Assam

Dibrugarh

CC/11/2011

SRI SIMANTA CHETIA - Complainant(s)

Versus

THE BRANCH MANAGER, LIFE INSURANCE CORPN. OF INDIA - Opp.Party(s)

SRI JAN DUTTA

20 Apr 2018

ORDER

The case of the complainant in brief is that, the complainant No.2, father of the complainant No.1 for the benefit of his son obtained an Insurance Policy on 15.09.97 bearing Policy No.440812670 being the policy of ‘Money Back Children Without Profit’ from Mankota Branch, Dibrugarh. Accordingly, he was paying premium of Rs.2627/- as quarterly basis till September, 2008 which was the last due date of the premium for the said policy. However, the complainant No.2 after paying the last premium faced some financial crisis and as such, requested the OP for a loan against the policy. The OP No.1 assured the complainant that he would get loan against the  aforesaid policy and accordingly on 17.10.08 sanctioned a loan amount of Rs.71,000/- against the aforesaid policy to the complainant. The complainant utilised the said loan amount. Subsequently, on 24.10.09 surprisingly enough after one year from the sanction of loan the OP sent a letter asking the complainant to refund the aforesaid loan amount on or before 31.10.09 stating that the loan amount was sanctioned wrongly and was to be paid within six days from the receipt of the letter. After receiving the said letter by the complainant No.2 became puzzle as he was not in position to return the loan amount in such a short time as mentioned in the letter. It was a very painful and illegal demand made by the OP No-1. Thereafter,  the OP No.1 sent few reminders to the complainant No.2 to refund loan amount. While sanctioning the loan the OP No.1 did not mention any procedure in details for the  recovery of loan. But suddenly by the above said letter demanded the entire loan amount which is quite abuse of the process of law. Further, the wrongly sanction of the loan by the OP was not fault of the complainant No-2. If any wrong sanction was made, the whole responsibility is on OP, but for the fault of OP No.1 complainant should not suffer. Anyway complainant is not in a position to refund such a huge amount of Rs.71000/- at a time. Subsequently, on 31.03.11 OP No.1 sent a letter to the complainant No.1 with a cheque bearing No.0472387 dated 31.03.11 for an amount of Rs.18050/- showing the said amount being a surrender of Policy No.440812670 whereas, complainant No.1 did not surrender the aforesaid policy in any way. The OPs with malafide intention causing wrongful loss to the complainant closed the aforesaid policy which is clear deficiency in service on the part of OP. Therefore, complainant has no other option except to file the present complaint with prayer to direct the OP to pay all the benefit under the Policy No.440812670 and also Rs.40,000/- as compensation for harassment and mental agony along with cost of litigation.

 

      After registering the case, notices were issued to the OP No.1 and 2 which were duly received by them and contested the case by filing written statement stating inter-alia that the case is not maintainable in law as well as in fact. It is stated that as per terms of the ‘Children Money Back Assurance Plan’ the policyholder is not entitled to receive any loan once minor attain the majority. The policy was obtained for the benefit of the OP No.1 while he was minor and as soon as he attain majority he is not entitled to any loan. In the instant case loan was sanctioned in the name of the complainant No.2, the proposer. However, in the instant case the loan was sanctioned in the name of the complainant due to oversight which was a bonafide mistake. The said mistake was detected after one year from the date of granting the loan. Besides, as per terms of the loan the complainant No.2 required to pay interest of the loan over half yearly, in case complainant failed to return the principal amount. As per terms, in case, the loanee is not in a position to refund any money towards the principal amount then the entire principal amount would be realised from the maturity value. As the complainant No.2 did not pay any amount towards the half yearly interest as such, he violated the terms of the loan and taking all the fact into consideration the OP did not have any other option, but to issue the letter directing the complainant to refund the money on or before 31.10.09. The OP No.1 even personally contacted with the complainant No.2 several times and the complainant No.2 orally admitted to refund the entire money. As such, OP admitted that few reminders were issued to the complainant No.2 to refund the loan amount. The OP also admitted of issuing the letter dated 24.10.09 for refund of the loan amount. The fact that the granting of loan was objected by the Auditor of the Corporation was intimated to the complainant, instead of that complainant failed to pay half yearly interest even in spite of knowing his liability to pay the same. Finding the intention of the complainant not to pay the loan with interest, the OP was compelled to close the policy of the complainant. The complainant at least could have paid some part of the loan if not the full together with the half yearly interest from time to time. As such, the OP finding no other alternative but to cause surrender of the policy of the complainant which is already in the hand of OP and thereby adjusted the loan amount with interest and refunded a sum of Rs.18,050/- after being adjusted. The OP stated that they have given sufficient time to the complainant to refund the loan amount and as such, they are compelled to take the aforesaid step without having any malafide intention. That being the position the OP did not commit any illegality and deficiency in service and therefore  prayed to dismiss the case against them.

 

 In this case Complainant gave two evidence by swearing affidavit as PW-1 and PW-2 and  exhibited as many as 2(two) documents in support of their case. On the other hand, OP examined one witness, namely Debashish Sarma as DW-1 and exhibited no documents to rebut the case of the complainant.

 

 

Complainants submitted their written argument whereas, OP made no any argument.

 

 

DISCUSSION,DECISION AND REASONS THEREOF:

Upon going through the pleading, evidence, documents and argument advanced by both the parties it reveals that the complainant No.2 obtained an Insurance Policy on 15.09.97 bearing Policy No.440812670 being the Policy of ‘Money Back Children Without Profit’ for the benefit of the complainant No.1, son of the complainant No.2 from Mankota Branch, Dibrugarh. The last premium for the said policy was September, 2008 and the maturity was 2016. The premium was Rs.2627/- to be paid quarterly. The complainant paid all the premium of Rs.2627/- till September, 2008 i.e. upto the last premium. In the year 2008 the complainant No.2 faced some financial crisis for which he requested OP No.1 for a sanction of loan. Accordingly, OP No.1 assured the complainant that he would sanction the loan against the aforesaid policy. The OP No.1 on 17.10.08 sanctioned a loan amount of Rs.71,000/- against the policy to the complainant.   The complainant utilised the said loan amount for his personal expenses. Subsequently, on 24.10.09 surprisingly after one year from the sanction of loan the OP sent a letter asking the complainant to refund the aforesaid loan amount on or before 31.10.09 stating that the loan amount was sanctioned wrongly as because the complainant is not entitled to any loan against the said policy. Further, complainant was asked to pay the loan within six days from the date of receipt of the above letter. After receiving the said letter the complainant was puzzle and was not in a position to return the loan amount in such a short time as mentioned in the letter.  Thereafter, the OPs sent few reminders to the complainant No.2 to refund the loan amount.  However, it is to be mentioned that while sanctioning the loan OP No.1 did not mention any procedure in detail and the made of recovery of loan and suddenly by the aforesaid letter demanded the entire loan amount which is quite abuse of the process of law. Besides, wrongly sanction of the loan by the OP was not fault of the complainant No.2 and for the fault of OP No.1 complainant should not be suffer. Complainant was not in a position to refund the  huge amount of Rs.71000/- at a time. While at the time of sanction the OP did not mention any mode of repayment of loan.  Subsequently, on 31.03.11 sent a letter to the complainant No.1 with a cheque bearing No.0472387 dated 31.03.11 for an amount of Rs.18050/- showing the said amount being surrender of the Policy No.440812670 which the complainant did not surrender the aforesaid policy and thereby cause great loss to the complainant. The above act of the OP was malafide intention of causing wrongful loss to the complainant which is clear deficiency in service on the part of OP.

 

OP in their evidence stated that as per terms of the policy the complainant cannot avail any loan against the policy. The OP admitted that due to oversight and bonafide mistake by the OP No.1 a loan was sanctioned in the name of the complainant No.2 against the policy and said mistake was detected after one year from the date of granting loan. As per terms of the loan complainant No.2 was required to pay the interest of the loan over half yearly, in case he was not in a position to return the principal amount. Whereas, the complainant No.2 failed to repay any amount towards half yearly interest or principal amount and thereby he violated the terms of the loan thereof. Therefore, taking all the fact in consideration, the OP stated that they had no other alternative but to issue the letter stating the fact and asking them to refund the money on or before 31.10.09. Meanwhile, the Branch Manager and one Officer Sri Gobinda Saikia personally contacted with complainant No.2 several time at his residence with request to  refund the loan amount to which the complainant No.2 agreed. It is stated by the DW-1 that when loan was granted along with the cheque the terms and conditions were explained, and as per the said terms half yearly interest were to be paid by the loanee in case he failed to pay the principal amount. The OP also sent few reminders to the complainant No.2 to refund the loan amount at a time. However, it is common principle that once a loan has been taken it is to be repaid and if in any case loanee default, the same can be recovered from the policy by causing surrender which is already in our hand. As such, finding no other alternative they surrendered the policy and thereafter adjusted the loan amount from the value of the policy and refund the sum of Rs.18050/- to the policy holder. Meanwhile, the OP gave sufficient time to the complainant to pay the loan and also to surrender the policy. Under the circumstances, OPs were forced to cause surrender of the policy on 31.03.11 having no other any alternative and thereby they have no malafide intention of causing any wrongful lost to the complainant and also not committed any deficiency in service.

 

On meticulous scrutiny of the evidence produced by both the parties it appears that as per terms of the policy No.440812670 ‘Money Back Children Without Profit’ there was no provision for sanctioning any loan when the minor got majority. The OP No.1 due to oversight, wrongly sanctioned the loan for an amount of Rs.71000/- on 17.10.08 against the aforesaid policy. However, after lapse of one year when the default came to their notice, the OP vide Ext-1 letter dated 24.10.09 asked the complainant to refund the aforesaid loan amount on or before 31.10.09 stating that loan amount was sanctioned wrongly.  It is pertinent to mention here that to refund such a huge amount of Rs.71000/- at a time is not a simple thing for a poor person like complainant. Besides, it appears that while sanctioning the loan DW-1 in para No.2 stated that they sent a forwarding letter together with loan cheque wherein all the terms and conditions were explained and as per  the said terms the half yearly interest were to be paid by loanee in case he failed to pay the principal amount. But, it is to be mentioned here that the OP failed to substantiate the above statement of DW-1 by producing any documents that any terms and conditions were explained to the complainant at the time of sanctioning the loan as to how the loan will be repaid. As soon as the wrong was detected by the OP after one year they hurriedly sent a letter i.e. Ext-1 on 24.10.09 directing the complainant to refund the money on or before 31.10.09. They demanded the refund of entire amount of the loan within six days of receipt of the letter by the complainant without issuing any notice which is against the basic principle of natural justice and the act of the OP was unbecoming.

 

OP stated that  as the complainant No.2 did not pay any amount towards half yearly interest he thereby violated the terms and condition of the loan. The complainant also failed to repay the loan amount as was directed vide letter dated 24.10.09 and even though sufficient opportunity was given to the complainant to repay the loan amount but the complainant failed to refund the loan amount and as such, taking all the fact into consideration the OP having no other option but to cause surrender the policy of the complainant, which is in the hand of OPs. However, this act of  the OPs are against the principle of law and by doing so the OPs have violated the law. As per agreement of Insurance Policy there were five modes of payment which would have been matured in the year 2016. Following are the modes of payment :

 

“(i)  on the life assured’s death before the stipulated date of maturity it shall occur on or after the date of commencement of risk sum will be assured.

 

(ii)  on the life assured’s surviving the policy anniversary immediately after the completion of age 18 years 20% of the sum assured will benefitted by the policy holder.

 

(iii)  on the life assured’s surviving the policy anniversary immediately after the completion of age 20 years 20% of the sum assured will be benefitted by the policy holder.

 

(iv)  on the life assured’s surviving the policy anniversary immediately after the completion of age 22 years 30% of the sum assured will be benefitted by the policy holder.

 

(v)  on the life assured’s surviving the policy anniversary immediately after the completion of age 24 years 30% of the sum assured will be benefitted by the policy holder.”

 

 

The OPs instead of following the above modes, suddenly caused surrender of the policy without consent of the complainant No.1 and 2  which is the violation of law. Even if OPs caused surrender of the policy and paid the amount, they should have considering the five modes of the policy which would have been matured in the year 2016. It was an abundant duty on the part of the OP to obtain the consent of the complainant before causing surrender the policy.

 

The complainant obtained the loan facility from the OPs against the policy and he is bound to repay the loan, but in absence of any mode of payment he failed to repay the loan and as such it is not the fault of the complainant. There is every scope of the OP to recover the loan but after following the five modes of payment. However, it must be followed the contract of the policy because complainant had paid all the instalment against the said policy till September, 2008 and sum assured had to be paid by 2016 by observing all the five modes as mentioned in the policy. But the OPs instead of following the modes of payment of the policy without maturity suddenly in the midst of the policy caused surrender which caused sufficient lost to the complainant.

 

Considering the above fact and circumstances, it appears that OPs with their malafide intention taking the law into their own hand whimsically caused surrender of the policy of the complainant without any valid cause. If any amount had to be recovered of the loan amount they could have recovered after completion of the  maturity of the policy and thus the act of the OP shows malafide intention and deficiency in service.

 

In view of the conclusion arrived above the Forum comes to the conclusion that complainant has been able to disclose material of deficiency in service and illegal trade practice committed by the OP by causing surrender of the policy before its maturity though all the premium were paid by the complainants. As such, the complainants are entitled to all the benefits of the policy till 2016 i.e. till the time of maturity and also entitled to get compensation for harassment,  inconvenience and agony suffered by the complainant along with the cost of litigation. As such, this Forum doth order the OPs to pay all the benefits of the policy till 15.09.16 with simple interest @12% per annum from the date of closing the policy i.e. 15.09.16 on maturity amount after deducting the loan amount of Rs.71000/- along with simple interest @ 4% per annum from the date of taking loan i.e. 17.10.08 in absence of any terms and condition while sanctioning the loan. The OPs are  also directed to pay Rs.10000/- as compensation for harassment, inconvenience and mental agony suffered by the complainant. The OPs are also directed to pay Rs.5000/- as cost of litigation. All the amount ordered above shall be paid to the complainant within one month from the date of this judgment through this Forum.

               

Send copy of this judgment to OPs for compliance.