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2026 Supreme(Online)(SCDRC) 4855
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
K.R. Radhakrishnan, Member
ICICI Prudential Life Insurance Co. Ltd. – Appellant
Versus
Dennis K. Thomas – Respondent
FIRST APPEAL NO. SC/32/A/721/2017
For the Appellants/Petitioners: Sachin Daga, R. Suja Madhav
For the Respondents: C.R. Suresh Kumar, Amrutha Suresh
An insurance policy is a contract governed strictly by its terms and conditions; subsequent regulatory changes do not apply retrospectively to contracts issued prior to those regulations.
Headnote:(A) Consumer Protection Act, 1986 - Section 15 - Appeal against order of District Commission- Life Insurance Policy - Non-payment of premium leading to foreclosure - Whether insurer entitled to foreclose policy and whether surrender value calculation correct - Regulations regarding surrender value (2010 regulations) have prospective effect and do not apply to policies issued prior to 2010 - Terms of the contract including clauses for foreclosure and surrender value are binding on parties.
Facts of the case:
Complainant purchased a life insurance policy, paying the first premium but defaulting on subsequent installments due to cheque dishonour. The insurer foreclosed the policy after two years of non-payment as per policy clauses and paid a surrender value. The District Commission partially allowed the complaint, ordering additional payment to the complainant. The insurer appealed against this order.
Findings of Court:
The foreclosure of the policy was justified under the contract terms. The retrospective application of 2010 IRDAI regulations was rejected. The court held that the insurer acted strictly according to the binding contract terms and conditions.
Issues: Whether the foreclosure of the policy was unlawful and whether the surrender value was calculated correctly per relevant regulations and policy terms.
Ratio Decidendi: Insurance policies are contracts and must be construed strictly according to their terms. New regulations not in force at the time of issuance of the policy cannot be applied retrospectively.
Result: Appeal allowed; order of the District Commission set aside.
| Table of Content |
|---|
| 1. procedures for policy foreclosure and evidence submission. (Para 1 , 2 , 3 , 4 , 8) |
| 2. arguments regarding policy breach and applicability of regulations. (Para 5 , 6 , 7) |
| 3. contractual supremacy and non-retrospectivity of laws. (Para 9 , 10 , 11 , 12 , 13) |
| 4. judgment concludes the appeal by setting aside previous orders. (Para 14) |
ORDER
SRI. K.R.RADHAKRISHNAN: MEMBER
This is an appeal filed under section 15 of the Consumer Protection Act, 1986 by the opposite parties in C.C.No.64/2013 on the files of the District Consumer Disputes Redressal Commission, Kottayam (for short, ‘the District Commission’). As per the order dated 30.05.2017, the District Commission allowed the complaint as follows:
(1) Opposite party is ordered to pay Rs.96,000/- after deducting Rs.4,000/-, the deductible amount, with 7% interest from the date of complaint i.e.;13.03.2013, to the complainant.
(2) Since interest is allowed, no compensation is ordered.
(3) Opposite party is ordered to pay Rs. 5,000/- as costs of litigation to the complainant.
Aggrieved by the said order the opposite parties have filed this appeal
2. The brief details of the complaint are as follows:-
The complainant had taken a Life Time Gold Insurance Policy No.07495910 from the opposite parties for a sum assured of Rs.10,00,000/-. The term of the policy was 10 years and the complainant was required to pay Rs.1,00,000/- as premium every year. The first instalment premium of Rs.1,00,000/- was paid by the complainant and the policy commenced from 30.01.2008. The complainant could not pay the second and third instalments due on 30.01.2009 and 30.01.2010. The cheque issued by the complainant for Rs. 2,00,000/- towards the second and third instalments of the premium was dishonored due to insufficient balance in his account. Subsequently the complainant informed the opposite party that he was ready to pay the entire dues of Rs.3,00,000/- to revive the policy. But without intimating the complainant and getting his consent, the opposite parties foreclosed the policy and sent a cheque dated 07.03.2011 for Rs. 21,990.03 towards surrender value. Foreclosure of the policy by the opposite parties was unlawful and in gross violation of the policy conditions and hence he prayed for getting refund of the premium paid i.e; Rs.1,00,000/- with 12% interest along with compensation and costs.
3. Notice was issued to the opposite parties, who appeared and filed their joint version. The opposite party submitted that the complainant himself admitted the dishonour of his cheque for Rs.2,00,000/- towards two instalments due on 30.01.2009 and 30.01.2010. Subsequently they had informed the complainant vide their letter dated 10.02.2011 to pay the outstanding premium under the policy. However, the premium was not paid by the complainant even after getting the said letter. As per the terms of the policy, if the premium is not paid within two years from the due date of the first unpaid premium, the policy can be foreclosed as per clause 9 of the policy and the complainant is entitled for the surrender value as per clause 2.2(a) of the policy. As the complainant/insured did not pay the premium dues within the prescribed period the policy was foreclosed and the surrender value of Rs.21,990.03 was sent to the complainant vide cheque No. 255316 dated 07.03.2011. The policy was foreclosed and surrender value was sent to the complainant as per the terms and conditions of the policy issued to him. There is no deficiency in service on the part of the opposite parties and hence they prayed for dismissal of the complaint.
4. The evidence in the complaint consists of proof affidavit of the complainant and Exhibits A1 to A4 were marked on his side. The opposite parties also filed proof affidavit and Exhibit B1 was marked on their side. On the basis of the evidence adduced, the District Commission passed the impugned order. The opposite parties challenge the said order.
5. Heard both sid
