State Consumer Disputes Redressal Commission
1.The Manager, M/S. Hdfc Standard Life ... vs A.Vimal Menon, S/O Mr.V.B.R.Menon, ... on 14 September, 2023
Daily Order IN THE TAMIL NADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI. Present: Hon'ble Thiru. Justice R.SUBBIAH ... PRESIDENT F.A. No.321 of 2019 (Against the Order, dated 02.08.2019, in C.C. No.447 of 2015, on the file of the DCDRF, Chennai-South) Orders pronounced on: 14.09.2023 1.The Manager, M/s.HDFC Standard Life Insurance Company Ltd., No.37/38, Ramana Towers, 2nd Floor, Vekatanarayana Road, T. Nagar, Chennai 600 017. 2. The Manager, HDFC Bank Limited, Valasaravakkam Branch, No.7, Alwarthirunagar, Arcot Road, Valasaravakkam, Chennai 600 087. ... Appellants/OPs-1 & 2 Vs. A.Vimal Menon, S/o.V.B.R. Menon, No.4B, Brook Dale Apartments, No.12, P.T. Rajan Salai, K.K. Nagar, Chennai 600 078. ... Respondent/Complainant For Appellant : M/s.P.D.Selvaraj For Respondent : M/s.V.B.R.Menon This First Appeal came up for final hearing on 31.08.2023 and, after hearing the arguments of the counsels for the parties and perusing the materials on record and having stood over for consideration till this day, this Commission passes the following:- O R D E R
R.Subbiah, J. - President .
Aggrieved by the Order, dated 02.08.2019, passed by the DCDRF, Chennai-South, in C.C. No.447 of 2015, in partly allowing the Complaint filed by the respondent herein as complainant and consequently, directing OP Nos.1 and 2 therein/appellants herein/HDFC Standard Life Insurance Co. Ltd. and HDFC Bank to convert the endowment policy of the complainant as a Single Premium Policy and to pay to him a sum of Rs.20,000/- towards compensation for the mental agony said to have been suffered, besides a costs of Rs.10,000/-, the Insurance Company & Bank/OPs-1 and 2 have come up with this appeal.
2. The crux of the Complaint is as follows:-
The complainant, who is said to be an employee of M/s.Sleeves India Automotive Limited, Chennai-89, had purchased a life insurance policy bearing No.15958536 from the 1st OP under the 'HDFC Life Sampoorn Samridhi Scheme' and the annual premium payable being Rs.4,63,905/-, the first premium was paid by M/s.Sleeves India/Employer from their Current Account on 22.03.2013 on condition that they would pay the annual premium every year as per their Rewards Program and that the policy would stand initially assigned to the name of the Employer for 3 years and thereafter, it would be re-assigned back by the Employer to the name of the employee-complainant, free of any claim.
Before taking the Policy, the complainant had discussed with the OPs about the contingency of the employer not paying the policy premium under the Rewards Programme and he was promised and assured by them that, in such an event, he could either get refund of the premium amounts already paid or get the Policy converted into a single premium type.
While so, due to unforeseen reasons, the Employer of the complainant/Company underwent liquidation process on 06.08.2014 and payment of further annual premiums had become impossible on the part of the Employer; as such, the insurance contract had become void due to impossibility of performance and thereupon, the complainant requested the OPs either to refund the initial premium amount or to treat the policy as a single premium type. The employer also, by a letter dated 03.08.2014, addressed the 1st OP, seeking to cancel the policy and refund the initial premium by citing the ground that the company is undergoing a voluntary winding-up procedure. On the strength of a notice of re-assignment issued in his favour by his Employer, the complainant requested the OPs for re-assignment of the policy in his favour, but in vain. By letter, dated 19.08.2014, the 1st OP rejected the requests of the complainant for cancellation of the Policy or its conversion into a single premium type.
Hence, seeking a direction to refund the premium amount together with accrued bonus and to pay a sum of Rs.3 lakh as compensation for the mental stress & agony resulted to him due to deficiency of service, the complainant filed the complaint before the District Forum.
3. Per contra, in the written version filed by the OPs, they sought for dismissal of the case on the ground that the complaint is vexatious in nature and a clear abuse of the CP Act, by inter alia stating thus:-
The relationship between the parties is governed by the terms of the policy which is a concluded and binding contract, where-under, in consideration of the annual premium received, the 1st OP had insured the complainant's life for Rs.81,38,083/- with other applicable benefits, for a period of 20 years, subject to payment of annual premium of Rs.4,50,000/- upto 22.03.2023. The premium having been paid by the employer and the policy itself having been assigned by the complainant in favour of the employer, the claim for refund by the complainant is a clear evidence to show the frivolous nature of the complaint. No assurance was ever given by the OPs or their representatives to the effect that, in the event of failure on the part of the Employer in paying the premium, the policy would be closed and the entire premium amount would be refunded or the policy would be converted into a single premium type.
There cannot be any frustration of contract or impossibility of its performance since the contract was performed for 1 year from 22.03.2013 to 22.03.2014 and thereafter, the policy lapsed due to default in payment of premium, which cannot be construed as frustration of contract from the inception, nor it gives a legal basis in favour of the complainant to claim any refund. The default legally entails lapse of the insurance contract and the consequences arising there-from cannot be avoided by pleading liquidation. Only in the event of paying a minimum of 3 year premium, the insured is eligible for claiming the minimum surrender value which had not arisen in this case since no premium was ever paid after the first-initial premium.
By denying all other allegations and stating that no cause of action is shown to have arisen to maintain a consumer claim, the OPs ultimately sought for dismissal of the Complaint.
4. In order to prove the claim and counter-claim, both sides filed their respective proof affidavits and, while on the side of the complainant, 19 documents were filed as Exs.A1 to A19, the 1st OP filed 11 documents as Exs.B1 to B11.
The District Forum, in its impugned order, by referring to Clause-12 of the policy dealing with "Cancellation in the Free-Look Period" and by citing the letters under Exs.B10 and B11, held that the said letters seeking surrender of the policy and refund were issued within the one month period as given under Clause-12 and hence, the OPs are liable to refund the amount. By further holding that, as per Ex.B2, the OPs can also convert the policy into a single premium policy and that there is no scope for lapsed/paid-up policies or reinstatement as contended by the OPs since, within one month of availing the policy, the complainant and his employer had issued a letter surrendering the policy and claiming refund or conversion, the Complaint was ultimately allowed in part by issuing the aforementioned direction to the OPs. Questioning the correctness of the said order passed by the District Forum, the OPs are before us with this Appeal.
5. Heard the learned counsels appearing for the parties, who made their respective submissions elaborately by referring to the facts & averments from the complaint and the written version.
6. It is the contention of the Insurance Company/appellants that this is a simple case of default in payment of the 2nd premium that fell due on 22.03.2014. Neither the complainant nor his employer is a rustic; rather, both of them know each and every detail about the Policy, in particular the crucial aspect thereof that, for the benefit of continued coverage, after commencement of the policy with the initial payment of premium, the subsequent annual premiums shall be paid each year on the stipulated date and that, if any premium remains unpaid 15 days after the due date during the first 3 years of the policy, the policy will be altered to a lapsed status and no benefits would be payable. As per the terms of the policy, even a 'minimum surrender value' cannot be claimed by the insured if he fails to pay the premium for a continuous period of three years. While so, after the first premium, neither the complainant nor his employer came forward to pay the 2nd premium and they rendered the policy lapsed by their conduct of wilful default. As their claim for refund of the sum paid towards the first premium is not admissible as per the insurance contract, such an ill-suited claim was rightly rejected, against which, the complainant filed a frivolous complaint on a vain ground that a valid contract had become subsequently void due to impossibility of performance or frustration by citing the liquidation procedure, which had nothing to do with the insurance policy, and the District Forum also, without properly sifting the records and understanding the scope of the free-look period that was in vogue only for thirty days from the date of receipt of the Policy, erroneously allowed the claim as if it was made within the free-look period, which is factually incorrect and hence, the impugned order that has been passed in total disregard to the factual particulars and contrary to the terms & conditions of the Policy is liable to be interfered with, or else, not only the interests of the Insurance Company will be highly prejudiced but also, an endorsing order will only set a bad precedent.
7. Per contra, learned counsel appearing for the respondent/complainant, while arguing in support the impugned order, submits that, due to unforeseen reasons & circumstances that went beyond the control and anticipation of the employer, the company had slipped into liquidation and, as a result thereof, the employer, in whose favour, the policy was assigned for the reason that they would pay the premium for the first three years and thereafter, would re-assign it in favour of the employee/complainant without any claim whatsoever, was driven to a position of complete inability to pay any further premium. According to him, owing to the supervening event/liquidation process which obviously rendered performance of the insurance contract 100 per cent impossible, the doctrine of frustration had come into play in terms of Section 56 of the Indian Contract Act, 1872, which is based on the maxim "les non cogit ad impossibilia", meaning - law will not force or compel a man to do what he cannot possibly perform humanely. As a consequence, in terms of Section 65 of the said Act, which revolves around the principle of restitution, the Insurance Company is under an obligation to restore the benefits received by them to the complainant. Therefore, the complainant has well demonstrated here that the doctrine of frustration has come into play on the ground that the Company/employer had to suddenly undergo the process of winding up.
Secondly, before taking the policy, when the complainant himself had conveyed his apprehension about any probable failure on the part of the company/employer in paying the premium in future, the representatives of the OPs assured him that, in such a situation, he would either be refunded the premium paid or else the policy itself would be converted into a single premium type. But, now, they deny of making any such representation which is nothing but a clear instance of unfair trade practice. At any rate, various factors viz., the scope of the policy, provisions under the Contract Act regarding the doctrine of frustration & the principle of restitution, option already open to the Complainant for seeking refund of the premium or conversion of the policy into a single premium type, etc. were all taken due note of by the District Forum for holding against the OPs and allowing the appeal in part; hence, the well-considered order passed by the said Forum does not call for any interference and consequently, the appeal is liable to be dismissed as devoid of any merit, learned counsel pleaded ultimately.
8. In the light of the rival submissions advanced on either side, the issues that arise for consideration in this first appeal are:-
i) whether the complainant, whose policy admittedly lapsed for failure in payment of the 2nd premium on the due date, is justified in invoking the doctrine of frustration for getting refund of the initial premium paid for a 20 year endowment policy?
ii) Whether the findings of the District Forum by referring to clause-12 of the Policy and the letters under Exs.B10 and B11 to hold that the option for cancellation was exercised by the complainant and his employer well within the free-look period as specified in the said clause and that the OPs are liable to refund and the other finding based on Ex.B2 that the OPs can convert the policy into single premium type, are all factually correct and legally sustainable?
iii) Is there any scope under the terms and conditions of the policy to claim full refund of the only initial premium paid, when the Policy is tailored with an in-built clause of guaranteed minimum surrender value only if premium has been paid for a continuous period of 3 years?
9. Before delving into issue No.1, let us find answers to the following questions together for the purpose of factual clarification -
I. As to who actually paid the initial/1st premium?
II. what is the duration-cum-effect of the assignment of the policy by the complainant in favour of his employer/company?
III. what were the circumstances prevalent on 22.03.2014/the due date for payment of the 2nd Premium?.
In this regard, a side-by-side comparison between the averments in the complaint and the details available in the records reveals the following:-
Regarding payment of Rs.4,63,905/- towards the first premium, it is stated in the complaint thus:-
" 1. ..... The above payment was paid by Cheque No.749334 dated 22.03.2023 drawn on HDFC Bank, Valasaravakkam Branch, from the Current account of the Complainant's Employer, M/s.Sleeves India Automotive Pvt. Ltd., ....."
While so, at para No.3 of the same complaint, in respect of payment, it is stated otherwise as follows:-
" 3. ... the Complainant had purchased the policy and consequently had paid the first premium amount of Rs.4,63,905/- vide payment receipt issued by the first Opposite party, dated 20.05.2013."
Thus, at one place, it is claimed by the complainant that the first premium was paid by his employer from their Current Account and, at the other place, it is stated as if the employee/complainant himself had paid the 1st premium and took the policy. If the above second statement/averment in the complaint is taken to be correct, in the absence of any single document about the reward programme of the Company/Employer and also about the actual position held by the complainant thereat, assignment of the policy by him in favour of the company would appear to be formal with some hidden understanding and thereby the other issues viz., the company undertaking the liability to pay the premium for the reward programme period, liquidation of the company, doctrine of frustration, etc. would all become absolutely irrelevant.
On the face of the above averment, a reasonable doubt would arise as to why the complainant should also state at the inception of the compliant with proper details that the payment for the first premium was made through the company's current account. In this regard, the letter under Ex.A12, dated 20.09.2014, seemed to have been addressed by the Director of Sleeves India/Employer of the complainant to the HDFC Bank, brings to surface certain core details about the actual status of the complainant in the company and, from the same, the background in which two different claims regarding one single payment have been made by the complainant in the averments could be well discerned:-
" Dear Sir, .... The Sleeves India group of Companies, which are owned by me and my family members, presently operate over 15 Company Current Accounts, 20 Savings Accounts, several Fixed Deposits and a NRI, NRO accounts with your Bank branches at Valasaravakkam Branch ....
.... I am attaching the First Premium receipt of the above policy in which the company is mentioned as the Policy Holder with my son, Mr.Vimal Menon, our Employee, as the life assured. Subsequently, they have arbitrarily changed our status as an Assignee and my son as the Policy Holder. This was illegal and improper as the premium amount was paid from our Company. "
The above letter shows the following:-
the company was owned by the Director/Author of Ex.A12 and his family members;
the complainant, being the son of the Director and a part of the family, is therefore obviously a co-owner of the company; and yet, he is also shown as a mere employee without revealing his actual status of employment or the position held by him.
Therefore, the above letter makes it clear that the complainant is none else than the son of the Director and the company is owned by the Director and his family members and the said aspect is very specifically spelt out with the wordings "The Sleeves India group of Companies, which are owned by me and MY FAMILY MEMBERS.". As such, although, for name-sake or some hidden purposes, he is projected as an employee, it is because of the reason that the complainant was also dealing with the affairs of the company as a co-owner, he averred probably in both ways that the payment was made by him as well as by the company. Therefore, it is apparent that he willfully suppressed his actual role and involvement in the affairs of the company and portrayed himself as a mere employee - perhaps, with a view to shore up his consumer claim.
Regarding assignment of the policy, at para No.2 of the complaint, it is stated thus:-
" 2. .... the above insurance policy was taken on condition that the Complainant's Employer would pay the annual premium amounts every year into the policy as per a rewards program which the Employer and the Opposite Parties had with the Complainant. As per the terms of the insurance policy, the above policy was required to be initially assigned to the name of Complainant's Employer for 3 years and after that it would be re-assigned back to the name of Complainant, free of any claim."
In this regard, the following clauses from the Annexure-C/declaration given by the complainant/employee under Ex.B-7 are relevant to be quoted below:-
" a. I am aware that the company has agreed to pay the premium for the life insurance policy in my name under the "long term reward program". Please issue the premium receipt for all premiums paid by the company on my behalf in favour of the company.
b. I am aware that the Company is going to pay the premium on behalf of me only if the policy is assigned in the name of the company at the time of conversion.
c. I am aware of the minimum lock in period of employment which forms the basis of the insurance policy and that the policy will be absolutely assigned in my favour upon completion of the said minimum lock in clause.
d. I FURTHER UNDERSTAND THAT THE POLICY WILL NOT BE RE-ASSIGNED TO ME BY THE COMPANY DURING THE MINIMUM LOCK IN PERIOD. In case of termination of employment for reasons other than death, the company will surrender the policy to HDFC Standard Life Insurance co Ltd for the then surrender value (if any) or absolutely reassign the policy to me as part of the terminal benefits at the sole discretion of the company"
A conjoint reading of para No.2/extracted portion from the complaint, indicating the period of assignment in favour of the Employer as 3 years, and the above quoted contents from the Declaration makes it clear that -
the period of assignment and the 'long term reward program" seemingly go together for 3 years and hence, the MINIMUM LOCK IN PEROD OF EMPLOYMENT, which forms the basis of the policy, is 3 years.
the policy cannot be re-assigned to the complainant during the said MINIMUM LOCK-IN PERIOD.
In the event of termination of employment, the company will either surrender the policy to the insurer for the then surrender value IF ANY or absolutely re-assign the same to the employee/complainant as part of the terminal benefits.
Now, let us look at the circumstances that existed as on 22.03.2014, when the 2nd premium payable had become due. In this regard, the first ever communication addressed by the complainant on 17.04.2014, marked as Ex.B10, which is although later in point of time, shall also be looked into and the relevant contents thereof are extracted below:-
" I had taken the above policy and had paid the First Premium of Rs.4,63,095/- (including Taxes) on 22.03.2013 against which you had issued me the policy certificate. I had subsequently assigned the policy in favour of M/s.Sleeves India Automotive Pvt. Ltd. on 21.05.2013.
As I have decided to quit the job with M/s.Sleeves India Automotive Pvt. Ltd., due to personal reasons, I am unable to continue the above policy and hence I have not paid the second premium amount of Rs.4,50,000/- which had fallen due on 22.03.2014. You may kindly consider my case sympathetically and arrange to refund the first premium amount of Rs.4,50,000/- which was paid on 22.03.2013 either to me or to M/s.Sleeves India Automotive Pvt. Ltd., and confirm closure of the above policy at the earliest."
Obviously, the said letter shows that copy thereof is also marked to the Company/Employer. While so, on the very next date, under Ex.B11/surrender letter, dated 18.04.2014, the Company makes the following request to the OPs:-
"... As Mr.A.Vimal Menon has decided to quit our company w.e.f. 01.05.2014 for personal reasons, we are unable to continue with the above policy and request you to close the same and pay us the First Premium amount of Rs.4,50,000/- which was paid on 22.03.2013 and confirm to us at an early date"
Having regard to the requests made in the subsequent letters, the circumstances that existed on the due date for payment of the 2nd premium are:-
The Company was not undergoing any liquidation procedure and it was very much functional;
The complainant was in the so-called employment as he had not resigned yet at that time;
There was a conscious failure on the part of the company to honour the commitment under the assignment in paying the 2nd premium during the minimum lock-in period.
While so, it is not known as to how, in the middle of the minimum lock in period, without any valid re-assignment of the policy in favour of the complainant by the company and in the absence of any contingency in the form of resignation or termination of the employee, the complainant sought through the letter dated 17.04.2014 for refund and interestingly, on the very next date/18.04.2014, the company also comes up with a similar request seeking refund in their favour. One another aspect is, the company, by virtue of the assignment, had taken upon itself the liability to pay the premium, which means the complainant need not pay the premium during the lock-in period; while so, he states in Ex.B10 that he had not paid the second premium which fell due on 22.03.2014. But, since it has become apparent now that the company itself was run by the family of the complainant, such inordinate and self-willed actions would give no surprise. Anyhow, the letters under Exs.B10 and B11 reveal that both the complainant as well as the company, for their own purposes and reasons, deliberately avoided paying the 2nd premium.
10. In this backdrop, if we examine the 1st issue, since the company was functional as on 22.03.2014/the due date for the second premium, as per its commitment and assurance under the assignment, it ought to have honored such assurance by promptly paying the second premium. As per Ex.A12/letter of the Director, the company/Group owned by him and his family members has 15 COMPANY CURRENT ACCOUNTS, about 20 SAVINGS ACCOUNTS, SEVERAL FIXED DEPOSITS and also NRI / NRO ACCOUNTS with the OPs. Yet, the company slept over its liability to pay the premium due and, after committing the default, it came up with a vague request under Ex.B11 letter to close the policy and pay back the first premium amount, one day after the letter under Ex.B10 written by the complainant with an almost similar request, conveniently forgetting the fact that such a request is not entertainable at all under the terms and conditions of the policy.
To his part, being a co-owner of the company, the complainant could have also paid the said premium, for, at para No.4 of the complaint, he has boasted about himself that he is a PREMIUM IMPERIA ACCOUNT HOLDER with the 2nd OP. It is of common knowledge that, to hold a premium imperia account with the HDFC, the customer should maintain a minimum average Monthly Balance of Rs.10 Lakhs in his Savings Account. That being so, when the company itself was very much functional on the due date and the complainant was also affluent enough to pay the premium, the conduct of the complainant in posing himself as the employee and that of the company in its deliberate default to honor the assurance under the reward programme and their further conduct in writing the letters under Exs.B10 and B11 on 17.04.2014 and 18.04.2014 respectively, expressing/admitting their inability to pay the premium despite resources and in making parallel claims for closure/surrender of the policy and seeking refund either in favour of the employee or the company only shows that they resorted to a clear hide and seek game in an endeavour to somehow get back the single premium amount paid by them and, no doubt, such a backhanded claim is a clear example of seeking bounty from one's own fault, which cannot be legally granted. At this juncture, it is also relevant to refer to the letter under Ex.A10, dated 26.08.2014, wherein, along with the company's NOTICE OF RE-ASSIGNMENT, dated 01.08.2014, an endorsement for Re-assignment, carrying the same date, has been enclosed by the complainant, seeking re-assignment from the OPs and the said endorsement reads as follows:-
" Endorsement for Re-Assignment We, M/s.Sleeves India Automotive Pvt. Ltd (name of the Company) do hereby re-assign absolutely all the rights, title and interest in the Policy No.15958536 and the moneys thereby secured & benefits attached thereto to Mr.A.VIMAL MENON (name of the Employee) towards his terminal benefits due from the Company on termination of his employment consequent to the winding-up of our company."
As per the above endorsement issued by the Company, the re-assignment of the policy, dated 01.08.2014, was apparently towards settlement of the complainant's terminal benefits due from the company on termination of his employment subsequent to the winding-up of the company. While so, in Ex.A6 letter, dated 03.08.2014, addressed to the OPs, the complainant states thus:-
"PLEASE NOTE THAT MY TERMINAL BENEFITS FROM THE COMPANY ARE WITH-HELD FOR WANT OF REFUND OF THE ABOVE PREMIUM AMOUNT FROM YOU, WHICH THE COMPANY HAD PAID EARLIER ON MY BEHALF"
Further, in the Ex.B7 Declaration under Annexure-C submitted to the Insurance Company at the time of taking the policy, the complainant very clearly stated in clause-d-
" d. I further understand ........ in case of termination of my employment for reasons other than death, the company will surrender the policy to HDFC Standard Life Insurance co Ltd for the then surrender value (if any) or absolutely reassign the policy to me as part of the terminal benefits at the sole discretion of the company. "
Therefore, it is obvious that any re-assignment before the minimum lock in period would be as a part of the terminal benefits. On that basis, when the re-assignment made by the Company on 01.08.2014 was towards the terminal benefits payable by the company to the complainant, it is claimed by the complainant in his letter under Ex.A6, dated 03.08.2014, that his terminal benefits were withheld for want of refund of the premium. This only shows that the complainant is habitual in changing his voice and tone suiting his convenience to somehow achieve his unjust goal. Apart from the aforementioned two letters, contrasting the complaint and the claim of the complainant in the light of the records as a whole would show the inveigle conduct of the complainant and his employer by being inconsistent throughout and in presenting half-baked details to appear as if that the complainant was just a mere employee of the company and that the policy had become void even during or before the due date of the 2nd premium, only with the sole intention to get back, at any cost, the sum paid by them towards the initial premium. It must be adverted to at this juncture that failure to pay the premiums at least till the policy fetches a minimum surrender value would render it absolutely unproductive which means nothing is claimable there-from. Both the company as well as the complainant, by their willful conduct, altered the policy to a lapsed status. While so, the complainant, who is said to have been terminated only in August, 2014, which is about 4 long months after the due date, has no locus standi to maintain a consumer claim against the Insurance Company seeking refund either in his favour of that of the company by pointlessly citing the issue of liquidation which was not the state of affairs as on the due date of the 2nd premium and by arguing that the doctrine of frustration had been attracted. If the complainant has any real grievance, that should & could be only against his employer/company that took upon the liability to pay the premium on his behalf. As per his own letter and that of the employer under Exs.B10 and B11 respectively, he had already decided to quit the Concern; while so, he could have very well initially urged the company to pay the second premium when the company was functional and the lock in period was also in effect or else later insisted to settle him suitably from the proceeds realizable from the liquidation process to pay the remaining premiums that were actually payable by the company. But, it was not done for the obvious reason that it was a Family Unit. In order to cleverly distract the attention of the Forum from the main issue of willful & deliberate failure to pay the premium and, in a tricky endeavour to unjustly get back the single premium amount through the consumer proceedings, the complainant resorted to presentation of selective facts in an obscure manner, so as to make it appear at the first sight that the dispute has a cause of action for maintaining a consumer claim. In our view, this is not a case about the "doctrine of frustration" rather it is a manifest "attempt of frustration" by an overzealous complainant to win an unjust case.
11. Coming to the 2nd issue, let us straight away focus upon clause-12 of the Policy that runs to the following effect:-
" 12. Cancellation in the Free-Look Period:
In case you are not agreeable to any of the provisions stated in the policy and the details in the proposal form, you have the option of returning the policy to us stating the reasons thereof, within 30 days from the date of receipt of the Policy. On receipt of your letter along with the original Policy documents, where the reasons stated thereof are found valid, we shall arrange to refund the premium paid by you, subject to deduction of the proportionate risk premium for the period on cover and the expenses incurred by us on medical examination and stamp duty. A Policy once returned shall not be revived, reinstated or restored at any point of time and a new proposal will have to be made for a new policy."
The above clause gives an option to the insured to return the policy upon his disagreement with any of the provisions stated in the policy or the proposal form and such option is exercisable by him within 30 days from the date of receipt of the Policy. While so, after the receipt, dated 20.05.2013, issued for the first premium, the complainant did not address any letter to the OPs, seeking cancellation, whereas, he proceeded to confirm the assignment and Ex.B9, dated 16.06.2013/policy bond mentions "confirmation of assignment" which means that the insured had opted to proceed ahead with the Policy and that he never approached the OPs for cancellation within the respite given under clause-12 and accordingly, he chose to stay continued with the policy. That being so, the following finding of the District Forum, " 12. .... But on a careful perusal of records and the terms and conditions of the policy, the complainant and the employer issued letter dated:17.04. 2013 as per Ex.B10 & B11 the complainant and his employer issued a letter surrender the policy claiming for the return of the premium or alternatively, conversion of policy into single premium policy i.e. within one month as per clause-12 for the Employer which reads as follows:
"12. .....
....."
The opposite parties are liable to refund the amount", only reflects the utter non-application of mind on its part to the materials on record. From the description of documents given at the end of the impugned Order, it is seen that the date of Ex.B10/letter is clearly shown as 17.04. 2014. The said description also shows the date of Ex.B11 as 18.04. 2014. While so, the District Forum could have taken some little efforts to browse through the documents in order to verify & cross-check the year of the letters under Exs.B10 and B11 which is very relevant to examine the applicability or otherwise of the cancellation clause. Both the aforesaid letters only carry the dates - 17.04. 2014 and 18.04. 2014 respectively and the description of documents available in the very impugned order itself also depicts the same. Admittedly, when the receipt issued for payment of the premium is also dated 20.05.2013, the option for cancellation could not have been exercised before the said date. That being so, the injudicious conduct of the District Forum in pre-dating both the aforesaid documents with 17.04. 2013 and recording erroneous findings for granting the relief in a very generous manner contrary to the facts borne out by records and clearly against the principles of the insurance law is highly devious and totally unwarranted. Similarly, it is not known as to how the District Forum construed Ex.B2 as if it provides for conversion of the policy into a single premium type when the said document is nothing but a mere Addendum to the E-Proposal Form and it in no way deals with conversion. The findings of the District Forum thus run quite contrary to the basic concept of the insurance law as well as the terms and conditions of the policy which equally govern the parties on the principle of utmost good faith which is totally invisible on the part of the insured/complainant. In our view, an endorsement to such a blatantly erroneous impugned order would only amount to travesty of justice.
12. Coming to the third issue, even if the complainant had exercised the free-look option, he would not have been eligible for full refund of the premium amount since Clause-12 is specific in stating that refund is subject to deduction of the proportionate risk premium for the period on cover and the expenses incurred by the insurer on medical examination and stamp duty. Also, Clause 5 of the Policy deals with Guaranteed Minimum Surrender Value with the following terms:-
"5. Guaranteed Minimum Surrender Value If you pay premiums for a continuous period of 3 years, the guaranteed minimum surrender value of your policy, including the value of your policy, including the value of any attaching bonuses, will be:
ZERO IN RESPECT OF PREMIUMS PAID IN THE FIRST YEAR:; and 50% of premiums paid subsequent to the first year, excluding any extra premiums paid. "
As already stated, neither the company nor the complainant paid the 2nd premium and, by their willful default, they rendered the policy lapsed. Further, the inceptive portion of clause 6(1) of the Policy specifically says thus:-
"6.Lapsed Polices, Paid-Up Polices and Reinstatement Lapsed and Paid-Up policies If any Premium remains unpaid 15 days after the Due Date during the first 3 years of the Policy, the policy will be altered to lapsed status and NO BENEFITS WOULD BE PAYABLE. "
In terms of above clauses of the Policy, having only paid the initial premium, the complainant is not eligible to claim even a minimum surrender value and also for any conversion to a single premium type, as there is no scope at all for the same in the Policy.
13. For the foregoing reasons, the appeal deserves acceptance and accordingly, it stands allowed by setting aside the impugned order, dated 02.08.2019, passed by the DCDRF, Chennai - South, in C.C. No.447 of 2015, consequently, the complaint is dismissed. No costs.
R.SUBBIAH, J.
PRESIDENT.
ISM/TNSCDRC/Chennai/Orders/September/2023.