KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No. 609/2018

JUDGMENT DATED: 19.01.2022

(Against the Order in C.C. 15/2017 of CDRF, Palakkad)

PRESENT:

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN              : PRESIDENT

SRI.T.S.P. MOOSATH                                                       : JUDICIAL MEMBER

SRI.RANJIT. R                                                                   : MEMBER

SMT. BEENA KUMARY. A                                              : MEMBER

SRI. RADHAKRISHNAN K.R.                                        : MEMBER

APPELLANT:

The Manager, Max Life Insurance Co. Ltd,  Operation centre, Plot No. 90A, Sector 18,Udyog Vihar, Gurgaon (Haryana) 122015.     

(By Adv. Saji Isaac. K.J)

RESPONDENTS:

1. Mandakath Balakrishnan Usha (Unnikrishnan) W/o V. Krishnan, 15/722, Keerthy, Kunnathurmedu.

                        (By Adv. M. Beena Jasmi)

2. The Manager,   Axis Bank, City Centre, English Church Road,Palakkad 678 014.    

(By Advs. Ullas Sudhakaran & V.S. Balasubramaniam)

JUDGMENT

SRI. RADHAKRISHNAN K.R : MEMBER

This appeal has been filed u/s 15 of the Consumer Protection Act, 1986, by the 2^nd opposite party in C.C. No. 15/2017 on the file of the Consumer Disputes Redressal Forum, Palakkad (District Forum/Commission for short) against the order dated 14.06.2018 of the District Forum.  As per the order, the 2^nd opposite party was directed to refund an amount of Rs.4,46,400/- together with interest thereon @4% from 25.06.2014 till date of realization and also to pay an amount of Rs.5,000/- as the compensation for the loss, damage, injury and mental agony caused to the complainant due to the deficiency in service and unfair trade practice on the part of the second opposite party.  The first opposite party was exonerated from liability.  If the amount is not paid within one month from the date of receipt of the order, the complainant is entitled to realize interest @ 9% from the opposite party on the total amount due to her from the date of the order till realization.

2. The case of the complainant is briefly as follows: The complaint pertains to a dispute with the bank and insurance company of the complainant.  The complainant has an account with the first opposite party Bank who are the corporate Agents of the second opposite party insurance company. At the instance of the first opposite party, the complainant took a life insurance policy bearing number 876939794 from the second opposite party.  The policy was maxlife guaranteed monthly income plan with a sum assured of Rs.18 lakhs.  Premium was payable for six years @ Rs.2,23,000/+ST/GST per annum.  An amount of Rs.2,30,097 (including ST) was paid on 16.01.2013 as first installment.  ECS mandate was given for payment of subsequent installments which are due on 16^th January every year upto 16-01-2018. The second installment was due on 16.01.2014.   The complainant alleges that she has paid two installments amounting to Rs.4,46,400/- and it was confirmed by the second opposite party in the Annual Credit summary dated 16-06-2014. The first opposite party failed to make payment of 3^rd installment due on 16-01-2015 and failed to inform her of the opportunity to revive the policy within six months.  No proper advice was given by the first opposite party.  The second opposite party terminated the policy for non-payment of the premium.  The complainant lost the benefits accruing from the policy and also the premium amount paid by her due to the deficiency on the part of the opposite parties.  The complainant prayed for accepting her request dated 14-09-2015 to revive the policy or to refund              Rs.4,46,400/- with 10% interest from the date of termination of policy with a compensation of Rs.50,000/- for mental agony, stress and harassment and costs of Rs.1,000/-.

3. Both the opposite parties entered appearance and contested the case.  In their version the first opposite party admitted that the complainant is their account holder and they solicited the policy as the corporate agent of 2^nd opposite party.  The policy given to her contains all relevant information.  They have not undertaken timely remittance of subsequent premiums by transferring the required amount from her account.  Payment of premium is the responsibility of the insured.  The complainant had given ECS mandate authorizing the 2^nd opposite party to obtain the premium payable through electronic clearance.   The complainant should have ensured sufficient amount in her account on the due date.  Second installment premium could not be debited as there was insufficient fund.  This was conveyed to the complainant.  As the premium was not paid on the due date or during the grace period, the policy got lapsed. No standing instruction was received from the first respondent for payment of premium to the appellant insurance company. They are not aware whether the premium was remitted directly by her. There is no deficiency in service or unfair trade practice on the part of the first opposite party and complainant is not entitled to any of the reliefs claimed by her.

4. In their version the second opposite party admitted having issued the policy to the complainant and that she had opted for ECS mode of payment for subsequent premiums.  The first premium was paid through Demand Draft.   The ECS transaction for payment of second installment of premium due on 16.01.2014 was dishonoured due to insufficient funds in the Bank Account.  ECS transaction on 03.02.2014, 10.06.2014 & 01.07.2014, were also defaulted in spite of advance intimation.  As the premium was not paid even during the revival period, the policy lapsed and the policyholder is not entitled to get the premium back or policy reinstated.  The complainant is a defaulter in payment of premium and so she is not entitled to any of the reliefs. 

5. Chief affidavits were filed by all the parties.  Exbts.A1 to A8 were marked from the side of complainant and Exbt.B1 and B1(a) to B5 were marked from the side of opposite parties. Complainant and 1^st opposite party were cross examined as PW1 and DW1 respectively.  On the basis of the evidence available the District Commission passed the impugned order.  Aggrieved by the order the second opposite party has filed this appeal.

6. Heard both sides.  The learned counsel for the appellant submitted that the complainant / respondent paid only the first installment of premium. ECS transactions towards payment of second installment failed on four occasions and this was conveyed to the complainant/first respondent.  No premium was paid directly by the complainant/first respondent and Exbt.A2 was an advance receipt issued subject to realization of money.  B1 Bank statement clearly states that sufficient funds were not available in her account. The policy lapsed for non payment of premium and the appellant / second opposite party is not liable to pay any amount to the complainant / respondent and hence prayed for allowing the appeal. 

7. The learned counsel for the Complainant/1^st Respondent submitted that  she has paid two installments of premium and the third installment was not accepted by the appellant / 2^nd opposite party. Exhibits A1 and A2, issued by the appellant sufficiently prove the payment of second installment of premium. She has not received any communication subsequently informing that these documents are not valid. She was ready and willing to continue the policy.  But the 2^nd opposite party intentionally refused to accept the third installment making the policy lapse.  This action on their part is a clear deficiency and hence prayed for dismissal of the appeal with costs.

8. Second respondent submitted that they are the corporate Agents of the appellant. As a Bank they debit the account of the 1^st respondent on the advice of the appellant who is having the ECS mandate. ECS transactions were not cleared due to insufficient balance in the account and so the second installment was not debited by them. They are not aware whether payment was made directly or through some other Bank. They did not get any standing instructions from the 1^st respondent for payment of premium. There was no deficiency on their part and therefore, they were exonerated by the District Commission.

9. We have examined the contentions on both sides and perused the records.  Payment of first installment of premium is admitted by all the parties.  The issue is whether the second installment premium was paid or not and whether the action of the second opposite party in treating the policy as lapsed is in order. The authenticity of the account summary (Exhibit A1) and premium receipt for second installment premium (Exhibit A2) are significant in this case.

10.  Exhibit A1 is the Annual Credit Summary wherein the total premium paid is shown as Rs.4,46,400/-. Appellant contends that it is an undated document and cannot be relied upon to show that the 1^st respondent has paid two installments of premium. We note that this document is issued in the letterhead of the appellant with all relevant information about the policy and the life insured. Not putting the date is a lapse on the part of the appellant and the 1^st respondent cannot be blamed for their fault. It is strange that the appellant disowns a document of their own. Incidentally Ext. B2 proposal form, claimed to be that of the first respondent, produced by the appellant relate to some other customer. Appellant, an organization handling public money should not be so casual. If Exhibit A1 statement was found to be wrong at a later stage, the first respondent/complainant should have been specifically advised that it was issued inadvertently and hence withdrawn/cancelled. Appellants have not produced any such communication before us. Hence we are not inclined to accept the contentions of the appellant in this regard and find that it is a valid document.

11.  According to the appellant there were no sufficient funds in the account of the 1^st respondent maintained with the second respondent, to honour the ECS transaction towards payment of second installment of insurance premium as evidenced by the bank statement (Exhibit B1) and intimations vide Exhibits B3 to B5. However giving ECS mandate or the failure of ECS transactions do not bar the life insured from making the payment directly by cash or otherwise. The first respondent / complainant submitted that she opted for this route of direct payment and obtained receipt No.876939794/2013-14/04 dated 16.06.2014 (Exhibit A2), which acknowledged receipt of premium and contains relevant information regarding the life insured and the policy. The learned counsel for the appellant submitted that Exbt.A2 was wrongly issued as is evident from ECS dishonor intimation letter dated 18.06.2014(Exbt.B5) and that it was issued subject to realization of money. It is true that Ext A2 contained a note at the bottom “subject to realization of monies”. However the appellant have not given the mode of payment in this receipt - whether it was by ECS/ cash/ cheque/ DD/NEFT etc. They should have given the details in the receipt such as cheque/DD number, date, amount, drawee bank and branch etc. and reference number in the case of other modes. There will be no clarity or relevance in the ‘note’ unless these information are provided in the receipt. Nowhere it is mentioned that it is a provisional or advance receipt. If the payment was not realized, the appellant should have specifically informed the 1^st respondent that the said receipt was no longer valid and cancelled, giving details of dishonour of the transaction with remarks of the bank. No such communication, clearly specifying all the details of dishonour of the instrument, is sent by the appellant. The decision of the National commission in RP No.1848 of 2019 {M/s The New India Assurance Co Ltd Vs Kamlesh Chandra Tiwari and Anr - 2019(4)CPR 620(NC)} is relevant here. In this case it was held that it was the duty of the petitioner to inform the insured within time to make good the premium in case the cheque had bounced. Ext B5 is an intimation about failure of ECS transaction on 16.06.2014. However no reference is made in it to Ext A2 receipt, to correlate the issuance of the receipt with this ECS transaction. In fact it contains a sentence also – “in case you have already made the payment through an alternate method, kindly ignore this intimation”. This means that they have not cross checked whether the payment was received otherwise. Based on the above discussion, we are unable to accept the contentions of the appellant that Ext A2 was wrongly issued and find that it is a valid document issued by the appellant.

12. For the reasons stated hereinabove, we conclude that the first respondent / complainant has sufficiently proved payment of second installment of premium since the  appellant failed to substantiate their contentions that  the Ext A1 and A2 documents produced by her were wrongly issued.  According to the appellant the policy has lapsed due to non payment of the second installment of premium and as a natural consequence subsequent installments could not be collected on a lapsed policy. A ‘lapsed policy’ is a policy for which all benefits to the policyholder ceases and is terminated due to non payment of premium amount on the due date or even after the grace period.  In this case second installment is found to be paid as above and hence any communication sent or actions taken by the appellant after issuing Ext A1 and A2, treating the second installment of premium as unpaid, are not tenable. Appellant erred in considering the insurance policy as lapsed for alleged non payment of second installment premium. For the foregoing reasons we concur with the finding of the District Commission that there is deficiency in service on the part of the appellant/second opposite party. We find no grounds to interfere with the order of the District Commission as sought for by the appellant.

In the result the appeal is dismissed. The order dated 14-06-2018 in CC.No:15/2017 of CDRF, Palakkad is confirmed.  The sum of Rs.25,000/-deposited by the appellant on filing the appeal shall be released to the first  respondent/complainant on proper application before this Commission. The  balance amount due as ordered by the District Commission shall be paid by the  appellants within two months from the date of receipt of a copy of this judgment, failing which the respondent can initiate appropriate proceedings for executing the order.  There is no order as to costs.

JUSTICE K. SURENDRA MOHAN  : PRESIDENT

T.S.P. MOOSATH   : JUDICIAL MEMBER

RANJIT. R                : MEMBER

                                                                        BEENA KUMARY. A         : MEMBER

RADHAKRISHNAN K.R.  : MEMBER

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