State Consumer Disputes Redressal Commission
Sh. Sunil Kumar Arora vs The Idbi-Principal Asset Management ... on 5 August, 2010
STATE CONSUMER DISPUTES REDRESSAL COMMISSION UTTARAKHAND
DEHRADUN
FIRST APPEAL NO. 337 / 2007
Sh. Sunil Kumar Arora S/o late Sh. Anand Prakash Arora
R/o 102, Tagore Villa, Dehradun
......Appellant / Complainant
Versus
1. The IDBI-Principal Asset Management Co. Ltd.
2nd Floor, Bajaj Bhawan, Nariman Point
Mumbai - 400 021
2. The New India Assurance Company Limited
D.O. 120400, Maker Chambers III
5th Floor, Nariman Point
Mumbai - 400 021
3. The New India Assurance Company Limited
Divisional Office, Astley Hall, Dehradun
......Respondents / Opposite Parties
Sh. Vijay Chandna, Learned Counsel for the Appellant
Sh. K.K. Goyal, Learned Counsel for Respondent No. 1
Sh. M.K. Kohli, Learned Counsel for Respondent Nos. 2 and 3
AND
FIRST APPEAL NO. 62 / 2009
Principal Pnb Asset Management Company Private Limited
having its registered office at Exchange Plaza
2nd Floor, B Wing, NSE Building, Bandra Kurla Complex
Bandra (East), Mumbai - 400 051
......Appellant / Opposite Party No. 1
Versus
1. Sh. Sunil Kumar Arora S/o late Sh. Anand Prakash Arora
R/o 102, Tagore Villa, Dehradun
......Respondent No. 1 / Complainant
2. The New India Assurance Company Limited
D.O. 120400, Maker Chambers III
5th Floor, Nariman Point
Mumbai - 400 021
3. The New India Assurance Company Limited
Divisional Office, Astley Hall, Dehradun
......Respondent Nos. 2 and 3 / Opposite Party Nos. 2 and 3
2
Sh. K.K. Goyal, Learned Counsel for the Appellant
Sh. Vijay Chandna, Learned Counsel for Respondent No. 1
Sh. M.K. Kohli, Learned Counsel for Respondent Nos. 2 and 3
Coram: Hon'ble Justice Irshad Hussain, President
C.C. Pant, Member
Smt. Kusum Lata Sharma, Member
Dated: 05/08/2010
ORDER
(Per: C.C. Pant, Member):
These two appeals are directed against the order dated 05.09.2007 passed by the District Forum, Dehradun, allowing consumer complaint No. 135 of 2003 ex-parte against the opposite party No. 1 and dismissing the same against the opposite party Nos. 2 and 3. Vide the impugned order, the District Forum has directed the opposite party No. 1 to pay a sum of Rs. 2,00,000/- to the complainant within 60 days from the date of the order, failing which the opposite party No. 1 shall also be liable to pay interest @9% p.a. on the said amount from the date of filing of the consumer complaint till the date of actual payment.
2. The facts of the case in brief are that the complainant Sh. Sunil Kumar Arora and his father late Sh. Anand Prakash Arora were the unit holders of 500 units, which were purchased in March, 1996 @Rs. 10/- per unit with a total investment of Rs. 5,000/- under a close ended scheme TAX-I-NIT'96 launched by IDBI-Principal Asset Management Company Limited - opposite party No. 1. As per the scheme, the first holder Sh. Anand Prakash Arora was provided a personal accident insurance cover for sum of Rs. 3,00,000/-. The arrangement for insurance was initially with the National Insurance Company Limited, but later on, when the scheme was converted into an open ended scheme, the fund managers made the arrangement for 3 insurance of the unit holders with The New India Assurance Company Limited (hereinafter to be referred as "insurer"). Unfortunately, the first holder Sh. Anand Prakash Arora died in a car accident on 25.08.2002. By that time, the scheme was converted into open ended scheme and the arrangement for insurance cover of the unit holders was with the insurer. The insurer settled the claim preferred by the complainant, who was also the nominee/assignee at sum of Rs. 1,00,000/-. The complainant wrote letters to insurer's Mumbai office - opposite party No. 2 and Dehradun office - opposite party No. 3, but the opposite party No. 3 never replied the said letters. Whatever information was provided, the same was provided by the opposite party No. 2. The complainant ultimately contacted the opposite party No. 3 on 29.07.2003 and handed over a legal notice, but the opposite party No. 3 did not take any action. Copy of the notice was also sent by registered post to the opposite party Nos. 1 and 2. Upon this, the complainant filed a consumer complaint before the District Forum, Dehradun, which was decided by the District Forum, Dehradun in the above terms by the order impugned. Aggrieved by the said order, the complainant (hereinafter to be referred as "appellant No. 1") and successor company of opposite party No. 1 (hereinafter to be referred as "appellant No. 2") filed these two appeals, which have been registered as First Appeal No. 337 of 2007 and First Appeal No. 62 of 2009 respectively. Appellant No. 2 has filed the appeal with a delay of 1 year, 7 months and 4 days, for which an application for condonation of delay has also been filed.
3. We have heard the learned counsel for the parties and perused the material placed on record in the light of the legal aspects of the case.
44. We considered the reasons for delay in filing the First Appeal No. 62 of 2009 by the appellant No. 2. Explaining the reason, the appellant No. 2 has said that the scheme was launched as a close ended scheme on 01.01.1996 by IDBI Investment Management Company Limited for the period from 01.01.1996 to 31.03.1996 with some incentives for the early comers. In March 2000, constitution / share-holding of the IDBI Investment Management Company Limited was restructured ad its name was changed to IDBI Principal Asset Management Company Limited. In April, 2001, the scheme was converted into an open ended scheme and in June, 2003, the share- holding pattern of IDBI Principal Asset Management Company Limited was restructured and consequently, its name was changed to Principal Pnb Asset Management Company Private Limited. The appellant No. 2 has further said that in December, 2003, the appellant No. 1 had filed the consumer complaint No. 135 of 2003 before the District Forum, Dehradun, but at that time, the appellant No. 2 was shifting its registered office from 2nd Floor, Bajaj Bhawan, Nariman Point, Mumbai to Exchange Plaza, 2nd Floor, B Wing, NSE Building, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. Probably due to this reason, notice issued by the District Forum could not be served and the District Forum decided the consumer complaint ex-parte against the appellant No. 2.
5. It was only in the month of August, 2008 that the appellant No. 2 came to know about an appeal filed by the appellant No. 1 impleading the appellant No. 2 as respondent No. 1 in the appeal. Thereafter, the appellant No. 2 engaged an Advocate in Dehradun, who inspected the record of consumer complaint No. 135 of 2003 and apprised the appellant No. 2 about the facts of the case and ex-parte order dated 05.09.2007 passed by the District Forum against the predecessor company of the appellant No. 2 and also that the appellant 5 No. 1 has filed First Appeal No. 337 of 2007 before the State Commission, impleading the appellant No. 2 as respondent No. 1 in the said appeal.
6. After coming to know about the facts of the case, it was necessary to study the investment details of the complainant. Since the said scheme was launched in January, 1996 and had undergone a lot of changes vis-à-vis the share-holding pattern of the appellant No. 2, its registered office, the Registrar and Transfer Agents inter-alia who hold the information with respect to the unit holder, terms of offer under the said scheme etc., it took time in tracing the investment record of the appellant No. 1. With all its best efforts, the appellant No. 2 could file the First Appeal No. 62 of 2009 on 09.04.2009.
7. In our opinion, the appellant No. 2 has explained the reasons for delay in filing the appeal in a most lucid manner and we have no reason in doubting the genuineness of the averments made by Ms. Sujata Punjabi, an employee of the appellant No. 2 - company in her affidavit dated 01.04.2009 (Paper Nos. 15 to 17). Therefore, in the interest of justice, the delay in filing the First Appeal No. 62 of 2009 is condoned and the same is admitted for decision on merit.
8. Appellant No. 1 has challenged the impugned order on the ground that while investing Rs. 5,000/- in the said scheme, the contract was between the investors and IDBI-Principal Asset Management Company Limited, there was no direct contract between the investors and the insurance company, whatsoever it be whether National Insurance Company Limited or The New India Assurance Company Limited. The investors had nothing to do with the insurance company. The scheme was for a period of 10 years and one 6 of the salient features of the scheme was in respect of the personal accident insurance cover which was for a sum of Rs. 3,00,000/- in the case of appellant No. 1's father. The company, which had launched the scheme or its successor company, cannot escape from the liability of paying the insurance amount of Rs. 3,00,000/- by saying that the scheme was modified and under the modified scheme, the insurance cover was only for Rs. 1,00,000/- for an investment upto Rs. 5,000/-. Therefore, the District Forum should have held all the opposite parties jointly and severally liable to pay the insurance amount. Appellant No. 1 also contended that IDBI-Principal Asset Management Company Limited never intimated him in respect of the changes in the scheme, offer for redemption of units and changed terms and conditions including insurance cover. The prayer of the appellant No. 1 is to modify the impugned order accordingly.
9. The contention of appellant No. 2, apart from the facts already narrated in condonation application, is that the insurance cover of deceased - unit holder was to the tune of Rs. 3,00,000/- at the time of allotment of the units but it stood revised subsequently to Rs. 1,00,000/- prior to the date of his death. The appellant No. 2 through its learned counsel, has submitted that the said scheme was offered without prejudice to the rights of the IDBI-Principal Asset Management Company Limited or its successor to make subsequent addition(s) and/or amendment(s) thereto, subject to prior approval of the Board of Directors of IDBI Principal Trustee, Securities and Exchange Board of India (SEBI)/Reserve Bank of India (RBI). The document of the scheme clearly evidenced that the trustee may, from time to time, add or otherwise amend or alter all or any of the terms of scheme, complying with the guidelines of Govt./RBI/SEBI or ay other regulatory body, in this regard. The learned counsel pointed out to the following clause of the offer document (Paper No. 47):
7"(b) Scheme to be binding on i-nit holders - The terms of Tax I-nit'96 including any amendments thereof, made from time to time, shall be binding on each holder of i-nits issued under the Scheme and any person claiming through or under him/her/them, as if he/she/they had expressly agreed to be bound by the same."
10. The learned counsel for the appellant No. 2 further submitted that the IDBI-Principal Asset Management Company Limited vide its letter dated 08.03.2001 (Paper Nos. 54 to 56) had intimated to all its unit holders under the said scheme that the said scheme had been converted from a close ended scheme into an open ended scheme w.e.f. 12.04.2001 with certain changes in the features of the product offering including terms and conditions in respect of free accidental death insurance cover. Under the modified scheme, free accidental death insurance cover was of Rs. 1,00,000/- on an investment upto Rs. 6,000/-, Rs. 3,00,000/- on an investment ranging from Rs. 6,001/- and above and upto Rs. 11,000/- and Rs. 5,00,000/- on an investment of Rs. 11,001/- and above. The unit holders were given the option to redeem their investments at the then applicable NAV as on the date of the redemption without any levy of exit load, if they were not in support of the said conversion. A time limit of 30 days from the date of the said letter dated 08.03.2001 was given to the unit holder for carrying out such an exit load free redemption. The IDBI-Principal Asset Management Company Limited had also hosted the relevant terms concerning the proposed changes in the scheme on its website and investors were also advised to contact company's customer service department for further particulars concerning such revision. Thus, the appellant No. 1 and his father (joint holders of the I-nits) were aware of the benefits of the scheme and the appellant No. 1 can 8 not take the stand that no intimation was given to them in respect of the changes in the scheme. The appellant No. 1 had also received the dividends on various dates under the open ended scheme. The appellant No. 2 has prayed in its appeal to set aside the ex-parte order passed by the District Forum against it and it be absolved of the liability to pay amount of Rs. 2,00,000/- to the appellant No. 1, as directed by the District Forum in its order.
11. We considered the submissions made by learned counsel for the parties. One of the salient features of the said scheme is Personal Accident Insurance coverage under the scheme. We noted, after perusing the record that it was offered by the company to its investors without any additional cost. The office document (Paper Nos. 37 to 53) also reveal that the said insurance of the unit holders was on annual period basis and the premium was to be paid by the IDBI- Principal Asset Management Company Limited or its successors on annual basis. The premium so paid to the insurance company was a part of the recurring expenses of the company. Thus, it is well proved that the product offering of accidental death insurance was being provided free of cost by the Managing Company. This being so, it would not be just to infer out that the appellant No. 2 had made any deficiency in service if the investment slabs were revised for the insurance coverage of the unit holders at some point of time at a later stage. At the time of launching the scheme, it was made clear to the investors through the offer document containing terms and conditions that the trustees may, from time to time, add or otherwise amend or alter all or any of the terms of the scheme. We can not accept the contention of the appellant No. 1 that the predecessor company of the appellant No. 2 did not intimate him and his father regarding the change in scheme and its terms. Company's letter dated 08.03.2001 and information on its website alongwith the fact that the appellant No. 1 had received the dividends under the revised scheme are 9 sufficient evidences to prove that he was aware of the changes. The said letter dated 08.03.2001 (Paper Nos. 54 to 56) clearly states that w.e.f. 12.04.2001, the fund will be governed as per the terms and conditions of the IDBI-Principal Tax Savings Fund. However, the existing unit holders would continue to enjoy all the rights and privileges pertaining to their investment in the scheme as were available to them under the original offer document except the level of the insurance cover, as mentioned above.
12. Thus, we have all the best reasons to conclude that the appellant No. 2 or its predecessor companies had not made any deficiency in service by not paying the insurance amount of Rs. 3,00,000/-. The First Appeal No. 337 of 2007 filed by the appellant No. 1 is devoid of merit and is liable to be dismissed. However, First Appeal No. 62 of 2009, for the reasons stated above, is fit to be allowed and the ex-parte order dated 05.09.2007 passed by the District Forum, Dehradun against the predecessor company of appellant No. 2 in respect of payment of Rs. 2,00,000/- to the appellant No. 1, is liable to be set aside.
13. Both the appeals are accordingly disposed of. The ex-parte order dated 05.09.2007 passed by the District Forum, Dehradun against IDBI-Principal Asset Management Company Limited is set aside and the appellant No. 2 is absolved of the liability to pay the insurance amount of Rs. 2,00,000/- to the appellant No. 1, as directed by the District Forum. As a result, consumer complaint No. 135 of 2003 is disposed of accordingly. No order as to costs.
14. Let the copy of the order be kept on the record of First Appeal No. 62 of 2009.
(SMT. KUSUM LATA SHARMA) (C.C. PANT) (JUSTICE IRSHAD HUSSAIN) K