Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.49-50 OF 2019
(@SLP(C) Nos.24070-24071/2015)
MADHAV HARI JOSHI Appellant(s)
VERSUS
DIVISIONAL MANAGER,
LIFE INSURANCE CORPORATION OF INDIA & ANR. Respondent(s)
J U D G M E N T
Delay condoned.
Leave granted.
The present appeals arise from the decisions of the
National Consumer Disputes Redressal Commission (“the
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National Commission”) dated 26 February, 2015 and 29
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April, 2015 .
The appellant submitted a proposal to the Life
Insurance Corporation (LIC) under its Jeevan Aastha Plan
on 31 January, 2009. On 15 April, 2009, the Branch
Officer of LIC responded to the proposal in the following
terms:
“We are in receipt of your proposal for plan
Jeevan Astha on 31.1.2009.
Alongwith special reports the case was referred
to our divisional office for decision. We have
Signature Not Verified
Digitally signed by
DEEPAK GUGLANI
Date: 2019.01.09
16:04:19 IST
Reason:
received the decision to complete the proposal
with class V health extra.
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Revision Petition No.4493 of 2014
2 Review Petition No.80 of 2015
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Shree Jeevan Astha Plan was a close ended paln up
to 21.2.2009. We can offer you another plan.
Kindly inform us the plan and accordingly so that
we can proceed further in completion of your
proposal.”
It is not in dispute that together with the proposal,
the appellant had paid an amount of Rs.1,75,000/- (Rupees
one lakh seventy five thousand only) inclusive of an
amount of Rs.10,000/- towards additional risk premium.
The Jeevan Aastha Plan was open for subscription for
45 days between 8 December, 2008 and 22 January, 2009.
Upon receipt of the above letter dated 15 April,
2009, the appellant addressed a communication to the
Chairman of LIC recording his grievance that he had
already complied with all formalities, including the
payment of additional premium and had undergone a medical
test.
In response to his representation, the appellant was
issued a communication dated 23 July, 2009 by the Manager
(Admn.), LIC. The letter reads thus:
“We are in receipt of your letter dt.27.06.2009
originally addressed to our Chairman. In this
regard we would like to inform you that the
proposal was accepted by our higher office on
02.03.2009 subject to the following requirements:
1) Consent for Cl. V extra
2) Reason for nomination if favour of Sister-
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in-law
3) Moral Hazard Report by Development Officer
The above decision was informed to the agent (Sri
S.S. Joshi) who has introduced the proposal’s to
convey the same to you in time. It is learnt
from the agent that you have not given your
consent for extra premium.”
Eventually, as it transpires, neither was a policy
issued to the appellant nor were his moneys refunded.
That led him to institute a complaint before the District
Consumer Disputes Redressal Forum, Thane (“the District
Forum”) in 2012. By his complaint, as amended, the
appellant sought a refund of his investment of
Rs.1,75,000/- together with interest and compensation in
the amount of Rs.5,00,000/-.
The District Forum allowed the complaint by directing
LIC to refund the amount of Rs.1,75,000/-. In addition,
compensation in the amount of Rs.4,25,000/- was granted
on the ground that the appellant had been deprived of his
moneys for a period of five years.
The State Consumer Disputes Redressal Commission,
Mumbai (“the State Commission”) confirmed the order of
the District Forum.
LIC instituted revisional proceedings before the
National Commission. The direction for the payment of
Rs.1,75,000/- has been maintained by the National
Commission. The appellant was also granted interest at
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the rate of 12% per annum from the date on which the
principal amount was paid to LIC till the date on which
it was deposited with the District Forum. However, the
direction for the payment of compensation has been
deleted.
A review petition instituted against the order in
revision was dismissed.
Learned counsel appearing on behalf the appellant
submits that by the order of the National Commission, all
findings of fact recorded in favour of the appellant were
confirmed. However, the direction for the payment of
compensation has been deleted without any reason or
justification.
Learned counsel further submitted that both in the
letter dated 15 April, 2009 as well as in the subsequent
letter dated 23 July, 2009, the appellant was called upon
to pay an extra premium which as a matter of fact, had
already been paid. The remaining two conditions in
regard to the nomination which was made in favour of a
relative and for a ‘moral hazard report’ by the
Development Officer were required to be fulfilled by
LIC. Hence, the appellant completed all necessary
formalities. Once the proposal was accepted, it has been
submitted that there was no justification to deny the
issuance of a policy. Moreover, it was submitted that
the policy was an equity-based plan. As a result of the
retention of the moneys by LIC for nearly five years, the
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appellant lost the benefit of an enhancement in the value
of his investment in a booming equity market and should
be suitably compensated. Hence, it has been urged that
the refund ordered with 12% interest would not be a
sufficient recompense.
On the other hand, learned counsel appearing on
behalf of LIC submitted that LIC had, by its letters,
informed the appellant that the plan stood closed on 21
February, 2009 and he could apply for an alternative
plan. The appellant having failed to do so, it has been
urged that there is no warrant for the grant of
compensation and the order of the National Commission
does not call for interference.
From a reading of the impugned judgment of the
National Commission, it emerges that all findings of fact
have, in fact, been recorded in favour of the appellant.
For convenience of reference, we extract paragraphs 6, 7
and 8 from the impugned order hereafter:
“6. On a perusal of the letters dated 15-04-2009
and 23-07-2009 issued by LIC we find that the
proposal submitted by the complainant was kept
pending till he submitted (i) consent for Clause
V Express, (ii) the reasons for nomination in
favour of sister in law and (iii) moral hazard
report from the development officer was received.
Thus, the petitioner found the complainant
eligible for the Jeevan Asthan policy on his
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completing the aforesaid requirements.
7. As regards extra premium amounting to
Rs.10,000/-, it is an admitted case that the
complainant had paid Rs.1,75,000/- as against the
regular premium of Rs.1,65,000/-. In view of the
aforesaid payment, the requirement to submit the
consent to pay an additional premium became
redundant. As regards reasons for nominating
sister in law, a perusal of the relevant policy
would show that if the person nominated was a
distant relative or not related to the life to be
assured, such cases were not to be considered and
nomination in favour of a close relative was to
be insisted upon. If the proposer insisted for
nomination in favour of a person not related
(included a distant relative) to him/her then a
letter was to be sent at his/her address to
obtain consent for the desired nomination and a
special MHR is to be obtained at least from a
Development Officer regarding the genuineness of
the nomination to ensure that no moral hazard was
involved. In the case before us it is obvious
that the complainant was insisting upon
nomination in favour of his sister in law. The
LIC, therefore, should have sent a letter to her
seeking consent for the said nomination.
However, no such letter was addressed by the
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petitioner to the sister in law of the
complainant. As far as special MHR is concerned,
it was to be obtained by LIC and not by the
proposer so as to verify the genuineness of the
nomination and to ensure that no moral hazard is
involved. That also was not done in this case
and the matter was simply kept pending till the
last date for issuing the said policy expired on
21.02.2009.
8. That is petitioner’s own case that Jeevan
Astha policy was to close on 21.02.2009.
Therefore, if any consent was to be obtained from
the nominee or any verification was to be done,
that ought to have been done well before the date
on which the scheme was to close. The proposer
cannot be made to suffer on account of the delay
and the negligence on the part of the petitioner
LIC in not processing the proposal expeditiously
and well before the Scheme was to close on
21.02.2009.”
These findings are borne out from the record.
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
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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. The National Commission has
awarded interest at 12% per annum on the principal sum of
Rs.1,75,000/-. The District Forum had quantified the
compensation payable to the appellant at Rs.4,25,000/-.
The District Forum did not indicate the basis on which
the above computation was made.
Learned counsel appearing on behalf of the appellant
submitted that the plan for which he had applied was an
equity based market plan and, hence, he has lost the
benefit of an escalation in his investment value. There
is merit in this submission. 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.
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
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Rs.2,00,000/- is directed to be paid towards all the
claims, demands and outstandings, including litigation
expenses.
The addition which has been directed to be made by
this Court shall be paid over to the appellant within a
period of one month from today.
Learned counsel appearing on behalf of LIC states
that the amount which has been ordered to be paid by the
National Commission has already been deposited in the
District Forum. The additional amount which has been
directed by this Court shall also be deposited before the
District Forum within the period stipulated. The amount
shall be released to the appellant by the District Forum
on proper identification.
We clarify that the above amount of Rs.2,00,000/-
shall be in addition to what has been ordered by the
National Commission.
The appeals are accordingly disposed of. There shall
be no order as to costs.
.............................J.
(DR. DHANANJAYA Y. CHANDRACHUD)
.............................J.
(HEMANT GUPTA)
NEW DELHI
JANUARY 04, 2019
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ITEM NO.38 COURT NO.12 SECTION XVII
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CIVIL APPEAL Nos.49-50 OF 2019
(@SLP(C) Nos.24070-24071/2015)
MADHAV HARI JOSHI Appellant(s)
VERSUS
DIVISIONAL MANAGER,
LIFE INSURANCE CORPORATION OF INDIA & ANR. Respondent(s)
Date : 04-01-2019 These appeals were called on for hearing today.
CORAM :
HON'BLE DR. JUSTICE D.Y. CHANDRACHUD
HON'BLE MR. JUSTICE HEMANT GUPTA
For Petitioner(s) Mr. Subodh S. Patil, AOR
For Respondent(s) Mr. R. Chandrachud, AOR
Mr. Karan Sharma, Adv.
UPON hearing the counsel the Court made the following
O R D E R
Delay condoned.
Leave granted.
The appeals are disposed of in terms of the signed
reportable judgment. There shall be no order as to
costs.
(SANJAY KUMAR-I) (SAROJ KUMARI GAUR)
AR-CUM-PS COURT MASTER
(Signed reportable judgment is placed on the file)