any consent prior to accepting the form but admitted position is that complainant did not file any application before the op nos. 1 & 2.  Op nos. 1 & 2 did not check or verify the financial capacity of the complainant.  Though it is proved that complainant’s monthly income is near about of Rs. 25,000/- per month but his liability is fixed by the insurance company on the basis of 4 policies to the extent of Rs. 25,000/- per month, that means complainant had no financial capacity to continue such policy which also proves that complainant intended to purchase a policy against one time premium payment but not the present product.

          Truth is that in the market such a policy is being sold by the insurance company and practically there is publication, advertisement on the part of the life insurance company, everywhere, people at large think that similar policies are sold by private insurance companies.  So, relied upon such policy complainantbelieved the ops whodeceived the complainant ultimately.

          Considering the above fact and materials of IRDA guidelines the present perspective we are convinced that the condition of free look period cannot be applied in this case because sale was made in a deceitful manner.  No condition for depositing application form for policy was complied by the insurance company not even through their agent and for which deceitful manner of trade on the part of the op nos. 1 & 2, through their agents is proved very well for which complainant is entitled to such decree.

          In the result, the complaint succeeds.

          Hence, it is

ORDERED

          That the complaint be and the same is allowed on contest against op nos. 1 & 2 with cost of Rs. 5,000/- and same is also allowed against op no.3 exparte with cost of Rs. 2,000/-.

          Op nos. 1 &2 are hereby directed to refund the entire deposited amount of Rs. 2,43,590/- after deducting 5 percent as service charge over the said amount and shall have to pay the same along with litigation cost within one month from the date of this order positively, failing which for non-compliance and for disobeyance of Forum’s order till full satisfaction of the decree, in that case op nos. 1 & 2 shall have to pay penal damages  at the rate of Rs. 200/- per day till full satisfaction of this decree and if it is collected it shall be deposited to this Forum.

          Even if it is found that ops are reluctant to comply this Forum’s order, in that case penal prosecution u/s 25/27 of C.P. Act 1986 shall be started against them for which further penalty and fine shall be imposed upon them.