Chandigarh

DF-II

CC/374/2014

Sadhu Ram Sharma - Complainant(s)

Versus

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

Ms.Ashu Chojar,Adv

29 Jun 2015

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

======

Consumer Complaint  No	:	374 of 2014
Date  of  Institution	:	23.07.2014
Date   of   Decision	:	29.06.2015

 

 

 

 

 

Sadhu Ram Sharma, H.No.233, Sector 21-A, F.F., Chandigarh.

 

             …..Complainant

Versus

 

1]  Kotak Mahindra Old Mutual Life Insurance Ltd., 8^th Floor, Godrej Colucium Behind Everand Nagar, Sion (East) Mumbai 400022, through Chief Operating Officer.

 

2]  Kotak Mahindra Old Life Insurance, SCO No.141-142, IInd Floor, Sector 19-C, Chandigarh 160009, through Insurance Broker.

 

….. Opposite Parties

 

BEFORE:  SH.RAJAN DEWAN                 PRESIDENT

         SH.JASWINDER SINGH SIDHU       MEMBER

         MRS.PRITI MALHOTRA             MEMBER

 

 

For complainant(s)      :     Ms.Ashu Chojar, Counsel for complainant

 

For Opposite Party(s)   :     Sh.Gaurav Bhardwaj, Counsel for the       Opposite Party-1.

                             

                              Opposite Party-2 exparte.  

 

 

PER PRITI MALHOTRA, MEMBER

 

 

          As per the case of the complainant, he purchased “Kotak Guaranteed Pension Builder” Plan floated by the Opposite Parties and accordingly issued Policy No.01894308, dated 22.2.2010 having term period of 10 years. It is averred that the complainant paid a total sum of Rs.40,000/- i.e. Rs.20,000/- each in Feb., 2010 & Feb., 2011. It is also averred that due to unavoidable circumstances, the complainant could not make further payments of the premium and after completion of four years, he requested the Opposite Parties to refund his deposited amount after deducting reasonable penalty. However, the OPs sent a cheque of Rs.8282.10 only against the deposit of Rs.40,000/-, which is too meager and as such, as averred, the said cheque was returned. Hence, alleging the said act of the Opposite Parties as deficiency in service and unfair trade practice, the present complaint has been filed.

 

2]       The Opposite party No.1 has filed the reply and admitted the issuance of the policy in question and receipt of two premiums amounting Rs.40,000/- against it. It is stated that complainant has not made the Insurer Broker as the party from whom the policy was taken, who is governed by the provisions of IRDA (Insurance Brokers) Regulations, 2002.  It is also stated that the complainant even after receiving the policy on 23.2.2010 did not avail the benefit of free look period of 15 days.  It is pleaded that the complainant never approached the answering Opposite Party with a request to cancel the policy within the free look period as given under the policy. It is submitted that the Opposite Party also sent renewal premium notices dated 21.1.2012 & 24.1.2012 to the complainant as well as the lapsation notice on 19.6.2012 and Major revival form dated 10.5.2013 (Exhibit R-3 to R-6). Apart from it, the foreclosure intimation letter dated 20.12.2013 was also sent to the complainant (Ex.R-7), but the complainant did not make the payment of subsequent due premiums. It is also pleaded that since the complainant failed to pay the renewal premiums on the due date, therefore, the policy was lapsed and as per Clause No.4 of the Policy terms & conditions, the policy in question was terminated and as such, a cheque of Rs.8282.10 was sent to the complainant by 22.2.2014. Pleading no deficiency in service and denying all other allegations, it is prayed that the complaint be dismissed.

         Opposite Party No.2 did not turn up despite service, hence it was proceeded against exparte on 21.10.2014.

 

3]       Parties led evidence in support of their contentions.

 

4]       We have heard the ld.Counsel for the complainant, ld.Counsel for Opposite Party No.1 and have also perused the record.

        

5]       From the record available on file and the admission of the Opposite Party No.1, it is proved that the complainant Sh.Sadhu Ram Sharma opted for ‘Kotak Guaranteed Pension Builder Plan’ floated by the Opposite Parties.  Further, the OPs issued Policy No.01894308, dated 22.2.2010, to the complainant and the term of the policy was for 10 years, which is not denied. The Opposite Party No.1 in its written statement in Para No.1 under the heading “facts of the case” has admitted that the complainant paid, in total, Rs.40,000/- as premium in two installment i.e. Rs.20,000/- each. It is also not in issue that the complainant after paying 2^nd installment amounting to Rs.20,000/- did not pay any further installments for the reasons of financial constraints. 

 

6]       The complainant filed the present complaint claiming that when demanded the refund of his money from OPs, after deducting reasonable penalty, the OPs sent a cheque of Rs.8282.10, which is too meager against an amount of Rs.40,000/- paid.  Alleging deficiency in service and unfair trade practice on the part of the Opposite Parties, the complainant has sought the relief as quoted in the complaint.

 

7]       The Opposite Parties in their defence pleaded that the complainant has failed to make the Insurer Broker as the party from whom the policy was taken, who is governed by the provisions of IRDA (Insurance Brokers) Regulations, 2002.  Further, claimed that the complainant despite receiving the policy on 23.2.2010 failed to avail the benefit of free look period of 15 days.  Claimed that the complainant never approached with the request to cancel the policy within the free look period given under the policy.  Further, the complainant failed to pay the renewal premium on the due date and resultantly, the policy lapsed and thereafter, as per Clause No.4 of the Policy terms & conditions, it got terminated and accordingly a cheque amounting to Rs.8282.10 was dispatched through speed post on 22.2.2014.  Clarified that before terminating the policy, they sent renewal premium notices dated 21.1.2012 & 24.1.2012, followed by lapsation notice on 19.6.2012 and thereafter, Major revival form dated 10.5.2013 (Ex.R-3 to R-6). It is added that the foreclosure intimation letter dated 20.12.2013 was also sent to the complainant (Ex.R-7).  Alleging no deficiency in service on their part, the OPs have prayed for dismissal of the complaint.

 

8]       Not repeating the admitted facts, we straightway come to the issue, which forced the complainant to file the present complaint.  It is clear that the complainant, who deposited Rs.40,000/- in the form of Rs.20,000/- each i.e. two premiums against the policy in question and after a period of approximately 4 years, he was offered Rs.8282.10 vide cheque, which he never encashed and felt suitable enough to file the present complaint. 

 

9]       The perusal of the record reveals that the OPs calculated the surrender value of the policy, which got lapsed and foreclosed thereafter, as per the terms & conditions of the policy in question. It shows that they deducted 70% of the surrender charges from the account. As per settled principle of law every insurance policy during its continuation is governed by the IRDA Regulations, which come into effect from time to time.  In the present case, the policy in question was issued on Feb., 2010 and at the same time was in lapsed made after non-payment of the 3^rd installment in the year 2012.  In the meanwhile, the IRDA Regulations namely Treatment of Discontinued Unit Linked Policies Regulations of July, 2010 came into force, thus modifying the terms & conditions of the policy to that effect.  The relevant clauses applicable to the present case are reproduced herein below:-

“Obligations of an insurer upon discontinuance of a policy

7.         The obligations of the insurer in this regard shall be as follows:-

i.          To impose discontinuance charges only to recoup expenses incurred towards procurement, administration of the policy and  incidental thereto.

ii.         To design the discontinuance charges to encourage the policyholder to continue with the contract for the full term;

iii.       To ensure that the discontinuance charges reflect the actual expenses incurred.

iv.        To structure the discontinuance charges within the statutory ceilings on commissions and expenses and

5. To ensure that the charges levied on the date of discontinuance (as a percentage of one annualized premium) do not exceed the limits specified below:-

 

Where the policy is discontinued during the policy year.	Maximum Discontinuance charges for the policies having annualized premium up to Rs.25000/-	Maximum discontinuance charges for the policies having annualized premium above Rs.25000/-
1	Lower of 20% (AP or FV) subject to a maximum of Rs.3000.	Lower of 6% (AP or FV) subject to maximum of Rs.6000/-
2	Lower of 15% (AP or FV) subject to a maximum of Rs.2000.	Lower of 4% of (AP or FV) subject to maximum of Rs.5000/-
3	Lower of 10% (AP or FV) subject to a maximum of Rs.1500.	Lower of 3% (AP or FV) subject to maximum of Rs.4000/-
4	Lower of 5% (AP or FV) subject to a maximum of Rs.1000.	Lower of 2% (AP or FV) subject to maximum of Rs.2000.
5 and onwards	NIL	NIL

 

 

 AP - Annualised premium

FV- fund value on the date of discontinuance

Provided that where a policy is discontinued, only discontinuance charge may be levied by the insurer, and no other charges by whatsoever name called shall be levied.

Provided that no discontinuance charges shall be imposed on single premium policies and on top ups.”

            8.         xxxxxxxxxxxxxx

9.         Every insurer shall send a statement of account, on a half yearly basis, within fifteen days, in respect of every policy in force including discontinued policies where the proceeds are yet to be paid to the policyholder or her nominee as the case may be, his last known address, which shall contain the following details :-

(i) The total premium paid by the policyholder

(ii) Next due date of the premium

(iii) Pattern of the investment chosen

(iv) Pattern of investment

(v) Status of the policy

(vi) Total fund value

(vii) Total units

(viii) Detail of charges recovered.

 

10]      The above mentioned Clause No.7 of the Treatment of Discontinued Unit Linked Policies Regulations, 2010, is clearly applicable to the present complaint of the complainant.  However, the OPs preferred to ignore this regulation and deducted 70% of the NAV, while calculating the surrender value, whereas the same was the subject matter of Clause No.7 of the abovementioned regulations.  Such deduction is clear cut violation of the guidelines issued by the IRDA dated July, 2010, which specifically prescribes the mode of deductions in case of discontinued policies. 

 

11]      The contents of Regulation-9 clearly indicate that these regulations are attracted even to the policies, which are in existence on 1^st July, 2010 and also to the policies, which are in the discontinued mode and the proceeds of such policies had not been paid to the insured.  Meaning thereby, that the case of the complainant is squarely covered under Regulation 7 & 9 of the IRDA Regulations, 2010, quoted above. 

 

12]      There is no justification by the OPs by not adhering to the Regulation No.9 of the above mentioned IRDA July, 2010 regulations by not sending the statement of account on half-yearly basis within 15 days in respect of every policy in force including discontinued policies where the proceeds are yet to be paid to the policy holder, as was the case of the complainant.

 

13]     In the light of the regulation, the Opposite Parties were not entitled to deduct any amount in excess to the one mentioned in Regulation No.7 according to which the OPs were only entitled to an amount of Rs.4000/- and the deduction made by the OPs on the higher side then prescribed, was against the provisions of the said regulations. This act of the OPs amounts to deficiency in service on the part of the complainant. 

 

14]      From the above observations, we are of the concerted view that the Opposite Parties are found deficient in rendering proper service to the complainant. Hence, the present complaint of the Complainant is allowed qua OPs jointly & severally. The Opposite Parties are directed jointly & severally as under;_

1. To refund Rs.36,000/- i.e. Rs.40,000/- minus Rs.4000/-, calculated as per Regulation 7 of IRDA, referred to above;

 

2. To pay an amount of compensation to the tune of Rs.15,000/- along with litigation expenses amounting to Rs.5000/-.

 

         The above said order shall be complied within 45 days of its receipt by the Opposite Parties; thereafter, they shall be liable for an interest @18% per annum on the awarded amount of Rs.36,000/- and Rs.15,000/- from the date of this order till it is paid, besides paying litigation expenses of Rs.5000/-. 

 

         The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

29^th June, 2015                                                   

                                                                                                Sd/-

 (RAJAN DEWAN)

PRESIDENT

 

 

Sd/-

 (JASWINDER SINGH SIDHU)

MEMBER

                                                                                                                     

 

                                                                                Sd/-

(PRITI MALHOTRA)

                                                                        MEMBER

 

 

DISTRICT FORUM – II

CONSUMER COMPLAINT NO.374 OF 2014

PRESENT:   None   Dated the 29th day of June, 2015

O R D E R                        Vide our detailed order of even date, recorded separately, the complaint has been allowed against Opposite Parties.                    After compliance, file be consigned to record room.

 

(Jaswinder Singh Sidhu)	(Rajan Dewan)	(Priti Malhotra)
Member	President	Member