Ms. Bimla Nainwal, House No.2504, Phase 11, Mohali, S.A.S. Nagar, Punjab. 

                                                       .…Complainant

                           Vs.

1.                M/s Aviva Life Insurance Company India Limited, SCO 180-182, Sector 9, Chandigarh through its Branch Manager.

2.                HDFC Bank (Formerly Centurian Bank of Punjab) SCO 146-147-148, Sector 43B, Chandigarh 160042, through its Branch Manager.

3.                Bir Inder Singh, Asstt. Manager, HDFC Bank (Formerly Centurian Bank of Punjab) SCO 146-147-148, Sector 43B, Chandigarh 160042

4.                Randeep Chawla, Agent M/s Aviva Life Insurance Company India Limited, SCO 180, -182, Sector 9, Chandigarh.       

                                                                             …. Opposite Parties

 BEFORE: JUSTICE SHAM SUNDER (RETD.), PRESIDENT

                MRS. NEENA SANDHU, MEMBER

Argued by: Sh. V.K. Sachdeva, Advocate for the complainant.

                    Sh. R.S. Dhull, Advocate for Opposite Party No.1

                    Sh. Sunil Narang, Advocate for   Opposite Parties                                 No.2&3.

                    Opposite Party No.4 already exparte.

MRS. NEENA SANDHU, MEMBER  

          Briefly stated, the facts of the case, are that the complainant is a non-resident Indian having citizenship of USA and her permanent address in India is 2504, Phase 11, Mohali SAS, Nagar Punjab. It was stated that the complainant was maintaining her saving bank account with Opposite Party No.2. In the second week of February, 2008 when she was in India, she visited Opposite Party No.2 to know the status of her bank account. Opposite Parties No.3&4 approached her as officials of  Opposite Parties No.1&2 and  induced her to invest in the investment scheme of Opposite Party No.1. She was assured that it would pay annualized return @15% on the investment made by her and the annual rate of interest will be 13% per annum. It was further stated that the Opposite Parties, further assured her that, if she deposited Rs.5.00 lac annually for 3 years in the investment scheme of Opposite Party No.1, she would get maturity amount thereof to the tune of Rs.21.75 lacs on the expiry of 4 years. She was also assured that she would also get an insurance policy of Rs.37.50 lacs. She was also assured that she was not liable to pay any amount after making the payment of third installment of Rs.5.00 lacs. It was further informed by Opposite Parties No.3&4, that the investment scheme of  Opposite Party No.1 was duly sponsored by Opposite Party No.2, and Government of India, and the same was confirmed by Opposite Party No.1. The complainant allured by the promises of the   Opposite Parties, regarding the investment scheme,  agreed to invest her money and issued a cheque dated 14.2.2008 amounting to Rs.5.00 lac, in favour of Opposite Party No.1, but no receipt thereof, or any document, was provided to her. The Opposite Parties took her signatures on blank printed form of Opposite Party No.1 by insisting that the same contained so many columns, and they would fill the same themselves but no copy thereof was supplied to her. It was further stated that despite numerous calls from USA she was neither provided the investment or policy documents and receipt of cheque of Rs.5.00 issued by her in favour of Opposite Party No.1 towards first installment, nor copy of the form signed by her. Every time the complainant approached the Opposite Parties regarding the issue, she was given false assurances. It was further stated that the   Opposite Parties threatened her that in case of non-deposit of second installment, the first installment paid by her shall be forfeited, and thus, she issued second cheque amounting to Rs.5.00 lac in favour of Opposite Party No.1. However, the   Opposite Parties even did not issue receipt thereof.  Thereafter the complainant paid the third installment of 5.00 lac to the Opposite Party No.1, and the   Opposite Parties assured her that she would receive the maturity amount of Rs.21.75 lacs on 31.3.2012.  But the complainant was shocked when she contacted the   Opposite Parties regarding the maturity amount and she was informed that the investment policy was forfeited and closed and she was entitled to Rs.5.00 lac instead of Rs.21.75 lacs and letter to this effect alongwith cheque of Rs.5.00 lac was sent to her address i.e. 2089, Sector 44-C, Chandigarh, which was never supplied by her for correspondence especially when her permanent address is in Mohali. It was further stated that when the complainant contacted the said address where Opposite Party No.1 sent the letter and cheque, she was shocked to know the contents of letter wherein Opposite Party No.1 mentioned about Policy No.1884344 and policy status as auto-foreclosure and falsely stated that since the surrender value of her policy was less than her first year’s premium, thus, in such a situation as per her policy terms and conditions, it had to auto foreclose her policy and refunded Rs.5.00 lac  to her. The complainant immediately lodged protest with Opposite Party No.1 that she had never taken such policy and requested to release her full maturity value of Rs.21.75 lacs but to no avail.   It was further stated that after making numerous requests Opposite Party No.1 provided incomplete photocopy of the aforesaid policy in  question of ULIP Scheme, which was never sent to the her for more than 4 years and the complainant never filled the application form nor she agreed to take the alleged policy issued by it (Opposite Party No.1.)  and, as such, the   Opposite Parties misappropriated the invested amount of Rs.15.00 lacs.  It was further stated that Opposite Party No.1 had not informed the complainant as to how and in what manner the surrender value of the policy of the complainant was reduced from 15.00 lacs  deposited by her,even below Rs. 5 lacs after more than 4 years.   It was further stated that the complainant was not bound by the terms and conditions of the alleged ULIP policy, which was provided now because she never filled the application form for taking the said policy nor the   Opposite Parties provided her receipts for the money deposited by her. When the grouse of the complainant regarding release of full maturity amount was not redressed, by the   Opposite Parties, she issued a legal notice to them   but to no effect.  It was further stated that the aforesaid acts of the   Opposite Parties, amounted to deficiency, in service, and indulgence into unfair trade practice. Hence, the complaint was filed.

2                   In its written reply, Opposite Party No.1, while admitting the factual matrix of the case stated that the complainant after understanding all the terms and conditions of the Life Saver Plus Plan filled the proposal form and gave all the relevant details and information in the prescribed form. It was further stated that in the said policy annual premium of Rs.5.00 lacs was to be paid for 15 years and the policy, in question, commenced w.e.f. 29.2.2008 with assured sum of Rs.37,50,000/-. The policy documents were dispatched to the mailing address of the complainant alongwith policy schedule which clearly explained the maturity date and terms and terms of the policy.  It was further stated that the complainant stopped paying further premiums, after payment of three premiums. Therefore, as per the terms and conditions of the policy if payment of premium was discontinued after 36 months, then the policy could be reinstated or could be surrendered after penalty.  Thus due to non-payment of renewal premium, the policy of the complainant lapsed and as per the terms and conditions of the policy the complainant was entitled to the surrender value equivalent to the regular premium paid in the first year. Thereafter, the policy automatically terminated and surrender value i.e. of Rs.5.00 lac as per the terms and conditions of the policy, was sent to the complainant. It was further stated that, as such, there was nothing due against the answering Opposite Party to the complainant.  It was further stated that the complainant received the policy documents, which were attached by her with the complaint and if she was not satisfied with the same she could have surrenderd the same within 15 days of free look period.  It was further stated that the letter dated 3.8.2012 and cheque were sent at the address given by the complainant in the proposal form and as per the documents submitted by the bank.  It was further stated that the original policy bond was delivered to the complainant, at the address given by her in 2008. It was further stated the policy document attached as Annexure C-5 with complaint, is an original policy bond and not a duplicate policy bond. Duplicate policy bond is issued to the insured, if some genuine reasons are furnished for the issuance of the same. Hence it was for the complainant to explain as to how she was in the possession of original bond if  the same was never received by her.. All other allegations, levelled by the complainant, in the complaint, were denied. It was further stated that there was no deficiency, in service, on the part of the answering Opposite Party nor it indulged into unfair trade practice.

3                   In their joint reply Opposite Parties Nos 2&3 stated that they had no role in filling up the proposal form or in the issuance of policy.  It was denied that it was Opposite Party No.4 who acted as agent of Opposite Party No.1 and dealt with the complainant regarding the policy in question.  It was further stated that the answering Opposite Parties ever represented the complainant that, there was less rate of interest, in the saving bank account, and they offered the complainant a better investment scheme with assured guaranteed returns at much higher rate of interest. It was denied that if the answering   Opposite Parties, assured the complainant that Opposite Party No.1, would return annualized return at the rate of 15% on the invested amount of the complainant and the rate of interest would be 13% p.a.   It was further stated that the answering   Opposite Parties never induced the complainant, in respect of the policy in question. It was denied that the answering   Opposite Parties pressurized the complainant to give cheque for second installment and threatened that  in case of failure her first installment would be forfeited.  It was further stated that the complainant herself gave the address of Chandigarh in the proposal form i.e. H. No. 2089, Sector 44-C, Chandigarh. It was further stated that the complainant concealed the fact that the said address was of her friend Mrs. Avtar Kaur who was also having account with Opposite Party No.2 and there had been transactions between the complainant and her said friend which showed relationship between them.  The remaining allegations of the complaint were denied being wrong.

4                   Despite due service, none appeared, on behalf of Opposite Party No.4, hence he was proceeded against ex parte vide order dated 21.12.2012.

5                   The parties led evidence, in support of their case.

6                   We have heard the Counsel for the parties, and, have perused the record, carefully.

7                   The Counsel for the complainant submitted that the   Opposite Parties assured the complainant that if she invests Rs.5.00 lacs  annually for three years in the investment scheme of Opposite Party No.1 she would get Rs.21.75 lacs as maturity value on the expiry of 4 years and she would also get insurance policy of Rs.37.50 lacs. It was further submitted that   the Opposite Parties assured that the complainant would not be liable to pay any amount after payment of third installment of Rs.5.00 lacs and, as such,  on the inducement of the   Opposite Parties, she invested her hard earned money with Opposite Party No.1 and paid three installments amounting to Rs.15.00 lac. But Opposite Party  No.1 neither issued her the  document of the investment scheme nor she was supplied receipts of the amount paid by her.  It was further submitted that after payment of three consecutive premiums of Rs.5.00 lac each, when the complainant asked  Opposite Party No.1 to release the assured maturity amount of Rs.21.75 , it (Opposite Party No.1) informed the complainant that the investment policy of the complainant was foreclosed and the complainant was only entitled to a sum of Rs.5.00 lacs and it had already sent a letter to this effect alongwith a cheque of Rs.5.00 lac at her address i.e. H. No.2089, Sector 44-C, Chandigarh, which was never supplied by the complainant to the   Opposite Parties  and, as such, the complainant agitated the matter. It was further submitted that the cheque of Rs.5.00 paid towards the surrender value by Opposite Party No.1, being illegal, was never encashed by the complainant, hence validity thereof expired.  It was further submitted that sending of cheque of Rs. 5.00 lacs by the   Opposite Party No.1 to the complainant was totally in contravention of the guidelines of the IRDA notified on 1.7.2010, wherein discontinuance charges were fixed. It was further submitted that as per the said notification maximum discontinued charges in the 4th year were Rs.2000/. It was further submitted that even the complainant was entitled to the surrender value, as per the Insurance Regulatory and Development Authority (Standardization of terms & conditions of ULIP Products and treatment of lapsed polcies), Regulations, 2010, wherein in Regulation 1(2) it has been clearly mentioned that they shall come into force on the date of their publication in the official gazette and shall apply to all contracts of Linked Life Insurance affected thereafter. These Regulations supercede the provisions of circular/guidelines, if any issued by the Authority and will be applicable to the existing products also.  Hence the act of  Opposite Party No.1 in refunding Rs.5.00 lacs to the complainant, as surrender value, amounted to deficiency in rendering service on its part and indulgence into unfair trade practice. It was further submitted that the complainant never filled up the proposal form and she signed the blank paper which was later on filled up by the   Opposite Parties  and the address given in the proposal form was never supplied by the complainant. 

8                   On the other hand, Counsel for Opposite Party No.1 submitted that as per the terms and conditions of the policy, in question, proposal form whereof was duly signed by the complainant, she was to pay premium of Rs.5.00 lacs annually  for 15 years and the sum assured was Rs.37,50,000/-. It was further submitted that the policy documents were dispatched to the  address mentioned by the complainant in duly signed proposal form alongwith policy schedule, which clearly explained the maturity date and terms of the policy. It was further submitted that the complainant stopped paying further premiums after payment of three premiums, and therefore, as per the terms and conditions of the policy if payment of premium was discontinued after 36 months then the policy could be reinstated or could be surrendered after penalty, and, as such, on account of non-payment of renewal premium the policy of the complainant lapsed. It was further submitted that as per the terms and conditions of the policy the complainant was  entitled to the surrender value equivalent to the regular premium paid in the first year. Hence the policy automatically terminated and surrender value i.e. of Rs.5.00 lac as per the terms and conditions was sent to the complainant.  It was further stated that the IRDA Regulations notified on 1.7.2010 were not applicable to the policy, in question, as the same were notified after the issuance of the policy i.e. in the year 2008.  It was further submitted that the complainant could not place reliance on the Insurance Regulatory and Development Authority (Standardization of terms & conditions of ULIP Products and treatment of lapsed policies), Regulations, 2010, because the same were only draft Regulations, which were never notified by the IRDA.  It was further submitted there was no deficiency in rendering service on the part of  Opposite Party No.1.

9                   Counsel for Opposite Parties No.2&3, submitted that they had no role to play in issuance of the policy, or refund of the value thereof. It was further submitted that the matter is between the complainant and Opposite Party No.1. Hence there was no deficiency on the part of   Opposite Parties No.2&3.

10              The first dispute, to be determined, in the present case, is as to whether the Insurance Regulatory and Development Authority (Standardization of terms & conditions of ULIP Products and treatment of lapsed policies), Regulations, 2010, upon which the Counsel for the complainant placed reliance during the course of arguments were notified or not. The contention of the Counsel for Opposite Party No.1, was that the same were never notified by the IRDA, and, as such, there was no question of applicability thereof to the present case. On the other hand, the counsel for the complainant submitted that he downloaded the same from the official website of the IRDA. On the asking of this Commission Opposite Party No.1 filed affidavit of Sh. Gaurav Bajaj, Assistant Manager of Aviva Life Insurance CO. India Ltd- Opposite Party No.1, to the effect that the aforesaid Regulations  were never notified by the IRDA and, thus, the same never came into force. On the other hand, the complainant filed no affidavit to rebut the said affidavit. Hence, in this situation, we are left with no alternative, but to believe the evidence of Opposite Party No.1. Hence it is established that the aforesaid Regulations were never notified, in the official gazette, and as such the same are not applicable in the present case.

11              The next issue, to be determined, is regarding the correspondence address of the complainant. Perusal of the Annexure R-1 reveals that the proposal form as also declaration were duly signed by the complainant and the current address mentioned therein was of 2089, Sector 44-C, Chandigarh and not of Mohali as alleged by the complainant. Thus in view of the address given, in the proposal form, as also in the declaration, the plea of the complainant that the Opposite Party No.1 sent the letter and cheque at the wrong address, is not sustainable. Hence this plea of the complainant being devoid of merit, is rejected.  

12             The next contention of the Counsel for the complainant, was that the Opposite Parties got signed the blank proposal form from the complainant by misrepresentation. We do not find merit in this contention of the complainant because the complainant who is NRI is a well educated lady and it cannot be presumed that she would sign a blank proposal form especially when she was to invest a huge amount of Rs.5.00 lacs as annual premium towards the policy in question. Hence she was aware of the policy in question and, accordingly, she signed the proposal form.  Admittedly the complainant took the policy, in question, in the year 2008, and paid three installments and thereafter stopped making payments. Opposite Party No.1, after calculating the surrender value, sent a cheque in the sum of Rs.5.00 lacs, at the address of the complainant mentioned in the proposal form. We find merit, in the contention of the Counsel for the complainant, that since Opposite Party No.1 was governed by the guidelines and Policies of the IRDA, the surrender value calculated by it, was in contravention of guidelines issued by the IRDA vide notification dated 1.7.2010. Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010, were notified vide notification dated 1.7.2010. Regulation 7 of the Regulations ibid reads as under;

“ Obligation of an insurer upon discontinuation of a policy

7.         The obligation of an insurer in this regard shall be as follows:-

i.          To impose discontinuance charges only to recoup expenses incurred towards procurement, administration of the policy and  incidental thereto.

ii.         To design the discontinuance charges to encourage the policyholder to continue with the contract for the full term;

iii.        To ensure that the discontinuance charges reflect the actual expenses incurred.

iv.        To structure the discontinuance charges within the statutory ceiling on commissions and expenses and

v.         To ensure that the charges levied on the date of discontinuance (as a percentage of one annualized premium) do not exceed the limits specified below:-

 Ap- Annualised premium

Fv- fund value on the date of discontinuance

Provided that where a policy is discontinued, only discontinuance charge may be levied by the insurer and no other charges by whatsoever name called shall be levied.

Provided that no discontinuance charges shall be imposed on single premium policies and on top ups.”

Admittedly, cause of action arose to the complainant, when the policy of the complainant was discontinued in 2012, i.e. after payment of three consecutive premiums of Rs.5.00 lac each, and she was sent a cheque of Rs.5.00 lacs towards surrender value, whereas, the aforesaid Regulations came into force, in the year 2010. Thus, according to Regulation 7, extracted above, Opposite Party No. 1, could not charge any other charges, except the one mentioned above. Since the complainant paid a sum of Rs.15.00 lacs, as premiums, for three years to Opposite Parties  No. 1, according to the Regulation extracted above, she was entitled to  get Rs 14,96,000/- (Rs.15,00,000-4000) but it (Opposite Parties No. 1) offered her only Rs.5.00 lacs, by way of a cheque, which was infact, not encashed by her, that too, without producing, on record, justifiable calculations thereof. Hence there was deficiency in rendering service, on the part of Opposite Party No1, and, as such it is liable to pay Rs14,96,000/- to the complainant.

13             Opposite Party No.1, failed to pay the complainant the amount, which was legally due to her as per the Regulation, extracted above, and, as such, caused her a lot of mental agony and physical harassment for which she is also entitled to compensation.

14             In view of the above, we find merit, in this complaint. Accordingly, the same is allowed, with cost, in the following manner;

i)                   Opposite Party No.1 is directed to pay
Rs 14,96,000/-        (Rs.15,00,000-4000) to the complainant. The complainant shall return the uncashed cheque of Rs.5.00 lacs to Opposite Party No.1.

ii)                 Opposite Party No1 is further directed to pay Rs.25,000/- as compensation for causing the complainant mental agony and physical harassment.

iii)              Opposite Party No.1 is further directed to pay Rs.5,000/- as cost of litigation to the complainant.

15                       The aforesaid directions given in clauses (i) to (iii) shall be complied with by Opposite Party No.1 within 45 days, from the date of receipt of a certified copy of this order, failing which, it shall be liable to pay penal interest on the amounts mentioned in clauses (i) and (ii) @12% p.a. from the date of filing the complaint till realization, besides payment of costs of Rs.5,000/-

16                       Copies of this order be sent to the parties, free of charge.

Pronounced.                                                                 Sd/- 

19.3.2013                   [JUSTICE SHAM SUNDER[RETD.]

                                                              PRESIDENT            

                                                                   Sd/-

                                                                            [NEENA SANDHU]

                                                                                  MEMBER