Summary
LIC retained a proposer’s Rs.1.75 lakh for nearly five years without issuing the policy or refunding the money, although the extra premium was paid and remaining formalities were LIC’s responsibility. The Supreme Court found deficiency of service and held that refund with 12% interest did not sufficiently redress deprivation of the investment opportunity. It awarded an additional Rs.2 lakhs, inclusive of all remaining claims and litigation expenses.
Issues
- Whether LIC’s failure to complete processing or refund the proposal money amounted to deficiency of service.
- Whether the refund and interest awarded by the National Commission sufficiently compensated the proposer.
Held
- The extra premium had already been paid. Obtaining the nominee’s consent and the necessary moral-hazard report were LIC’s responsibilities; it neither completed those steps in time nor refunded the money. The favourable factual findings were supported by the record and established deficiency. (¶¶ 17, 18, 19)
- The District Forum had not explained its Rs.4.25 lakh compensation calculation. Nonetheless, the investment component and wrongful retention of funds meant that interest alone was inadequate redress. (¶¶ 19, 20)
- An additional Rs.2 lakhs was awarded toward all remaining claims, demands, outstandings and litigation expenses, over and above the National Commission’s refund and interest. It was to be deposited with the District Forum within one month and released on proper identification. (¶¶ 21, 22, 23, 24, 25)
Result
Appeals disposed of; additional Rs.2 lakhs awarded over the National Commission’s refund and 12% interest, payable through the District Forum within one month. No costs.