BANGALORE URBAN DISTRICT, NO.8, SAHAKARA BHAVAN, CUNNINGHAM ROAD, BANGALORE – 560 052           

C.C.No.978/2012

DATED THIS THE 25^th SEPTEMBER 2012

PRESENT

SRI.J.N.HAVANUR, PRESIDENT

SRI.H.M.SHIVALINGAPPA, MEMBER

Complainant: -             

                                                Sri.M.A.Nagaraj

                                                S/o. Late K.S.Aprameya,

                                                Aged about 60 years,

                                                Residing at No.190, 3^rd Cross,

                                                2^nd Main, Hanumanthanagar,

                                                Bangalore-19       

V/s

Opposite parties: -                 

1.     M/s. Kotak Mahindra Old Mutual Life Insurance Limited, 9^th floor, Godrej Coliseum, Behind Everard Nagar, Sion (East), Mumbai-22

Reptd by its Managing Director

2.     M/s. Kotak Grievance Kotak Life Insurance Limited, 7^th Floor, Kotak Towers, Building no.21, Infinity park, Off Western Express Highway, Goregaon Mulund Link Road, Malad (East), Mumbai-97,

Reptd by its Manager,

3.     M/s. Kotak Mahindra Old Mutual Life Insurance Limited, “Akashya”, # 102, 104, 136, 1^st Floor, Cears Plaza, Near Vijaya Bank, Residency Road, Bangalore-25

Reptd by its Branch Manger/officer

ORDER

SRI.J.N.HAVANUR, PRESIDENT

        This is a complaint filed by the complainant against the OPs no.1 to 3, under section 12 of the Consumer Protection Act, praying to pass an order, directing the OPs no.1 to 3 to return the premium amount paid by him i.e. Rs.1,29,117.32 after deducting certain charges alongwith interest and award compensation of Rs.5,00,000=00 and grant such other relief as deemed fit, in the circumstances of the case.

2. The brief facts of the complaint can be stated as under.

While the complainant was aged 57 years, he had obtained an insurance policy from OPs Company under the nomenclature Kotak Retirement Income Plan without cover bearing policy no.01042980 on 19-5-2008 and the complainant was assigned client ID no.51360562, the period of the policy was ten years, commencing from 19-5-2008, annual premium installment was Rs.1,50,000=00. The next premium was due on 19-5-2009. The maturity value was stated to be Rs.16,01,760=00. Though the second installment premium fell due on 19-5-2009 on account of financial constraints, the complainant could not make payment of the second and subsequent installments as per the terms of the policy. By a letter dated 19-3-2011 Ms.Aneela Sinha, Chief Manager, Policy servicing of the OPs intimated the complainant that, the aforementioned policy was in a lapse mode on account of non payment of renewal premium payments and that the said policy could be revived by the end of 18-5-2011 by making payment of installments. As per the terms and conditions of the policy contract and as stipulated by the insurance regulatory and development authority vide circular No.032/IRDA/Act1/Dec-2005 the policy would be terminated and the surrender value, if any would be payable at the end of the revival period or on the completion of three policy years, whichever was earlier. By a subsequent letter dated 19-5-2011 the aforesaid officer had intimated the complainant that the said policy has been terminated without acquiring any surrender value, and as a result thereof no refund of surrender proceeds payable to complainant. Prima facie, such a termination without assigning acceptable reasons is highly arbitrary in nature and tantamounts to deficiency of service under the CP Act. It is an irony that, the OPs held out in the policy agreement that, this is the beginning of a long relationship with the complainant, it would be their pleasure to serve the complainant, protect and be with him assuring their best services at all times, but arbitrary termination would run counter to OPs business ethos. As per clause II (2) of the policy agreement, speaks about the terms and conditions in general and payment of premiums in particulars, inasmuch as it states that, if the premium is not paid on or before the expiry of the grace period the policy will automatically lapse if in the first three policy years any premiums have not been fully paid, else will enter automatic non forfeiture mode. It is to be noted that under clause II (4) of the policy agreement which speaks about the benefits of surrender in general and main account in particular, it has been stated that, the policy will be eligible for return of fund value less surrender charge after completion of three policy years. The surrender charge shall be equal to 3% of the fund value in the 4^th policy year, 2% of the fund value in the 5^th policy year and 1% of the fund value in 6^th policy year. Thereafter the surrender charge shall be equivalent to 0% of the fund value in this account. Thus it is clear that, the complainant is completely eligible as per the aforesaid clause to receive the return of fund value less surrender charge as his policy has lapsed within the first 3 years itself. The OPs have brought to complainant’s notice certain clauses which ascribe reason for denial of surrender value to complainant. On the contrary, as per clause 5.8 of the aforesaid circular which states that, in case the contract is not revived during this period, the contract shall be terminated and the surrender value, if any shall be paid at the end of the third policy anniversary or at the end of the period allowed for revival, whichever is later, thus in the case of complainant there is no surrender of policy within three years, and hence the complainant is entitled to receive back the full amount that has been paid as premium, after deducting admissible charges. The OPS may further note that as they have withheld the legitimate amounts payable to complainant they are liable to pay interest at the rate of 24% p.a. as per the trade usage and customs. The repeated requests and demands of the complainant has not been received well by the OPs and so the complainant was constrained to cause issuance of a legal notice through his advocate dated 21-2-2012, the said notice came to be served on the OP. They have not complied with the demands made therein or replied the same. The complainant could not pay the second installment of premium due to his financial contingencies and he is supposed to receive back the amount paid by him from the OPs. He is waiting for his amount to be paid by the OPs. Due to refusal to settle the account of the complainant and reticence maintained by the OPs, the complainant is suffering mentally as well as humiliation from his family members. Action of the OPs in keeping the money of the complainant is nothing but unjust enrichment. The OPs have wrongly deprived of the amounts due to the complainant, and hence, he is entitled for grant of reasonable compensation. Hence the present complaint is filed.

3. After service of notice, the OPs no.1 to 3 have appeared through their counsel and filed common version, contending interalia as under:

        The complaint of the complainant is not maintainable as the same is barred by time. The complaint is filed after the limitation period of two years which is prescribed under the provisions of the section 24A of the CP Act, so the complaint needs to be dismissed on this ground alone. The complainant has miserably failed to prove any deficiency in service on the part of the OPs and so the present complaint is liable to be dismissed. The complainant was well aware of the policy terms and conditions, the policy entered lapse mode when the complainant failed to pay the premium installment due for the second year on 19-5-2009. As per clause 2 of the policy the complainant was offered a grace period of 30 days for payment of premium. Clause 2 of the policy documents reads as follows; if the premium is not paid on or before the expiry of the grace period, the policy will automatically lapse if in the first three policy years any premiums have not been fully paid, accordingly as per the above mentioned clause of the policy document, the policy entered lapse mode on 19-6-2009 itself. Evenafter grace period being offered to the complainant has not paid premium installment, by its letter dated 19-3-2011, the OPs once again called upon the complainant to pay the premiums due and further informed him of the consequences of non payment of premiums. The complainant was informed that his policy has been terminated through letter dated 19-5-2011 and the said policy was terminated without any surrender value pursuant to clause 5 read with clause 8 of the policy document. But it is denied that the OPs are guilty of any deficiency in service and the complainant has not paid any of the premiums due after payment of the first year premium in 2008 and that after an elapse of three years only the policy has been terminated as per the terms and conditions of the policy document. It is reiterated that the policy entered lapse mode on 19-5-2009. The complainant had to pay second year premium on 19-5-2009 which was not paid and so the policy entered lapse mode. Once the policy is under lapse mode the policy has to be revived under clause 5 of the policy document. As per clause 8 of the policy document, the policy will be forfeited if, the policy not revived as specified in clause 5 herein and all the claims to any benefit under this policy shall cease and all monies that have been paid in consequence of this policy shall belong to the company. From the above mentioned clause appearing in the policy document, it is clear that the action taken by the OPs is entirely as per the terms and conditions of the policy. It is denied that the complainant is entitled to any refund out of amount paid by him, the complainant has only made allegations which are completely against the terms and conditions of the policy. The contents of para 9 are misconceived and need no reply and the contents of para 10 are wrong and are strongly denied. The OPs have acted in accordance with the terms and conditions of the policy and guidelines issued by the IRDA. The complainant has obtained this policy under free will and after fully understanding the terms and conditions of the policy. The OPs have not wrongfully withheld any amount of the complainant, the complainant’s policy has been terminated as per terms and conditions of the policy, so he is not eligible for any compensation. There is no cause of action to file the present complaint. The complainant is not eligible for any of the reliefs sought by him, so the complaint be dismissed with cost.

4. So from the averments of the complaint of the complainants and objection of the OPs no.1 to 3, the following points arise for our consideration.

1.                           Whether the complainant proves that, the OPs no.1 to 3 are negligent and there is deficiency of service on the part of the OPs in not returning the amount of policy paid by him after deducting certain charges as prayed in the complaint?

2.                           If point no.1 is answered in the affirmative, what relief, the complainant is entitled to?

3.                           What order?

5. Our findings on the above points are;

          Point no.1:  In the Negative

Point no.2:  In view of the negative finding on the

Point no.1, the complainant is not entitled to any relief as prayed in the complaint

          Point no.3:  For the following order

REASONS

          6. So as to prove the case, the complainant has filed his affidavit by way of evidence and produced six copies of documents which are marked as Annexure-I to VI, and also produced six more original documents with list dated 13-11-2012 On the other hand, one R.Mahesh Kumar, Vice-President-Legal working in the OPs office has filed his affidavit on behalf of the OPs and produced four copies of documents which are marked as annexure- R1 to R4. We have heard the arguments of both parties, and we have gone through the oral and documentary evidence of both sides meticulously. 

7. One M.A.Nagaraj, who being the complainant has stated in his affidavit that, while he was aged 57 years, he had obtained an insurance policy from OPs Company under the nomenclature Kotak Retirement Income Plan without cover bearing policy no.01042980 on 19-5-2008 and he was assigned client ID no.51360562, the period of the policy was ten years, commencing from 19-5-2008, annual installment premium payable was Rs.1,50,000=00. The next premium was due on 19-5-2009, and the maturity value was stated to be Rs.16,01,760=00. Though the second installment premium fell due on 19-5-2009 on account of financial constraints, he could not make payment of the second and subsequent installments as per the terms of the policy. On 19-3-2011 Chief Manager, Policy servicing of the OPs intimated him that, the aforesaid policy was in a lapse mode on account of non payment of renewal premium payments and the said policy could be revived by the end of 18-5-2011 by making payment of installments and as stipulated by the insurance regulatory and development authority vide circular No.032/IRDA/Act1/Dec-2005 the policy would be terminated and the surrender value, if any would be payable at the end of the revival period or on the completion of three policy years, whichever was earlier. By a subsequent letter dated 19-5-2011 the said officer had intimated him that the said policy has been terminated without acquiring any surrender value, and as a result thereof no refund of surrender proceeds payable to him. Prima facie, such a termination without assigning acceptable reasons is highly arbitrary in nature and tantamounts to deficiency of service under the CP Act. It is an irony that, the OPs held out in the policy agreement that, this is the beginning of a long relationship with him, it would be their pleasure to serve the complainant and protect him and be with him assuring their best services at all times, but arbitrary termination would run counter to OPs business ethos, and as his policy had lapsed within the first 3 years itself, he is eligible for return of his premium after deducting certain charges which works out to be Rs.1,29,117.32. The OPs have withheld the legitimate amounts payable to him, so, the OPs are liable to pay interest at the rate of 24% p.a. as per the trade usage and customs. His repeated requests and demands have not received well by the OPs, so he was constrained to issuance of a legal notice on 21-2-2012, and this notice was served on the OPs, but they did not comply the demands made therein or replied the same, and he is supposed to receive back the amount from the OPs. Due to refusal to settle his account and reticence maintained by the OPs, he is suffering mentally as well as humiliation from his family members. The act of the OPs is nothing but a criminal breach of trust and action of the OPs in keeping his money is nothing but unjust enrichment. The OPs are negligent in making settlement of his claim. Hence the present complaint is filed, so the complaint be allowed and pass an order as prayed for.

8. Let us have a look at the relevant documents of the complainant. Annexure-I is the copy of insurance policy no.01042980 issued by the OPs in the name of complainant dated 19-5-2008 and the said policy was for 10 years and installments of premium was Rs.1,50,000=00 and sum assured was Rs.16,01,670=00. The said copy of the policy issued by the OPs contained terms and conditions of the policy and perform filled up and given by the complainant duly signed. Annexure-II is the copy of letter of OPs addressed to the complainant dated 19-3-2011 stating that his policy is in the lapse mode due to non payment of renewal premium payments, the revival period of policy ends on 18-5-2011. Annexure-III is the copy of letter of OPs dated 19-5-2011 addressed to the complainant stating that, the revival period of policy has ended on 18-5-2011, so his policy was terminated and his policy has not acquired surrender value, so his policy has been terminated without refund of surrender proceeds. Annexure-IV is the copy legal notice of the complainant addressed to the OPs no.1 and 2 dated 21-2-2012 stating that, the complainant is entitled for Rs.1,29,117.32 after deducting certain charges alongwith interest @ 24% and cost of the notice. Annexure-V and VI are the copies of postal receipts and acknowledgement cards of the OPs.

9. At this stage, it is relevant to have cursory glance at the material evidence of the OPs. One R.Mahesh Kumar who being the Vice-President-Legal of OPs office has stated in his affidavit that, the present complaint is time barred as the complainant had taken the policy in the year 2008 and he is approaching this forum after a period of four years. The complainant was well aware of the policy terms and conditions, if the premium is not paid on or before the expiry of the grace period, the policy will automatically lapse and the complainant has not revived the policy. As per clause 8 of the policy documents at page no.10, it is sated that, the policy will be forfeited if the policy is not revived as specified in clause 5, the policy shall be void, and all claims to any benefit under this policy shall cease and all money that has been paid in consequence of this policy shall belong to the company. There is no cause of action and there is no deficiency of service on the part of the OPs, so the complaint of the complainant be dismissed with cost.

10. Annexure-R1 produced by the OPs is the copy of insurance policy issued by the OPs in the name of complainant dated 19-5-2008 and the said policy was for 10 years and annual premium was of Rs.1,50,000=00, maturity value was Rs.16,01,670=00, the said document of the OPs contained terms and conditions of the policy, wherein under clause 8 of the policy, it is stated that, the policy will be forfeited if the policy not revived as specified in clause 5 and all the claims to any benefits under this policy shall cease and all monies that have been paid in consequence of the policy shall belong to the company. Annexure-R2 is the letter of OPs addressed to the complainant stating that, his policy is currently in the lapse mode due to non payment of renewal premium payment and if the policy is not revived within the revival period, the policy will be terminated at the end of the revival period. Annexure-R3 is the letter of OPs addressed to the complainant stating that, the revival period of policy of the complainant has ended on 18-5-2011 and accordingly the policy of the complainant has been terminated and his policy has not acquired surrender value and hence his policy has been terminated without refund of surrender proceeds.

11. So taking the oral and documentary evidence of the complainant and compare the same with the material evidence of the OPs, it is crystal clear that, the complainant took the insurance policy of OPs on 19-5-2008 by paying premium amount of Rs.1,50,000=00 and that policy was for a period of 10 years and yearly premium of Rs.1,50,000=00 was to be paid by the complainant. At the time of taking the policy, the complainant has filled up printed perform of OPs and put signature duly after understanding the terms and conditions of the policy of the OPs when the premium of policy during the second year i.e. on 19-5-2009 was payable, the complainant did not pay the premium amount and accordingly the policy issued to the complainant was under lapse mode and the complainant was informed by the OPs to revive the policy under clause 5 of the policy document. Evenafter, issuance of the letter by OPs, the complainant did not pay the second year premium amount of the said policy in the year 2009. The OPs once again got issued letter to the complainant dated 19-5-2011 stating that, the revival period of the policy of complainant has ended on 18-5-2009, so his policy has been terminated and his policy has not been acquired surrender value, so the policy has been terminated without refund of surrender proceeds.

12. Having once the policy was taken by complainant agreeing to terms and conditions of the insurance policy of the OPs, it is imperative on the part of the complainant to go on paying the premium amount as and when it becomes due. In view of non payment of premium amount in the year 2009 by the complainant, the policy issued in the name of complainant was in lapse mode and evenafter issuance of notice by the OPs to revive the policy by paying the amount as per policy, the complainant has not chosen to revive the policy, and accordingly, the policy has been forfeited under clause 8 of the policy condition and all claims to any benefit under the said policy shall cease and all the monies paid in consequence of this policy shall belong to the company. In fact, the OPs have acted strictly in terms and conditions of the policy issued in the name of complainant, we do not find any negligence and deficiency of service as such on the part of the OPs. On the other hand, the complainant who took the policy by filling up printed perform has failed to pay the second year premium and did not revive the policy by paying the amount well within the revival period and accordingly his policy has been terminated without refund of surrender proceeds as per terms and conditions of the policy. So viewing the case of complainant on the back ground of material evidence of both parties and also relevant terms and conditions of the policy, we are of the considered opinion that, that, the complainant who comes to the forum seeking relief has utterly failed to prove with clear cogent and consistent material evidence that, the OPs are negligent and there is deficiency of service on their part in not returning the amount of the policy after deducting certain charges as prayed in the complaint, and accordingly, we answer this point in a negative.

          13. In view of our negative finding on the point no.1, the complainant is not entitled to any relief as prayed in the complaint. So, we answer this point in a negative. In the result, for the foregoing reasons, we proceed to pass the following order.

ORDER

          The complaint of the complainant filed under section 12 of the Consumer Protection Act is hereby dismissed. No cost.

          Supply free copy of this order to both parties.  

          (Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open forum on this, the 25^th day of September 2013).

MEMBER                                 PRESIDENT