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Judgment
V.K. Jain, Presiding Member
Oral arguments were heard on 7.1.2020. Thereafter, the complainant submitted brief written arguments, which have been considered.
The complainant / respondent No.1 obtained a Unit Linked Insurance Policy from the petitioner company through respondent No.2 Union Bank of India. The policy document issued by the petitioner company was duly received by him. The policy was issued for a term of 12 years and the annual premium stipulated in the policy was Rs.10 lakhs. Minimum fund value, as per the Schedule of Benefits incorporated in the policy document, was Rs.10 lakhs. The Premium clause contained in the policy required the first premium to be paid alongwith the application and subsequent premium to be paid, in full, on the dates and at the frequency set out in the policy schedule. It was stipulated that if the premium remained unpaid 15 days after due date, the policy would become lapse or become paid-up. The policy holder could increase of decrease his regular premium amount, subject to discretion of the insurer, subject to deduction of the Premium Reduction Charges from the Unitized Fund Value. It was also stipulated in the policy document that the policy might be surrendered at any time after the completion of three years and the amount payable on surrender would be Unitized Fund Value, arrived at after deduction of surrender charges, and upon payment of such benefit, the policy would terminate. It was also stipulated that if any premium remained unpaid during the first three years of the policy, the policy would lapse but the lapsed policy could be revived any time during the period of two years from the date of lapse of the policy or till the end of three years from inception, whichever was earlier. It was further stipulated that if the policy was not revived, the Unitized Fund Value at the date of lapse, less surrender charges, would be paid to the policy holder at the end of two years from the date of lapse or at the end of three years from the inception whichever was later.
The policy document also stipulated that if any premium remains unpaid after the first three years of the policy, the policy would be made paid-up, the unitized funds will continue to be invested, all charges will continue to be deducted and the policy holder will be entitled to all policy servicing. Clause 5(iii)(d) of the policy document provided that if the value of units in a paid up policy fell below the minimum fund value as specified in the policy schedule, the policy would be cancelled and the amount payable on cancellation would the Unitized Fund Value, arrived at after deduction of the surrender charges.
The complainant paid first premium of Rs.10 lakhs to the petitioner. Thereafter, he submitted a letter dated 18.7.2009 to the petitioner seeking reduction of the premium from Rs.10 lakhs to Rs.2,50,000/-. The request was granted by the petitioner vide its letter dated 29.11.2009, w.e.f. 30.1.2009. It was reiterated in the said letter dated 29.11.2009 that if fund value of the policy falls below the minimum criteria, it could lead to policy cancellation. The criteria for determining the fund value was also reproduced in the said letter. The complainant paid two premiums of Rs.2,50,000/- each to the petitioner company but did not pay any premium in the year 2011 though the said premium had become due on 30.1.2011. The complainant was informed by the petitioner vide its letters dated 7.2.2011 and 21.3.2011 that the policy was in paid-up status and he was advised to pay the renewal premium. The complainant instead of paying any premium for the year 2011, wrote a letter dated 17.8.2011 to the petitioner company stating therein that he had come to know on 16.8.2011 through a message on his phone that the policy had been cancelled. It was further stated in the said letter, that the policy was taken by him from Union Bank of India which had informed him that he could pay Rs.10 lakhs in the first year and thereafter he could pay Rs.10,000/-. He sought refund of the amount of Rs.15 lakhs which he had paid to the petitioner. He was informed by the petitioner company vide its letter dated 25.8.2011 that the policy had attained a paid-up status due to non-receipt of the renewal premium which was due on 30.1.2011. He was further informed that the policy had been cancelled since the fund value had fallen to less than Rs.10 lakhs which was the minimum fund value stipulated in the policy document. It was also informed to him that a cheque dated 12.8.2011 for an amount of Rs.997246.81, which represented the fund value on the date of cancellation of the policy had been sent to him but he did have option to reinstate the policy by paying the outstanding premium alongwith fund value cheque refunded to him. Instead of making any payment to the petitioner, the complainant encashed the cheque of Rs.997246.81 sent to him by the petitioner and thereafter filed a consumer complaint before the concerned District Forum impleading the petitioner company as well as Union Bank of India as the opposite parties in the complaint, seeking refund of the amount which he had paid to the petitioner company alongwith interest @ 12% p.a. or in the alternative revival of the policy with all benefits accruing therefrom.
The complaint was resisted by the petitioner company which justified the cancellation of the policy on account of non-payment of the premium due on 30.1.2011.
The District Forum having dismissed the consumer complaint filed by him, the complainant approached the concerned State Commission by way of an appeal. Vide impugned order dated 11.2.2017, the State Commission directed as under:-
"The appeal is allowed on contest against the respondents with cost of Rs.10,000/-. The appellant is also entitled to get back, within 45 days from the date of this order, the residual amount of Rs.5,02,753.19 from the respondent Nos.1 to 3 together with simple interest @ 9% p.a. with effect from the date of filing of the complaint before the Ld. District Forum till full and final payment is made. The impugned order is hereby set aside."
Being aggrieved from the order passed by the State Commission, the petitioner is before this Commission by way of this revision petition.
It is an admitted position that the policy document was duly received by the complainant. Therefore, all the terms and conditions of the policy came to be known to him as soon as the policy document was received. The insurance policy has a free look period of 14 days in which the policy can be returned by the insured if its terms and conditions are not acceptable to him. Admittedly, the policy was never returned by the complainant to the petitioner. The terms and conditions of the policy were thereby accepted by him.
As per the terms of the insurance policy noted hereinabove, the policy was to become a paid-up policy if any premium remained unpaid after the first three years of the policy. In that case, the unutilized funds would continue to be invested and the policy holder would be entitled to the benefits available in respect of a paid-up policy. Admittedly, the insurance premium payable on 30.1.2011 was not paid by the complainant at any point of time though it was required to be paid within 15 days of the due date. As a result, the policy taken by him became paid-up policy. The case of the complainant is that Union Bank through which the policy was taken by him had told him vide letter dated 4.12.2008, that he could pay a minimum premium of Rs.10,000/- per year. The said letter was given to the complainant by the Branch Manager of Union Bank of India which was acting as an agent of the petitioner company while selling the policy to the complainant. Though the case of the petitioner is that the Bank was not authorized to decide the minimum premium which could be paid by the policy holder and the reduction in the policy premium required approval of the insurer, the fact remains that the complainant did not pay even the minimum premium amounting to Rs.10,000/- on 30.1.2011 or within 15 days thereafter. If the petitioner believed that he was required to pay at least Rs.10,000/- as annual premium, at least that much amount ought to have been paid by him within 15 days of the due date, in order to keep the policy alive. Even that having not been done, the petitioner company, in my opinion, was fully justified in treating the policy as a paid-up policy and later on cancelling the same when the fund value of the policy came below Rs.10 lakhs on account of erosion in the NAV of the units. At no point of time before cancellation of the policy, the complainant informed the petitioner company that the Bank had represented to him that he could keep the policy alive by paying a minimum annual premium of Rs.10,000/-. What is crucial for the purpose of deciding this petition is that even the premium of Rs.10,000/- which according to the complainant was the minimum premium required to be paid by him to keep the policy alive was not paid by him on or before the due date or even thereafter. As noted earlier, the policy was cancelled by the petitioner company on 8.8.2011. Even till that date, no attempt was made by the complainant to pay the premium amounting to Rs.10,000/- to the petitioner company.
The first communication after cancellation of the policy was sent by him to the petitioner company on 17.8.2011. Even in the said letter dated 17.8.2011, he did not offer to pay the premium amount of Rs.10,000/- for the year 2011. The petitioner only wanted refund of the entire amount which he had paid to the petitioner company alongwith bank interest on that amount. He never sought revival of the policy or recall of the cancellation on payment of the premium amounting to Rs.10,000/-. It is, therefore, evident that the complainant was not willing even to pay the amount of Rs.10,000/- which according to him was the minimum premium payable by him in order to keep the policy alive. Therefore, the petitioner company, in my opinion, was fully justified in treating the policy as a paid-up policy and then in cancelling the same when the fund value fell below Rs.10 lakhs. The complaint, therefore, merited dismissal.
Admittedly, the complainant received payment of Rs.997246.81 representing the fund value as on the date of cancellation of the policy. Having accepted that amount, he is estopped from disputing the cancellation of the policy on account of his failure to pay the requisite premium and the fund value having gone below the required value of Rs.10 lakhs. This is yet another ground justifying dismissal of the complaint.
For the reasons stated hereinabove, the order passed by the State Commission cannot be sustained and the same is hereby set aside. The consumer complaint is consequently dismissed, with no order as to costs.