State Consumer Disputes Redressal Commission
Superintendent Of Post Offices, ... vs Jamshed Khan on 5 September, 2008
JHARKHAND STATE CONSUMER DISPUTES REDRESSAL COMMISSION, RANCHI JHARKHAND STATE CONSUMER DISPUTES REDRESSAL COMMISSION, RANCHI FA no.102 of 2008 Against order dated 30.1.2008, passed by District Consumer Disputes Redressal Forum, Garhwa, in Consumer Complaint no.3 of 2007. Superintendent of Post Offices, Palamu, Daltonganj and others - Appellants Vrs. Jamshed Khan - Respondent For Appellants : Mr.Chitranjan Kumar Jha, Advocate. For Respondent : Mr.Pravin Kumar Pandey, Advocate. Before: Justice Gurusharan Sharma- President Mrs. Kalyani Kar Roy- Member
And Mr.Satyendra Kumar Gupta-Member Judgment S.K.Gupta: The opposite parties are appellants before us. They have challenged order dated 30.1.2008, passed by District Consumer Disputes Redressal Forum, Garhwa, in Consumer Complaint no.3 of 2007. By the impugned order the appellants (Postal Department) were directed to make payment of balance amount, which was due after subtracting Rs.27,138/-, already paid from the principal amount, to the complainant-respondent. They were also directed to pay Rs.2,000/- as compensation with the condition that if the order was not complied with within 25 days they would be liable to pay interest @ 7% on the said amount.
2. The complainant-respondent had taken one Postal Life Insurance Policy for assured sum of Rs.2,00,000/- for which monthly premium of Rs.1,150/- was to be paid. The policy was of EA-58 type. It was accepted on 20.12.2002 and its maturity date was 20.12.2017. The premium was regularly paid for the period from December, 2002 to June, 2006, for 43 months. Thus he paid total amount of Rs.44,850/-. Afterwards he (the complainant) could not pay the premium and continue the policy. He was in need of money. Therefore, he made application for premature closure of the policy and for payment of the deposited amount with interest. But after four months he was paid only Rs.27,138/-.
3. The complainant-respondent claimed Rs.23,094/- as compensation for loss and Rs.10,000/- as compensation of mental agony.
4. The grounds of appeal, interalia, are that the District Forum failed to appreciate term no.14 of contract and that the appellants decided the case of the subscriber (complainant) as per rule, in accordance with letter no.29-14/98-L1 dated 18th November 2003 of the Directorate of Postal Insurance.
5. Photostat copy of the policy in question, is annexure 4 of the Memorandum of appeal. Terms of contract are mentioned on the overleaf of the policy. Term no.14 is quoted below:-
Surrender/Paid up value: An Endowment Assurance policy may be surrendered for an immediate payment in cash provided the said policy is in force and has completed 3 years from the date of commencement/acceptance. Surrender/paid up quotations are liable to change from time to time. Admittedly, the policy was in force and the complainant paid premium regularly for more than 3 years, from December, 2002 to June, 2006. Therefore, surrender of the policy was as per terms of contract and it is not in dispute. Another aspect of term no.14 of the contract as stated above is that surrender/paid up quotations are liable to change from time to time.
6. The complainant-respondent paid 43 installments of Rs.1,150/-, making total of Rs.49,450/- (in the complaint wrongly it has been mentioned as only Rs.44,850/-). It is the case of the appellants that on premature surrender of the policy, paid up value has been correctly calculated as Rs.27,138/-, which has been paid to the respondent. Therefore, they were not deficient in their service.
7. Photostat copy of letter no.29-14/98-L1 dated 18th November 2003 of the Directorate of Postal Life Insurance, addressed to officers of Postal Department including all Heads of Circles shows that it was decided that the surrender cases will be regulated as under:-
(i) Surrender of a policy will not be allowed unless payment of premium for 36 months continuously has been made as per Rule 34 of POIF Rules.
(ii) If a policy is in full force and is surrendered before completion of 5 years, no bonus will be payable on the paid up value.
(iii) If a policy is surrendered after 5 years and the policy is in full force till the date of surrender, then proportionate bonus on paid up value will be paid in addition to paid up value.
(iv) If a paid up policy is surrendered i.e. if policy is not in full force and has been made paid up/auto paid up only proportionate bonus will be payable on the paid up value after 5 years and no bonus will be paid thereafter.
From the above rules, it is obvious that the respondent is not entitled to bonus on the paid up value.
8. It has been argued on behalf of the appellants that the amount of surrender value depends on paid up value attained by the policy on the basis of premium payable with reference to the terms of policy and sum assured multiplied by surrender factor for different age on the date of the surrender and corresponding factor for the relevant category and claim was settled according to the said rule. It has also been contended that a subscriber after paying premiums continuously for more than three years may, prematurely close his policy, but if such closure is before completion of 5 years, bonus will not be paid and if the remaining years for making payment of premium at the time of closure are more, less surrender value than the deposited premium is payable. And, this is the reason that the respondent was paid less amount than the amount deposited by him.
9. Photostat copy of letter no.25-06/98-L1 (Vol.1) dated 27.01.2006 of Directorate of Postal Life Insurance has also been filed on behalf of the appellants. The letter contains guidelines relating to surrender factor and method of calculation of Surrender value. Para 3 (d) and 3(e) are quoted below:-
(d) The reduced sum assured shall be calculated by multiplying the sum assured with the number of installments paid and dividing the same with the total number of premiums to be paid,
(e) The surrender value shall be calculated by multiplying the sum of reduced sum assured plus the proportionate bonus, if any, with the surrender factor as applicable on the attained age as on the date of surrender of the policy.
10. A chart of calculation of surrender value of the policy has been filed by the appellants. The chart shows as follows:-
(A) Policy was taken at the age of 43 years with class EA= 58 Policy was payable up to 15 years= 180 months Policy was in force from December 2002 to June 2006= 43 months Paid up value= Sum Assured x No. of Premium paid = 0200000 x 43 = Rs.47,777.78.No. of premiums payable 180
(B) Bonus admissible Nil (C) Surrender factor on the date of surrender is calculated as per POIF (Post Office Insurance Fund) Rules Date of application Date of birth = 29.08.2006 10.10.1960 = 45 years 10 months 19 days i.e. 45 years 11 months.
Surrender factor for 45 years 11 months = 0.545 + 0.0229 = 0.568 (Surrender factor has been mentioned in a Chart of the Brochure of the Postal Department, which has been filed).
Surrender value= (Paid up value + Bonus) x Surrender factor = Rs.(47,777.78 + Nil) x 0.568 = Rs.27,137.77 = Rs.27,138/-(rounded up) The above calculation appears to be correct.
11. Therefore, we are of the opinion that in view of the existing rules of the Postal department, Rs.27,138/- was correctly paid to the respondent on premature closure of his policy and the appellants were not deficient in service on this score. Accordingly, the impugned order for payment of the balance amount, which is to be arrived at by subtracting the amount already paid from the total amount deposited, is erroneous. Hence, the impugned order is fit to be set aside.
12. However, this is admitted position that after four months from making application for premature closure of the policy, the respondent was paid the surrender value amounting to Rs.27,138/-. Date of application has been taken to be 29.8.2006 by the appellants (complainant-respondent has not mentioned the specific date of application). And, payment of surrender value has been made after four months as claimed by the respondent. The specific date of payment is not clear, but the appellants have not refuted the claim of the respondent in this regard. No explanation of such delay in making payment, has been given by the appellants. According to the rule of the Postal Department itself, for immediate payment in cash, premature closure of the policy is allowed. Therefore, the delay in making payment, without reasonable cause, is certainly deficiency in service on the part of the appellants. Hence, we direct the appellants to pay interest @ 9% on Rs.27,138/-from the date of application before Postal Department till the date payment was made.
13. In the circumstance, therefore, the impugned order is set aside, with the direction to make payment of the interest as indicated above.
14. The appeal is accordingly, allowed to the extent indicated above. The parties will bear their own costs of appeal.
The 5th September, 2008.
Ranchi.
Member Member President