State Consumer Disputes Redressal Commission
Consumer Guidance Society vs 1. M/S Lic Of India And Others on 28 June, 2013
BEFORE THE CIRCUIT BENCH A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT VIJAYAWADA F.A.No.856 OF 2012 AGAINST C.C.NO.322 OF 2011 DISTRICT FORUM-II VIJAYAWADA KRISHNA DISTRICT Between: Consumer Guidance Society rep. by its Secretary G.Lakshmi Narayana S/o late Malakondaiah, R/o D.No.76-1-102, B-Dharga Plots, Bhavnipuram, Vijayawada-012 Krishna District Appellant/complainant A N D 1. M/s LIC of India rep. by its Chairman & Managing Director Regd.Off: 1st Floor, Yogakshema Central Office Jeevan Bheema Marg, P.B.No.19953, Nariman Point, Mumbai 2. M/s LIC of India rep. by its Chief Manager City Branch-1, 686, Besant Road, Vijayawada-002 3. M/s LIC of India rep. by its Divisional Manager, Divisional office Machilipatnam, Krishna District 4. M/s LIC of India rep. by its Zonal Manager D.No.5-9-21, Jeevan Bhagya, Opp. To Secretariat Saifabad, Hyderabad-004 Respondents/opposite parties Counsel for the Appellant M/s V.Gourisankara Rao Counsel for the Respondent M/s KRL Sarma QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
AND SRI THOTA ASHOK KUMAR, HONBLE MEMBER FRIDAY THE TWENTY EIGTH DAY OF JUNE TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The complainant is the appellant. He filed the complaint through consumer guidance society claiming the relief for partial surrender of the insurance policy by adjusting partial surrender value for which the appellant is entitled to, against the arrears of premium for March 2010 to March 2011 and he claimed for a sum of `4 lakh towards compensation on the premise of negligence of the respondents.
2. The appellant obtained money plus policy bearing policy number 674631970 from the respondent-insurance corporation in the year 2007. The appellant opted for partial surrender of the insurance policy.
The respondent surrendered the policy in toto and paid an amount of `1,53,968/- through cheque dated 31.03.2010. The appellant had returned the cheque with a request to the respondent to effect partial surrender of the insurance policy.
The respondent kept the matter pending.
The appellant made application under Sec.6 of RTI Act seeking for the information and the respondent made in complete disclosure of information. Thereafter, the appellant filed the complaint.
3. The respondent corporation returned the claim on the premise that the consumer guidance society has no locus standi to file the complaint. It is contended that the appellant filed application for partial surrender to a tune of `50,000/- when he had to pay the premium for the month of March 2010. The appellants request was inadvertently registered for full surrender value due to heavy ULIP requests in the last week of March, 2010 and a cheque for `1,53,968/-
was issued towards full and final settlement of the appellants claim.
4. The respondent submitted that when the appellant returned the cheque, he came know of the error crept in settlement of the claim. As the policy is a unit linked policy, the branch office of the respondent insurance corporation could not cancel or reverse the surrender of the policy. The respondent considered the change of status of the insurance policy from surrender to in force. The software development centre Pune changed the status of the policy from reduced to paid up. By the time the status of the policy was reduced to paid up, two yearly premiums was fallen due from the appellant.
5. The respondent informed the appellant that policy would be revived on payment of two yearly premiums which had been fallen due from March,2010 to March 2011 which premia were payable even when partial surrender of the policy is effected.
The appellant requested the respondent to adjust the amount through partial surrender process which could not be made possible as the funds available by partial surrender of the policy was not sufficient to meet the amount required for payment of the two premia. The appellant refused to pay the premia.
As such, the surrender action of the policy was not reduced. The respondents adjusted a sum of `50,000/- by the partial surrender of the policy and requested the appellant to pay the premium for the month of March, 2011.
The policy is continued in reduced paid up condition. The appellant requested the respondent to keep the insurance policy in force without insisting on him to pay the premium from his own funds. There is no deficiency in service on the part of the appellant.
6. The appellant filed his affidavit and the documents, Exs.A1 to A13. On behalf of the respondent insurance corporation, its Manager(L&HPF) filed his affidavit and the policy copy, Ex.B1.
7. The District Forum allowed the complaint on the premise that the respondent refused the appellants request for surrender value and the respondent failed to keep the policy in force. The District Forum observed that the respondent is at fault and it held the respondent to bring back the policy into force.
8. Feeling dissatisfied with the relief granted by the District Forum, the complainant has filed appeal contending that the District Forum ought to have directed the respondent to effect partial surrender of the policy by adjusting the partial surrender value against the arrears of the premium. It is contended that the respondent failed to issue fresh cheque for `50,000/- towards partial surrender for renewal of the policy.
9. The Point for consideration is whether the order of the District Forum suffers from mis-appreciation of facts or law?
10. The appellant obtained money plus 180 Plan life insurance policy which came into force from 31.3.2007 for a period of 20 years. The appellant opted for partial surrender of the insurance policy for the purpose of adjustment of the surrender value to be adjusted towards the premium for March, 2010. The respondent instead of effecting partial surrender of the policy, made complete surrender of the policy and issued cheque for `1,53,968/- towards total surrender value of the cheque. The appellant returned the cheque bringing it to the knowledge of the respondent that he opted for partial surrender of the policy and not the total surrender of the insurance policy. The District Forum discussed the request made for and the action taken by the respondent as under:
The section 8 of the policy document Ex.B1 refers to the surrender value payable. According to said clause surrender value is payable only after completion of third policy anniversary and the surrender value payable shall be fund value of units held in the policy holders account as on the date of surrender and there cannot be surrender charges. As regards partial withdrawal it is stated in Section 10 that a life assured can partially withdraw the units at any time after third policy anniversary subject to the conditions which include that the partial withdrawal may be in the form of fixed amount or in the form of fixed number of units and that under regular policies where at least three years premiums have been paid, the partial withdrawal shall be allowed subject to minimum balance of two annual premiums in the policy holders funds value. So in case of partial surrender, the policy holder may ask for a fixed amount or to ask for fixed units to his credit. The amount allocated towards insurance premium would not be distributed and amount allocated to towards units purchased would be released for payment of partial surrender value. The policy documents also show the method of allocation. According to Section.4 (a) the allocation in the policies with an annual premium of Rs.50,000/- would be 26.5% during the first year, 5% during the 2nd and 3rd year and the balance amount will be utilized for purchase of units for that policy. Basing on such calculation units must have been credited to the account of the complainant. Neither party would say what was the amount of units value as on the date of partial surrender.
11. The respondent in its written version referred to effecting surrender of the insurance policy instead of effecting partial surrender due to mistake which occurred on account of the lapse on the part of the respondent corporation. Again on account of the lapse on the part of the software Development Centre, the status of the insurance policy was changed from surrender to paid up. The District Forum had condemned the lapse on the part of the respondent corporation and obligation of the respondent to rectify its mistake in the following terms.
Since there is a mistake on the part of the opposite parties the remedy shall be to see that the policy is kept in force as at the end of March, 2010 and the opposite parties shall adjust the surrender value towards premium payable for arch, 2010. So by March, 2011 the policy must be deemed to have been valid and subsisting policy If the premium is not paid in the month of March, 2011 and if not paid in the month of March, 2012 the policy would be a lapsed policy and still with a facility to get it revived by proper application and payment of premiums by the complainant. For mistake committed by the opposite parties only some amount may be allowed towards compensation. We are of the opinion that the insurance company has not made concrete proposal to see that the policy is kept intact. They seem to have given scope for unnecessary technicalities. Therefore the insurance company shall be made liable to pay compensation and in our opinion a sum of Rs.10,000/- would be reasonable compensation. The opposite parties shall see on that the policy would stand as a valid and subsisting policy as at the beginning of March, 2011 subject to payment of premiums payable in the month of March, 2011 and thereafter. A direction may be given to the opposite parties accordingly.
12. The appellant has not shown any reason for this commission to interfere with the order of the District Forum. The learned counsel for the respondent filed memo stating that the respondent paid the amount awarded by the District Forum as also it had taken steps to bring back the policy in to force. As such, the appellant cannot be considered to be entitled to any relief than what was held him to be entitled for, by the District Forum.
13. In the result, the appeal is dismissed confirming the order of the District Forum. There shall be no order as to costs.
MEMBER MEMBER Dt.28.06.2013 కె.ఎం.కె*