26.05.2015
JAGANNATH BAG, MEMBER
The present appeal is directed against the order dated 25.06.2013 passed by the Ld. District Consumer Disputes Redressal Forum,North 24 Parganas, in CC Case No. 193 /2012, whereby the complaint was allowed on contest with cost against OP Nos. 1 , 2 and 3 and dismissed against other OPs.
The Complainant’s case, in brief, was as follows:
The Complainant opened on 21.11.2007 a Unit Linked Policy with the OP No. 3, being a branch office of OP No. 1 . The first yearly premium of Rs. 70,000/- was paid with the opening of the policy and thereafter the second premium of same amount was paid . On 24.05.2011 , the OP informed by a letter that major revival of the policy could not be done because of E.C.G report of the insured. It was informed that the policy could not be revived and the insurance cover not to be extended as the policy stood terminated. After getting the said information , the Complainant made total investigation through heart check-up at R.N. Tagore International Institute of Cardiac Science , Mukundapur and found there was no serious illness. Copy of the report was forwarded to the OP. After being directed by the OP, the Complainant made payment of 3rd premium of Rs. 70,000/- together with interest of Rs. 552/- by account payee cheque . Thereafter , on 25.08.2011 , the OP transferred an amount of Rs. 1,32,103.35 to the Complainant’s bank account as surrender value of the policy, though the total premium amount of Rs. 2,10,000/- was paid, apart from Rs. 552/- as penalty. Allegedly, the OP adopted fraudulent tactic and clandestine practice in not reviving the policy but making a refund of Rs. 1,32,103.35/- only against total payment of Rs. 2,10,552/-. A legal notice dated 14.02.2012 was sent to the OP Nos. 1, 2 and 3 asking them to refund the sum of Rs. 78,448.65 together with usual rate of bank interest. No reply was received from the OPs. In the said situation, a complaint petition was filed before the Ld. Forum below with prayer for direction upon the OP Nos. 1, 2 and 3 to refund the sum of Rs. 78,448.65/- together with usual rate of bank interest till the date of making payment , apart from costs and other relief.
The complaint has been contested by OP Nos. 1 ,2 and 3 by filing W.V., wherein it has been submitted that though the 3rd annual premium was due on 23.12.2009 , such payment was made on 20.08.2011 and as such , Service Tax and Education Cess of Rs. 52/- together with handling charges of Rs. 500/- had to be paid by the Complainant, no interest being charged. It was also contended that the surrender value had been refunded in view of a surrender form received from the Complainant on 22.08.2011 duly filled in. After calculation of surrender value and deduction of summary charges, a sum of Rs. 1,32,103.35 was returned and there was no unfair trade practice on their part.
Ld. Forum below having considered the materials on record, including the documents filed by OPs and W.V. of OP Nos. 1 , 2 and 3, observed that the Complainant was cheated by the Insurance Company’s agent . The policy was shown to have been surrendered after lapse of 3 years. Ld. Forum below also observed that the OP Insurance Company did not inform or report to the Complainant that day by day the market value would be decreased and they did not ask the Complainant whether she was willing to continue it or to close it. This was construed as an unfair trade practice on the part of the OP Insurance Company. Ld. Forum below allowed the complaint with cost of Rs. 10,000/- against OP Nos. 1, 2 and 3 with direction upon the said OPs to pay the entire amount of Rs. 2,10,000/- with interest of Rs.10,000/- within one month from the date of order , failing which punitive damages @ 200/- should have to be paid till full satisfaction of the order. Further, OP Nos. 1 ,2 and 3 were directed to pay Rs. 25,000/-as punitive damages to the State Consumer Welfare Fund.
Being aggrieved by and dissatisfied with the order of the Ld. Forum below the Appellant has come up before this Commission for setting aside the impugned order.
Ld. Advocate appearing for the Appellant submitted that the policy in question was under Unit Linked Endowment Assurance Plan wherein the investment risk is borne by the policyholder. Though the Respondent/Complainant paid two annual premiums, she failed to pay the 3rd premium which was due on 23.12.2009, as a result of which the policy lapsed. On her approach for revival of the policy, the Respondent /Complainant was asked to pay Rs. 70,552/- after which the policy stood fully paid up. On 22.08.2011 , the Appellant received a duly filled in and signed surrender form in respect of the policy in question. The surrender value was assessed in terms of Clause 5 of the policy and a total sum of Rs. 1,32,103.35 was assessed which was in accordance with the terms and conditions of the policy. The order passed by the Ld. Forum below is against the mutually accepted terms and conditions of the policy which deserves to be set aside. Ld. Advocate appearing for the Appellant cited the order dated 08.11.1995 in the matter of LICI –vs Anil P. Tadkalkar and another order in Revision Petition No. 3694 of 2009 asserting that the Complainant was entitled to only surrender value as per surrender factor. It was also stated that there was a surrender request from the Respondent/Complainant and on the basis of her request the surrender value was calculated as per the fund value per unit as on date of surrender. After deduction of 3% surrender charges as per the contract and service charge of Rs. 409.87 being assessed, the net surrender value of Rs. 1,32,103.35 was paid. There was nothing wrong and the Respondent/Complainant was under same obligation as noted in the contract policy. The order passed by the Ld. Forum below has failed to take note of the policy condition which is against the legal propriety. The impugned order may therefore be set aside.
Ld. Advocate appearing for the Respondent submitted that the Appellant arbitrarily neglected to revive her policy bearing No. 00796732 and suo motu got surrendered the policy and refunded the sum of 1,32,103.35 . The Complainant paid interest for late payment of his premium due and on such payment the policy was regularized. Since the policy was regularized, the Insurance Company had no lawful right to treat the policy as lapsed one. In such situation , the surrender value as assessed by the Insurance Company was irregular and that is an unfair trade practice . That being the case , the Ld. Forum below decided to award the refund of the total deposited amount of Rs. 2,10,552/-, out of which only Rs. 1,32,103.35 has been refunded, and a further amount of Rs. 78,448.55/- is yet to be refunded. Ld. Forum’s order against the Appellants deserves to be upheld.
Decision with Reasons
We have gone through the memorandum of appeal together with copies of the impugned order , the policy papers , the W.V. filed by OP Nos. 1 , 2 and 3 before the Ld. Forum below and other papers as placed on record.
It is a fact that the Respondent/Complainant purchased a policy upon payment of the first yearly premium of Rs. 70,000/- on 21.11.2007 and thereafter the second premium of the same amount was paid to the OP No. 3. But, the 3rd premium was not paid on due date . The policy attained the lapsed status . The Complainant was understandably asked to file health check-up report and the OP Insurance Company having perused the ECG report of the Respondent / Complainant informed that the policy could not be revived. The Complainant/ Respondent made total investigation through medical check-up at R.N. Tagore International Institute of Cardiac Science and thereafter being directed by the OP Appellant paid the 3rd premium of Rs. 70,000/- by an account payee cheque.
The Appellant’s case is that a surrender request was received from the Complainant/Respondent on 22.08.2011 duly filled in and signed . A calculation of the surrender value being made, a sum of Rs. 1,32,103.35 was refunded.
The Respondent/Complainant, however, avoided mentioning the fact of submitting the surrender form duly filled in and signed by her. On the contrary, it was mentioned in paragraph 4 of her petition of complaint that the ‘policy rather suo motu got surrendered.’ The Respondent /Complaint actually, filed the surrender form giving particulars of her policy, Bank account no. along with a copy of cancelled cheque no. 35442 which all show that she surrendered her policy and as per policy Clause no.5 of the policy terms, she was entitled to refund of surrender value.
Clause 5 of the policy terms and conditions provides as follows:
On payment of three full year’s premiums, the policy shall acquire a Surrender Value. The surrender value will be the then fund value in the Main Account (based on unit price) less a surrender charge (refer clause 13 ) .
The Appellant accepted the surrender request and paid the surrender amount by transferring the same to her bank account. The detailed calculation of the surrender value was as follows:
No. of Units to the credit of Complainant as on date of Surrender 4320.34752
Fund value per Unit as on date of Surrender Rs. 31.62344
Gross Surrender Value Rs. 1,36,624.25
Less :3% Surrender Charges as per contract Rs. 4,098.73
Less Service charge Rs. 409.87
Less : Sur-charge Rs. 12.30
Net Surrender Value paid Rs. 1,32,103.35
As per observation of the Hon’ble National Consumer Disputes Redressal Commission in Revision Petition No. 3694 of 2009, surrender value is payable as per surrender factor.
Ld. Forum below appears to have ignored/overlooked the surrender factor in passing the impugned order which led to a jurisdictional error.
We are convinced that there was no deficiency in service on the part of the Insurance Company in so far as the Ld. Advocate appearing for the Appellant drew out attention to the observation of the Hon’ble National Consumer Disputes Redressal Commission in Life Insurance Corporation of India –vs- Anil P Tad Kalkar that service under the Insurance Policy can arise only under the accrual of the contingency (viz ) the maturity of the policy or the death of the insured. In the present case, none of those contingencies have occurred by the time , the complaint was filed. In fact, the Complainant on her own surrendered the policy and the Appellant refunded the amount as payable under the policy terms and conditions.
Going by the above discussion we are inclined to hold that the appeal does have merit as the impugned order suffers from jurisdictional error. Hence,
Ordered
That the appeal be and the same is allowed on contest . The impugned order stands set aside and the complaint stands dismissed. There shall be no order as to costs.
