SC Tells LIC To Pay Rs. 2 L Compensation To Man Whose Money It Held Wrongfully For About 5 Years [Read Judgment]
“LIC retained the moneys of the appellant for a period of nearly five years. No effort was made to refund the moneys. In this view of the matter, a deficiency of service was clearly established.”
The Supreme Court, while affirming a National Consumer Commission order to refund the money the Life Insurance Corporation (LIC) held wrongfully from a man for nearly five years, has also asked the corporation to pay a compensation of Rs. 2 lakh to him.
In January 2009, Madhav Hari Joshi submitted a proposal to the LIC) under its Jeevan Aastha Plan. He paid an amount of Rs. 1, 75,000, inclusive of an amount of Rs. 10, 000 towards additional risk premium. As the policy was not issued to him and also because his money was not refunded by LIC, he approached the District Consumer Forum. The District forum allowed his complaint and directed LIC to refund the amount and also to pay compensation in the amount of Rs. 4, 25,000 to him. The State Forum upheld this order. The National Consumer Commission upheld the order to refund the amount, but set aside the direction for the payment of compensation. Joshi appealed to the Supreme Court.
Deficiency Of Service Was Clearly Established
The bench comprising Justice DY Chandrachud and Justice Hemant Gupta observed: "It appears from his letter dated 15 April, 2009 that the Branch Manager of LIC had already received a decision to complete the proposal with extra premium. Admittedly, even the extra premium of Rs.10,000 was paid by the appellant as part of his payment of Rs.1,75, 000. The remaining formalities that were required to be observed 8 were to be fulfilled by the Development Officer and not by the appellant. LIC retained the moneys of the appellant for a period of nearly five years. No effort was made to refund the moneys. In this view of the matter, a deficiency of service was clearly established."
Modifying the National Commission order, the bench said: "The plan in question was not exclusively an insurance based product. By being linked to the equity market, it had an investment element. LIC held on to the moneys of the appellant wrongfully for five years. Its omission to refund has deprived the appellant of the use of his moneys. Hence, a mere direction for the payment of interest on the principal sum will not provide sufficient redress."
While disposing of the appeal, the bench ordered: "In our view, the ends of justice would be met, if the direction, which has been issued by the National Commission, is modified and an additional amount of Rs.2,00,000 is directed to be paid towards all the claims, demands and outstandings, including litigation expenses."
Read the Judgment Here