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In The District Consumer Forum
University Institute of Legal Studies, Intra Department Moot Court Competition 2013
Ashok KumarComplainant
v.
IBI BankRespondent 1
Memorial For Respondent
Table of ContentsIDENTIFICATION OF CONTENTIONS:............................................................................... vSTATEMENT OF FACTS........................................................................................................viSUMMARY OF PLEADINGS:.............................................................................................. viiARGUMENTS ADVANCED:.................................................................................................. 1PRAYER..................................................................................................................................33
Arguments Advanced1. WHETHER NECESSARY PARTIES HAVE JOINED THE COMPLAINT ?....................12. WHETHER ASHOK IS A CONSUMER?............................................................................ 43. WHETHER COMPLAINT IS MAINTAINABLE IN CONSUMER FORUM?..................64. WHETHER THE COMPLAINT IS TIME BARRED ?....................................................... 95. WHETHER BURDEN OF PROOF LIES ON THE COMPLAINANT ? .........................116. WHETHER COMPLAINANT HAS FOLLOWED GRIEVANCE REDRESSAL PROCEDURE AS MANDATED BY IRDA?.........................................................................147. WHETHER THE INVESTMENT MANAGER WAS ACTING IN PERSONAL CAPACITY ?...........................................................................................................................168. WHETHER TERMS AND CONDITIONS ARE BINDING ON COMPLAINANT?.......199. WHETHER ADVICE GIVEN BY MR. X IS OF SOME LEGAL IMPORTANCE?.........2310. WHETHER THE FRAUD HAS BEEN COMMITTED ?................................................2511. WHETHER THERE HAS BEEN ANY DEFICIENCY IN SERVICE ?..........................2812. WHETHER IT WAS NECESSARY FOR THE COMPLAINANT TO DEINVEST IN THE EARLIER POLICY?...................................................................................................... 3013. WHETHER THE COMPLAINANT IS ENTILED FOR COMPENSATION:..............32
i
INDIAN CASES:
1) Krishnappa v. Shivappa, 31 B. 393 : 9 Bem. L. R. 630
2) United Provinces Vs. Atiqa Begum, AIR 1941 FC 16(28)
3) Deputy Commissioner of Hardoi v. Rama Krishna
4) Benaras Bank Ltd. Vs. Bhagwan Das., AIR 1947 ALL 18;
5) Suresh Chandra vs. Ram Vilas Maheshwari, II (2001) CPJ 543 (Gujarat SCDRC)
6) Naba Kumar Vs. Radhayshyam, AIR 1931 PC 229.
7) Chuba Temsu Versus Nangponger
8) Diwakar Vs. State of MP., 1984 Supp SCC 214;
9) Pritam Singh Vs. State of Punjab 1993(3) RRR 544(P&H)
10) Chief Conservator of Forests Vs. Collector, AIR 2003 SC 1805(1810)
11) Smt. Pushpa Meena Vs. Shah Enterprises 1990 RLT Part III, 59.
12) Cheema Engineering Services v. Rajan Singh (1997)1 SCC 131
13) Gangadhar v. UTI, 1994 (2) CPR 474 (H).
14) Ram Narayan v. Larsen & Toubro, (1993) CPJ 3 (NC) 1993 (1) CPR 106
15) M/s. Harsolia Motors Versus M/s. National Insurance Co. Ltd
16) State Bank of India v. Shyama Devi, AIR 1978 SC 1263
17) Pirthi Singh And Anr. vs Binda Ram And Ors, AIR 1987 P H 56
18) Harshad J. Shah v. LIC of India, III (1997) CPJ 9 (SC)
19) Rashee Industries Ltd. v. Export Credit Guarantee Corpn. Of India Ltd., (2009) 1
S.C.C. 138
20) Thawardas Pherumal v. Union of India, A.I.R. 1955 S.C. 468 at p. 476: (1955) 2
S.C.R. 48.
21) Ralli Bros v. Bhagwan Das Parmeshiri Das, A.I.R. 1945 Lah. 35 at p. 40 : I.L.R.
(1944) Lah. 578.
22) Bai Hira Devi V. Official Assignee of Bombay (AIR 1958 SC 448, 452), Sumati Bala
V. N.K. Das( AIR 1975 Gau 43)
23) Subramaniam Vs. M.L.R.M. Lutchman(AIR 1923 PC 50).
24) Gurubasappa Vs. Guru Lingappa.
25) Roop Kumar Vs. Mohan Thedani AIR 2003 SC 2418: (2002)6 SCC 595.
i
26) Ramdip Sharma Vs. Baldeo Singh AIR 1977 Pat 234: 1977 BLJR 308.
27) Shujaatamnd Khan Vs. Govind behari AIR 1934 All. 100.
28) Virse Vs. Balwant 2008(4) ICC 702 (P&H).
29) U. Sin Vs. U Tun Si AIR 1935 Rang 473.
30) Bishunath Ojha VS. S. Pragasho Jha AIR 1924 All 842;
31) Dinker Rai Vs. Sukhdayal AIR 1947 Bom. 293
32) General Assurance Society Ltd. v. Chandumull Jain
33) Rakesh Chanana vs. HDFC Standard Life Insurance Co. Ltd.
34) Smt. Pushpa Meena Vs. Shah Enterprises 1990 RLT Part III, 59.
35) Jiyajeerao Cotton Mills Ltd. Vs. New India Assurance Co. LTD
36) Pannalal Vs. Bank of India
37) J.K Synthetics Ltd. v. Smt. Anita Bhargava, 1996(1) CPC 480 W.Bengal
38) Reliance Industries Ltd. v/s United India Insurance Company Ltd, (1998) I CPJ 13
(NC)
39) Devappa Kanchan Vs. Oriental Insurance Co., (1992) CPR 479(480)(Kant).
40) Delhi Transport Corporation Employees Provident Fund Trust vs. Orissa Small
Industries and Anr
41) Ramesh Vs. M/s Askok Financial Corporation
42) Jacob v. Bank of India, AIR (1997) All. 196
43) Himatlal Ratilal v. State of Gujarat, 1971 CrLJ 165 (Guj),
44) Gobardhan v. State, AIR 1959 All 53.
45) Raj Malik v. Overseas Financial Corporation, AIR 2002 All. 186.
46) V.N. Shrikhande vs. Anita Sena Fernandes
47) Sh. Shambhu Nath vs. HDFC Standard Life Insurance Company Limited
48) State Bank of India vs. M/s B.S. Agricultural Industries
49) Pushpaben Balwantrai vs. Nandkumar Ramanlal( AIR 2004 (NOC) 382 (Guj)
50) Ajit Singh Thakur Singh v. State of Gujarat, AIR 1981 SC 733 (735): (1981) 1 SCC
495.
51) Balwant Singh Vs. Jagdish Singh
52) Ram Chandra Singh v. Savitri Devi, (2003) 9 S.C.C 319 at p. 329
53) Smt. Shrisht Dhawan v. M / s Shaw Brothers, AIR 1992 S.C. 1555.
54) Yog Raj v. Kuldeep Raj Gupta, AIR 1991 J. & K. 26.
ii
55) Hajra Bai v. Jadavbai, AIR 1986 M.P. 106
56) Kamal Kant vs. Prakash Devi
57) Afsar Shaikh v. Soleman Bibi, (AIR 1976 SC 163),
58) Suguna v. Vinod G. Nehemid, 2008 (2) CTC 433 (Mad)
59) Grasim Industries Limited Vs. Aggarwal Steel, (2010) 1 SCC 83
60) Horsfall v. Thomas (1862) 1 H. & C. 90 : 130 R.R. 394; Smith v. Hughes, L.R.
(1871) 6 Q.B. 597.
61) William Charles Binns v. W. & T. Avery Ltd., A.I.R. 1934 Cal. 778 at p. 779
62) Subhash Chandra Dass Mushib v. Ganga Prasad dass Mushib : AIR 1967 SC 878
63) Mst. Chand kaur and others v. Mst. Jiwi and another
64) Harihar Prasad Singh and others v. Balmiki Prasad Singh and others.
65) Kewal Krishnan and others v. Smt. Krishna Devi and others.
66) Union of Bank vs. M/s. Seppo Rally OY
67) Poonam Bishnoi vs. Bajaj Allianz Life Insurance Co. Ltd.
ENGLISH CASES:
1) Henderson Vs. Arthur.
2) Honorary Secretary, Elegance Members Assn Vs. Pharthane Construction Co Pvt ltd.
3) Kylr bay Ltd. v. Underwriters, 2006.
4) Horsfall v. Thomas (1862) 1 H. & C. 90 : 130 R.R. 394;
5) Smith v. Hughes, L.R. (1871) 6 Q.B. 597.
BOOKS, ARTICLES, JOURNALS, TREATISES AND DIGESTS:
1) Consumer Protection Act, 1986
2) Code of Civil Procedure, 1908
3) Insurance Act, 1938
4) Indian Contract Act, 1872
5) Indian Evidence Act, 1872
6) Sale of Goods Act, 1930
7) Reports of cases argued and determined in the Court of Appeals and Court of Errors
of South Carolina, on appeal from the courts of law, Volume 4.
iii
8) Sanjiva Row’s Commentary on The Indian Contract Act, 1872 And Tenders, (ACT
NO. IX Of 1872), Delhi Law House, 11th Edition, 2009,
9) Leakes Law of Contracts, Vol. I, Edition II, 2007.
10) Story’s Law of Contracts, Vol. 1, Edition III, 2008.
11) Mindy Chen-Wishart, Contract Law, Indian Edition, II Edition, 2010
12) M.C. Bhandari, 'Law of Contract', Ashoka Law House, New Delhi (India), Third
Edition 2008.
13) Ratanlal and Dhirajlal, The Law of Evidence, 23rd Edition, 2010
14) TAYLOR, Contract Act, 12th Edition, 2009.
iv
IDENTIFICATION OF CONTENTIONS:
1) Whether Necesary parties have joined the complaint?
2) Whether the Ashok is a consumer?
3) Whether complaint at bar is maintainable in this forum?
4) Whether complaint is time barred?
5) Whether burden of proof lies on complainant?
6) Whether the complainant followed grievance redressal procedure mandated by
IRDA?
7) Whether Investment manager was acting in personal capacity?
8) Whether terms and conditions are binding on complainant?
9) Whether advice given by Mr. X is of some legal importance?
10) Whether the fraud has been committed?
11) Whether there has been any deficiency in service?
12) Whether it was necessary for the complainant to deinvest in earlier policy?
13) Whether the complainant is entitled for compensation?
v
STATEMENT OF FACTS
➢1. Ashok Kumar- A Retired Chief Engineer from State services and a resident of
Chandigarh.
➢2. Ashok retired- July, 2010 , Received a good amount of retiral benefits on
October, 2010.
➢3. Ashok returned the earlier investment of a dead lock period of 3 years.
Received Rs.24,300. Refund was credited on 7th October, 2010.
➢4. Ashok purchased the new policy on 10th October, 2010. One time Investment
of Rs.50,000
➢5. Ashok received the new policy document by registered post on 22nd October,
2010. He was shocked to find out that the policy was not a one time investment
rather an every year investment for 10 years.
➢6. Ashok returned the policy with a request of refund on 23rd October, 2010 and
mentioned in his letter addressed to the bank that he was misled that it is a one
time investment policy.
➢7. Request was acknowledged by IBI Bank on 28th October, 2010.
➢8. Nothing was heard from the Bank till three months.
➢9. Ashok forced to send a strong reminder to the head office and MR. X on 31 st
January, 2011.
➢10. Ashok received Rs.48,500 from the Bank on 3rd February, 2011.
vi
SUMMARY OF PLEADINGS:
1) Whether Necesary parties have joined the complaint?
In the present case Complainant has neither impleaded Mr. X, Investment Manager, as a
party nor has he impleaded the company, in whose units the bank has invested the
amount of complainant, as a party. The bank being merely a collecting agent of the
company could not be held liable for deficiency in service. In the absence of these two
parties no effective decree can be passed as these parties form the essence of constitution
of this complaint. Therefore, in the absence of these parties a complaint cannot be
decided, hence, this complaint shall be dismissed.
2) Whether the Ashok is a consumer?
That as soon as the amount is invested, the investor gets units which are in the
nature of share certificates and he is entitled to share in profits. Therefore, it is a
commercial purpose. It is well settled that when the expression ‘Commercial Purpose’
has not been defined in the Act, its common parlance meaning should be given and
according to that a commercial purpose is that purpose, the object or aim of which is to
make profit. Therefore he does not fall under the ambit of word consumer of the act.
3) Whether complaint at bar is maintainable in this forum?
The present complaint filed is not at all maintainable as the complainant has no
jurisdiction to file the complaint in this present forum. It involves alot of complicated
issues to be decided. the complainant’s case involves a determination of complex
questions of law and fact which cannot be satisfactorily determined by the Consumer
Forum in the time frame provided under the Act it would be better for the complainant to
seek redress of his grievances in a civil court. In the Present complaint there is no clear
and cogent evidence which could be relied upon. The act does not contemplate the
determination of complicated issues of fact involving taking of elaborate oral evidence
and adducing of voluminous documentary evidence and a detailed scrutiny and
assessment of such evidence by the Consumer Redressal Forum.
4) Whether complaint is time barred?
Complaint has been filed after a gap of 2 years and 18 days from the cause of action.
vii
Limitation prescribed under Section 24A is 2 years. Complaint is barred by limitation. If
complaint is time barred yet consumer forum decides it on merits, the forum would be
committing an illegality - Aggrieved party would be entitled to have such an order set
aside.
5) Whether burden of proof lies on complainant?
The complainant has asserted the affirmative of the issue. Thus, according to Sec. 101,
the burden of proof should be placed on the complainant. According to Sec. 102, a test
for ascertaining on which side the burden of proof should lie is held. The burden of proof
should lie on the complainant as he would fail if no evidence at all were given.
6) Whether the complainant followed grievance redressal procedure mandated by
IRDA?
The matrix of consumer protection for aggrieved consumers of insurance in order of
access is as follows: (a) Grievance redressal cell (b) IRDA Grievance Cell / Director of
Public Grievances (only for public sector insurance companies). (c) Insurance
Ombudsman: (d) Consumer courts under COPRA (e) Civil courts. But the complainant
directly approached consumer court.
7) Whether Investment manager was acting in personal capacity?
All the previous investment suggestions were beneficial and fruitful for the
complainant and thus he opted for the present insurance policy also as he had
great conviction and confidence. This clearly proves that manager gave a mere
opinion and acted as an agent of the complainant. His advice to purchase the
policy document was not exercised within his course of employment but fell
under the category of fiduciary relationship shared by both of them. Also, the
complainant handed over the cheque to manger for encashment. This clearly
proves that manager acted in personal capacity which falls outside the course of
employment. Thus, manager was clearly not acting within the course of
employment.
viii
8) Whether terms and conditions are binding on complainant?
The whole point of a document in writing is to exclude speculation as to what was and
what was not agreed to, how much ever the matter might have been raised by one of the
parties during the stage of negotiation.1 The complainant on signing the prescribed form
cannot bring up the issue that the terms agreed to orally were different from the terms
mentioned in the policy document received. A contract is not voidable merely because it
was caused by one of the parties to it being under a mistake as to a matter of fact.
9) Whether advice given by Mr. X is of some legal importance?
In the present case respondent no. 1 just provided statement of opinion as regard to
deinvestment in the first policy and even in regard to the nature of policy being issued to
him. Since it was just a statement of opinion it is not sufficient to prove a
misrepresentation in this case.Obviously it would be unreasonable to treat opinions
provided by investment manager in the same manner as truths, as opinions are purely
based on personal beliefs with no additional foundation.
10) Whether the fraud has been committed?
In case it appears from the facts that even though there was a false statement but the
complainant has means to know the correct position and ought to have known the truth,
there is no fraud. The complainant was an educated man and had all the means to know
the contents of the document. He cannot simply raise the matter declaring that his
signatures were obtained by a false statement. Hereby, no fraud shall arise in this case.
11) Whether there has been any deficiency in service?
The complainant had opted for regular investment plan as he signed the signed the
prescribed form for the purchase of the said plan. In view of this, it is contended that the
allegations contained in the complaint that the complainant took single premium
insurance policy of Rs.50,000 did not survive. As a result of the above discussion, it is
contended that the complainant has failed to prove any deficiency in service on the part
of respondents.
1 Thawardas Pherumal v. Union of India, A.I.R. 1955 S.C. 468 at p. 476: (1955) 2 S.C.R. 48.
ix
12) Whether it was necessary for the complainant to deinvest in earlier policy?
The complainant being a well educated man and a routine investor, investing in various
policies of respondent bank, for the past ten years for tax saving purposes as well as for
long term investments, was very much aware of the rules and regulations of respondent
bank. The complainant was a retired Chief Engineer from State Services and also he
received a good amount of retirement benefits as mentioned above, so it was easy for
him to invest in the new said insurance scheme without having to withdraw money from
the first policy.
13) Whether the complainant is entitled for compensation?
The complainant has filed a false complaint and thus the case must be dismissed. The
complainant also has not undergone any harassment or suffered any mental agony. Had
he suffered this much, he would not have waited for 2 years and 18 days to file the
complaint. Moreover, he would have approached the respondent bank soon after getting
the refund of Rs. 48,500.
x
1. ARGUMENTS ADVANCED:
2. WHETHER NECESSARY PARTIES HAVE JOINED THE COMPLAINT ?
The presence of opposing parties is one of the essential requirements of any civil suit as has
been held in the case of Krishnappa v. Shivappa2 . But all parties are not necessary for the
suit to be adjudicated upon. Therefore, necessary and non-necessary parties have to be
distinguished between. ‘Necessary Parties’ are those parties from whom relief is claimed and
whose presence is indispensable to the constitution of suit3. ‘Non-necessary Parties’ are
those parties who may be party to the suit, but from whom no relief has been claimed. The
presence of necessary parties is obviously required for the court to adjudicate and pass an
effective and complete decree granting relief to the complainant. In the absence of necessary
parties, the court may dismiss the suit, as it shall not be able to pass an effective decree.
The Code of Civil Procedure, the procedural law relating to civil suits can be classified into
two parts, "Body of the Code" and "Rules". The latter deals with non-joinder of parties. Order
1, Rule 94 lays down the procedure to be followed in cases of non-joinder of parties. The
Code provides for compulsory joinder of all those parties necessary for the court to decide
the suit, and consequently grant relief to the complainant.
A necessary party is a party without impleading whom, a claim cannot be legally settled by
court. In other words, in the absence of a necessary party, no effective and complete decree
can be passed by the court. Two tests5 have been laid down for determining the question
whether a particular party is a necessary party to a proceeding6:
a)There has to be a right of relief against such a party in respect of the matters
involved in the suit.
2 31 B. 393 : 9 Bem. L. R. 630 3 United Provinces Vs. Atiqa Begum, AIR 1941 FC 16(28)4 Code of Civil Procedure, 19085 Deputy Commissioner of Hardoi v. Rama Krishna6 Benaras Bank Ltd. Vs. Bhagwan Das., AIR 1947 ALL 18;
1
b)The court must not be in a position to pass an effective decree in the absence of
such a party.
‘Non-joinder’ means an omission to join some person as a party to a complaint, whether as
complainant or as respondent who ought to have been joined according to the law. Non-
joinder of parties refers to a situation in which those parties whose presence is essential and
in whose absence no effective decree can be passed by the court, have not been impleaded.
They are those parties who should have been joined under Order 1, Rule 10 (2) of the Code.
In contrast, presence of proper parties is needed only for the court's convenience in deciding
the dispute. The court shall in their presence only be able to decide the dispute completely
and effectively.
The rule of indispensable party was based on the premise that a court should do "complete
justice or none at all. " In the present case Complainant has neither impleaded respondent
Mr. X, Investment Manager, as a party nor has he impleaded the company, in whose units the
respondent bank has invested the amount of complainant, as a party. The respondent bank
being merely a collecting agent of the company could not be held liable for deficiency in
service.7 In the absence of these two parties no effective decree can be passed as these
parties form the essence of constitution of this complaint.8 Therefore, in the absence of these
parties a complaint cannot be decided, hence, this complaint shall be dismissed.
Chuba Temsu Versus Nangponger9- Order 1 and Rule 9 – It was held that where Necessary
party is not added a suit has to be dismissed because effective order cannot be passed and
consequently no relief can be granted to the parties on record.
Though the rule 9 of order 1 of the Code mandates that no suit shall be defeated by reason of
the misjoinder or non joinder of parties yet it is important to notice that the proviso thereto
clarifies that nothing in that rule shall apply to non joinder of a necessary party and hence
the present complaint is liable to be dismissed10. Since all the charges are against respondent
7 Suresh Chandra vs. Ram Vilas Maheshwari, II (2001) CPJ 543 (Gujarat SCDRC)8 Naba Kumar Vs. Radhayshyam, AIR 1931 PC 229.9 1994(2) CivCC 607 : 1994 AIR (Gauhati) 110 10 Diwakar Vs. State of MP., 1984 Supp SCC 214;
2
Mr. X and moreover the respondent bank being merely a collecting agent of the company no
adverse order can be passed in the absence of these necessary parties i.e., respondent Mr.
X,investment manager, and company.11 Therefore, care must have been be taken by the
complainant to ensure that the necessary parties are before the court, otherwise the
complaint or proceedings will have to fail.
11 Pritam Singh Vs. State of Punjab 1993(3) RRR 544(P&H)
3
3. WHETHER ASHOK IS A CONSUMER?
It is contended that the complaint is not maintainable under the Consumer Protection Act,
1986, (C.P. Act for brief) as investing amount in ULIP12 is a ‘commercial activity’13.
The question, therefore, which requires consideration is whether the investment made by the
Complainant is for ‘commercial purpose’. For this purpose, reliance is placed on the IRDA
Circular14, which is as under:
“All ULIP pension / annuity products shall offer a minimum guaranteed return
of 4.5 per cent per annum or as specified by IRDA from time to time, on the
maturity date. This guaranteed return is applicable on the maturity date, for
policies where all due premiums are paid.”.
It is therefore, contended that the Corporation is established to acquire
holding, management and dispose of securities.That as soon as the amount is invested, the
investor gets units which are in the nature of share certificates and he is entitled to share in
profits. Therefore, it is for a commercial15 purpose. It is well settled that when the expression
‘Commercial Purpose’ has not been defined in the Act, its common parlance meaning should
be given and according to that a commercial purpose is that purpose, the object or aim of
which is to make profit.16 The Investment Manager of IBI Bank, respondent Mr.X, who
earlier also used to advise him regarding investment decisions, advised him to invest in one
of the apparently lucrative Insurance scheme sponsored and managed by the respondent IBI
Bank, on the request of complainant himself.17
12 Unit Linked Investment Plan13 Section 2(d) Consumer Protection Act 1986, [hires or avails of] any services for a consideration which has
been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person [but does not include a person who avails of such services for any commercial purpose];
14 IRDA Circular No.- IRDA/ACT/CIR/ULIP/102/06/2010 15 Profit is the main aim to prove a purchase for commercial purpose - If profit is not intended the purpose
cannot be called commercial - 2005(1) CPC 53 N.C.16 Smt. Pushpa Meena Vs. Shah Enterprises 1990 RLT Part III, 59.17 Proposition Page 1
4
The burden of proof that complainant is a consumer, who purchased a brick machine, is on
the complainant that it has been purchased for self-employment.18
In Gangadhar v. UTI,19 the complainant applied for Master Gain-92 Units. The complainant
insisted that he should have been allotted by 30.9.92. This issue was substantiated with
reliance on the observations made in the case of Ram Narayan v. Larsen & Toubro20, may
boom-rang upon stand with observation therein that, if the complainant had purchased the
units, then the transaction could be for a“Commercial Purpose” and, therefore, he would not
be a consumer as defined under Section 2 (1)(d) (i) of the CPA.
In this view of the matter, a person who takes insurance policy to cover the envisaged risk
does not take the policy for commercial purpose. But as the complainant has taken ULIP
Policy, he intends to generate profit.21
18 Cheema Engineering Services v. Rajan Singh (1997)1 SCC 131 19 1994 (2) CPR 474 (H). 20(1993) CPJ 3 (NC) 1993 (1) CPR 106 21 M/s. Harsolia Motors Versus M/s. National Insurance Co. Ltd
5
4. WHETHER COMPLAINT IS MAINTAINABLE IN CONSUMER FORUM?
It is well settled that when the expression ‘Commercial Purpose’ has not been defined in the
Act, its common parlance meaning should be given and according to that a commercial
purpose is that purpose, the object or aim of which is to make profit.22 The Investment
Manager of respondent IBI Bank, respondent Mr.X, who earlier also used to advise him
regarding investment decisions, advised him to invest in one of the apparently lucrative
Insurance scheme sponsored and managed by the respondent IBI Bank, on the request of
complainant himself.23 It is therefore, contended that the Corporation is established to
acquire holding, management and dispose of securities.That as soon as the amount is
invested, the investor gets units which are in the nature of share certificates and he is
entitled to share in profits. Therefore, it is for a commercial purpose24. Since the Complainant
availing commercial service, complaint under CP Act not maintainable as claimant is not a
consumer u/s 2 (1) (d) of the Act.25
The present complaint filed is not at all maintainable as the complainant has no jurisdiction
to file the complaint in this present forum. It involves alot of complicated issues to be
decided. the complainant’s case involves a determination of complex questions26 of law and
fact which cannot be satisfactorily determined by the Consumer Forum in the time frame
provided under the Act it would be better for the complainant to seek redress of his
grievances in a civil court.27 In the Present complaint there is no clear and cogent evidence
which could be relied upon. The act does not contemplate the determination of complicated
issues28 of fact involving taking of elaborate oral evidence and adducing of voluminous
documentary evidence and a detailed scrutiny and assessment of such evidence by the
Consumer Redressal Forum.29
22 Smt. Pushpa Meena Vs. Shah Enterprises 1990 RLT Part III, 59.23 Proposition Page 124 Profit is the main aim to prove a purchase for commercial purpose - If profit is not intended the purpose
cannot be called commercial - 2005(1) CPC 53 N.C.25 2010(1) CPC 627 U.P.26 2010(1) CPC 315 Orissa27 Pannalal Vs. Bank of India28 J.K Synthetics Ltd. v. Smt. Anita Bhargava, 1996(1) CPC 480 W.Bengal29 Industrial Products Vs. PNB
6
This is a matter in respect of which the complainant should seek his redress before a Civil
Court in as much as there had been no deficiency in service on the part of the Insurance
Company, as has been held in the case of Jiyajeerao Cotton Mills Ltd. Vs. New India
Assurance Co. LTD.30 As mandated by IRDA, deductions that can be made by the insurer for
cost incurred during health check-up, charges towards stamp duty and mortality charge for
interim period. In addition to these deductions, in case of ULIPs, the fluctuations in the
amount of already allocated units will be adjusted in the settlement. Here, the insurer will
have to repurchase the units on the date of cancellation to redeem money and pay the value
of units on the cancellation.31 So, deductions are on account of provisions that has been made
mandatory by the IRDA regulations and respondent bank has nothing to do with these
deductions. As regard to delay in refund of money is concerned, certain procedure has to be
followed by the respondent bank, a request for cancellation of policy has to be sent to Policy
Issueing Department of the respondent bank. Its a long procedural process and the
respondent bank has no role to play in that.
Complainant is also claiming compensation due to delay in refund of premium and the
complaint is accompanied with documents containing general terms and conditions for the
scheme of the insurance, memorandum of understanding and other documents, so it is not a
case to be decided in summary jurisdictions because it requires great deal of evidence both
oral and documentary and raise complex question of law and facts.32
Complainant has charged allegations of fraud and cheating against the respondents. Keeping
in view the procedure followed in this Commission, it is contended that the questions of
fraud, cheating and conspiracy cannot satisfactorily resolved and adjudicated here and the
proper Forum for dealing with such questions would be a competent Civil Court.33 Matter of
fraud and cheating cannot be gone into under Consumer Protection Act. Parties are to be
relegated to Civil jurisdiction for necessary relief.34
30 1992(1) CPR 124 (124,125) : I (1992) CPJ 292: 1992 CPC 78(NC)31 IRDA Circular No. 24/TGF/07-08, 200732 Honorary Secretary, Elegance Members Assn Vs. Pharthane Construction Co Pvt ltd.33 Reliance Industries Ltd. v/s United India Insurance Company Ltd, (1998) I CPJ 13 (NC)34 2004(1) CPC 678 Chd
7
The complainant himself had stated in his complaint that his signatures were obtained on the
prescribed form. The allegation of the complainant was that the signature on said document
was obtained from him either by misrepresentation or fraud, the complaint is not maintainble
in this forum as the question whether the signatures on policy document were obtained from
the complainant by misrepresentation or fraud was a matter to be decided by the civil court.35
It was held in the case of Delhi Transport Corporation Employees Provident Fund
Trust vs. Orissa Small Industries and Anr36 that complaint is not maintainable since they
were engaged in trading of securities which amounts to commercial activity. Secondly, in
view of Securities and Exchange Board of India Act, 1992 (for short Securities Act),
Consumer Forum has no jurisdiction to adjudicate upon such disputes between the
parties. In support, learned counsel has relied upon a decision of this Commission.
35 Devappa Kanchan Vs. Oriental Insurance Co., (1992) CPR 479(480)(Kant).36 III (2007) CPJ 316 (NC).
8
5. WHETHER THE COMPLAINT IS TIME BARRED ?
He who comes into equity must come with clean hands. This maxim bars relief for anyone
liable of improper conduct in the matter at hand. It operates to prevent any affirmative
recovery for the person with "unclean hands," no matter how unfairly the person's adversary
has treated him or her. Complaint at the bar is barred by limitation which is 2 years since the
last cause of action arose on 3.2.2011 and the complaint was filed on 3.2.2011 i.e., 18 days
beyond limitation period as defined in the act37. Consumer Forums do not have the
jurisdiction to entertain a complaint if the same is not filed within 2 years from the date on
which the cause of action has arisen.38
Complainant filed complaint at bar, against before Consumer Forum claiming compensation
on account of different charges. Complaint, however, has been filed after a gap of 2 years
and 18 days from the cause of action. Limitation prescribed under Section 24A is 2 years.
Complaint is barred by limitation. If complaint is time barred yet consumer forum decides it
on merits, the forum would be committing an illegality - Aggrieved party would be entitled
to have such an order set aside.39
In the case of Sh. Shambhu Nath vs. HDFC Standard Life Insurance Company Limited,40 the
complainant is that one Sh. Gurcharan Singh, who was the agent of the OPs at the relevant
time, approached the complainant and persuaded him to invest a sum of Rs.20,000/- in a
product of OPs known as ‘Young Star Policy’. According to the complainant, he was told by
Sh. Gurcharan Singh that as per the terms of the said policy, he was required to pay a sum of
Rs.20,000/- as one time premium and he would receive the assured amount after the
completion of the term of the policy. So, according to the complainant, he paid a sum of
Rs.20,000/- to Sh. Gurcharan Singh and filled the proposal form. Thereafter, the complainant
received the policy along with the letter and the proposal form. After going through the said
policy, he found that the policy sent to him was not the same, which was offered to him by
Sh. Gurcharan Singh and for which the premium was paid by him. The policy issued was of
37 Section 24A, Consumer Protection Act, 198638 V.N. Shrikhande vs. Anita Sena Fernandes39 State Bank of India vs. M/s B.S. Agricultural Industries40 Complaint Case No:585 of 2011
9
a product known as ‘Young Star II’. As per the terms and conditions of this policy, the
complainant was required to pay premium of Rs.20,000/- for 10 years on yearly frequency. It
was held that the complaint alleging deficiency in service or unfair trade practice could have
been filed within a period of two years thereafter. The present complaint was filed much after
the expiry of period of limitation of two years. Hence, the complaint is barred by limitation.
So, the complaint deserves dismissal of this score alone.
In the present complaint, Forum is not required to take into consideration the merits of the
case. Merits of the case cannot be decided unless the delay is condoned and the matter is
taken up for hearing after condonation of delay. Thus, the main issues cannot be decided
unless delay is condoned by the Court and the matter is taken up for hearing after
condonation of delay. Thus, the main issues cannot be decided unless delay is condoned by
the Court and the matter is taken up for hearing on its merits.41
Last Cause of action arose on 3.2.2011, when refund was credited in the accout of
complainant. Complaint at bar filed on 21.2.2013. Complaint is liable to be dismissed as
time barred.42 No event or circumstance arising after the expiry of limitation can constitute
sufficient cause.43 In the case of Balwant Singh Vs. Jagdish Singh44, there was delay in filing
of application of 44 days beyond limitation period, it was held that applicant did not come to
Court with clean hands.
The principle of finality of litigation cannot be pressed to the extent of such an absurdity that
it becomes an engine of fraud in the hands of dishonest litigants. The Courts of law are
meant for imparting justice between parties. One, who comes to the Court, must come with
clean hands. That most often than not, process of the Court is being abused. Property-
grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of
life find the Court process a convenient lever to retain the illegal gains indefinitely.
Complainant's case is based on falsehood and is barred limitation, therefore he has no right
to approach the this Forum.45
41 Pushpaben Balwantrai vs. Nandkumar Ramanlal( AIR 2004 (NOC) 382 (Guj)42 2009(2) CPC 1 S.C.43 Ajit Singh Thakur Singh v. State of Gujarat, AIR 1981 SC 733 (735): (1981) 1 SCC 495.44 2010(92) AIC 10345 Ram Chandra Singh v. Savitri Devi, (2003) 9 S.C.C 319 at p. 329
10
6. WHETHER BURDEN OF PROOF LIES ON THE COMPLAINANT ?
The burden of proof is often associated with the Latin maxim semper necessitas probandi
incumbit ei qui agit, the best translation of which seems to be: "the necessity of proof always
lies with the person who lays charges”.
He who does not carry the burden of proof carries the benefit of assumption, meaning he
needs no evidence to support his claim. Fulfilling the burden of proof effectively captures the
benefit of assumption, passing the burden of proof off to another party.46
Mere existence of relationship between the complainant and respondent Mr. X, whereby one
person is in dominant position, is not sufficient to prove undue influence and would not
make contract unconscionable. Court must consider relationship as well as attending
circumstances. Burden of proving such relationship and use of actual dominant position to
obtain unfair advantage was on the complainant.47
When a written contract has been signed by both the parties, the party alleging that it has
been erroneously recorded and that he signed it under a mistake, must establish the fact
beyond all doubt.48
The complainant must establish the facts relating to his plead that he signed the contract
under undue influence. He cannot just proclaim that he signed the policy under a mistake. He
has to have a valid proof.
The burden of proof lies on the party who substantially asserts the affirmative of the issue
and not upon the party who denies it. It is but reasonable and just that the suitor who relies
upon the existence of a fact, should be called upon to prove his own case.49 The complainant
can establish the affirmative facts of the case and thus he must come forward and take the
burden of proof.
46 Ratanlal and Dhirajlal, The Law of Evidence, 23rd Edition, 2010, p. 117447 Shivadas Loknath Singh v. Gayabai Shankar Surwase, 1993 Mah LJ 1623 (DB).48 William Charles Binns v. W. & T. Avery Ltd., A.I.R. 1934 Cal. 778 at p. 779 49 TAYLOR, 12th Edition, S. 364, p. 252.
11
The party on whom the onus of proof lies must, in order to succeed, establish a prima facie
case. He cannot, on failure to do so, take advantage of the weakness of his adversary's case.
He must succeed by the strength of his own right and the clearness of his own proof.50 The
case will only be encouraged if the complainant is able to prove that his signature was taken
under undue influence.
Merely because the parties were nearly related to each other no presumption of undue
influence can arise. Whether by law of India or law of England, more than mere influence
must be proved so as to render influence, in the language of the law, “undue”.51
The complainant has asserted the affirmative of the issue. Thus, according to Sec. 10152, the
burden of proof should be placed on the complainant. According to Sec. 102, a test for
ascertaining on which side the burden of proof should lie is held. The burden of proof should
lie on the complainant as he would fail if no evidence at all were given. If he fails to prove
the liability of respondent bank on grounds of misrepresentation, undue influence and fraud,
respondent bank will be successful. Hence, the onus must be cast on the complainant and
such allocation would be correct. If the wrong allocation of onus is allowed to remain on
respondent bank, then there is every likelihood of the complainant to succeed without giving
any evidence in respect of this issue. According to Sec. 11553, wrongly casting the burden of
proof on respondent bank in respect of this issue, is a palpable or a gross error, which will
materially affect the ultimate decision of the Court on this issue.54
Section 355 says that there should be appreciation of evidence, i.e., the oral evidence of too
old incident is to be assessed with great care.56 The complainant is giving oral evidence
relating to an event that took place 2 years and 18 days ago. It's after a long lapse of time and
so must be weighed and handled with due care. The burden of proof must lie on the
complainant in order to establish the case from his part.
50 Sec. 101 of The Law of Evidence, 1872.51 Subhash Chandra Dass Mushib v. Ganga Prasad dass Mushib, 1967 (1) SCWR 271 : AIR 1967 SC 87852 Evidence Act, 1872.53 Civil Procedure Code.54 Mst. Chand kaur and others v. Mst. Jiwi and another Civil Writ no. 437 of 1967. D/d. 25.3.1968, Punjab and
Haryana High Court55 Evidence Act, 1872.56 Harihar Prasad Singh and others v. Balmiki Prasad Singh and others.
12
Insured claiming liability of the insurer must prove the same. The insurer will not be held
liable if the insured did not controvert the same by producing evidence.57 The complainant in
order to prove that respondent bank should be held liable must provide proper evidence and
only then will the decision of the Court favour him.
57 Kewal Krishnan and others v. Smt. Krishna Devi and others.
13
7. WHETHER COMPLAINANT HAS FOLLOWED GRIEVANCE REDRESSAL
PROCEDURE AS MANDATED BY IRDA?
A “Grievance/Complaint” is defined as any communication that expresses dissatisfaction
about an action or lack of action, about the standard of service/deficiency of service of an
insurance company and/or any intermediary or asks for remedial action.58
Regulation 5 of IRDA and Regulations for Protection of Policyholders Interests, 2002
provides for insurers to have in place speedy and effective grievance redressal systems, and
in terms of the Authority’s powers and functions as enunciated in Section 14 of IRDA Act,
1999.59
The insurance sector in India (both life insurance and general) is governed by the Insurance
Regulatory and Development Authority, set up by an Act of Parliament in 1999 “…to protect
the interests of the holders of insurance policies, to regulate, promote, and ensure orderly
growth of the insurance industry…”. Quasi-legislative powers, in the form of regulation and
rule-making authority, are conferred upon the regulator, subject to Parliamentary oversight.
The IRDA also passes regulations from time to time regulating both substantive as well as
procedural aspects of the above consumer protection structure.
The matrix of consumer protection for aggrieved consumers of insurance in order of access
is as follows:60
a) Grievance redressal cell within each of the life and non-life companies
Mandated by IRDA (Protection of Policyholders’ Regulations), 2002.-
Policyholders who have complaints against insurers are required to first
approach the Grievance/Customer Complaints Cell of the concerned insurer.
58 IRDA Circular No. : 3/CA/GRV/YPB/10-11 , 2010 59 INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY,
“http://www.policyholder.gov.in/uploads/CEDocuments/Guidelines%20on%20Grievance%20Redressal.pdf”, accessed on 17 th feb 2013 at 7.33 PM
60 Jayanth Srinivasan, Evolution of Consumer Protection Laws in India – Part 2, “http://www.ifmr.co.in/blog/2012/04/03/evolution-of-consumer-protection-laws-in-india-part-2/”, accessed on 17th feb 2013 at 7.41 PM
14
b) IRDA Grievance Cell / Director of Public Grievances- These remain the
second port of call, coming into play in practice only after the consumer has
sought redress through the in-house grievance cells. If policy holders do not
receive a response from insurer(s) within a reasonable period of time or are
dissatisfied with the response of the company, they may approach the
Grievance Cell of the IRDA. The complaints need to be sent to the Grievance
Cell of the IRDA. The latter, the Director of Public Grievances entertains
complaints against the public sector insurance companies (including LIC,
GIC, United India, National, New India, Oriental) and is based within the
Cabinet Secretariat of the Government of India.61
c) Insurance Ombudsman- First created by Government of India notification in
1998. There are 12 such Ombudsman in India. Insured is necessarily required
to first approach the concerned insurer, failing which he may approach these
Ombudsman. If the grievance is not redressed, insured are advised to
approach the Insurance Ombudsmen.
d) Consumer courts under COPRA
e) In case the claimant is not satisfied with decision of Ombudsmen, appeal can
be filed at the appropriate judicial forum like civil courts and consumer
courts.
IRDA through its official circular has made it mandatory to follow the above matrix in
submitting a complaint. Complainant was supposed to first register a complaint with internal
Grievance Redressal Cell of the insurance company. In case of negligence on the part of
company's redressal cell, he could register a complaint with IRDA Grievance cell and
thereafter with Insurance Ombudsman. Consumer Forum and Civil Courts come at last.
Complainant without following manadatory hierarchy directly registered a complaint with
consumer forum.
61 IRDA Circular No. : 4/FA/GRV/TPB/11-12 , 2011
15
8. WHETHER THE INVESTMENT MANAGER WAS ACTING IN PERSONAL
CAPACITY ?
The complainant, being a layman, developed complete and faithful trust on,
respondent Mr. X, manger as he was helped with all his investment decisions for the
past 10 years by, respondent Mr. X,manager. All the previous investment
suggestions were beneficial and fruitful for the complainant and thus he opted for
the present insurance scheme also as he had great conviction and confidence. This
clearly proves that, respondent Mr. X, manager gave a mere opinion and acted as
an agent of the complainant. His advice to purchase the policy document was not
exercised within his course of employment but fell under the category of fiduciary
relationship shared by both of them. Also, the complainant handed over the cheque
to, respondent Mr.X, manger for encashment. This clearly proves that, respondent
Mr. X, manager acted in personal capacity which falls outside the course of
employment. The fact that one man is in a legal sense the 'agent' of another does
not in itself render the 'principal' liable for any and every tort which the servant may
commit. The principal will only be held liable for such torts which are committed by
the agent in the course of employment. An act is only deemed to be within the
course of employment when the agent executes the orders of the principal. Thus,
respondent Mr.X, manager was clearly not acting within the course of employment.
In the case of State Bank of India v. Shyama Devi62, The Supreme Court held that the
appellant bank was not liable to make good the loss caused to the complainant the act of an
employee of the bank, while the latter was acting as an agent of the complainant and not
within the scope of his employment with the bank. In this case the complainant, a client of
the bank, paid certain amount to an employee of the bank for crediting it to her account. The
onus was on the client to show that she paid the amount to the employee of the bank and was
received by that employee in the course of the employment with the bank. In such a case the
false and fraudulent entry about the deposit of the amount in the pass book of the
complainant could not shift the onus on the bank to prove the contrary. Consequently, the
bank was not liable to make good the loss caused to the complainant by the act of the
62 AIR 1978 SC 1263
16
employee because the latter in such a case would be deemed to have acted as an agent of the
complainant and not within the scope of his employment with the bank.
Insurance Act, 193863 says that the Insurance Broker is entitled to receive commission on
every policy he is able to make the customers purchase. In this case, respondent Mr.X,
manager saw his benefit of gaining commission and thus he opted for selling the policy
document to the complainant. He enacted this part completely for his own benefit. He was
aware of the fact that if he is able to sell the policy, he would be able to mint money.
Respondent bank is not responsible for the action done by, respondent Mr.X, manager. The
master would not be liable if the wrong was committed not for his but for the servant’s own
benefit.64
The complainant had entrusted, respondent Mr.X, manager, who had been advising him for
10 years, for encashment and utilisation by respondent bank. Respondent Mr. X, manager
was not said to have been acting in due course of his employment or as an agent of
respondent bank. 65
In view of the express prohibition in the Rules/Regulations which were published in the
Gazette of India, it is not possible to infer an implied authority by the bank authorizing its
agent i.e., manager, to collect premium on behalf of bank. Further it cannot be said that
manager had the express authority to receive the premium on behalf of bank. Thus it is
contended that, respondent Mr. X, manager in receiving the bearer cheque from the
complainant on account of premium of the policy of respondent bank was not acting as an
agent of respondent bank, nor could it be deemed that respondent bank had received the
premium on the date the bearer cheque towards the premium was received by respondent
bank.66 Hence the present complaint is not maintainable.
63 Section 10, Insurance Act, 193864 Barwick v. English Joint Stock Bank- In this case, the bank manager made a fraudulent representation to the
complainant who, on the strength of it, supplied goods on credit to a customer of the bank and suffered loss; and in doing so the manager acted in the bank’s interest and for realizing the bank’s dues from that customer.
65 Pirthi Singh And Anr. vs Binda Ram And Ors, AIR 1987 P H 56
66 Harshad J. Shah v. LIC of India, III (1997) CPJ 9 (SC)
17
If the terms of contract of employment of the agent are not explicit, although it may appear
that the party is an agent, he will be deemed to have contracted in his personal capacity. 67
67 Reports of cases argued and determined in the Court of Appeals and Court of Errors of South Carolina, on appeal from the courts of law, Volume 4.
18
9. WHETHER TERMS AND CONDITIONS ARE BINDING ON
COMPLAINANT?
It is a well-settled rule of construction that words in a contract (the Policy herein) are to be
understood in their ordinary meaning. Hence, the correct approach is to consider the policy
of insurance by the reference to its terms. The complainant should have read the given terms
and conditions before signing the prescribed form.68
The whole point of a document in writing is to exclude speculation as to what was and what
was not agreed to, how much ever the matter might have been raised by one of the parties
during the stage of negotiation.69 The complainant on signing the prescribed form cannot
bring up the issue that the terms agreed to orally were different from the terms mentioned in
the policy document received. A contract is not voidable merely because it was caused by
one of the parties to it being under a mistake as to a matter of fact.70
When the contract had been reduced to writing, the previous offers made by respondent Mr.
X and acceptances by the complainant lose all importance and the only contract between the
parties is the written contract which thenceforth becomes exclusive evidence of the terms.71
Section 9272 says that oral evidence cannot control written evidence. When the terms of any
such contract, grant or other disposition of property, or any matter required by law to be
reduced to the form of a document, have been proved according to the last section, no
evidence of any oral agreement or statement shall be admitted, as between the parties to any
such instrument or their representatives' interest, for the purpose of contradicting, varying,
adding to, or subtracting from, its terms. Section 9173 forbids proving the contents of a
writing otherwise than by written itself. This is based on the “best evidence” rule. Section
92 prevents admission of oral evidence for the purpose of varying the contract as between
68 Rashee Industries Ltd. v. Export Credit Guarantee Corpn. Of India Ltd., (2009) 1 S.C.C. 138 at p. 146.69 Thawardas Pherumal v. Union of India, A.I.R. 1955 S.C. 468 at p. 476: (1955) 2 S.C.R. 48.70 Sec. 22 of Indian Contract Act 1872, Contract caused by mistake of one party as to matter of fact.71 Ralli Bros v. Bhagwan Das Parmeshiri Das, A.I.R. 1945 Lah. 35 at p. 40 : I.L.R. (1944) Lah. 578.72 Indian Evidence Act, 187273 Ecidence Act, 1872
19
the parties to the contract. Once the document is produced to prove the terms under section
91 that the provisions of section 92 come to play.
Cardinal rule of evidence is that where written document exists it shall be produced as being
the best evidence of its contents.74 Oral proof cannot be substituted for the written
evidence.75 The complainant cannot come forward with the plead by providing an oral
evidence when there is clearly an accepted and signed contract by the complainant. Only the
written document will be attended.
If the document is clear and unambiguous evidence of surrounding circumstances as to
intention of parties is not admissible.76 The general and most inflexible rule is that in case of
a written instrument any other evidence is excluded either as a substitute for such instrument
or to contradict or alter the written contract.77 If a transaction is reduced to, or recorded in,
writing either by requirement of law, or by agreement of the parties, the writing becomes the
exclusive memorial thereof, and no evidence is admissible to prove the terms of the
transaction except the document itself or secondary evidence of its contents.78
When language used in a document is plain in itself, and when it applies accurately to
existing facts, evidence may not be given to show that it was not meant to apply to such
facts.79 Documentary evidence is the best evidence and withholding of such evidence draws
adverse inference.80 A document is proper evidence of its own contents where the said
contents are in issue and all derivative evidence is inadmissible. With a document of contract
between parties, the document alone is the repository of the terms of contract.81
74 Bai Hira Devi V. Official Assignee of Bombay (AIR 1958 SC 448, 452), Sumati Bala V. N.K. Das( AIR 1975 Gau 43)
75 M. Subramaniam Vs. M.L.R.M. Lutchman(AIR 1923 PC 50).76 Gurubasappa Vs. Guru Lingappa.77 Roop Kumar Vs. Mohan Thedani AIR 2003 SC 2418: (2002)6 SCC 595. 78 Ramdip Sharma Vs. Baldeo Singh AIR 1977 Pat 234: 1977 BLJR 308.79 Shujaatamnd Khan Vs. Govind behari AIR 1934 All. 100. 80 Virse Vs. Balwant 2008(4) ICC 702 (P&H).81 U. Sin Vs. U Tun Si AIR 1935 Rang 473.
20
Contract might be oral and no writing was necessary. But if it is reduced to the form of a
document the terms of contract have to be proved by document alone.82 Hence, the terms and
conditions mentioned in the policy document will alone be applicable.
Wherever on the face of the policy words to the effect “For conditions see below” are
printed the complainant concerned is as a matter of law held to be bound by the conditions
subject to which the contract is issued whether he takes care to read the conditions or not.83
Constitution bench has observed that the policy document, being a contract has to be read
strictly, and that in interpreting documents relating to a contract of insurance, the duty of the
court is to interpret the words in which the contract is expressed by the parties, because it is
not for the court to make a new contract.84
While a fiduciary is required to exercise care in recommending investments, he or she is not
a guarantor of the investment. Often an investment is subject to market and economic forces
which cannot be foreseen. The parole evidence rule states that if the contract is written then
that writing is the whole contract and the parties cannot adduce extrinsic evidence, and
especially oral evidence, to add to vary or contradict that writing’ as held in the case of
Henderson Vs. Arthur.85 An accountant is not liable for losses caused by events which cannot
reasonably be foreseen. respondent Mr. X, being a fiduciary, was acting as an agent of the
complainant. After his recommendation was paid heed to, the complainant should have made
an effort to read the terms and conditions provided, before signing the prescribed form.
In the Sh. Rakesh Chanana vs. HDFC Standard Life Insurance Co. Ltd.86, the complainant
pleaded that, Ms Noopur Goel and Ashish both representatives of HDFC Standard Life
Insurance Co.Ltd./OP (in short the company), approached him and insisted upon him for
having a life insurance policy. The complainant agreed to purchase the policy as per terms
82 Bishunath Ojha VS. S. Pragasho Jha AIR 1924 All 842; Dinker Rai Vs. Sukhdayal AIR 1947 Bom. 293
83 Sanjiva Row’s Commentary on The Indian Contract Act, 1872 And Tenders, (ACT NO. IX Of 1872), Delhi Law House 11th Edition, 2009, p. 205 84 General Assurance Society Ltd. v. Chandumull Jain85 1907 1 KB 1086 Complaint Case No. 231 of 2010
21
and conditions told by the representatives. The application form was filled and he paid the
premium of Rs.50,000/-. The Policy was issued to him alongwith the terms and conditions of
the policy. That policy was ‘HDFC Savings Assurance Policy”. After reading the policy and
its condition, the complainant came to know that the terms and conditions as told by the
representatives of the company, were not in the policy document. It was held that the
allegations of the complainant that the representatives of the company played fraud upon
him, had got no merit. The complaint was rejected.
22
10. WHETHER ADVICE GIVEN BY MR. X IS OF SOME LEGAL
IMPORTANCE?
In the present case respondent Mr. X just provided statement of opinion as regard to
deinvestment in the first policy and even in regard to the nature of policy being issued to
him. Since it was just a statement of opinion it is not sufficient to prove a misrepresentation
in this case.87 Where a statement is not made of a fact but only as an opinion it is not
misrepresentation.88 Ordinarily, a naked statement of opinion is not a representation, on
which a buyer is legally entitled to rely.89 Obviously it would be unreasonable to treat
opinions provided by, respondent Mr. X, investment manager in the same manner as truths,
as opinions are purely based on personal beliefs with no additional foundation.90
A fact is a statement that can be proven by direct experience or objective verification. This
evidence may be in the form of the testimony of witnesses, agreed-upon observations, the
written records of such testimony and observations, or the result of research or investigation.
A statement of fact can theoretically be checked for accuracy. The ground of this rule is
probably the impracticability of attempting to discover by means of the rules of law, the real
opinion of the party making the representation, and also, because a mere expression of
opinion does not alter facts, though it may bias the judgement. 91 An opinion is a statement of
belief or judgment that cannot be objectively proven true or false. Opinions usually express
the feelings, preferences or biases that a person has about a subject.
Where the opinion of an expert is receivable, the grounds or reasoning upon which such
opinion is based may also be inquired into. Opinion is no evidence, unless the reason is
assigned for such opinion.92
87 Ramesh Vs. M/s Askok Financial Corporation88 Leakes Law of Contracts, Vol. I Sec. 511 , p. 622-E.89 Hazard v. Irwin, 18 Pick. R. 105; Collins. v. Evans, 5 Adolph & Ell. (N.S.) 804 at p. 820.90 Jacob v. Bank of India, AIR (1997) All. 19691 Story’s Law of Contracts, Vol. 1 , Sec. 511 p. 622.92 Himatlal Ratilal v. State of Gujarat, 1971 CrLJ 165 (Guj), Gobardhan v. State, AIR 1959 All 53.
23
The complainant carelessly relied on respondent Mr. X's erroneous statement about the
policy without checking the policy itself. Respondent Mr. X's statement is simply a
negotiating position or an opinion containing no implication of a reasonable basis since this
was a commercial negotiation being conducted by experienced professionals on both sides.
Both had equal access to the papers and were well able to form their opinions.93
Statements of opinion or belief are not statements of fact and are not actionable just because
they turn out to be inaccurate.94
Where the facts are equally well known to both the parties, what one of them says to the
other is frequently nothing but an expression of opinion.95 The complainant had been
purchasing investment plans routinely for the past 10 years. He definitely had investment
experience. He had the potential to confirm the facts and base his decision himself therefore.
93 Kylr bay Ltd. v. Underwriters, 2006.94 Contract Law, Mindy Chen-Wishart95 Raj Malik v. Overseas Financial Corporation, AIR 2002 All. 186.
24
11. WHETHER THE FRAUD HAS BEEN COMMITTED ?
In order to constitute fraud, it is necessary that there should be a statement of fact which is
not true. Mere expression of opinion is not enough to constitute fraud.96
Fraud is essentially a question of fact, and the complainant who alleges that has to prove the
same.97 Merely making a mention of fraud or misrepresentation in the pleadings is not
enough.98
In case of sale of policies, the rule is caveat emptor, i.e., buyer beware, which means that it
was the duty of the complainant to be careful while purchasing the policy, and there is no
implied condition or warranty by the respondent Mr. X as to the characteristics of the policy
for any particular purpose.99
Even assuming that the relations between the complainant and respondent Mr. X were
friendly or close on that basis it cannot be readily inferred that respondent Mr. X was in a
dominating position or that he was exerting any undue influence or was trying to take undue
advantage of the complainant's position and thus wanted to practice fraud upon him. It is
unlikely that the complainant even after coming to know of the alleged fraud would have
waited for such a long period and in order to justify the delay he has introduced a peculiar
case in his notice, which is not consistent with the pleadings.100
The general rule of law is that a party of full age and understanding is normally bound by his
signature to a document whether he reads it or understands it or not. Equity does not save
people from the consequences of their own folly, but will save them from being victimized
by other people. Whenever a person of full age and understanding puts his signatures to a
legal document without taking the trouble of reading it or without asking the document to be
read and explained to him but signs it relying on the word of another as to its character,
96 Sec 17 of The Indian Contract Act, 1872.97 Smt. Shrisht Dhawan v. M / s Shaw Brothers, AIR 1992 S.C. 1555.98 Yog Raj v. Kuldeep Raj Gupta, AIR 1991 J. & K. 26.99 Sec 16 (Indian) Sale of Goods Act, 1930.100Hajra Bai v. Jadavbai, AIR 1986 M.P. 106 at p. 111
25
content or effect, he cannot be heard to say that it was not his document. It was settled law
that a vague and general plea of undue influence will not be sufficient when the complainant
comes forward with an action to set aside a contract on that ground or for fraud.101
The complainant was a well educated man. He is bound by the policy as he had signed the
policy whether or not he has read the terms and conditions. The document became a legal
contract immediately after the complainant signs the document.
While it was true ‘undue influence’, ‘fraud’, ‘misrepresentation’ are cognate vices and may,
in part, overlap in some cases, they are in law distinct categories, and are in view of Order
VI, Rule 4, read with Order VI of the Code of Civil Procedure, required to be separately
pleaded, with specificity and precision. A general allegation that the complainant was a
simple old man of sixty-five years who had reposed great confidence in respondent Mr. X
was much too insufficient to amount to an averment of fraud.102
In case it appears from the facts that even though there was a false statement but the
complainant has means to know the correct position and ought to have known the truth, there
is no fraud. In Kamal Kant vs. Prakash Devi, the complainant, Kamal Kant filed a suit
against his mother, Prakash Devi and some others seeking cancellation of a a trust deed on
the ground that his signatures to it were obtained by fraud by falsely telling him that it was a
general power of attorney. Under these circumstances, it was held that there was no fraud in
this case.103 The complainant was an educated man and had all the means to know the
contents of the document. He cannot simply raise the matter declaring that his signatures
were obtained by a false statement. Hereby, no fraud shall arise in this case.
When a person signs a document, there is a presumption, unless there is proof of force or
fraud, that he has read the document properly and understood it and only then he has affixed
his signatures thereon, otherwise no signature on a document can ever be accepted. There is
no allegation of force or fraud in this case104
101M.C. Bhandari, 'Law of Contract', Ashoka Law House, New Delhi (India), Third Edition 2008. p. 169102Afsar Shaikh v. Soleman Bibi, (AIR 1976 SC 163), Suguna v. Vinod G. Nehemid, 2008 (2) CTC 433 (Mad)103 ( AIR 1976 Raj. 79)
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The respondent Mr. X supplied the form to the complainant. Had the complainant examined
the form, he would have been aware of its terms and conditions and then he would have been
justified in rejecting it. The complainant cannot call for fraud in such a case as the
complainant was given an opportunity to examine the form. If he neglects to do so,
respondent Mr. X cannot be considered liable for fraud.105
104Grasim Industries Limited Vs. Aggarwal Steel, (2010) 1 SCC 83 at Pg. 84105Horsfall v. Thomas (1862) 1 H. & C. 90 : 130 R.R. 394; Smith v. Hughes, L.R. (1871) 6 Q.B. 597.
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12. WHETHER THERE HAS BEEN ANY DEFICIENCY IN SERVICE ?
As per S. 2(1)(g)106 of the Act, deficiency means inadequacy in the quality of service,
undertaken to be performed by a person in pursuance of a contract.
There was delay in refund premium amount by the respondent Mr. X. The delay was on the
ground that the principal investment amount was to be further invested by the IBI bank i.e.,
respondent bank, in private securities. A request for cancellation of units was sent to the
company whose units were purchased. There was procedural delay in the refund of money.
The respondent bank cannot be held liable for deficiency in its service as it just acted a
mediatory between customer and the company.107 Therefore, there is no deficiency in service
as defined in clause (g) of Section 2 of the Act.
As regard to question of deductions is concerned, deductions are not unfair. It was clearly
mentioned in the policy document, that even if the policy is cancelled with in free look
period, principal amount will be subjected to deduction of administrative charges and any
fluctuations in the stock market since the Insurance policy was a unit linked plan, therefore
stock market fluctuations will also affect the principal amount.
The complainant had opted for regular investment plan as he signed the signed prescribed
form for the purchase of the said plan. In view of this, it is contended that the allegations
contained in the complaint that the complainant took single premium insurance policy of
Rs.50,000 did not survive. As a result of the above discussion, it is contended that the
complainant has failed to prove any deficiency in service on the part of respondents.
It is evident from proposal forms, duly signed by the complainants that they filled up and
signed the same for obtaining the Unit Linked Policies. Under these policies, the frequency
of premium, as mentioned, in the proposal forms was required to be paid regularly. that the
complainant was signatories to the said proposal forms and received the insurance policy &
106Deficiency means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be perormed by a person in pursuance of a contract or otherwise in relation to any service;
107Union of Bank vs. M/s. Seppo Rally OY
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other documents and, thus, he could not claim that he was not satisfied with terms, which he
had already accepted.108
Considering the aforesaid circumstances and the fact that terms and conditions were received
by the complainant and he did not file any written complaint against the respondents for a
long period. That the allegations of the complainant that the representatives of the company
played fraud upon him, has got no merit. Otherwise also, the complainant has not produced
any proof regarding the terms and conditions, which were told to him by the representatives
of the insurance company. His mere allegations that he was told about the life insurance
policy with details, has got no meaning. The policy and its terms and conditions were duly
communicated to the complainant. He accepted the same without raising any written
objection. Therefore present complaint is liable to be dismissed.109
108 Poonam Bishnoi vs. Bajaj Allianz Life Insurance Co. Ltd.109Shri Rakesh Chanana Vs. HDFC Standard Life Insurance Co.Ltd.
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13. WHETHER IT WAS NECESSARY FOR THE COMPLAINANT TO
DEINVEST IN THE EARLIER POLICY?
Chief Engineers are normally on the top-tier of the engineering department of an
organization. Candidates are hired for the position of Chief Engineer in different industries
like automotive, commercial real estates, construction, pipeline, gas and petroleum.
The minimum Pay scale for the position of Chief Engineer in Government jobs in India is
Rs.9300-34800 plus a GP of Rs.4600. This is the minimum pay scale offered for this
position; however, some organizations offer a higher pay scale for Chief Engineers.
There is difference in pay scale for the position of Chief Engineer in government
organizations. The complainant, Chief Engineer in State Services, is assumed to be entitled
to a salary of Rs.35,000 and a Grade pay of Rs.8,000.
The complainant being a Chief Engineer in State Services received a good amount of
retirement benefits. He was entitled to dearness allowance, gratuity and also leave
encashment as he was a retired state employee. The complainant was entitled for gratuity of
Rs. 7,55,400 as he was in service for 10 years he was entitled for 12 times of the basic and
dearness allowance. Also being a state government employee he was entitled for leave
encashment which is shown as follows:
Pay 35000
Grade Pay 8000
DA @ 65% 27950
Total 709500
Calculation for 300 days…
70950 X 300 / 30 709500
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Total Leave Salary admissible = Rs.7,09,500
(Rupees Seven Lakh Nine Thousand and Five Hundred Only)
The complainant, a retired Chief Engineer from State Services, received good amount of
retirement benefits. When the complainant was advised by the investment manager
respondent Mr. X that the earlier policy had no growth potential, it was the duty of the
complainant to make sure whether the statement was true or not. The complainant should
have known that the earlier policy was with a lock in period of three years and the
complainant had withdrawn the money after 2 years due to which he assumed that he was
penalized by respondent bank. Had the complainant kept the money in the earlier policy for
one more year, he could have avoided the deductions. The complainant being a well
educated man and a routine investor, investing in various policies of respondent bank, for the
past ten years for tax saving purposes as well as for long term investments, was very much
aware of the rules and regulations of respondent bank. The complainant was a retired Chief
Engineer from State Services and also he received a good amount of retirement benefits as
mentioned above, so it was easy for him to invest in the new said insurance scheme without
having to withdraw money from the first policy.
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13. WHETHER THE COMPLAINANT IS ENTILED FOR COMPENSATION:
No, the complainant is not entitled for compensation. There was no deficiency in service on
respondent bank's part so there should be no unfit deductions. They were just enacting the
role of a mediator between the complainant and the company in whose private securities they
invested in for the benefit of the complainant. The complainant claiming the loss of Rs. 700
should not be considered as he had complete knowledge of the dead lock period of 3 years
for his earlier plan. His claim for the loss of the insurance scheme of Rs. 1,500 must not be
compensated for, as respondent bank had no role to play regarding this. They were simply a
mediator and it was very well mentioned in the terms and conditions that there was a free
look period of 15 days and the refund would be given after the deductions related to the the
administrative charges and any fluctuations in the stock market as it was a unit linked plan. It
was a frivolous complaint filed against respondent bank's officials. It thus affected the
goodwill of the respondent bank. It was simply a way of the complainant to mint money. The
complainant has filed a false complaint and thus the case must be dismissed. The
complainant also has not undergone any harassment or suffered any mental agony. Had he
suffered this much, he would not have waited for 2 years and 18 days to file the complaint.
Moreover, he would have approached the respondent bank soon after getting the refund of
Rs. 48,500.
Where the innocent representation has the effect of inducing the representee to enter into the
contract, then the representee is entitled to rescind the contract, but he is not entitled to
damages.110 The complainant can only rescind the contract but he cannot claim any damages
or compensation.
110Cheshire and Fifoot on Contracts, Rescission, p. 200 (1946 Ed.)
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PRAYER
Wherefore, in the light of the issues raised, arguments advanced, reasons given and
authorities cited, it is humbly prayed before the Hon'ble District Consumer Disputes
Redressal Forum:
1. That the continuation of proceedings against the respondent is unjustified and is an abuse
of law.
2. That the respondent is not liable as no charges have been proved.
3. That the evidence is not upto mark to make the respondent liable.
4. That the present complaint be dismissed.
5. That heavy cost be imposed on complainant on account of filing frivoulous complaint.
And any other relief that this Hon’ble Forum may be pleased to grant in the interest of
justice, equity and good conscience.
Counsel for Respondent
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