Upholding orders passed by fora below, the national consumer dispute redressal commission (NCDRC) asked Life Insurance Corporation Housing Finance Ltd (LICHF) to refund the excess amount deducted as insurance premium with interest and pay Rs75,000 to a borrower as compensation and cost. Since the policy was matured, NCDRC also directed Life Insurance Corporation of India (LIC) to pay the surrender value with interest to the insured.
In an order issued last week, the bench of justice RK Agrawal (president) and Dr SM Kantikar (member) says, "We fully agree with the conclusion arrived at by the fora below that since the policy was matured on 10 October 2008, there was no question of its restoration and, therefore, the fora below had directed the Insurance Company to pay only surrender value along with interest at 7% per annum (pa) from the date of lapse of the policy till realisation. This apart, LICHF had been directed to refund the excess amount of Rs10,116 with interest at 9% pa from 2 July 1997 and further to pay compensation of Rs50,000 to the complainant for the lapse on their part to inform about the lapse of the policy. The complainants had also been awarded costs of Rs25,000 payable by LICHF."
"LIC had already complied with the award and deposited the awarded amount with the district forum. Under these circumstances, we are of the considered opinion that the finding recorded by the fora below is based on due appreciation of the facts of the case and the evidence adduced by the parties and it does not call for any interference from us under limited revisional jurisdiction under section 21 of the Consumer Protection Act," the bench says.
Jalna, Maharashtra-based Philips Willson Patole had obtained an insurance policy, 'Jeevan Sathi (double cover joint life plan) with profits (with accident benefit)' of Rs1 lakh from LIC in October 1988. Its maturity was in October 2008. In 1992, Mr Patole was sanctioned a loan of Rs1.30 lakh from LICHF, out of which he borrowed only Rs1.17 lakh. He had mortgaged his insurance policy to obtain the loan. Including principal, interest, penalty and premium, he paid Rs3.27 lakh to LICHF as repayment.
On 29 November 2001, he received the mortgaged policy back. However, he found that the policy had lapsed since 1 May 1996. Two years after he made enquiries, in 2003, LIC informed Mr Patole that he had not paid the premium since May 1996. It also demanded Rs60,501 for restoration of policy, including Rs37,920 towards 80 months' premiums at Rs474 per month and Rs22,581 as 12% interest along with health declaration and medical certificate.
Mr Patole then filed a complaint before the district forum. LIC contended that the insurance policy of Mr Patole was assigned to LICHF and, hence, it has no legal obligation to inform him about the policy, which lapsed due to non-payment of premium.
LICHF contended that it received Rs3.27 lakh from Mr Patole towards loan repayment and interest till 2001. The policy premium remained unpaid and the policy got lapsed, it added.
While partly allowing the complaint, the district forum says, "It is clearly seen from receipts filed by Mr Patole that he had regularly paid instalments as well as premium. Even then, LICHF adjusted his amount in loan instalments and interest on it and not deposited the premium with LIC. This shows a deficiency in the service of LICHF. Policy of Mr Patole lapsed from 1995; this fact was not informed by respondents to him."
"Mr Patole was given the protection of Rs1 lakh under this policy. In the above, if any bad incident would have occurred, respondent would have refused to pay insurance for the reason that policy is lapsed. Due to mistake of LICHF, amount deposited by Mr Patole towards premium, was (not) given to LIC of India and policy of Mr Patole was lapsed. He could not get any benefit of policy. And he was compelled to file this complaint in this forum. So this Forum feels that Mr Patole is entitled for compensation of Rs50,000 for the mental and physical torture caused to him," it says.
However, Mr Patole, as well as LIC and LICHF filed an appeal before the state commission. Upholding the district forum ruling, the state commission dismissed the petitions.
Mr Patole then filed an appeal before NCDRC. LICHF decided not to challenge the order passed by the state commission.
Counsel for LIC submitted that, in terms of the orders passed by the fora below, it calculated the surrender value of the policy with 7% interest per annum (pa) from 1 May 1996, which came to be Rs63,030 and deposited the amount with the district forum.
Counsel for LICHF contended that Mr Patole was liable to pay equated monthly instalments (EMIs) towards the loan obtained and also the premium toward the insurance policy assigned in his favour. However, he failed to pay the instalments and committed defaults on various occasions and accordingly, reminders were issued to Mr Patole, LICHF added.
Mr Patole contended that he paid Rs3.27 lakh against his loan of Rs1.17 lakh through Bank of Maharashtra's Jalna branch. He also submitted a certificate issued by the Bank stating that Mr Patole had deposited monthly instalments with a premium of policy since 8 May 1992.
"However, LICHF adjusted the amount paid to it on various heads, i.e. interest, additional interest, short rim, and principal but not remitted the policy premium to its sister concern, i.e. the insurance company. If LICHF would have paid the premium of Rs474 per month, the policy would not have lapsed. LICHF neither paid the premium of the policy received by it nor refunded it to the complainant and they never informed to them about the lapse of policy in the year 1996. Under such circumstances, as there is clear cut deficiency in service on the part of LICHF, the complainant is entitled for maturity benefits instead of surrender value," Mr Patole contended.
After hearing all parties, NCDRC observed that there is a concurrent finding of facts returned by the fora below that Mr Patole could not pay the amount of EMIs, including the premium of the policy after May 1996 which resulted in the lapse of the policy. Thereafter, LICHF did not pay any premium amount to LIC and also refunded the excess amount to Mr Patole. However, they had failed to inform Mr Patole that the policy in question had lapsed due to non-payment of premium.
"We do not find any good ground to interfere with the well-reasoned orders passed by the fora below in revisional jurisdiction under section 21 (b) of the Act. Consequently, the present revision petitions fail and are hereby dismissed," the bench says. It also directed that within eight weeks, the amount lying deposited with the district forum should be released with accrued interest and the balance amount in favour of Mr Patole.
(Revision Petition No2168-2169 of 2017 Date: 10 March 2023)
