BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I, U.T. CHANDIGARH

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Harmandeep Singh son of Sh.Surjit Singh, r/o H.no.2120, Phase 7, Mohali.

…..Complainant

                 V E R S U S

1]  Kotak Mohindra, Old Mutual Life Insurance Ltd., SCO No.141-142, 2nd Floor, Sector 9-C, Chandigarh, through its Manager.

2]  Kotak Mohindra, Old Mutual Life Insurance Ltd., Regd. Office, 5th Floor, Goregaon, Mumbai, through its Managing Director.

                      ……Opposite Parties

CORAM:SH.P.D.GOEL                     PRESIDENT

     SH.RAJINDER SINGH GILL          MEMBER

     DR.(MRS) MADANJIT KAUR SAHOTA     MEMBER

Argued by: Sh.H.S.Parwana, Counsel for Complainant.

          Sh.Gaurav Bhardwaj, Counsel for OPs.     

PER SH.RAJINDER SINGH GILL, MEMBER

        Brief facts of the case are that the representative of OP company approached the father of the complainant and requested him to purchase plan of life insurance of the company and allured him to purchase policy under Guaranteed Growth Funds Unit Linked Endowment Insurance Plan Scheme under the Kotak Flexi Plan and convinced the father of the complainant that the plan will be beneficial for him. Accordingly, the father of the complainant agreed to purchase the said plan with beneficiaries of the Policy as complainant. He purchased the said plan and paid a sum of Rs.15,000/- towards first premium. The representative of OPs told the complainant that lock in-period of the policy is three years and after the regular payment of premium for three years, the complainant will be entitled to the amount paid by the complainant towards the premium and will also be entitled for the bonus/profit earned by the company for the period for which the policy was retained by the complainant. The complainant has been paying regular premium since the date of purchase of the policy i.e. for more than three years and till date, the complainant paid a sum of Rs.75,000/-.

    It is alleged that the complainant approached OP No.1 and told that he do not want to continue with the policy and want to surrender the same. The representative of OP No.1 informed the complainant that in case the policy is surrendered pre-matured, then surcharge will be levied upon the policy and the complainant will be entitled to a sum of Rs.64,194/- only. The complainant was informed that the amount was invested towards the purchase of mutual funds unit and in the first year, the value of the unit for which the same was purchased was Rs.23.01 and in the second, third, fourth and fifth year the same was purchased @ Rs.25.47, Rs.32.57 and Rs.30.88 respectively. The complainant was also informed that the present value of the unit is Rs.31.82/-. The complainant was shocked that after paying regular installments towards the policy for five years and having paid a sum of Rs.75,000/-, he is entitled to a sum of Rs.64,194/- only, which shows an unfair trade practice and deficiency in service on the part of OPs. Hence, this complaint.

2]       OPs in their reply pleaded that after understanding the features and terms & conditions of Kotak Flexi plan, the complainant agreed to purchase the said plan and hence provided the OP with a duly filled up proposal form No.429157, dated 24.3.2006. The complainant has specifically stated in the proposal form that the premium payment frequency shall be ‘yearly’ and that the premium shall be paid for the ‘Full Policy Term’ i.e. 16 years. It is further pleaded that complainant has knowingly and after thorough understanding has invested into a unit linked life insurance policy and, therefore, complainant was well aware that the surrender value and other benefit will be subject to market risks which have to be borne by the policy holder. It is denied that complainant was not explained the terms & conditions of the policy. The contentions and the averments with respect to the alleged communication that lock in period of the policy is three years and after paying premium for 3 consecutive years the complainant would be entitled to close the policy and get back his money with profit without deduction, is vehemently denied. Denying all other allegations made in the complaint, the OPs prayed for dismissal of the complaint. 

3]       Parties led evidence in support of their contentions.

4]       We have heard the learned counsel for the parties and have also perused the record.

5]       The case of the complainant is that he purchased Kotak Flexi Plan by paying Rs.15,000/- towards first premium.  He had paid a total sum of Rs.75,000/- towards premium of said plan.

6]       The contention of the complainant is that when he approached the OPs to enquire about the value of his insurance plan, he was told that he will be entitled for a sum of Rs.64,194/- only against the total payment of Rs.75,000/- paid by him towards the premium of said policy. 

7]       Admittedly, the complainant has not returned the policy document to the Opposite Parties within 15 days from the date of receipt of the policy, as stipulated in the policy, under Free Look Period, and intimated vide letter dated 29.3.2006, which is reproduced as under:-

         “Free Look Period

In case you wish to reconsider your decision to hold the policy, you have the option of returning the original policy to us, within 15 days from the date of receipt of the policy. We would refund the premium paid by you after deducting stamp duty, medical expenses and proportionate risk premium for the period of cover.”

8]       Since, the complainant himself failed to return the policy document within the above said free look period, therefore, now he cannot seek the cancellation of the policy purchased by him alleging false allurement on the part of OPs.

9]       As far as the terms & conditions of the insurance policy are concerned, the complainant has himself singed the proposal form (Annexure R-1).  Once the complainant is signatory to the proposal form (Annexure R-1) and has also received the insurance policy & other documents, he cannot, at this later stage, wriggle out from those terms & conditions, which he had already accepted    and now say that he was not aware about it.

10]      So far as the imposing of surrender charges are concerned, in our opinion, the same are justified in case the policy is surrendered before the period of 10 years. This is clear from Schedule-2, Clause 5 of the Terms & Conditions of the Policy document (Page 28), which states as under:-

    “Surrender Value

In case the Main Account, after receipt of premium for the first policy year and on expiry of one year from the date of commencement of the policy, the policy shall attain a surrender value. Such surrender value shall be the then current value of the units (based on selling price) less a surrender charge of 50% of value of units in second and third policy year and 2.5% of the value of units in subsequent years upto 10^th policy year.  However, there will be no surrender charge after the term of 10 years of the Policy………”

11]      In view of the above discussion, we are of the opinion that the complaint deserves to be partly allowed.  The same is accordingly allowed partly. The OPs are directed to pay Rs.64,194/- to the complainant towards surrender value of his policy No.00429157-Kotak Flexi Plan, as already assessed by them, along with interest @9% p.a. from the date of filing this complaint i.e. 23.3.2011 till its actual payment.  However, there is no order as to compensation and litigation costs. 

12]      Certified copies of this order be sent to the parties free of charge.  The file be consigned.