J. Bag. Dt. 09.03.15
J. Bag, Member
The present appeal is directed against the Order dated 28.11.2013, passed by the Ld. District Consumer Disputes Redressal Forum, Kolkata Unit-II, in CC No.300 of 2012 , whereby the complaint was allowed on contest with costs , compensation and punitive damages against the OPs.
The complaint case, in brief, was as follows:
The Complainant, namely, Smt. Keya Das, purchased one insurance policy under HDFC, SL Savings Assurance Plan from the OP Insurance Company whose agent assured good prospect of her investment and better service from the Company. The Complainant on 13.10.2011 paid the premium of Rs. 1,50,000/-. She was under the impression that the premium was one time but after receiving the policy paper , she found that premium was annual in nature in respect of her policy. She approached the OPs for rectification of her policy but she was told that nothing could be done, and she would have to continue the policy or else the premium as paid by the Complainant would be forfeited. The Complainant requested for refund of the premium amount but nothing was done. After being frustrated and harassed she requested for settlement of the claim but the OPs paid no heed to her request. Alleging negligence on the part of the OPs in rendering service which was deficient in nature , the Complainant filed a petition of complaint with prayer for direction upon the OPs to refund the deposited premium amount together with interest and cost of litigation , apart from payment of compensation of Rs. 2,00,000/- for causing mental harassment .
The complaint was contested by OP Insurance Company by filing W.V. wherein, with denial of material allegations , it was submitted that the Complainant sent a letter for cancellation of the policy and refund of the premium , but the policy was availed with full knowledge about the terms and conditions of the same and the request for cancellation was not made within free look period as noted in the policy. Second premium was not paid. The policy attained ‘lapsed’ status .Accordingly, they were unable to refund the premium as claimed.
Ld. Forum below after careful perusal and scrutiny of the policy certificate and also upon hearing of pleadings observed that though the Complainant asked the OP Insurance Company to rectify the policy , OP did not do that for which she prayed for cancellation of the policy and refund of the amount paid as premium. It was also observed by the Ld. Forum below that as per IRDA Rules if any insured is willing to get back deposited amount from private or a Government Insurance Company, then they shall have to return the entire amount after cancellation of the policy after deducting only 5 to 10 percent of the said amount. But , there is no scope on the part of the Insurance Company to grab the entire amount. Accordingly, Ld. Forum below allowed the complaint with cost of Rs. 10,000/- against the OPs. OPs were also directed to refund the entire premium of Rs. 1,50,000/- after deducting Rs.10,000/- as service charge. In total a sum of Rs. 1,65,000/- was ordered to be paid by the OP insurance company within a period of one month from the date of order failing which for each day’s delay a composite interest @ Rs. 250/- per day would have be paid to the Complainant till full payment . Further, for adopting unfair trade practice , the OPs were directed to pay punitive damage of Rs. 15,000/- to the State Consumer Welfare Fund within one month from the date of the order.
Being aggrieved by and dissatisfied with the order of the Ld. Forum below , the Appellants have come up before this Commission with a prayer for direction to set aside the impugned order on certain grounds.
Ld. Advocate appearing for the Appellants submitted that the Complainant took a policy under HDFC Savings Assurance Plan with yearly premium of Rs. 1,50,000/-. After payment of the first premium ,the second premium was not paid. As a result, the status of the policy stood lapsed . No application for revival of the policy was made either. As per policy condition claim for refund of premium amount could not be entertained unless premiums were paid for first three years . The Complainant’s plea that she was not aware of the premium paying term or frequency of payment of premium is not at all true. In the application form itself , the information about term of payment was noted. Even after receipt of the policy certificate, she could have exercised an option to cancel the policy within the free look period of 15 days from the date of receipt of the policy paper. She failed to exercise such option and became defaulter in respect of payment of subsequent premium . As per policy condition, the claim of the Complainant to refund the premium value is not entertainable. Ld. Forum below allowed the refund with costs and other penal amounts arbitrarily and without consideration of the material facts or the terms and conditions of the policy. The impugned order deserves to the set aside.
Ld. Advocate appearing for the Respondent submitted that the agent of the Insurance Company assured the insured that policy premium was a one time deposit only of Rs.,1,50,000/- in respect of the policy and no further premium would have to be paid. It was only because of misguidance and mis-sale on the part of the OP Insurance Company through their agent that the Complainant agreed to purchase the policy with the understanding that no further payment of premium would have to be made before its maturity. After receipt of the policy certificate , she came to know that premium was annual in nature in respect of the policy . This was brought to the knowledge of the Insurance Company with a request to rectify her account but nothing was done and the Complainant became frustrated inspite of repeated visits to the office of the Insurance company . Ld. Advocate, having drawn our attention to Clause No. 6 (2) of the IRDA Notification dated 16th October 2002 emphasized that the insurer should have informed by their letter forwarding the policy that she has a period of 15 days from the date of receipt of the policy document to review the terms and conditions of the policy and where the insured disagrees to any of those terms or conditions , she has the option to return the policy stating the reasons for her objection. It was also emphasized that no such letter as required under clause 6 (2) of the IRDA Notification, dated the 16th October 2002, was communicated to the Complainant which is a clear deficiency in service and negligence on the part of the Insurance Company. This was a serious lapse on the part of the Insurance Company that caused physical and mental sufferings and also financial loss which the Insurance Company was liable to compensate for. Ld. Forum below adjudicated the matter in a reasoned manner . The impugned order should be upheld.
Decision with Reasons
We have gone through the memorandum of appeal together with copies of the impugned order , the petition of complaint , the policy documents , W.V. filed on behalf of the OPs before the Ld. Forum below and other documents including examination in chief on affidavit of the Complainant etc.
There is no dispute that the Complainant purchased one policy under HDFC Savings Assurance Plan. Allegedly , the agent of the insurance company made her understand that the premium paid was one time in nature and she would not have to pay any subsequent premium. She disputed the matter of payment of subsequent premium and finally urged for refund of her premium amount with cancellation of the policy. The insurance company appears to have stuck to the policy condition of making payment of at least 3 premiums before any prayer for surrender of policy could be considered.
The entire dispute revolves round the fact that the Complainant took the words of the agent for granted and when she realized that she has to pay premiums annually she was dissatisfied and pleaded for refund of the premium amount .
It is seen that though the insurance company was required under Clause 6 (2) of the IRDA Notification of 16th October 2002, to ‘inform by letter forwarding the policy that he has a period of 15 days from the date of receipt of the policy document to review the terms and conditions of the policy’ no document / proof was produced before the Ld. Forum below establishing the fact of issuance of such letter in the interest of proper service to the Complainant. There is enough reason to hold that such negligence on the part of the insurer was a deficiency in service. The Respondent/ Complainant should have been provided with a letter drawing her attention to the fact that she could exercise option to review the terms and condition of the policy , though the fact goes that she took the policy after filling the application form and signing the same .
Ld. Forum’s order in issuing direction upon the insurance company to refund the entire amount of Rs. 1,50,000/-after deducting Rs. 10,000/- as service charge from the said amount appears to be fair and just, but the costs, compensation and punitive damages as ordered to be paid do not stand justified in consideration of the fact that the Complainant preferred to rely heavily upon the words of the agent of the Insurance Company rather than the written words in the policy paper. The agent was not made a party for examination either . In that view of the matter , the impugned order is decided to be modified.
Hence,
Ordered
That the appeal be and the same is allowed in part on contest with modification of the impugned order to the effect that the Insurance Company/ Appellants shall refund Rs. 1,40,000/- to the Respondent within a period of 40 days from the date of this order , failing which, interest @ 9% p.a shall be payable on the said amount from the date of this order till full realization. The other parts of the impugned order stand struck off. The impugned order stands modified accordingly. There shall be no order as to costs.
