Dt. 09.03.15
J. Bag, Member
The present appeal is directed against the Order dated 02.12.2013, passed by the Ld. District Consumer Disputes Redressal Forum, Kolkata, Unit-II, in CC No. 299 of 2012 , whereby the complaint was allowed on contest with costs, compensation and punitive damages against the OPs.
The complaint case, in brief, was as follows:
The Complainants, namely, Sri Charan Kumar Das and Mrs. Keya Das, purchased two HDFC SL Classic Policies from the OP Insurance Company, whose agent promised good prospect of their investment and better service from the Company. The Complainants paid on 13.10.2011 the premium of Rs. 1,40,000/- each . They were under the impression that the premium was one time premium ; but, after receiving the policy paper , they found that the premium was annual in nature in respect of both the policies. Complainant No.1 requested for rectification of their account which turned fruitless . He approached the OPs for refund of the premium amounts but nothing was done. After being frustrated and harassed, Complainants requested for settlement of the claim, but the OPs paid no heed to their request. Alleging negligence on the part of the OPs in rendering service which was deficient in nature , the Complainants filed a petition of complaint with prayer for direction upon the OPs to refund the deposited premium amounts together with interest and cost of litigation , apart from payment of compensation of Rs. 2,00,000/- for causing mental harassment.
The complaint was contested by the OP Insurance Company by filing W.V. wherein it was submitted that the Complainants sent a letter for cancellation of the policies and refund of the premium , but the policies were availed with full knowledge of the terms and conditions of the same. The request for cancellation was not made within the free look period as noted in the policy. Accordingly, they were unable to refund the premium as claimed. The claim of the insured could not be entertained as per policy conditions .
Ld. Forum below, after careful perusal and scrutiny of the policy certificates and also upon hearing of pleadings, observed that though the Complainants asked the OP Insurance Company to rectify the policy , OPs did not do that for which he prayed for cancellation of the policies and refund of the amount paid as premium. It was also observed by the Ld. Forum below that as per IRDA Rules if any insured is willing to get back deposited amount from private or a Government Insurance Company, then they shall have to return the entire amount after cancellation of the policy and after deducting only 5 to 10 percent of the said amount. But , there is no scope on the part of the Insurance Company to grab the entire amount. Accordingly, Ld. Forum below allowed the complaint with cost of Rs. 10,000/- against the OPs. OPs were also ‘directed to refund the entire premium of Rs. 1,40,000/- after deducting Rs. 10,000/- each ( Rs. 23,000/-) as service charge from the said amount’. In total, OPs were directed to pay a sum of Rs. 3,05,000/- (Rs.2,80,000/- + Compensation of Rs. 15,000/- + Cost of Rs. 10,000/-) within one month from the date of order , failing which for each day’s delay a composite interest @ 400/- per day shall have to be paid to the Complainants till full payment. Further, for adopting unfair trade practice , the OPs were directed to pay punitive damage of Rs. 20,000/- to the State Consumer Welfare Fund within one month from the date of the order.
Being aggrieved by and dissatisfied with the order of the Ld. Forum below , the Appellants have come up before this Commission with a prayer for direction to set aside the impugned order on certain grounds.
Ld. Advocate appearing for the Appellants submitted that the Complainants took policies under HDFC SL Classic Assure Insurance Plan with yearly premium of Rs. 1,40,000/- for each policy . After payment of the first premium for both the policies, the second premium was not paid. As a result, the status of the policies stood lapsed . No application for revival of the policies was made either. As per policy condition, claim for refund of premium amount could not be entertained unless premiums were paid for first three years . The Complainants’ plea that they were not aware of the premium paying term or frequency of payment of premium is not at all true. In the proposal form itself , the information about terms of payment was recorded and the Complainants themselves signed the proposal forms with full knowledge of the fact that the policy was for 10 years and the premium was yearly / annual in nature. Even after receipt of the policy certificates, they could have exercised an option to cancel the policies within the free look period of 15 days from the date of receipt of the policy papers. They failed to exercise such option and became defaulter in respect of payment of subsequent premium . As per policy condition the claim of the Complainants to refund the premium value is not entertainable. Ld. Forum below allowed the refund with costs and other penal amounts arbitrarily and without consideration of the material facts or the terms and conditions of the policy. The impugned order deserves to the set aside.
Ld. Advocate appearing for Respondent Nos. 1 and 2 submitted that the agent of the Insurance Company assured the insured that policy premium was a one time deposit only of Rs.1,40,000/- in respect of each policy and no further premium would have to be paid . It was only because of misguidance and mis-sale on the part of the OP Insurance Company through their agent that the Complainants agreed to purchase the policies with the understanding that no further payment of premium would have to be made before their maturity. After receipt of the policy certificate , they came to know that premium was annual in nature in respect of two policies . This was brought to the knowledge of the Insurance Company with a request to rectify their account but nothing was done and the Complainants became frustrated inspite of repeated visits to the office of the insurance company . Their request was not accepted. Ld. Advocate having drawn our attention to Clause No. 6 (2) of IRDA Notification of October 16, 2002 , emphasized that the insurer should have informed by their letter forwarding the policy that he has a period of 15 days from the date of receipt of the policy document to review the terms and conditions of the policy and where the insured disagrees to any of those terms or conditions , he has the option to return the policy stating the reasons for his objection, when he shall be entitled to a refund of the premium paid. It was also emphasized that no such letter as required under Clause 6 (2) of the IRDA Notification was communicated to the Complainants which is a clear deficiency in service and negligence on the part of the Insurance Company. This was a serious lapse on the part of the Insurance Company that caused physical and mental sufferings and also financial loss which the insurance company was liable to compensate for. Ld. Forum below adjudicated the matter in a reasoned manner . The impugned order should be upheld.
Decision with Reasons
We have gone through the memorandum of appeal together with copies of the impugned order , the petition of complaint , the policy documents , W.V. filed on behalf of the OPs and other documents including the proposal forms submitted for purchase of the policies etc.
There is no dispute that the Complainants purchased two policies under HDFC Classic Assure Insurance Plan. The proposal forms were duly filled in and signed by the Complainants in respect of both the policies. In the said proposal forms the particulars furnished contained that the policy term was for 10 years , premium paying term was for 7 years and frequency of payment was ‘yearly’. With such knowledge , the Complainants obtained the policies. Allegedly, the agent of the insurance company made them understand that the premium paid was one time in nature and they would not have to pay any subsequent premium .They disputed the matter of payment of subsequent premium and finally urged for refund of their premium amount with cancellation of the policies. The Insurance Company appears to have stuck to the policy condition of making payment of at least 3 premiums before any prayer for surrender of policy could be considered. The entire dispute revolves round the fact that the Complainant took the words of the agent of the Insurance Company for granted and when they realized that they have to pay premiums annually, they were dissatisfied and pleaded for refund of the premiums amounts .
It is seen that though the Insurance Company was required under Clause 6 (2) of the IRDA Notification of 16th October, 2002, to ‘inform by letter forwarding the policy that he has a period of 15 days from the date of receipt of the policy document to review the terms and conditions of the policy’, no document / proof was produced before the Ld. Forum below establishing the fact of issuance of such letter in the interest of proper service to the Complainants . There is enough reason to hold that such negligence on the part of the insurer was a deficiency in service. The Complainants should have been provided with a letter drawing their attention to the fact that they could exercise option to review the terms and condition of the policy , though the fact goes that they took the policies after filling in the proposal forms and signing the same . Ld. Forum’s order in issuing direction upon the insurance company to refund the premium amount after deduction of Rs. 10,000/- as service charge from each premium amount appears to be fair and just, but the costs, compensation and punitive damages as ordered to be paid do not stand justified in consideration of the fact that the Complainants preferred to rely heavily upon the verbal words of the agent of the Insurance Company, ignoring the written down words of the policy proposal . The agent was not made a party for examination either . In that view of the matter , the impugned order is decided to be modified.
Hence,
Ordered
That the appeal be and the same is allowed in part on contest with modification of the impugned order to the effect that the Insurance Company/ Appellants shall refund Rs. 2,60,000/- to the Respondents within a period of 40 days from the date of this order , failing which, interest @ 9% p.a shall be payable on the said amount from the date of this order till full realization. The other parts of the impugned order stand struck off. The impugned order stands modified accordingly. There shall be no order as to costs.
