By Sri. MOHANDASAN.K, PRESIDENT

1. Complaint in short is as follows: -

        The complainant is the policy holder of Aviva Life Insurance Private Limited and his policy number is APG2134237 which commenced on 25/08/2008.  The complainant remitted 25,000/- rupees on 25/08/2008 and later 25/11/2008 remitted Rs.   25,000/- and subsequently a sum of Rs. 25,000/- remitted and the total sum of Rs. 75,000/- was remitted. The complainant recently approached the opposite party for surrendering the policy, but they were not willing to receive the request.   The opposite party informed the complainant that he cannot surrender the policy.   As per the policy conditions the policy can be surrendered after a period of 10 years. The agent /Unit Manager has convinced that after 10 years, the amount which is deposited would accrue sufficient profit/ premium from the deposit itself, and there will be no serious deductions in any manner regarding the amount deposited. 

2.     The opposite party had offered to the complainant that; the policy can be surrendered after 10 years.   The complainant approached to the opposite party for surrendering his policy as per this advice, but the opposite party was not ready to consider the same and the complainant could understand that the opposite party has deducted a highly amount from the policy without his permission.   The opposite party is deliberately delaying the payment, the complainant is frustrated, went into deep despair due to mental agony, personal inconvenience, coupled with pecuniary loss.  The complainant had paid the amount, and the opposite party is liable to return the amount.  The complainant alleges there are latches and deficiency in providing service on the part of the respondent /opposite party. 

3.     The opposite party has paid scant regard to circulars issued by Insurance Regulatory Development Authority Regulations.  The Respondent is bound to serve the notice on the customer/ complainant regarding his entitlements since the respondent is acting as a fund manager, the complainant has not purchased any equity share from the respondent. The action of the respondent is illegal and opposed to rules issued by the SEBI and Reserve Bank.   

4.       Hence, the complainant seeking direction against the opposite parties to pay Rs. 75000/- with the interest at the rate of 12 % per annum  from June 2017 or from the date of commencement of the policy.  The complainant prays for further compensation of Rs. 50,000/- and the cost of the proceedings.

5.         On admission of the complaint notice was issued to the opposite parties and on receipt of notice the opposite parties entered appearance and filed version, denied, the entire allegations in the complaint.  The opposite parties contended that the complaint is not maintainable either in law or on facts and it is barred by law of limitation.

6.        The opposite party submitted that the policy of the complainant lapsed due to non-payment of premium due in 2009 and the present complaint filed after a period of 11 years and so the complaint is barred by limitation and so liable to be dismissed in limine.

7.      The opposite party contented that the policy availed by the complainant is a Unit Linked Policy and is a speculative investment.  Since the policy was a speculative investment, the complainant is not a consumer within in the meaning of the Consumer Protection Act and hence complaint is not maintainable before the Consumer Forum. 

8.      The complainant had availed a Pension Plus Unit Linked policy from the opposite parties.  The policy had a premium payment term of 20 years with premium amount of Rs. 25,000/- payable quarterly.  Admittedly the complainant paid only a total premium of Rs. 75,000/-. The last instalment of premium paid by the complainant was for 22/04/2009.

9.   The complainant had accepted the policy after agreeing to the terms and conditions of the policy.  After having taken the policy, the complainant further had an option to return the policy within a period of 15 days on receipt of the policy.  After having accepted the policy, the complainant is bound by the terms and conditions of the policy.   The complainant despite obtaining the policy and the free look option letter did not exercise his option to return.  By accepting the policy, the complainant has agreed to the terms and conditions of the policy. 

10.      The opposite party denied the allegations that the complainant  had assured  that  as per the policy conditions of  the policy can be surrendered  after a period of 10 years,  that  after 10 years the amount  which is deposited  would accrue sufficient  profit/premium from the deposit itself and there will be  no serious deductions  in any manner  regarding the amount deposited.  It is also submitted that the amount paid by the complainant is not a deposit, but premium for the policy taken by the complainant. The opposite party denied the allegation that, the first opposite party had offered to the complainant that the policy can be surrendered after 10 years.   It is also denied that a respondent is acting as a fund manager.  The first opposite party is an insurance company and not a fund manager and is not a banking company, but the complainant himself had chosen 100% pension index fund.  The first opposite party submitted that they are in IRDA licensed Insurance Company and the policy issued by the first opposite party is approved by IRDA.  It is denied that the first opposite party paid scant regard to circulars issued by IRDA regulations is false and so denied. 

11.       The opposite party submitted that contract of insurance is a contract based on the terms and conditions of the policy which are binding of the policy. The opposite parties are liable to the complainant only according to the terms and conditions of the policy.  According to the conditions of the policy “If we do not receive the regular premium due during the first three policy years from the commencement date then:

1. We will allow a 180 day grace period from the due date of the first unpaid instalment of regular premium.  During this grace period, the benefits under Article 3 will continue to apply.
2.  If the regular premium due is not received within the grace period of 180 days and the due date of the first unpaid instalment of regular premium is.

Less than or equal to 12 months from the commencement date, the policy will lapse and no benefit shall be payable other than the fund value as at the date of notification of death of insured, at which time the policy shall automatically terminate.  The policy holder may reinstate the policy within 2 years of the due date of the first unpaid instalment of regular premium, provided he/she has complied with Article 2 (d).

        If the policy holder  does not reinstate, the policy within the afore said 2 years period the policy will automatically terminate at the date of  expiry of the  reinstatement period and  we will calculate the value of the units  pertaining to  top up premium, if any,  at the unit price applicable  on the date of expiry of the reinstatement period  and pay the same to the policy holder at the expiry of the reinstatement  period or the commencement of the fourth policy year, whichever is later.  During the period from the due date of the first unpaid instalment of regular premium up to the date of reinstatement   the charges as specified in the schedule will continue to be deducted and policy was terminated without any value as per terms and conditions of the policy.

Excerpt of the standard terms and conditions of the mentioned   below for reference:

Payment of Regular Premium, Grace Period & Reinstatement and Dealings with the policy.

1. If the Schedule indicates that Regular has been opted for by the Policy holder, Regular Premiums are payable in the amounts, Premium frequency and for the term specified in the Schedule, Regular Premium shall become due on every Policy Anniversary, if  the  premium  is annual.  If the Premium Frequency is half yearly, or quarterly, or monthly, then the Regular Premium shall become due on the day corresponding with the Commencement Date in every half-year, quarter, or month respectively.  If the corresponding day does not exist in a particular month, then the last day of that month shall be deemed to be the due date.
2. If we do not receive the Regular Premium due during  the first  3 Policy years from  Commencement Date then:

1. We will allow a 180-day grace period from the due date of the first unpaid instalment of Regular Premium.  During this grace period, the benefits under Article (3) will continue to apply.
2. If the Regular Premium due is not received within the grace period of 180 days and the due date of the first unpaid instalment of Regular Premium is:

1. Less than or equal to 12 months from the commencement date, the policy will lapse and no benefit shall be payable other than the Fund Value as at the date of notification of death of the Insured, at which time the Policy shall automatically terminate.  The policy holder may reinstate the policy within 2 years of the due date of the first unpaid instalment of Regular Premium, provided he/she has complied with Article 2(d). If  the Policy holder does not reinstate the Policy  within the afore said  two years period, the policy will automatically  terminate at the  date of expiry of the  reinstatement period and  we will  calculate the value  of units pertaining  to top up premium, if any , at the unit price applicable on the date of expiry of the reinstatement period and pay the same to the Policy holder at the  expiry  of the reinstatement period or the commencement of the fourth  Policy Year, whichever is  later.  During the period from the due date of the first unpaid instalment of Regular Premium up to the date of reinstatement, the charges as specified in the Schedule will continue to be deducted.
2. Greater than 12 months but less than or equal to 36 months from the Commencement Date, then no benefits shall be payable other than the Fund Value as at the date of notification  of death  of the insured, at which time the Policy shall automatically terminate.  The policy holder may reinstate the Policy within two years of the due date of the first unpaid instalment of Regular Premium subject to Article 2(d).  If the Policy is not reinstated within the aforesaid two year period, the policy shall automatically terminate at the date of the expiry of the reinstatement period and the Surrender Value shall be payable.  During the period from the due date of the first unpaid instalment of Regular Premium up to the date of reinstatement, the charges as specified in the Schedule will continue to be deducted.

12.      As on the date of expiry of reinstatement period, the unit price of the policy of the complainant is zero and hence no amount is payable to the complainant.   The policy lapsed only because of the default of the complainant in not paying the premium on the due date despite receiving the reminder of due premium notices.   The complainant has by his own action made the policy to lapse and cannot now claim after 11 years that he is entitled to the profit.  Hence there is no deficiency in service on the part of the opposite parties.   The opposite parties further submitted that the Hon’ble National Commission has held that the premium is given to cover the risk for a given period and the insurer covers the risk for which the premium has been paid. If after the policy has lapsed, under no provision of terms of the policy or law could any direct for refund of any premium.  The policy terms and conditions must be strictly construed and the complainant is bound by the terms and conditions of the policy.   It is also submitted that the Apex Court has held that the terms of the insurance policy have to be strictly construed   to determine the extent of liability of and insurer and the court while construing the terms of the policy is not expected to venture  into  extra liberalism that may result  in re-writing the contract  or substituting the terms  which were not  intended by the parties.  It was held that the terms of the insurance policy   must be strictly construed   to determine the extent of the liability of the insurer and it is not permissible for the court to substitute terms of the contract itself, under the garb construing terms incorporated in the agreement of insurance.  It cannot be extended to the extent of substituting words that were never intended to form a part of the agreement.

13.    Hence there is no deficiency in service, no cause of action for the complaint.  The policy of the complainant lapsed due to the default of the complainant himself and so the opposite parties are not liable to pay any relief as prayed in the complaint.  The complainant is not entitled to the amount of Rs. 75000/- or for interest.  The complainant is also not entitled for the compensation or cost and the complaint is liable to be dismissed with cost of the opposite parties. 

14.    The complainant filed affidavit and documents.  The documents on the side of complainant marked as Ext. A1 and A2. Ext. A1 is policy documents in respect of policy number APG 2134237 dated 27/08/2008.  Ext. A2 is the copy of IRDA (Standardisation of terms and conditions of ULIP products and treatment of lapsed policies) Regulations 2010. The opposite parties  did not file affidavit. Hence opposite parties  set exparte.

15.      The case of the complainant is that he is the policy holder of opposite party and the policy number is APG 2134237. The complainant remitted premium of altogether Rs. 75,000/- to the opposite party. The opposite party admitted the same in the version.   Thereafter the complainant approached the opposite party to pay back the amount, but the opposite party denied the claim of the complainant.  The complainant submits that, he did not receive fund value of the policy or not received any sort of communication from the opposite party.  Hence the complainant prays for the refund of the amount which the opposite party is bound to pay to the complainant.  The opposite party is bound to obey the IRDA regulations regarding the conditions of lapse policy.  The complainant submitted that the IRDA regulations was enacted   in order to deal with lapsed policies and its consequences and it was found that the companies  were extracting  huge surrender charges and the broken sales was contributing huge profits and surrender value return to the customer were phenomenally low.     

16.   The complainant submitted that the surrender charges and surrender value are enumerated in the regulation, 2(g) & 2(h) of the definition clause of the Regulation.   A reference to paragraph of the 8 Regulation settles controversy between the complainant and opposite party   and the policy period of the complainant is 20 years and therefore second column  of the (policy period) is applicable and the first instalment was paid on  25/08/2008  and last payment made on 22/4/2009. The column1 is applicable as premium was interrupted during the first year itself, Therefore 15 % surrender charges can be levied from the customer / complainant, balance has to be return to the complainant, it was not done so far by the opposite party.  The complainant also contended that there is no merit in the averment in the version regarding the maintainability and limitation.   It is submitted that opposite party has not informed the complainant  about the due amount  which he is entitled as  contemplated under 8 of the IRDA regulation,  the absence of communication and information  is a clear deficiency  of service and complaint  was filed  when the complainant had no  information from the opposite party regarding his  entitlements and when complainant visited the office of opposite party in June 2017  there was no positive response from the opposite party and further the maturity date is on   25/08/2028  and currency of policy  period  is 20 years and respondent has not taken  any step for refund of the amount during the above period and therefore  there is deficiency of service on the part of the respondent and no  limitation is attracted in filing the complaint. Obligation to serve proper notice and information is contemplated, but the opposite party has not complied the same.  The complainant produced the decision in the matter of Jacob Punnen Vs United Insurance Company Limited rendered by Hon’ble Supreme Court of India on 09/12/2021. 

17.     Though the opposite party filed version contenting the claim is lapsed one, it  is a Unit Linked  Policy and amounts speculative claim which  shows the complainant  is not a consumer  and there was no  assurance   that the policy amount will be  refunded after ten years,  not fund manager, but insurance company etc.  But which does not supported through filing proof affidavit and so the opposite party set exparte. 

18.     In the absence of contra evidence against the case of complainant, the case of complainant stand proved.   The complainant produced Ext. A1 and A2 to prove his case. Hence, we do not find reason to disallow the claim of the complainant. Hence, we allow this complaint as follows: -

1. The opposite parties are directed to pay Rs. 75,000/-(Rupees seventy-five thousand only) to the complainant with interest at the rate of 9% per annum  from the date of filing this complaint to till date of payment. 
2. The opposite parties are directed to pay Rs.25,000/- (Rupees Twenty-five thousand only) as compensation on account of deficiency in service and thereby caused inconvenience, hardship, and mental agony to the complainant.
3. The opposite parties also directed to pay Rs.  5000/- (Rupees Five thousand only) to the complainant as cost of the proceedings.

The opposite parties shall comply this order within one month from the date of receipt of copy of this order, failing which the complainant is entitled 12% interest per annum for the above entire amount from the date of order to till the date of payment.

Dated this 28^th day of April, 2023.

MOHANDASAN K., PRESIDENT

PREETHI SIVARAMAN C., MEMBER

MOHAMED ISMAYIL C.V., MEMBER

APPENDIX

Witness examined on the side of the complainant                        : Nil

Documents marked on the side of the complainant                      : Ext.A1 & A2

Ext.A1 : Policy documents in respect of policy number APG 2134237 dated

              27/08/2008.

Ext.A2 : Copy of IRDA (Standardisation of terms and conditions of UILIP products and

                treatment of lapsed policies) Regulations 2010.

Witness examined on the side of the opposite party                      : Nil

Documents marked on the side of the opposite party                    : Nil

MOHANDASAN K., PRESIDENT

PREETHI SIVARAMAN C., MEMBER

MOHAMED ISMAYIL C.V., MEMBER

CPR