Punjab

Faridkot

CC/15/35

Lakhwinder Singh - Complainant(s)

Versus

Sohan Lal - Opp.Party(s)

V.K.Monga

25 May 2015

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, FARIDKOT

 

Complaint No. :      35

Date of Institution: 3.03.2015

Date of Decision :   25.05.2015

 

Lakhwinder Singh s/o Sh Lekh Raj r/o House No. 389, V P O Wander District Moga.                                     

                                                                             ........... Complainant

Vs

1. Sohan Lal Sharma, Deviwala Road, St No. 5, Kotkapura Agent Advisor bearing Agent Code 13766 Max New York Life Ins. Co. Ltd Branch Kotkapura, District Faridkot.

2. Max New York Life Insurance Co. Ltd. Operations Centre, 90-A, Udyog Vihar, Sector 18, Gurgaon, Haryana. 122015.

3. Max New York Life Insurance Co. Ltd 12^th Floor, DLF Square, Jacaranda Marg, DLF Phase II, Gurgaon-122002.

                                                                        .....Opposite Parties(Ops)

 Complaint under Section 12 of the

Consumer Protection Act, 1986.

 

Quorum: Sh. Ashwani Kumar Mehta, President,

               Smt Parampal Kaur, Member,

               Sh P L Singla, Member.

 

Present: Sh Dildeep Singh, Ld Counsel for complainant,

              None for OP-1,

              Sh Vinod Monga, Ld Counsel for OP-2 & 3.

(A K Mehta, President)

1                                       Complainant has filed the present complaint under Section 12 of the Consumer Protection Act, 1986 against Sohan Lal Sharma etc/OPs seeking directions to OPs to refund the full premium amount of Rs 47,337/- with interest and for further directing OPs to pay Rs 50,000/- as compensation for harassment and mental tension and for litigation expenses.

2                                    Briefly stated, the case of the complainant is that OP-1/Sh Sohan Lal Sharma reached house of complainant and pursued him to take the policy and on assurance of OP-1, complainant opted for policy at the rate of Rs 4000/- as half yearly instalments and complainant paid first premium of Rs 5,000/-to OP as first yearly premium; that the policy started on 30.07.2005; that Ops promised complainant that if complainant pay regularly for five years premium, then, complainant would be entitled to take back the premium alongwith interest after five years; that complainant nominated his wife Karamjit Kaur as his nominee; that at the time of filling of proposal form, no terms and conditions were provided or disclosed by Ops and after completion of five years i.e August 2010, when complainant approached Ops, then, Ops replied that the payment will be made after one year and on the assurance of OP-1, complainant returned back and when in the month of December 2011, complainant again reached the office of OP-1, then he told the complainant that it will take some time and in the month of September 2012, complainant received a letter in which it was mentioned that the revival period of three years of policy expired under R.P.U. Scheme and complainant reached in the office of OP-1 and OP-1 told complainant that he will come in the month of January 2013 to collect the amount but on 2^nd January 2013, when complainant reached the office of OP-1, he did not give satisfactory reply to complainant and refused to listen any word from complainant, which amounts to deficiency in service and trade mal practice on the part of answering OP and has caused inconvenience, mental agony, harassment and financial loss to complainant for which he has prayed for directing OPs to pay Rs 50,000/-as compensation for harassment and mental tension and litigation expenses besides main relief. Hence, the complaint.

3                                    The counsel for complainant was heard with regard to admission of the complaint and vide order dated 22.01.2013, complaint was admitted and notice was ordered to be issued to the opposite party.

4                                 On receipt of the notice, OP-1 filed reply and admitted that OP-1 is the agent of OP-2 and OP-3 and said insurance policy was started by answering OP and first instalment was deposited by OP-1 with other Ops. OP-1 asserted that terms and conditions were provided to the complainant by answering OP and remaining instalments were deposited by complainant to other Ops and not to answering OP; that there is no deficiency in service on the part of answering OP and no cause of action arises against answering OP-1; that all the allegations levelled by complainant are denied being wrong and incorrect and prayer for dismissal of complaint is made. OP-2 and OP-3 also filed written statement  through counsel taking preliminary objections that complaint is false, frivolous, vague and vexatious in nature and is filed to injure the interest and reputation of answering Ops and is therefore, liable to be dismissed; that complainant has suppressed the material facts, which are relevant for the disposal of the present complaint and complaint is filed with ulterior motive to mislead Forum by fabricating the facts; that complainant has not paid premium since 30.07.2009 and hence, the status for policy was charged to reduce paid up mode with effect from 30.07.2009 as per non forfeiture option opted by the complainant in proposal form at the time of commencement of policy and policy goes in non forfeiture option once it completes three years and all three yearly premiums are paid in full; that in reduce paid up non forfeiture option, policy value gets utilized to buy insurance for the reduced face amount; that revival period of three years has elapsed and complainant was intimated that since three years revival period for his policy has already expired and his policy would be continued in reduce paid up mode only with the reduced insurance cover; that on 12.05.2010, complainant enquired about pendency of premium and complainant was informed that the answering Ops have got only Rs 4,225/- and need a total reinstatement premium of Rs 3,998.36/- to reinstate the policy; that on 13.05.2010, complainant sent a request for reinstatement of policy and answering Ops expressed their inability to reinstate the policy vide letter dt 19.06.2010, because signatures of complainant differed from the policy documents and complainant has not paid the shortfall in the premium amount; that complainant failed to pay the deficient premium nor filed health declaration form; that complainant was not regular in payment of premium and so the policy goes into lapse mode; that vide letter dt 21.08.2012,  complainant requested answering Ops to reinstate the policy and showed his willingness to pay the unpaid premium and further to undergo medical  tests. However, on merits, OPs have denied all the allegations levelled by complainant being incorrect and wrong and reiterated that there is no deficiency in service or unfair trade practice on the part of answering opposite parties. The allegations with regard to relief sought too were refuted with a prayer that complaint deserves to be dismissed with costs.

5                                            Parties were given proper opportunities to prove their respective case. The complainant tendered in evidence his affidavit Ex.C-1, and documents Ex C-2 to C-6 and then, closed his evidence.

6                                   In order to rebut the evidence of the complainant, ld Counsel for OP-2 &3 tendered in evidence, affidavit of Juhi Kulshrestha Ex R-1 and documents Ex R-2 to Ex R-18 and then, closed the evidence.

7                                    Present complaint was initially dismissed by this Forum and on appeal filed by complainant before Hon’ble State Commission Punjab, Chandigarh, this complaint is remanded back to the District Forum, Faridkot vide order dt 5.02.2015, for deciding the same afresh on merits after going through the evidence produced by the parties.

7                        Evidence has already been led in this complaint. Therefore, we have heard the learned counsel for the parties and have very carefully gone through the affidavits and documents placed on the file.

8                                   The Ld Counsel for complainant contended that on persuasion of OP-1, who is agent of OP-2 and P-3/ Insurance Company, complainant purchased insurance policy in July, 2005 and paid first instalment. He contended that agent told the complainant that if he continues policy for five years, then he would be entitled to get the paid premium alongwith interest. He contended that complainant has paid the premium continuously for five years and deposited amount of Rs 47,337/- as premium for five years and after completion of five years, complainant visited OP-1/agent but he asked complainant to come after one year and accordingly, complainant met OP-1/agent in December 2011 but again complainant was told to come after some time and then, complainant received a letter from the OP Insurance Co. that revival period has expired and then, complainant met OP-1/agent, but he did not give any satisfactory reply to the complainant, rather refused to admit the claim of the complainant. He contended that it amounts to deficiency in service and trade mal practice on the part of OPs and Ops have not refunded paid premium inspite of repeated requests. As such, complaint is required to be allowed and complainant is entitled to refund of premium with interest and compensation etc.

9                        Ld Counsel for OP-2 and 3/Insurance Company contended that complainant filled up the proposal form in which all the terms and conditions of the policy were mentioned and after going through the same, complainant signed the proposal form and thereafter, the insurance policy was issued to the complainant. He contended that even 15 days free look period was given for returning the policy if complainant is not satisfied with the policy and he can withdraw the policy, but no such option was exercised by complainant, which shows that complainant accepted the terms and conditions of the policy. He further contended that complainant never requested for payment of surrender value, rather he applied for reinstatement of the policy, but he did not deposit deficient premium amount and as such, policy was not revived. He contended that complainant can be paid only in accordance with the terms and conditions of the policy and as such, the request of complainant cannot be accepted for return of premium. He contended that complaint is false and frivolous and is liable to be dismissed.

10                                                     The issuance of insurance policy in question is admitted fact in this case. Complainant contended that he paid amount of Rs 47,337/- as premium for five years but OP /Insurance Co have not admitted this fact specifically though admitted that complainant continued the policy up to July, 2009 and have not paid the premium thereafter. It means even as per OP/Insurance Co, complainant have paid premium for four complete years and first six monthly instalment in July, 2009 because insurance policy started in July, 2005. The contention of complainant is that he deposited  premium for full five years and this fact stands proved because the OPs have proved letter Ex R-2 written by complainant which is dt 12.05.2010, in which it is mentioned that complainant deposited instalment of Rs 4,110/- in January 2010. Complainant has also proved receipt Ex C-4 dt 25.01.2010 for Rs 4,110/-. As such, case of the complainant stands proved that he deposited premium for five complete years. It is correct that complainant has not proved all receipts for five years and has proved some of the receipts but the OP/Insurance Company who is supposed to have complete record of the premiums have not disclosed the actual deposit made by the complainant. OPs should have produced the record showing as to what premium has been deposited by complainant but this fact is admitted by the OP/Insurance Company that complainant deposited premium up to July, 2009 though complainant has also proved receipt dt 25.01.2010 for Rs 4110/-showing that he also deposited second six monthly instalment premium and as such, have deposited premium for five years.

11                                  It is correct that complainant has not continued his policy after five years. In this eventuality, complainant is entitled to surrender value of the insurance policy. Previously, different Insurance Companies used to calculate surrender value in their own way without caring for the interest of policy holders and due to this reason, Insurance Regulatory & Development Authority (Treatment of Discontinued  Linked Insurance Policies ) Regulations, 2010 who is a statutory body, formed Regulations to bring uniformity in payment of surrender value and Regulation-7 provides methods vide which payment is to be made for discontinued policy which is reproduced as under:

“Regulation-7   Obligation  of an insurer upon discontinuance of a policy. The obligations of the insurer in this regard shall be as  follows :

1. To impose discontinuance charges only to recoup expenses incurred towards procurement, administration of the policy and incidental thereto.

2. To design the discontinuance charges to encourage the policy holder to continue with the contract for the full term.

3. To ensure that the discontinuance charges reflect the actual expenses incurred.

4. To structure the discontinuance charges within the statutory ceilings on commissions and expenses and

5. To ensure that the charges levied on the date of discontinuance (as a percentage of one annualized premium ) do not exceed the limits specified below :

Where Policy is discontinued during Policy Year	Max discontinuance charges for policies having annualized premium upto Rs 25,000/-	Max discontinuance charges for policies having annualized premium above Rs 25,000/-
1	Lower of 20% (AP or FV) subject to maximum of Rs 3000/-.	Lower of 6% (AP or FV) subject to maximum of Rs 6000/-.
2	Lower of 15% (AP or FV) subject to maximum of Rs 2000/-.	Lower of 4%(AP or FV)  subject to maximum of Rs 5000/-.
3	Lower of 10% (AP or FV) subject to maximum of Rs 1500/-.	Lower of 3%(AP or FV)  subject to maximum of Rs 4000/-.
4	Lower of 5% (AP or FV) subject to maximum of Rs 1000/-.	Lower of 2% (AP or FV) subject to maximum of Rs 2000/-.
5 and onwards	Nil	Nil

AP -  Annualised premium

FV - Fund value on the date of discontinued,

                         Provided that where a policy is discontinued, only discontinuance charge may be levied by the insurer, and no other charges by whatsoever name called shall be levied.

                         Provided that no discontinuance charges shall be imposed on the single premium policies and on Top Ups”.  

                      The above regulation shows that if policy holder continues his policy for five years, then, he is not liable for any deduction due to discontinuance of his policy and is entitled to refund of premium paid by him. In view of it, complainant is entitled to refund of premium paid by him to the OP/Insurance Company as the policy continued for five years and OP/Insurance Company is liable to pay this amount and as OP/Insurance Company did not pay surrender value as per Regulations to the complainant inspite of his repeated requests, it must have caused harassment and mental agony to the complainant for which complainant is entitled to compensation.

12                             In the light of above discussion, complaint succeeds and the same is hereby allowed with costs in favour of complainant and against OP/Insurance Company and OP-2 and OP-3 are directed to refund premium deposited by complainant alongwith interest at the rate of 9% per anum from the date when the policy completed five years till its realization and complainant is held entitled to recover Rs 4,000/-as compensation and Rs 1,000/-as litigation expenses from OP-2 and 3. OP-2 and Op-3 are directed to comply with the order within one month from the date of receipt of the copy of this order. Copies of order be supplied to the parties free of costs under the rules. File be consigned to record room.

Announced in Open Forum

Dated : 25.05.2015

                                      Member            Member                  President

 (P Singla)          (Parampal Kaur)     (A K Mehta)