DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II
Udyog Sadan, C-22 & 23, Qutub Institutional Area
(Behind Qutub Hotel), New Delhi-110016.
Case No.463/2012
Sh. Krishan Kumar
Sahan Special School
C-21, Qutub Institutional Area,
New Delhi ….Complainant
Versus
SBI Life Insurance Company Ltd.
III Floor, Bank of Baroda Bldg.
16, Sansad Marg,
Nr. Con. Place
New Delhi-110001 ……Opposite Party
Date of Institution : 12.09.12 Date of Order : 11.02.16
Coram:
Sh. N.K. Goel, President
Ms. Naina Bakshi, Member
O R D E R
Briefly stated, the Complainant had purchased a single premium Life Insurance Policy bearing No.4404145004 dated 31.03.12 from OP for a total consideration of Rs.6 lakh and the sum assured was Rs.7,50,000/-. He paid the amount through cheque No.533587 drawn on SBI Sultanpur, Delhi. As per the policy, if the insured felt dissatisfied with the terms and conditions of the policy or for whatsoever reason, the insured could ask for a refund in the free lock period of 15 days from the date of issue of the policy. After reading the policy document, he applied for a refund of Rs.6 lakhs vide letter dated 10.04.12 i.e. within 10 days. OP vide letter dated 18.04.12 sent a cheque No.460128 dated 16.04.12 for only Rs.589266/- after deducting Rs.10,734/-. As per the terms of the policy, it was clearly mentioned that the premium will be fully refunded if the cancellation was in the free lock period. He sent several letters, reminders and made personal visits to the OP to refund the balance amount but to no response. Hence, pleading deficiency in service on the part of the OP the complaint has been filed with the following prayers:-
- Direct the OP to pay Rs.10,734/- alongwith 18% interest to the Complainant.
- Direct the OP to pay Rs.1 lakhs as compensation for causing mental agony, torture, misrepresentation and harassment to the Complainant.
- Direct the OP to pay Rs.25,000/- as cost of litigation.
In the written statement OP has stated that Complainant had submitted a proposal bearing No.44AE339511 dated 28.03.12 alongwith a proposal deposit of Rs.6,00,00/- with periodicity of payment of premium as single. Complainant had signed a benefit illustration also in which also it was clearly written that the investment returns may vary depending upon market conditions and “In this policy, the investment risk in investment portfolio is borne by the policy holder”. A policy bearing No.44041450804 was issued with date of commencement as 31.03.12 for a Basic Sum Assured of Rs.7,50,000/- with single premium payment mode. The request for free look cancellation was received on 13.04.12 @ 1:30 p.m. The amount payable under the free look cancellation was paid as per terms and conditions of the policy. OP has further stated that as per clause 13.1.1 of the policy, “if you have purchased the policy through distance marketing channel, you have 30 days from the date of receipt of this policy document to review its terms and conditions. If you are not satisfied, you can return the policy stating the reasons for objection”.
According to clause 13.1.2, “If you have purchased the policy through a channel other than distance marketing, you have 15 days from the date of the receipt of this policy document to review its terms and conditions. If you are not satisfied, you can return the policy stating the reasons for objection”.
clause 13.1.3 provides, “We will then refund your fund value after adjustment. The adjusted fund value on that will be
Fund value
Plus Policy Administration Charges, already deducted
Plus Premium Allocation Charges, already deducted
Plus Guarantee Charges, already deducted
Plus Charges, for ADB option, already deducted
Minus Stamp duty paid
Minus medical expenses if any
Minus payment instrument collection charges, if any”
In the present case, on date of receipt of request for cancellation i.e. 13.04.12 at 1:30 pm and the NAV of the same day was taken for computation of fund value. The said policy is unit linked policy wherein the premium paid by the policyholders will be invested in the capital market and any appreciation or depreciation in the fund value will have to be borne by the policyholder. So when the policy is issued the proposal deposit amount is allocated towards the premium and the said premium will get invested into financial market portfolio on the date of commencement of the policy. Thus when the policyholder requested for cancellation of the policy under free look option, the fund will be disinvested from the portfolio as per the net asset value (NAV) applicable. In the instant case also, as on the date of receipt of request for cancellation, i.e. 13.04.2012, the fund invested under the policy was disinvested and from that amount only an amount of Rs.250/- (towards Stamp duty and Collection charges) was deducted. The detailed calculation for the amount paid under the free look cancellation is as follows:-
Policy Investment Value or Fund Value as on date of 13.04.2012 | Rs.569393.5 |
Add: Entry Fee | Rs.19854 |
Admin Fee | 55.15 |
Guarantee Fee | Rs.213.3 |
Less: Stamp duty | 150/- |
Collection charges | Rs.100/- |
Net amount payable Rs.589265.95 |
OP has further stated that an amount of Rs.589266/- vide cheque bearing No.460128 dated 16.04.12 was paid towards Free Look Cancellation of the Policy. The difference in the amount of Rs.10,734/- as alleged in the complaint was due to the fluctuations in the capital market and it is very clear from the proposal form that the Complainant was aware of the same. OP has prayed for dismissal of the complaint.
Complainant has filed unsigned rejoinder cum written arguments to the written statement of OP.
Complainant has filed his own affidavit in evidence while affidavit of Sh. V. Srinivas, AR has been filed in evidence on behalf of the OP.
No written arguments have been filed on behalf of the OP.
We have heard the arguments of the Complainant and have also gone through the file very carefully.
Copy of the insurance policy alongwith terms and condition is Annexure-A. Complainant vide letter dated 13.04.12 requested the OP for cancellation of the policy (copy annexure-C). The OP vide letter dated 18.04.12 cancelled the policy and sent the above amount to the Complainant by accepting the cancellation in accordance with the terms and conditions of the policy (copy Annexure-D).
Para 2 of the policy deals with “definitions”. Item 27 thereof defines free look period as “is the period during which policy holder has the option to return the policy and cancel the contract”. It clearly goes a long way to show that during the free look period the policyholder has the option to return the policy and cancel the contract. Therefore, in our considered opinion, if the policyholder returns the policy and cancels the contract within free look period, then he is entitled to be returned the whole insurance amount by the OP. In such a situation, the OP is supposed to wait for 15 days to expire before investing the amount in Units. If no such construction is given to the definition of free look period, then the very purpose of having such a clause in the policy would frustrate. Thus, if we read Para 2(27) of the policy along with Para No. 13 (1) which deals with “General Terms” and which is relied on behalf of the OP, we come to the conclusion that while refunding the fund value within the free look period to the policyholder, the OP insurance company is entitled to deduct the stamp duty and the payment instrument collection charges, if any. Both the provisions have to be given harmonious construction and they should not be read in isolation.
According to the OP, amount of Rs. 150/- towards stamp duty and Rs. 100/- towards collection charges were to be deducted from out of the amount to be paid to the complainant. If it is so, the OP was not justified in deducting Rs. 10,734/- from out of the amount of Rs. 6 Lacs to be refunded to the complainant. If the OP had invested the said amount in the market and sustained some loss for waiting for free look period of 15 days, the OP had done so on its own risk and peril because the complainant had the option to return the policy and cancel the contract within the free look period i.e. 15 days from the date of issue of policy.
In view of the above discussion, we come to the conclusion that the OP committed deficiency in service. Accordingly, we allow the complaint and direct the OP to pay Rs. 10,734/- minus Rs. 250/- = Rs. 10,484/- (Rupees Ten Thousand Four Hundred and Eighty Four Only) alongwith interest @ 6% per annum from the date of filing the complaint till the date of realization. OP is also directed to pay a sum of Rs.10,000/- to the complainant for harassment and mental agony undergone by the Complainant including cost of litigation.
The order shall be complied within one month of receipt of copy of this order failing which the OP shall become liable to pay Rs. 10,484/- along with interest @ 10% p.a. from the date of filing of complaint till the date of realization.
Let a copy of this order be sent to the parties as per regulation 21 of the Consumer Protection Regulations. Thereafter file be consigned to record room.
Announced on 11.02.16.
(NAINA BAKSHI) (N.K. GOEL) MEMBER PRESIDENT
Case NO. 463/12
11.02.2016
Present – None.
Vide our separate order of even date pronounced, the complaint is allowed. OP is directed to pay Rs. 10,734/- - Rs. 250/- = Rs. 10,484/- (Rupees Ten Thousand Four Hundred and Eighty Four Only) alongwith interest @ 6% per annum from the date of filing the complaint till the date of realization. OP is also directed to pay a sum of Rs.10,000/- to the complainant for harassment and mental agony undergone by the Complainant including cost of litigation. The order shall be complied within one month of receipt of copy of this order failing which the OP shall become liable to pay Rs. 10,484/- along with interest @ 10% p.a. from the date of filing of complaint till the date of realization. Let the file be consigned to record room.
(NAINA BAKSHI) (N.K. GOEL) MEMBER PRESIDENT
