CONSUMER DISPUTES REDRESSAL COMMISSION – X

GOVERNMENT OF N.C.T. OF DELHI

Udyog Sadan, C – 22 & 23, Institutional Area

(Behind Qutub Hotel)

New Delhi – 110016

Case No.75/2016

NILIMA SAXENA

W/o SHRI PRABHAT KUMAR SAXENA

R/o A-202, DEFENCE OFFICER APARTMENT

PLOT NO. 33, SECTOR-4

NEW DELHI -110078…..COMPLAINANT

Vs.

M/s. MAX NEW YORK LIFE INSURANCE CO. LTD.

HAVING ITS REGISTERED OFFICE AT

MAX HOUSE – 1,

DR. JHA MARG, OKHLA

NEW DELHI - 110020.…..RESPONDENT

Date of Institution-19.02.2016

Date of Order- 04.11.2022

 O R D E R

RASHMI BANSAL– Member

The complainant has filed the present complaint against OP alleging unfair and restrictive trade practice and deficiency in services, claiming for the refund of the money paid to the OP towards premium for the insurance policy and compensation with interest for causing harassment and mental agony along with litigation cost.

1. It is the case of the complainant that she has taken 6 life insurance policies, Exhibit CW1/1 (colly), with the risk commencement date from 11.06.2007 from the OP and has paid a substantial sum of Rs. 9 lakhs towards premium in respect of above said policies, for the years 2007 to 2009, at the rate of Rs.50,000/- p.a. for each policy.  Complainant submitted that the OP, illegally and unauthorizedly, deducted substantial sum, almost equivalent to the half of the each premium, towards policy administration charges.

2. The complainant submitted that the clause 3, sub-clause D of the respective policies dealing with administrative charges, states, “In the policy year 1 and 2, a charge @ Rs.0.42% of the sum assured will be charged every month and from policy year 3 to the end of the policy term a charge at the rate Rs.0.07% of the sum assured will be charged every month subject to a maximum of Rs. 100/- per month;”. Complainant submitted that from the said clause it is very specifically and categorically made clear that there cannot be a charge more than Rs. 100/- per month in any case even if the charge is calculated either at the rate Rs.0.42% or at the rate Rs.0.07%.  per month of the sum assured, but OP, contrary to this, has charged Rs. 2100/- per month, per policy that comes to equal to Rs.25,200/- per year, per policy instead of Rs. 1200/  per year per policy for the first three years, i.e. for  2007, 2008 and 2009. Complainant submitted charging Rs.25,200/- p.a. as policy administration charges in respect of a policy whose annual premium is of Rs.50,000 is wholly arbitrary, unfair and restrictive, unreasonable and unsustainable and clearly constitutes unfair and restrictive trade practice on the part of OP causing wrongful gain to the OP and wrongful loss to the complainant in particular and large number of customers in general which practice need to be curbed also in the larger public interest under the provision of the Consumers Protection Act, 1986, being a social welfare legislation. Complainant further submitted that by indulging in such act, the OP has considerably reduced the money available for fund allocation to more than 50% of the premium amount which is detrimental to the interest of the complainant and sought cancellation of the policies and return of the premium paid by her. The complainant also submitted that the OP has not explained that why the administrative charges for first two years would be Rs.0.42% of the sum assured and why it would be @ Rs. 0.07% of the sum assured from third year onwards till end. This is further submitted by the complainant that in view of the illegal charges being collected by the OP she could not continue with the aforesaid policies after 2009 and has requested the OP, time and again, to cancel the said insurance policies and refund the premium amount of  Rs. 9 lakh paid in respect of her 6 insurance policies but OP consistently failed  to do so. Complainant submitted that OP is liable to refund total premium paid by her of Rs.9,00,000/-  and  also to pay surrender value since the above said policies were continued for the mandatory three year period. Complainant further submitted that OP has not furnished any information as to where the amount was invested, what was the return on such fund allocation/investment and how much money or benefit has been given to the complainant with regard to such returns on the investments made. Such activities of the OP categorically show and prove the gross deficiency in the service on the part of OP. The complainant had sent a legal notice, Ex. CW1/2, to the OP demanding the aforesaid amount from the OP, which was denied by OP vide its reply dated 24.04.2015, Ex. CW1/3. The OP has never disclosed in the proposal form that such exorbitant policy administration charges would be levied upon the premium amount paid by the complainant and thereby failed to make true disclosure to the complainant. The act of OP has caused severe mental agony, harassment and undue hardship for which OP is liable to compensate the complainant in addition to refunding the same to the complainant, along with the  interest thereupon at the rate of 18% per annum from the respective dates of deposit till payment.

3. Upon notice, OP has filed reply, through Power of attorney, Ex. RW1/1  denying the allegation of the complainant stating that complaint is vexatious, misconceived, based on misrepresentation of facts and is not maintainable in law against OP and that there is no deficiency in service of OP nor it has been involved in unfair trade practice. OP submitted that the complainant had full knowledge of terms and conditions of the policy including the charges and OP bears no liability to refund the premium paid by her as the same being against the terms of insurance contract and the complaint is liable to be dismissed.

4. OP submitted that before taking the said policy, the complainant has understood and gone through all terms and conditions of the policy including the charges applicable thereon and only thereafter the complainant had filled up the proposal form dated 29.05.2007, Ex. RW1/2 and had entered into the contract of insurance for issuance of insurance policies namely “Max life Max Amsure Secure Returns Builder ULIP- level – Standard Base Risk” commencing from 11.06.2007, with annual premium of Rs.50,000 for a policy term of 15 years each. The policy schedule, Ex. RW1/3, given to complainant shows the premium mode as annual. It is further submitted that all the relevant documents including the policy schedules, terms and conditions of the policy, copy of the proposal forms, benefit illustrations plans and forced insurance premium receipts were duly received by the complainant thereby giving her an opportunity to verify and examine the benefits and terms and conditions of the policy taken by her and complainant has not raised any objection during the ‘free look’ period of 15 days therefore, at later stage complainant cannot claim any clause as arbitrary or illegal, and  the complainant is strictly bound by the terms and conditions of the policy, also the complaint is barred by limitation. The copy of the policy documents including terms and conditions and first insurance premium receipts are Ex. RW1/4 (Colly). The OP stated that the tenure of the policy is 15 years and the complainant has defaulted in regular payment of renewal premium and hence attracted the consequences thereof.  Due to non-payment of renewal premium the status of the policies is that of “premium holiday”, meaning thereby that the policy and the insurance cover are yet subsisting; however, charges in respect of the insurance cover being provided to the complainant continue to be deducted which would ceases as soon as the fund value of the policy is nil.

5. The OP also stated that the all the emails of the complainant were duly replied informing the complete details of the payment and fund, along with the statement of funds. The copy of email dated 26.08.2012 and reply dated 28.08.2012 by OP   Ex. RW1/5; the email dated 05.10.2012 and reply dated 08.10.2012 by OP Ex. RW1/6;  email dated 05.03.2013 and reply dated 03.08.2013 by OP Ex. RW1/7; email dated 19.03.2013 and reply dated 31.03.2013 of OP Ex. RW1/ 8, are on record. OP submitted that the charges levied are strictly in accordance with the guidelines laid down by the Regulator and were as per terms and conditions. The objection by the complainant at this belated stage, almost after six years of commencement of the policies and after four years of non-payment, is evidently malafide attempt to wrongful gain from the OP and to avoid the consequences of non-payment of regular premium under the policy. In the reply to the legal notice of the complainant, Ex. RW1/9, the OP has cleared all the terms and conditions once again to the complainant. OP submitted that the complainant at this stage, without fulfilling her part of obligation under the policies, cannot be allowed to demand benefits which were never assured in the policies. Moreover, the complainant has paid only three premiums each under the policies and therefore, refund of the entire premiums and compensation as claimed by the complainant is not feasible and contrary to the basic terms of the policy and in violation of the insurance contract. The payment of the premium regularly is the sole responsibility of the policyholder and it is evident that complainant is not willing to continue the payment of the regular premium under the policies availed by her, hence, present complaint appears to be complainant’s attempt to escape the consequences as mentioned in the terms and conditions. It is a settled law that a party, the complainant in the present case, cannot be allowed to take benefits of her own wrongs. The entire section 3 of the terms and conditions of the policy covered the different types of charges. OP denied any illegality in charging Rs.25,200/-  instead of Rs.1200 per policy per year  and stated that the charges levied by the OP are in consonance of with the terms and conditions of the policy, duly approved by the Regulator IRDA. OP further submitted that OP does not invest the money of the policyholder without their consent. The complainant has specifically instructed the OP to invest her money in a particular kind of fund which is evident from the proposal form submitted by the complainant. The charges levied by the OP to administer the investment of the of the customer in the best possible way and the statement of account is Ex. -RW1/10. OP denied any liability  to refund premium paid by complainant and that any loss caused to the complainant by deducting the charges as prescribed by IRDA.

6. We have carefully gone through the pleadings, the evidence produced by them and have heard learned counsels on their behalf.
7. First of all, after considering the record we are of the view that complaint is within limitation as the policy is still in subsistence at the time of filing the complaint.

8. The facts of the case and the documents filed by the parties are not in dispute. The proposal form and the policies issued to the complainant clearly shows that complainant was aware about the terms and conditions and that the policies are market based for a term of 15 years, whose growth depends upon volatility of the market and  regular premium and after satisfying herself during “look up” period, has taken the policies. The perusal of the proposal form reveals that it does not contain information about the levying of the administrative charges by OP but it did mention about the mode of investment of funds in market to which complainant has opted for 100% growth fund under the head of allocation of the her funds in the proposal form, at clause 8, which establishes that OP has invested complainant money as per her instructions and with her consent. Therefore this cannot be said that OP has done anything which was not in complainant knowledge or was done without her consent. The charges levied were for management of the investment of the policy holder and the complainant was aware about that.

9. The only issue between the parties is with respect to the levying of the administrative charges, which as per complainant are  exorbitantly high, almost 50% of the premium paid by her for the policies for the first two years of the policy.

10. The careful analysis of clause 3, sub-clause D of the policy, which is related with the administrative charges, shows that the above said clause has two parts, the first is related with charges for 1^st and 2^nd year of the policy and second is related with charges from  3^rd year to the end of the policy. The said clause is ambiguous in nature and not clear as to whether the rider of Rs. 100/- is applicable to both the parts or only to the second part of the said clause. The statement of account, as filed by OP, Ex. R10, shows that OP has charged at the rate 0.42% of the sum assured for the 1^st and 2^nd year of policy and accordingly charged Rs. 2100/- pm during the 1^st  and 2^nd  year of the policy,  i.e. from 11.06.2007 till 11.05.2009. From 3^rd year onwards i.e. from 11.06.2009,  OP has applied the rider of Rs. 100/- as per second part of the clause and charged Rs.100/- pm. 

11. We find the administrative charges clause ambiguous, not clear and highly in favour of the OP, the same shall not be binding upon complainant, in view of the rule of Proferentem Rule which  states that that when there is ambiguity in the policy, the same should be resolved by adopting the construction favourable to the insured. The same is held by  the Hon'ble Supreme Court of India in Manmohan Nanda vs UOI and Anr., I (2022) cpj 20 (SC), wherein Hon'ble Supreme Court of India as follows:

 “Para 44. The Contra Proferentem Rule has an ancient genesis. When words are to be construed, resulting in two alternative interpretations then, the interpretation which is against the person using or drafting the words or expressions which have given rise to the difficulty in construction, applies. This Rule is often invoked while interpreting standard form contracts. Such contracts heavily comprise of forms with printed terms which are invariably used for the same kind of contracts. Also, such contracts are harshly worded against individuals and not read and understood most often, resulting in grave legal implications. When such standard form contracts ordinarily contain exception clauses, they are invariably construed contra proferentem rule against the person who has drafted the same.”

12. Further, this is also noted that the complainant stopped payment of premium in 2009 not because of levying of the administrative charges by OP @ 0.42% but to the reason best known to her. The  documents on record show that complainant was in receipt of the statement of account for the year 2007-08 which clearly mentioned details of different charges as levied by OP and never objected.  In the year 2013, for the first time complainant objected for high rate of administrative charges, Ex. RW1/ 8, when her assured amount started depleting and she received the notice letter from OP intimating her ‘end of the revival period’. Complainant did not object even when his policies underwent ‘premium holiday’ since she was very well covered under insurance. Moreover, the administrative charges were high for the first two years of the policies only, and from the third year Rs. 100/- was levied by the OP, which led us to the conclusion that had the OP charged Rs. 100/- p.m. for the first two years also, then there would have been no problem with complainant with respect to these policies. Therefore, the plea of the complainant that she could not pay premium because of high rate of administrative charges is not sustainable. By not paying regular premium complainant has violated the terms and conditions of the insurance policy, therefore, the premium amount paid by her cannot be returned to her. Moreover, the complainant has been covered under the policy. So far as, administrative charges are concerned, OP, is directed to refund the extra amount charged by him towards same for first two years of the policy, i.e. Rs. 2100/- per month extra charged for a period from 11.06.2007 till 11.05.2009, which is equal to Rs. 50,400/- with interest at the rate of 6% p.a. from the date of order till its realization. The OP is further directed to pay a compensation of Rs. 10,000/- towards deficiency in services and causing mental agony and harassment to the complainant and 10,000/- towards litigation charges.  The above said order shall be complied with by the OP within 90 days from the date of order, failing which the entire amount shall carry interest @9% p.a. till its actual realization by complainant.

13. The complainant could not be decided in time due to heavy pendency of the cases.

14. The copy of the order be given to parties in terms of the Consumer Protection Act, 1986, and thereafter file be consigned to Record room.

15. The order be uploaded on web site.

16. The order contains 9 pages, each bearing my signature.