This is an application u/s.12 of the C.P. Act, 1986.
Complainant by filing this complaint has submitted that OP1 is the servicing branch of the OP2 and OP2 is an insurance company running its business of selling insurance policies of various schemes to the interested purchasers and is guided and ruled by the guidelines laid down by the IRDA.
Fact remains complainant obtained a policy from the OP namely Invest Assured Gold Policy on 17-10-2007 for a term of 31 years and in the said policy complainant shall have to pay a sum of Rs.1 lakh in each year for a consecutive 5 years and sum assured is mentioned Rs.50 lakhs for expiry of 31 years. Accordingly, after purchase of the said policy and subject to said terms and conditions complainant deposited 5 years consecutive premiums at the rateRs.1 lakh per annum on 12-10-2007, 20-11-2008, 22-10-2009, 27-10-2010 and 12-11-2011.
But unfortunately, complainant received a Fund Activity Statement dated January, 29, 2014 from the OPs wherein it was intimated that the policy shall be discontinued if the regular premium is outstanding for 31 days from the premium due date and the OPs asked the complainant to contact the Advisor for further queries. Fact remains complainant as per terms and condition of the policy already paid all the 5 yearly premiums. So, the complainant did not contact the advisor for further enquiries.
However, all on a sudden complainant received a cheque of Rs.98,234-01 dated 02-02-2014 accompanied by a forwarding letter dated 14-02-2014 from the OP wherein OP stated that they were not received premium amount of Rs.1 lakh within the due date of October 17, 2012 and in this regard they also brought attention to premium holiday provision of the contract and the same was reproduced in the same reference letter and then also stated that due to non-fulfilment of condition no.2 they regret that the policy has been auto-surrendered. Against that letter complainant replied by a letter dated 14-02-2014 and sent it to the OP on 18-02-2014 and it was informed that last premium due date was 17-10-2011. So, question of premium due on October 17, 2012 does not arise.
It is also informed by the complainant that the said policy was taken by the complainant on 17-10-2007 and complainant deposited per annum premium at the rateRs.1 lakh regularly and last premium (i.e. 5th premium) was paid by cheque No.842543 dated 07-11-2011 on Dena Bank. So, allegation of non-payment of last premium is completely false and fabricated.
Considering the above facts and materials it is proved that only for the purpose of deceiving the complainant/insured violating the terms and condition of the policy and arbitrarily discontinued the policy by the OP without any legal cause and sent a meager amount of Rs.98,234-01 though complainant actually paid Rs.5 lakhs by 17-10-2011 as consecutive 5 years premium paid as per condition, so, the entire act of the OP is deceitful act and at the same time it is arbitraty in nature and under any circumstances, OP cannot cancel the said policy without any legal reason and in the circumstances, complainant has prayed for refund of the entire Rs.5 lakhs including interest and harassment cost etc.
On the contrary OP by filing written statement submitted that the subject policy is a unit linked policy and the investment risk in the portfolio are borne by the policy holder and on the basis of the response made by the complainant in the said application form, the OP issued a policy bearing no.U200554770 with an annual premium of Rs.1,00,000/- for a term of 31 years with a premium payment term of 5 years and complainant signed the said application form and original document was issued and dispatched to the complainant by mail at his address as per application form and further it was submitted as it was a unit linked policy and complainant has opted for a basic life cover/sum assured of Rs.15 lakhs OP issued such policy and the policy is non-participating regular premium unit linked insurance plan and out of the total premium received from the complainant an amount of Rs.4,60,681-60 was invested. Further the subject policy provided life risk cover of Rs.15 lakhs. As the policy covered a high risk and due to cost of insurance, the fund value towards the policy became lower than the premium paid, so the total fund value of Rs. Rs.98,234-01 was refunded on 28-01-2014 when fund value ws below the one annual premium of Rs.1 lakh so the policy is automatically surrendered as per the policy provision containing termination clause which are set out in the said policy but otherwise OP denied all the allegations and submitted that they have their no deficiency, negligence, arbitrary act but it was surrendered automatically as per condition of the policy. So, OP has nothing to do. It is further submitted that OP acted as per terms and conditions of the policy of IRDA Guidelines, so, under any circumstances, complainant cannot get any relief as per terms and condition of the policy the amount which was invested in the Unit linked policy which shall be refunded as per NAV. In the above result, OP prays for dismissal of this case.
Decision with Reasons
On complete reading of the complaint and the written statement and also relying upon the argument as advanced by the parties and the Ld. Lawyers it is undisputed fact that complainant purchased a policy bearing no.U200554770 with the condition to pay annual premium of Rs.1 lakh for a term of 5 years. Life Expectancy was for 31 years and it is also admitted position that complainant paid consecutive 5 premiums at the rateRs.1 lakh per annum and that was received by the OP.
OP has submitted that subject policy is a non-participating regular premium unit linked insurance policy and out of the total premium received from the complainant an amount of Rs.4,60,681-60 was invested and it is admitted position the subject policy private life risk cover is of Rs.15 lakhs.
So, it is clear that complainant had no fault on his part when he paid 5 years consecutive premium at the rateRs.1 lakh for 5 years and it was within time. There was no irregularity. Admitted fact is that life risk cover is Rs.15 lakhs and duration was for 31 years and during that 31 years the policy cannot be anyway withdrawn or cancelled by the insured. It is undisputed fact that complainant has no intention to withdraw or cancel the policy because he already paid 5 consecutive yearly premiums as per terms and condition of the policy which was admitted by the OP.
OP’s main contention is that as policy covers a high risk and due to cause of the insurance the fund value towards the policy is lower than the premium paid so the total fund value was Rs. Rs.98,234-01 which was refunded to the complainant on 28-01-2014 and since the fund value was below the one annual premium of Rs.1 lakh the policy was automatically surrendered as per policy provision applying the termination clause. Now, question is whether in the policy there was any such clause or not and in this regard we have gone through the policy document wherefrom we have gathered that there is no such term on the other hand it is found that type of cover is Invest Assured Gold Policy and amount of benefit is Rs.15 lakhs, 5 years regular premium per annum is Rs.1 lakh and that policy was issued on 17-10-2007 and policy term is 31 years and maturity or expiry date is 17-10-2038. Number of years of premium payable is five. So, considering that policy it is clear that complainant completed all the terms and conditions, he paid premium in due course in each year within due time and last premium was paid on 17-10-2011 that has not been denied by OPs then under what provision or terms that was automatically cancelled by the OP and, in fact, OP has no legal right to cancel it. Another factor is that in the policy document there is no such terms and condition which is evident from the fact that OP has not produced the original application form filled up by the complainant, on the contrary they have produced basic definition etc. a book but it is not applicable in this case because insurance policy is a contract between the insured and the insurance company and at the time of executing the proposal form for purchasing policy if there is no such terms and conditions as alleged in the present case by the defence, in that case OP cannot introduce any new clause subsequent product of the company as part of that contract and at the same time the different type of theories have been made by the OP for the defence but that theories cannot be accepted in view of the fact in that contract or agreement for purchasing the said product of the insurance policy there was no such terms and condition. In fact, Ld. Lawyer for the OP also failed to substantiate the defence of the OP at the time of argument by producing that application form for purchasing policy or the document which has been sent by the OP to the complainant in respect of the said insurance policy. Considering all the above facts we are convinced to hold that under any circumstances, insurance company cannot act beyond the terms and conditions of the policy which was promised to the complainant at the time of execution and no subsequent fund or theories or policy as adopted by the OP shall be included as part of the present agreement in between the complainant and the OP but now-a-days it is found all the private insurance companies have adopted an unfair trade practice and they are introducing some new terms and conditions and same are being used with the old policy conditions but that cannot be done.
If for the sake of the argument it is found insurance company is facing much loss for continuing such policy in that case insurance company shall have to refund the entire premium to the insured on payment of interest at the rate8 percent p.a. otherwise that insurance policy shall be continued as per said terms and conditions when consecutive 5 year premiums have been paid as per terms and conditions of the policy then invariably complainant is entitled to get benefit of the said policy for 31 years up to 2038 and in any circumstances, OP authority has no chance or right legally to automatically treat as surrendered when complainant has not surrendered it.
In the light of the above observations we are convinced to hold that this insurance company like a rat has eaten the entire Rs.5 lakhs money and thereafter eating the entire amount of Rs.5 lakhs they kept a balance amount of Rs.98,234-01 which was refunded but there is no legal right on the part of the Op to refund the same. In fact, OP has done it arbitrarily, immorally without any legal foundation and against the terms and conditions of the policy and in this regard it is to be mentioned that already Hon’ble Supreme Court and National Commission have confirmed that parties cannot act beyond the executed document of agreement in respect of the policy and it is also decided by the National Commission that parties of the contract shall be guided by the policy condition and no exception or relaxations can be made on the ground of equity as reported in 2013 (4) CPR 165 N.C. At the same time Hon’ble Supreme Court has decided that in case of policy terms and conditions of the policy are binding upon either of the parties and either of the parties shall be liable to give such benefit to the other party (insured) if any violation is made by the insurance company.
Moreover, unilateral cancellation or surrender of the policy by the insurance company is completely arbitrary in nature but when OP has adopted such procedure and automatically surrendered the policy treated as it surrender in that case there is no other scope on the part of the OP but to discharge their liability as per terms and condition of the policy and in the light of the above observation we are convinced to hold that each and every act on the part of the OP is arbitrary, illegal and without any legal foundation for which it is proved that in a negligent and deficient manner OPs have acted for which complainant has suffered huge financial loss and for which Ops are liable to pay the entire amount of Rs.5 lakhs to the complainant when OPs have auto surrendered the policy at their own wish violating the terms and condition of the insurance policy in between the complainant and the OPs and at the same time OPs are bound to pay benefit or interest for such sort of loss or interest over such amount and at the same time for facing much inconvenience for the immoral and arbitrary act of the OP, OP shall have to pay compensation or interest over the amount and in case of interest the interest shall be assessed at the rate10 percent p.a. over the entire amount since the date of inception of the policy and also shall have to pay litigation cost for throwing the complainant before this Forum to get relief.
In the result, the case succeeds.
Hence,
Ordered
That the case be and the same is allowed on contest against the OPs with a cost of Rs.10,000/-
OPs are directed to refund the entire amount of Rs.5 lakhs and also interest at the rate10 percent p.a. over the said amount from the date of receipt of the money from the complainant in each year and from the date of effect of the policy that is from 17-10-2007 and till its full payment.
OPs are directed to comply the order and to pay the decretal amount to the complainant within one month from the date of this order failing which OPs shall have to pay penal damages at the rateRs.300/- per day till full satisfaction of the decree and if that amount is collected it shall be deposited to this Forum but even after that they are found unwilling to comply the Forum’s order in that case penal action u/s.27 of the C.P. Act shall be started against them for which they shall be imposed further penalty and fine.
