IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, KOTTAYAM

Dated, the 31^st day of March 2022.

Present:  Sri. Manulal V.S. President

Smt. Bindhu R.  Member

Sri. K.M. Anto, Member

C C No. 44/2015 (Filed on 25-02-2015)

Petitioner                                          :         Prabhakara Kaimal T M,

                                                                   Madhavan Nair,

                                                                   Thekkekara Karottu,

                                                                   Champakara P.O.

                                                                   Karukachal – 686 540

(Adv.Suseela M)

                                                                             Vs.

Opposite parties                               :  1)   Tata AIA Life Insurance Co. Ltd.

                                                                   14^th Florr, Tower A,

                                                                   Peninsula Business Park,

                                                                   SenapatiBapat Marg,

                                                                   Lower Parel, Mumbai – 400013.

                                                                   Rep. by Manager.

                                                               2) Tata AIA Life Insurance Co. Ltd.

                                                                   Ground Floor, Karimattom

                                                                   Plaza, Near Medical

Centre Hospital, Nagampadam,

                                                                   Kottayam – 686 001.

                                                                   Rep. by Manager.

                                                          (For Op1 and 2, Adv. Saji Isaac K.J)

O  R  D  E  R

Sri. Manulal V.S. President

Brief facts necessary for disposal of the complaint is that the complainant is a government servant. The complainant is a consumer of the opposite parties and policy holder of insurance policy No.U0029288.

During the month of November 2007, Deepu who is the executive of the opposite parties approached the complainant and assured that the policy holder can stop making payments of premium at any time and can withdraw the amount after five years from the commencement of the policy. Believing the words of the executive the complainant paid Rs.25,000/- as premium on belief that he would get the premium amount together with growth of the same . Opposite parties assured that the complainant in any event would get a growth of 25% per annum, on the amount invested. On 2-1-2014 the opposite parties sent a cheque for                           Rs.9,134.55 with a covering letter. On enquiry it was told that the amount is the income from the investment. It is averred in the complaint even though the complainant requested the opposite parties to provide the details of the allocation of the payments made by him, the opposite parties were not amenable for the same. According to the complainant the acts of the opposite parties are against the public policy and amounts to deficiency in service and unfair trade practice. Hence this complaint is filed for an order directing the opposite parties to pay              Rs.25,000/- together with interest @15% and compensation of Rs.10,000/- and cost of litigation.

Upon notice opposite parties appeared before the Commission and filed joint version.

Version of the opposite parties is as follows:

The complaint is not maintainable. The complaint is barred by limitation. The complainant is not a consumer of the opposite parties. The policy taken by the complainant is a unit linked policy and for a speculative gain and the matter does not come under Consumer Protection Act. Hence the complaint is not maintainable.

The complainant had taken an Invest Assure II policy from the opposite parties on 29-11-2017 with a sum assured of Rs.2,50,000/- with an annual premium of Rs.25,000/- and a premium paying term of 20 years. Allegation in the complaint that the executive of the opposite parties assured that the policy holder can stop the payment of premium at any time and the policy holder can with draw the amount after 5 years from the commencement of the policy is false.

The policy was issued on the basis of the proposal submitted by the complainant. The complainant himself had submitted the proposal form after he had read and understood the terms and conditions of the policy. The complainant in spite of obtaining the policy, did not exercise his option to return the policy within 15 days but continued paying premiums by accepting the policy.

According to the conditions of the policy, after payment of first premium, failure to pay the subsequent premium on or before the due date will constitute a default in payment of premium. A grace period of Rs.31 days from the due date will be allowed for payment of subsequent premium. If any regular premiums

remained unpaid at the end of the grace period the policy shall lapse from the due date of the first unpaid premium. If at the time of lapse, less than three complete years of regular premiums have been paid, and the opposite parties do not receive written request to reinstate the policy within five years from the date of lapse, the company shall surrender and return the total fund value if any after 5 years of lapse or on third policy anniversary whichever is later. The complainant did not pay the premium after first premium and hence the policy had lapsed. In accordance with the terms and conditions of the policy, the opposite parties after the third anniversary of the policy refunded an amount of Rs.9134 /- which was the amount payable to the complainant.

The allegation in the complaint that the complainant is made to believe that in case of payment of regular premium is stopped, the amount paid by him together with growth of the same will be returned and in any event he will get a growth of 25% is false.

There is no unfair trade practice or deficiency in service on the part of the opposite parties and the opposite parties are not liable to refund any amount to the complainant.

Evidence consists of proof affidavit of complainant and Ext.A1 to A5 from his side. P.B. Ganapathy who is the Legal Manager of the opposite parties filed proof affidavit and   Ext.B1 to B3 were marked on the side of the opposite parties.

On evaluation of complaint version and evidence on record we would consider the following issues.

1. Whether the complaint is barred by limitation?
2. Whether there is any deficiency in service on the part of the opposite parties?
3. If so what are the reliefs?

Point number 1

Opposite parties contended that the complaint is barred by limitation. Admittedly the policy was taken by the complainant on 28-11-2007 and the complainant did not pay the premium after the first premium, and the policy was lapsed in 2008 whereas the complaint was filed in 2015 ie after a period of 7 years

from the lapse of the policy. From a mere reading of the first page of exhibit A1 we can see that the complainant had paid first premium on 26-11-2007. On perusal of clause regarding Grace period in exhibit B1 we can see that if the regular premium due is not received within the grace period of 31 days from the due date of the first unpaid installment of regular premium, the policy shall lapse from the due date of the first unpaid premium except as may be provided under the Premium Holiday Provision. . If at the time of lapse, less than three complete years of regular premiums have been paid, and the opposite parties does not receive written request to reinstate the policy within five years from the date of lapse, the company shall surrender and return the total fund value if any after 5 years of lapse or on third policy anniversary whichever is later.

The second premium became due on 26-11-2008 and the policy was lapsed on 27-12-2008 after the expiry grace period of 31 days from the due date of the unpaid premium. The complainant did not file any application for reinstating the policy within five years from the date of lapse of the policy. On 2-1-2014 the opposite parties sent a cheque for Rs.9134.55. Thus, the cause of action of this complaint arose on 2-1-2014. As per provisions of the consumer protection act the complaint is to be filed within 2 years from the date of cause of action, which in this case is before 2-1-2016. On the basis of the above discussion we are of the opinion that the complaint is not barred by limitation.

Point No. 2 and 3

The specific case of the complainant is that he was canvassed to join the opposite parties insurance policy by believing the assurance given by the opposite parties that he can stop making payments of premium at any time and withdrew the amount after five years from the commencement of the policy. It is admitted that the opposite parties issued an Invest Assure II policy on 29-11-2007 with a sum assured of Rs.2,50,000/- with an annual premium of Rs.25,000/- for a period of 20 years. Admittedly, the complainant had not paid premium amount after                  26-11-2007. According to the complainant on 2-1-2014 he received exhibit A2 cheque with covering letter for an amount of Rs.9134/-. As the surrender value being the full and final settlement of claims under the policy. According to the complainant he is entitled for the refund of Rs.25,000/- together with interest @15% per annum.

.         The first opposite party resisted the complaint contending that since the complainant defaulted payment for a premium after the first year, according to the conditions of the policy, and the policy of the complainant was lapsed and auto surrendered due to nonpayment of subsequent premium.

On perusal of clause regarding Grace period in exhibit B1 we can see that if the regular premium due is not received within the grace period of 31 days from the due date of the first unpaid installment of regular premium, the policy shall lapse from the due date of the first unpaid premium except as may be provided under the Premium Holiday Provision.

It is further stated in that clause that if at the time of lapse, less than three complete years of regular premiums have been paid, and the opposite parties does not receive written request to reinstate the policy within five years from the date of lapse, the company shall surrender and return the total fund value if any after 5 years of lapse or on third policy anniversary whichever is later As per the premium holiday provisions of exhibit B1 we can see that after payment of at least three complete years of regular premium and the policy holder fails to pay the regular premium thereafter, the policy will be maintainable in force on premium holidays automatically without paying the regular premium and the policy charges and any other costs will be paid as due by deduction of units at unit price from the Total fund Value of the policy, until the total fund value is insufficient to cover the policy charges and costs or the surrender value falls below the amount equivalent to one regular premium. It is further stated that the policy will maintainable in force two years from the due date of the first unpaid regular premium unless the company receive written request to continue with automatic deduction subject to condition 1 and 2.

On perusal of Exhibit A2 we can see that the opposite parties treated the policy of the complainant as lapsed in the event of the total fund value became insufficient to cover the policy charges and costs and surrender value became below the amount which is equivalent to one annual premium.

According to clause 3 the policy holder can reinstate the policy . Here in this case the opposite parties have no case that the complainant has opted any of the options for which he is entitled. It is further stated in clause 2(iv) that if the insured fails to exercise his right under clause 2(ii) then the policy with all available benefits as per article 3 and the benefits under applicable riders if any shall automatically terminate and the opposite party will pay the surrender value to the policy holder. Clause 5(b) of terms and conditions of Exhibit A1 and B1 cast upon a duty to the opposite party  to issue a notice to the policy holder regarding the termination of the policy. Thereafter the insurer can pay the surrender value which is available to the policy holder as per clause 5(a) to the insured.

It is the specific case of the complainant that though he demanded to the opposite parties for to opposite parties to provide the details of the allocation of the payments made by him they did not gave the same to him. Here on case in hand the opposite party neither in version nor in proof affidavit not stated what is the surrender value available and payable to the complainant as per the policy terms and conditions.

The opposite parties did not produce any evidence to show that value of units which were allotted to the complainant was communicated to him. . According to the complainant for a deposit of Rs.25,000/- the opposite parties offered only an amount of Rs.9314 after a lapse of almost 6 years. Exhibit B 3 is the fund activity statement dated 17-1-2020 issued by the opposite parties to the complainant. Though the said statement contains the number of units, unit price and policy fund value on the date of foreclosure of the policy it is pertinent to not that the it is stated in exhibit B3 as fund value as 0n 16-1-2020. From this it is proved that B3 is prepared after the filing of this complaint

In Raghbir Singh vs M/S. Aviva Life Insurance Co. Ltd. ...decided on 1 November, 2019 Hon’ble national commission has held that “In our considered view, it is reasonable, logical, just and appropriate that the Consumer should know the calculation and rationale for arriving at the surrender value of his policy as a matter of his Consumer Rights.”

Thus, we are of the opinion that the Insurance Company was expected and required to function with clean hands and clear conscience. The refund of the surrender value should have been made within reasonable time, and relevant and material information to the Consumer should have been concomitantly provided. 

The Insurance regulatory and Development authority had made certain regulations regarding the discontinued linked insurance policy in the year 2010. As per IRDA Treatment of Discontinued Linked Insurance Policies Regulations 2010 had made certain obligations upon discontinued policy to the insurer regarding the charges levied from the date of discontinuance as follows:

In case in hand the policy was discontinued by not remitting the regular premium for the second year . Thus the insurer can levy only Rs.20,00/- from the total amount of premium remitted by the insurer. It is not proper on the part of the opposite parties  to deduct total amount of premium paid by the complainant and to get unnecessary enrichment.

In our view, the complainant is entitled for refund of amount after deducting Rs. 2,000/- so that there will not be any loss to the insurance company. So also, the complainant would get justice. Thus, the consumer complaint deserves to be allowed.

The complainant had paid amount of Rs.25,000/ to the opposite party insurance company. He did not get any benefit out of policy. He did not ask for any claim earlier. He is entitled to get an amount of Rs.23,000/- towards refund. Out of the said amount the opposite parties paid Rs.9134 to the complainant on

24-12-2013. Thus we are of the opinion that the complainant is entitled to                        Rs.13,866 from the opposite parties. With this view, we pass the following order:

1. The opposite parties shall refund Rs.13,866 /- to the complainant together with simple interest @ 9% per annum w.e.f. 25-2- 2015 (date of filing of the complaint) till full and final payment is made.
2. The opposite parties shall pay Rs.10,000/- as compensation to the complainant.
3. The opposite parties shall pay Rs.3,000/- as cost of this litigation to the complainant.

Order shall be complied within a period of 30 days from the date of receipt of Order.  If not complied as directed, the compensation amount will carry 9% interest from the date of Order till realization.

Pronounced in the Open Commission on this the 31^st day of March, 2022.

Sri. Manulal V.S. President             Sd/-

Smt. Bindhu R.  Member                Sd/-

Sri. K.M. Anto, Member                 Sd/-

Appendix

Exhibits marked from the side of complainant

A1 – Receipt dtd.26-11-2007 issued by opposite party

A2 –Letter dtd.02-01-14 issued by opposite party

A3 – Lawyers notice dtd.23-01-15

A3(a) – Postal AD card

A3(b) –  Postal AD card

A3(c)  - Postal receipt

A3(d)- Postal receipt

A4 – Letter dtd.04-03-2015 issued by opposite party to petitioner

A5 – Copy of election ID card and copy of pension payment order

Exhibits marked from the side of opposite party

B1 – Copy of policy document

B2 – Copy of proposal form

B3- Copy of the fund value of the complainant less surrender charge

                                                                                                By Order

                                                                           Assistant Registrar