State Consumer Disputes Redressal Commission
Pradip Kumar Basu vs Aviva Life Insurance Co. Pvt. Ltd. on 30 December, 2009
State Consumer Disputes Redressal Commission State Consumer Disputes Redressal Commission West Bengal BHABANI BHAVAN (GROUND FLOOR) 31, BELVEDERE ROAD, ALIPORE KOLKATA 700 027 S.C. CASE NO. FA/311/09 DATE OF FILING: 21.8.09 DATE OF FINAL ORDER: 30.12.2009 PETITIONER/APPELLANT Pradip Kumar Basu S/o Late Dulal Krishna Basu Residing at P-72, C.I.T. Road, Scheme VI M P.S. Phoolbagan, Kolkata, West Bengal RESPONDENT/O.P. Aviva Life Insurance Company Private Limited 5th Floor, JMD Regent Square Gurgaon-Mehrauli Road Gurgaon 122 001, Haryana BEFORE : HONBLE JUSTICE MR. A. CHAKRABARTI, PRESIDENT MEMBER : MR. A.K. RAY MEMBER : MRS. S. MAJUMDER FOR THE PETITIONER/APPELLANT : Mr. D. Dutta, Advocate FOR THE RESPONDENT/O.P. : Mr. S. Lahiri, Advocate : O R D E R :
HONBLE JUSTICE MR. A. CHAKRABARTI, PRESIDENT This appeal was filed against order dated 03.7.09 passed by District Consumer Disputes Redressal Forum, Kolkata Unit-II in C.C. No.310 of 2007 whereby the complaint was dismissed.
The facts, in brief, as made out in the complaint are that the complainant obtained a Lifelong Unit Linked (Balanced fund) Policy from the OP with annual premium of Rs.57,143/-. It appeared to the complainant that as per the General Terms and Conditions of the Policy the complainant would be entitled to receive back the surrender value upon having made payment of regular premium for two years prior to termination. There were other conditions for receipt of surrender value. The complainant paid premium for two years i.e. in October, 2004 and October, 2005 totaling a sum of Rs.1,14,286/-. The complainant, thereafter, faced with financial exigencies and so decided to terminate the policy and to obtain full surrender value.
But the OP intimated the complainant that the surrender value was only Rs.27,692/- and the complainant by letter dated 02.12.06 requested for clarification and for necessary action for return of the amounts paid along with interest thereon. By letter dated 18.12.06 the OP intimated the complainant that only Rs.27,692 is the surrender value in terms of the Standard Terms and Conditions and in particular Article 16.2 thereof. From the said letter it appeared that the OP was applying a formula for determination of the surrender value and the said formula is redemption is equal to 1-1/ (1.05) for initial premium unit. The said formula is inapplicable to Lifelong Insurance Policies.
The n factor which is required for computation in accordance with the policy is the outstanding term of the policy in years and in view of the fact that the policy in question is a Lifelong Insurance Policy, the n factor cannot be computed. As the OP refused to refund the entire surrender value the present complaint was filed seeking payment of Rs.15 lacs as compensation for harassment, mental agony etc. and for other reliefs and cost.
The OP filed affidavit in opposition to the said complaint stating interalia that the OP issued a Lifelong Unit Linked Policy from 08.10.06 for an assured sum of Rs.4 lacs with a premium of Rs.57,143/- annually. The assured paid a total sum of Rs.1,14,286/- towards premium for two years. Due to non-receipt of the third annual premium which fell due on 08.10.06 the policy was converted into a Paid-up Insurance Policy.
Thereafter on 05.12.06 the Insurance Company received a letter dated 02.12.06 from the proposer alleging that redemption charge levied by the company was arbitrarily proposed and requested the company to refund the amount paid towards annual premium. The OP by letter dated 18.12.05 informed the proposer that early redemption charge was mentioned in the key features brochure.
Heard Mr. D. Dutta, the Ld Advocate for the Complainant/Appellant and Mr. S. Lahiri, the Ld. Advocate for the Respondent/OP.
Mr. Dutta, the Ld. Advocate for the Appellant contended that the key features brochure was not part of the policy and it was first time supplied on 18.12.06. It is further contended that even of those are applicable in the present policy, the right to get the policy converted into paid-up status is a right of the policy holder and not of the company as contained under the heading What happens if I am unable to pay my premium? Moreover, in the Forum below oral evidence was adduced by the complainant and those remained uncontroverted and, therefore, those stand admitted. The letter written by IRDA relied on by the appellant has no nexus with the present proceeding as the claim is only to get reasonable amount and not the whole.
The contention of the Respondent mainly is that the policy was duly approved by appropriate authority and so the terms and conditions of the policy were also approved.
It is further contended that the Proposal Form if read with the notes then it will show that, the key features brochure was mentioned therein and the OP1 was required to show the key features brochure which was shown to the complainant and he agreed to it. With the above contentions the Ld. Advocate for the Appellant advanced his argument stating that the key features brochure was available before policy was taken and n has been mentioned as 30 years under the heading Do I have to pay a charge when I withdraw my money.
The Respondent though admittedly did not adduce any evidence in the Forum below they have filed before this Commission the copy of the Proposal Form for Lifelong Lifesaver and Lifeshield and Youngachiever along with relevant portions of the Key Features Brochure.
Upon considering the relevant contentions by the parties and perusing the materials on record I find that the OPs have placed reliance on the key features brochure in support of their claim for quantification of refund amounts when a policy is converted into paid-up status. It is not disputed that after payment of premium for two years, the third premium though fell due was not paid. The Standard Terms and Conditions of the Policy annexed to the Memorandum of Appeal are relevant in this connection, Article 1 whereof provides as follows:
Article 1 General Provisions The Insurance provided by Aviva Life Insurance Company India Private Limited (hereinafter called the Company) is based upon the signed, dated and completed Proposal (hereinafter the Proposal) and is as detailed in the Policy Document, which comprises the Standard Terms and Conditions, the Special Terms and Conditions appearing in Riders (if any), the Rules for the Investment Funds, the Schedule, and the Proposal.
The same does not include key features document. In Article 2 of the said Standard Terms and Conditions it is noted as initial unit is a unit allocated in respect of payment of regular premiums during the first two years of the insurance or during the first two years of an indexation or any other increase to the regular premium. The Early Redemption Charge has been defined as a deduction to the value of units based on the number of Initial Units in the Unit Account on termination of the insurance or on conversion to a Paidup Insurance before the end of the Premium Payment Term.
Article 15.1 of the Standard Terms and Conditions provides that subject to Article 18, w.e.f. commencement of the third policy year the policy holder is entitled to receive a surrender value upon termination of the insurance, provided that regular premium have been paid for at least two full policy years. In Article 15.2 it is provided that the surrender value is equal to the surrender value of Initial Units, which is equal to the value of all Initial Unit less an Early Redemption Charge determined at the time of surrender and the value of all Accumulation Units in respect of Regular Premiums. The extract of Key Features Brochure shows that early redemption charges would be equal to 1-1/(1.05) for initial premium units where n is equal to 30 years minus the number of years the policy has been in force.
In the circumstances it appears that the facts as stated by the complainant in pleading and evidence, have been contradicted by adducing fresh evidence by the OP. It has been contended by the OP appellant that they were not granted opportunity by the Forum to adduce evidence. From the LCR I have considered the ordersheet wherefrom it appears that after the complainant filed his evidence on 05.9.08, next date was fixed for exparte hearing as none appeared for the OP nor any step was taken. On the next date no work could be done as the Ld. Advocates stayed away from the proceedings following a resolution. On 27.01.09 both parties appeared and OP paid cost. OP filed also brief written argument along with a petition for time.
Time was allowed. On the next date i.e. on 09.4.09 the Ld. Advocate for the complainant was present but none was present for the OP. On the next date i.e. on 04.6.09 both parties are found present and petition for time was filed for OP with the prayer for permission to cross examine the complainant as well as for filing of evidence. Considering that ample opportunity had been granted earlier and no step having been taken the application was rejected and the matter was heard and decided.
Therefore it is apparent that the OP did not avail opportunity of either cross examining the complainant or adducing its own evidence I do not find that the Forum at all acted irregularly in refusing such opportunity to the OP to file evidence after the OP filed its brief notes of argument on 27.01.09.
But in any event the OP has been granted opportunity in the present appeal to produce documents and after adjournments on some occasions two documents were filed as discussed hereinabove. Therefore ultimately the OP has not been deprived of opportunity of adducing documents and the matter has been decided on all the materials on record.
From the general provisions contained in Standard Terms and Conditions I find that policy documents do not include key features brochure. Therefore the contention of the OP appellant that key features brochure was part of the policy, is not acceptable.
From the documents supplied to the complainant it does not appear that any explanation to expression n has been supplied by the OP appellant to the complainant before the policy was taken.
As regards the Proposal Form in one of the notes contained therein though referred to the key features document but as supply thereof has not been shown satisfactorily, the said printed Clause does not help in deciding such matter particularly when the OP Appellant did not adduce any evidence to show supply of key features brochure and policy documents do not include Key Features brochure.
In view of the above material and in absence of any evidence on behalf of the OP either Oral or documentary to satisfy that the key features brochure was supplied to the complainant before the policy was taken, the contention of the OP Appellant on such key features brochure and the value of n contained therein, cannot be accepted.
It is true that the Forum below while deciding the matter in the judgment did not give any decision of its own giving reasons apart from noting down the points raised by the OP.
In the circumstances aforesaid I am of the opinion that the contention of the OP relying on key features brochure and the value of n cannot be accepted. In such circumstances the OP is unable to show justification of the quantum of deduction they proposed. From the Standard Terms and Conditions no amount of deduction except charges as have been shown justified in case of refund on conversion of policy to Paid-up Policy after payments of premium for two years. As facts are conclusively shown that the complainant had paid premium for two years and then the policy has been converted to Paid-up Policy, refund has to be made after deduction of requisite charges.
Therefore, the complainant is entitled to refund of the amount on conversion of the policy to paid-up policy. But as value of n was never disclosed by the OP to the complainant, the Early Redemption Charge as proposed by the OP cannot be deducted from the policy value.
In above view of the findings the appeal is allowed and the impugned order is set aside. The complaint is allowed and the OP is directed to pay the policy value to the complainant along with interest @ 9% per annum from the date of conversion of the policy to paid-up policy till the date of this order within a period of 60 days from the date of this order. In case the OP fails to comply with the said this order the complainant will be entitled to recover the amount from the OP along with further interest of 9% per annum for the period of default.
(S. Majumder) (A.K. Ray) (Justice A. Chakrabarti) MEMBER(L) MEMBER PRESIDENT