DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II

U.T. CHANDIGARH

Anu Goel daughter of Shri Satish Kumar Goel, resident of H.No.756, Sector 9, Panchkula, District Panchkula.

                                      ---Complainant.

Versus

1.                 Kotak Mahindra Old Mutual Life Insurance Limited, Registered Office 9^th Floor, Godrej Coliseum, Behind Everard Nagar, Sion (E), Mumbai, through its Managing Director.

2.                 Kotak Mahindra Old Mutual Life Insurance Limited, Home Branch Chandigarh Manimajra, Basement and Ground Floor, SCO No.826, N.A.C. Manimajra, U.T., Chandigarh through its Branch Manager.

---Opposite Parties.

BEFORE:  SHRI LAKSHMAN SHARMA                 PRESIDENT

                   SMT. MADHU MUTNEJA                       MEMBER

                   SHRI JASWINDER SINGH SIDHU       MEMBER

Argued by:  Sh. R.K. Singla, Counsel for the complainant

                        Sh. Mukesh Garg, Counsel for the OPs.

PER JASWINDER SINGH SIDHU, MEMBER

1.                           In brief, the case of the complainant is that she purchased a policy of Kotak Flexi Plan II (Regular) from the opposite parties for a period of 10 years commencing from 31.1.2008.   Her father paid a total sum of Rs.21,000/- in 13 monthly installments of Rs.1,500/-.  However, due to some loss in the business, her father could not deposit the future installments and requested opposite party No.2 to close her policy and to refund the amount of Rs.21,000/- but it put off the matter.  According to the complainant, she also filed a consumer complaint which was later on dismissed as withdrawn in view of the stand taken by the opposite party that the policy had a lock-in period of three years.

                   According to the complainant, she visited the office of opposite party No.2 on 10.2.2011 and requested to release the amount of Rs.21,000/- as the lock-in period had expired on 30.1.2011; she also served a legal notice dated 8.4.2011 in this regard but to no avail.   Hence this complaint. 

2.                           In their joint written reply the opposite parties admitted that the policy in question was issued to the complainant based on the details furnished in the proposal form.  It has been averred that the said policy document was duly despatched to the complainant.  It has been admitted that the complainant paid 13 monthly premiums of Rs.1500/- each but subsequently she did not pay any premium.  It has been averred that the complainant was duly informed vide letter dated 31.3.2011 about the termination of the policy.  It has been denied that the complainant ever approached opposite party No.2.  It has been pleaded that as per terms and conditions of the policy, the complainant is not eligible for any refund of premium.  Pleading that there is no deficiency in service on their part, prayer for dismissal of the complaint has been made.

3.                           We have heard the learned counsel for the parties and have gone through the documents on record.

4.                           The present complaint has been filed by the complainant stating that she subscribed for a life insurance policy, premium for which was to be paid on monthly basis for ten years.  A premium of Rs.1,500/-was to be paid and the sum assured was  Rs.90,000/-.  The complainant having paid a total of Rs.21,000/- to the opposite parties preferred not to pay any further premiums due to some personal constraints.  The complainant’s such request was replied back by the opposite parties through their communication dated 31.3.2011 (Annexure 6) wherein according to them the policy of the complainant, on not being revived, was liable to be terminated as per IRDA circular No.032/IRDA/Act1/Dec-2005 dated 21.12.2005 and the surrender value, if any, would be released in her name.  However, the opposite parties declared that the policy of the complainant has not acquired any surrender value, hence the policy has been terminated without refund of surrender proceeds. 

5.                           Though, on the face of it, the stand of the opposite parties seems to be covered under the Regulation of December 2005, mentioned in their letter dated 31.3.2011; however, the insurance policy subscribed by the complainant, being a unit linked policy, is actually governed by the Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010 which supersedes all previous circulars and notifications by the same authority.   

6.                           In the given situation, the complainant having expressed her desire of not continuing the policy any further, and in the absence of any payment towards the premium amount, the policy of the complainant deserves to be treated as discontinued as envisaged under the Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010 and furthermore the complainant is entitled to refund of her premium as per clause 7 of the aforementioned regulations, which is reproduced in detail, as under :-

“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

v.                  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:-

 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.”

Thus, from the perusal of Regulation 7, extracted above, it is crystal clear that the opposite Parties, could have at the most deducted an amount of Rs.2,000/- from this policy and refunded the remaining amount to the complainant at their own.  However, they have miserably failed to do so.  In such circumstances, the act of the opposite parties in not offering this option to the complainant, and even while defending this complaint have also not come up with such solution so that this Forum could have been lenient towards them, proves that the opposite parties are deficient in rendering proper service to the complainant.  Therefore, in the given situation, the present complaint deserves.

7.                           In view of the above discussion, the present complaint is allowed and the opposite parties are directed as under :-

                                           i.            To pay the amount of Rs.21,000 – 1,500 = Rs.19,500 as per Regulation 7, extracted above.

                                         ii.            To pay Rs.5,000/- as compensation for mental agony and harassment.

                                      iii.            To pay Rs.2,000/- as cost of litigation;

8.                           This order be complied with by the opposite parties, within 45 days from the date of receipt of its certified copy, failing which the amounts at Sr.No.(i) &(ii) shall carry interest @18% per annum from the date of this order till actual payment besides payment of litigation costs.

9.                           Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

15.5.2013.

Sd/-

(LAKSHMAN SHARMA)

PRESIDENT

Sd/-

 (MADHU MUTNEJA)

MEMBER

Sd/-

(JASWINDER SINGH SIDHU)

MEMBER