LIFE INSURANCE CORPORATION OF INDIA vs Sudhi P.P.

BOTH these revision petitions are based on identical facts and involve similar question of law and hence are being disposed off by this common order. For the purpose of narration of facts, the lead case is Revision Petition No. 2674 of 2013.

BRIEFLY stated, the respondent Smt. Sudhi P.P., who is the complainant in this case, deposited a sum of Rs.50,000/ - in Growth Fund Market Plus Policy issued on 11.12.2007 by the petitioner Insurance Company/opposite party through their agent Vijaya Raghavan. As per the allegations, the agent had told the complainant / respondent that the amount could be withdrawn only after three years. On 29.11.2011, after three years, the respondent/complainant approached the opposite party/petitioner for withdrawing the amount but she was shocked to know that she would get only Rs.49,799/ - . It was the grievance of the respondent that in spite of the amount remaining in deposit for four years, she did not get any increase in the deposited amount. Alleging this as deficiency in service, the complainant/respondent filed a consumer complaint with the District Consumer Disputes Redressal Forum, Palakkad praying for a compensation of Rs.2 lakh with interest @12% p.a. in addition to court expenses and compensation for mental agony. The OP/petitioner filed its reply before the District Forum in which it was admitted that the complainant had availed Market Plus Policy for Rs.50,000/ -. It was submitted that Market Plus Policy was subject to market risk and was issued subject to terms and conditions mentioned in the policy document itself. As per the policy document, the risk has to be borne by the life assured during the term of the policy and the value of the policy holders unit account shall be the number of units in the account multiplied by the NAV of the units of that date. In view of this, the NAV of units was likely to increase or decrease depending upon the investment performance of the fund. It was also submitted by the opposite party that it had advised the complainant not to surrender the policy when the market was low. It also pointed out that it never advertised or made any propaganda that the market value of the policy would get doubled after three years. Denying any deficiency in service on its part, the OP Insurance Company prayed for dismissal of the complaint.

BOTH the parties filed their affidavits of evidence along with other documents. After hearing the parties and appraising the evidence before it, the District Forum dismissed the complaint vide its order dated 15.05.2012. Aggrieved by this order of the District Forum, the complainant / respondent filed an appeal bearing No. 541/2012, before the Kerala State Consumer Disputes Redressal Commission (for short ''the State Commission '') which vide its impugned order dated 08.03.2013 accepted the appeal and reversed the order of the District Forum in terms of the following directions: - ''''The opposite party is directed to refund Rs.50,000/ - with interest at the rate of 9 % per annum from the date of investment till date of refund. The amount if any already paid shall be deducted from the amount ordered to be paid. The parties are directed to bear their costs in the appeal. ''''

IT is against the aforesaid order of the State Commission that the present revision petition has been filed. The other revision petition is also against a similar order passed on the same date by the State Commission in the other appeal bearing No. 542/2012. We have heard Ms. Jaya Tomar, Advocate for the petitioner Insurance Company and Shri Sankunni P.P., who has filed authority letter issued in his favour, for the respondent and perused the record.

LEARNED counsel for the petitioner has submitted that the State Commission while reversing the well -reasoned order of the District Forum has failed to take into consideration clause 20 of the Policy in question, which clearly states that the risk under the Policy is borne by the life assured. It also failed to consider the fact that when there is no pleading by the respondent in her complaint that the petitioner Insurance Company has not invested the fund prudently then there was no need for the petitioner to prove the same. She further submitted that the District Forum had considered different terms and conditions subject to which the policy in question was issued and keeping them in view it rightly non -suited the claim of the complainant and held that there was no deficiency in service on the part of the petitioner insurance company. The State Commission while reversing this order of the District Forum not only failed to take into consideration these important terms and conditions of the policy but has also reversed the order on strange grounds and reasons, which cannot be sustained in the eyes of law. She submitted that it is well -settled by now that it is not permissible for the courts to substitute the terms of the contract itself under the garb of construing terms incorporated in the agreement of insurance. She finally submitted that the amount of refund calculated on the request of the respondent for pre -mature surrender of the Policy was strictly in accordance with the terms of the policy and based on NAV (Net Assets Value) of the fund prevailing on the date of the surrender. There was, thus, no deficiency in service on the part of the petitioner Insurance Company and hence the impugned order is liable to be set aside. On the other hand, the Authorised Representative of the respondent submitted that the State Commission has rightly accepted the appeal and reversed the order of the District Forum. He has also filed written arguments on behalf of the respondent in which it is stated that the petitioner Insurance Company had accepted the fund amount under the Policy from the respondent by undertaking to conduct share trading business on behalf of the respondent. According to the respondent, it has not been shown and proved by the Insurance Company as to whether it conducted this business honestly and fairly by taking due care and caution. She has alleged that the transactions done by the Insurance Company were unilateral without disclosing the details thereof to the respondent and hence loss sustained by the complainant/respondent was due to negligent conduct and deficiency in service on the part of the Insurance Company, for which they have been rightly held liable by the State Commission vide its impugned order which deserves to be confirmed.

HAVING considered the rival contentions, we find that the terms and conditions of the policy in question, a copy of which is placed on record, are quite elaborate and specific. While pre -mature surrender is permissible under the Policy after a minimum period of three years, the maturity date given in the Policy is 11.12.2018. These facts are not in dispute. This being the position, we find that the District Forum has returned its finding strictly in terms of the conditions subject to which the growth policy was issued. While dismissing the complaint of the respondent, it has observed thus: - ''''It is an admitted fact that the complainant has taken a market plus policy in the year 2007 and premium of Rs.50,000/ - was paid and surrendered an amount of Rs.49,799/ - in the year 2011. Complainant himself has stated in the complaint that he has deposited the amount in growth fund, market plus plan. Complainant has no case that the agent has misrepresented him regarding the terms and conditions of the policy. Complainant has merely stated that the agent has told that the amount cannot be withdrawn within 3 years of deposit. Ext.B1 proposal form is signed by the complainant. As per Ext.B2 the maturity date of the policy is 11/12/2018. Complainant has surrendered the amount in the year 2011 much prior to the maturity date. Complainant himself has stated that opposite party adviced not to withdraw at that time as the market was low. As per clause 10 of Ext.B2 policy, the surrender value payable will be fixed value of units held in the policy holders account at the date of surrender. As per Ext.B4 the number of units held by the complainant is 33674.61 units. The said units multiplied by the NAV as on the date of surrender cuts to Rs.49,499/ -. Said amount was paid to the complainant as evident from Ext.B4.

We understand that the complainant has deposited the amount under high expectation and the complaint in the result of loss of that expectation. Market plus plan being an unit linked policy in subject to market variation. Insurance being a contract between the parties, they are bound by the terms and conditions of the policy. It is settled position that forum cannot go beyond the terms and conditions of the policy. We find that opposite party has paid whatever amount complainant is entitled to. Hence we are not in a position to attribute any deficiency in service on the part of opposite party '''' We may note that even though the State Commission has not pointed out violation of any of the conditions of the Policy on the part of the Insurance Company which could constitute deficiency in service, it has yet reversed the finding returned by the District Forum on some reasoning which, in our view, is strange and unjustified. It has given the following reasons in support of the impugned order which may be reproduced thus: - ''''In market plus plan policies especially in growth fund plans there is a striking difference with the other simpler life insurance policies. Here nearly 80% of the amount is invested in the share market and that amount is liable to the vagaries of the share market. Once amount is invested with the opposite party the complainant has no say as to the nature of the shares in which or in the shares of which company the amount is to be invested. Here involves a risk factor and therefore a duty is cast on the part of the officers of the opposite party to invest in only those shares the value of which are likely to increase, that is, a question of prudent investment of the amount in the share market is involved. It is the duty of the opposite party to convince the insured that her money was invested and prudently managed by the opposite party in the share market. No such plea is taken by the opposite party. They simply say that the complainant is bound to accept the money which they offer. There is an element of deficiency in service involved in this aspect. In the absence of specific contention and proof that the money invested by the appellant/complainant was prudently invested in share market by the opposite parties, they are bound to reasonably compensate the complainant especially as expectation of reasonable increase in her investment was natural. Hence I am inclined to hold that the respondent is bound to refund the invested amount with reasonable interest of 9% per annum. In the circumstances, separate compensation for deficiency in service need not be allowed. ''''

WE do not agree with the view taken by the State Commission. It is not understood as to how and on what basis, the State Commission could assume that ''''It was the duty of the OP to convince the insured that her money was invested and prudently managed by the opposite party in the share market '''' and that the Opposite party failed to do so. Learned counsel for the petitioner has rightly pointed out that there was no such plea by the complainant / respondent in her complaint. In such a situation, the question of any plea being taken by the petitioner Insurance Company did not arise. In any case, it has to be appreciated that Life Insurance Corporation of India which is the petitioner herein is the largest company in the field which is required to manage billions of rupees deposited by the policy -holders and a large number of professionals constantly oversee and advise the investments of the Company in different products in the market. Had this ground been taken by the petitioner/complainant, it could have been easily dealt with and suitably answered by the Insurance Company. The finding of the State Commission, therefore, is not only perverse but is based on lack of information on the subject. In the circumstances, the impugned order is liable to be set aside. We, therefore, allow the two revision petitions, set aside the impugned orders and restore the orders passed by the District Forum and dismiss the complaints with the direction that parties shall their own costs.