APPEAL NO.701 OF 2009

                                                          Date of Institution : 28.12.2009

                                                                        Date of Decision     :  .26.9.2011

1.         M/s Aviva Life Insurance Co. India Limited, SCO No.180-182, Sector 9, Chandigarh, Regd. Office at 2^nd Floor, Prakash Deep Building, 7 Tolstoy Marg, New Delhi, through Sh.Ashwani Tyagi, Manager.

2.         Chirag Jain, Director through Aviva Life Insurance Company India Limited, Aviva Tower, Sector road, Opposite Gold Course, DLF, Phase V, Sector 43, Gurgaon.

                                                          .…Appellants.

                            Vs.

Raghbir Singh c/o Atma Singh, VPO Bairampur, Bhaga Majra, Mohali, Punjab.

                                                                             …. Respondent.

 BEFORE:             JUSTICE SHAM SUNDER, PRESIDENT

                        MRS. NEENA SANDHU, MEMBER

Present:           Sh.Sandeep Suri, Advocate for the appellants.

                    Sh.Sandeep Bhardwaj, Advocate for the respondent.

MRS. NEENA SANDHU, MEMBER

1.         This is an appeal filed by the appellants/OPs against the order, dated 17.11.2009 passed by District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter to be called as District Forum only) in complaint case No. 788 of 2009, vide which, it allowed the complaint and directed the OPs to refund the amount of Rs. 1 lac to the complainant alongwith interest @ 8% p.a. since the date of deposit i.e. 18.2.2008 till its actual payment to him. The OPs were further directed to pay the aforesaid amount alongwith litigation costs of Rs.1100/-, within 30 days, from the date of receipt of copy of the order.

2.         Briefly stated, the facts of the case, are that the complainant purchased an insurance policy (Life Long Unit Linked) from the OPs, through Sumit Bhatia, Manager, Centurion Bank of Punjab, Branch III-B-2, Mohali. At the time of issuance of the policy, the agent of the OPs had not disclosed the plan of insurance to the complainant in his language i.e. Punjabi. It was stated that the complainant was totally ignorant about the terms and conditions of the policy. It was further stated that when the complainant contacted the agent of the OPs, he was told only to pay a sum of Rs.1 lac annually for a period of three years, and, as such, he paid a sum of Rs.1 lac to them. It was further stated that due to some financial problem, the complainant did not pay the remaining amount of Rs. 2 lacs to the OPs. The complainant wrote a letter to refund a sum of Rs. 1 lac alongwith interest to him. In reply to his letter, the OPs had issued a letter dated 21.11.2008, in which, it was mentioned that  he had a right to exercise option within 15 days, from the date of receipt of the policy papers, but he did not do so. Accordingly, his claim was repudiated. It was further stated that he tried his level best and also requested the OPs to refund the amount of Rs.1 lac because the actual facts were not disclosed to him, by their agent, but to no avail. It was further stated that the aforesaid acts of the OPs, amounted to deficiency, in service. Hence, the complaint was filed.

3.         Reply was filed by the OPs, wherein, it was admitted that the complainant purchased a Life Long Unit Linked Policy against proposal form dated 9.1.2008. The policy commenced w.e.f. 18.2.2009 against the annual premium of Rs. 1 lac. It was denied that the complainant was ignorant, about the terms and conditions of the policy, at the time of its issuance. It was stated that the complainant was also provided ‘Right to Reconsider’ notice, in which, he had the option to get the policy cancelled, in case he was not satisfied with any of the terms and conditions of the policy, but the OPs did not receive any request for cancellation from the complainant, as per the said notice. It was further stated that the complainant only paid the first year premium of the policy i.e. Rs. 1 lac and he did not pay the annual premium due and, as a result, whereof the policy lapsed. 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 OPs.

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

5.         The learned District Forum, allowed the complaint, in the manner, referred to, in the opening para of this order.  

6.            Aggrieved by the order, passed by the learned District Forum, the appellants/OPs, filed the instant appeal.

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

8.         The learned Counsel for the appellants/OPs, contended that the respondent/complainant, availed of the policy of life insurance. He further contended that the agent of the OPs duly explained the terms and conditions of the policy to the complainant, at the time of signing the proposal form. The detailed terms and conditions had also been provided to him alongwith the policy documents and no objection was raised by him, at any stage.  It was further contended that the complainant was also aware of the annual premiums, required to be paid by him but he did not pay the same subsequently and, thus,he could not be allowed to take benefit of his own wrong. It was further contended that as per the terms and conditions of the policy, the complainant, in order to avail of the surrender value had to pay premium amount for the first three years, and in case of non-payment of renewal premium amount, by the complainant, the policy lapsed without value in accordance with the terms and conditions of the same. It was further contended that the complainant himself failed to pay the annual premiums and, thus, the amount paid by the complainant towards the first premium, was not refundable. It was further contended that no plea was raised by the complainant that there was any discrepancy about the allotment of units. It was further contended that the funds have been allocated by the OPs, compliance with the terms and conditions of the policy. It was further contended that in the letters dated 10.10.2008 and 17.10.2008 sent by the complainant to the OPs, he did not state that he was misrepresented the facts. In fact, the complainant had requested that the policy be converted from an annual premium policy to a single premium policy, as he was unable to continue with the policy. It was further contended that the complainant did not implead the Manager of the Centurion Bank of Punjab, as stated in the complaint. It was further contended that on the one hand, the complainant stated that he is an illiterate person and at the same time, he signed the complaint as well as his affidavit in English. It was further contended that the complainant was unable to pay the annual insurance premium of Rs. 1 lac after the first year, as he was not in a financial position to do so.

9.         The learned Counsel for the respondent/complainant contended that the complainant purchased one Life Long Unit Linked Insurance Policy from the agent of OPs and paid a premium of Rs.1 lac on 18.2.2008. It was further contended that the complainant was not aware about the terms and conditions of the policy. The complainant, later on, due to financial constraints, remained unable to pay the annual premium of Rs. 1 lac for a continuous period of three years. It was further contended that when the complainant wrote a letter to the OPs seeking refund of the amount, alongwith interest, the OPs informed him that his 15 days (Free Look Period) had expired, so he could not be given the refund because the policy had lapsed for non payment of the subsequent premium

10.     From the perusal of the record, it is evident that the complainant purchased a life long unit linked policy, which was directly linked with the share market, against the annual premium of Rs.1 lac, which was to be paid for 3 years, for which the complainant filled in the proposal form and also deposited Rs.1 lac as a premium for the first year and the policy commenced w.e.f. 18.2.2008. The OPs dispatched all the policy documents, which included copy of the proposal form, policy schedule, the ‘Right to Consider’ notice, the standard terms and conditions and the first premium receipt by speed post on 3.3.2008. As per Right to Consider Notice, the complainant had option to get the policy cancelled, within 15 days, from the date of receipt of policy documents, in case the terms and conditions thereof were not acceptable to him, but he did not exercise such an option. Except the bald statement of the complainant, there is no other evidence, that the agent of the OPs misrepresented the facts to him. He signed the complaint and his affidavit in English. Therefore, it could not be said that he is illiterate and, therefore, did not understand the terms and conditions of the policy, as he was not explained the same in Punjabi. He paid only one annual premium, but due to financial constraints, did not pay the premium for two more years. Thereafter, when the policy was in lock in period then he requested for the refund of the premium amount, but as per the terms and conditions of the policy, the premium amount could not be refunded, to him, whereas, the District Forum wrongly directed the OPs for the refund of Rs.1 lac, the premium amount. From the facts, narrated above, we are of the opinion that the allegations regarding misrepresentation by the agent of the OPs, are baseless. The policy lapsed on account of non-payment of premium for two years. Therefore, we are of the opinion that the OPs rightly refused to refund the premium. We don’t concur with the finding recorded by the learned District Forum for the refund of Rs.1 lac being premium amount. The impugned order, to this extent, is liable to be set aside.

11.       So far as the issue, regarding the allocation of funds, under the unit linked policy is concerned, no doubt in Clause 5.12 of the proposal form, the percentage of premium in Index Fund is written as 100% but at the same time, we cannot ignore this fact that in Column 3 of the Schedule, it was specifically mentioned that the allocation rate for one year is 40% and the OPs purchased the units for Rs.39,629/- out of Rs.1 lac, at the NAV of 8.619 per unit and in total purchased 4597.865 units. Therefore, we are of the view that the OPs have rightly purchased the units for Rs.39,629/- as per the policy schedule. We don’t find that the OPs have indulged into unfair trade practice by investing Rs.39,629/-, out of Rs.1 lac. The findings of the District Forum, that the entire amount of Rs.1 lac was liable to be invested, are not correct.

12.            According to the OPs, the policy lapsed and, as per Clause 5(a) of the standard terms and conditions of the policy, they refunded the surrendered value of Rs.3365/- on 24.2.2011, which was equal to the value of the units pertaining to regular premium, less the surrender charges. In our view, the calculation made by the OPs for arriving at the figure of refund, may be correct.

13.       Now the question for consideration is why the OPs did not pay this amount immediately, after the lapse of the policy, itself in the year 2008. Not only this, why the OPs did not attach the calculation sheet alongwith the letter dated 24.2.2011, vide which, they refunded Rs.3,365/- as a surrender value, whereas, as per Circular dated 1.1.2008 issued by IRDA, it was mandatory for the Insurance Company to give the information, to the policyholder. By not supplying this calculation sheet it is not known as to how and on the basis of which formula the OPs  calculated this surrender amount of Rs.3365/-. The OPs kept the complainant in dark. Due to this callous and negligent act of the OPs, by refunding the surrendered amount of Rs.3365/-, after a delay of almost three years, and also by not providing the calculation sheet, they caused the complainant mental agony and physical harassment, which tantamounts to deficiency, in service and, therefore, the OPs are liable to pay compensation on this account.

14.       For the reasons recorded above, the appeal is partly accepted and the impugned order is modified, in the manner, that the appellants/OPs are directed ; i)            To provide the calculation sheet to the complainant, vide which, they calculated the surrendered value, within 30 days, from the date of receipt of a copy of this order.

ii)         To pay Rs.50,000/- on account of mental and physical harassment, caused to the complainant..

iii)        To pay Rs.10,000/- as litigation expenses.

            We further direct the OPs to pay Rs.50,000/-, as mentioned at serial (ii) above, within 30 days, besides costs, from the date of receipt of a copy of this order, failing which, penal interest @ 12% p.a. will be charged, on this amount. 

15.     Copies of this order be sent to the parties, free of cost. 

Pronounced.                                                                        

26^th September, 2011.