This is a complaint filed U/s 12 of Consumer Protection Act for an order directing the opposite party to pay an amount of `27,530 with its 3 years interest at the rate of 12% with compensation of an amount of `10,000.

          The case of the complainant in brief is as follows:   The complainant had purchased Met Smart plus unit linked Insurance policy on 03.07.2007 from 2^nd opposite party.  The terms of policy is 41 years for the coverage of `1,80,000.  He has to pay three annual premium instalments of `12,000.  He paid entire instalments at July, 2010. The fund value of the policy depends upon the share market value.  When he checked the fund value on 17.09.2010 it could be seen that the fund value reduced to `16,632.70826. The complainant send a notice to 1<sup>st</sup> opposite party on 26.10.2010 with regard to some discount of fund value.  But 1<sup>st</sup> opposite party did not respond.  As per the terms complainant can continue the fund upto 41 years and wait for the increase of the market value.  On that period petitioner is entitled for a coverage of `1,80,000. But on 06.01.2011 1^st opposite party foreclosed the policy without the instruction of the petitioner and send a cheque of Axis Bank, Bangalore for an amount of `8470.  As per terms company should inform the policy holder at least four weeks prior to such foreclosure.  The respondents misappropriated `27,530 with its  four years interest, complainant approached several times to get back the money but they evaded.   Lawyer notice was sent but they did not reply and hence this complaint.

          Pursuant to the notice opposite party appeared and filed version jointly contending as follows :  The complaint does not fall within the definition of a consumer dispute.  Complainant had applied voluntarily for the Insurance policy.  The opposite party issued the alleged insurance policy after being completely satisfied with terms of policy though the complainant had paid two renewal premiums the mortality charges were being deducted from the fund value every month.  Resultantly the fund value of the complainant was showing a reduced figure.  The complainant had failed to pay the third renewal premium. It became due on 03.07.2010.   After completion of policy 3 years opposite party had sent Policy status Intimation notice.  It was intimated that premium had not been received from 03.07.2010. It was also informed that the policy would continue to be in force till the existence of sufficient fund value.  All charges like admission fee, mortality charge etc would continue to remain deducted from the fund value till the availability of sufficient amount and afterwards the policy would stand terminated.  The applicable surrender value would be paid to the complainant.  Complainant did not pay any heed to the notice and continued in defaulting to remit the third renewal premium on the policy. On 04.10.10 the fund value was `16,870.77 and the surrender penalty `8400.  It was approaching the minimum threshold limit of one Annualized premium viz. `12,000.  Notice dated 08.10.10 communicated the above fact and the fund value in the policy’s unit account was approaching the minimum threshold limits and that the policy would get foreclosed in the event that the fund value comes down to the minimum threshold limits.  Complainant also asked to pay the renewal premium amount so as to avoid foreclosure of the policy and to continue the enjoyment of the benefit.  Complainant did not make the payment of the renewal premium and hence terminated the policy.  The balance amount of `8,470.77 after deducting the surrender charges was paid to complainant.  Complainant has failed to make out a prima facie case against the opposite party.  Hence to dismiss the complaint.

          On the above pleading the following issues have been taken for consideration.

1.     Whether there is any deficiency on the part of opposite party?

2.     Whether the complainant is entitled to get the relief as prayed in the complaint?

3.     Relief and cost.

The evidence consists of the oral testimony of PW1, DW1 and Ext.A1 to A12 on the side of the complainant and Ext.B1 to B6 on the side of opposite parties.

Issues No.1 to 3 :

          Admittedly complainant purchased Met Smart plus unit linked Insurance Policy from 2^nd opposite party for a period of 41 years with an annual premium of `12,000.  The case of the complainant is that he has made payment of entire three premium instalments `36,000.  Then he checked fund value and found fund value reduced to `16,632.  Though notice was sent regarding this, opposite party did not respond.  But the opposite party foreclosed the policy on 06.01.2011 without the instruction of the complainant.  Forecloser was done without lawful notice of at least four weeks prior to the forecloser.  Opposite party misappropriated an amount of `27,530.  They paid only `8470 out of local payment of `36,000.

          Opposite party on the other hand contended that complainant failed to pay third renewal premium and on completion of three years policy status intimation notice had been sent.  It was also intimated all charges admission fee, mortality charges etc would continue to remain deducted from the fund value till the availability of sufficient amount and afterwards policy would stand terminated.  The balance surrender value would also be paid.

          Ext.A1 is the policy document, which reveals a coverage of `1,80,000 for a period of 41 year.  Ext.A2, 3 & 4 dated 10.07.2007, 14.08.2008 and 14.08.2009 respectively shows that complainant had paid an amount of `36,000 altogether.  The fund value depend upon the market value.  Complainant alleged that after completing 3 years when he checked on 17.09.2010 he could see the fund value become reduced to `16,632.70.  Admittedly opposite party had sent policy status intimation Ext.B4 dated 03.08.2010 and informed the complainant premium for policy had not been received since 03.07.2010.   Ext.B4 also intimated that the policy in question would continue to be inforce till the availability of sufficient fund and thereafter it would stand terminated. Opposite party contended that complainant did not heed to the letter.  But it can be seen that complainant sent a notice Ext.A5 dated 26.10.2010 when he could see the fund value decreased.

          Complainant alleged that opposite party did not send any reply to Ext.A5, which was sought for the details of their fixed value.   Thereafter 2 ½ months opposite party sent foreclosure intimation letter Ext.A6 dated 06.01.2011 together with a cheque for `8470.   It can also be seen that foreclosure was done even without giving a clarification to the letter of notice Ext.A5 opposite party has the liability to give explanation to complainant especially on the reason that the clarification sought for with respect to the variation in fund value.  It is only a service deficiency, since in all respect an obligation on the part of opposite party.

          Notice of policy disclosure was claimed to be sent to complainant on 08.10.2010 which denied by the complainant.  Even the postal receipt had not been produced.  Hence it cannot be believed since it is a matter of proof, though it was marked on Ext.B5.  Even Ext.B5 shows that the surrender value as on 08.10.10, the date of issue was not below the minimum threshold limit.  It has also shown that the fund value as on 04.10.10 was `16,870.77.   What is claimed to be communicated to complainant was that of the amount happened to be below the minimum threshold value the policy would be closed.  Minimum threshold value is only `12,000.

          The evidence available goes to show clearly that the policy was closed at a time when there had been sufficient amount over and above the minimum threshold value `12,000.  Foreclosure letter together with a cheque for `8476 was sent to complainant on 06.01.2011.  The specific case of the complainant is that the foreclosure of policy was done without his instruction or consent.   Complainant also alleges that no notice was given to complainant with respect to the foreclosure of policy Terms and Conditions.  Met Smart plus – 10 quite clearly stipulated that “the insured/policy holder shall be given at least four weeks prior notice of company’s intention to close any of the unit linked fund.”  DW1 in his cross examination also deposed that “A1se condition 10 {]Imcw   unit linked fund close sN¿p-¶-Xn\v  4 BgvN aps¼ notice Ab-¡-W-sa¶v \n_-Ô-\-bp-­v.”  So notice is a must.  Condition 21 stipulates that if after three years the surrender value falls below the annualized premium at any point of time the policy would be terminated by payment of the surrender value as on the date.”  Herein, when termination was done the surrender value had been remained above the annualized premium at that point of time the policy was terminated.  Moreover, it was done ignoring the condition-10 ‘atleast four weeks prior notice’.  Nowhere in the conditions it was stipulated that company is entitled for foreclosure without giving notice to insured.  As per the terms and conditions it is seen notice is mandatory and thus the foreclosure without notice is a deficiency in service.

          It is also necessary to examine whether or not the amount of surrender value taken below the minimum threshold value `12,000 at the point of time of closure of the policy. The letter of foreclosure was sent on 06.01.2011.  The cheque for `8470 also sent together with the letter.  But Ext.A7 reveals that the cheque was dated 30.12.2010 whereas, Ext.A6 policy foreclosure was dated on 06.01.2011, which categorically stated that they were constrained to foreclose the policy since the surrender value had fallen below the minimum threshold limit.  The actual date of foreclosure is earlier to Ext.A6 and A7.  Ext.A11 sent by opposite party to complainant stated that the policy had foreclosed on 04.10.10 as the surrender value had fallen below the threshold limit of one annualized premium.

          Threshold limit of one annualized premium is `12,000.  Ext.B3 summary of account position shows that as on 26.10.10 the full surrender amount was `16,870.77.  The current status of policy set out in Ext.B5 notice of policy Foreclosure claimed to be sent by opposite party to complainant dated 08.10.10 shows the fund value as on 04.10.10 had been `16870.77.  In the cross examination DW1 deposed that “B3 {]Imcw 05.10.10-þ\v  policy terminate sN¿p-t¼mÄ fund value 16780.77 BWv.  Fund value annualized premium¯n\v tase-bmWv.”  DW1 also stated that “policy kz-ta-[bm foreclosure sNbvXv 3 amk-¯n-\p tij-amWv A6 Ab-¨Xv.”  Para 2 of the version also stated that on 04.10.10 the fund value was `16,870.77. Hence there is no doubt that the fund value on the date of foreclosure (04.10.10) was `16,870.77.  So the contention of opposite party that they constrained to foreclose the policy since the surrender value had fallen below the minimum threshold limit remains as plain lie.  Opposite party is only attempting to create confusion so as to make impression upon complainant that they have issued notice and the amount of surrender value had fallen below the threshold limit.  We have no doubt that there is deficiency in service on the part of opposite party in the foreclosure of policy without giving four weeks notice showing clearly that the surrender value had fallen below the minimum threshold limit.  No doubt it is deficiency in service and the attempt to create the impression that sufficient notice had been given amounts to only unfair trade practice.

          Admittedly complainant herein totally paid `36,000 by Ext.A2, 3 & 4 and completed three years period.  If it was not terminated by opposite party complainant would have an opportunity to continue the policy after paying the balance amount.  Complainant has the case that he lost the opportunity to continue the policy and sustained loss of coverage of life insurance for `1,80,000 for a long period.  Further he lost the opportunity to wait for the increase of the market value for surrender.  Since the opposite party foreclosed the policy without proper notice this allegation of complaint is not without substance.

          However, with respect to the loss sustained by the complainant the main dispute is on the point of mortality charge and extra mortality charge.  Opposite party contended that the policy was issued as a non-standard rate with extra mortality charge of 150% and this fact was duly communicated.  But nothing has been mentioned in the policy conditions with respect to the extra mortality charges.  Even in the alleged revised conditions of policy Ext.B6  Extra Mortality charge was not defined.  No other documents including the version did not give explanation to extra mortality charges.  Even the chief affidavit filed by opposite party stated only that opposite party agreed to issue the policy to the complainant subjected to payment of extra mortality charges at 150% for the policy.  But it does not speak of by which document it was agreed upon.  Even the chief affidavit did not speak of anything what is Extra Mortality charges. Opposite party failed to prove that complainant agreed upon extra mortality charges.  Absence of consensus ad idem to the point of extra mortality charge is quite evident since none of the document produced by opposite party carries any explanation to extra mortality charges.

          Condition of policy 10 explain what is mortality charge and it is stipulated that mortality charge will be deducted at the beginning of each month.  Calculation method shown is mortality charge = sum at risk/1000. If it is so mortality charge = `1,80,00/1000 = `180.  So as per the documents made available the mortality charge is `180 and the same will be deducted at the beginning of each month.  The statement of account Ext.B3 from 02.07.2007 to 26.10.10 the mortality charges shown in `15,575.55.  Total months from 02.07.2007 to 26.10.2010 comes to 39.  Even if it is taken to 40 months the total amount at the rate of 180 per month will come only `7200.  How does it comes to `15575.55 for 40 month is not understandable. Ext.B2 statement of account shows on the day 23.01.2008 six entries of `366.13 shown as mortality charge.  So also on 03.10.2008 there was three entries with `360.18 each as mortality charge.  It can also be seen that different charges were shown in different months.  No explanation has been given for this difference.  So the calculation of mortality charge also cannot be considered accurate.  In the absence of an understandable method of calculation opposite party is not entitled to charge more than `7200 as mortality charges as per the terms of policy condition accepting that simple transparent view justifiable, we hold that the mortality charge `15,575 shown in Ext.B3 is wrong and this opposite party is liable to return `8375.  Other charges being not challenged by the complainant calculation has been taken for granted.

          However, complainant has lost the opportunity to continue the policy and thereby sustained loss.  It is also found that there is deficiency in service that amounts to unfair trade practice on the part of opposite party in closing the policy without the knowledge and consent of complainant avoiding service of statutory notice of foreclosure.  Complainant lost the opportunity to continue the policy, which is progressive.  Complainant deserves for compensation to this count which we estimate an amount of `7500 (Seven Thousand Five Hundred only) to settle with `1000 as cost of this proceedings. Hence the issues answered infavour of complainant and order passed accordingly.

          In the result complaint is allowed directing opposite parties to pay `8375 as excess amount taken as mortality charge and to pay an amount of `7500 (Rupees Seven Thousand Five Hundred only) as compensation towards deficiency in service together with `1000 as cost of this proceedings within 30 days of receipt of this order failing which the opposite party is liable to pay interest @ 10% for the entire award amount from the date of order till the payment.  Complainant is also entitled to execute the order after the expiry of one month as per the provisions of Consumer Protection Act.

          Dated this the 2^nd day of July, 2012.

                          Sd/-                            Sd/-                  Sd/-

                       President                    Member               Member

APPENDIX

Exhibits for the Complainant

A1.  Original policy certificate with terms and conditions.

A2.  Premium receipt dated 10.07.07.

A3.  Premium receipt dated 14.08.08.

A4.  Premium receipt dated 14.08.09.

A5.  Notice to OP dated 26.10.10.

A6.  Letter dated 06.01.2011.

A7.  Copy of cheque dated 06.01.11.

A8.  Copy of lawyer notice.

A9.  Acknowledgment card.

A10.Acknowledgment card.

A11. Notice reply dated 27.04.2011.

A12. Cover of the notice.

Exhibits for the opposite parties

B1.  Application form for insurance.

B2.  Schedule “met smart plus”.

B3.  Statement of account dated 02.07.07 to 26.10.11.

B4.  Policy status intimation notice.

B5.  Notice of policy foreclosure.

B6.  Metlife – counter offer letter.

Witness examined for the complainant

PW1.  Complainant

Witness examined for opposite party

DW1.  Ranjith K.P.

                                                                      /forwarded by order/

                                                                   SENIOR SUPERINTENDENT