Date of Filing      : 29.01.2021

                                                                                                                 Date of Disposal: 29.12.2022

 

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION

THIRUVALLUR

 

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

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

 

CC. No.07/2021

THIS THURSDAY, THE 29th DAY OF DECEMBER 2022

 

Mr. K.V.Narasimhan,

S/o.K.Venkatachala Pillai,

No.30, Thagini Kottai Street,

Veera Nagar, Thiruvallur Town,

Thiruvallur Taluk & District.                                                     ……Complainant.     

                                                                          //Vs//

1.The Manager(CRM),

    Life Insurance Corporation of India,

    Divisional Office –II,

    C-47, 2nd Avenue, 3rd Floor,

    Anna Nagar Plaza,

    Anna Nagar, Chennai 600 040.

 

2.The Branch Manager,

    Life Insurance Corportation of India,

    Thiruvallur Branch, J.N.Road,

    Thiruvallur Town & District – 602 001.

 

3.Mr.G.Dinesh Kumar (LIC Agent),

    S/o.Gunavanth Raj,

    No.39, Gandhi Road,

    Thiruvallur Town & District – 602 001.                         ..........Opposite parties. 

 

Counsel for the complainant                               :   Mr.A.R.Poovannan, Advocate.

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

Counsel for the 3rd opposite party                    :    exparte 

                         

This complaint is coming before us on various dates and finally on 15.12.2022 in the presence of Mr.A.R.Poovannan 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 withdraw the letter dated 01.10.2020 and to issue an ADD On policy with correct details and to pay a sum of Rs.1,00,000/- as compensation for the mental agony, hardships, strain and inconvenience caused by the act of the opposite parties and to pay a sum of Rs.10,000/- towards cost  of the proceedings to the complainant.

Summary of facts culminating into complaint:-

 

It was submitted that the complainant on assurance and belief had taken Jeevan Saral Policy (with Profits) with Terms insurance and Endowment has launched by LIC for a sum assured of Rs.5,00,000/- as Death benefit sum assured of Rs.5,00,000/- along with Accident benefit sum assured Rs.5,00,000/- vide proposal No.2356 dated 09.06.2010  vide policy No. 719213158 for a period of 14 years starting from 09.06.2010 and the maturity was on 09.06.2024.  The quarterly premium payable was Rs.6,000/- for the main plan and Rs.125/- towards Accident benefits. The complainant received the policy document wherein nothing was mentioned as maturity sum assured. The complainant was regular in paying the premium at quarterly intervals as per the terms of the policy and receipt was given by the opposite party which clearly indicates that the sum assured was Rs.5,00,000/-. All of a sudden on 17.11.2020 the complainant received a notice from the 1st opposite party mentioning that there was some typographical error in the policy issued in the year 2010 and the maturity sum assured was only Rs.1,44,600/-. The complainant paid Rs.2,40,000/- as premium towards main policy and Rs.5,000/- towards the terms policy. The balance premium payable till the maturity of the policy towards the main policy was Rs.96,000/-.  The total premium payable by the complainant towards the main policy was Rs.3,36,000/-. The maturity value should be the total of premium paid towards main policy plus loyalty bonus, which in any case will be more than Rs.3,36,000/-.  Having issued the receipt for 10 years on the sum assured as Rs.5,00,000/- cannot now become Rs.1,44,600/-.  It was not a typographical error but a case of massive irregularity in the policy and it amounts to gross deficiency in service.  Therefore the complainant issued a legal notice to the opposite parties to voluntarily withdraw the letter dated 01.10.2020 and issue an ADD ON policy with correct details for which the 1st opposite party sent a reply notice that the jeevan Saral was a unique plan and the complainant’s demand cannot be complied with. Thus aggrieved by the act of the opposite parties the complaint was filed by the complainant for the following reliefs as mentioned below; 

To direct the opposite parties to withdraw the letter dated 01.10.2020 and to issue a ADD On policy with correct details;

 To pay a sum of Rs.1,00,000/- as compensation for the mental agony, hardships, strain and inconvenience caused by the act of the opposite parties;

 To pay a sum of Rs.10,000/- towards cost  of the proceedings to the complainant.

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

The opposite parties filed version stating that the policy No.719213158 on the life of Shri K.V.Narasimhan was issued on 09.06.2010 under plan & Term 165-14(14) i.e., Jeevan Saral Policy with policy terms of 14 years for a death benefit sum assured of Rs.5,00,000/-, together with Accident benefit sum assured of Rs.5,00,000/-. A glance at the schedule of subject policy would reveal that the date printed therein have been printed one line above their respective places. For example, in the schedule of policy bearing number 719213158, the date of birth of life assured (02.10.1954) has been printed against the date of maturity.  Likewise his age 56 was shown against date of birth.  Similarly, the sum assured Rs.5,00,000/- in respect of the death sum assure & accident benefit sum assured have been printed one line above their places.  Nothing was 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 01.10.2020. Even as the maturity sum assured column was left blank or unfilled, the complainant cannot take advantage of the same by demanding Rs.5,00,000/- as maturity sum assured. It was a settled legal position, that an inadvertently typographical error will not extend benefit or right to the complainant. The death sum assured under the plan was 250 times the monthly premium selected by the customers in all other conventional insurance plans, the installment premium payable for the same sum assured varies, according to the age of the customer.   However, in the particular plan, the premium payable and death sum assured remains the same irrespective of age. Thus there is no deficiency in service on the part of the opposite parties.  It is not the case that the opposite parties had promised any maturity sum assured in the schedule of the policy as it was inadvertently left blank.  The complainant too did not bring that omission to the notice of the 1st opposite party.  Thus the opposite parties sought for the dismissal of the complaint.

The complainant has filed proof affidavit and documents Ex.A1 to Ex.A4 were marked on their side.  On the side of opposite parties 1 & 2 proof affidavit and documents Ex.B1 to Ex.B3 were filed. Despite service of notice 3rd opposite party did not appear before this commission to file any written version hence he was called absent and set exparte on 08.04.2022 for non appearance and non filing of written version.

Points for consideration:

Whether the opposite parties had committed deficiency in service and unfair trade practice in altering the terms of the insurance contract entered between the complainant and the opposite parties with respect to the Jeevan Saral Policy No.719213158 and whether the same has been successfully proved by the complainant?

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;

Copy of Jeevan Saral Policy dated 09.06.2010 was marked as Ex.A1;

Letter from the 1st opposite party dated 01.10.2020 was marked as Ex.A2;

Renewal premium receipt dated 04.12.2020 was marked as Ex.A3;

Legal notice issued by the complainant’s counsel to the 1st opposite party dated 04.12.2020 was marked as Ex.A4;

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

Copy of Policy bond No.719213158 was marked as Ex.B1;

Reply notice issued by the opposite party to the complainant dated 15.12.2020 was marked as Ex.B2;

Copy of circular Ref. ACTL/1934/4 dated 12.02.2001 was marked as Ex.B3;

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

 The crux of the arguments advanced by the learned counsel appearing for the complainant is that the policy No.719213158 was issued by the opposite parties under the policy Jeevan Saral (with profits) with terms insurance and endowment.  He believed that the sum assured was Rs.5,00,000/- as promised by the opposite parties and also the death benefit and accident benefit as Rs.5,00,000/-.  The policy is for a period of 14 years starting from 09.06.2010 and after 10 years on 17.11.2020 the complainant received a letter from the 1st opposite party stating that there was some typographical error issue in the policy and the maturity sum assured was only Rs.1,44,600/- and not Rs.5,00,000/- as promised earlier.  The total premium payable by the complainant towards the policy comes around Rs.3,36,000/-and hence the maturity value should be the total of premium paid towards main policy plus loyalty bonus which should be more than Rs.3,36,000/- .  Thus stating that reducing the maturity sum assured on the ground that the policy issued has some typographical error amounted to gross deficiency in service, he argued that it is not proper to intimate there is some typographical error after receiving the premiums for more than 10 years.  The complainant sought for the withdrawal of the letter dated 17.11.2020 by the opposite parties and to issue an ADD ON Policy with correct details with bonus and maturity sum assured.    It was further stated that non-mentioning of the sum assured in the policy document which a vital information to be provided in the insurance contract could not be termed as an typographical error.  Thus the learned counsel appearing for the complainant sought for the complaint to be allowed. 

On the side of opposite parties the learned counsel argued that the Jeevan Saral Policy is a unique policy and the sum assured and death benefits are different. Further he stated that nothing had been written in the place of maturity sum assured and thus to rectify the said defect the letter has been issued to the complainant.  It has been categorically argued that an inadvertent typographical error will not extend benefit or right to the complainant. Further it was submitted that the death sum assured under the plan was 250 times the monthly premium selected by the customer.  The premium payable and death sum assured remains the same irrespective of age.  In any traditional life insurance product, the premium charged for covering the risk, increases as one’s age increases. Whereas in Jeevan Saral Policy the premium and death benefit are selected by the customers irrespective of age.  Hence the risk premium value is calculated based on age and duration of the policy.  Thus stating among other defenses that the maturity sum assured in the schedule of the policy was inadvertently left blank and hence there is no deficiency in service on the part of the opposite parties in issuing the letter dated 17.11.2020, the learned counsel appearing for the  opposite parties sought 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 Ex.A1 the policy document under the column “maturity sum assured” nothing was printed.  It is hard to believe the contention raised by the opposite parties that five 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. It is seen that the opposite parties themselves had accepted that the maturity sum assured is left blank but still no convincing reason was provided 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 also have admitted that there are certain typographical errors in the policy document for which they have sent a letter with correct particulars after a period of over 10 years. Thus as rightly pointed out by the complainant when the complainant was made to believe that the maturity sum assured was Rs.5,00,000/-, 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 interest of 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 had sent the correct policy schedule with respect to the policy documents is highly unacceptable.  In the facts and circumstances, the argument made by the complainant that the principle of free look period of 15 days applies to both parties has to be accepted.  It is also to be taken into consideration in another similar case disposed by this commission in CC.No.01/2021 dated 29.09.2022 when the complainant in that case approached the Ombudsman, he 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.” 

Further our view is supported by a recent unreported 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 that LIFE INSURANCE CORPORATION OF INDIA / opposite party is liable in a similar situation 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.

 Thus 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.5,00,000/- and to continue the policy with the same terms for fourteen years and later modifying the terms unilaterally prejudicially to the interest of the insured/complainant and the same also amounted to unfair trade practice. The point is answered accordingly in favour of the complainant and against the opposite parties.

 

 

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 to withdraw the letter dated 01.10.2020 and to continue the policy No.719213158 with the same terms and conditions as assured with maturity value of Rs.5,00,000/- along with admissible bonus. vide Policy Document No.719213158 till its maturity.  Further we also award Rs.5,000/- towards litigation expenses to the complainant.

In the result, the complaint is dismissed against opposite party 3 and partly allowed against opposite parties 1 & 2directing them; 

a) To withdraw the letter and to continue the policy with the same terms and conditions as assured vide Policy Document No.719213158 till its maturity;

b) 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 December 2022.

 

     -Sd-                                                                                                               -Sd- 

MEMBER-II                                                                                               PRESIDENT

 

 

List of document filed by the complainant:-

 

Ex.A1 09.06.2010 Copy of Jeevan Saral Policy. Xerox

Ex.A2 01.10.2020 Letter from 1st opposite party. Xerox

Ex.A3 04.12.2020 Renewal premium receipt. Xerox

Ex.A4 04.12.2020 Legal notice issued by the complainant to 1st opposite party. Xerox

 

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

 

Ex.B1 09.06.2010 Copy Policy Bond No.719213158. Xerox

Ex.B2 15.12.2020 Reply notice Xerox

Ex.B3 12.02.2001 Copy of LIC Circular Re.ACTL/1934/4 Xerox

 

 

 

     -Sd-                                                                                                                   -Sd-

MEMBER-II                                                                                                     PRESIDENT