State Consumer Disputes Redressal Commission
The Manager, Icici Prudential Life ... vs Satinder Singh on 27 August, 2012
2nd Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB
SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
First Appeal No.913 of 2011.
Date of Institution: 09.06.2011.
Date of Decision: 27.08.2012.
1. The Manager, ICICI Prudential Life Insurance Company Limited, ICICI
Prulife Towers, 1089, Appasahas Marathe Marg, Prabhadevi, Mumbai-
4000 25.
2. The Manager, ICICI Prudential Life Insurance Company Limited, Vinod
Silk Mills Compound, Chakravarthy Ashok Road, Ashok Nagar
Knadivali (E) Mumbai-400 101.
3. The Manager, ICICI Prudential Life Insurance Company Limited, SCO
70, 1st and 2nd Floor, Phase-9, S.A.S. Nagar, Mohali.
.....Appellants.
Versus
Satinder Singh son of Sh. Mohinder Singh, Resident of House No.239,
Phase-4, Mohali.
...Respondent.
First Appeal against the order dated
02.05.2011 of the District Consumer
Disputes Redressal Forum, SAS Nagar,
Mohali.
Before:-
Shri Inderjit Kaushik, Presiding Member.
Shri Baldev Singh Sekhon, Member.
Present:- Sh. K.S. Cheema, Advocate, counsel for the appellants.
Sh.Sandeep Bhardwaj, Advocate, counsel for the respondent.
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INDERJIT KAUSHIK, PRESIDING MEMBER:-
This order shall disposed of two appeals i.e. First Appeal No.913 of 2011 (The Manager, ICICI Prudential Life Insurance Company Limited & Ors. Vs Satinder Singh) and First Appeal No.914 of 2011 (The Manager, ICICI Prudential Life Insurance Company Limited & Ors. Vs Harcharan Singh), as questions of law and facts involved in both the appeals are the same and both the appeal are directed against two similar orders First Appeal No.913 of 2011 2
02.05.2011 passed by the learned District Consumer Disputes Redressal Forum, SAS Nagar, Mohali (in short "the District Forum"). The facts are taken from First Appeal No.913 of 2011 and the parties would be referred by their status in this appeal.
2. Facts in brief are that Sh. Satinder Singh, respondent/ complainant (hereinafter called as "the respondent") filed a complaint under section 12 of the Consumer Protection Act, 1986 (in short, "the Act") against the appellants, asserting that Sh. Mohinder Singh has two sons namely Tejinder Singh and Satinder Singh. Tejinder Singh is living abroad and did not visit India for the last more than 10 years. Satinder Singh is living in India. Mohinder Singh has saving bank account with Centurion Bank of Punjab (Now 'HFDC Bank').
3. In the year 2005, after selling his share of land by Mohinder Singh, he was approached by Jagdish Singh, advisor of the appellants at the instance of Hardev Singh, who working with appellant no.3 at that time. Said Jagdish Singh insisted the upon the respondent to invest money in the plan being offered by the appellants, by showing high profits about the One Time Investment Plan. The respondent specifically told that he cannot make any investment in any such plan where he has to pay regular installment and he was assured by the advisor and said Hardev Singh that the respondent is required to make only one time investment which would give him recurring income in future.
4. The respondent believed the representation of said Jagdish Singh and paid an amount of Rs.2.50 lacs towards 'one time investment' and receipt dated 20.12.2007 was issued and he was assured that after three years, he can take the refund of his premium along with interest between 15% to 18% p.a. and other benefits of the policy. Signatures of the respondent were taken on some printed documents and he was informed that he will receive the policy documents through registered post within a short span of time, but the respondent did not receive any policy till date. First Appeal No.913 of 2011 3
5. In the year 2010, the respondent approached appellant no.3 to get the benefits of the policy, but the respondent was shocked to hear that he will get the surrender value after huge deductions of about 66% of the amount paid. On 27.01.2011, he was asked to receive a letter dated 22.12.2011 wherein a meager amount of Rs.35,497-86 was refunded to him against the investment of Rs.2.50 lacs. The respondent received the same under protest and approached the office of the appellants and he was informed that the surrender value of the policy has been paid to him after deducting various charges. No details about the deductions were provided and the amount of Rs.35,497-86 was paid ignoring IRDA regulations. The appellants are befooliong the customers and the information in the proposal form was filled by the executives of the appellants and was not verified to the effect that the respondent has the annual income of Rs.30.00 lacs as shown in the proposal form and he can pay Rs.2.5 lacs annually. The respondent was neither medically examined nor his PAN card was taken. As per IRDA regulations, the insurance companies are liable to refund the premium after nominal deductions. No terms and conditions were disclosed. A legal notice dated 14.02.2011 was served upon the appellants. Due to unfair trade practice adopted by the appellants, the money received by the respondent after selling his land, has gone waste.
6. It was prayed that the appellants be directed to refund the premium amount of Rs.2.50 lacs along with interest @ 18% p.a. from the date of deposit till payment and to pay Rs.50,000/- as compensation and Rs.21,000/- as litigation expenses.
7. In the written reply filed on behalf of the appellants, preliminary objections were taken that the complaint is false and frivolous and is liable to be dismissed U/s 26 of the Act. No cause of action is disclosed. The complaint does not disclose any consumer dispute under the Act and there is no deficiency in service or negligence on the part of the appellants. Under the policy terms, the respondent was required to make payment of the premium First Appeal No.913 of 2011 4 regularly on due dates or during the grace period, but he failed to pay the premium on due date on account of his own fault and allowed the policy to be foreclosed. The respondent is a Graduate and received the policy documents. As per Clause 5.1 of the policy, the premiums are payable without any obligation on the company to issue a notice for the same (although in this case, notices were sent to the respondent). If the policy holder fails to make payment of the premium on due date or during grace period, the policy will lapse and no benefit is payable to the policy holder. In the present case, the policy bearing no.07073923 was issued by the appellants in the name of life assured, commencing from 20.12.2007 with yearly frequency for paying the premiums. Only one premium was paid under the policy and all subsequent premiums were not paid and as per Clause-10 read with clause-4 of the terms and conditions of the policy, the policy was foreclosed and a cheque bearing no.048880 for Rs.35,497-86 drawn on ICICI Bank was sent to the respondent which was received and encashed by him. As such, no benefit can be claimed by the respondent under the policy in question.
8. The policy is a legal contract between the policy holder and the appellants and the parties to the contract are bound by its terms and conditions. Clause-10 of the policy terms and conditions deals with foreclosure of the policy and it says that if full premium for three policy years is not paid and policy is not revived within the period of 2 years from the due date of first unpaid premium, then the surrender value as described in clause- 4 will be paid at the end of third policy year or at the end of reinstatement period, whichever is later. As per clause 4-Surrender, the policy acquires a surrender value after the payment of full premium for the first policy years and would be payable only after the completion of three policy years or whenever the policy is surrendered thereafter. The surrender value payable is the fund value after deducting surrender charges @ 75% when the premium has been paid only for one year. Since, in this case the respondent paid only one premium of Rs.2.50 lacs and failed to pay the remaining premiums and then First Appeal No.913 of 2011 5 failed to revive his policy, thus, the policy was foreclosed and a sum of Rs.35,497-86 has been paid to him through a cheque which has been got encashed.
9. The policy in question was issued considering the information and declaration made in proposal form to be true and correct. The policy certificate along with policy documents in original was dispatched to the respondent on 01.01.2008 and was duly received by him on 03.01.2008. The respondent has not withdrawn the policy within the 'free look period' of 15 days and thereby agreed to the policy and its terms and conditions. The amount was paid to the respondent as full and final payment and nothing is left payable under the policy. The legal notice was received from the respondent which the appellants replied vide letter dated 12th March, 2010.
10. On merits, similar pleas as raised in preliminary objections were repeated and denying allegations of the complaint, it was prayed that the complaint may be dismissed with costs.
11. Parties led evidence in support of their respective contentions by way of affidavits and documents.
12. After going through the documents and material placed on file and after hearing the learned counsel for the parties, the learned District Forum observed that the appellants never issued any notice to the respondent, either before arrival of the due date of second premium i.e. 20.12.2008 about any premium due and that its non-payment by the due date or within the grace period would result in its lapse, or thereafter that the policy had actually lapsed due to non-payment of second premium. The appellants have not tendered affidavits of Jagdish Singh or Hardev Singh to prove that proper advice was given to the respondent and that the terms and conditions of the policy were disclosed and explained. The respondent was only interested in 'one time investment'. Mere encashment of the amount of cheque of Rs.35,497-86 by the respondent does not in any way estop him from bringing to the notice of the Forum the unfair trade practice and First Appeal No.913 of 2011 6 deficiency in service on the part of the appellants, and allowed the complaint, directing the appellants to refund to the respondent his premium amount of Rs.2.50 lacs minus the amount of Rs.35,497-86 already refunded to him, along with interest thereon @ 9% p.a. from the date of payment i.e. 20.12.2007 till the date of actual refund. Rs.5000/- were awarded as costs of litigation.
13. Aggrieved by the impugned order dated 02.05.2011, the appellants have come up in appeal.
14. We have gone through the pleadings of the parties, perused the record of the learned District Forum and have heard the arguments advanced by the learned counsel for the parties.
15. The District Forum has passed a very detailed and speaking order. The appellants seems to be interested only to receive the first premium of Rs.2.50 lacs and the conditions of the policy were never explained to the respondent. This fact stands proved from the fact that the appellants never bothered to comply with the statutory provisions of Section-50 of the Insurance Act as well as the guidelines of Unit Linked Insurance Products. Section-50 of the Insurance Act is reproduced as follows:-
"50. Notice of options available to the assured on the lapsing of a policy:- An insurer shall, {before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable, but not paid}, give notice to the policy-holder informing him of the options available to him {unless these are set forth in the policy}".
16. The guidelines on Unit Linked Insurance Products also provide that in case the policy lapses, the insurer shall give an opportunity to the policy holder to revive the same. Clause 5.7 of Unit Linked Insurance Products provides as follows:-
"Insurer shall give an opportunity to the policyholder to revive within the period allowed for revival as per policy conditions". First Appeal No.913 of 2011 7
17. Hon'ble National Commission in case "Life Insurance Corporation of India & Ors. Vs Bimla Devi", III(2009)CPJ-370(NC) also observed that U/s 50 of the Insurance Act, the insurer is expected to issue notice, giving options available to the insured.
18. The appellants in the present case, have neither complied with the provisions of Section-50 of the Insurance Act, nor with the guidelines of the Unit Linked Insurance Products. Even the principle of natural justice demands that notice should have been issued to the respondent to pay the remaining amount of premium after adjusting the excess amount within a stipulated period, failing which the policy could lapse, but that was also not done.
19. The respondent in Para-3 of his complaint mentioned that he was approached by Jagdish Singh, Advisor of the appellants at the instance of Hardev Singh, who was working with appellant no.3 and said Jagdish Singh insisted upon the respondent to invest the money in the plan offered by the appellants, by showing him high dreams about the 'one time investment plan'. In the reply to this Para, the appellants nowhere specifically denied that said Jagdish Singh, Advisor have not approached the respondent at the instance of said Hardev Singh and he was insisted to deposit in 'one time investment plan'. Affidavits of Jagdish Singh and Hardev Singh were not tendered to rebut these allegations, as observed by the District Forum, to prove that they advised the respondent properly. The impugned order is valid and legal and there is no ground to interfere with the same.
20. Sequel to the above discussion and the law laid down above, the appeal filed by the appellants is dismissed and the impugned order under appeal dated 02.05.2011 passed by the District Forum is affirmed and upheld. No order as to costs.
21. The appellants had deposited an amount of Rs.25,000/- with this Commission at the time of filing of the appeal and another sum of Rs.1,19,000/- vide receipt dated 02.08.2011 in compliance of the order dated First Appeal No.913 of 2011 8 July 12, 2011 passed by this Commission. Both these amounts with interest accrued thereon, if any, be remitted by the registry to the respondent/ complainant by way of a crossed cheque/demand draft after the expiry of 45 days under intimation to the learned District Forum and to the appellants.
22. Remaining amount as per order of the District Forum shall be paid by the appellants to the respondent/complainant within 45 days of the receipt of copy of the order.
First Appeal No.914 of 2011:-
23. Similarly in First Appeal No.914 of 2011 (The Manager, ICICI Prudential Life Insurance Company Limited & Ors. Vs Harcharan Singh), the respondent received a handsome amount after selling his land and the respondent was approached and allured by Jagdish Singh, Advisor of appellants at the instances of Hardev Singh, who was working with appellant no.3, to invest the money in the plans offered by the appellants. Believing the sweet words of said Jagdish Singh and assurances to receive the refund of his premium along with interest ranging between 15% to 18% p.a. with benefits of policy, the respondent paid an amount of Rs.7,00,000/- to the appellants towards 'one time investment' vide receipt dated 24.12.2007. In the year 2010, the respondent when approached appellant no.3 to get the benefits of the policy, he was shocked to know that he will get only the surrender value after huge deductions upto 66% of the amount paid. The respondent is only 10th pass and can only sign in English. He cannot understand the technical language of proposal form and said Jagdish Singh obtained his signatures without disclosing the terms and conditions of the policy. The respondent was not medically examined nor his PAN card was taken or verified to assess his annual income before issuing the policy. As per IRDA regulation, the insurance companies are liable to refund the premium after nominal deductions. It was prayed that the appellants be directed to refund the premium amount of Rs.7,00,000/- lacs along with interest @ 18% First Appeal No.913 of 2011 9 p.a. from the date of deposit till payment and to pay Rs.1,000,000/- as compensation and Rs.21,000/- as litigation expenses.
24. The complaint was contested by the appellants by filing written reply on the similar lines of their reply filed in First Appeal No.913 of 2011 (The Manager, ICICI Prudential Life Insurance Company Limited & Ors. Vs Satinder Singh).
25. The District Forum allowed the complaint, directing the appellants to refund to the respondent his premium amount of Rs.7,00,000/- lacs along with interest thereon @ 9% p.a. from the date of payment i.e. 24.12.2007 till the date of actual refund. Rs.5000/- were awarded as costs of litigation.
26. In view of the reasons and discussions held in First Appeal No.913 of 2011 (The Manager, ICICI Prudential Life Insurance Company Limited & Ors. Vs Satinder Singh), the First Appeal No.914 of 2011 (The Manager, ICICI Prudential Life Insurance Company Limited & Ors. Vs Harcharan Singh) is dismissed and the impugned order under appeal dated 02.05.2011 passed by the District Forum is affirmed and upheld. No order as to costs.
27. The appellants had deposited an amount of Rs.25,000/- with this Commission at the time of filing of the appeal and another sum of Rs.4,40,000/- vide receipt dated 02.08.2011 in compliance of the order dated July 12, 2011 passed by this Commission. Both these amounts with interest accrued thereon, if any, be remitted by the registry to the respondent/ complainant by way of a crossed cheque/demand draft after the expiry of 45 days under intimation to the learned District Forum and to the appellants.
28. Remaining amount as per order of the District Forum shall be paid by the appellants to the respondent/complainant within 45 days of the receipt of copy of the order.
First Appeal No.913 of 2011 10
29. The arguments in both these appeals were heard on 16.08.2012 and the orders were reserved. Now the orders be communicated to the parties.
30. The appeals could not be decided within the stipulated timeframe due to heavy pendency of court cases.
31. Copy of this order be placed in First Appeal No.914 of 2011 (The Manager, ICICI Prudential Life Insurance Company Limited & Ors. Vs Harcharan Singh).
(Inderjit Kaushik) Presiding Member (Baldev Singh Sekhon) Member August 27, 2012.
(Gurmeet S)