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Judgment
THIS revision is directed against the order of the State Commission Maharashtra dated 10.04.2013. The main controversy in the revision petition is in regard to the surrender value of the policy payable to the insured before the maturity period is over.
BRIEFLY stated facts relevant for the disposal of the revision petition are that the respondent complainant obtained insurance policy with sum assured of ''''75000/ - '''' on 11.11.1993 with date of maturity 11.11.2018. The respondent failed to pay the insurance premium from August 2002 onwards resulting in the lapse of the policy. The complainant had taken a loan against the policy. The complainant applied for release of surrender value of the policy as he was not in a position to pay the arrears of premium for revival of the policy. The petitioner insurance company assessed the surrender value and offered to pay a sum of Rs.2268/ - to the respondent complainant after adjusting the amount of loan due from the complainant. The complainant did not accept the offer because while computing the surrender value, bonus amount of Rs.37800/ - was not taken into account. Claiming this to be deficiency in service, the respondent filed a consumer complaint. The petitioner in its written statement admitted issue of insurance policy in favour of the complainants. According to the petitioner, the complainant stopped payment of the premium w.e.f. August 2001 and applied for the surrender value under the policy. Accordingly, the surrender value was calculated and after deducting the loan of Rs.15,000/ - which was taken by the petitioner against the policy as also the thereon, offered the balance Rs.2268/ - to the respondent which was not accepted by the complainant.
THE District Forum on consideration of the pleadings and evidence on record, allowed the complaint and ordered thus: ''''1. The respondent shall pay to the complainant the amount of Rs.29888/ - (Rupees Twenty Nine Thousand Eight Hundred Eighty Eight only) with interest @ 9% p.a. from the date of filing of the complaint (21.07.2004). 2. The respondent shall pay to the complainant the costs of Rs.1000/ - (Rupees one thousand only) 3. The respondent shall comply with the order within 30 days of the receipt of the true copy of this judgment. ''''
FEELING aggrieved of the order of the District Forum, the petitioner preferred an appeal. The State Commission Maharshtra Mumbai, however, dismissed the appeal. Mr. U.C.Mittal, Advocate, counsel for the petitioner insurance company has contended that the impugned orders of the fora below are unsustainable as the orders have been passed on wrong interpretation of condition no.7 of the insurance policy which deals with the guaranteed surrender value. It is submitted that since the status of the subject policy was ''''lapsed '''' as on the date of request of the complaint, the surrender value was calculated in term of condition no.7 of the policy as 30% of sum of premium paid by the respondent excluding the premium for one year plus the bonus declared from year to year till the date on which the policy lapsed and after adjusting the dues against the loan taken by the complainant, balance Rs.2268/ - was offered to the complainant.
LEARNED counsel for the opposite party on the contrary has argued in support of the impugned orders. She has contended that till date, there is no policy or guideline to compute the paid up / surrender value of a lapsed policy. If we go by condition no.7 of the insurance policy, then the guaranteed surrender value has to be 30% of the amount of premiums paid excluding one year premium plus the accrued bonus declared from year to year. It is argued that the insurance company was not justified in offering payment of 30% of the accumulated bonus against the expressed terms of the insurance policy. Thus, learned counsel for the respondent has urged us to dismiss the complaint.
WE have considered the respective submissions. The precise question which needs determination is that while computing the surrender value of the insurance policy before the maturity date, can the insurance company reduce the amount of the cash value of declared bonus to 30%?. Similar question came up for determination before the five member Bench of this Commission in the matter of Branch Manager, LIC of India & Anr. Vs. A. Paulraj II (1996) CPJ 69 (NC), wherein the larger Bench of this Commission took the view that while computing surrender value of a lapsed policy, the cash value of the accrued bonus cannot be the same if the payment is made before the maturity of the policy. Relevant observations of the larger Bench are reproduced thus: ''''We have heard the Counsel for the LIC at length. Neither the respondent nor his Counsel/authorised representative was present when the case was taken up for hearing. We have carefully perused Condition No.7 which defines the guaranteed surrender value. This Condition is as follows: Guaranteed Surrender Value: This policy can be surrendered for cash after the premiums have been paid for at least three years. The minimum surrender value allowable under this policy is equal to 30% of the total amount of the mentioned premiums paid excluding premiums for the first year and all extra premiums and/or additional premiums for accident benefit that may have been paid. The cash value of any existing vested bonus additions will also be allowed. The question for decision, therefore, is as regards the cash value of any existing bonus additions. The contention of the insured is that the cash value of the bonus should be the same as the accrued bonus thereon even before the maturity of the policy. That obviously is not the correct in terms of Condition No. 7. If the intention was to pay the entire bonus accrued on the policy at any given point of time before maturity, then the concept of cash value would not have been incorporated in this condition for calculating the guaranteed surrender value. The total amount of bonus is paid on the maturity of the policy along with the final payment and till then it remains with the LIC which can utilise it for investment purposes. If it has to pay the accrued bonus earlier than the final payment, the Condition No. 7 introduces the concept of cash value of the total accrued bonus upto that point to time, and the cash value has been calculated according to the surrender value factor which has been clearly indicated in the sheet showing calculation of the surrender value of the policy. We, therefore, find that the State Commission has erred in construing the cash value to be the same as the accrued bonus even, when paid before the maturity. We, therefore, accept this appeal and set aside the order of the State Commission and District Forum and dismiss the complaint. We hold that the surrender value as shown in the calculation sheet and for which the cheque of Rs.2,927.40 was sent to the insured is correct. There is no order as regards costs. ''''
WE find no reason to differ with the view taken by the larger Bench. In view of the above judgment, it is clear that the insurance company was right in applying the formula of 30% of total amount vis -à -vis the accrued bonus while computing the surrender value of the insurance policy. Therefore, we are of the view that the fora below have committed a grave error in allowing the complaint of the respondent in utter disregard of the judgment of the larger Bench in the case of Branch Manager, LIC of India and Anr. Vs. A. Paulraj (supra). The impugned order, therefore, cannot be sustained.
IN view of the above, the revision petition is allowed, impugned orders of the fora below are set aside and the complaint is dismissed.