Dr. Balasaheb Ramchandra Gaikwad Vs. Icici Prudential Life Insurance Company Ltd. - Court Judgment

Excerpt:
honble mr. dhanraj khamatkar, member dr. balasaheb ramchandra gaikwad (hereinafter referred to as ‘the complainant for the sake of brevity) has filed this consumer complaint on 7/1/2011 as against icici prudential life insurance company (hereinafter referred to as ‘the opponent for the sake of brevity). complaint was registered as consumer complaint no.16 of 2011 and it was placed for hearing on admission 18/1/2011 and it was accordingly admitted on 18/1/2011. [2] facts leading to this complaint can be summarized as under:- the complainant had taken an icici pru life time policy bearing no.076575 from the opponent and the policy was effective with effect from 1/4/2002. as per the terms of the insurance policy a premium of `5,000/- was to be paid quarterly. it is the contention.....

Judgment:

Honble Mr. Dhanraj Khamatkar, Member

Dr. Balasaheb Ramchandra Gaikwad (hereinafter referred to as ‘the Complainant for the sake of brevity) has filed this consumer complaint on 7/1/2011 as against ICICI Prudential Life Insurance Company (hereinafter referred to as ‘the Opponent for the sake of brevity). Complaint was registered as Consumer Complaint No.16 of 2011 and it was placed for hearing on admission 18/1/2011 and it was accordingly admitted on 18/1/2011.

[2] Facts leading to this complaint can be summarized as under:-

The Complainant had taken an ICICI Pru Life Time Policy bearing No.076575 from the Opponent and the policy was effective with effect from 1/4/2002. As per the terms of the insurance policy a premium of `5,000/- was to be paid quarterly. It is the contention of the Complainant that he was regular and punctual in making payment of the premium and he paid 30 premiums aggregating to `1,50,000/- over a period of seven years. On 7/10/2009, the Complainant received a letter from the Opponent stating thereunder that one Ms. Brinda working with the office of the Opponent had a talk with the Complainant. The letter further states that the amount eligible to be invested under the policy had reduced to zero on account of excess of mortality charges over the available premium and that the said discrepancy is on account of technical error while calculating the premium under the policy. The letter further stated that in the light of non-sustainability of the policy, the Opponent has decided to cancel the policy and refund all the premiums paid under the scheme. The Complainant further contends that alongwith the said letter a cheque for an amount of `1,50,000/- was received by him. In the response to the letter dated 7/10/2009, the Complainant denied the fact of talk with Ms. Brindra, representative of the Opponent with respect to termination of the policy. The Complainant requested the Opponent to revive/reinstate the said policy within a period of seven days vide his letter dated 9/11/2009.

[3] In response to the letter dated 9/11/2009, the Complainant received an e-mail dated 24/11/2009 from Mr. Atif Khan, Customer Relations Manager of the Opponent repeating and reiterating the contents of the letter dated 7/10/2009. The Complainant approached the Insurance Ombudsman vide his representation dated 4/12/2009 requesting to issue necessary directions to the Opponent for reinstating the policy. Insurance Ombudsman vide his letter dated 16/12/2009 acknowledged the receipt of the Complainants representation and the communicated to the Complainant that he has sought for an explanation from the Opponent. The Complainant contended that the Opponent has not offered any explanation as to how the Opponent has come to a conclusion about the technical error in the policy after a gap of seven years. The Complainant further stated that the Opponent has not given him any opportunity and option to change or to switch over to other policy. The Complainant contended that action on the part of the Opponent is not only arbitrary and high-handed but also illegal and unfair as the policy was terminated without affording any opportunity to the Complainant. The Complainant further states that the policy covers critical illness, major surgical assistance, accident and disability benefit and initial death benefit and the Complainant has taken the policy at the age of 45 years and now, he is aged 53 years and similar policy would entail a huge premium and it may be difficult for the Complainant to procure the insurance policy on similar terms and conditions. Hence, the Complainant filed a consumer complaint alleging deficiency in service on the part of the Opponent and prayed for following reliefs:-

“ a) That this Honble Forum be ordered and directed the Opposite Parties to re-vive / reinstate the Policy No.00076575

b) OR in the alternative the Opposite Parties to pay Rs.15,00,000/- as compensation towards refund of Policy amount together with interest @ 18% p.a.

c) That this Honble Forum be further ordered and directed the Opposite Parties to pay Rs.5,00,000/- to the Complainant towards monetary loss, damage, expenses, mental agony, harassment due to the deficiency of service of the Opposite Parties

d) That the Opposite Parties be ordered and directed to pay a sum of Rs.25,000/- for the cost of this complaint

e) For such further and other relief as this Honble forum may deem fit and proper.”

[4] The Opponent contested the complaint by filing its written version inter-alia contending that the complaint is frivolous, vexatious and is in abuse of process of law and hence not maintainable. The Opponent further contended that the Complainant has concealed true and correct facts. The Opponent further states that the complaint is not maintainable either on facts or in the eyes of law and suffers from suggestio vari suppressio falsi. The Opponent has contended that this Commission has no jurisdiction to entertain the present complaint as the present complaint is not characterized by deficiency in service or negligence on the part of the Opponent as prescribed under Section-2(1)(g) of the Consumer Protection Act, 1986. The Opponent further submitted that valuation of the complaint is unreasonable, arbitrary and not justified. The Complainant only paid an amount of `1,50,000/- by way of premium and the Complainant is demanding a claim of `20,25,000/- as compensation towards refund of policy which is highly exaggerated and baseless. Benefits of the policy are contingent benefits and are payable only on happening of certain event. Opponent submitted that the proposal of insurance was received by the Opponent on 22/1/2002 and the policy commenced from 1/4/2002. Premium for the policy was fixed @ `5,000/- per quarter. The Opponent has submitted that the Opponent has addressed a letter to the Complainant on 13/2/2010 stating therein that extra premium is required to be charged under the policy in question for which the Complainants consent was required. The Opponent further submitted that it is clearly mentioned in the letter dated 13/2/2002 that the total premium for the death benefit and riders opted by the Complainant will be recovered through cancellation of units allotted under the policy. It was also clearly and categorically stated that the same will be indicated in the annual statement of accounts under the policy. The Complainant had duly signed the letter and thereby gave his consent for the cancellation of the units allotted under the policy. It is contended that the Complainant has deliberately with malafide intention concealed the fact of issuance of a letter dated 13/2/2002 and his consent thereon. The Opponent, as per consent given by the Complainant vide a letter dated 13/2/2002 kept on recovering the extra amount by cancellation of units. The extra premium amount was recovered from the account of the Complainant by way of cancellation of units allotted to the Complainant as per Clause 4.3 of the policy document in order to keep the policy in force. Under the said policy the amount eligible to be invested reduced to zero on account of excess of mortality charges over the available investible premium and as the fund value reduced to zero the policy could not be sustained and, therefore, Opponent foreclosed the insurance policy as per Clause No.9 of the policy terms and conditions. It is contended that before invocation of the foreclosure clause of the policy it was duly explained and intimated to the Complainant by sending regular Unit Statements to the Complainant.

[5] The Opponent further submitted that with a view to maintain complete transparency an online access to the account is also provided to the policy-holders where they can monitor and verify the prevalent fund value of the policy. The Complainant paid an amount of `1,50,000/- through premium till 1/10/2009. The Opponent had refunded the entire amount vide a cheque bearing No.337888 dated 6/10/2009 amounting to `1,50,000/- and the Complainant has encashed the cheque on 30/12/2009 without any protest or reservation thereupon and, therefore, there exits no cause of action in favour of the Complainant. Action on the part of the Opponent is not arbitrary, high-handed, illegal or unfair. The Complainant has availed the benefits of the policy during the term of seven years of the policy. The Opponent submits that from the foregoing facts it is evident that all the grievances of the Complainant were resolved by the Opponent and the Complainant is not entitled for any relief what-so-ever claimed by the Complainant in his complaint. However, the Opponent stated that as a gesture of goodwill the Opponent is ready and willing to revive and reinstate the policy in question subject to the condition that the Complainant returns an amount of `1,50,000/- refunded to him and he pays all the outstanding premiums under the policy till date and also agrees that he shall maintain the minimum Fund Value as per the policy terms and conditions to keep the policy in force. On these grounds the Opponent prayed that the complaint may be dismissed with exemplary costs.

[6] Both the parties were directed to file their evidence on affidavits. Accordingly, the Complainant has filed evidence on affidavit alongwith various documents such as policy document, letter dated 7/10/2009 addressed by the Opponent to the Complainant, letter dated 9/11/2009 addressed by the Complainant to the Opponent, e-mail dated 24/11/2009 sent by the Opponent to the Complainant, letter dated 4/12/2009 addressed by the Complainant to the Opponent, letter dated 16/12/2009 addressed by the office of Insurance Ombudsman to the Complainant, letter dated 11/2/2010 addressed by the Complainant to the Opponent and letter dated 26/4/2010 addressed by the Insurance Ombudsman to the Opponent. Apart from this the Complainant has also filed his additional affidavit of evidence dated 17/11/2011. The Opponent has produced on the record an evidence affidavit of its Senior Manager Legal, namely – Sudha Sharma and alongwith affidavit the Opponent has produced on the record a copy of proposal form submitted by the Complainant, a copy of policy document/policy bond, copy of letter dated 13/2/2002 sent by the Opponent to the Complainant and acknowledgement of the Complainant thereon and a copy of letter dated 15/2/2011 sent by the Insurance Ombudsman.

[7] Both the parties closed their respective evidence by filing pursis to that effect and thereafter both the parties were directed to file their respective briefs of written arguments. Accordingly, both the parties have filed their respective briefs of written arguments.

[8] We heard Adv. Premlal Krishnan with Adv. Durgesh S. Singh and Adv. Gayatri Mahopatra on behalf of the Complainant and Adv. Anand Patwardhan on behalf of the Opponent.

[9] Admittedly the Opponent has issued to the Complainant an ‘ICICI Pru Life Time policy bearing No.00076575 and the policy commencement date was 1/4/2002. As per the policy document premium amount was of `5,000/- and periodicity of premium payment was quarterly. The policy document gives details about the benefit and benefit amount as follows:-

 BENEFIT	BENEFIT AMOUNT (`)
Initial Death Benefit	5,00,000/-
Accident and Disability	5,00,000/-
Critical Illness	5,00,000/-
Major Surgical Assistance	5,00,000/-

[10] Further, as per the policy document premium was to fall due on every following anniversary of the policy commencement date based on the periodicity of payment of premiums i.e. Yearly, Half-Yearly, Quarterly or Monthly anniversary. In the present case the periodicity of premium payment was quarterly. As per the terms of the policy the Complainant has paid 30 quarterly premiums aggregating to an amount of `1,50,000/- over a period of seven years. Admittedly, there is no delay in making payment of the premiums. For a period of seven years there is no breach of the terms and conditions of the policy.

[11] On 7/10/2009, the Opponent addressed a letter to the Complainant. Said letter is at Exhibit-B, page (27) of the complaint compilation. Said letter refers to tele-conversation dated 18/8/2009 the Complainant allegedly had with Opponents representative, namely – Mr. /Ms. Brinda. The letter further reads as follows:-

“As informed, the amount eligible to be invested has reduced to zero on account of excess of mortality charges over the available investible premium. The said discrepancy is on account of a technical error, while calculating the premium under the policy. In light of the non-sustainability of the policy we have decided to cancel the policy and refund all the premiums paid under the same.”

[12] Alongwith the said letter dated 7/10/2010 the Opponent enclosed a cheque bearing No.337888 dated 6/10/2009 for an amount of `1,50,000/- towards refund of all the premiums paid under the said policy. The Opponent concluded the said letter by informing to the Complainant that the Company will not be at risk under the said policy and no benefit becomes payable from the date of this communication. The Complainant communicated his displeasure by a letter dated 9/11/2009. The Complainant denied that Ms. Brinda, as alleged by the Opponent, talked with him with respect to termination of the subject policy. The Complainant further requested the Opponent to revive or reinstate the said policy within a period of seven days. The Complainant also conveyed to the Opponent that he is not going to encash the cheque.

[13] Insurance is a contract and it is based on utmost good faith. The Opponent has not established that its representative Ms. Brinda talked with the Complainant. Even in a latter communication dated 24/11/2009 which is an e-mail addressed to the Complainant by one Mr. Atif Khan on behalf of the Opponent which is simply a copy of earlier letter dated 7/10/2009, there is no clarification of the objections raised by the Complainant. Crucial factor in this case is the words – ‘technical error in the letter dated 7/10/2009. Neither in the written version as filed by the Opponent nor the in pleadings of the Learned Advocate for the Opponent the Opponent has explained as to what was the ‘technical error while calculating the premium under the policy. Now, the question arises as to whether the Opponent can change the terms and conditions of the policy by only communicating to the Complainant that there was a ‘technical error while calculating the premium under the policy? The answer to this question is in the negative.

[14] The Opponent is relying on the letter dated 13/2/2002. Said letter dated 13/2/2002 was sent to the Complainant by the Opponent stating that an extra premium benefit, corresponding to an extra mortality rating is required to be charged. The Complainant has signed this letter. It is the contention of the Learned Advocate for the Opponent that by signing this letter the Complainant had consented for charging extra premium. We are unable to agree with the said contention. Policy document is very clear and it is issued subsequently and the policy document does not have a condition that an extra premium will be charged corresponding to extra mortality rating required to be charged. Hence, the letter dated 13/2/2002 relied by the Learned Advocate for the Opponent does not have any evidentiary value. Then, Learned Advocate for the Opponent argued that as per Clause No.4.3 of the policy document the Opponent kept on recovering extra amount by cancellation of units and the policy and the riders were continued. Extra premium was recovered from the account of the Complainant by way of cancellation of units allotted to the Complainant as per Clause No.4.3 of the policy document. Relevant Clause No.4.3 of the policy document reads as follows:-

“4.3 Keeping the Policy in force

If the Proposer/Life Assured fails to pay the Premiums on the due date, or within the grace period of 30 days where the mode of payment is other than monthly and within the grace period of 15 days where the mode of payment is monthly other Charges shall be recovered by the Company through cancellation of Units and the Policy and the riders shall continue till such time as the Unit Value is sufficient to pay the remaining charges and the Policy and riders shall be terminated immediately upon the Unit Value under the policy becoming insufficient to pay those charges.”

[15] Clause No.4.3 of the policy is in respect of delay in payment of premium and in the present case there is no delay in payment of premium and hence this clause will not be applicable in the present case.

[16] Learned Advocate for the Opponent vehemently argued that in the instant case the amount eligible to be invested reduced to zero on account of excess of mortality charges over the available investible premium. He further argued that as the fund value reduced to zero the policy could not be sustained and, therefore, the policy was foreclosed as per Clause No.9 of the terms and conditions of the policy document. Clause No.9 of the policy documents prescribes that the policy shall terminate when the Unit Value is insufficient to pay for the Charges computed in accordance with the Clause No.8 of the policy document and the balance Unit Value, if any, would be paid upon such termination. Here the question arises when the fund value reduced to zero how the Opponent returned an amount of `1,50,000/- to the Complainant?

[17] Learned Advocate for the Complainant drew our attention to Clause No.8.7 of the policy document, which reads as follows:-

“8.7 Change in rate of Charges

The Company reserves the right to change the investment charge at any time with prior approval from the IRDA upto a maximum of 1.50% per annum of the net assets for each of the plans.

The Company reserves the right to change the annual administrative charges at any time with prior approval from the IRDA upto a maximum of 2% per annum of the net assets for each of the plans.

The Company reserves the right to modify the insurance charges and the Processing charge with prospective effect after giving a notice of three months to the policyholders.

The Proposer/Life Assured who does not agree with the modified charges shall be allowed to withdraw the units in the plans at the then prevailing unit value and terminate the policy.”

[18] Thus, as per Clause No.8.7 of the policy document the Opponent had a right to modify the insurance charges and processing charges with prospective effect after giving a notice of three months to the Complainant, as a policyholder and this clause also further makes a provision to the effect that if the Proposer/Life Assured does not agree with the modified charges then he shall be allowed to withdraw the units in the plans at the then prevailing unit value and terminate the policy. In the present case, giving a notice of three months to the policyholder is a pre-condition. However, the Opponent without giving any such notice arbitrarily and high-handedly terminated the policy issued to the Complainant. Such act of termination of policy on the part of the Opponent is not only illegal but it amounts to an unfair trade practice.

[19] Learned Advocate for the Opponent tried to raise the point of jurisdiction and tried to raise a point that there is no deficiency in service on the part of the Opponent as contemplated under Section-2(1)(g) of the Consumer Protection Act, 1986. He even tried to challenge the pecuniary jurisdiction of this Commission. However, we do not find any force in these arguments advanced by the Learned Advocate for the Opponent.

[20] The Opponent in its written version has stated that as a gesture of goodwill the Opponent is ready and willing to revive and reinstate the policy under question subject to the condition that the Complainant returns an amount of `1,50,000/- refunded to him and further the Complainant pays outstanding premiums under the policy till date and also agrees that he shall maintain the minimum fund value as per the policy terms and conditions to keep the policy in force. Looking to the facts and circumstances of the case it is an established fact that the Complainant is the policyholder and he has paid 30 quarterly insurance premiums over a period of seven years. Without issuing any notice the Opponent has terminated the policy issued to the Complainant arbitrarily by exercising foreclosure clause. As per Clause No.8.7 of the policy document at-least the Opponent ought to have given a three months notice to the Complainant. In such circumstances, termination of policy cannot be justified. In the policy termination letter there is a reference to tele-conversation of the Complainant with the Opponents representative, namely – Ms. Brinda which the Complainant has challenged. However, no explanation has been given regarding this tele-conversation by the Opponent. Similarly, there is no explanation regarding alleged ‘technical error while calculating the premium under the policy. It is not a technical error. It is a substantial error on the part of the Opponent while issuing the policy and for which the policy cannot be terminated. So, prima-facie there is deficiency in service on the part of the Opponent. The Opponent is not only deficient in rendering service to the Complainant but it also amounts to unfair trade practice. The Opponent is a leading private sector insurance company with automation in its transactions. The Opponent claims transparency in its business. Hence, the arbitrary action without giving reasonable opportunity to the client is not expected from the Opponent.

[21] The Opponent in its written version has stated that as a gesture of goodwill the Opponent is ready and willing to revive and reinstate the policy under question subject to the condition that the Complainant returns an amount of `1,50,000/- refunded to him and further the Complainant pays outstanding premiums under the policy till date and also agrees that he shall maintain the minimum fund value as per the policy terms and conditions to keep the policy in force. The Complainant agrees to this proposition. However, the Complainant prays that in view of ex-parte termination of the policy and taking into consideration mental agony he has suffered he may be awarded some reasonable compensation. In the prayer clause of the complaint, the Complainant has claimed compensation of `5,00,000/- by way of compensation towards monetary loss sustained by him, mental agony and harassment due to deficiency in service on the part of the Opponent. No doubt, the Complainant has suffered harassment. Since 7/10/2009 the Complainant is without insurance cover. Had something untoward the Complainant was without any insurance cover. However, the compensation as sought by the Complainant is on a higher side. Looking to the facts of the case and the risk involved with the life of the Complainant, we are of view that if an amount of `2,00,000/- is awarded to the Complainant by way of reasonable compensation it would meet the ends of justice. In view of the aforesaid facts we hold accordingly and pass the following order:-

ORDER

Complaint is partly allowed.

The Opponent is hereby directed to forthwith revive and reinstate ICICI Pru Life Time Market Linked Insurance Plan (RP) bearing Policy No.00076575 on the life of the Complainant subject to the condition that within a period of one month from the date of this order, the Complainant returns to the Opponent an amount of `1,50,000/- refunded to him and further the Complainant pays outstanding premiums under the policy till date and also agrees that he shall maintain the minimum fund value as per the policy terms and conditions to keep the policy in force.

The Opponent shall also pay to the Complainant an amount of `2,00,000/- by way of compensation besides costs of `25,000/- within a period of two months from the date of this order.

Rest of the claims of the Complainant stands rejected.

Inform the parties accordingly.