Chandigarh

DF-II

CC/176/2014

Gurdev Singh - Complainant(s)

Versus

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

10 Apr 2015

ORDER

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

======

Consumer Complaint  No	:	176 of 2014
Date  of  Institution	:	09.04.2013
Date   of   Decision	:	10.04.2015

 

 

 

 

 

Gurdev Singh son of Sh.Niranjan Singh, R/o H.No.3204, Sector 37-D, Chandigarh.

 

                 ...  Complainant.

Versus

1]  Kotak Mahindra Old Mutual Life Insurance Ltd., SCO No.141-142, Second Floor, Sector 9-C, Chandigarh through its Branch Manager/Authorised Signatory.

 

2]  Kotak Mahendra Old Mutual Life Insurance Ltd., Regd. Office 9^th Floor, Godrej Colliseum, Behind Evered Nagar, SION (East) Mumbai PIN 400022 through its Managing Director/CEO

 

…. Opposite Parties.

 

BEFORE:  SH.RAJAN DEWAN                 PRESIDENT

         SH.JASWINDER SINGH SIDHU       MEMBER

                                MRS.PRITI MALHOTRA             MEMBER

        

 

Argued By:  Sh.H.S.Parwana, Counsel for complainant.

Sh.Mrigank Sharma, Counsel for OPs.

 

 

PER JASWINDER SINGH SIDHU , MEMBER

 

 

          As per the case, the complainant, a Senior Citizen of 80 years of age, being allured by the assurance of the representative of the OPs that it has a saving and protection policy, agreed to make investment with 12.5% return with nomination of his son Sh.Avtar Singh and accordingly paid Rs.25,000/- through cheque.  It is averred that some blank forms and documents were got signed by the complainant, which were filled-in by the representative of the OPs themselves.  Thereafter, the complainant received a policy under Unit Linked Assurance Plan showing the name of his son Sh.Avtar Singh as insured person (Ann.C-2).  The complainant paid 2^nd & 3^rd half yearly installments (Ann.C-3 & C-4).  At the end of year 2011 at the time of 4^th half-yearly premium payment, the complainant expressed his inability to the OPs to continue the policy owning to illness of his wife and as such requested for refund of the amount of Rs.75,000/- deposited with them after deducting discontinuance charges.  Finally after two years a refund of Rs.4242.73 was sent by the complainant through cheque (Ann.C-6) against the deposited amount of Rs.75000/- and the reason mentioned was ‘Laps Auto Termination Policy’. However, the complainant did not present the said cheque of Rs.4242.73.  Hence, this complaint has been filed alleging the above act of the Opposite Parties as gross deficiency in service.

 

2]       The OPs have filed joint reply stating therein that the complainant had proposed for the insurance policy by duly filling and executing a proposal form dated 20.6.2010 and submitted all necessary information (Ann.R-1) and as such, the policy No.02031552 was issued and sent to the complainant (Ann.R-4).  The complainant was also provided free look period of 15 days to seek cancellation of the insurance policy in case of any dissatisfaction, but no such request was made.  The complainant had only paid first three half-yearly premiums for the subject policy and thereafter chose not to pay the renewal premiums, hence the policy entered into lapse mode. The complainant also did not get the policy revived within 2 years from the date of first unpaid premium and after that the policy got foreclosed/terminated and as such an amount of Rs.4242.73 as foreclosure amount was issued in favour of the complainant.  The calculation of the said foreclosure amount has been mentioned in Para No.13 (Page No.12) of the reply of the OPs.  Rest of the allegations have been denied with a prayer to dismiss the complaint.

 

3]       Parties led evidence in support of their contentions.

 

4]       We have heard the ld.Counsel for the parties and have also perused the record.

 

5]       The complainant has preferred the present complaint on the ground that on being approached by the agents of Opposite Parties, who coaxed him into buying insurance policy of the Opposite Parties by presenting a rosy picture about the features of the policy, which he ultimately subscribed for.  The complainant preferred ‘Kotak Super Advantage Plan’ with a bi-annual premium payment plan of Rs.25,000/- each amounting to Rs.50,000/- per annum by paying its first installment through a cheque dated 20.6.2010.  The complainant was promised by the agents that he would be able to gain 12.5% interest on his investments and he would be free to surrender the policy after 3 years. 

 

6]       The complainant paid three six-monthly installments of premiums i.e. 20.6.2010, 26.12.2010 and 25.6.2011 of Rs.25,000/- each, however, citing his personal difficulties about his wife’s suffering with dementia, preferred to opt for surrendering the policy and requested the refund of the amount due towards him. A copy of the said communication is found annexed as Annexure C-5, dated 18.4.2012 duly received by the office of the Opposite Parties on even date.  The complainant is aggrieved of the delayed action on the part of the Opposite Parties in acting on his request dated 18.4.2012 for the reason that the complainant has pleaded that OPs were duty bound to act on his communication as per Treatment of Discontinued Unit Linked Policies IRDA Regulation, 2010, as found mentioned in para 7 of this complaint, claiming that the Opposite Parties were only liable to deduct Rs.5000/- as discontinuation charges, but is aggrieved of the huge deductions made by the OPs and offer of a meager amount of Rs.4242.73, which was sent to his address through a cheque dated 02.01.2014 along with covering letter of even date disclosing that the complainant’s policy has been auto-foreclosed on account of non-payment of premium, after the lapse of revival period.  The complainant has preferred the present complaint seeking the quoted relief.

 

7]       The Opposite Parties have contested the claim of the complainant claiming that the complainant’s request for surrender of policy could not be honoured as he was not entitled for any amount till the lock-in period of 3 years and he himself having discontinued paying the premiums was only entitled to the amount that has been calculated on the basis of the fund value payable to him and also after necessary deductions on account of surrender charges at the rate of 70% as per Clause 4 of the policy document.  The Opposite Parties have also claimed that the complainant was not entitled to receive any amount from the first year’s premium as mentioned on Page-3 of Policy Terms & Conditions under the Heading Fixed Advantage Benefit and Dynamic Advantage Benefit.  The Opposite Parties have also held their actions right under Clause-3 & Clause-14 of the Policy Terms & Conditions dealing with Allocation of Available Monies & Premium Allocation Charges.  The Opposite Parties have disclosed the manner of calculation of the amount payable to the complainant in the Table as mentioned in Para No.13 of the Reply. 

 

8]       The Opposite Parties while answering to the allegations of the complainant about not dealing the case of the complainant as per Treatment of Discontinued Unit Linked Policies Regulations, 2010, have claimed that the case of the complainant is not covered under the said regulations as he had subscribed for the policy on 12.5.2008.  However, the said regulations have come into effect on the date of its notification i.e. 1.7.2010 and only the policies issued after this date, would attract the provisions of the said regulations.  Thus, claiming no deficiency in service on their part, the OPs have prayed for dismissal of the complaint. 

 

9]       The complainant, who has specifically pleaded that his case falls under the ambit of Treatment of Discontinued Unit Linked Policies Regulations, 2010 and as per the provisions of these regulations, the Opposite Parties are not entitled to deduct discontinuation charges more than the specified amount of Rs.5000/- and the Opposite Parties having deducted a huge amount of Rs.15,000/- approx. are claimed to have ignored the provisions of the said regulations.  It is pertinent to mention here that the Opposite Parties have categorically stated in Para No.17 – Page No.14 of their reply that the complainant’s claim of his policy being covered under the said regulations, is not maintainable as the provisions of aforementioned regulations for the reasons that the policies issued after 1^st July, 2010 alone would be treated under the said provisions.  However, we are not impressed by the justification so put forward by the Opposite Parties for the reason that the clause 7, 8 & 9 of the said regulations, which reads as follows:-

“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 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 9 of the IRDA Regulations, 2010, quoted above. 

 

11]      In the light of these regulations, 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.5000/- and a deduction of rupees more than Rs.15,000/-, was against the provisions of the said regulations.  This act of the OPs amounts to deficiency in service on the part of the complainant. 

 

12]      It is necessary to point out the fact that the complainant, who had expressed his desire to surrender the policy and seek his refund in the year 2012 by giving a representation dated 18.4.2012 Ann.C-5, duly received by the office of the Opposite Party No.1 under a due acknowledgement, as evident from its office Stamp as well as signature of its official found appended on the receipt of even date.  Surprisingly, the Opposite Parties while filing their reply in Para No.5 – Page 17, have denied the contents of the pleadings of the complainant and even while ignoring the annexure C-5, the receipt, have claimed that the complainant has not approached the office of the answering Opposite Parties on 18.4.2012. Though the Opposite Parties have also filed its affidavit in support of their version/reply, but preferred not to file any evidence to falsify the document Ann.C-5, therefore,  the claim of the complainant of having submitted his request for surrender of the policy on 18.4.2012, is upheld and the Opposite Parties are found deficient in not reply to his such communication, within specified time period of 10 days, as envisaged in Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002, dated 16.10.2002:-

10. Policyholders’ Servicing

(1) An insurer carrying on life or general business, as the case may be, shall at all times, respond within 10 days of the receipt of any communication from its policyholders in all matters, such as:

(a) recording change of address;

(b) noting a new nomination or change of nomination under a policy;

(c) noting an assignment on the policy;

(d) providing information on the current status of a policy indicating matters, such as, accrued bonus, surrender value and entitlement to a loan;

(e) processing papers and disbursal of a loan on security of policy;

(f) issuance of duplicate policy;

(g) issuance of an endorsement under the policy; noting a change of interest or sum assured or perils insured, financial interest of a bank and other interests; and

(h) guidance on the procedure for registering a claim and early settlement thereof.”               

 

Therefore, the act of the Opposite Parties in not answering at all to the communication dated 18.4.2012 of the complainant, which was duly received in the office of Opposite Party No.1, certainly amounts to deficiency in service on its part and also the blatant denial of receipt of this communication and stating the same on oath, without any valuable evidence, is an act to mislead this Forum away from the merits of this case, as well as an unfair trade practice on their part.

 

13]      The Opposite Parties while issuing the cheque dated 02.01.2014 along with letter of even date, preferred not to disclose the fund value that the investment of the complainant had acquired at the time when the policy in question stood discontinued after the non-payment of 4^th half-yearly premium on 25.12.2011. Though the Opposite Parties have disclosed that the complainant’s investment in the policy in question had acquired a value of Rs.19874.09, but neither a particular date has been disclosed nor any statement of account is placed on record by the Opposite Parties from where the pleadings of Opposite Parties could be believed for the reason that a huge investment of Rs.75,000/- could not just diminish to such a small amount and it is incumbent upon the Opposite Parties to prove their version with a cogent, reliable and trustworthy evidence from their records.  The Opposite Parties have also failed to adhere to Regulation-9 of the aforementioned IRDA July, 2010 regulations by not sending a statement of account, on half-yearly basis, within 15 days, in respect of every policy enforce including discontinued policies where the proceeds are yet to be paid to the policy holder, as was the case of the complainant.  Therefore, the Opposite Parties have also breached the aforementioned Regulation 9 of the IRDA July, 2010 Regulations, which amounts to deficiency in service on their part. 

 

14]     In the light of 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;_

i)  Treat the case of the complainant as per aforementioned Regulations 7 & 9 of IRDA with regard to declaration of fund value on the date when the policy had become discontinued i.e. 25.12.2011 and refund the said amount, after deductions, as per aforementioned Regulation 7, along with an interest @8%p.a. on the said amount from 25.12.2011 till it is paid;

ii) To pay an amount of compensation to the tune of Rs.20,000/- along with litigation expenses amounting to Rs.7000/-.

         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 amount of compensation of Rs.20,000/- from the date of this order till it is paid, besides paying litigation expenses of Rs.7000/-. 

 

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

Announced

10^th April, 2014

                                                                             Sd/-

 (RAJAN DEWAN)

PRESIDENT

 

 

Sd/-

 

 (JASWINDER SINGH SIDHU)

MEMBER

                                                                                                                    

 

 

                        Sd/-

(PRITI MALHOTRA)

                                                                        MEMBER 

DISTRICT FORUM – II

CONSUMER COMPLAINT NO.176 OF 2014

PRESENT:   None   Dated the 10th day of April, 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