Sri Shyamal Gupta, Member

Present Appeal is directed against the Order dated 29-01-2015, passed by the Ld. District Forum, Kolkata, Unit-II (Central) in CC/294/2014 whereof the complaint has been allowed on contest.

Brief facts of the complaint case are that the Complainant obtained an insurance policy from the OPs, namely, ‘Invest Assured Gold Policy’ on 17-10-2007.  In terms of the said policy, the Complainant was required to pay Rs. 1,00,000/- as premium for the initial five years.  Accordingly, the Complainant paid all the premiums in time.  However, on 29-01-2014, he was surprised to receive a Fund Activity Statement from the OPs wherein it was stated that the said policy would be discontinued if regular premium stood outstanding for 31 days from the premium due date.  Subsequently, the Complainant received a cheque for a sum of Rs. 98,234.01 being the auto-surrendered value of his policy.  Although he raised strong protest against such arbitrary action of the OPs, the latter did not redress his grievance; hence, this complaint.

By submitting a WV, the OPs stated that when the Complainant evinced his interest over the subject policy, he was duly explained the benefits, terms & conditions of the same.  After understanding the details, he opted for the said policy and on receipt of due premium together with the duly signed proposal form, the instant policy was issued in favour of the Complainant and subsequently, policy documents were sent to his residential address.  As the subject policy covered high risk and also, due to cost of insurance, the fund value towards the policy became lower than the premium paid.  Total fund value was Rs. 98,234.01 on 28-01-2014, which was below the one annual premium amount of Rs. 1,00,000/-.  Accordingly, the said policy got automatically surrendered as per the policy provision and the OP sent the surrender value cheque to the Complainant.

Decision with reasons

We have heard the averments of Ld. Advocates of the parties and gone through the documents on record. 

On a reference to the policy documents and having heard the submission of Ld. Advocates concerned, it appears to us that, thanks to inappropriate presentation of intricate details of the policy terms and conditions in the policy documents, the present dispute cropped up. 

Perusal of the policy documents reveal that, the same in crystal clear terms entailed, under the heading, ‘Schedule of Benefits and Premiums’, payment of annual premium @ Rs. 1,00,000/- for 5 years since inception and also that last premium was payable on 17-10-2011. Basis such stipulation, if the Respondent presumed that post payment of annual premium for the fifth year, he need not pay any further premium in respect of the said policy, surely, he could not be cursed too much, particularly when no such rider was stipulated therein to enable the Respondent understand his obligation of maintaining cut off fund value equivalent to one year annual premium at all times.

The termination clause of the subject policy contained that all coverage under the policy would automatically terminate on the occurrence of (1) maturity, lapse, surrender of the same or (2) death of the Insured or (3) when total fund value of the policy would be such that the surrender value would fall below an amount equivalent to one annual regular premium provided the policy completed three policy anniversaries. 

In this regard, it is noteworthy that the subject policy was scheduled to be matured on 17-10-2038.  Therefore, there was no question of termination of the policy on account of maturity of the subject policy as on 28-01-2014.

As per policy stipulation under the heading Schedule of Benefits and Premiums’, Respondent paid all the required five premiums.  Presumably, as a person of normal prudence, he was under the impression that he need not worry about the possibility of cessation of the policy on this score.

The Respondent undisputedly did not make any such request for surrendering the subject policy.

Condition No. 2 of the termination clause was also not applicable in respect of the Respondent.

Conditions No. 3 of the termination clause shows that this provision would come into play when the policy is surrendered. It appears from the copies of correspondence made by the Respondent that he was under the impression that this condition was not applicable to him as he never volunteered to surrender the said policy.  

Although it is claimed by the Appellants that the Respondent was duly apprised of the benefits and terms & conditions before signing the policy documents; it is clear from the copies of correspondences made from the side of the Respondent that he did not have slightest inclination that he was required to stay put and pump money into the policy periodically to ensure that the fund value never fall below the annual premium amount. 

Admittedly, it was obligatory on the part of the Appellants to provide periodical unit statements to the Respondent.  However, no such documentary proof is forthcoming before us to show that the Appellants walked the talk in this regard.  Not a single copy of such statement that was supposed to be provided to the Respondent on or before 29-01-2014 is either furnished from the side of the Appellants in order to establish that all their dealings were above board.

Significant to note here that the Respondent stated in his petition of complaint that, he received one such unit statement from the side of the Appellants on 29-01-2014.  However, the very timing of sending the aforesaid statement does raise eyebrows.  It is stated by the Appellants in their WV that on 28-01-2014, fund value fell below one annual premium of Rs. 1,00,000/- and accordingly, the policy got automatically surrendered.  In such circumstances, what was the point of reminding the Respondent on 28-01-2014 that the subject policy would be discontinued if regular premium remained outstanding for 31 days from the premium due date. After the policy got auto-surrendered, it was pointless issuing such statement to the Respondent.

It further appears that there were mention of two types of premiums in the policy document, viz., (1) Regular premium and (2) Top-up premium. Although the policy document does not define regular premium in crystal clear terms, according to the policy documents, top-up premium means unscheduled premium.  Taking a cue from such definition of top-up premium, it can reasonably be presumed that by regular premium, the policy document meant scheduled premium.  According to the policy bond, the Respondent was supposed to pay premiums during the initial five years. Since the Respondent discharged his liabilities by paying all the five annual premiums in time, he was totally at a loss to receive the unit statement dated 28-01-2014 from the Appellants that fund value of the policy fell below one year regular premium amount on account of non-payment of regular premium.

Also, we have taken due note of the fact that the Appellants have refrained from furnishing any Statement of Account, thereby proving beyond doubt that there was no arbitrariness in determining the fund value of the subject policy since inception of the same. In absence of requisite periodical statement from the side of the Appellant, it was virtually impossible for the Respondent to take corrective measure in time to save his policy. 

To be fair to the Appellants, we are fully appreciative of the fact that it was the primary responsibility of the Respondent to go through the policy documents carefully.  At the same time, it is equally true that Appellants too were supposed to keep the Respondent in the loop about associated risk factors while filling up the proposal forms to enable the latter take an informed/judicious decision. 

Selling insurance products to consumers cannot be the be all and end all of any Insurance Company.  Being experts in the field, representatives of Insurance Companies are supposed to disclose all salient features of the policy, particularly the associated risk factors to prospective clients who are not supposed to be well conversant with the nitty-gritty of unit-linked policies.  Unfortunate though, this is honoured in its breaches most of the times.  As noted hereinabove, the letters of the Respondent bear enough testimony of the fact that grey areas of the policy were purposely not brought to the notice of the Respondent. 

To aggravate the situation further, since it was clearly mentioned in the policy documents that the Respondent was required to pay only 5 annual premiums and that the last premium under the policy was payable on 17-10-2011, quite predictably, Respondent was under the impression that after payment of 5 annual premiums, he need not pay any further amount to keep the policy alive. 

If the Respondent was guilty of not reading between the lines of the policy documents; so were the Appellants, who laid the trap by authoring complex/vague/confusing terms and conditions which was not easily comprehensible by any human being of normal prudence.  It is bounden duty of the Insurance Company to set out relevant terms and conditions in such a fashion that it leaves no room for any sort of ambiguity.  That being not done, to our mind, the Appellants cannot evade their moral responsibility towards the Respondent. Insurance company cannot rely on Exclusion (Termination) clause to repudiate a claim without apprising Complainant about the same [2017 (4) CPR 754 (NC) relied upon].

For all these reasons, we feel that the instant complaint was rightly allowed by the Ld. District Forum.   However, in the facts and circumstances of the case, the penal damages @ Rs. 300/- per day appear totally uncalled for.  Further, insofar as the Respondent enjoyed insurance benefit for 5 long years, we deem it fit and proper to exonerate the Appellants from the liability of paying any interest over the sum of Rs. 5,00,000/- as ordered by the Ld. District Forum.

The Appeal, thus, succeeds in part.

Hence,

O R D E R E D

That the Appeal stands allowed on contest in part against the Respondent.  The impugned order is modified as under:

The Appellants shall return Rs. 5,00,000/- to the Respondent within 40 days hence, i.d., simple interest @ 9% over the aforesaid sum shall accrue from this day till full and final payment is made.