DISTRICT CONSUMER DISPUTES REDRESSAL FORUM,

PATIALA.

                                      Consumer Complaint No. 24 of 25.1.2016

                                      Decided on:             28.3.2018

Labh Singh Bhangu aged about 77 years son of Sh.Kehar Singh, resident of House No.749 Amardeep Colony, Patiala Road, Rajpura.

                                                                   …………...Complainant

                                      Versus

1. Managing Director M/s Birla Sun Life Insurance Company one India Bulls Centre Tower Ist Floor Jupitar Mills compound 841 Sena Pati BpatMarg, Elphinstore Road, Mumbai 400013.
2. Branch Manager Birla Sun Life Insurance Company Leela Bhawan, Patiala.

                                                                   …………Opposite Parties

                                      Complaint under Section 12 of the

                                      Consumer Protection Act, 1986.

QUORUM

                                      Smt. Neena Sandhu, President

                                      Smt. Neelam Gupta, Member

ARGUED BY:

                                      Sh.Labh Singh, complainant in person.

                                      Sh.Amit Kumar Bedi, Advocate, counsel

for opposite parties.

 ORDER

                                    SMT.NEENA SANDHU, PRESIDENT

Sh.Labh Singh, complainant has filed this complaint under Section 12 of the Consumer Protection Act,1986 ( hereinafter referred to as the Act) against the Opposite Parties (hereinafter referred to as the O.Ps.)

2.                In brief, the case of the complainant is that he got himself insured with the OPs vide insurance policy No.001213397 for Rs.99000/-. The policy was issued by the OPs on 11.10.2007 alongwith the circular showing the way of claim surrender value of the policy after every year up to its maturity of 8 years. The complainant paid Rs.99,000/- in the year 2007-2008 in four installments, Rs.10,000/- in November,2008 and Rs.10,000/- in October/2009, as reduced premium as per policy norms. It is stated that as per the provisions of the policy the consumer could get the surrender value of the insured amount after the lapse of three years without any deduction and the survival benefits were to be paid on the completion of the policy. It is stated on maturity of the policy,  on 10.10.2015, the complainant approached branch manager of the OPs, who told that no survival benefits were to be paid. There is thus deficiency of service on the part of the OPs which caused mental agony and physical harassment to the complainant. Hence this complaint with prayer for giving directions to the OPs to pay the survival benefits of the insured amount of Rs.1,19,000/- alongwith interest @10% per annum  till realization.

3.       On being put to notice, OPs appeared through counsel and filed the written version, taking preliminary objections interalia that the complaint is not maintainable as no cause of action has accrued to the complainant; that the complainant has not come to the Forum with clean hands; that the complainant is not a consumer as the policy has already been lapsed and that the complaint is barred by limitation. On merits, It is admitted that the complainant purchased the insurance policy from the OP but it is stated that the same has been lapsed w.e.f. June 11,2013. It is further stated that the document sent alongwith the policy was not the circular but was one page of illustrations. The complete illustrations was signed by the complainant at the time of signing the proposal form, wherein it has been mentioned that the investment risk in investment funds chosen by you is borne by you meaning thereby that if all the three installments would be paid by the life assured, the fund value could enhance after the completion of 8 years. It is also written in the illustrations that investment funds are subject to investment risk and unit prizes may go up or down. It is admitted that the policy was for eight years and the complainant paid Rs.99,000/- in the year 2007-2008 in four installments, Rs.10,000/- in November,2008 and Rs.10,000/- in October/2009, as reduced premium as per policy norms. It is further stated that the life assured could apply for the surrender value of the policy and not surrender value of the insured amount after expiry of three years without any surrender charges. Even the life assured could apply for surrender value of the policy during three years but in that case the consumer would have to pay the surrender charges. It is stated that surrender value of the policy   was payable only if  there was any fund value  of the policy. Since the policy in question has already been lapsed and terminated w.e.f.11.6.2013, therefore,there was no question of its maturity as on 10.10.2015.There is no deficiency of service on the part of the OPs. After denying all other averments made in the complaint, it was prayed to dismiss the complaint.

4.       On being called to do so, the complainant has tendered in evidence Ex.CA his affidavit alongwith documents Exs.C1 toC11 and closed the evidence.

          The ld. counsel for the OPs has tendered in evidence Ex.OPA affidavit of Ms. Kshama Priyadarshini, Sr.Chief Manager(Legal) alongwith documents Exs.OP1 to OP6 and closed the evidence of the OPs.

5.       We have heard the complainant, the ld. counsel for the OPs and have also gone through the record of the case, carefully.

6.       At the out set, the ld. counsel for the OPs raised the objection that the present complaint is barred by limitation because the policy in question was terminated on 11.6.2013.The complainant was intimated vide letter dated 17.6.2013 .As such the cause of action had accrued to the complainant on 17.6.2013 and if the complainant had any grievance against the OP, then as per Section 24-A of the Act, he could have filed the complaint  within two years from the accrual of the cause of action i.e. up to 16.6.2015.Whereas the complainant has filed the present complaint 25.1.2016. On the contrary, the complainant has vehemently argued that   he purchased the policy in question  on 11.10.2007  and  had  paid  the premium of Rs.99000/- in the year 2007-2008 in four installments and Rs.10,000/- in November, 2008 and Rs.10,000/- in October 2009 as reduced premium as per the policy norms.  He never received the letter dated 17.6.2013 regarding termination of the policy as alleged by the OPs. The policy got  matured on 10.10.2015 but the OPs refused to pay the survival benefits, as such cause of action accrued to him against the OPs on 10.10.2015 and he has filed the present complaint well within the prescribed period as envisaged in Section 24-A of the Act. It may be stated here that  the OPs have not placed any document on record to show vide which they had sent the termination letter dated 17.6.2013 to the complainant .Thus in the absence of any documentary proof, it cannot be said that the said letter was actually  sent  to the complainant by the OPs. From the copy of policy details annexed alongwith the copy of document Ex.C2, it is evident that the policy matured on 11.10.2015. The complainant has alleged that OPs did not pay him the survival benefits, thus the cause of action accrued to the complainant against the OPs on 11.10.2015 and he has filed the present complaint on 25.1.2016, well within the prescribed period  as envisaged under Section 24-A of the Act. Thus the objection raised by the OPs is not tenable ,hence rejected.

7.       Now coming to the merits of the case, at the outset, the ld. counsel for the OPs has vehemently argued that the policy in question was a market linked policy and the complainant had also taken the life cover, as such number of charges i.e. premium allocation charges, policy administration charges, fund management charges and mortality charges etc. were to be paid by the complainant. The complainant stopped paying the premium but continued to enjoy the life cover to the extent of 4,95,000.-.As such,the charges were continuously deducted from the units allocated to the complainant as per the terms of the policy. He further argued that the surrender value was payable if there was any fund value. The policy in question was unable to sustain the charges, as is evident from the copy of the unit statement, Ex.OP5,  as such, the policy was  terminated on 11.6.2013. Therefore, there was no question of maturity and nothing was payable to the complainant.

8.       The complainant has vehemently argued that  no doubt the policy in question was a market linked , but at the time of issuance of the same, the OPs had assured him that he would get Expected  Investment return @6% is 3.08% and @10% is 6.83% as is evident from Your Sales Illustrations Gold Plus, Ex.C3. But on maturity of the policy in question, the OPs paid him nothing. The complainant has further submitted that he did not receive the letter dated 17.6.2013, Ex.OP3,   alleged to be sent to him by the OPs. Even otherwise, the OPs had not supplied any information with regard to the actual charges levied and the funds/ policy account value for the amount paid as premium by him consecutively for three years, i.e. 2007 to 2009. Had the OPs provided him the  proper information from time to time then by knowing this fact that the fund value  of the policy in question was decreasing constantly, then  he instead  to wait  till maturity,  could have opted to discontinue  it   and  asked for surrender value . The OPs by not providing the material information  with regard to the investment made by him, have committed deficiency in service. Thus, they are liable to refund the amount of Rs.1,19,000/-, received by the OPs alongwith interest . They are also liable to pay litigation expenses.  

9.             It may be stated here that all the insurance companies are governed by the Insurance Regulatory And Development Authority. The said authority issued notification dated 16.2.2013, i.e. (Linked Insurance Products) Regulations, 2013. In para No. 1 (c) of the said notification, it is mentioned that these regulations shall be applicable to all the linked insurance products offered by the life insurance companies. Further in para no.1(d) it is mentioned that unless otherwise provided by these regulations, nothing in these regulations shall deem to invalidate the linked insurance policies entered prior to these regulations coming into force. As per regulation 11,LOCK-IN-PERIOD, “All linked insurance products shall have a lock-in period of five years from the date of inception of the policy”.

In Chapter-II, LINKED INSURANCE PRODUCTS, in para No. vii FURNISHING STATEMENT OF ACCOUNTS  , which reads as under

1. “The statement of policy account shall be sent to the policy holder at least once a year.
2. Policy account statement shall be issued at the end of each financial year to the policy holder giving the breakup of the Opening balance, premium received, deductions towards charges, minimum floor interest earned, variable interest earned, non-negative residual interest rate credited and closing balance ….”

Further In chapter - XIV Disclosure Norms Under, in regulation No. 60(b) & (d) , which reads as under:

(b) “For all unit linked products, the policy holder shall be given the full details, using the same font, relating to the investments, as an annual report, covering the fund performance during the preceding financial year in relation to the economic scenario market developments etc. which should include particulars like.

1. The investment strategies and Risk Control measures adopted.
2. The changes in fundamentals, such as interest rate, tax rate, etc. affecting, the investment port folio.
3. The composition of the fund (debt,equity,etc.), analysis within various classes of investment, investment portfolio details, sectoral exposure of the underlying funds and the ratings of investments made.
4. Analysis according to the duration of the investments held.

5. Performance of various funds over different periods like 1 year, 2 years, 3 years, 4 years, 5 years and since inception alongwith comparative benchmark index.

(d) All the life insurers are required to issue the periodical statements of the accounts to the policy holders each year disclosing the actual charges levied and the fund/policy account value at the beginning and end of the year

1. Unit Statement account/Policy account value shall form a part of the policy document.
2. Unit Statement account/Policy account value shall make a reference to the terms and conditions applicable under the respective policy document.
3. Unit Statement account/Policy account value shall be issued on every policy anniversary and also as and when a transaction takes place.

From the regulations referred above, it is abundantly clear that the OPs were duty bound to provide the periodical statements of the accounts to the complainant, each year disclosing the actual charges, levied and the fund/policy account value at the beginning and end of the year. However, no such document has been placed on record by the OPs to show that they had sent the periodical statement to the complainant yearly. Thus, in the absence of any documentary evidence, it can easily be said that the OPs had failed to provide the requisite information with regard to the investment made by the complainant , under the policy in question. By not providing the requisite information, the OPs have deprived the complainant from his right to discontinue the policy in question and to get the surrender value. Thus, we hold that the OPs were deficient in rendering services to the complainant and are liable to pay the surrender value.Under regulation No.15, of the aforesaid notification, the insurer is under obligation to pay the surrender value to the insured for the discontinued insurance policy after the expiry of lock-in-period of five years,as referred above, as per Regulation No.13(a)(vi) of the said notification, which reads as under:

1. To ensure that the charges levied on the date of discontinuance (as a percentage of one annualized premium or a percentage of single premium) do not exceed the limits specified below:-

1. For Annual Premiums

AP-Annualized Premium

FV- Fund Value

b.     Provided that where a policy is discontinued, only discontuned charge and fund management charge, which shall not exceed 50 bps per annum on discontinuance fund/policy account value, as applicable, may be levied by the insurer and no other charges by whatsoever name shall be levied.

c.      Provided that no discontinuance charges ahll be imposed on tojp-ups premiums.

10.   Admittedly, the policy in question was issued in favour of the complainant on 11.10.2007 and  he paid a total sum of Rs.1,19,000/-From the receipt dated 15.9.2007, Ex.C4, receipt dated 12.2.2008, Ex.C5, receipt dated 10.5.2008,Ex.C6, receipt dated 6.8.2008,Ex.C7, it is evident that the complainant paid a total  sum of Rs.99000/- as first installment. From the receipt dated 5.9.2008, for Rs.10,000/, Ex.C8 and receipt dated 28.10.2009, for Rs.10,000/-Ex.C9, it is evident that the complainant had paid Rs.20,000/- as 2^nd and 3^rd installments. Since the policy was issued in the year 2007 and the prescribed lock in period of five years as per regulation No.11, of the above said notification dated 16.2.2013, has already been expired, therefore, as per regulation No.13(a)(vi), referred above, the OPs are liable to pay the surrender value, to the complainant, amounting to Rs.1,15,000/- (Rs.1,19,000/- minus Rs.4000/-)as provided in the above quoted table alongwith interest.

11.     In view of the aforesaid discussion, we partly allow the complaint and direct the OPs  to pay the surrender value of 1,15,000/- (Rs.1,19,000/- minus Rs.4000/-) to the complainant alongwith interest @7% per annum from the date of filing of the instant complaint i.e. 25.1.2016 till realization .The OPs are also directed to pay Rs.5000/- as litigation cost, to the complainant. The said order be complied by the OPs, within  a period of 45 days, from the date of the receipt of the certified copy of this order. Certified copies of this order be sent to the parties free of cost under the Rules. Thereafter file be indexed and consigned to the Record Room.

ANNOUNCED

DATED:-28.3.2018

                                                                             NEENA SANDHU

                                                                                   PRESIDENT

                                                                             NEELAM GUPTA

                                                                                     MEMBER