BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE URBAN

07^th DAY OF AUGUST 2015

O R D E R

SRI. P.V SINGRI, PRESIDENT

This complaint filed U/s.12 of the Consumer Protection Act, 1986 by the complainant against the Opposite Parties- 1 & 2 (herein after referred as OPs) with a prayer to direct the OPs to refund him a sum of Rs.50,000/- being the premium amount together with interest and compensation of Rs.50,000/- together with costs of this proceedings.

2. The brief averments made in the complaint are as under:

The complainant who is serving in Indian Air Force at Bangalore took a ICICI policy No.12981466 with yearly premium of Rs.50,000/- in the name of his daughter Arpita in the month of November 2009.  The complainant did not receive the policy bond for a long time.  Then he contacted the agent who told him that he will bring the bond.  However, the agent did not turn up for several days and ultimately on repeated requests by the complainant he turned up in the month of June 2010 and handed over the policy bond.  When the complainant verified the said policy, he found that the policy commences in the month of March 2010 instead of November 2009.  The policy was for half yearly premium of Rs.50,000/- instead of yearly premium of Rs.50,000/- as opted by the complainant and the correspondence address of the complainant was wrong and was not in accordance with the one which he had given.

In view of the above mentioned anomalies the complainant requested the agent to get him a modified policy bond as agreed by him earlier for which the agent agreed and took back the bond along with him however never came back.  Then the complainant contacted the OPs on line however without any success.  The complainant was being called by the customer care reminding of payment of the premium amount.  When the complainant asked for the modification of the bond, he was told that the OPs will do the needful.  The complainant even personally went to the Sheshadripuram Branch of OPs on two occasions and requested for modified policy bond.  However, he was not issued with modified/rectified policy bond.  Whenever the complainant raised the issue of modification of policy with OPs they were telling him that he could have raised this issue only during ‘free look period’.  Then the complainant requested the OP for refund of the premium even without interest to which the OPs did not agree and insisted that this could have been possible only during the ‘free look period’.  Since the agent came with the bond after 8 months how could the complainant raise this issue within “free look period” of 15 days.

The agent Sri.Amith Sharama who came to the complainant for the sake of the policy filled up the application form in his own hand writing after collecting the correct residential address of the complainant with ID proof and also the documents regarding proof of date of birth of his daughter and together with her ID proof.  Despite furnishing the correct residential address and date of birth together with necessary documents in proof of birth, the OPs wrongly mentioned the residential address of the complainant in the policy bond so also the date of birth of his daughter Arpita.  The date of birth of his daughter Arpita is 06.12.2003 however her date of birth mentioned in the policy is 30.12.2003.  Though the correct residential address of the complainant as per is ID proof is ‘No.05, 8^th Main, Near Andhra Bank, Vinayaka Nagar, Yelahanka (IAF Post), Yelahanka, Bangalore-560 063’, the OPs in the policy bond wrongly mentioned his address as ‘No.143, Maruthi Road, 1^st Phase, Saraki Main, J.P Nagar 1^st Phase, Bangalore - 560 078’.

Though the complainant has agreed for a single yearly premium of Rs.50,000/-, the OPs have issued the policy bond with half yearly premium of Rs.50,000/-.  The OPs have overwritten Rs.1,00,000/- in place of Rs.50,000/- which could be clearly seen from the proposal form.  The complainant is unable to pay half yearly premium of Rs.50,000/- as his monthly salary is only Rs.40,000/-, out of which Rs.12,000/- is deducted towards his house building loan.  Though the complainant never agreed for half yearly premium of Rs.50,000/-.  The OPs by overwriting in the proposal form have mentioned in the policy that the premium to be paid is Rs.50,000/- half yearly.  The OPs later continuously harassing the complainant without attending to his requests which amounts to deficiency of service and unfair trade practice.  The conduct of OP also amounts to breach of trust.  Therefore, the complainant having no other alternative has approached this Forum for refund of his premium amount of Rs.50,000/- together with interest, damages amounting to Rs.15,000/- and the cost of the proceedings.

3. In response to the notice issued, OPs appeared through their advocate and filed their version contending in brief as under:

The complaint does not disclose any ‘Consumer’ dispute as defined under the Consumer Protection Act.  The complainant is not entitled for refund of any premium or any other relief as sought in the complaint.  The policy is contract entered into between the policy holder and the Insurance Company.  Therefore, the parties are bound by the terms and conditions of the Insurance policy.  Thus any claim under the policy is subject to the terms and conditions of the policy bond.  Clause-8 provides foreclosure of other policy as provided in the clause-8’

If the full premium for the first three policy years is not paid and the policy is not revived within a period of two years from the due date of the first unpaid premium, then surrender value as described in Clause 2.3 will be paid at the end of the third policy year.

The clause 2.3 provides for surrender of the policy.  The said clause provides the surrender value will be payable only after the completion of three policy years or whenever the policy is surrendered thereafter.  In the instant case on hand the complainant except paying the first premium of Rs.50,000/- has failed to pay the subsequent premium.  After verification of all the documents furnished by the complainant along with the proposal, the cheque for Rs.50,000/- bearing No.820392 issued by the complainant and drawn on State Bank of India was presented on 20^th February 2010 for encashment.  However, the same was dishonored due to signature mismatch.  The complainant was informed about the same and he re-issued another cheque with the correct signature and after the encashment of the said cheque, the policy has been issued.  Thereafter, the complainant has negligently failed in paying the renewal premiums and further also failed to revive the policy within two years from the first unpaid premium.  Hence, the policy was foreclosed as per clause-8 and no surrender benefit has accrued as per clause 2.3 of the policy.  Therefore, the present complaint is not maintainable and it is liable to be dismissed.

The complainant has failed to demonstrate any deficiency of service on the part of the OPs.  On the other hand complainant himself has failed to pay the renewal premiums and allowed the policy to be foreclosed.  The complainant has not approached this Forum with clean hands.  The complainant himself has agreed in the proposal form for the half yearly premium of Rs.50,000/-, as could be seen from the question No.27 of the proposal form, since the complainant has opted for half yearly premium and failed to renewal the premium, he cannot now ask for refund of the premium amount in violation of the terms and conditions of the policy.

That, in accordance with the clause-6 (2) of the Insurance Regulatory and Development Authority (Protection of Policy holder’s Interests) Regulations, 2002, every policy document sent by the Company to the policy holder is accompanied by policy which clearly mentioned that in case the policy holder is not satisfied with the features or the terms and conditions of the policy he can withdraw/return the policy within “Free Look Period” of 15 days.  The complainant has retained the policy documents sent by the OP to the address given by the complainant and did not return the same for cancellation of the policy within ‘free look’ period impling that he has agreed to all the policy terms and conditions.

As per clause-4 (1) of the Insurance Regulatory and Development Authority (Protection of Policy holder’s Interest) Regulations 2002, a copy of the proposal form is sent to the policy holders along with the policy documents, thereby, giving an opportunity to the policy holders to re-examine the replies made by him in the proposal form and get the details rectified in case of any discrepancies in the proposal form.  In this case also, the copy of the proposal form along with other policy documents was sent by the OP to the complainant and after receiving the policy documents, the complainant did not approach the OP within ‘Free Look Period’ implying that policy documents are acceptable to him/life assured.  The subject policy was foreclosed due to the negligence on the part of the complainant to pay the due premiums and even he did not bother to revive the policy within 2 years from the first unpaid premium.  Therefore, the complainant is not entitled to surrender benefit accrued under the policy in question since the complainant did not pay the premiums continuously for the period of three policy years.

The complainant approached the OP in the month of June 2011 with a request to correct the details of the Life Assured and his address and requested OP to change the premium frequency under the policy from half yearly to yearly.  The OP accepted his request and asked the complainant to submit his application at the nearest branch and to submit the required documents for rectification of the error.  However, the complainant never approached the OPs with any such letter or documents.  For the reasons mentioned above, the OPs prayed for dismissal of the complaint with exemplary costs to the OP.     

4. On the rival contention of both the parties, the points that arise for our determination in this case are as under:

        5. The complainant to substantiate the allegations made in the complaint filed his affidavit by way of evidence.  The OPs also submitted the affidavit evidence of their Chief Manager, Legal Sudha Sharma in support of the averments made in the version.  Both complainant as well as OPs submitted their written arguments.

          6. Heard the oral arguments submitted by both the parties, perused the materials placed on record including various documents relied upon by both the parties.

7. Our answer to the above said issues are as under:

REASONS

8.  The OP took up a contention that in the given facts and circumstances of the case, the complainant does not became a ‘consumer’ as defined under the Consumer Protection Act, 1986.  Therefore, no right to invoke the provisions contained in Sec.12 of the said Act, to file this complaint.  Now it is well settled law that a policy holder of insurance also falls under the definition of ‘Consumer’ as defined in Consumer Protection Act, 1986.  In umpteen number of cases the Apex court as well as the Hon’ble National Commission have held that a policy holder of Insurance policy is a ‘Consumer” and he can approach the District Consumer Disputes Reddressal Forum for resolving the disputes arising with the Insurance Company.  Even in the judgment rendered in the case of Reliance Life Insurance Co. Ltd., V/s Madhavacharya (Revision Petition No.211/2009) relied by OPs, the Hon’ble National Commission has held that a policy holder is a ‘Consumer’ as defined under the Consumer Protection Act, 1986.  Therefore, we don’t find any basis for the allegations of OPs that the complainant is not a ‘consumer’ and he cannot invoke the jurisdiction of this Forum for redressal.

9. It is not denied by the OPs that Sri.Amith Sharma, one of their agents approached the complainant for a Insurance policy and he filled up the proposal form and collected the relevant documents pertaining to the residential address of the complainant and the date of birth of the Arpita the daughter of the complainant together with the residence ID proof.  The complainant claims that he agreed for yearly premium of Rs.50,000/- and issued necessary cheque for Rs.50,000/- towards first premium in the month of November 2009 itself.  However, he did not get the policy bond for several months and when he contacted the above mentioned agent Sri.Amith Sharma, he came with a policy bond only in the month of July 2010.  This allegation of the complainant has not been specifically denied by the OPs either in their version or in the affidavit filed in lieu of oral evidence.

10. The complainant alleged that since he did not get the Insurance policy immediately after issuance of the cheque for Rs.50,000/- towards the first premium, there was no occasion for him to make use of ‘Free Look Period’ of 15 days either to accept or reject the Insurance policy issued by the OPs.  The OPs in their version contended that in accordance with clause 6 (2) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002 the policy documents sent to the complainant was accompanied with a forwarding letter which clearly mentioned that in case the policy holder is not satisfied with the features or the terms and conditions of the policy he can either withdraw or return the policy within 15 days i.e., under the “Free Look Period” provision.  According to the OPs, the complainant did not make use of ‘Free Look Period’ of 15 days and retained the policy with him without any grouse thereby implying that he agreed to the terms and conditions of the said Insurance policy so also the correctness of the contents mentioned therein.  The OPs did not produce any documentary evidence to substantiate that they sent the policy documents to the complainant accompanied by the forwarding letter as provided in clause 6 (2) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002 and the same has been received by the complainant and thereafter he failed either to withdraw or return policy within ‘free look period’.  As already mentioned above, it is repeated contention of the complainant that he did not receive the Insurance policy even after waiting for several months after issuing the cheque for the first premium and the above mentioned said agent after repeated communication by the complainant came with the policy bond in the month of July 2010.  This allegation of the complainant has not been denied by the OP.  When this being the position how one can expect the complainant to verify the policy and either withdraw or reject the policy if not satisfied by the terms and conditions, within a period of ‘Free Look Period’.  In absence of any documentary evidence or credible oral evidence it cannot be believed that the OPs sent the Insurance policy to the complainant in compliance of the clause 6 (2) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002.  Even the OPs does not mention the date of dispatch of the Insurance policy to the complainant or date on which the complainant received the said Insurance policy.  Thus it is apparent that the OPs have failed to comply with clause 6 (2) of the Insurance Regulatory and development Authority (Protection of Policyholder’s Interests) Regulations, 2002 and give an opportunity to the complainant either to withdraw or return the policy within the ‘Free Look Period’.

11. The Clause 4 (1) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations 2002, provides for sending a copy of proposal form to the policy holder along with policy documents thereby giving him an opportunity to re-examine the details in the proposal form and get the details rectified in case of any discrepancies in the proposal form.  The OPs contend that in this case also a copy of policy documents were sent by the OPs to the complainant and the complainant failed to respond within ‘Free Look Period’.  Here again the OPs did not produce a scrap of paper or credible material to substantiate that they complied with the regulations of clause 4 (1) of the Insurance regulatory and Development Authority (Protection of Policyholder’s Interest) Regulations 2002.  In absence of any credible documents or oral evidence, we cannot believe that the OPs have complied with the mandatory provisions contained in clause 4 (1) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulation 2002.

12. When the complainant has not at all received policy documents together with copy of proposal form and the relevant documents furnished by him along with proposal form there was no occasion for him to intimate the OP regarding discrepancies in the Insurance policy and request for rectification of the same.  When the OPs have failed to comply with the relevant mandatory provisions of Insurance Regulatory and Development Authority Regulations 2002, they cannot expect the complainant to comply with the terms and conditions of the said Insurance policy.

13. The first and foremost discrepancy which the complainant found in the policy furnished to him by the above stated agent that, the policy instead of commencing from November 2009 started with effect from March 2010.  Nowhere, the OPs have denied the issuance of the cheque by the complainant in the month of November 2009.  There is no explanation from the OP as to why they did not present the cheque issued by the complainant in the month of November 2009 instead of 20^th February 2010, for encashment.  There is no explanation from OPs as to what made them to retain the said cheque issued by the complainant for more than 3 months without submitting the same for encashment.  There is also no satisfactory explanation from OPs as to why the said Insurance policy did not commence from November 2009 the month in which the cheque was issued by the complainant.  If at all any mismatch in the signature of the complainant the same should have been returned to him at the earliest but not after more than 3-4 months.  Certainly this conduct of OPs mentioned in the above said paragraphs amounts to deficiency of service.

14. The second discrepancy which the complainant noticed in the Insurance policy received by him after 8 months was that the premium of Rs.50,000/- was mentioned as half yearly instead of yearly as opted by him in the proposal at the time of giving the proposal.  The complainant pointed out that in the relevant column 20 (A) of the proposal the copy of which is produced by the OPs at annexure-A.  The premium of Rs.50,000/- has been overwritten as Rs.1,00,000/-.  The said overwriting making Rs.50,000/- as Rs.1,00,000/- could be seen by naked eyes.  In the premium column it has been mentioned as Rs.50,000/- whereas the total annual premium it has been mentioned as Rs.1,00,000/-.  There is no explanation from the OP as to who is responsible for the said overwriting in making Rs.50,000/- as Rs.1,00,000/-.  Since the complainant was never sent the copy of this proposal along with the Insurance policy, he had no occasions to notice the said discrepancy and seek for its rectification within the ‘Free Look Period’.  Assuming that the complainant agreed for yearly premium of Rs.1,00,000/- for a term of 15 years the total premium to be paid by him would come to Rs.15,00,000/- at the end of 15 years.  However, the sum assured is only Rs.5,00,000/-.  How could one imagine that the complainant had agreed for sum assured of Rs.5,00,000/- by paying premium of Rs.15,00,000/- at the end of 15^th year.  This discrepancy also strengthens the allegations of the complainant that the premium which was opted by him was yearly and the same was subsequently was made half yearly.  The complainant who is drawing salary of Rs.40,000/- per month with deduction of Rs.12,000/- towards home loan every month could not have agreed for half yearly premium of Rs.50,000/-.  Therefore, we are of the opinion that the proposal form has been tampered without notice of the complainant the yearly premium of Rs.50,000/- has been reduced to half yearly premium.

15. The complainant has produced his ID proof as well ID proof of his daughter.  According to the copy of the certificate issued by the superior officer of the complainant dated 04.12.2012 the date of birth of Arpita, the daughter of the complainant is 06.12.2003.  It is argued by the complainant that this is the address proof which he provided with his proposal form.  However for the reasons best known to the OP the wrong date of birth of Arpita has been mentioned and instead of 06^th December 2003 her date of birth has been mentioned as 30^th December 2003.  Again there is no explanation from OP as to why this serious discrepancy has crept in the insurance policy despite the fact that the necessary documents regarding date of birth was provided by the complainant.  The complainant has produced the copy of his ID proof issued by his superior officer dated 04.12.2012 wherein his permanent address as well as present address has been mentioned.  According to the said ID proof, the present address is “House No.5, 8^th Main, Near Andhra Bank, Vinayaka Nagar, Yelahanka (IAF Post) Yelahanka, Bengaluru-560063”.  Despite this document provided with the proposal the OPs have mentioned the residential address of the complainant as “No.143, Maruthi Road, 1^st Phase, Saraki Main, J.P Nagar 1^st Phase, Bangalore-560 078”.  Admittedly the complainant is working at Indian Air Force Station situated at Yelahanka and his daughter is studying in one of the schools at Yelahanka then how one can expect him to reside at J.P Nagar 1^st Phase which is not less than 50 kms away from Yelahanka Air Force Base.  No explanation is provided by the OP as to why this wrong address came to be mentioned in the proposal form as well as in the Insurance policy.

16. The wrong mentioning of the premium period, date of birth of beneficiary, wrong residential address of the complainant certainly amounts to deficiency of service on the part of OPs.  When the OPs themselves have not acted in accordance with the terms and conditions of the insurance policy and in accordance with the mandatory provisions of Insurance Regulatory and Development Authority (Protection of Policyholder’s Interest) Regulations 2002, we cannot demand or expect the complainant to abide by the terms and conditions of the insurance policy which never reached him on time thereby depriving him of his valuable right of either rejection or returning the policy within ‘Free Look Period’.

17. The OPs in their objection statement contended that due to the failure on the part of the complainant to pay premium amount for a period of 3 years has resulted in automatic foreclosure of the said policy therefore the complainant is not entitled for surrender value.  As mentioned above, the Insurance policy has reached the hands of the complainant nearly 8 months after he issued the cheque for first premium.  Secondly, the agent who took back the said policy promising him to return the same after necessary rectification when the same were pointed out by the complainant, failed to turn up and handover the modified/rectified policy to the complainant.  Thus when the OPs themselves have grossly violated the terms and conditions of the Insurance policy so also the mandatory provisions of Insurance Regulatory and Development Authority (Protection of policyholder’s Interests) Regulations 2002, they cannot enforce the clause-8 or clause-2.3 of the terms and conditions of the policy.  No doubt, the complainant being the policy holder and the OPs being the service provider are governed by the terms and conditions of the Insurance policy but in the given circumstances of the case due to the gross negligence and deficiency of service on the part of OP they cannot be permitted to enforce the terms and conditions of the Insurance policy.  Therefore, we are of the opinion that the OPs cannot take shelter under clause-8 of the terms and conditions of the policy and contended that the policy has been foreclosed due to the alleged default on the part the complainant in paying the premium.  Likewise the OPs also cannot enforce caluse-2.3 of the terms and conditions of the policy and contend that the complainant is not entitled to surrender value of the policy.

18. In view of the callous attitude of the OPs towards the complainant and the serious deficiency of service on their part we are of the opinion that the OPs are not only liable to refund the premium amount of Rs.50,000/- to the complainant together with interest but also liable to pay adequate damages for hardship, inconvenience and mental agony undergone by him.

19. Accordingly, we answer the point Nos.1 to 4 and proceed to pass the following:                    

  O R D E R

The complaint filed by the complainant U/s.12 of the Consumer Protection Act, 1986 is allowed in part.  OPs are directed to refund the premium of Rs.50,000/- to the complainant together with interest @ 8% p.a from the date of encashment of the cheque till the date of realization.  Further the OPs are directed to pay compensation of Rs.15,000/- to the complainant for the deficiency in service and the mental agony, hardship and inconvenience suffered by the complainant together with costs of Rs.3,000/-.

OPs shall comply the order passed by this Forum within a month from today.

Furnish free copy of this order to both the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Forum on this 07^th day of August 2015)

MEMBER                            MEMBER                    PRESIDENT

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