KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No.306/2015

JUDGEMENT DATED: 06.06.2024

(Against the Order in C.C.No.154/2013 of CDRF, Idukki)

PRESENT:

APPELLANTS:

(by Adv. C.S. Rajmohan)

Vs.

RESPONDENT:

JUDGEMENT

SRI. AJITH KUMAR  D.  :  JUDICIAL MEMBER

           This appeal is filed by the opposite parties in C.C.No.154/2023 on the file of the Consumer Disputes Redressal Commission, Idukki (the District Commission for short).

          2.       On 17.03.2014 the District Commission had allowed the complaint and directed the opposite parties to pay Rs.3,46,274/-(Rupees Three Lakhs Forty Six Thousand Two Hundred and Seventy Four only) being the balance premium collected along with interest @9% per annum from the date of deposit to the complainant and to pay Rs.2,000/-(Rupees Two Thousand only) as costs.  A default clause was also incorporated to pay interest @12% per annum in case of non-compliance of the order from the date of receipt of the copy of the order.

          3.       The complaint was filed by Supriya Tony alleging deficiency in service and unfair trade practice.  The agent of the opposite parties had approached the complainant and assured that if the complainant remits Rs.7,00,000/-(Rupees Seven Lakhs only) as single premium her life will be covered and she would be receiving an amount ten times than the deposit made.  Medical insurance coverage was also offered.  It was also assured that the policy can be closed after three years from the date of remittance.  Even if the policy was closed after three years, the amount remitted along with double bonus would also be received.  It was also stated that the policy is an investment policy.  Believing the assurance made by the agent of the opposite parties, and the information gathered from the customer care centre of the 1^st opposite party on 10.01.2008 the complainant had entrusted Rs.7,00,000/-(Rupees Seven Lakhs only) to the agent of the opposite party.  The opposite party had issued receipt evidencing the payment dated 12.01.2008.  On completion of three years the complainant had applied for closure of the policy but a meagre amount which is less than the half of the deposit made by the complainant was offered.  Wrong information were furnished by the agent and obtained the money.  Her signature alone was obtained in the documents and no policy was issued as assured by the agent of the opposite parties.  The complainant would seek for the refund of the entire amount along with interest.

          4.       The opposite parties 1 and 2 entered appearance and filed a joint written version with the following contentions:

          They denied the allegations of the unfair trade practice and deficiency in service.  According to them the complainant does not come under the definition of consumer in view of the judgement of the National Commission in Ram Lal Aggarwalla Vs. Bajaj Allianz Life Insurance Co. Ltd. & Ors. The present policies are unit linked and law is settled that such policies are speculative in nature and made for investment purposes.  So the complaint is not maintainable.  They would allege that there was no unfair trade practice or deficiency in service.  As per Clause 6(2) Insurance Development and Regulatory Authority Protection of Policy Holders Regulation 2002 a copy of the policy was forwarded to the complainant and she had a period of fifteen days from the date of receipt of the policy document to review the policy terms and conditions.  Here the copy of the policy document was forwarded to the complainant who never raised any objections against the terms and conditions of the policy.  So she cannot turn round and say that she does not know the contents of the policy.  Since the complainant had failed to remit the premium due on 26.01.2009 the policy was lapsed.  When the request of the complainant for surrender the amount of Rs.3,41,315/-(Rupees Three Lakhs Forty One Thousand Three Hundred and Fifteen only) was credited to the complainant’s account in respect of 1^st policy and a sum of Rs.12,411/-(Rupees Twelve Thousand Four Hundred and Eleven only) was credited in respect of the 2^nd policy.  The proposal form bears a declaration that this party has read over the proposal form and after fully understanding the contents thereof and the terms and conditions have applied for the same.  After accepting the proposal form, policy was issued to the complainant who never raised any objection against the terms and conditions in the contract.  So the complainant is estopped from challenging the terms and conditions by denying the contents in the proposal form.

          5.       The complainant is an educated person who will never sign the proposal form without perusing the same.  There was no negligence or deficiency in service on the part of the opposite party.  The complaint lacks any cause of action.  The complaint is not maintainable and hence the opposite party would seek for the dismissal of the complaint. 

          6.       No oral evidence was adduced by both sides.

          7.       Complainant had caused production of P1 series which are the four acknowledgement slips issued by the opposite party regarding the payments made by the complainant on 10.01.2008.  As per Exhibit P1 series it is seen that the complainant had remitted 7,00,000/-(Rupees Seven Lakhs only) on 10.01.2008.  On the side of the opposite parties Exhibit R1 series which marked are the copy of the proposal form and policy terms and conditions.

          8.       The appellant in the appeal memorandum contends that the District Commission went wrong in reaching a conclusion that there was deficiency in service on the part of the appellant.  The District Commission overlooked the fact that the appellant had covered the risk for the time period during which the policies were alive and hence no liability could be imposed on the appellant in refunding the whole premium.  The District Commission had failed to appreciate the fact that the appellant had acted in accordance with the terms and conditions of the policy.  The District Commission ought to have found that the complaint is not maintainable as the policy claim was unit linked which may fluctuate on account of the change in the share market.  The District Commission had failed to appreciate the features of the policy availed by the complainant.  The appellant would seek for an order by setting aside the order passed by the District Commission.

          9.       Notice issued to the complainant/respondent was not served on the complainant, hence notice was published by way of substituted service.  The respondent remained absent. 

          10.     Heard the counsel for the appellant.  Perused the records.

          11.     The first objection raised by the appellant is that the policy availed by the complainant is a unit linked policy and hence the complainant cannot be construed as a consumer.  The appellant would place reliance upon the ruling of the National Commission in Ram Lal Aggarwalla Vs. Bajaj Allianz Life Insurance Co. Ltd. & Ors..  According to the learned counsel for the appellant this policy is a unit linked policy which is construed as an investment and is exposed to capital market, a speculative business and it will come under the commercial transaction.  The policy also bears an insurance coverage which is depended on human life.  Mere existence of an additional investment factor can never convert the policy as a mutual fund policy.  Unlike share or mutual fund scheme there are two components.  One of which is the risk of the life insurance of the party which rests with the insurer and the other is the investment component which lies with the investor.  So it could be seen that this policy is a combination of product and the investment portion alone needs to be registered and regularised by SEBI.  The Hon’ble Supreme Court in Madhav Hari Joshi Vs. Divisional Manager, Life Insurance Corporation of India & Ors. observed that no refunding money paid for equity linked plan results in loss of benefit of an escalation in its investment value and complainant is entitled to be compensated for loss of benefit of escalation in his investment value.  In view of the above ruling of the Apex Court it cannot be found that a unit linked policy would never come within the scope of Consumer Protection Act.

          12.     In a recent decision of the National Commission in Revision Petition No.842/2022 in ICICI Bank Ltd Vs. Santosh Sardana & Ors. took a view that a complaint filed under the provision of Consumer Protection Act is maintainable in respect of rejection of the application for allocation of equity shares.  So even in disputes pertaining to the shares could also be brought before a Consumer Forum if there is any deficiency in service in the transaction alleged.  This Commission has considered an identical situation in C.C.No.156/2015 on the file of this Commission and reached a conclusion that the complaint is maintainable.

          13.     Having due regard to the aforesaid facts and circumstances, it could be seen that the policy covers the life of the complainant which is separable with the other component regarding the investment.  This being a combination of insurance coverage and investment, the complaint is maintainable.  So the preliminary objection raised by the appellant is answered in favour of the complainant. 

          14.     According to the appellant the complainant is bound by the provisions contained in the proposal form.  The deductions were made in accordance with the guidelines fixed by the IRDA.  So no refund as sought for could be ordered.  As per the evidence on record, it is seen that the complainant had remitted Rs.7,00,000/-(Rupees Seven Lakhs only) on 10.01.2008.  But the appellant had disbursed a sum of Rs.3,41,315/-(Rupees Three Lakhs Forty One Thousand Three Hundred and Fifteen only) towards policy no.00468714 and a surrender amount of Rs.12,411/-(Rupees Twelve Thousand Four Hundred and Eleven only) with respect to the policy no.00476616.  According to the appellant the amount was disbursed strictly as per the guidelines of the IRDA.  They had deducted a sum of Rs.3,46,274/-(Rupees Three Lakhs Forty Six Thousand Two Hundred and Seventy Four only).  When such a deduction is made, it is the duty of the opposite party to convince the complainant that the deductions were made as per the provisions prescribed by the IRDA.  In Paragraphs 6 and 7 of the written version filed by the opposite party it is stated that the surrender values were obtained after deducting the surrender charges from the fund value of the policies.  The quantum of surrender charges has been determined as per the declaration read in the policy documents and the guidelines issued by the IRDA.  But the details of such calculations are not seen furnished by the opposite parties.  Even after filing this complaint, the opposite parities did not show the courtesy to furnish the District Commission regarding the actual fund value as on date of the surrender and the commutation made by the opposite party in reaching the conclusion. 

15.     It is also significant to note that the opposite party did not cause production of the policy.  When deduction is made from the deposit made by the complainant, the burden is upon the appellants to furnish the details and convince that the deductions were made in accordance with the guidelines.  The complainant had invested a sum of Rs.7,00,000/-(Rupees Seven Lakhs only) in 2008.  But she was paid a surrender value of Rs.3,53,726/-(Rupees Three Lakhs Fifty Three Thousand Seven Hundred and Twenty Six only).  When a deduction to the extent of almost half of the amount invested, it was obligatory on the part of the appellants/opposite parties to furnish the details of the deduction so made.  Withholding a substantial amount without furnishing the actual calculation amounts to deficiency in service and unfair trade practice on the part of the opposite parties.  Therefore, the complainant is entitled to get the balance amount as ordered by the District Commission.  We find no reason to set aside the order passed by the District Commission.  The appeal lacks merits and we are inclined to dismiss the appeal. 

In the result, appeal is dismissed.  Parties shall bear their respective costs. The amount of statutory deposit made by the appellants shall be disbursed to the respondent on proper acknowledgement, to be adjusted towards the amount found due and payable to him.

SL