SHRI SWAPAN KUMAR MAHANTY, PRESIDENT

This is an application u/s.12 of the C.P. Act, 1986.

The facts of the case are that the complainants took insurance policies bearing Nos. 889145892, 889107652, 889145900 and 889109294 for Rs. 80,000/-, Rs. 20,000/-, Rs. 23,000/- and Rs, 20,000/- on 22.08.2013, 23.08.2013 and 24.08.2013 respectively from the OP-1 Max Life Insurance Co. Ltd. on basis of misrepresentation of one Rajiv Ray, introducing himself as authorized representative of OP-2. Complainants invested such amount to the OP-1 having knowledge of one time premium on basis of assurance given by Rajiv Ray. Complainants shocked when they were asked to pay annual premium for the year 2014. Immediately, the complainants requested the OP-1 to refund the policy amount but such request was turned down. The authorized representative of the OP-2 misguided the complainants and the OP-1/insurer expressed its inability to cancel the policy on the ground that no approach was made within the free look period. There is clear malpractice and unfair trade on the part of the OPs. Finding no other alternative, the complainants filed a Writ Petition being W.P. No. 25600 (W) of 2015 before the Hon’ble High Court which was disposed of with a liberty to the complainants to approach their grievance before the proper Forum. Lastly, on 19.09.2017 legal notice was sent to the OPs for refund of Rs. 5,65,134.17/-. The said notice was unattended. Hence, the consumer complaint.

The OP-2 has contested the case by filing W.V. denying all the material allegations made out in the complaint petition. The specific case of the answering OP is that the complainants approached the answering OP for buying insurance policies in the year 2013 and the complainants themselves choose to invest the policies of OP-1. Complainants filled in and signed the proposal forms, furnished all the relevant documents and cheuqes to the OP-2. Proper verifications were made and after obtaining telephonic conformation, subject policies were issued to the complainants. The original policy documents were duly dispatched to the complainants. As per Regularity and Development Authority (protection of policy holders interest) Regulation 2002 which gives the policy holders the option to return the policy stating the reasons thereof within 15 days from the date of receipt of the policy documents in case the policy holders are not agreeable to provisions of the same. The complainants did not exercise the right to cancel those policies within free look period which implied that they are agreeable to the terms and conditions of the policy. The consumer disputes redressal Forum has no authority to settle the alleged dispute as there are several other Forums such as IRDA and Insurance Ombudsman to settle the dispute. There is no malpractice and unfair trade on the part of the answering OP. Accordingly, the answering OP has prayed for dismissal of the complaint.

In this context, it is pertinent to mention here that in spite of given several opportunity the OP-2 fails to file E/chief in the form of affidavit. Thus, the case has proceeded ex parte against the OP-2.

            Initially the OP-1 appeared but ultimately failed to file their W.V. for which the case has proceeded ex parte against the OP-1.

Decision with Reasons

            Complainants to establish their case filed E/chief in the form of affidavit and also produced photocopies of policy documents, reply letter dated 08.03.2014 of the OP-1 against the grievance of the complainants, regret letter dated 18.04.2014 of the OP-1 regarding inability to cancel the policies and refund the premium amount, money receipts, statement of Bank Account of the complainants, demand justice letters dated 22.02.2016, 16.08.2017, reply letter dated 19.09.2017 of the OP-1, Advocate’s letter dated 02.10.2017, reply letter dated 03.11.2017 of OP-1 and request letter dated 20.11.2017 for cancellation of policies.

Fact remains that the complainants took four policies being Nos. 889145892, 889107652, 889145900 and 889109294 for Rs. 80,000/-, Rs. 20,000/-, Rs. 23,000/- and Rs, 20,000/- on 22.08.2013, 23.08.2013 and 24.08.2013 respectively from the OP-1 Max Life Insurance Co. Ltd. through the OP-2. Subsequently, the complainants failed to pay annual premium in respect of those policies to the OP-1 as the authorized representative of OP-2 falsely induced the complainants to invest in the life insurance policy of OP-1 being one time insurance premium. It is true that the complainants did not file any application for cancellation of those policies within the free look period. It is also undisputed that the OP-1 did not cancel those policies due to non-payment of annual premium and never refund any amount against those policies after deducting service charges. No document is forthcoming before this Forum that the OP-1 directed the complainants to provide NEFT particulars and cancel cheuqes in order to credit  the surrender value of the subject policies to the Bank Account of the complainants directly.

The dispute cropped up when the complainants requested the OP-1 to refund the entire invested amount but the OP-1 refused to pay the amount. Here, the factual aspect of the matter is not at all disputed. In a decision of the Hon’ble NCDRC in Dr. Aditya Prasad Ray -Vs.- Mr. Suresh Mahalingam, CEO & Managing Director, TATA  AIG  and others reported in 2015 (i) CPR 204 (NC) where the Hon’ble NCDRC has been pleased to observe that when complainant has failed and neglected to pay annual premium as per terms of the policy the same was automatically surrendered. In the instant case, the OP-1 did not cancel the subject policies on non-payment of the premium and never credit the refund amount to the Bank Account of the policy holders.

It is true that as per condition of the policy, it is mandatory to the complainants to inform or to pray cancellation of the policy within free look period but in the present case the complainants did not opt the said option within the free look period but after lapse of free look period of the policies submitted their grievances against the policy Nos. 89145892, 889107652, 889145900 and 889109294 with a request the OP-1 to refund the invested amount which is beyond the terms and conditions of the policy. It is the case of the complainants that they are induced by the authorized representative of OP-2 to purchase the policies being one time insurance premiums. Non-payment of annual premium of the policies automatically treated as surrender and it is obligatory on the part of the OP-1 to credit the surrender value of the policies to the complainants. Even the OP-1 never requested the complainants to provide NEFT particulars along with cancelled cheque in order to credit surrender value of the polices to the Bank Account of the complainants directly. It is well settled the insurance policy is totally based utmost good faith of both parties. In the instant case breach of contract is occurred on the behalf of the complainants as they fail to pay annual premium. In case of non-payment of premium it is the obligatory duty of the insurance company to cancel the policies and remit the surrender amount to the complainants. There is no attempt on the part of the OP-1 to remit the surrender value of the policies to the complainants. Therefore, there is malpractice and unfair trade on the part of OP-1.

Nobody can dispute that the insurance agents take the signature of the insured on a dotted line, most of the terms and conditions of the insurance policies contain various provisions and exclusion clauses which could not be understood easily even by the experts in the filed of occasions and ambiguous, the terms and conditions which are meant for understanding by the insured are mostly in a small print which would require strenuous   reading by insured, if at all he is vigilant, insurance company have not simplified their proposal forum or the form of insurance policies for reasons  best known to them, insurance companies are not keen to publish the insurance proposal forms or the policies in the regional languages which could be understood by the insured or a layman, and exclusion clauses are never highlighted or explained by the agent or the Development Officer to the insured.

            OP-2 is the broker and the authorized representative of OP-1 misguided the complainants for purchasing the subject policies for their own gain and profit. Such false inducement is obviously unfair trade practice on the part of the OP-2.

            Regard being had to the entire facts and circumstances of the case coupled with evidence and documents on record, we are of the opinion that there is deficiency in service and unfair trade on the part of the OPs. Therefore, the complainants are entitled to get relief against the OPs.

In result, the case succeeds in part.

Hence,

Ordered

That the complaint case be and the same is allowed in part  ex parte against the OPs with litigation cost of Rs. 10,000/- (Rupees Ten thousand) only.

The OP-1 is directed to refund Rs. 1,43,000/- (Rupees One lac Fourty Three thousand) only to the complainants within 45 days from the date of this order along with proportionate share of litigation cost after deducting 10  percent as service charges of the total policy amount.

The OP-2 is directed to pay Rs. 50,000/- (Rupees Fifty thousand) only for causing mental pain, agony and harassment to the complainants along with proportionate share of litigation cost within 45 days from the date of this order for misguiding the complainants.

OPs are jointly and severally directed to deposit Rs. 10,000/- (Rupees Ten thousand) only as punitive damage to this Forum for unfair trade within stipulated period.

 Liberty be given to the complainants to put the order in execution, if the OPs transgress to comply the order.