ORDER

HON’BLE MR. DINESH SINGH, MEMBER

1.      Complaint Case No. 788 of 2009 was filed before the District Consumer Disputes Redressal Forum-I, U.T. Chandigarh, hereinafter referred to as the ‘District Forum’.

The Complainant was one Mr. Raghbir Singh, hereinafter being referred to as the ‘Complainant’.

The Opposite Parties No. 1 and No. 2 were Aviva Life Insurance Company India Limited, hereinafter being referred to as the ‘Insurance Company’.

2.      Brief facts, succinctly put, are that the Complainant purchased a Life Long - Unit Linked Policy, hereinafter referred to as the ‘Policy’, from the Insurance Company vide proposal form dated 09.01.2008.

He paid Rs. 1 lakh on 18.02.2008 as the annual premium for the first year.

He thereafter asked for refund of the said Rs. 1 lakh paid by him as premium for the first year along with interest.

He had to pay Rs. 1 lakh each i.e. total Rs. 2 lakh as annual premia for the next two years.

He did not pay the subsequent two annual premia i.e. he did not pay the subsequent Rs. 2 lakh.

The Insurance Company vide its letter dated 21.11.2008 informed him that his “right to reconsider” option (“Free look Period”) for cancellation of the Policy could have been exercised only within 15 days of the receipt of the Policy, whereby he could have got his entire premium refunded (“less stamp and other applicable charges”). The Insurance Company regretted its inability to convert the Policy into a single premium plan “at this point in time”.

The Insurance Company did not refund the said Rs. 1 lakh paid as premium for the first year.

It did not make refund of any “Surrender Value” of the Policy to the Complainant along with its said letter dated 21.11.2008.

3.      The Complainant filed a Complaint before the District Forum on 02.06.2009.

4.      The District Forum vide its Order dated 17.11.2009 directed the Insurance Company to refund the entire premium of Rs. 1 lakh to the Complainant along with interest @ 8% per annum from the date of deposit i.e. 18.02.2008 till its realisation and awarded Rs.1100/- as cost of litigation.

5.      The Insurance Company appealed in the State Consumer Disputes Redressal Commission, U.T. Chandigarh, hereinafter referred to as the ‘State Commission’.

6.      During the pendency of the Appeal before the State Commission, the Insurance Company, vide its letter dated 22.02.2011, refunded Rs. 3365/- to the Complainant as “Surrender Value” of the Policy, inter alia stating that “However, your policy has acquired the surrender value which has been mentioned above. We are refunding this back you as per the terms and conditions. You will find the refund cheque of Rs.3365.00 along with this letter.”.

7.      The State Commission vide its Order dated 26.09.2011 modified the Award made by the District Forum and directed the Insurance Company to:

[a]     provide the calculation sheet to the Complainant vide which it calculated the surrender value of Rs.3365/- within 30 days; and

[b]     pay Rs.50,000/- for mental and physical harassment and Rs.10,000/- as cost of litigation to the Complainant within 30 days, failing which the said Rs.50,000/- plus Rs.10,000/- would attract penal interest @ 12% per annum.

8.      R.P. No. 3964 of 2011 has been filed by the Insurance Company under Section 21(b) of The Consumer Protection Act, 1986, hereinafter referred to as the ‘Act’, seeking to set aside the Order dated 26.09.2011 of the State Commission.

R.P. No. 1071 of 2012 has been filed by the Complainant seeking to uphold the Order dated 17.11.2009 of the District Forum along with cost of litigation of Rs.21,000/-.

9.      We heard the learned Counsel for the Insurance Company and the Complainant, and perused the entire material on record including inter alia specifically the Order dated 17.11.2009 of the District Forum and the impugned Order dated 26.09.2011 of the State Commission.

10.                 In the present context, we are not testing, per se, the terms and conditions of the subject Policy.

11.              In the facts of the instant case, we may say that the Insurance Company was required and expected to act in accordance with the terms and conditions of its Policy. If the “right to reconsider” option could have been exercised only within 15 days of receipt of the Policy, the Insurance Company can, albeit, not be faulted if it adheres to the said time limit. Again, if the “Surrender Value” of the Policy was Rs.3365/-, the Insurance Company can, albeit, not be faulted if it refunds only the said amount.

But the Insurance Company was expected and required to function with clean hands and clear conscience. The refund of the surrender value should have been made within reasonable time, and information as relevant and material to the Consumer should have been concomitantly provided.  

12.              We do not agree with the District Forum in ignoring the terms and conditions of the Policy and ordering refund of the entire premium of Rs. 1 lakh along with interest @8% per annum. The Order dated 17.11.2009 of the District Forum cannot sustain.

13.              In contrast, we find the State Commission’s Award, as contained in its Order dated 26.09.2011, to be just and well-considered.

(To recapitulate, the State Commission directed that the calculation sheet, vide which the Insurance Company calculated the surrender value, be provided to the Complainant, and awarded fair compensation of Rs. 50,000/- for mental and physical harassment and fair cost of litigation of Rs.10,000/-.)

14.              However, having said that, we note that against the amount of Rs. 1 lakh paid as premium on 18.02.2008, an amount of Rs.3365/- was refunded by the Insurance Company to the Complainant as surrender value on 22.02.2011, after about 3 years, during the pendency of its Appeal before the State Commission. But the calculation and rationale for arriving at the said surrender value were not provided.

15.              We fail to understand that when the Insurance Company vide its letter dated 21.11.2008 refused to refund the premium of Rs.1 lakh paid by the Complainant on 18.02.2008, what prevented it from simultaneously i.e. on 21.11.2008 itself refunding the surrender value to him as per its own terms and conditions and providing the calculation thereof and the rationale therefor to him.  

We also fail to understand what prevented the Insurance Company in refunding the surrender value to the Complainant along with the calculation and rationale when it was contesting the Consumer Complaint before the District Forum between 02.06.2009 to 17.11.2009.

We further fail to understand what prevented the Insurance Company in providing the calculation and rationale to the Complainant at the time of refunding the surrender value on 22.02.2011, during the pendency of its Appeal before the State Commission, and also filing its calculation and rationale with the State Commission with clean hands and clear conscience.

16.              We further still fail to appreciate the intransigent unwillingness of the Insurance Company in providing the calculation and rationale to the Complainant for refunding Rs.3365/- as surrender value on 22.02.2011, about 3 years after receiving the premium of Rs. 1 lakh on 18.02.2008.

17.             The ground taken by the Insurance Company in its memorandum of petition that “the petitioner was under no legal obligation to issue calculation table to the customer at the time of determining the surrender value” is totally untenable.

The question here is not whether instructions from any authority specifically prescribe providing a calculation sheet, containing the calculation and rationale for arriving at the surrender value, to the Consumer(s).

The question here is that no instructions from any authority specifically proscribe providing such calculation and rationale to the Consumer(s).

We may add that reason and justness dictate that any instruction to maintain opacity and arbitrariness in (not) providing the calculation and rationale for arriving at the surrender value would normally not be issued by any authority, and, if issued, would normally not withstand scrutiny.

18.              In our considered view, it is reasonable, logical, just and appropriate that the Consumer should know the calculation and rationale for arriving at the surrender value of his policy as a matter of his Consumer Rights.

19.             In the instant case we specifically note that:

[a]     On 21.11.2008, while refusing the request of the Consumer for refund of the premium of Rs. 1 lakh with interest, simultaneous refund of the surrender value along with concomitant calculation thereof and rationale therefor was not made.

[b]     Between 02.06.2009 to 17.11.2009, while contesting the Consumer Complaint before the District Forum, refund of the surrender along value with calculation and rationale for arriving at the said surrender value was not made.

[c]      Only while pressing its Appeal before the State Commission, against the premium of Rs. 1 lakh paid on 18.02.2008, an amount of Rs.3365/- was refunded to the Consumer on 22.02.2011 as surrender value, i.e. after about 3 years, but without any calculation and without any rationale forthcoming.

20.              We are of the considered view that, in each and every case, where surrender value of the policy has to be refunded to the Consumer(s) by the Insurance Company as per its own terms and conditions:

[a]     The refund should be made within a reasonable period (reasonable period here would connote a period which a reasonable man would not normally agitate); and

[b]     The refund should be accompanied with clear and cogent calculation and rationale for arriving at the said surrender value.

21.              We find ingredients of both, ‘deficiency in service’ within the meaning of Section 2(1)(g) & (o) and ‘unfair trade practice’ within the meaning of Section 2(1)(r) of the Act, to be well and truly evident against the Insurance Company.

22.              In the light of the above discussion, we deem it necessary and appropriate to pass the following order in the exercise of our revisional jurisdiction:

[a]     The Award made by the State Commission is modified as below:

(i)      The Insurance Company shall provide clear and cogent calculation and rationale to the Complainant for arriving at the surrender value of his Policy within 30 days of the pronouncement of this Order.

(ii)     Considering that the premium was paid in 2008, the surrender value was refunded in 2011, and we are now in 2019, in the presently obtaining situation of this case, we consider Rs.1,00,000/- to be just and equitable compensation for the loss and injury due to mental agony and physical harassment, hardship and difficulty, uncertainty and helplessness, caused to the Complainant for about 11 years, and consider Rs.50,000/- to be just and equitable cost of litigation, which has lasted for about 10 years in one, two, and then three, Consumer Protection Fora.  

The afore amount(s) shall be paid to the Complainant by the Insurance Company within 30 days of the pronouncement of this Order, failing which the said amount(s) of Rs.1,00,000/- plus Rs.50,000/-, that is, total Rs. 1,50,000/-, shall carry interest @ 10% per annum from the date of pronouncement of this Order till its actual realisation.

The amount deposited with the District Forum in compliance of this Commission’s interim Order dated 13.01.2012 along with interest if any accrued thereon shall be adjusted towards satisfaction of the Award. 

[b]     For ‘unfair trade practice’ per se:

(i)      The Insurance Company through its Chief Executive is put to stern advice of caution with imposition of cost of Rs. 2.50 lakh to be deposited by the Insurance Company in the Consumer Legal Aid Account of the District Forum within 30 days of the pronouncement of this Order.

(ii)     The Insurance Company through its Chief Executive is ordered under Section 14(1)(f) of the Act to forthwith discontinue its unfair trade practice of unreasonable delay in refunding the surrender value and opacity and arbitrariness in not providing the calculation and rationale for arriving at its surrender value to the Consumer(s).

The Insurance Company through its Chief Executive shall most immediately issue instructions to all its offices and branches to refund the surrender value within reasonable time and to provide clear and cogent calculation and rationale for arriving at its surrender value to the Consumer(s) simultaneous with the refund.  

A report-in-compliance shall be filed by the Insurance Company through its Chief Executive with the District Forum within 60 days of the pronouncement of this Order.

23.              The Registry is directed to send a copy of this Order to the Chief Executive of the Insurance Company within 3 days of its pronouncement.

24.              Learned Counsel for the Insurance Company is requested, in parallels, to bring this Order to the notice of the Chief Executive of the Insurance Company at the earliest.

25.    The Registry is also directed to send a copy of this Order to the District Forum within 7 days of its pronouncement.

26.              The Registry is further directed to send a copy of this Order to the Chairman, Insurance Regulatory and Development Authority of India (IRDAI), for information within 7 days of its pronouncement.

27.              So disposed.