Litigation Cost More Than Awarded Amount: Allahabad HC Pulls Up LIC For Challenging ₹74K Lok Adalat Award

Describing it as 'surprising' that LIC chose to challenge a 'very petty amount', a bench of Justice Prakash Padia directed a Senior Officer of LIC to file an affidavit explaining why the award should not be paid to the policyholder (Respondent No. 2).

“It is very surprising that against a very pity amount, the petitioner, i.e., Insurance Company filed the present writ petition which practice has been deprecated by this Court from time to time”, the Court said.

Interestingly, taking into account the legal fees incurred in filing the petition, the Single Judge observed that the cost of pursuing the present writ petition appeared to exceed the amount awarded by the Lok Adalat.

Essentially, the LIC moved the Court with the instant writ petition against an order of the Permanent Lok Adalat directing it to refund the deposited amount along with 7% interest and ₹5,000 in litigation expenses to one Megh Shyam Sharma (policyholder).

The award was passed on the application (for refund of premiums) of the policyholder, who had purchased five insurance policies from LIC that later lapsed due to non-fulfilment of policy conditions.

Since no benefits had accrued under the lapsed policies, the Lok Adalat directed LIC to refund the deposited amount.

Before the HC, LIC argued that since the respondent had not complied with the full terms of the policies, he was not entitled to any amount.

However, discarding this argument, the single judge noted that the respondent was merely seeking a refund of the amount already deposited, and that the Lok Adalat had not granted any additional or unjustified relief. The Court also pulled up LIC for challenging the award of the Lok Adalat.

The matter will be heard next on May 7.

Advocate Ashutosh Mani Tripathi appeared for the petitioner