Binoy Kumar,Member

1. The present Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”)  by M/s Bajaj Allianz Life Insurance Company Limited and Another (hereinafter referred to as the Appellants/Opposite Parties) against  Mr. Sarat Kumar Gajendra & Ors.(hereinafter referred to as the Respondents/Complainants) assailing the Order dated 08.01.2020 passed by the State Consumer Disputes Redressal Commission, Cuttack, Odisha (hereinafter referred to as the “State Commission”), whereby the Complaint filed by the Respondents was allowed.
2. The facts in brief as narrated in the Complaint are that on 30.06.2006 the Opposite Party-3/Sanjib Tripathy (hereinafter referred to as the Agent), an Agent of the Opposite Party-1/Bajaj Allianz Life Insurance Company Limited/Appellant (hereinafter referred to as the Insurance Company) approached the Respondents to purchase Life Insurance policies. The Agent as averred assured the Respondents that they were to deposit the premium amount for the policy for one time only. After the expiry of 3 years they would have option to close the policy and to receive the paid up premium amount with high rate of bonus, maturity value and accrual survival benefit.
3. The Respondent-1, wife and his son paid one time premium of Rs.7,00,000/-, Rs.4,50,000/- and Rs.4,50,000/- respectively to the agent. The agent after receiving the amount got several blank forms signed by the Respondent and his family members with the assurance that he would fill up the required fields later on. The agent split up the one time premium amount to Rs.50,000/- each and issued money receipts to that effect. The onetime premium of Rs.7,00,000/- paid by the Respondent-1 was split to 14 parts (policies), each amounting to Rs.50,000/-. Likewise, the premium of Rs.4,50,000/- each paid by the Respondent-1 wife and son were split into 3 parts each. Accordingly, the agent issued 14 policies to Respondent-1, 3 policies each to his wife and son.
4. The Respondent-1 averred in his Complaint that the he and his family members had no knowledge about the terms and conditions of the Insurance policies as they had no opportunity to go through the same before putting their signatures on the blank form. During subsistence of the Insurance Policies the Insurance Company issued a fund statement in respect of one policy bearing Number-0022802570 (Equity Plus Fund) stating that the account value of that policy as on 16.11.2007 was Rs.71,339.36.
5. On 16.03.2010, the Insurance Company intimated the Respondent-1’s wife that surrender value of her 3 policies was Rs.9,16,020.51 and paid the same to her. The Insurance Company on 05.08.2010 intimated his son/Samarjit Gajendra that the Surrender value of his 3 policies was Rs.9,83,103.36 which was paid to him.
6. The Respondent-1 stated that in the year 2010, he wanted to surrender his policies. But the branch office of the Insurance Company intimated him that, as the policy term would be completed after 9 years from the date of issue, in the event of surrender of the policies in the middle, the Respondent-1 would lose substantial amount of money and the return of the paid up premium would be slashed to half. He was further informed that due to his old age the maturity period of his policies was longer than that of his wife and son. The Respondent-1 vide letter dated 18.10.2013 asked the Insurance Company to refund his paid up premium along with interest.
7. The Insurance Company vide letter dated 23.08.2014 terminated the Policy No. 0024615168 & 0024612263 and sent two cheques of Rs.31,354/- & Rs.31,600/-. The Respondent-1 was intimated that as the minimum balance required to sustain the policies was not maintained by him, his policies were terminated. The Respondent-1 returned both the cheques to the Insurance Company.
8. On 16.10.2014, the Insurance Company issued a letter to the Respondent-1 stating that, he had purchased UNIT GAIN SUPER-SILVER regular premium policies with benefit term and premium paying term of 9 years which were issued based on the proposal form signed by the Respondent-1. The Insurance Company intimated the Respondent-1 that he had opportunity to cancel the policies within 15 days after receiving the policy document as per the policy condition. It further advised the Respondent-1 to clear the outstanding dues and to continue with the policies till the end of revival period of 9 years. The Complainant/Respondent-1 also stated that the Insurance Company invested the money in share market in the guise of investment and caused substantial loss. The agent intimated him that he had to pay Rs.7,00,000/- each year for 9 years to keep the policies alive and to get financial benefits at par with his wife and son.
9. On 10.07.2015, the Insurance Company sent a maturity intimation letter to the Respondent-1 with maturity discharge forms in respect of 11 policies. Out of 14 policies, the Insurance Company terminated 3 policies and sent 3 cheques to the Respondent-1 towards the surrender value. The maturity intimation letter showed that the matured value of 11 policies was only Rs.3,70,527/- and the surrender value of 3 terminated policies was Rs.87,353/- only. The total value of 14 policies was only Rs.4,57,880/- against the premium amount of Rs.7,00,000/- deposited.
10. The Respondent-1 made a calculation of his claim, keeping in view the growth of funds from Rs.4,50,000/- to Rs.9,83,103.36 within 4 years, which his son Samarjit Gajendra received from the Insurance Company. As per calculation of the Respondent-1, he was entitled to a sum of Rs.43,30,447.55/- towards the maturity value of his 14 policies worth Rs.7,00,000/-.
11. Aggrieved by the aforesaid acts of the Appellant, the Respondent-1 filed a Complaint in the State Commission with following prayer:-

1. In the circumstances, it is most humbly prayed that, this Hon’ble State Consumer Dispute Redressal Commission may be pleased to hold and declare that the O.P Nos.1 & 2 Bajaj Allianz Life Insurance Company have resorted to unfair trade practice with the insured and thus are liable to pay the maturity value to him for a sum of Rs.43,30,447.55 as on 29.06.2015 together with a sum of Rs.6,50,000/- towards punitive damages for stealing insured’s hard earned paid-up premium dues of Rs. 7,00,000/- and its growth value over the year;
2. Be pleased to direct the said O.Ps. 1 & 2Life Insurance Company to pay the above amount of Rs. 43,30,447.55/- and Rs.6,50,000/- with interest at the rate of 15% per annum from 30.06.2015 onward till the date of actual payment for illegally and arbitrarily withholding the same;
3. May be pleased to award cost against the O.P Nos. 1 & 2 and in favour of the insured-Complainant;
4. May be pleased to pass aby other or further Order(s) as the Hon’ble State Commission deems fit and proper in the interest of justice and fair play;
5. Be pleased to hold the O.P No.4 IRDAI guilty of non-performance leading to suffering of the Complainant-Insured.

12. The Appellant-1 and Apellant-2 filed their written version and averred that the Respondent-1, his wife and son signed on the printed insurance proposal forms after filling the required fields themselves. The subject matter and features of the policies were explained to the Respondent-1 and his family member vividly and after understanding those details, they opted for the policies. They further stated that the Respondent-1 has not taken any step to cancel the Insurance Policies by raising any objection within the free look period of 15 days from the date of receipt of policy bonds. They also pleaded that the surrender value of 11 policies and value of 3 terminated policies have been made as per the terms of the policy.
13. After hearing all the Parties and appreciating the facts of the case, the State Commission allowed the Complaint and directed the Appellant-1 & 2/Opposite Party-1 & 2 as under:-

“ Hence, the Complaint petition of the Complainant is allowed. The OP No. 1 and Op No.2 are directed to pay the maturity value of 14 numbers of policies amounting to Rs.43,30,447.55/- as on 29.06.2015 together with a sum of Rs.6,50,000/- towards punitive damages, with interest at the rate of 12% per annum from 30.06.2015 till actual payment.”

14. Aggrieved by the Order of the State Commission, the Appellant-1 & 2/Bajaj Allianz Life Insurance Company Limited & The Zonal Operation Head have filed the present Appeal before this Commission with the following prayer:
    1. Set aside the Order dated 08.01.2020 passed by the Learned State Consumer Disputes Redressal Commission, Odisha, Cuttack in Consumer Complaint No. 16 of 2016;and/or
    2. Pass such further Order or Orders as this Hon’ble Commission may deem fit, proper and necessary in the facts and circumstances of the case.

In the Appeal the Appellants raised the following issues:

1. The State Commission failed to appreciate that the insurer and the insured are bound by the terms of the insurance contract. It is the bounden duty of the Complainant/Insured to go through the policy which as statutory mandate contains a 15 day free look period wherein if the policy holder feels that if any of the terms, conditions or facts stated in the proposal are not correct or as per assurance given to him, then he can cancel the policy and in such case, the Appellants shall refund whatever premium paid by policy holder after settling miscellaneous expenses and coverage charges for such days. In the instant case, it is a matter of record that no request for cancellation of policy was made by the Complainant during the said free look period of 15 days which crystalizes the fact that the Complainant was satisfied with the terms and conditions of the policies in issue.
2. The State Commission lacked pecuniary jurisdiction.
3. The State Commission failed to appreciate that the Complainant/Respondent-1 has made false assertions that he signed blank printed forms which was later filled up by the agent.
4. The Appellants submitted that in the Proposal Forms, the Product name and Plans, Premium Paying Terms, Policy Terms and Premium amount were clearly defined and as such the same were within the complete knowledge of the Complainant at the time of filing of Proposal Forms.
5. The State Commission erroneously admitted the biased miscalculated returns calculated by the Respondent-1/Complainant based on his own assumption and not under any specific rules. The Learned State Commission fails to consider the actual value of the policies sold to him.

15. We have heard the learned Counsel of both the parties and carefully perused the material available on record.
16. The learned Counsel for the Appellants argued that the Impugned Order is contrary to the Contract of insurance and IRDA regulation. The parties are bound both under law and under the contract to abide by the terms of the contract. An insurance contract cannot be interpreted in the manner suggested by the Respondent-1/Complainant. The learned Counsel of the Appellants cited following case laws to support its above argument:

1. Bajaj Allianz Life Insurance Company Ltd. v. Master Ahan Luc Menezes Pinto, 2020 SCC OnLine NCDRC 434
2. Swapan Kumar Haldar v. Aditya Birla Sunlife Insurance Co. Ltd., 2020 SCC OnLine NCDRC 890

17. The learned Counsel for the Appellants also argued that the Complaint is premised on the averment that the signatures were taken on blank forms. He further argued that the Insurance agent was related to the Respondent-1 so the question of misrepresentation does not arise.
18. The learned Counsel of the Respondent argued that there was no mention of alleged 9 years policy period nor the policies premium to be paid Annual/yearly. The Appellants have wrongly asserted that Respondent-1/Complainant should have gone through the so-called statutory mandate of 15 days free look period of policy conditions or facts stated therein. He also argued that State Commission had pecuniary jurisdiction to entertain the Complaint since the claim was Rs.43,30,447.55.

19.     The basic issue involved in this Complaint is that the life insurance policy of the Complainant did not yield the same maturity value as what his wife and son got for their policy which was for much shorter tenure.  All the three persons got their policies on the same day and from the same agent.  The policies of his wife and his son were one time premium policy of 2006 maturing in 2010.  The policy of the Complainant was for nine years with annual nine premium payments. The complainant paid only one premium in the alleged mistaken impression that like his wife and son, he needs to pay only one premium.

20.     The argument of the Complainant is that he was under misrepresentation by the agent of the insurance company that all three persons have got similar policies and all of which were to mature in 2010.

21.     It is important to have a close look at the policy as well as the proposal form of the Complainant to get a clear picture in the matter.  In the proposal form of the Respondent, we find that the policy was Unit Gain Super.  While the premium term was left blank, however, the premium frequency was mentioned as annual.  Payment of the proposal deposit was made in cash.  The policy form had the clear signature of the insured and is dated 30.06.2006.

22.     In so far as the policy is concerned, there is a clear mention that the premium term is nine.  The due date of premium is 09^th August of every year, the date of maturity is 09.08.2015 and the policy term is nine.  The policy document was sent to the Respondent/Complainant on 10.08.2006 offering a 15 days free look period which commenced from the date of the receipt of the policy.  He was given an opportunity in case of disagreement of terms and conditions, to a free look refund.

23.     It will be also worthwhile see the Unit Gain Policy document and the terms contained therein.  In Clause 2.3 it is stated that the Policy enables the Policyholder to participate only in the investment performance of the fund.  Thus, the amount invested as premium would be used for investment purpose by the insurer.  In Clause 6.1 (III) , it is mentioned that if any regular premium is not paid within the grace period of one month before payment of two years premium (including top up premium), the policy shall lapse and no benefits shall be payable.  In Clause 12 on foreclosure it is stated that in the event of non-payment of regular premiums within the days of grace before two full year premiums (including top up premium) are paid the policy shall lapse and no benefits shall be payable.

24.     From the above, it is significant to note that only one premium was paid by the Respondent and as per the policy document, failure to pay balance premiums would have resulted in the policy to lapse and no benefits payable.  We notice from the correspondence that Insurance Company did not terminate the policy but continued the same.  On the other hand, the Insurance Company in its letter to the Respondent dated 16.10.2014 gave further an opportunity to revive the policy and advised to continue with the plan till maturity (9 years) to get good returns by paying the outstanding premium before the end of the revival period.  We notice a dichotomy in the stand of the Insurance Company.  This letter definitely was not in accordance with the terms of the policy document.  To this extent, we hold the insurance company is not having clarity in management of the Policy and to this extent deficient of service.

25.     In so far as the Respondent is concerned, his plea that he was misrepresented is not borne out of facts and cannot be taken into account.  It is very clear that even in the proposal form, the frequency of premium has been given as annual which clearly means that it is not a one-time premium policy.  Otherwise it should have been marked ‘Single’.  Secondly, the policy document sent to the Respondent details about the nature of the policy.  It clearly spelt out that the Policy was for investment in mutual funds, etc. Therefore, the Respondents complaint that the insurance company acted in a malafied manner to deprive of his money, does not stand scrutiny of law.

26.     Reliance here is placed on the Order of the Hon’ble Supreme Court in Reliance Life Insurance Company Limited –vs- Rekhaben Nareshbhai Rathod decided on 24.04.2019 in Civil Appeal No.4261 of 2019 wherein it was held as under :

36. Finally, the argument of the respondent that the signatures of the assured on the form were taken without explaining the details cannot be accepted.  A similar argument was correctly rejected in a decision of a Division Bench of the Mysore High Court in V. K. Srinivasa Setty v. Premier Life and General Insurance Co. Ltd. where it was held : (SCC OnLine Kar paras80-81)

“80.Now it is clear that a person who affixes his signature to a proposal which contains a statement which is not true, cannot ordinarily escape from the consequence arising therefrom by pleading that he chose to sign the proposal containing such statement without either reading or understanding it.  That is because, in filling up the proposal form, the agent normally, ceases to act as agent of the insurer but becomes the agent of the insured and no agent can be assumed to have authority from the insurer to write the answers in the proposal form.

81. If an agent nevertheless does that, he becomes merely the amanuensis of the insured, and his knowledge of the untruth or inaccuracy of any statement contained in the form of proposal does not become the knowledge of the insurer.  Further, apart from any question of imputed knowledge, the insured by signing that proposal adopts those answers and makes them his own and that would clearly be so, whether the insured signed the proposal without reading or understanding it, it being irrelevant to consider how the inaccuracy arose if he has contracted, as the plaintiff has done in this case that his written answers shall be accurate.”

27.     On the matter regarding relevance of free look period, we would like to refer to this Commission’s Order in Bajaj Allianz Life Insurance Company Limited & Ors. –vs- Master Ahan Luc Menezes Pinto & Anr. In FA No.404 of 2013 decided on 21.08.2020 wherein it was held as under :

“10. The third grievance of the complainants is that the insurer had not disclosed to them as to what would they do with the 70% of the premium which they would retain out of the premium paid for the first year, 2% of the premium which they retained out of the premium paid for the second year and 1% of the premium which they retained out of the premium paid for the third year. Even this, according to the State Commission, amounted to an unfair trade practice. I however, find myself unable to accept the view taken by the State Commission. In my opinion, when the insurer says that it will invest only 30% of the first year premium, it is implicit in such a statement that the remaining 70% of the first year premium will be retained by the insurer. The insurer was not obliged by any law to disclose how they proposed to utilize these 70% of the premium out of the premium received for the first year, 2% of the premium out of the premium received for the second year and 1% of the premium out of the premium received for the third year. No such requirement is prescribed in the Insurance Act or in the guidelines framed by IRDA. In any case, nothing prevented the complainants from insisting upon such a disclosure before subscribing to the insurance policies taken by them. They would have been within their right to insist upon such a disclosure before they submitted a proposal for obtaining these policies. Moreover, even during the free lookout period, they did not chose to return the policies on the ground that the policy document was silent as to the utilization of 70% of the first year premium, 2% of the second year premium and 1% of the third year premium. Therefore, the complainants cannot be allowed to make such a grievance at a belated stage.”

28.     Now, the basic issue is whether the Respondent’s claim for seeking a maturity value based on the maturity value that was received by his wife and son is correct.  We have to keep in mind that these are investments in the market which are subject to market risk.  Comparing policies which were maturing in four years with a policy maturing in nine years would not be fair and justified.  So claiming a return based on the performance of the units contained in the policies of his wife and son with the performance of units contained in his policy is unjustified.  However, the fact remains that he had paid Rs.7 lakhs to the Appellant Insurance Company and that the money was locked in from 2006 till date.  A close look reveals that the Insurance Company also held on to the premium amount of the Respondent instead of returning it or acting upon it as per the policy terms and conditions.  To this extent, the Insurance Company is faulted.  It is also further seen that out of 14 policies of the Complainant, three policies were terminated from the year 2014 to 2015 while for the other policies their surrender/maturity value, has been paid which of course, has not been accepted by the Respondent. Incidentally the surrender value is much less than the premium paid.

29.     In the given circumstances, we are of the considered view that ends of justice would be met if the Respondent/Complainant gets back his matured amount without deduction alongwith a reasonable interest.  He is also eligible to get back the premium amount for the terminated policies alongwith interest.

30.     In view of the foregoing discussion, we partly allow the Appeal and set aside the Order of the State Commission with the following directions to the Appellant/Insurance Company to pay to the Respondent/Complainant as under :

(1)     For the eleven policies which were not terminated, the maturity value without any deductions alongwith interest @ 9% compounded annually from the date of maturity till realization within two months

(2)     For the three Policies which were terminated, the policy amount alongwith interest @ 9 % compounded annually from the date of termination till realization within two months.