Date of Filing      : 08.01.2021

                                                                                                                 Date of Disposal: 29.09.2022

 

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION

THIRUVALLUR

 

 BEFORE  TMT. Dr.S.M. LATHA MAHESWARI, M.A.,M.L, Ph.D (Law)                 .…. PRESIDENT

                  THIRU.J.JAYASHANKAR, B.A,B.L.,                                                             .....MEMBER-I

                 THIRU.P.MURUGAN,M.Com.ICWA(Inter),B.L.,                                        ....MEMBER-II

 

CC. No.01/2021

THIS THURSDAY, THE 29th DAY OF SEPTEMBER 2022

 

Mr. G.Isaivannan,

S/o.Govindarajan,

No.14, First Main Road, 

Selvaraj Nagar, Thiruninravur,

Chennai 602 024.                                                                        ……Complainant.     

                                                                          //Vs//

1.The Branch Manager,

    Life Insurance Corporation of India,

    Ambattur Branch,

    Venkatapuram, Ambattur, Chennai -53.

 

2.The Zonal Manager,

   Old No.153, New No.102, LIC Building,

    11th Floor, Anna Salai, Mount Road,

    Chennai, Tamil Nadu – 600 002.                                ..........Opposite parties. 

 

Counsel for the complainant                               :   Mr.P.Raja, Advocate.

Counsel for the opposite parties 1 & 2              :   Mr.S.Sushil Kumar, Advocate. 

                         

This complaint is coming before us on various dates and finally on 22.09.2022 in the presence of Mr.P.Raja, Advocate counsel for the complainant and Mr.S. Sushil Kumar Advocate counsel for the opposite parties 1 & 2  and upon perusing the documents and evidences of both sides, this Commission delivered the following: 

 

ORDER

PRONOUNCED BY TMT. Dr.S.M. LATHA MAHESWARI,   PRESIDENT.

 

This complaint has been filed by the complainant u/s 35 of the Consumer Protection Act, 2019 alleging deficiency in service in the matter of issuance of the policy along with a prayer to direct the opposite parties to pay original two policy amounts respective each for Rs.2,00,000/- instead of Rs.62,352/- and to pay a sum of Rs.5,00,000/- as compensation for the mental agony, hardships, strain and inconvenience caused by the act of the opposite parties along with cost of the proceedings to the complainant.

Summary of facts culminating into complaint:-

 

Dispute related to insurance policy it was stated that the complainant was working at C.V.R.D.E., DRDO, Avadi, Chennai and had taken two polices vide LIC Jeevan Saral with Death benefit Sum Assured as Rs.2,00,000/- vide policy Nos.719470245 and 719467665 with accident benefit and other privileges respectively.  In both policies the sum assured is Rs.2,00,000/- and was taken on table No.165/10/10.  The premium was to be pay in monthly mode and the policies to be matured on 12.01.2022 and 14.03.2021 respectively.  On 05.10.2020 the complainant had received a letter for both policies from the LIC, Ambattur Branch stating that there was a typographical error while printing the schedule documents.  As per the letter sent after lapse of nine years it was mentioned that the maturity sum assured was only 62,352/- instead of Rs.2,00,000/-.  The complainant stated that how the typographical error can occur for both policies when the branch office always issues the policies with more caution and also he was prompt payer for the past years. Hence aggrieved by the act of the opposite parties the complainant sent a legal notice on 10.11.2020 calling upon the opposite parties to pay the original benefit as mentioned in the Jeevan Saral policies vide policy Nos. 719470245 & 719467665 and had filed the present complainant for the following reliefs;

To direct the opposite parties to pay original two policies amount respectively each for Rs.2,00,000/- instead of Rs.62,352/- & Rs.65,024/-

To pay a sum of Rs.5,00,000/- as compensation for the mental agony, hardships, strain and inconvenience caused by the act of the opposite parties along with cost of the proceedings to the complainant.

Crux of defence made by the opposite parties 1 & 2:-

The opposite parties 1 & 2 jointly filed version stating that it is true that the complainant had taken two policies for a death benefit sum assured of Rs.2,00,000/- vide policy Nos.719470245 and 719467665 and both the policies are Jeevan Saral  Policy taken for a period of 10 years together with accident benefit sum assured of Rs.2,00,000/-.  It was submitted that a glance at the schedule of the subject policies would reveal that the date printed therein have been printed one line above their respective places.  For example, in the schedule of the policy bearing number 719470245, the date of birth of the life assured (12.05.1960) has been printed against the date of maturity.  Likewise, his age 52 is shown against date of birth.  Similarly, the sum assured (Rs.2 lakhs each) in respect of the death sum assured & accident benefit sum assured have been printed one line above their places.  Nothing is printed against the maturity sum assured – in other words, it is blank.  As the sum assured was not printed, the opposite party merely sought to rectify the omission by issuing notice to complainant by letter dated 05.10.2020, that the maturity sum assured was left blank in the schedule of policy. It was submitted that if the complainant was not satisfied with the terms of the policy he could have returned it to the insurer.  In the policy document the terms of the maturity benefit was defined as “in the event of the life assured surviving the date of maturity, a sum equal to maturity sum assured in force, after partial surrenders, if any, along with the corresponding loyalty addition, if any, shall be payable”. It was also stated that the complainant cannot take undue advantage by demanding Rs.2,00,000/- as maturity sum assured, under this product as death cover and maturity sum will differ for different entry age and terms.  This policy also provides for loyalty additions.  On maturity the life insured will get the maturity sum assured plus loyalty addition, if any.  Policy document was an agreement, between the insurer and the insured and the same is to be read as a whole.  In short, it was submitted that the death cover will be same, irrespective of age at entry and term, but the sum payable at maturity would differ for each age at entry and terms of policy because higher ages has higher mortality rates and the death sum assured under this plan was 250 times selected by the customer. For policy No.719470245 it was submitted that the same was taken under salary saving scheme under the pan:165-10 I.e. jeevan Saral Policy and the maturity sum assured per Rs.100 after a term of 10 years transferred to Rs.7794/- and for basic monthly Rs.800/-, the maturity sum assured comes to Rs.62,352/-.  For policy No.719467665 the date of commencing was on 14.03.2011 and was taken under plan 165-10 I.e. Jeevan Saral Policy.  This policy as per calculation has maturity sum assured of Rs.65,024/-.  The policy premium mode was changed from monthly to quarterly and the policy loan outstanding of Rs.49,000/- was on 13.02.2020 and the policy was maturing on 14.03.2021 for which the opposite party had sent discharge voucher on 06.11.2020 with new amount payable at Rs.29,272 after deducting the loan principle with interest.  Thus submitted that the maturity sum assured was inadvertently left blank which fact was also not brought to the knowledge of the 1st opposite party by the complainant and it was not a mistake and deficiency in service on their part.  Thus they sought for the dismissal of the complaint.

The complainant has filed proof affidavit and documents Ex.A1 to Ex.A13 were marked on their side.  On the side of opposite parties 1 & 2 proof affidavit and documents Ex.B1 to Ex.B3 were filed. 

Points for consideration:

Whether the deficiency in service as alleged against the opposite parties by the complainant in the issuance of JEEVAN SARAL POLICIES with respect to the maturity sum assured has been proved successfully by the complainant by acceptable evidence?

If so to what relief the complainant is entitled?

Point:1

On the side of the complainant the following documents were filed in support of the complaint allegations;

First premium receipt of policy No.719470245 issued by the 1st opposite party to the complainant dated 12.01.2012 was marked as Ex.A1;

First premium receipt of policy No.719467665 issued by the 1st opposite party to the complainant dated 14.03.2011 was marked as Ex.A2;

Policy Bond No.719467665 issued by the 1st opposite party to the complainant dated 14.03.2011 was marked as Ex.A3;

Policy Bond No.719470245 issued by the 1st opposite party to the complainant dated 14.03.2011 was marked as Ex.A4;

Letter issued by the 1st opposite party to the complainant with regard to policy No.719470245 dated 05.10.2020 was marked as Ex.A5;

Letter issued by the 1st opposite party to the complainant with regard to policy No.719467665 dated 05.10.2020 was marked as Ex.A6;

Legal notice sent by the complainant to the opposite parties dated 11.11.2020 was marked as Ex.A7;

Acknowledgement cards for proof of service were marked as Ex.A8 & Ex.A9;

71G/claims/maturity benefit No.719467655 issued by the 1st opposite party to the complainant dated 06.11.2020 was marked as Ex.A10;

Status report of policy No.719467665 dated 24.11.2020 was marked as Ex.A11;

Status report of policy No.719470245 dated 24.11.2020 was marked as Ex.A12;

Aadhaar card of the complainant was marked as Ex.A13;

On the side of opposite parties 1 & 2 the following documents were filed in support of their contentions;

Policy bond No.719470245 was marked as Ex.B1;

Policy bond No.719467665 was marked as Ex.B2;

Letters issued by the opposite party to the complainant was marked as Ex.B3;

Heard both the parties and perused the pleadings and evidences submitted by them. 

 The crux of the case of the complainant was that he availed two policies from the opposite parties vide policy Nos.719470245 and 719467665 and for both policies the maturity sum assured was Rs.2,00,000/- as they were taken on table No.165-10 -10 in Jeevan Saral class category of LIC through Ambattur Branch and was paying the monthly premium amounts without any arrears.  On 05.10.2020 as the complainant received a letter from LIC, Ambattur Branch office for each of the policies stating that there was a typographical error while printing the schedule in the policy documents and that the same was corrected in the eleventh hour and as per the correction made by the opposite party the maturity sum assured for one policy was only Rs.62,352/-and not Rs.2,00,000/-and for another policy Rs.65,024/- and not Rs.2,00,000/-.  It was submitted by complainant that the policy was a contract of utmost good faith and the parties are bound by the contract and if there is any typographical error the same should have been brought to the knowledge of insured before the sum assured becomes due. In the present case the rectification of error has been sought once the payment of final maturity amount has come up before the insurance company.  Further it could be question whether the complainant would have gone for the policy, if he was made aware that he would get only Rs.62,352/- and Rs.65,024/- as maturity sum assured instead of Rs.2,00,000/-  after paying regularly the premium for a higher amount.  Now when the policies were matured and the claim becomes due on maturity, the insurance company is claiming to rectify the defect in the initial contract.  The mistake or typographical error in the contract does not seems to be obvious and even if the mistake is justified on the basis of table of the LIC, it is seen that the table was not a part of the policy and also not supplied along with the policy documents to the complainant and hence the complainant was not bound by the table.  It was further submitted that both the policies are bound by the written contract of insurance as per the policy document.  The alleged typographical error on the part of opposite parties could not be accepted for changing the same after the initial agreed contract and after expiry of the contract period.  It was argued that the typographical error or technical error was not due to the fault on the part of the insured/consumer and hence the insurance company should be made liable for its mistake. Thus sought for the complaint to be allowed.

On the other hand, admitting the policies taken by the complainant the opposite parties argued that no where the sum assured was printed as Rs.2,00,000/- in the policy No.719470245 on the life of Shri G.Isaivannan was issued on 12.01.2012 and only the death benefit sum assured altogether with accident benefit sum assured was Rs.2,00,000/- likewise in policy No.719467665.  As the sum assured was not printed in both policies it was rectified by issuing notices to the complainant and there was no typographical error.  The policies were issued on the basis of proposal and the entire terms and conditions had been fully explained to the complainant.  Further it was argued that the complainant cannot take advantage of the omission or error occurred during printing in the policies schedule and it was never informed to the complainant that the maturity sum assured for both policies was Rs.2,00,000/-.  The complainant had failed to understand the concept of insurance particularly relating to Jeeven Saral Policy. He further argued for the policy No.719470245 the net payable amount was only Rs.84,799/- and for policy No.719467665 the net payable amount was Rs.88,433/-.  It was submitted that in the proposal form, the complainant in response to question No.14 ‘have you understand fully the terms and condition of the plan you propose to take?’ has given the answer as ‘yes’ thereby assuring that he well understood all the benefits available and the terms and conditions of the plan. Though the death sum assured and premium amount and policy terms is same for all ages, but as the age of insured increases the applicable mortality charges also rises and the maturity benefit under policy gets reduced.  When the policy document was issued to the complainant he was aware that the coloumn was left blank and the terms of the contract.  Intentionally he had not approached the opposite party‘s office for rectification of the same. In the present case both the policies were purchased to avail the benefit to cover death sum assured and maturity sum assured and the complainant has taken the entire sum assured for life cover and now he cannot demand for refund of paid amount.  Thus stating that claim of the complainant for the premium was illegal he alleged for the complaint to be dismissed.

To avoid repetition of the facts we are discussing only the relevant facts that are essential to determine the real issues.

  We perused the documents provided by both parties and the pleadings submitted by them. It could be seen with naked eyes by this Commission that as per the Ex.A3 & Ex.A4 the policy documents under the column maturity sum assured nothing was printed.  However Rs.2,00,000/- was printed at first giving an impression that Rs.2,00,000/- is the maturity sum assured as the same cannot be left blank. It is hard to believe the contention raised by the opposite parties that the two lakhs was mentioned only in the second serial number printed as Death Benefit Sum Assured.  It is also not an acceptable defence that the maturity sum assured column was left blank. Hence it is seen that the opposite parties themselves had accepted that the maturity sum assured is left blank but no convincing reason has been given by them as to why the maturity sum assured column was left blank in a document which is conclusive in all aspects with terms and conditions.  .  Further they themselves have admitted that there are certain typographical errors in the policy documents for which they have sent a letter with correct particulars only just before 10 days of the maturity of the policies.  Thus as rightly pointed out by the complainant when the complainant was made to believe that the maturity sum assured was Rs.2,00,000/-, the opposite parties are not permitted to go back and alter the maturity sum assured for a lesser amount which is highly prejudicial to the complainant. Further the contention of the opposite parties that only when they were preparing to credit the maturity sum assured they came to know about the blank in the maturity sum assured in the policy schedule and thus sent the correct policy schedule with respect to the policy documents is highly unacceptable.  In the facts and circumstances, the argument by the complainant that the principal of free look period of 15 days applies to both parties is to be accepted.  Further it is also seen that the ombudsmen had clearly held that the opposite parties keeping the column of maturity sum assured column blank is a clear violation of IRDAI and has held in his Award as follows;

“Regulation No.9 (1) (iv) of IRDAI (Protection of Policy holders’ Interests) Regulations, 2017 stipulates that “benefits payable and the contingencies upon which these are payable and the other terms and conditions of the insurance contract’ shall be clearly stated in the life insurance policy.  In the case on hand, “Schedule” of the policy document clearly stats the contingencies upon which the benefits are payable.  However, as mentioned above, the “Maturity Sum Assured” benefit is not at all printed in the policy schedule and kept blank.  This would amount to clear violation of the provision of IRDAI (Protection of Policy holders’ Interests) Regulations, 2017.” 

“It also held that “the doctrine of good faith which is the underlying principle of life insurance contract requires that both parties to the contract must honestly disclose all relevant information and each of the governing terms and conditions of the insurance policy is required to be mandatorily mentioned in the policy document enabling the policyholder to take a judicious decision during the free-look period as to whether to continue or discontinue the policy.” They also had held that the act of the opposite parties amounts to “Mis-selling” in their words as follows;

“i. Having regard to the above, it is the considered view of this Forum that the insurer’s action would clearly amount to Mis-representation of the terms and conditions of the subject policy and as a sequel thereto, would be construed as “Mis-selling”. As such, the proper course of action for the insurer is to refund the premiums received under the subject policy along with “Interest” as envisaged in Rule 17(7) of the policy document read with Regulation 14(iv) of IRDA (Protection of Policy holders’ Interests) Regulations, 2017 and also, as demanded by the complainant.

ii) As per the aforesaid Rule, the complainant shall be entitled to such interest at a rate per annum, as specified in the Regulations framed under the IRDAI Act, 1999 from the date of the claim ought to have been settled till the date of payment of the amount awarded by the Ombudsman.  Further, Regulation 14(iv) of IRDAI (Protection of Policyholders’ interest Regulations, 2017 envisages that in case of any delay on the part of the insurer in settling the maturity claim on the due date, the life insurer shall pay interest at the a rate which is 2% above the Bank rate from the date of payment or date of receipt of last necessary document from the insured/claimant whichever is later.  In the instant case, interest at the specified rate should be paid from the date of receipt of the various instalment premiums and directing the opposite parties to refund the premium paid with interest.” 

 The said award of the insurance Ombudsman was also not carried out by the opposite parties.  Thus we hold the opposite parties had committed deficiency in service.

Further our view is supported by a recent decision rendered by the Hon’ble NCDRC in REVISION PETITION NO. 2282 OF 2018 dated 02.03.2020 in  LIFE INSURANCE CORPORATION OF INDIA & ANR.  Versus PARVATI BAI  MAHADEV MOGRE, an identical case holding LIFE INSURANCE CORPORATION OF INDIA / opposite party liable in its words as follows,

Policy is a contract of utmost good faith and parties are bound by this contract. If any typing error is brought to the notice of the other party by any party before the claim becomes due, it can definitely be corrected.  In the present case, the rectification of error has been sought once the question of final maturity amount has come up before the Insurance Company. Moreover, the question is whether the complainant would have gone for the policy, had he known that on maturity he will get only Rs.38,970/- after paying regular premium of Rs.1,225- quarterly for 10 years. During the currency of the policy, the insurance company did not point out any mistake in the policy, nor sent any corrected policy document. Now, that the policy has matured and the claim became due on maturity, the insurance company is claiming the defect in the initial contract. The mistake or typographical error in the contract does not seem to be obvious and even if the mistake is justified on the basis of table 165 of the LIC, it is seen that this table was not part of the policy and was not supplied along with the policy document, therefore, the complainant may not be bound by this table, rather, the complainant and the insurance company both are bound by the written contract of insurance as mentioned in the policy document. The policy contract has to be interpreted in the terms as agreed in the contract by the contracting parties. Hon'ble Supreme Court in General Assurance Society Ltd. Vs.Chandmull Jain, [1966 ] 3 SCR 500, has held as under:-

17." ...In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves."

7.      In Oriental Insurance Co. Ltd. Vs. Sony Cherian II(1999 )CPJ 13 (SC ), it has been observed as follows:-

"16. The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein."

8.      In United India Insurance Co. Ltd. Vs. Harchand Rai Chandan Lal, (2004) 8 SCC 644, the Hon'ble Apex Court held as follows:-

"6. ....The terms of the policy have to be construed as it is and we cannot add or subtract something: Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended.

9. ...It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in other laws. It is a matter of contract and in terms of the contract the relation of the parties shall abide and it is presumed that when the parties have entered into a contract of insurance with their eyes wide open, they cannot rely on definition given in other enactment.

14. Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous."

9.  Based on the above authoritative judgements of the Hon'ble Supreme Court, it is clear that the contract conditions of the policy cannot be changed or interpreted differently by any forum and therefore, the alleged typographical error cannot be accepted for changing the same after 10 years of the initial agreed contract i.e. after expiry of the contract period.

 The above decision squarely apply to the facts of the present case and we have no other option but to hold that the opposite parties had committed clear deficiency in service in the issuance of the policy document making the complainant to believe that the maturity sum assured was Rs.2,00,000/- and to continue the policy with the same terms for ten years and later modifying the terms unilaterally prejudicially to the interest of the insured/complainant the same also amounted to unfair trade practice. The point is answered accordingly in favour of the complainant. 

Point No.2:

With regard to the relief to be granted to the complainant as we have held above that the opposite parties have committed deficiency in service we direct the opposite parties with respect to policy No.719470245 to pay a sum of Rs.2,00,000/-(Rupees two lakhs only), the full maturity sum assured or if paid already a sum of Rs.62,352/- the balance amount of Rs.1,37,648/- with admissible bonus on the total maturity sum assured of Rs.2,00,000/-. Further with respect to policy No.719467665 to pay a sum of Rs.2,00,000/-(Rupees two lakhs only), the full maturity sum assured or if paid already a sum of Rs.65,024/- the balance amount of Rs.1,34,976/- with admissible bonus on the total maturity sum assured of Rs.2,00,000/-. Further we also award Rs.25,000/- as compensation for the deficiency in service committed by the opposite parties which caused huge mental agony and hardship to the complainant. We also award Rs.5,000/- towards litigation expenses to the complainant.

In the result, the complaint is partly allowed directing the opposite Parties 1& 2; 

a) to pay a sum of Rs.2,00,000/-(Rupees two lakhs only), the full maturity sum assured or if paid already a sum of Rs.62,352/- the balance amount of Rs.1,37,648/- with admissible bonus on the total maturity sum assured of Rs.2,00,000/- with respect to policy No.719470245. 

Further to pay a sum of Rs.2,00,000/-(Rupees two lakhs only), the full maturity sum assured or if paid already a sum of Rs.65,024/- the balance amount of Rs.1,34,976/- with admissible bonus on the total maturity sum assured of Rs.2,00,000/- with respect to policy No.719467665.

b) to pay a sum of Rs.25,000/- (Rupees twenty thousand only) towards compensation for mental agony caused to the complainant;

c) to pay a sum of Rs.5,000/- (Rupees five thousand only) towards litigation expenses to the complainant. 

Dictated by the President to the steno-typist, transcribed and computerized by him, corrected by the President and pronounced by us in the open Commission on this the 29th day of September 2022.

 

       -Sd-                                            -Sd-                                                             -Sd-

MEMBER-II                                  MEMBER-I                                               PRESIDENT

 

 

List of document filed by the complainant:-

 

Ex.A1 12.01.2012 First premium receipt of policy No.719470245 issued by the 1st opposite party to the complainant. Xerox

Ex.A2 14.03.2011 First premium receipt of policy No.719467665 issued by the 1st opposite party to the complainant. Xerox

Ex.A3 14.03.2011 Policy Bond No.719467665 issued by the 1st opposite party to the complainant. Xerox

Ex.A4 14.03.2011 Policy Bond No.719470245 issued by the 1st opposite party to the complainant. Xerox

Ex.A5 05.10.2020 Letter issued by the 1st opposite party to the complainant with regard to policy No.719470245. Xerox

Ex.A6 05.10.2020 Letter issued by the 1st opposite party to the complainant with regard to policy No.719467665. Xerox

Ex.A7 11.11.2020 Legal notice sent by the complainant to the opposite parties. Xerox

Ex.A8 ............ Acknowledgement card. Xerox

Ex.A9 ............. Acknowledgement card. Xerox

Ex.A10 06.11.2020 71G/claims/maturity benefit No.719467655 issued by the 1st opposite party to the complainant. Xerox

Ex.A11 24.11.2020 Status report of policy No.719467665 Xerox

Ex.A12 24.11.2020 Status report of policy No.719470245 Xerox

Ex.A13 ............. Aadhaar card of the complainant. Xerox

 

List of documents filed by the opposite parties 1 & 2:-

 

Ex.B1 ................ Policy Bond No.709470245 Xerox

Ex.B2 ............ Policy Bond No.709467665 Xerox

Ex.B3 05.10.2020 Letter issued bythe opposite party to the complainant. Xerox

 

 

 

   -Sd-                                                 -Sd-                                                            -Sd-

MEMBER-II                                  MEMBER-I                                               PRESIDENT