Advocate Sachin T. Jadhav for the Complainants

Advocate Supriya Mharolkar for the Opponent

Per Hon’ble Shri. V.P. Utpat, President

                                     JUDGMENT

                                Dated 4^th June 2014

                This complaint is filed by a group of employees against Life Insurance Corporation of India for deficiency u/s 12 of the Consumer Protection Act, 1986.  Brief facts are as follows-

[1]            Complainant is a group represented by Shri. Madhav Deshpande resident of Erandawana, Pune 411 004.  Opponent is office of Life Insurance Corporation situated at University Road, Pune 411 005.  It is the case of complainant that it was a Trust of Employees constituted for the benefits of employees. It has made provisions of payment of superannuation benefits on termination of employment or retirement of certain employees of the Company. The beneficiaries of the Trust are the employees of the Company who meet the eligibility criteria as set out in the rules annexed to the Deed of Trust dated 31/3/1989. Complainants had purchased the Group Superannuation Policy under Master Policy No.GS/CA.83280 from the Opponent on 31/3/1989 for providing pension benefits to their employees. Complainants had regularly paid premium of the said policy to the Opponent. In the year 2009, for the sake of practical convenience, the Complainants have decided to surrender the said policy and transfer the said funds to another organization. Accordingly, complainants and the Trustees executed a Deed of Variation dated 23/4/2009 thereby making necessary amendments to the Trust Deed for the effective transfer of the funds to the another organization. Complainants had communicated their decision to surrender the policy by letter dated 23/6/2009. Opponent replied the letter on 6/7/2009 and communicated that the proper notice of surrender shall be deemed to be received only upon submission of original master policy and approvals from the income tax authorities regarding surrender. It was further stated that the notice period for surrendering the said policy shall be three months from the date of receipt of the said documents by the Opponent, waiting period shall be six months after completion of the notice period and the payment shall be made by the Opponent in ten monthly installments commencing at the end of waiting period.  It was further sated that the interest accrual on the fund shall only be up to the end of the waiting period. On 27/8/2009 complainants have communicated the Opponent that the Commissioner of Income Tax I Pune (CIT) had approved the deeds of variation executed in respect of Intervet India Private Limited Employees Superannuation Fund vide order dated 17/8/2009.  The notice period of three months shall be calculated from the date on which they had intimated their intention to surrender the said policy to the Opponent i.e. 23/6/2009.  Complainants have requested the Opponent to discharge all the payments due in connection with their claim and expedite the process of closure and transfer of funds by 31/8/2009. Opponent had submitted that the notice period of three months would commence from 28/8/2009 i.e. the submission of the CIT order.  The Opponent has also informed that  5% Exit Charges will be deducted from the amount and the first installment will be paid on 28/5/2010. Complainants had represented their protest about the deduction of Exit Charges and other contents of letter of the Opponent. They have requested to waive the Exit Charges. It is the case of Complainant that, the Opponent has caused deficiency in service by deducting 5 % Exit Charges as well as by not paying interest on the total amount from the date of notice period till the payment of last installment. Hence, complainants have filed this complaint and claimed interest of Rs.2,67,860/- on the amount of Rs.39,38,524/- which is calculated @ 18% p.a..  Complainants have also claimed amount of Rs.1,87,549/- which is deducted by the Opponent towards Exit Charges. They have also claimed compensation for mental agony and inconvenience to the tune of Rs.1,00,000/-.

[2]            Opponent resisted the claim by filing written version in which the Opponent has denied the contents as regards deficiency in service. It is further contended that, the complainant is a Trust and it cannot be said as a ‘consumer’. Hence, complaint is not maintainable.  It is further contended that, the Opponent has deducted Exit Charges as per the terms and conditions of the policy and complainants are entitled for the interest from the date of surrender. It is also contended that the complainants are not entitled for the interest @ 18% p.a. for want of agreement between the parties.  Opponent has prayed for dismissal of the complaint.

[3]            Considering the pleadings of both parties and scrutinizing the documents as well as written argument and hearing argument of both counsel, following points arise for the determination of this Forum. The points, findings and reasons thereon are as follows-

Reasons

As to the Point Nos. 1 and 2-

[4]            The undisputed facts in the present proceeding are that the complainants have purchased Master Policy from the Opponent and they have regularly paid the premium, as alleged and  payment of Rs.37,50,975/- is also not disputed. It is also not disputed that the said amount is returned by the Opponent. However, the dispute between the parties is as regards deduction of Exit Charges @ 5% and non payment of interest on the due amount from waiting period. The learned Advocate for the complainant argued before this Forum that even though there is a reference of Exit Charges in the Terms and Conditions of the Policy, it is nowhere mentioned that, the Opponent is entitled for 5% Exit Charges. In that context, the learned Advocate for the Opponent argued that, there is a Circular No.493 dated 12/7/1991 by the Superior of the Opponent that, even the fund is less than Rs.5 crore and the period of policy is more than five years, then the surrender value should be 95%. Hence, Opponent is entitled for Exit Charges @ 5%. It is significant to note that the said circular is not part and parcel of agreement between the parties. Hence, it cannot be said that it is binding on the complainants.  It reveals from the terms and conditions of the policy that there is reference of Exit Charges but it is nowhere mentioned that 5% Exit Charges shall be deducted.  In this circumstances, it is the considered opinion of this Forum that, the Opponent is entitled for 2% Exit Charges.

[5]            The learned Advocate of the Opponent argued that, as soon as the policy is surrendered, the complainants are entitled for future interest and the Opponent has rightly paid interest till the waiting period. It reveals from the record that, the Opponent had used the funds of complainant evenafter waiting period. In such circumstances, complainants are entitled for interest by way of damages and compensation. They have asked interest @ 18% p.a.  But it is the opinion of the Forum that, they are entitled to receive interest @ 8.5%p.a. which is the agreed rate of interest between the parties. 

                In the result, this Forum held that the Opponent has caused deficiency in service by deducting excessive Exit Charges and by not paying interest on due amount.  Hence, points are answered accordingly and following order is passed-

                                       :- ORDER :-

1. Complaint is partly allowed.
2. It is hereby declared that the Opponent has caused deficiency in service by deducting excessive Exit Charges and by not paying interest on the due amount.
3. Opponent is directed to pay interest @ 8.5% p.a. on the due amount of Rs.37,50,975/- from the date of waiting period till making last payment to the complainant within six weeks from the date of receipt of copy of order.
4. Opponent is directed to refund amount of Rs.5626/- [Rupees Five Thousand Six Hundred and Twenty Six only] i.e. 3% Exit Charges to the complainant within six weeks from the date of receipt of copy of order.
5. Opponent is directed to pay amount of Rs.10,000/- [Rupees Ten Thousand only] to the complainant towards mental and physical sufferings within six weeks from the date of receipt of copy of order.
6. Opponent is directed to pay amount of Rs.5,000/- [Rupees Five Thousand only] to the complainant towards costs.
7. Both parties are directed to collect the sets which are provided for the Hon’ble Members within one month from the date of order. Else those will be destroyed.

        Copy of order be supplied to both the parties free of cost.