Case Note & Summary
The appellant, Madhav Hari Joshi, submitted a proposal to the Life Insurance Corporation of India (LIC) under its Jeevan Aastha Plan on 31 January 2009, paying Rs.1,75,000 including Rs.10,000 as additional risk premium. The plan was open for subscription from 8 December 2008 to 22 January 2009, but LIC accepted the proposal on 2 March 2009 subject to conditions: consent for Class V extra premium, reasons for nomination in favour of sister-in-law, and a moral hazard report by the Development Officer. The extra premium had already been paid, and the remaining conditions were to be fulfilled by LIC. LIC failed to process the proposal before the scheme closed on 21 February 2009, and retained the money for nearly five years without issuing a policy or refunding the amount. The appellant filed a complaint before the District Consumer Disputes Redressal Forum, Thane, which allowed the complaint directing refund of Rs.1,75,000 and compensation of Rs.4,25,000. The State Commission confirmed this order. LIC filed a revision before the National Commission, which maintained the refund with 12% interest but deleted the compensation. The Supreme Court held that LIC's failure to process the proposal and retention of money constituted deficiency of service. The Court noted that the plan was equity-linked, and the appellant lost investment benefits. The Court modified the National Commission's order, directing LIC to pay an additional Rs.2,00,000 towards all claims, including litigation expenses, within one month. The appeals were disposed of with no order as to costs.
Headnote
A) Consumer Law - Deficiency of Service - Insurance - Life Insurance Corporation - Jeevan Aastha Plan - Proposal accepted subject to conditions - Extra premium already paid - Remaining formalities to be fulfilled by LIC - LIC failed to process proposal before scheme closure - Retention of premium for five years without issuing policy - Held that deficiency of service is established (Paras 6-8). B) Consumer Law - Compensation - Wrongful Retention of Money - Equity-linked Plan - Interest at 12% per annum - Additional compensation of Rs.2,00,000 awarded - Held that mere interest is insufficient as appellant lost investment benefit in booming equity market (Paras 8-9).
Issue of Consideration
Whether the National Commission was justified in deleting the compensation awarded by the District Forum and State Commission for deficiency of service by LIC in not issuing the policy and retaining the premium for five years.
Final Decision
The Supreme Court modified the National Commission's order, directing LIC to pay an additional amount of Rs.2,00,000 towards all claims, demands, and outstandings including litigation expenses, in addition to the refund with 12% interest already ordered. The additional amount to be paid within one month. Appeals disposed of with no order as to costs.
Law Points
- Deficiency of service
- Consumer protection
- Compensation for wrongful retention of money
- Equity-linked insurance plan
- Interest rate
