Order-22.

Date-22/04/2015.

Complainant Sri Prodip Kumar Dutta by filing this complaint has submitted that by an Agreement No. 80412961 dated 09.10.2012, op no.1 Bank sanctioned loan against property called as Loan against Property (L.A.P.) in favour of complainant to the tune of Rs. 1,23,48,491/- and complainant was already enjoying one Cash Credit Loan from Allahabad Bank earlier and due to the lucrative offer made by the op no.1 Bank, complainant as an individual went for a take over proposal given by the op no.1 Bank and availed of the said loan by mortgaging the said properties to the HDFC termed as LAP and EMI’s for the said Loan Against Property Scheme was reckoned at Rs. 1,80,821/- with effect from 07.10.2012 and such EMI was fixed for close on 07.09.2022.

          It was also stipulated as per Agreement that risk of the policy loan would run side by side for 10 years.  But after getting the caption of the policy documents, it transpired that the tenure of the said policy had been made available for five years in stead of 10 years as proposed in the proposal letter of LAP Scheme to cover up the entire sum of loan.

          Op no.1 Bank was well aware that the said policy should continue for ten years when the EMI’s of Rs. 1,80,821/- would be completed and according to the requirement of the said policy named as Home Suraksha Plan being No. 291820032770 810000 dated 06.09.2012 and complainant filled up the standard format of HDFC ERGO General Insurance Company Limited for request of endorsement for correction of information mentioned in the Policy Schedule along with their letters where it transpired that the period is mentioned for five years and its several annexures.

          By a standard format reply letter dated 13.10.2012 the Head-Retail business group of HDFC ERGO sent one letter addressed to the complainant along with enclosures repeating their wrongful tenure.  Complainant issued two letters dated 09.11.2012 and 17.12.2012 to HDFC ERGO General Insurance Co. Ltd. for the correction of tenure for ten years and not for five years which remained unanswered by the ops.  Complainant finding no other alternative by his letter dated 28.02.2013 asked the HDFC ERGO General Insurance Co. Ltd. for refund of the entire of Rs. 10,48,492/- only for their mis-inappropriate sell of Home Suraksha Plan Policy No. 291820032770 8100001 dated 06.09.2012 and for mis-selling the said policy, complainant wrote various letters, but there was no respond on the part of the op and in the above circumstances, complainant finally decided to foreclose his loan and requested the op to consider the waiver of 4 percentforeclosure charges as an Imperia Customer of the Bank and also to consider on the basis of Rs. 1,12,99,999/- only for the reasons that EMI for previous 13 months which was paid by complainant to the Bank in excess which was not ever considered by the Bank.

          That the loan have been foreclosed and the Bank returned back the PDCs, original Deeds and documents what complainant acknowledged the same.  Complainant issued one letter dated 27.12.2013 addressed to the Area Sales Manager, HDFC ERGO General Insurance Company Limited asking the total refundable amount of Rs. 10,48,492/- + Rs. 1,28,440/- + Rs. 2,15,166/- amounting to a total sum of Rs. 13,92,098/- and also by a letter dated 12.02.2014.  But till the date of filing this instance case the op nos. 1 & 2 are silent and did not take any step and in fact for above reason and act of the op, complainant has suffered mental pain and agony including huge loss in his business and for the above circumstances, op nos. 1 & 2 are jointly liable to refund the amount of Rs. 13,92,098/- along with interest till the date of payment of the same.

          On the other hand op no.1 Bank submitted that the entire complaint is in respect of the insurance policy issued by the op no.2 and fact remains that HDFC Bank Ltd. and the HDFC ERGO General Insurance Company Limited is the two separate entities and the op no.1 cannot be held liable for any of the act of the op no.2 and moreover there is no allegation against op no.1 nor any correspondence has been made with the op no.1 and practically at the time of filling this complaint, op no.1 had already been closed by the complainant and there is no dispute in between the complainant and op no.1.  So, complainant has no cause of action, in fact the entire allegation against the insurance company is false or insurance company has no liability to answer and op no.1 wrongly made a party for which the complaint should be dismissed against op no.1.

          On the other hand op no.2 by filing written statement submitted that as per the procedure followed by op no.2 prior to issuance of each and every insurance policy a proposal form is taken from the concerned proposer who is going to be insured and accordingly in this case one proposal form was submitted by the complainant which is the basis of the contract of insurance between the complainant and this op no.2.  No doubt policy was issued with the consent of the complainant and the proposal form issued and signed by the complainant does not provide an option for the issuance of the aforesaid policy for more than five years and the use of term policy tenure up to five years on the proposal form is self-explanatory that the policy is issued for a tenure not exceeding five years.

          Further it is submitted that in the present case complainant initially opted for coverage for five years under the said policy, but after issue of such policy of insurance and after receipt of such policy of insurance only the complainant for the first time tried to make out the case that he had actually opted for coverage for ten continuous years and not five years as reflected in the policy of insurance and op no.2 submitted that due to the reasons best known to the complainant, after receipt of the policy of insurance only, he tried to make such case and not prior to that.

          Complainant did not file any such within 15 days within the free look period from the receipt of the said policy.  But everything was done for foreclosure of the loan.  So, there was no negligence and deficiency on the part of the op no.2.   That the complainant foreclosed the loan taken from op no.1 and on the foreclosure of the loan, the policy was cancelled by op no.2 and a refund was calculated as per the terms and conditions of the policy of insurance itself after deduction of the premium paid by the complainant calculated as per the cancellation clause of the policy wordings and a sum of Rs. 5,76,532/- was refunded to the complainant which is admitted by the complainant in letter dated 27.12.2013.  So, the op no.2 is not liable to pay any further amount to the complainant towards refund of the premium of the said policy of insurance and the refund premium amount has been credited in the complainant’s account on 05.12.2013.

          It is further submitted that it is an established position of law that terms and conditions of the insurance policy is binding between the parties and complainant after being satisfied with the terms and conditions of the said policy of insurance, the complainant approached this op no.2, though op no.1 to have the said policy of insurance.  Therefore the allegation made by the complainant of mis-selling of the policy for the purpose of this case and in the above circumstances, the present complaint should be dismissed.

                                                        Decision with reasons

          After comparative study of the complaint including written version and also relying upon the argument as advanced by the Ld. Lawyers of both the parties and further on overall evaluation of the copy of HDFC EGRO General Insurance Company Limited, it is clear that the said policy was for five years terms and that was specifically printed in the application form and fact remains that complainant signed and filled up that form at the time of taking such loan.  So, apparently complainant has failed to prove that he applied for ten years policy term, but that is not at all proved.  On the contrary op has proved the policy is for five years.

          Fact remains that complainant has admitted that he availed of loan against property L.A.P. from op no.1 on the basis of Agreement No. 80412961 dated 09.10.2012 and loan amount was Rs. 1,23,48,491/- at the time of taking of loan as per Agreement of loan and complainant was bound to purchase one HDFC Egro General Insurance Co. Ltd. and practically that was purchased by the complainant for the purpose of loan.

          Fact remains that complainant has tried to convince that at the time of opening the policy, it was agreed that the policy term would be for five years and to that effect, there was information of the Bank.  But from Annexure-A, there is no such expression that the policy shall be for 10 years term.  So, the complainant’s allegation that he was informed that the policy shall be for 10 years is not at all based material.  So, we cannot rely upon such baseless and groundless plea of the complainant.

          Moreover from the Annexure-B, it is clear that the op no.2 sent letter to the complainant along with policy document to check up the entire policy and if there is any objection in that case it shall be reported forthwith and that letter was of dated 13.10.2012 but against that complainant did not submit any objection to the op no.2 regarding tenure ship or etc.  Fact remains that as per policy and other documents including the proposal form, it is clear that the term was for five years, not 10 years and allegation of the complainant is that the policy was for ten years which is completely baseless and without any foundation.

          Truth is that complainant himself foreclosed the loan and bank has retained all original documents etc. and in fact after foreclosure of the loan, complainant prayed for refund of the entire amount.  Then it is clear that complainant prayed for cancellation of the said policy and practically from the complainant’s own application, it is clear that the said policy was cancelled within 14 months from the date of purchasing the same.

          Truth is that cancellation was made after lapse of 14 months and after foreclosure of the loan.  Accordingly op calculated the refund and refund shall be calculated and reckoned as per policy condition-31 and as per said refundable table, it is clear that out of the deposited premium, complainant shall have to get 50 percentand balance 50 percentshall be deducted and in fact total premium was paid Rs. 9,33,154/- and other charges such as service tax, cess tax etc. was paid and accordingly paid Rs. 10,48,492/-.  Policy was issued on 06.09.2012 and within 28.03.2013, complainant prayed for refund of the policy amount and after cancelling the said policy as he already foreclosed the loan.  Now the question is whether there was any deceitful manner of act on the part of the op.

          In this regard we have already confirmed that policy was for five years.  In application form it is glittering and complainant is a shrewd business man, for some reasons or otherwise he foreclosed the bank loan and prayed for refund of the entire policy amount.  But as per provision of law parties’ to contract shall be guided by the terms and conditions of the policy and there is no chance for the Forum to give any relaxation in respect of that agreement, fact remains that as per refundable clause of cancellation i.e. as per Clause-31, no doubt op already refunded more than 62%.  But actually complainant is entitled to 50 percentbecause it is the provision of law in case of cancellation of first year return of premium amount is nil, from the second year it is 50%, on the third year it is 65%, on the fourth year it is 75 percentand on the fifth year it is 80 percentand that deduction is made according to loan period and loan period shall be calculated as per loan agreement but same are applicable to Section-31 i.e. cancellation/refund of premium.  As per policy condition, refund of cancellation of long term policy is at the request of the insurance company subject following categories as noted in Clause-31.

          Practically regarding this clause, complainant has not denied anything only their plea is that they submitted application for ten years but it is proved a false story for which we find that complainant has failed to prove at all any sort of defect and deceitful activities or mis-selling of policy by any means.

          Another factor is that already in so many judgement, Hon’ble Supreme Court including National Commission has observed that the purpose of any insurance company shall be strictly governed by the policy condition and no exception or relaxation can be made on the ground of equity.  So, the deduction as made by the op is as per terms and conditions.  So, considering all the above facts and circumstances and materials, we are convinced to hold that the assessment of refund of premium after cancellation of the policy by the complainant and after foreclosure of the loan account, the assessment is made by the ops as per terms and conditions of the policy and in fact premium amount is actually Rs. 9,33,154/- and other amounts are service tax, cess tax etc. that is Rs. 1,15,338/- and accordingly complainant paid Rs. 10,48,492/- but that is not the total premium amount.  So, out of the total payment premium amount is Rs. 9,33,154/- and op already refunded Rs. 5,76,532/- practically Rs. 3,56,612/- were deducted as per clause but in this context we have gathered that calculation procedure is no doubt correct on the part of the op as made by the op.  The theorization is that if the entire amount shall be divided by the five years terms i.e. 60 months and if it is calculated, then per month deduction would be Rs. 15,553/- and in fact in this case after 14 months from the date of purchase of the policy, policy was cancelled.

          So, op can deduct by adopting such policy for proper adjudication of the claim in view of the fact that all the policy should not be dealt with in a mechanical manner when some other aspect should be considered.  No doubt in this case complainant within 14 months from the date of purchasing the said policy, cancelled the policy on the ground that the loan account has already been foreclosed and for that 14 months op may deduct Rs. 15,553/- X 14 months i.e. total Rs. 2,17,742/-.  But op has deducted Rs. 3,56,612/-.

          So, considering the present aspect and without dealing the entire policy in a mechanical manner for the proper relief to the policy holder and to avoid his further loss, op should refund a sum of Rs. 1,30,000/- further out of deducted amount of Rs. 3,56,612/-.  As per contract we have not found any legality.  But our approach is social approach when the insurance is a social legislation and considering the ruling of Hon’ble Supreme Court as reported in AIR 549 SC, we have followed that decision and release a sum of Rs. 1,30,000/- further in favour of the complainant directing the op to release the same treating the entire dispute as final.

          Accordingly, the complaint succeeds.

          Hence, it is

                                                             ORDERED

          That the complaint be and the same is allowed on contest without any cost against op no.2 and same is dismissed against op no.1 and without any cost in both the cases.

          Op no.2 is hereby directed to further refund and pay sum of Rs. 1,30,000/- in favour of the complainant positively within one month from the date of this order and on payment of that, the entire dispute shall be treated as finally closed and if op no.2 fails to comply the order in that case, after expiry of the stipulated time, op no.2 shall have to pay penal interest  at the rate Rs. 3,000/- per month till full satisfaction of the decree and if it shall be collected, it shall be deposited to this Forum.

          Even if it is found that Op no.2 is reluctant to comply the order of this Forum, in that case, op no.2 shall be prosecuted u/s 27 of C.P. Act 1986 for which they shall be further imposed fine and penalty.