Amarjit Kaur Vs Kotak Mahindra Old Mutual Life Insurance Ltd. & Anr

Dr. S.M. Kantikar, Presiding Member

1. This Revision Petition has been filed under section 21(b) of the Consumer Protection Act, 1986 by Amarjit Kaur (hereinafter referred to as the “Complainant”) against the Order dated 22.01.2016 of the State Consumer Disputes Redressal Commission, Punjab, (for short “the State Commission”) in First Appeal No. 1362 of 2013, wherein the Appeal filed by the Appellant (Respondent herein) was allowed and the Order dated 30.08.2013 passed by District Consumer Dispute Redressal Forum, SAS Nagar, Mohali (for short ‘District Forum’) in CC No. 128/2013 was set aside.

2. The issue pertains to an alleged deficiency in service and unfair trade practices, wherein an employee of the OPs approached the complainant to purchase an insurance policy. He allured informed the complainant that she could withdraw the amount after 3 years or receive double the amount after 10 years. Relying on this assurance, the complainant paid a one-time premium of Rs.4,60,000/- through a cheque. The OPs issued a policy under the ‘Kotak Secure Retirement Plan’. However, when the complainant tried to withdraw the deposited amount after 3 years, OP-1 refused to pay her. The complainant was illiterate, and her husband a small agriculturist. The OPs concealed the information, obtained her thumb impression on papers, and issued her a wrong policy.

3. Being aggrieved, the Complainant filed a Consumer Complaint before District Forum, Mohali and prayed for refund of Rs.4,60,000/- with compensation of Rs.50,000/- for mental agony  and Rs.8,000/- as costs of litigation.

4. The OPs in their reply raised preliminary objections that the complaint was barred by limitation under section 24 A of the Act. The cause of action had arisen to the complainant on 23.03.2009 whereas the complaint was filed on 25.03.2013. Also the complaint is liable to be dismissed for non-joinder of necessary party i.e., Kotak Mahindra Bank Ltd.

5.  The OPs further submitted that the Complainant signed the proposal form after understanding its contents and was explained the details by Jaswinder Singh and Ms. Garima Gupta. There was a 15-day free look period during which the complainant could have returned the policy if unsatisfied. The complainant was informed about renewal premium but did not make the payment. The OPs sent a letter dated 22.02.2010 and 23.03.2010 informing her of the revival period, but she did not respond. The policy was eventually terminated on 23.03.2012, and a cheque of Rs.32,079.10 was sent to the Complainant according to the policy's terms and conditions. Thus, denying all the allegations of the complaint the OP has sought dismissal of the complaint.

6. The District Forum allowed the Consumer Complaint and directed the OPs to refund Rs. 4,26,421/- with interest @ 9% per annum from the date of legal notice (01.03.2013) till realisation along with lump sum compensation of Rs.50,000/- for mental agony and harassment and litigation costs.

7. Being aggrieved by to the Order of the District Forum, the OPs filed the First Appeal before State Commission, Punjab. The Appeal was allowed and the Order of District Forum set aside with the following observation: -

“9. It is further argued by the counsel for OPs that the District Forum allowed a sum of Rs. 4,60,000/- relied upon clause 7 of Gazette Notification dated 01.07.2010 issued by IRDA In which maximum discontinued charges have been referred and that the said notification is not applicable to the facts of the case. As is clear from the pleadings pf the parties, policy was sold to the complainant on 23.03.2009, certainly before issuance of the notification dated 01.07.2010 and there is nothing in the notification that it will apply retrospectively, therefore, findings of the District Forum to allow the deductions on the basis of clause 7 of the Gazette notification dated 01.07.2010 issued by IRDA are incorrect findings. The complainant was present in person and her advocate did not come forward to contradict the same. Otherwise, prima facie, it is clear that any notification will not operate retrospectively unless it is specifically mentioned in the notification, therefore, findings of the District Forum to affect maximum deductions under that notification are incorrect findings. This view was upheld by State Consumer Disputes Redressal Commission, U.T. Chandigarh in appeal No. 307 of 2013 decided on 10.09.2013 titled as "Kotak Mahindra Vs. Anu Goyal.” In case, IRDA 2010 was not applicable then IRDA 2005  will be applicable and according to clause 5.5 (ii) in case, premium have not been paid for the last 3 consecutive years from inception  of the policy, the insurance cover under the unit linked life insurance  contract shall cease immediately and according to clause  5.8 in case contract is not revived during this period, the contract shall be terminated and surrender value, if any, shall be paid at the end of third policy anniversary or at the end of the period allowed for revival whichever is later. According to that at the end of revival period, the surrender value has been calculated as Rs. 32079.10 and has been. paid to the complainant. Again the complainant was unable to rebut this preposition. Under these circumstances, the order passed by the District Forum is relied upon IRDA 2010 is not legally sustainable in view if the reason stated above.”

8. The Counsel for the petitioner vehemently argued that the complainant, being illiterate, was misled by the agent who promised her that her money would be doubled in ten years and could be withdrawn after three years. It is alleged that the terms and conditions of the policy were not properly explained to her, and her thumb impression was obtained on printed papers. The counsel further argued that provisions that allow the insurance company to forfeit the complainant's money on technical grounds should not be upheld in law. Additionally, referring to the Gazette Notification dated 01.07.2010, the counsel states that the insurer is only allowed to deduct a maximum of 10% of the annualized premium or fund value upon discontinuation, with a maximum limit of Rs.1500/-, and the remaining amount should be refunded by the insurer (OPs).

9. The learned Counsel for the OPs/respondents argued that the District Forum did not find any evidence of mis-selling the policy to the petitioner/complainant. The decision was based solely on the IRDAI Notification dated 01.7.2010. The State Commission correctly held that the 2010 notification does not have retrospective effect and that the IRDAI Notification 2005 applies. The counsel refers to a judgment passed by Commission in RP No. 2356 of 2013 titled as “Aviva Life Insurance Co. India Pvt. Ltd. Vs. Shelly Sharma & Anr. has held that the notification dated 01.07.2010 has no retrospective effect. The learned Counsel also argued that the petitioner is bound by the policy and its terms and condition.

10. He further argued that the policy was terminated as per clause of the terms and conditions and cheque amounting to Rs.32,079.10 was sent to the Complainant/ Petitioner. The breakup of the same amount is as under:-

11. Heard arguments from both the sides and perused the material on record.

12. I have perused all the material records. The proposal form on record reveals it was Kotak Retirement Plan. It was Unit Linked Investment Policy (ULIP). It is surprising to note the insured was an illiterate lady of age 56 years at the time of purchasing the policy. The proposal clearly established that she don’t know either writing or reading. Thus, it is cleared that the agent of the insurance company has filled the form in English language and took thumb impression of the insured. In my view it was misleading to the poor and innocent consumer. The insurance Company just allured the innocent consumer and issued the policy without proper explanation. It is illogical and unpalatable that paying a premium of Rs.4,60,000.- and thereafter receiving merger amount less than 10% i.e., Rs.32.079.10 as a refund itself appears to be unjust enrichment of  insurance company.

13.  The statement of objects and reasons stated in the Consumer Protection Act, to provide better protection of interest of consumer. However, such instances with the poor illiterate consumers defeat the object of the Act. Therefore, the considering the peculiarity of the case and moreover insurance company collected huge premium. Unfortunately, the Complainant could not get benefit of the gazette notification dated 01.07.2010. Therefore, in the ends of justice, the insurance company shall refund the premium amount after deducting 10% of the premium amount within four weeks from today. Beyond four weeks the OPs liable to pay interest @8% per annum till its realization.

14. The Revision Petition is partly allowed.