Complainant Puneet Aggarwal has filed the present complaint against the opposite parties U/S 12 of the Consumer Protection Act (for short, C.P.Act.) seeking necessary directions to the opposite parties to refund the amount of two premium under the policy in question together with interest @ 9% p.a. from the date of payment till its realization. Opposite parties be further directed to pay Rs.50,000/- as damages alongwith Rs.10,000/- as litigation expenses.
2. The case of the complainant in brief is that he hired the services of the opposite party in the year 2014 vide policy No.00743503 for Rs.10,16,000/- and the term of the policy was 21 years w.e.f. 06.02.2014. The period of paying term of premium was 10 years annually amounting to Rs.51,379/- besides service tax and the total amount of premium was fixed as Rs.52,966/-. He paid two installments for two years and could not continue further due to financial crisis. He has next pleaded that as per clause 5 of terms and conditions, it is the condition that "if the policy holder has not paid the due premium within the grace for the first three full years, the policy be considered as lapsed. The life cover ceases and no benefits are payable under the lapsed policy." As per clause 7 of Annexure-4, the policy's lapse status can be revived/reinstated within a period of 2 years from the due date of first unpaid premium by payment of all arrears of premium with interest at applicable rate of interest (Current 9% p.a. and the revision of this revival interest rate is subject to approval of IRDA) at the time of payment. He has further pleaded that the opposite party issued a letter dated 07.02.2018 vide which intimation regarding termination of his policy has been sent, which is against the terms and conditions as mentioned in clause of 8 of the policy as in case of neither of the two conditions of clause 8 have come in existence according to which his policy could be terminated. Thus, there is deficiency in service on the part of the opposite party. In the month of December, 2017, he visited the office of the opposite party no.2 at Amritsar to know the status of the policy wherein he was told that his policy has been lapsed due to non-payment of third premium and he was suggested to pay the same which he was planning to pay the same but unfortunately the letter dated 07.02.2018 was received. He has next pleaded that on receipt of the aforesaid letter, he made a request vide his letter dated 06.03.2018 with the opposite party to allow him to pay the third premium. In response to it, the opposite party intimated through their e-mail dated 14.05.2018 that his query will be responded within 48 hours. No response till date has been received. The complainant sent requests in this respect again through e-mails dated 11.06.2018 & 26.06.2018 on the e-mail ID of the opposite party but with no result. He has next pleaded that by terminating his policy by the opposite party against the terms and conditions of the policy amounts to deficient act in service on the part of the opposite party. Hence this complaint.
3. Notice of the complaint was issued to the opposite parties who appeared through their counsel and filed their written reply taking the preliminary objections that the complaint is liable to be dismissed for want of cause of action; the instant complaint is false, malicious, incorrect and has been filed with a malafide intent and is nothing but an abuse of the process of the law and is an attempt to waste the precious time of this Hon'ble Commission, as the same has been filed by the complainant just to avail undue advantage. The complaint is thus liable to be dismissed under Section 26 of the Consumer Protection Act, 1986. On merits, it was submitted that the complainant had submitted a duly filled and executed proposal form bearing No.11465349 to the opposite party and the opposite party in accordance with the same issued the policy to the complainant. As per terms and conditions of the policy, the complainant was bound to pay an annual premium of Rs.52,966/- for a period of 10 years to avail the benefits of the policy. The policy was issued on 06.02.2014 after the duly filled and executed proposal form bearing no.11465349 alongwith first premium cheque of Rs.52,966/- was received by the opposite parties. The renewal premiums were to be paid annually for a period of ten years from the date of issuance of the policy, however, the complainant paid only one renewal premium of Rs.52,966/- on 9.01.2015. Thereafter no premium was received from the complainant. It has also relied upon a judgment of Hon'ble Supreme Court in the case of Life Insurance Corporation of India Vs. Mani Ram, III (2005) CPJ 31 (SC). It was next submitted that the complainant failed to revive the policy within the stipulated time period. The complainant had failed to pay the annual renewal premiums due within the grace period for the first three full years from the date of commencement of the policy i.e. 06.02.2014 and thus the policy is considered as lapse, as a result of which the life cover under the policy ceases and no benefits payable under the policy as per Clause '5' of Discontinuance of due premium 'Lapse' which is read as under:-
"If the policyholder has not paid the due premiums within the grace period for the first three full years, the policy be considered as lapsed. The life cover ceases and no benefits are payable under the lapsed policy".
The complainant had paid only one annual renewal premium against the first renewal premium due on 06.02.2015 and subsequent renewal premium which was due on 06.02.2016 remained unpaid. Further, the complainant had a period of two years from the said date of unpaid premium i.e. till 06.02.2018 to get the policy revived after paying the amount of unpaid and due premium alongwith applicable interest as per Clause 7 of the policy which read as under:-
Policy in lapsed status or Reduced Paid-up status can be revived/reinstated within a period of 2 years from the due date of the first unpaid premium by payment of all arrears of premium with interest at the applicable rate of interest (currently 9% p.a. the revision of this revival interest rate is subject to approval of IRDA) at the time of payment, and on submission of the satisfactory medical evidence as per the board approved underwriting rules applicable at that time. The cost of the required medical examination, if any will be borne by the policyholder."
It is reiterated that the complainant had paid only one annual renewal premium and had failed to pay the subsequent renewal premiums, hence, the policy had lapsed. Further the complainant failed to revive the policy within a period of two years from the date of last unpaid premium i.e. till 06.02.2018. Consequently, owing to non-revival of the lapsed policy all the benefits under the policy ceased to exist and no refund is payable under this Policy. The opposite party duly communicated the same to the complainant vide its letter dated 07.02.2018. If the policyholder has not paid the due premiums within the grace period for the first three full years, the policy be considered as lapsed. The life cover ceases and no benefits are payable under the lapsed policy. The opposite party has rightly acted as per the terms and conditions of the policy. All other averments made in the complaint has been vehemently denied and lastly prayed that the complaint may be dismissed with costs.
4. Alongwith the complaint, complainant has filed his own affidavit alongwith other documents Ex.C-1 to Ex.C-6 and Ex.C3A.
5. Alongwith the written statement opposite parties filed affidavit of Sh.Vasudev Gerewal, Deputy Vice President, Legal & Compliance Ex.OP-1 alongwith other documents Ex.OP-2 to Ex.OP-5.
6. Rejoinder filed by complainant.
7. Written arguments filed on behalf of opposite parties.
8. We have carefully gone through the pleadings of counsel for both the parties; arguments advanced by their respective counsels and have also appreciated the evidence produced on record with the valuable assistance of the learned counsels for the parties for the purposes of adjudication of the present complaint.
9. As narrated above present complaint is filed by the complainant for refund of two premium paid to opposite party against an insurance policy after termination of the policy. The complainant placed on record a copy of insurance policy at Ex.C-2, purchased from opposite party and paid Rs.53,000/- on 24.1.2014 as per copy of transaction detail of bank placed alongwith Ex.C-4 &C-5. As per renewal premium receipt placed alongwith C-4 & ex.C-5 complainant paid an amount of Rs.52,173/- to opposite party on 12.1.2015 and thereafter no premium is paid by the complainant. Insurance policy in question has been terminated by opposite party as per letter dated 7.2.2018 placed at Ex.C-1 wherein it is stated that "you may please note that since the policy now stands terminated effective 07.02.2018 all the benefits have been ceased and no refund is payable in this policy."
Complainant further pleaded that he has sent a request letter dated 6.3.2018 (Ex.C-3) to opposite party for continuation of policy by paying the required premium due to him but it is denied by opposite party.
10. Opposite party in their written statement stated that the policy of the complainant has been rightly terminated as per terms and conditions of the policy. Reference of Clause 5 - Discontinuance of due premium is given which is given under the heading 'Lapse':-
"if the policyholder has not paid the due premiums within the grace period for the first three full years, the policy be considered as lapsed. The life cover ceases and no benefits are payable under the lapsed policy."
Regarding revival/reinstatement of the policy reference of caluse 7 is quoted by opposite party as under:-
Policy in lapsed status or Reduced Paid-up status can be revived/reinstated within a period of 2 years from the due date of the first unpaid premium by payment of all arrears of premium with interest at the applicable rate of interest (currently 9% p.a. the revision of this revival interest rate is subject to approval of IRDA) at the time of payment, and on submission of the satisfactory medical evidence as per the board approved underwriting rules applicable at that time. The cost of the required medical examination, if any will be borne by the policyholder."
From the above details, it is made out that the complainant has paid only two instalments, one at the time of purchase of policy and another after one year in 12.1.2015.
As per Clause 7, detailed above it could have been revived by complainant if the due premium is paid upto 6.2.2018. But complainant failed to do so and opposite party has rightly terminated the policy following the terms and conditions of the policy which is binding on both the parties.
It is seen that the contents of termination letter of opposite party are contradictory to policy terms and condition no.5 'Lapse' with regard to refund of the amount deposited by the policy holder. As per term 'Lapse as detailed in proceeding paras, life cover ceases and no benefits are payable under the lapsed policy. But it is silent over the refund of the amount deposited by the policy holder as premium.
11. We are of the opinion that insurance company has no right to forfeit the full amount paid by a policy holder as premiums from his hard earned money without any reason. However, benefit under the lapsed policy can be rightly denied. Moreover, it is not explained in the terms and conditions of the policy to forfeit the amount deposited as yearly premium and opposite party failed to put on record any cogent evidence with regard to their action to forfeit the full amount of premiums deposited. No doubt opposite party can deduct their nominal charges for discontinuance of deposit of instalments as per rules and regulations from the amount paid but their action to forfeit the full amount deposited is not justified.
12. So in view of the abovesaid discussion based on the facts of the case the present complaint can be best disposed off by giving direction to the opposite party.
13. Hence the opposite party is hereby directed to refund the amount deposited by the complainant after deducting their nominal charges as per rules and regulations within 45 days from the receipt of copy of order, failing which the due amount shall be paid with 6% p.a. interest from the date of order till its realization.
The present complaint is disposed off accordingly with no order as to costs.
14. The complaint could not be decided within the stipulated period due to heavy pendency of Court Cases, vacancies in the office and due to pandemic of Covid-19.
15. Copy of the order be communicated to the parties free of charges. After compliance, file be consigned.
(Naveen Puri)
President
Announced: (B.S.Matharu)
September 30, 2022 Member
*MK*
