KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No. 688/2016

JUDGMENT DATED: 06.03.2020

(Against the Order in C.C. 01/2015 of CDRF, Alappuzha)

PRESENT : 

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN              : PRESIDENT

SRI. RANJIT. R                                                                              : MEMBER

SMT. BEENA KUMARY. A                                                          : MEMBER

APPELLANT:

Aviva Life Insurance Co. India Ltd., Head Office, Aviva Tower, Sector Road, Opp: Golf Course, DLF-Phase V, Sector 43, Gurgaon, 122 003 represented by General Manager.

                                 (By Adv. Saji Isaac K.J.)

                                                Vs.

RESPONDENT:

Sumakumari. C, C/o Rajan. K, Thattathezhathu Puthen Veedu, Kallumala P.O, Mavelikkara, Alappuzha-690 101.

(By Amicus Curiae Adv. Nithya)

JUDGMENT

SRI. RANJIT. R: MEMBER

The opposite party has filed this appeal against the order dated, 30.06.2016 in C.C. No. 01/2015 on the file of the Consumer Disputes Redressal Forum, Alappuzha (for short the District Forum).   The District Forum has by its order directed the opposite party to refund an amount of Rs. 2,96,000/- along with 9% interest per annum from the date of filing of the complaint till realization.  They were further directed to pay an amount of Rs.3,000/- towards costs.

2.  The case of the complainant is that she is a policy holder of the opposite party the insurance company.  She had been made to believe by the agent of the opposite party that after paying three instalments of premium the total sum assured would be given to the complainant.  Believing those words the complainant paid three instalments of Rs.1.lakh each on 22.08.2008, 12.10.2009 and 20.12.2010 respectively.  Complainant is an illiterate lady and had signed the papers as suggested by the agent.  Since the complainant was in need of money, she approached the agent for cash withdrawal.  At that time only she came to know that the policy was for a period of 10 years.  She is not in a position to pay the balance instalments.  Even though she asked for return of the amount paid as premium, the opposite party was not ready to pay the amount.  Hence the complaint.

3.  The opposite party filed version challenging the maintainability of the complaint.  According to the opposite party the complaint was barred by the law of limitation as the policy of the complainant was terminated on 26.7.2012 and the complaint filed after a period of two years, was barred by limitation.  It was contended by the opposite party that the policy taken by the complainant was a unit linked policy and a speculative investment with speculative gain and hence the complainant was not a consumer within the meaning of Consumer Protection Act.  The allegation that without knowing the full details, the complainant was made to sign the policy applications was denied.  Complainant paid three instalments and defaulted payment of the subsequent premiums demanded by the opposite party.  According to the conditions of the policy, if regular premium due was not received within the grace period of 30 days from the due date of the first unpaid instalment of regular premium, then the policy would remain in force for a period of 2 years from the due date of the first unpaid instalment of regular premium, and the charges as specified in the schedule will continue to be deducted.  The policy holder may exercise any of the 3 options during the 2 year reinstatement period namely, reinstate the policy, surrender the policy or continue the policy beyond the reinstatement period without paying the regular premium, provided the Company receives a written notice from the policy holder within 60 days from the due date requesting to continue the policy.  The complainant did not exercise any of the three options as provided under the policy conditions.  The policy conditions stipulate that if the policy holder fails to exercise any of the options, then the policy with all available benefits shall automatically terminate at the expiry of the reinstatement period and the Company shall pay the surrender value to the policy holder.  The policy of the complainant was automatically terminated at the expiry of the reinstatement period on 26.7.2012.  The complainant was given an amount of Rs.1,00,000/- as the surrender value, by cheque. An interest of Rs.99/- was also paid to the complainant.  There is no deficiency in service on the part of the opposite party.

4.  The evidence in the case consists of the oral testimony of complainant as PW1 and her documents marked as Exts. A1 to A4.  The opposite party did not adduce any oral evidence.  Document produced by them was marked as Ext.B1.  The District Forum found that as per the IRDA (treatment of discontinued linked insurance policies) regulation 2010, regulation 7, the opposite party could deduct only an amount of Rs.4,000/- from the total premium amount of Rs.3,00,000/-.  Thus the complainant was held entitled to get return of an amount of Rs.2,96,000/-.  The failure on the part of the opposite party to refund the amount to the complainant amounts to deficiency in service.  The Forum on that basis passed the impugned order.

5.  Heard both counsel and perused the records.  According to the learned counsel for the appellant the contract of insurance is a contract based on the terms and conditions of the policy and the opposite parties are liable only according to the conditions, terms, limitations and exclusion of the policy.  He placed reliance on the decision of the Hon’ble Supreme Court of India in the matter of Export Credit Guarantee Corporation of India Limited Vs. Garg Sons International (in Civil Appeal No.1557/2004 with connected appeals) and also Vikram Greentech (1) Ltd. And Ors. Vs. New India Assurance Company Ltd. (in Civil Appeal No.2080/2002) in support of his case.  By accepting the policy the complainant had accepted the terms and conditions of the policy.  As per the conditions of the policy if the policy holder fails to re-instate the policy then the policy with all available benefits shall automatically terminate at the expiry of the re-instatement period and the company shall pay the surrender value of the policy.  The policy of the complainant was automatically terminated at the expiry of the re-instatement period on 26.07.2012.  The complainant was sent an amount of Rs.1,00,000/- as surrender value by cheque and she was also paid an amount of Rs.99/- as interest.  He further contended that the IRDA regulation 2010 was not applicable to the policy of the complainant.  The aforesaid regulation specifically states that it was applicable only to those products which were approved by IRDA after the publication of the said regulation in the gazette.  The policy of the complainant was taken in the year 2008 and hence the IRDA regulation 2010 was not applicable to the policy of the complainant.  Hence the direction of the Forum to refund Rs.2,96,000/- after deducting only an amount of Rs. 4,000/- from the premium amount is wrong and prays for allowing the appeal.

6.  Adv. Nithya, who was appointed as the amicus curiae, on the other hand, canvassed that the complainant who was an illiterate person was made to believe by the agent of the opposite party insurance company that after paying 3 instalments of premium the total sum assured will be given to the complainant.  She believed the words of the agent and paid 3 instalments of Rs. 1,00,000/- each on 22.08.2008, 12.10.2009 and 20.12.2010 respectively.  She signed all the policy papers as suggested by the agent.  After paying three instalments she approached the opposite party for return of the above amount which was paid as premium, but they did not pay the insurance amount.   Complainant could not follow the terms and conditions of the policy as she was illiterate.  The amicus curiae further contended that the policy of the complainant was terminated only in the year 2012 and hence the IRDA regulation of 2010 was squarely applicable to the policy of the complainant also.  As per the IRDA regulations the opposite party could deduct only an amount of Rs.4000/- from the premium amount of Rs.3,00,000/- and the complainant is entitled to get back the amount of Rs.2,96,000/- with interest.  The complainant received the amount of Rs.1,00,000/- sent  by the appellant/opposite party only after the pronouncement of the order of the District Forum.  She received the amount because she was in dire need of money.  The amicus curiae further contended that the opposite party/appellant was liable to pay the balance amount with interest and compensation as ordered by the District Forum.

7.  We have considered the arguments canvassed by both the parties and examined the records.  It is true that the insurance policy is a contract between the parties and both parties are bound by the terms of contract.  What follows is that both parties should enter into the contract on free will and only then it becomes binding.  The definite case of the complainant is that she was persuaded by the agent of the opposite party insurance company to buy the policy on the assurance that only three yearly premiums were required to be paid.  The terms and conditions of the policy were not disclosed to her by the insurance company’s agent.  She was made to believe that by paying three instalments the total sum assured would be given to her.  The complainant being a poor lady having only basic education, believing the luring and attractive promise of the agent took the policy.  The complainant could not follow the terms and conditions of the policy and thus she paid the three instalments of the premium to the opposite party without knowing about the policy.  When she was in dire need of money for the treatment of her children she approached the opposite party, but they wilfully neglected to pay any amount to her.  It was under these circumstances that she filed the complaint before the District Forum.  Before the District Forum she has testified on oath that she was compelled to buy the policy on the basis of the inducement made by the agent of the insurance company.  She was made to believe by the agent that she would get a handsome amount in the event her money was invested in the policy of the opposite party.  In cross examination, though the complainant had stated that she was a graduate, she has later on said that she had not passed even SSLC.  The District Forum had the benefit of seeing the demeanour of the complainant and had found her testimony to be reliable.  The opposite party has not elicited anything from the complainant in cross examination to discredit her evidence.  The opposite party has not adduced any contra evidence.  They did not take steps even to examine their agent to contradict the evidence of the complainant.  Therefore, we do not find reason to disbelieve her testimony.  From the evidence it can be seen that the complainant was forced to sign the policy document on the dotted lines.  Nothing contra has been brought out by the appellant to prove otherwise.  It is clear that the complainant was deceived by the agent to pay for the policy.  It follows that there was no free will on the side of the complainant before signing the policy.  In these circumstances we find that the terms of the policy are not binding on the complainant.  According to the opposite party/appellant the complainant is entitled to get only an amount of Rs. 1,00,000/-, which they state is as per the terms of the contract.  They further state that this amount of Rs. 1,00,000/- was handed over to the complainant.  But the appellant/opposite party has failed to prove how they had arrived at the amount that was paid to the complainant.  They did not produce any evidence to substantiate their claim that the complainant was eligible only for an amount of Rs. 1,00,000/-.  The appellant would say that the policy is a unit linked policy and as per the conditions of the policy, if the policy holder fails to reinstate the policy, then the policy with all available benefits shall automatically terminate at the expiry of the reinstatement period and the company shall pay only the surrender value of the policy.  As per clause 5 of the terms and conditions, surrender value will be equal to the value of units pertaining to regular premium less the surrender charge on units pertaining to the regulations of the premium as mentioned in the schedule plus the value of units pertaining the additional regular premium and top up premium, if any. Here the value of the units is not mentioned by the appellant.  Net Asset Value of the complainant’s policy at the point of surrender is also not mentioned anywhere by the appellant.  They have not disclosed the Net Asset Value.  Nothing is produced by the appellant to substantiate that the surrender value of the policy of the complainant is only Rs. 1,00,000/- at the time of termination of the policy.  They have not disclosed that they have invested the part of the premium amount of the complainant’s policy.  In the absence of any evidence to substantiate the contentions of the appellant, it can only be concluded that the policy amount of the complainant was not invested in any speculative business as stated by them.  In view of the above circumstances also the complainant is entitled to get full refund of the premium with interest.  It is admitted that out of the premium amount of Rs. 3,00,000/- the complainant had received an amount of Rs. 1,00,000/- from the appellant.  Hence complainant is eligible to receive the balance amount of Rs. 2,00,000/-.  The District Forum, however, found that as per IRDA (treatment of discontinued linked insurance policy) Regulation 2010 clause 7, the opposite party could deduct only an amount of Rs. 4,000/- from the total premium amount of Rs. 3,00,000/- and the complainant was entitled to get an amount of Rs. 2,96,000/- only.  However, as pointed out by the learned counsel for the appellant, since the policy of the complainant was taken in the year 2008 and the IRDA Regulation 2010 (supra) is applicable only to those products which were approved by IRDA after publication of the above regulation in the Gazette, the order of the District Forum is erroneous.  But since this order of the District Forum is not challenged by the complainant we are not interfering with this part of the order.  In the above circumstance we find that there is no merit in the appeal and the appeal fails.  However as admitted by the respondent/complainant that she has received an amount of Rs. 1,00,000/- from the appellant, the appellant is liable to refund only an amount of Rs. 1,96,000/- as against Rs. 2,96,000/- ordered by the District Forum. 

In the result, the appeal is dismissed.  Parties to suffer their respective costs.

The statutory amount of Rs. 25,000/- deposited by the appellant shall be released to the respondent/complainant to be adjusted towards the balance policy amount of Rs. 1,96,000/- with 9% interest and costs of Rs. 3,000/- ordered by the District Forum.  

JUSTICE K. SURENDRA MOHAN         : PRESIDENT

                                                                                                                                                                            RANJIT. R    : MEMBER

jb                                                                                                                                                 BEENA KUMARY. A         : MEMBER