Failure To Refund Premium Amount Within Free Lock Period, Chandigarh District Commission Holds Max Life Insurance Co. Liable

Brief Facts:

Yes Bank approached Harminder Kaur (“Complainant”) with an offer to purchase an insurance policy from Max Life Insurance Co. Ltd. (“Insurance Company”). The offer included a three-year investment period with a one-time payment of ₹ 1,00,000, survival benefits of ₹ 5.45 lacs after three years, as well as income tax and life risk benefits. The Complainant agreed to the offer, transferred ₹1,00,000 to the insurance company, and received the policy on 15.2.2021. However, upon inspection, she discovered discrepancies, such as the maturity date being fixed as 29.1.2031 and the premium payable for five years. The Complainant made several attempts to contact Yes Bank and the Insurance Company by sending emails and letters. However, no resolution was provided. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (“District Commission”) and filed a consumer complaint against Yes Bank and the Insurance Company.

In response, Yes Bank disputed the maintainability of the consumer complaint, asserting that it is a corporate agent of the Insurance Company and merely assisted the Complainant in obtaining the subject policy. It argued that the Complainant, being educated, submitted the proposal form in English through OTP, acknowledging an understanding of the policy's T&C. It denied the allegation that the bank induced the Complainant and argued that she approached the bank for the policy purchase.

On the other hand, the Insurance Company raised preliminary objections regarding maintainability, cause of action, jurisdiction, and mis-joiner/non-joinder of necessary parties. It stated that upon the Complainant's request, the Insurance Company cancelled the policy and issued a refund cheque. It claimed that the Complainant refused to accept the refund cheque, which was valid for three months, and argued that it was willing to pay the ₹ 1,00,000 refund to the Complainant or issue a fresh cheque.

Observations by the District Commission:

The District Commission noted that the Insurance Company agreed to cancel the policy and refund the amount of ₹ 1,00,000/-, requesting specific documents. However, the Complainant, instead of complying, sought additional compensation and interest. The Insurance Company, in response, sent a cheque, which the Complainant refused, claiming it was sent post the issuance of a legal notice and without interest and compensation.

The District Commission noted that the Complainant promptly requested cancellation of the subject policy within the free lock period (the initial period in which one can cancel their insurance policy without paying for the surrender charges). Despite the Complainant's refusal to accept the cheque, the District Commission held that the delay in refunding the premium until 11.3.2022 constituted a deficiency in service and unfair trade practice on the part of the insurance company. Had the insurance company issued the cheque earlier, the Complainant might have accepted it, avoiding litigation through consumer complaints.

Therefore, the District Commission held that while the Complainant's refusal to accept the cheque reflected negligence, the Insurance Company was also accountable for the delay in refunding the premium.

Consequently, the District Commission was directed to refund the amount of ₹ 1,00,000/- to the Complainant with interest at 9% per annum from 3.6.2021 to 11.3.2022. Moreover, the Insurance Company was ordered to pay ₹ 5,000/- to the Complainant as compensation for mental agony and harassment, along with ₹ 7,000/- as the costs of litigation.

Case Title: Harminder Kaur vs The Manager, Yes Bank Ltd. and Anr.

Case Number: CC/616/2021

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