Tamil Nadu

South Chennai

CC/447/2015

M/s.A.Vimal Menson - Complainant(s)

Versus

The Manager, HDFC Standard Life Insurance Co Ltd - Opp.Party(s)

T.Kokilavane

02 Aug 2019

ORDER

                                                                  Complaint presented on : 19.10.2015

                                                                    Date of Order                : 02.08.2019

                                                                                  

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, CHENNAI (SOUTH)

@ 2^ND Floor, T.N.P.S.C. Road, V.O.C. Nagar, Park Town, Chennai – 3.

 

PRESENT: THIRU. M. MONY, B.Sc., L.L.B, M.L.                    : PRESIDENT

TR. R. BASKARKUMARAVEL, B.Sc., L.L.M., BPT., PGDCLP.  : MEMBER

 

C.C. No.447/2015

DATED THIS FRIDAY THE 02^ND DAY OF AUGUST 2019

                                 

A. Vimal Menon,

S/o. Mr. V.B.R. Menon,

No.4B, Brook Dale Apartments,

No.12, P.T. Rajan Salai,

K.K. Nagar,

Chennai – 600 078.                                                        .. Complainant.                                                

 

                                                                                             ..Versus..

 

1. The Manager,

HDFC Standard Life Insurance Co. Ltd.,

No.37/38, Ramana Towers,

2^nd Floor, Venkatanarayana Road,

T. Nagar,

Chennai – 600 017.   

 

2. The Manager,

HDFC Bank Limited,

Valsaravakkam Branch,

No.7, Alwarthirunagar,

Arcot Road,

Valsaravakkam,

Chennai – 600 087.                                             ..  Opposite parties.

 

Counsel for the complainant           : M/s. T. Kokilavane

Counsel for the 1^st opposite party  : M/s. M.B. Gopalan & others

Counsel for the 2^nd opposite party : M/s. PASS Associates

 

 

ORDER

THIRU. M. MONY, PRESIDENT

       This complaint has been filed by the complainant against the opposite parties 1 & 2 to permit the complainant to refund the amount of Rs.4,63,905/- which was paid as the first premium amount of the Insurance Policy together with accrued bonuses from 22.03.2013 till the date of refund and to pay a sum of Rs.3,00,000/- towards compensation for mental agony and stress with cost to the complainant.

1.    The averments of the complaint in brief are as follows:-

The complainant submits that his employer took an endowment insurance policy bearing No.15958536 from the 1^st opposite party, insurance company through the 2^nd opposite party under HDFC Life Sampoorn Samridhi Scheme and the first annual premium of Rs.4,63,905/- including the service tax was paid by way of cheque No.749334 dated:22.03.2013 drawn on HDFC Bank, Valasaravakkam Branch from the account of the complainant’s employer, M/s. Sleeves India Automotive Pvt. Ltd.  The complainant submits that the said endowment policy was taken on the condition that the complainant’s employer shall pay the annual premium amount every year into the policy as per a rewards program which the opposite parties had succeeded in convincing to the complainant and his employer as a good long - term investment option of the amounts due to the complainant from the employer.  As per the terms of the insurance policy, it was required to be initially assigned to the name of the Complainant’s Employer – Company for 3 years and thereafter, it would be re-assigned back to the complainant free of any claim.  Hence, the premium amount to be paid to the above insurance policy were primarily investments meant to get for better returns with life coverage as an added collateral benefit. 

2.     The complainant submits that immediately after availing the insurance policy, the complainant had expressed her inability to pay such huge annual premium every year and the employer issued notice dated:23.03.2013 to the opposite parties 1 & 2 and enclosed board resolution and details of insured employees and the complainant’s declaration which has been received by the opposite parties and due endorsement letter issued dated:23.03.2013.  Hence, the complainant is claiming refund of the premium amount or conversion of the policy into single premium policy.  The complainant submits that within the period of one month i.e. on 20.05.2013 the employer of the complainant issued a letter requesting the opposite parties to refund the premium amount of Rs.4,63,905/-. The complainant submits that the employer of the complainant’s company also sent a letter to the 1^st opposite party on 03.08.2014 which was received by the 1^st opposite party requesting the opposite party either to refund the initial annual premium amount or to convert into a single premium policy in the name of the complainant which also refused by the opposite party.  Thereafter, the complainant and his employer made repeated correspondence through email and letters for which, the opposite parties has not given proper response.   The act of the opposite party amounts to deficiency in service and unfair trade practice which caused great mental agony.  Hence, the complaint is filed.

3.      The brief averments in the written version filed by 1^st opposite party is as follows:

The 1^st opposite party specifically denies each and every allegation made in the complaint and put the complainant to strict proof of the same.    The 1^st opposite party states that the claim of refund of the premium after a concluded contract of insurance was entered with them by the complainant cannot sustainable.  This complaint has been based on a self-serving interpretation of “frustration”, by wrongly quoting Sections 57 & 65 of the Contract Act.  The 1^st opposite party states that the Life Sampooran Samridhi Insurance plan policy was issued by the 1^st opposite party for an insurance sum of Rs.81,38,083/- with other applicable benefits for a period of 20 years subject to the annual premium of Rs.4,50,000/- with service charge upto 22.03.2032.  The policy coverage commenced on 22.03.2013 immediately after receipt of a cheque for the 1^st premium.  Thereby, the contract of insurance came into force and which is concluded.  The 1^st opposite party states that the terms of the policy governs the obligations of the 2^nd opposite party and for any claims under the same including lapse of Policy in the event of default in payment of annual premium and return of premium by Surrender vide condition Nos.5 & 6 of the Policy. 

4.     The 1^st opposite party states that in the scheme of insurance, where the opposite party has remained on risk for the period upto which the premium has been received, the inability to pay further premium does not amount to “frustration” of the contract since inception or render the contract void, to plead failure of consideration.    There can be no “frustration” or demand for refund of premium for the period when the opposite party has already run the risk on the life of the insured for the sum insured for Rs.81,38,083/- for the first year after which the Policy lapsed.   The 1^st opposite party denies except that the Policy is a valid contract which lapsed due to non-payment of premium from second year (March 2014 onwards).  As already stated, there can be no frustration of the contract or impossibility of performance when the contract has been performed for 1 year from 23.03.2013 to 22.03.2014 and had lapsed due to default in payment of premium thereafter.  Hence, the question of refund of premium for the period when the opposite party has been on risk is legally and contractually unsustainable.  The opposite party is not liable as per the policy terms and conditions to refund the premium paid by the complainant. There was no reference to any representation of any executives that the Policy could be converted to single premium plan or that he was seeking any such conversion.   The opposite party is only obliged to act as per the terms and conditions of the policy.  It has not committed breach of any condition of the Policy.   The 1^st opposite party had declined the request for refund for valid reasons.   Therefore, there is no deficiency in service on the part of the 1^st opposite party and hence, the complaint is liable to be dismissed.

5.      The brief averments in the written version filed by 2^nd opposite party is as follows:

The 2^nd opposite party specifically denies each and every allegation made in the complaint and put the complainant to strict proof of the same.    The 2^nd opposite party states that there is no privity of contract between the 2^nd opposite party the complainant for rendering any service to the complainant under the insurance policy as referred by the complainant.   Hence, the question of deficiency in service on the part of the 2^nd opposite party would not arise.  More so, no relief muchless any specific relief has been claimed against the 2^nd opposite party.  Hence, the 2^nd opposite party is neither a proper nor a necessary party to the complaint.  The 2^nd opposite party states that HDFC Bank Ltd. is a reputed one among the private sector banks.   The 2^nd opposite party states that the 2^nd opposite party i.e. HDFC Bank Limited and  the 1^st opposite party is HDFC Standard Life Insurance Co. Ltd. are distinct and totally two different entities.   The 2^nd opposite party is a Banker.   The 2^nd opposite party do not have any role or responsibility in the investment or insurance policy between the customer and the entities which are offering investment schemes.   The 2^nd opposite party states that the dispute is between the complainant and the 1^st opposite party in which, the 2^nd opposite party has nothing to do with the same.   The 2^nd opposite party states that there was no communication sent to the 2^nd opposite party prior to filing of the complaint.  Hence, the 2^nd opposite party offers no comment over the same.   Since there was no demand on the 2^nd opposite party prior to filing of the complaint there was no occasion for the 2^nd opposite party to refuse the claim of the complaint and hence, the complaint is liable to be dismissed as against the 2^nd opposite party.

6.     To prove the averments in the complaint, the complainant has filed proof affidavit as his evidence and documents Ex.A1 to Ex.A19 are marked.  Proof affidavit of the 1^st opposite party is filed and documents Ex.B1 to Ex.B11 are marked on the side of the 1^st opposite party.   Proof affidavit of the 2^nd opposite party is filed and no document is marked on the side of the 2^nd opposite party. 

7.      The points for consideration is:-

1. Whether the complainant is entitled to get refund of Rs.4,63,905/- paid towards the first premium of the endowment Insurance Policy together with accrued bonuses from 22.03.2013 as prayed for?

 

2. Whether the complainant is entitled to a sum of Rs.3,00,000/- towards compensation for mental agony and deficiency in service with cost as prayed for?

 

8.      On point:-

Both parties filed their respective written arguments.  Heard the complainant’s Counsel also.  Perused the records namely; the complaint, written version, proof affidavits and documents. The complainant pleaded and contended that his employer took an endowment insurance policy bearing No.15958536 from the 1^st opposite party, insurance company through the 2^nd opposite party under HDFC Life Sampoorn Samridhi Scheme as per Ex.A4 and the first annual premium of Rs.4,63,905/- including the service tax was paid by way of cheque No.749334 dated:22.03.2013 drawn on HDFC Bank, Valasaravakkam Branch from the account of the complainant’s employer, M/s. Sleeves India Automotive Pvt. Ltd. is admitted. Further the contention of the complainant is that the said endowment policy was taken on the condition that the complainant’s employer shall pay the annual premium amount every year under reward program which the opposite parties had succeeded in convincing to the complainant and his employer as a good long - term investment option of the amounts due to the complainant from the employer.  As per the terms of the insurance policy, it was required to be initially assigned to the name of the Complainant’s Employer – Company for 3 years and thereafter, it would be re-assigned back to the complainant free of any claim.  Hence, the premium amount to be paid to the above insurance policy were primarily   investments meant to get for better returns with life coverage as an added collateral benefit which is apparently seen from Ex.A2 to Ex.A4.  Further the contention of the complainant is that immediately after availing the insurance policy, the complainant had expressed his inability to pay such huge annual premium and the employer issued notice dated:23.03.2013 to the opposite parties 1 & 2 and enclosed board resolution and details of insured employees and the complainant’s declaration as per Ex.B4 to Ex.B7 which has been received by the opposite parties and due endorsement letter issued dated:23.03.2013 as per Ex.B8.  Thereby, the complainant is claiming refund of the premium amount or conversion of the policy into single premium policy. 

9.     The learned Counsel for the complainant further contented that as per Section 65 r/w Section 56 and Section 19 of the Indian Contract Act, 1872 which are extracted below:

        Sec.65: Obligation of person who has received advantage under void agreement, or contract that becomes void.  – When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.

Sec.56: Agreement to do impossible act – An agreement to do an act impossible in itself is void.

Contract to do act afterwards becoming impossible or unlawful – A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.

Compensation for loss through non-performance of act known to be impossible or unlawful – Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promise did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise”.

Sect.19 : Voidability of agreements without free consent – When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

A party to contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true”.

that such policies are shall be treated as non performance  and coming under frustration.  Thereby, the said insurance contract become void on the ground of impossibility performance or frustration under Sec.56 or fraud under Sec 19 r/w Sec 17 of the Indian Contract Act, 1872. 

10.    Further the contention of the complainant is that within the period of one month i.e. on 20.05.2013 the employer of the complainant issued a letter requesting the opposite parties to refund the premium amount of Rs.4,63,905/- including service tax, and claimed bonus.  As per the terms of and conditions of the policy in clause 12 which is marked as Ex.A4 which reads as follows:

12. Cancellation in the Free-Look Period:

        “In case you are not agreeable to any of the provisions stated in the Policy and the details in the proposal form, you have the option of returning the Policy to us stating the reasons thereof, within 30 days from the date of receipt of the Policy.   On receipt of your letter along with the original Policy documents where the reasons stated thereof are found valid, we shall arrange to refund the premium paid by you, subject to deduction of the proportionate risk premium for the period on cover and the expenses incurred by us on medical examination and stamp duty.  A Policy once returned shall not be revived, reinstated or restored at any point of time and a new proposal will have to be made for a new Policy”.

proves the deficiency in service.    Further the contention of the complainant is that the employer of the complainant’s company also sent a letter to the 1^st opposite party on 03.08.2014 as per Ex.A6 which was received by the 1^st opposite party as per Ex.A7 requesting the opposite party either to refund the initial annual premium amount or to convert into a single premium policy in the name of the complainant as per Ex.A2 insurance scheme which also refused by the opposite party. Thereafter, the complainant and his employer made repeated correspondence through email and letters for which, the opposite parties has not given any proper response.  Hence, the complainant was constrained to file this case claiming refund of the amount with compensation etc.

11.    The contention of the opposite parties 1 & 2 is that the claim of refund of the premium after a concluded contract of insurance was entered with them by the complainant cannot sustainable.  This complaint has been based on a self-serving interpretation of “frustration”, by wrongly quoting Sections 57 & 65 of the Contract Act.  But on a careful perusal of the provision and the terms and conditions of the agreement including Ex.B2, Addendum to Electronic Proposal form, it is clear that when a contract / agreement was initiated with anomalies the Sections 56 & 65 coupled with Section 19 of the Indian Contract Act squarely applies.  Further the contention of the opposite parties 1 & 2 is that admittedly, Life Sampooran Samridhi Insurance plan policy was issued by the 1^st opposite party for an insurance sum of Rs.81,38,083/- with other applicable benefits for a period of 20 years subject to the annual premium of Rs.4,50,000/- with service charge upto 22.03.2032.  The policy coverage commenced on 22.03.2013 immediately after receipt of a cheque for the 1^st premium.  Thereby, the contract of insurance came into force and which is concluded.  But it is settled that contract of insurance is Ubri my fide i.e. on good faith.  In this case, the complainant and his employer M/s. Sleeves India informed to this opposite party paying the premium under a long term reward program initiated by the employer for the employee as a result of which, the policy was assigned in the employer’s name by the complainant, essentially the contract of insurance was to cover the life of the  complainant during the period of policy upto the terms and conditions  proves that Sections 56 & 65 of the Insurance Contract act is squarely applicable.  

12.    Further the contention of the opposite parties 1 & 2 is that the terms of the policy governs the obligations of the 2^nd opposite party and for any claims under the same including lapse of Policy in the event of default in payment of annual premium and return of premium by Surrender vide condition Nos.5 & 6 of the Policy.  But on a careful perusal of records and the terms and conditions of the policy, the complainant and the employer issued letter dated:17.04.2013 as per Ex.B10 & Ex.B11 the complainant and his employer issued a letter surrender the policy claiming for the return of the premium or alternatively, conversion of policy into single premium policy i.e. within one month as per clause 12 for the Employer which reads as follows:

12. Cancellation in the Free-Look Period:

        “In case you are not agreeable to any of the provisions stated in the Policy and the details in the proposal form, you have the option of returning the Policy to us stating the reasons thereof, within 30 days from the date of receipt of the Policy.   On receipt of your letter along with the original Policy documents where the reasons stated thereof are found valid, we shall arrange to refund the premium paid by you, subject to deduction of the proportionate risk premium for the period on cover and the expenses incurred by us on medical examination and stamp duty.  A Policy once returned shall not be revived, reinstated or restored at any point of time and a new proposal will have to be made for a new Policy”.

 The opposite parties are liable to refund the amount it is also seen from Ex.B2 that the opposite parties can convert the policy into a single premium policy.  But the opposite parties has not come forward to do the same and prolonged the matter to file this case amounts to deficiency in service as well as unfair trade practice.  Further the contention of the opposite parties 1 & 2 is that the lapsed policies, paid up policies and reinstatement is no way connected with this case since, admittedly within the period of one month of availing the policy, the complainant and his employer issued a letter surrendering the policy and claimed refund of the policy or conversion of the policy.  Considering the facts and circumstances of the case this Forum is of the considered view that the opposite party shall convert the policy as single premium policy from the date of policy and to pay a compensation of Rs.20,000/- for mental agony with cost of Rs.10,000/- to the complainant.

In the result, this complaint is allowed in part.   The opposite parties 1 & 2 are jointly and severally liable to convert the policy as a single premium policy from the date of policy and to pay a sum of Rs.20,000/- (Rupees Twenty thousand only) towards compensation for mental agony with cost of Rs.10,000/- (Rupees Ten thousand only) to the complainant.  

The aboveamounts shall be payablewithin six weeks from the date of receipt of the copy of this order, failing which, the said amounts shall carry interest at the rate of 9% p.a. to till the date of payment.

Dictated  by the President to the Steno-typist, taken down, transcribed and computerized by her, corrected by the President and pronounced by us in the open Forum on this the 02^nd day of August 2019. 

 

MEMBER                                                                                PRESIDENT

 

COMPLAINANT SIDE DOCUMENTS:-

Ex.A1	24.07.2007	Copy of write up on Endowment Insurance Plans by Rediff.com
Ex.A2	01.03.2013	Copy of email from the 1st opposite party with offer details of the Insurance Scheme
Ex.A3	23.04.2013	Copy of the Economic Times News Paper Report on mis-sale of Insurance Policies.
Ex.A4	21.05.2013	Copy of complainant’s Insurance Policy Document No.15958536 from HDFC Standard Life Insurance Company Ltd.
Ex.A5	01.09.2013	Copy of the Economic Times News Paper Report regarding rise of Customer complaints against insurers by over 10%
Ex.A6	03.08.2014	Copy of the letter to the 1st opposite party by the complainant with postal receipt
Ex.A7	03.08.2014	Copy of the letter to the 1st opposite party by the complainant’s employer with postal receipt
Ex.A8	13.08.2014	Copy of the Tamil Nadu Government Gazette Publication regarding winding-up of Employer company
Ex.A9	19.08.2014	Copy of the letter received from the 1st opposite party refusing the complainant’s request
Ex.A10	26.08.2014	Copy of the letter along with notice of re-assignment to the 1st opposite party with postal receipt
Ex.A11	29.08.2014	Copy of the letter sent to Mr. Anthony O’Brien, HDGC Standard Life Insurance Company Ltd.
Ex.A12	21.09.2014	Copy of the e-mail sent to the Managing Director of the 2nd opposite party seeking  his intervention
Ex.A13	26.09.2014	Copy of the reply mail received from the Managing Director’s Office
Ex.A14	26.09.2014	Copy of the email sent to the 2nd opposite party seeking clarifications
Ex.A15	16.10.2014	Copy of the email received from the 2nd opposite party with illustrations
Ex.A16	28.10.2014	Copy of the 2nd letter received from the 1st opposite party refusing the complainant’s request
Ex.A17	28.11.2014	Copy of the email from the 2nd opposite party’s Managing Director rejecting the complainant’s requests
Ex.A18	04.02.2016	Copy of illustration of HDGC Life Click 2 project plus showing Annual premium for Rs.1 Crore- Term Insurance Policy
Ex.A19	23.02.2016	Copy of email from SBI Life Insurance Company Showing Annual Premium of Term Insurance Plan for Rs.1 Crore

 

1^ST  OPPOSITE PARTY SIDE DOCUMENTS:-

Ex.B1	22.03.2013	Copy of Electronic Proposal Form
Ex.B2	23.03.2013	Addendum to Electronic Proposal
Ex.B3	22.03.2013	Copy of Illustration form
Ex.B4	23.03.2013	Copy of employer’s letter
Ex.B5		Copy of board resolution of employer
Ex.B6		Copy of the details of the insured employees
Ex.B7		Copy of the employee / complainant’s declaration
Ex.B8	23.03.2013	Copy of the endorsement letter
Ex.B9	16.06.2013	Copy of the Policy bond
Ex.B10	17.04.2014	Copy of the surrender letter
Ex.B11	18.04.2014	Copy of the employer’s letter

 

2^ND OPPOSITE PARTY SIDE DOCUMENTS:-:- NIL

 

                              

MEMBER                                                                                PRESIDENT