DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION ERNAKULAM
Dated this the 23rd day of January, 2024
Filed on: 04/10/2021
PRESENT
Shri.D.B.Binu President
Shri.V.Ramachandran Member Smt.Sreevidhia.T.N Member
C.C. NO. 354/2021
COMPLAINANT
Nisha K. John, House No. 38, Mythri Residence, Mamala P.O., Thiruvankulam, Ernakulam.
(Rep. by Advs. Thomas Jacob, Sabu John, Bindu G., Rajeevu, X-pert Law Associates, P-20, 2nd Floor, Pure Business Centre, Kombara, Near High Court of Kerala, Kochi 18)
Vs
OPPOSITE PARTIES
- The Manager, HDFC Standard Life Insurance Co. Ltd., Gr, 1st & 2nd Floor, Pallath Enclave, MG Rd, Ernakulam, Kerala - 682015.
- The Zonal Manager, - Legal & Compliance, HDFC Standard Life Insurance Co. Ltd., Ramana Towers, 2nd Floor, Venkatanarayana Road, T. Nagar, Chennai.
(Rep. by Adv. Saji Isaac K.J., 311, HB Flats, Panampilly Nagar, Kochi 682036)
F I N A L O R D E R
D.B. Binu, President.
1). A brief statement of facts of this complaint is as stated below:
The complainant filed a complaint under Section 35 of the Consumer Protection Act, 2019, against HDFC Standard Life Insurance Company Ltd. The complainant had purchased an insurance policy (HDFC Life Click to Invest ULIP Policy No. 20747366) on 05/10/2018. The policy was presented as attractive, with an annual premium of Rs. 5,00,000 and investment in the equity market, along with a life cover of Rs. 50,00,000.
In 2020, the complainant made an early payment of Rs. 5,00,000 due to representations made by the insurance company regarding benefits. However, after making the payment, the complainant received no further information. When inquired, the insurance company claimed it was a misrepresentation and demanded documents for a refund, causing mental distress.
Later, the insurance company made an excess refund of Rs. 10,00,000, and after the complainant reported the error, there was no response for a significant period. The insurance company then issued a misleading document, asking the complainant to "Revive" the policy, even though the premium was due only in October 2020. The complainant's attempts to resolve the situation went unanswered, and eventually, the insurance company admitted its mistake but offered no solution.
The complainant requested a debit note for the excess payment and offered to refund it, but the insurance company terminated the policy and adjusted the excess amount against the premium paid in 2019. Despite the complainant's willingness to refund, the insurance company retained the money.
The complainant believes that the termination of the policy was arbitrary and against the norms, causing her financial loss and mental distress. Despite various emails, messages, and a complaint to the Insurance Ombudsman, the issue remains unresolved. The complainant sent a legal notice, but the insurance company failed to comply with the demands.
As a result, the complainant seeks the following relief from the Commission:
Refund of the first premium of Rs. 5,00,000 with an interest. Payment of interest for the second premium of Rs. 5,00,000 retained by the insurance company. Compensation of Rs. 2,50,000 for the delay, refusal to pay, loss of utility, mental stress, agony, and hardship. Compensation for the loss of equity market appreciation on the payment of Rs. 10,00,000 made in 2018 and 2019, calculated based on NAV value. Any other relief the Commission deems fit based on the circumstances of the case. Cost of the complaint.
2) Notice
The commission sent notices to the opposite parties; the opposite parties submitted their versions.
3) THE VERSIONS OF THE OPPOSITE PARTIES
The opposite parties present a defence focusing on the nature of the policy as a unit-linked policy, which is a speculative investment, and states that their liability is limited to the policy's terms and conditions. They deny allegations that Mr. Irshad, who claimed to be a manager, directed the complainant to make an early premium payment due to the pandemic-affected market situation. They also refute claims about gaining more units due to a fall in NAV value and state that they did not authorize anyone to collect advance premiums. The WhatsApp chats presented by the complainant as evidence are also denied.
The complainant had access to a toll-free number/customer care number and an email ID for any policy-related queries and was informed by customer care that the prepayment made was not proper. This suggests that the complainant could have avoided confusion through proper inquiries.
The policy conditions specify that premiums due in the same financial year can be paid in advance, but no units will be allocated before the respective due dates for premiums paid before their due date.
The Opposite Parties agreed to refund the advance premium paid by the complainant. The complainant requested a refund, and the Opposite Parties sought the complainant's KYC details for the refund process, denying the claim that the payment was remitted upon their direction.
The premium due on 05.10.2019 was received on 04.11.2019. Due to a system error, Rs. 5,00,000, which was the renewal premium, was refunded along with the advance premiums. The refund was made on 18.06.2020, and upon realizing the mistake, the Opposite Parties emailed the complainant to repay the refunded amount.
The Opposite Parties are ready and willing to reinstate the policy with full benefits as valid on the original policy renewal date, 04.11.2019, contingent on the complainant repaying the renewal premium.
The complaint was previously dismissed by the Insurance Ombudsman, and there has been no deficiency in service on the part of the Opposite Parties.
The Opposite Parties deny allegations of negligence or illegal actions on their part, attributing the policy termination to the complainant's failure to repay the renewal premium.
The complainant is not entitled to compensation, interest, or a refund of the premium paid beyond the policy's terms and conditions. The policy was issued subject to a lock-in period of five years, and any fund value could be paid only after this period.
The Opposite Parties deny allegations of breach of contract and deficiency in service, stating that their actions were in compliance with the policy conditions.
The Opposite Parties request the dismissal of the complaint, asserting no negligence or deficiency in service and limiting their liability to the policy terms, conditions, and exclusions.
4) . Evidence
The complainant had filed proof affidavit and 13 document that was marked as Exhibits-A-1 to A13.
Exhibit A-1: Copy of the receipt for the premium paid on 5/10/2018.
Exhibit A-2: A copy of the receipt for the premium paid on 5/10/2019.
Exhibit A-3: Copy of the WhatsApp messages sent by the Manager of the Opposite Party No.1.
Exhibit A-4: True copy of various E-mails sent by the complainant to the Opposite Parties for refund of the premium paid in advance.
Exhibit A-5: A true copy of the e-mail communication intimating the opposite parties regarding excess payment. Exhibit A-6: Copy of the Revival notice cum termination of the policy sent by the Opposite Party.
Exhibit A-7: Copy of the e-mail dated sent by the complainant to the opposite parties for debit note/invoice for returning the excess money received by the complainant.
Exhibit A-8: True copy of the email of the Opposite Party admitting technical glitch/error from their side.
Exhibit A-9: Copy of the IRDA notification on ULIP policy. Exhibit A-10: Details of NAV value of the said fund as on date to show the incidental loss to the complainant.
Exhibit A-11: Copy of the legal notice along with the receipt.
Exhibit A-12: Copy of the acknowledgment card of the notice.
Exhibit A-13: Copy of the order passed by the Ombudsman.
The opposite parties had filed 1 document (Policy document) that was marked as Exhibits-B-1.
4) The main points to be analysed in this case are as follows:
i) Whether the complaint is maintainable or not?
ii) Whether there is any deficiency in service or unfair trade practice from the side of the opposite party to the complainant?
iii) If so, whether the complainant is entitled to get any relief from the side of the opposite party?
iv) Costs of the proceedings if any?
5) The issues mentioned above are considered together and are answered as follows:
In the present case in hand, as per Section 2(7) of the Consumer Protection Act, 2019, a consumer is a person who buys any goods or hires or avails of any services for a consideration that has been paid or promised or partly paid and partly promised, or under any system of deferred payment. The Copies of the receipts for the premium paid on 5/10/2018 and 5/10/2019 (Exhibit A-1 and A-2). Hence, the complainants are consumers as defined under the Consumer Protection Act, 2019 (Point No. i) goes against the opposite parties.
The complainants have initiated legal proceedings to obtain damages and compensation from the opposite parties, citing deficiencies in service, engagement in unfair trade practices, and negligence. They are particularly distressed by the Opposite Parties' termination of their legitimate Insurance Policy, an action they argue contravenes the established terms of the Policy condition.
We have heard from Sri. Thomas Jacob, the learned counsel representing the complainant. The complainant emphasizes the potential impact on their dependents, noting that the Opposite Parties' failure to notify the complainant about the termination of the policy left their family vulnerable.
- Evidence and Exhibits: Both parties have submitted proof affidavits. Exhibits A1 to A-13 are marked by the complainant, and Exhibit B1 by the Opposite Parties.
- Issues in the Case:
- A) Deficiency in service by the Opposite party.
- B) The validity of the reliefs claimed by the complainant.
Arguments in Support of Issue A:
i) Deficiency in Service: Defined under the Consumer Protection Act, any inadequacy in the quality of service is a deficiency. The complainant argues that the actions of the Opposite Parties violate the policy conditions, constituting a deficiency in service.
ii) Exhibit B1 Scrutiny: The policy conditions in Exhibit B1 outline the process for Policy Discontinuance and Revival. The complainant asserts that the Opposite Parties failed to follow these conditions, particularly Part D Clause No. 1, demonstrating a deficiency in service.
iii) Exhibit A-6 Analysis: A letter from the Opposite Parties (Exhibit A-6) indicates that the policy was terminated before the due date of premium, further supporting the claim of deficiency in service.
iv) Case Law Reference: Reliance on the judgment of the Supreme Court in Life Insurance Corporation Vs. Pushpa P. Mansukhani (1991 ACJ 686) to differentiate between 'revival' and 'renewal' of a policy, and how this distinction applies to the case.
Arguments in Support of Issue B:
i) Financial Loss Due to Termination: The unilateral termination of the policy by the Opposite Parties, evidenced in Exhibit A-10, resulted in significant financial loss for the complainant.
ii) Communication and Efforts for Policy Revival: Referencing Exhibit A-7, the complainant's efforts to communicate with the Opposite Parties and suggestions for rectifying the situation were ignored, exacerbating the complainant's losses.
iii) Principle of Estoppel: The complainant argues that the Opposite Parties cannot deny their mistake in illegally terminating the policy due to
their system error, as admitted by them.
iv) Negligence and Harm: The complainant asserts that the Opposite Parties' actions, including the unilateral termination of the policy, put them in danger, especially during the COVID-19 pandemic. This act of negligence is highlighted as causing significant harm and risk to the complainant.
v) Responsibility of the Opposite Parties: It is contended that the Opposite Parties were in a position to rectify the error and maintain the policy, but chose not to, demonstrating a lack of good faith and disregard for the complainant's situation.
vii) Validity of Manager's Representation: The contention that Manager Mr. Irshad was not authorized to make representations is challenged, with the complainant arguing that since he is still employed by the Opposite Parties and was involved in transactions, his representations should be considered valid.
viii) Conclusion and Relief Sought: The complainant concludes that they have established their case with solid evidence and are entitled to recover the amount with interest, along with the cost of litigation. The submission requests that the complaint be decreed as prayed for, in the interest of justice.
We have also heard from Sri. Saji Isaack K.J , the learned counsel representing the complainants. The contract of insurance is based on the policy's terms and conditions, and liability is limited accordingly. Allegations about Mr. Irshad, claiming to be a Manager and advising early premium payment due to the pandemic, are false and denied. HDFC Life Insurance Co. Ltd did not authorize anyone to collect advance premiums or send WhatsApp messages regarding such payments.
Claims of misrepresentation by the Opposite Parties are denied. The complainant was provided with official contact details for queries and admitted being informed by customer care that the prepayment was not proper.
The policy terms specify conditions for advance premium payment. Premiums due in the same financial year can be paid in advance, but no units are allocated for premiums paid before their due dates.
The policy terms must be strictly construed, as upheld in various Supreme Court rulings, which emphasize that the terms of an insurance policy are to be strictly interpreted without rewriting the contract.
The Opposite Parties are not liable for any alleged representations made by someone claiming to be the Manager. The complainant should have verified the identity of this person.
It is acknowledged that the Opposite Parties agreed to refund the advance premium paid by the complainant. The allegation that the amount was remitted as per their direction is denied.
There was a system error resulting in the refund of Rs. 5,00,000, which was the renewal premium. The complainant has been repeatedly asked to repay this amount but has not done so.
The Opposite Parties are ready to reinstate the policy with full benefits as of the original renewal date, contingent on the complainant repaying the renewal premium.
The complaint was dismissed by the Insurance Ombudsman, and there has been no deficiency in service by the Opposite Parties.
The complainant's allegations regarding holding money, entitlement to interest and compensation, and breach of contract are denied. The complainant is not entitled to any relief sought in the complaint, as there has been no negligence or deficiency in service on the Opposite Parties' part.
The liability of the Opposite Parties, even assuming without admitting, is limited to the policy's terms, conditions, and exclusions. The Opposite Parties request that the Commission dismiss the complaint with cost.
“Besides it is a settled position of law relying on the judgements of the Hon’ble Apex Court in the matter of Skandia Insurance Co. Ltd. v. Kokilaben Chandravan & Others as reported in I (1987) ACC 413 (SC)=1987 (SLT SOFT) 159=(1987) 2 SCC 654, Shashi Gupta v. LIC of India as reported in II (1995) CPJ 15 (SC)=1995 (SLT SOFT) 1117=(1995) 1 SCC 754, LIC v. Raj Kumar Rajgharia & Ors. as reported in (1999) 3 SCC 465 and United India Insurance Co. Ltd. v. Pushpalaya Drifters as reported in I (2004) CPJ 22 (SC)=II (2004) SLT 263=(2004) 3 SCC 694, that when two interpretations of the terms of policy are possible, the interpretation which favours the insured is to be accepted and not the interpretation which favours the insurer. Besides the terms of the insurance policy are drafted by the Insurance Company. Therefore, in case the terms of the polices are vague and capable of leading to more than on interpretation, the benefit should occur in favour of the insured and not the insurer.” ( Forech India Limited vs. IFFCO Tokio General Insurance Co. Ltd.," decided by the Delhi State Consumer Disputes Redressal Commission in 16-04-2019 , II (2019) CPJ 202 (Del.).
Based on the provided facts and arguments from both parties, the commission is tasked with carefully considering and evaluating the following points:
- Maintainability of the Complaint:
Under Section 2(7) of the Consumer Protection Act, 2019, the complainant qualifies as a consumer. The payment of insurance premiums (Exhibit A-1 and A-2) confirms their consumer status. This satisfies the criteria for a complaint under the Act.
- Deficiency in Service and Negligence:
- The complainant alleges a deficiency in service, citing unilateral termination of the policy and misrepresentation. The termination, as shown in Exhibit A-6, appears to contravene the policy's terms, constituting a deficiency in service.
- The Opposite Parties' failure to adhere to their policy terms (Exhibit B1), specifically in terms of policy discontinuance and revival, supports the complainant's claim.
- Reliance on the Supreme Court judgement in Life Insurance Corporation Vs. Pushpa P. Mansukhani (1991 ACJ 686) can be used to interpret the terms of 'revival' and 'renewal' in the context of this case.
- The policy terms, while to be strictly construed, must also be interpreted in a manner that does not unfairly prejudice the insured, as per various Supreme Court rulings.
- Relevant Case Laws:
- The principle that in case of ambiguity in policy terms, the benefit of doubt should go to the insured, as seen in Skandia Insurance Co. Ltd. v. Kokilaben Chandravan & Others and similar cases, supports the complainant's position.
- The Commission observes that the Opposite Parties’ actions, particularly the termination of the policy and handling of the excess refund, demonstrate a lack of due diligence and fair dealing.
- The policy’s terms and the conduct of the Opposite Parties should have been oriented towards protecting the interests of the insured, which in this case, appears to have been neglected.
- The complainant's efforts for communication and resolution (Exhibit A-7) and the Opposite Parties' admission of a technical glitch (Exhibit A-8) further affirm the complainant’s claim.
We find in favour of the complainant on Issues I to IV, due to the serious service deficiency of the opposite parties and unfair trade practices. The complainant has suffered considerable inconvenience, mental agony, hardship, and financial loss due to this negligence, mental agony, hardship, and financial loss.
We aim to rectify the wrongs experienced by the complainant and ensure that the Opposite Parties are held accountable for their actions, in accordance with the principles of justice and fairness as embodied in the Consumer Protection Act, 2019.
In view of the above facts and circumstances of the case, we are of the opinion that the opposite parties are liable to compensate the complainant.
Hence the prayer is allowed as follows:
- The Opposite Parties shall refund the first premium of ₹5,00,000 (Five Lakhs only) with an interest rate of 18% per annum.
- The Opposite Parties shall pay interest at the rate of 18% per annum for the second premium of ₹5,00,000 (Five Lakhs only) for the period the Opposite Parties retained the amount.
- The Opposite Parties shall pay ₹1,00,000 (One Lakh only) to the complainant as compensation for the deficiency in service by way of long delay, refusal to pay, and the mental distress, hardships, and financial losses incurred by her due to the Opposite Party's negligence.
- The Opposite Parties shall also pay ₹20,000 (Rupees Twenty Thousand only) to the complainant towards the cost of the proceedings.
The opposite parties are jointly and severally liable for the above-mentioned directions. They must comply within 30 days from the date of receiving a copy of this order. If they fail to do so, the amounts ordered in points (iii) above will attract interest at a rate of 9% per annum from the date of the complaint (04.10.2021) until the date of realization.
Pronounced in the Open Commission on this the 23rd day of January, 2024
Sd/-
D.B.Binu, President
Sd/-
V.Ramachandran, Member
Sd/-
Sreevidhia.T.N, Member
Forwarded/By Order
Assistant Registrar
Appendix
Complainant’s Evidence
Exhibit A-1: Copy of the receipt for the premium paid on 5/10/2018.
Exhibit A-2: A copy of the receipt for the premium paid on 5/10/2019.
Exhibit A-3: Copy of the WhatsApp messages sent by the Manager of the Opposite Party No.1.
Exhibit A-4: True copy of various E-mails sent by the complainant to the Opposite Parties for refund of the premium paid in advance.
Exhibit A-5: A true copy of the e-mail communication intimating the opposite parties regarding excess payment. Exhibit A-6: Copy of the Revival notice cum termination of the policy sent by the Opposite Party.
Exhibit A-7: Copy of the e-mail dated sent by the complainant to the opposite parties for debit note/invoice for returning the excess money received by the complainant.
Exhibit A-8: True copy of the email of the Opposite Party admitting technical glitch/error from their side.
Exhibit A-9: Copy of the IRDA notification on ULIP policy. Exhibit A-10: Details of NAV value of the said fund as on date to show the incidental loss to the complainant.
Exhibit A-11: Copy of the legal notice along with the receipt.
Exhibit A-12: Copy of the acknowledgment card of the notice.
Exhibit A-13: Copy of the order passed by the Ombudsman.
Opposite party’s evidence
Exbt. B1: Policy document
kp/
Despatch date:
By hand:
by post:
C.C. No. 354/2021
Order date: 23/01/2024
