DEVIDAS M. SHANBHAG vs Life Insurance Corporation of India

THE appeal is against order dated 28.9.2001 of North Goa District Forum. THE appellant now is complainant in original complaint and respondent is opposite party.

IT is the case of appellant that he took a Life Insurance Policy of respondent in the year 1969 for Rs. 15,000/- for 30 years under "Salary Saving Scheme". The premium was Rs. 42.65 per month initially which was subsequently raised to Rs. 45.20 p.m. for covering additional risks. Appellant was employee of State Bank of India and his premium was regularly recovered by his employer and was remitted to respondent every month. The maturity of said policy was in March 1999 and appellant paid the premium upto October 1996. When appellant approached the respondent for payment of insurance sum on maturity, he was informed that his case is being processed. Later on, after exchange of some correspondence, respondent informed the appellant that said policy was in fact surrendered by respondent and surrender value of Rs. 3,363.35 was also paid to the appellant on 9.6.1982. Surprisingly, however, the premium on surrendered policy continued to be recovered from the salary of appellant even thereafter upto October, 1998 and was also accepted by respondent. Such being the case appellant did not accept the fact of surrendering of his policy. He desired the policy amount in full since he was kept under impression by the respondent, by accepting the premium that policy is alive. He later on asked the respondent to refund the premium (Rs. 8,904.40) paid after the surrender of policy till October 1998 i.e., last payment of premium, with 16.5% interest compounded quarterly. He also found that the surrendered value of policy received by him on 9.6.1982 was less than the amount of premium paid by him to respondent from commencement of policy till the date of surrender and demanded the difference of Rs. 2,573.80 on this account. It is the stand of respondent that the policy was surrendered by appellant in 1982 and surrender value was also paid to appellant on 9.6.1982. On acceptance of surrender value, the contract of insurance between appellant and respondent is not subsisting Due to non-deletion of mechanical entry in their records premium continued to be erroneously accepted by respondent even after surrender of policy. Respondent, however, agreed initially to refund the amount of premium erroneously collected by them after the date of surrender till October 1998 i.e., last payment of premium along with interest. Subsequently, however, respondent informed that payment of interest is not permissible under the rules and only amount of premium erroneously accepted can be refunded. As regards the claim of appellant about difference between amount of premium paid and surrendered value, respondent refused to entertain the demand of appellant on the ground that under the scheme of surrender of policy, surrender value is less than the amount of premium paid till the date of surrender.

District Forum, on going through evidence of both the parties and also after the respective arguments came to the conclusion that complainant having accepted the surrender value cannot now take a different stand. Appellant is an educated person and a bank employee and on acceptance of surrender value of his policy, he should have informed his employer not to recover and remit the premium to appellant thereafter. On the other side, on payment of surrender value to appellant, respondent''s continued erroneous acceptance of premiums on account of non-deletion of mechanical entry in the records of respondent, smacks of element of negligence on the part of respondent. The premium was found to have been allowed to be deducted by appellant, remitted by his employer and accepted by respondent even after contract of insurance between them ceased to exist after 9.6.1982. District Forum, therefore, found inherent lapses on the part of both the parties. Forum accordingly, ordered the refund of erroneously accepted premium of Rs. 8,904.40 along with interest of 12% together with cost of Rs. 2,500/- rejecting, however, the claim of appellant of differential amount (Rs. 2,573.80) of premium and surrender value since as per scheme of payment of surrender of policy, surrender value is less than the premium paid upto the date of surrender.

HEARD arguments. It is a fact that policy was surrendered and surrender value accepted by the appellant on 9.6.1982. Naturally, therefore, after accepting of the surrender value by the appellant, there is no subsisting of contract of insurance between appellant and respondent thereafter. The demand of differential amount of premium is also rightly rejected by the Forum since as per scheme of surrender of policy, surrender value is less than premium paid upto the date of surrender.

THE reasoning given by appellant in his letter 23.3.1999 addressed to LIC behind asking for interest at quarterly compound interest are, (a) he had to pay high rate of interest for money borrowed intermittently for present needs, (b) in case of accident/death claims would have been disowned by respondent. In absence of any evidence on records in support of his intermittent borrowings, this as a reason for compound interest quarterly is not acceptable. Similarly, incidents mentioned as second reason for compound interest did not take place. With this reasoning the only issue left before the District Forum was to order the refund of erroneously accepted premium with interest which Forum ordered with 12% interest till the date of actual payment; and a cost of Rs. 2,500/-. The Forum has, therefore, adequately dealt with the grievance of complainant. No further issue survives in the matter. Therefore, we do not find any ground to interfere with the order of Forum and it is maintained and appeal is dismissed. Appeal dismissed.