STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

(1)

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

……Appellant/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, 5^th Floor, Goregaon, Mumbai, through its Managing Director.

              ....Respondents/Opposite parties

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:     JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

Argued by: H.S. Parwana, Adv. for the appellant

                   Sh. Gaurav Bhardwaj, Adv. for the respondents

(2)

Surjit Singh s/o Sh. Gurdit Singh r/o H.No.2120, Phase 7, Mohali.

……Appellant/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, 5^th Floor, Goregaon, Mumbai, through its Managing Director.

              ....Respondents/Opposite parties

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:     JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

Argued by: H.S. Parwana, Adv. for the appellant

                   Sh. Gaurav Bhardwaj, Adv. for the respondents

PER  NEENA SANDHU, MEMBER

                   As similar questions of law and fact, are involved in both the aforesaid appeals, therefore, we propose to dispose of the same by this order. 

2.                     The aforesaid two appeals, have been filed by the appellants/complainants, for modification of the orders dated 13.12.2011, rendered by the learned District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter referred to as the District Forum) vide which it partly allowed the complaints, filed by the complainants/appellants.  The following order was passed by the District Forum, in the complaint case, in which the first mentioned, appeal has been filed:-

“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, alongwith interest @ 9% p.a. form the date of filing of this complaint i.e. 23.3.2011, till its actual payment.  However, there is no order as to compensation and litigation costs.”

The following order was passed by the District Forum in the complaint case, in which the second mentioned appeal, has been filed:-

                   “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.1,10,000/- to the complainant towards surrender value of his policy No.00445718-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.”

3.                     The facts, in brief, of consumer complaint bearing No.RBT/CC/298/2011, are that, on the basis of the assurance given by the representative of the opposite parties (now appellants), the father of the complainant, purchased the Guaranteed Growth Funds Unit Linked Endowment Insurance Plan Scheme, under the Kotak Flexi Plan, with him being the beneficiary of the Policy, and paid a sum of Rs.15,000/- towards the first premium. The representative of the opposite parties, told him that the lock in-period of the policy was three years and after the regular payment of premium for three years, the complainant would be entitled to the amount paid towards the premium and would also be entitled to the bonus/profit earned by the Company for the period, for which the policy was retained by the complainant. It was stated that regular premiums have been paid since the date of purchase of the policy.  The total amount paid came to be Rs.75,000/-.  It was further stated that the complainant approached opposite party No.1, and told it, that he wanted to surrender the policy, upon which, he was informed that, in case of the premature surrender of policy, surcharge would be levied upon the same and he would be entitled to a sum of Rs.64,194/- only. He was further informed that the amount was invested towards the purchase of mutual fund units. It was further stated that he was shocked to know that after paying regular installments towards the policy for five years, to the tune of Rs.75,000/-, he was held entitled to a sum of Rs.64,194/- only without any tangible basis. 

4.                     In complaint case No.162 of 2011, the complainant purchased the policy and paid premium for four years to the tune of Rs.1,99,975/-.

5.                     It was further stated that the aforesaid acts of the opposite parties, amounted to deficiency, in rendering service, and indulgence into unfair trade practice.  When the grievance of the complainant was not redressed, left with no alternative, two complaints under Section 12 of the Consumer Protection Act, 1986 (hereinafter referred to as the Act) were filed.

6.                     In their joint written version, the opposite parties stated that after understanding the features and terms & conditions of Kotak Flexi plan, the complainant agreed to purchase the same.  He provided the duly filled up proposal form No.429157, dated 24.3.2006 stating therein, that the premium payment frequency shall be ‘yearly’ and that the premium shall be paid for the ‘Full Policy Term’ i.e. for 16 years. It was further stated that complainant was well aware that the surrender value and other benefits would be subject to market risks, to be borne by the policy holder. It was denied that complainant was not explained the terms & conditions of the policy, and that the lock in period of the policy was three years.  It was also denied that after paying the premium for 3 consecutive years, the complainant was entitled to close the policy and get back his money with profit without deduction. The remaining averments were denied, being wrong.

7.                     The parties led evidence, in support of their case. 

8.                     After hearing the Counsel for the parties, and on going through the evidence and record, the learned District Forum allowed both the complaints, in the manner, referred to, in paragraph No.2 of the instant order.

9.                     Feeling aggrieved, the instant appeals have been filed by the appellants/complainants.

10.                  We have heard the  learned  Counsel for the parties, and have gone through the evidence and record of the case carefully. 

11.                  From the record, it is clear that the father of the complainant purchased a policy under Guaranteed Growth Funds Unit Linked Endowment Assurance Plan under the Kotak Flexi plan and paid annual premium of Rs.15,000/- for five years in RBT/CC/298 of 2011 whereas in Consumer Complaint No.162 of 2011 the complainant paid premium for four years in the sum of Rs.1,99,975/-. The complainant was the insured in the said policy.  As per Schedule 2, Clause 5 of the terms and conditions of the Policy document (at page 74 of the District Forum record), the complainant was at liberty to surrender the same after the expiry of one year from the date of commencement of the policy and, in that case, surrender value was to be the  then current value of the units (based on selling price) less a surrender charge of 50% of the value of the units, in second and third policy year, and 2.5% of the value of the units, in subsequent years, upto 10^th policy year.  As per the contention of the learned Counsel for the appellants/ complainants, when, in the 5^th year, after the commencement of the policy, the complainant approached the opposite parties, they informed him that he was entitled to the refund of the surrender value to the tune of Rs.64,194/- only, out of the total premium paid in respect of one policy to the tune of Rs.75,000/-. 

12.                  At the time of arguments, the learned Counsel for the opposite parties, was asked to apprise this Commission, as to how, and, in what manner, the amount of Rs.64,194/- had been calculated as surrender value in respect of Policy No.00429157 and Rs.1,10,000/- in respect of Policy No.00445718, but he neither gave any satisfactory explanation, as to how the figures aforesaid, as surrender value, were arrived at, nor he produced any tangible data or authentic document, in this regard.  Even, on the record of the District Forum no document was produced, by the opposite parties, depicting therein, the formula based on some tangible authentic material, as to how the surrender value, referred to above, was arrived at.   The opposite parties, being the service providers, were under an obligation to produce the record to convince the Commission, as to how such a figure was arrived at, but they failed to do so.  The terms and conditions of the policy are placed at pages 69/20 to 86/37 of complaint case No.RBT/CC/298/2011 titled as Harmandeep Singh Vs. Kotak Mohindra Old Mutual Life Insurance Ltd.  Clause 5 of the terms and conditions of policy at page 74/25 reads as under :-

“5.     Surrender Value

In case of Main Account, after receipt of premiums 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 10th policy year.  However, there will be no surrender charge after the term of 10 years of the Policy.

In case of Supplementary Account, the policyholder may opt to surrender the Supplementary Account any time after first policy year. The surrender value will be then the balance in supplementary account, which is an amount equivalent to the value of the units in the Supplementary Account at the Selling Price.”

The plain reading of the afore-extracted clause, establishes that the surrender value, after the third policy year, shall be 2.5% of the value of units upto 10^th policy year.  In the instant cases, the annual premiums were paid for 5 years and 4 years respectively.  In this view of the matter, the complainants, in both the cases were entitled to NAV of the units, on the date of surrender, minus 2.5% of the value of units, with interest.  The District Forum was wrong, in coming to the contrary conclusion.  The findings of the District Forum, deserve to be modified to the extent indicated above.

13.                  The opposite parties were certainly deficient, in rendering service, due to which the complainants suffered a lot of mental agony and physical harassment and were unnecessarily dragged into litigation.  Thus, the opposite parties, were liable to pay compensation to the complainants.  However, while allowing the complaint, this fact was not taken into consideration, by the learned District Forum and, as such, the order impugned needs to be modified.

14.                  In view of the above discussion, both the above referred to appeals, are accepted with costs and the order passed by the learned District Forum is modified as under :-

(i)           The respondents/opposite parties shall pay the amount of NAV of the units, on the date of surrender, minus 2.5% of the value of the units, alongwith interest @ 9% per annum, from the date of filing of the complaint, till actual payment to the appellants/complainants, in each complaint case.

(ii)         The respondents/opposite parties shall pay to the appellants/complainants Rs.10,000/- as compensation, for mental and physical harassment, suffered by them, in each complaint case.

(iii)       The respondents/opposite parties shall pay Rs.5,000/- as costs of litigation, in each appeal.

15.                  This order be complied with by the respondents/ opposite parties within 30 days, from the date of receipt of a certified copy of the same, failing which, they shall pay the entire payable amount with penal interest @12% per annum, from the date of filing the complaint till actual payment to the complainant, in each complaint case, besides costs.

16.                  The original order be placed, in First Appeal No.18 of 2012 and certified copy thereof be placed in First Appeal No.19 of 2012.

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

Pronounced.

16­.04.2012

[JUSTICE SHAM SUNDER]

PRESIDENT

[NEENA SANDHU]

MEMBER