Veena Rajput W/o Sh.B.C.Rajput, H.No.730, Sector 11-B, Chandigarh.

……Appellant(s)

V e r s u s

1.     Kotak Mahindra Old Mutual Life Insurance Ltd., SCO No.141-142, 2^nd floor, Sector 9-C, Chandigarh, through its Branch Manager.

2.     Kotak Mahindra Old Mutual Life Insurance Ltd., Kotak Towers, 5^th floor, Zone II Building No.21, Infinity Park, Off. Western Express Highway, Goregaon Mulund Link Road, Kalad (E), Mumbai – 400 097.

              ....Respondent

BEFORE:  MRS. NEENA SANDHU, MEMBER.

Argued by:          Sh. Anshuman Narula, Advocate for the appellant.

                    Sh.  Mrigank Sharma, Advocate proxy for Dr. Puneet Kaur Sekhon, Advocate for the respondents.  

PER MRS. NEENA SANDHU MEMBER

                        This is an appeal filed by the appellant/complainant against the order, dated 14.6.2012, passed by District Consumer Disputes Redressal Forum-II, UT, Chandigarh (hereinafter to be called as District Forum only) vide which, it dismissed  the complaint.

2.                 The brief facts of the case are that the complainant took Kotak Smart Advantage Plan from the Opposite Parties for assured sum of Rs.3.00 lacs. The complainant paid three regular premiums of Rs.30,000/- each from 2008 to 2010 (Ann.C-1 colly). It was stated that as per Clause 6 of the terms & conditions of the policy, the policy could be surrendered after the completion of 3 years, and as such, the complainant surrendered her policy in the year 2011.  But to her utter dismay, the   Opposite Parties paid a sum of Rs.62,234.10 only against the total premium amount of Rs.90,000/-, which was illegal & unjustified. It was further stated that the matter was taken up with the   Opposite Parties but to no effect..  Ultimately, a notice Ann.C-3 was sent, but to no avail.  It was further stated that the aforesaid act of the   Opposite Parties amounted to deficiency in rendering service and indulgence into unfair trade practice. Hence, this complaint was filed.

3.                 No reply and evidence filed by the   Opposite Parties and the District Forum struck off defence of the   Opposite Parties vide order dated 1.6.2012.

4.                 The complainant led evidence in support of her version.

5.                 After hearing the Counsel for the parties and, on going through the evidence on record, the District Forum dismissed the complaint as mentioned in the opening para of this order.

6.                 Feeling aggrieved, the instant appeal has been filed, by the complainant for setting aside the impugned order.

7.                 In the present case, the Hon’ble President, State Consumer Disputes Redressal Commission, U.T., Chandigarh, abstained himself, from proceedings. However, the matter was argued before the Single Bench, constituted, by the Hon’ble President, State Consumer Disputes Redressal Commission, U.T., Chandigarh, under Section 16(1B)(i) and (ii) of the Consumer Protection Act 1986, vide order bearing No.SC/CP-2012/3650 dated 20.12.2012, to ensure speedy redressal of grievances of the consumers, as also taking into consideration the factum that the smooth working of the Commission is not hampered with.

8.                 I have heard the Counsel for the parties, and have gone through the evidence, and record of the case, and also the written submissions submitted by the parties, carefully.

9.                 The Counsel for the appellant has submitted that the appellant/complainant took insurance policy from the Opposite Parties,  having yearly premiums of Rs.30,000/- each. It was further submitted that after paying first three continuous premiums of Rs.30,000/- each towards the policy in question, the appellant/complainant surrendered the policy and      requested the Opposite Parties to pay the surrender value. However the   Opposite Parties on 6.8.2011 paid a sum of Rs.62,234.10 against the amount of Rs.90,000/- paid by the appellant towards premiums. On receiving the said amount the appellant approached the Opposite Parties for making enquiry regarding the details of payment and how they calculated the amount of Rs.62,234.10 though she had paid a sum of Rs.90,000/- towards first three premiums but no reply was given by the   Opposite Parties. It was further submitted that when the grievance of the complainant was not redressed she filed a complaint but the District Forum by ignoring the fact  that the first year premium was illegally kept aside by the   Opposite Parties towards payment of Assured Additional Advantage and  not invested in the market for purchase of units, dismissed the complaint.  It was further submitted that the Opposite Parties did not file reply intentionally and as such the allegations of the complainant remained un-rebutted but the District Forum still dismissed the complaint. Hence the order of the District Forum is not sustainable in the eyes of law because the units for which the price was paid were purchased with only two premiums installments.  Hence the order of the District Forum is liable to be set aside.

10.             On the other hand the counsel for the respondents has submitted that the order of the  District Forum is just and legal and requires no interference of this Commission. It was further submitted that the complainant was paid the surrender value as per the terms and conditions of the policy.  It was further submitted that as per the terms and conditions of the policy the first year premium was not invested in the market  as the same was payable on completion of the premium payment term or on death, as applicable. But in the present case none of the two conditions had arisen as the complainant surrendered the policy prior to its maturity.  Hence there was no deficiency on the part of the   Opposite Parties.

11.             Admittedly the complainant purchased unit linked policy subject to market risks namely Kotak Smart Advantage Plan from the Opposite Parties for assured sum of Rs.3.00 lacs against yearly premiums of Rs.30,000/- and paid first three consecutive premiums of Rs.30,000/- each  from 2008 to 2010. Thereafter she surrendered the policy in the year 2011 and the Opposite Parties paid a sum of Rs.62,234.10 /- as surrender value.  Now the question for consideration before us is whether the   Opposite Parties have rightly paid the surrender value to the complainant or not. It is pertinent to mention here that the Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010, were notified vide notification dated 01.07.2010 and the same came into force in the year 2010, Regulation 7 of the Regulations ibid reads as under;

“ Obligation of an insurer upon discontinuation of a policy

7.         The obligation of an 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 ceiling 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.”

12.      Undoubtedly , the Insurance Companies are governed by the Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010, which were notified vide notification dated 01.07.2010. In the present Complaint, the complainant surrendered the policy in question, in the year 2011 and, as such, cause of action accrued to her in the year 2011 i.e. much after the aforesaid Regulations, came into force, in the year 2010. Thus, taking into consideration the principle of equity, I am of the considered opinion that complainant was entitled to get surrender value as per the table of Regulation 7, extracted above. Hence the respondents/ Opposite Parties, could not charge any other charges, except those mentioned therein. Since the complainant paid a sum of Rs.90,000/-, for the policy in question, as premium, for three years to the respondents/Opposite Parties, according to the Regulation extracted above, she was entitled to  get Rs.86,000/- (Rs.90,000-4000) but Opposite Parties paid a sum of Rs.62,234.10 towards surrender value, hence, they are liable to pay a sum of Rs.23,765.9/- (Rs.86,000- Rs.62,234.10 /-) to the complainant.

13.              Since the aforesaid extracted Regulations came into force in the year 2010 and the complainant surrendered the said policy in the year 2011, it was the duty of the   Opposite Parties to pay surrender value to the complainant as per Regulation 7 of the aforesaid Regulations, but they failed to do so, which caused a lot of mental agony and physical harassment to the complainant for which she is entitled to compensation.  These facts were not properly appreciated, by the District Forum. Thus the order of the District Forum being perverse, is not sustainable in the eye of law, and the same is liable to be set aside.

14.             In view of the above, I find merit in the appeal and, accordingly, the same is allowed with costs. The order of the District Forum, is set aside and the complaint is allowed, in the following manner:-

                Respondents/Opposite Parties are directed as follows: -

i)                   To pay to the complainant Rs.23,765.9/- as held in para No.12.

ii)                 To pay to the complainant Rs.10,000/- as compensation, for mental agony and physical harassment.

iii)               To pay Rs.5,000/- as cost of litigation.

15.                         The aforesaid order shall be complied with, by the respondents/Opposite Parties, within 30 days from the date of receipt of a certified copy of the order, failing which they shall be liable to pay interest on the aforesaid awarded amount mentioned in clauses (i) & (ii) above @12% p.a. from the date of filing the complaint till its realization, besides payment of costs.

16.             Copies of this order be sent to the parties free of charge.

Pronounced.

1.4.2013                                                               

                                                                             Sd/-

 [NEENA SANDHU]

MEMBER