The Uttarakhand State Consumer Disputes Redressal Commission dismissed an appeal challenging the dismissal of a complaint alleging misrepresentation and unfair trade practice in the sale of three insurance policies. The Commission held that the appellant's voluntary continuation of policies after withdrawing her free-look cancellation request, with full knowledge of terms, defeated her claim of deficiency in service.
Background & Facts
The Dispute
The appellant, Smt. Ragni Mittal, purchased three insurance policies (Nos. 51433229, 51433237, 51433242) on 10.01.2014 from Reliance Life Insurance Company through its Sales Manager, Sh. Sanjay Gupta. The annual premiums for the policies were Rs. 14,994.44, Rs. 14,994.44, and Rs. 14,998.56 respectively, aggregating approximately Rs. 45,000. The appellant alleged that the policies were sold without assessing her financial capacity to pay future premiums and that she was induced to purchase them under false assurances.
Key Facts
- 10.01.2014: Appellant purchased three insurance policies from the respondents
- Premium Amounts: Rs. 14,994.44, Rs. 14,994.44, and Rs. 14,998.56 (total ~Rs. 45,000)
- 27.01.2014: Appellant sent a letter requesting withdrawal of policies during the free-look period
- Subsequent Events: Branch Manager and Sales Manager visited the appellant, persuaded her to withdraw the cancellation request, and assured her of a refund after five years with 8% simple interest
- Security: Respondent No. 2 handed over an undated cheque of Rs. 30,000 as security
- Withdrawal of Cancellation: Appellant withdrew her cancellation request relying on these assurances
- Continuation: Appellant continued paying premiums, and the policies remain active
Procedural History
- Complaint No. 51 of 2019: Filed before the District Consumer Disputes Redressal Commission, Haridwar, alleging deficiency in service and unfair trade practice
- 25.09.2020: District Commission dismissed the complaint
- Appeal: Appellant filed an appeal before the State Consumer Disputes Redressal Commission, Uttarakhand (SC/5/A/162/2020)
- 28.04.2026: Final hearing conducted
- 07.05.2026: State Commission dismissed the appeal and affirmed the District Commission's order
The Parties' Positions
Appellant's Contentions:
- The policies were procured through misrepresentation and inducement by the respondents
- The respondents assured a refund of the premium amount with interest and issued a cheque as security
- The financial capacity of the appellant was not assessed before selling the policies
- The District Commission failed to consider crucial evidence and misapplied settled principles relating to mis-selling of insurance products
Respondents' Contentions:
- The policies were sold in accordance with the appellant's requirements
- All material facts relating to the policies were duly explained to the appellant
- The appellant voluntarily withdrew her free-look cancellation request
- The complaint is devoid of merit and based on incorrect facts
Relief Sought
The appellant sought:
- Setting aside of the District Commission's order dated 25.09.2020
- A finding of deficiency in service and unfair trade practice against the respondents
- Appropriate compensation for the alleged misrepresentation and financial loss
The Legal Issue
The central question was whether the appellant's voluntary continuation of insurance policies after withdrawing her free-look cancellation request, with full knowledge of the terms and conditions, constitutes a valid defense against allegations of misrepresentation, unfair trade practice, and deficiency in service under the Consumer Protection Act, 1986/2019.
Arguments Presented
For the Appellant
The appellant argued that:
- The respondents induced her to purchase the policies without assessing her financial capacity, amounting to misrepresentation and unfair trade practice
- The respondents assured her of a refund after five years with 8% simple interest and provided a cheque as security, which prima facie establishes inducement
- The District Commission failed to apply settled principles relating to mis-selling of insurance products and erred in dismissing the complaint
For the Respondents
The respondents contended that:
- The policies were sold in accordance with the appellant's requirements, and all material facts were explained to her
- The appellant voluntarily withdrew her free-look cancellation request and continued paying premiums, indicating her acceptance of the policy terms
- The complaint was devoid of merit and based on incorrect facts
The Court's Analysis
The Commission examined the admissions and evidence on record, particularly the appellant's letter dated 27.01.2014 (Paper No. 59), wherein she stated that she had fully understood the terms and conditions of the policies and voluntarily requested withdrawal of the free-look cancellation application. The Commission noted that:
- The appellant admitted to purchasing the policies and sending a withdrawal request during the free-look period
- The appellant subsequently withdrew her cancellation request and continued paying premiums, with the policies remaining active
- Both parties confirmed during arguments that the appellant intended to continue the policies
The Commission observed that the appellant's voluntary continuation of the policies, with full knowledge of their terms, undermined her claim of deficiency in service or unfair trade practice. The Commission relied on the principle that free and informed consent is a critical factor in determining whether a service deficiency exists. Since the appellant consciously elected to continue the policies after being aware of their terms, the Commission held that the respondents did not commit any deficiency in service.
"In view of the aforesaid admissions and letter dated 27.01.2014 (paper No. 59) placed on record, it is evident that the appellant had consciously elected to continue the polices in question after being aware all the terms and conditions of the policies. Hence, the finding recorded by the District Commission in the impugned judgment and order is well-reasoned, based on proper appreciation of the facts available on record and do not suffer from any illegality and material irregularity and warranting interference by this Commission."
The Verdict
The appeal was dismissed. The State Commission affirmed the District Commission's order dated 25.09.2020, holding that the appellant's voluntary continuation of the policies after withdrawing her free-look cancellation request defeated her claim of deficiency in service. No costs were awarded.
What This Means For Similar Cases
Voluntary Continuation Defeats Deficiency Claims
- Free and Informed Consent: Practitioners must emphasize whether the complainant had full knowledge of the terms and conditions of the service or product at the time of continuation. Voluntary continuation after such knowledge can defeat claims of deficiency in service or unfair trade practice
- Burden of Proof: The complainant bears the burden of proving that their consent was vitiated by misrepresentation, undue influence, or coercion. Mere allegations without concrete evidence may not suffice
Importance of Documentary Evidence
- Written Correspondence: Courts place significant weight on written communications, such as the appellant's letter dated 27.01.2014, which demonstrated her understanding of the policy terms
- Assurances and Promises: Verbal assurances, even if made, must be corroborated by documentary evidence. In this case, the undated cheque provided as security was insufficient to establish inducement without further proof
Misrepresentation and Unfair Trade Practice
- Financial Capacity Assessment: Insurers and service providers must assess the financial capacity of consumers before selling high-premium policies. Failure to do so may expose them to claims of misrepresentation
- Consumer Awareness: Consumers should be vigilant about understanding policy terms during the free-look period. Withdrawing a cancellation request without full comprehension of the implications can weaken subsequent legal claims
