RAM PARKASH PAHWA vs LIFE INSURANCE CORPORATION OF INDIA

THIS revision petition is filed against the Judgment and Order dated 24.5.2004 passed by the State Consumer Disputes Redressal Commission, Delhi, in Appeal No. A-182 of 2004, confirming the order passed by the District Forum on 5.2.2004 dismissing the Complaint Case No. 1948 of 1999. It is the case of the Complainant, who himself was a Branch Manager of the L.I.C., that he had taken a Life Insurance Policy for his son, Chander Pahwa, for a sum of Rs.50,000/- under the Jeevan Surabhi Plan (a money back plan), effective from 20th October, 1993. Under the said policy, the policy holder was entitled to refund of 20% of the sum assured i.e. Rs.10,000/- as survival benefit at intervals of every 4 years from the date of commencement of the policy and the last 5th instalment would be after 2 years, that is to say, the first survival benefit of Rs.10,000/- was required to be paid on 20th October, 1997, if the policy remains in force.

THE Petitioner paid only two half yearly instalments, i.e. Rs.1,858/- for the premium payable half-yearly. Thereafter, he omitted to make any payment towards premiums. However, on 3rd October, 1998, the Petitioner wrote a letter for revival of the said policy by enclosing the health and medical report with a request to adjust the survival benefit of Rs.10,000/- which had become payable on 20th October, 1997 against the premium. He has also deposited the difference of the arrears of premium amounting to Rs.8,032/- as demanded by the L.I.C. by its letter dated 3rd October, 1998 and sent medical certificate etc. He contends that despite the completion of the said formalities, the L.I.C. failed to revive the lapsed policy and by letter dated 9th October 1998, called upon the Petitioner to furnish encashment certificate of the cheque sent by him. The L.I.C. has also failed to intimate the premium due from the Petitioner and without furnishing any details or particulars demanded further sum, medical report and other documents which were not required at all. Hence, the aforesaid complaint was filed before the District Forum for compensation of pecuniary loss, harassment and mental agony caused to him. During the pendency of the complaint, the L.I.C. revived the policy vide its letter dated 1.11.1999. It was the contention of the L.I.C. that the Complainant had paid only one-year''s premium toward the policy in question and the same stood lapsed for non-payment of premium. Thereafter, the Complainant suddenly made a request for revival of the policy with a proposal that the survival benefit of Rs.10,000/- which would have fallen due had the policy been in force be adjusted against the premium due. It was pointed out that as per Condition No.3 of the Policy the lapsed policy can be revived within 5 years from the date of unpaid premium but before the date of maturity only on payment of the arrears of the premium together with compounded interest at such rate as may be fixed by the Corporation from time to time. As the Petitioner failed to pay the entire amount there was no question of making any payment of survival benefit or interest thereon unless the policy was revived by making full payment. It is submitted that survival benefit would accrue on 20th October 1997 only if the policy was in force. Findings: (a) Petitioner who is appearing in person submitted that the L.I.C. ought to have paid interest on the survival benefit of Rs.10,000/-.

In our view, this claim is rightly repudiated by the L.I.C. and rightly rejected by the State Commission. The policy has lapsed, and, therefore, unless it was revived, there is no question of paying any interest on the said amount. Further, without receiving the premium there is no question of paying the interest on the said amount. As stated above, only on 3rd October, 1998 the Complainant sent the proposal for revival of the policy by sending only Rs.8,032/-. The said amount was sent as if the policy was revived and that the Complainant was entitled to survival benefit amounting of Rs.10,000/-. (b) The Complainant next contended that the L.I.C. unjustifiably demanded the encashment certificate of the cheque sent by the Complainant. In our view, this submission requires to be accepted because, it was the duty of the Officer or the concerned Clerk of the L.I.C. to verify their bank statement/record and find out whether the cheque deposited by them was honoured or dishonoured. Their own accounts would reveal this fact. Therefore, asking for the certificate of encashment of the cheque is totally unjustified. This is a typical instance of red-tapism and the art of delaying or shirking of the responsibility by the officers of the Government or semi-Government bodies. Such an act of the concerned officer undoubtedly, increases the work and causes lot of harassment to the person affected. It speaks of high-handed action. (c) The Complainant further submitted that his request to adjust the survival benefit of Rs.10,000/- which was due in the year 1997, ought to have been accepted. For this submission, he sought reliance upon the Clause (3)(h) of Policy Servicing Department, Manual No.3 for Revival of Lapsed Policies, which provides as under: "3(h): The Revival of Anticipated Endowment or Money Back Policy can be allowed under Ordinary Revival Scheme by taking into account the amount of Survival Benefit that will fall due subject to revival, towards the accumulated arrears of premiums with interest required for the revival". This submission also requires to be accepted in view of the aforesaid procedure for revival of the lapsed policy prescribed by the LIC itself. As per the aforesaid clause, LIC is required to take into account the amount of survival benefit that will fall due subject to revival. Undisputedly, the Complainant sought revival of his policy on the basis of revival drive for lapsed policies undertaken by the LIC. (d) The Complainant next submitted that LIC revived the policy when he approached the District Forum and undisputedly there is delay of more than one year in reviving of the same and for this delay, LIC should pay compensation. In our view, this submission of the Complainant is justified. For the fault of officers of the LIC, Complainant was required to approach the District Forum, State Commission and this Commission. The policy was revived during the pendency of the complaint before the District Forum. For this mental agony and harassment the Complainant is required to be adequately compensated. At this stage, it would be worthwhile to quote relevant portion of the decision of the Apex Court ion the case of Lucknow Development Authority vs. M.K. Gupta (1994) 1 SCC 243 at 262-263, in the following words: "The jurisdiction and power of the courts to indemnify a citizen for injury suffered due to abuse of power by public authorities is founded as observed by Lord Hailsham in Cassell and Co. Ltd. v. Broome 1972 AC 1027: (1972) 1 All ER 801 on the principle that, ''an award of exemplary damages can serve a useful purpose in vindicating the strength of law''. An ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities. """"".A public functionary if he acts maliciously or oppressively and the exercise of power results in harassment and agony then it is not an exercise of power but its abuse. """""". Nothing is more damaging than the feeling of helplessness. An ordinary citizen instead of complaining and fighting succumbs to the pressure of undesirable functioning in offices instead of standing against it. Therefore the award of compensation for harassment by public authorities not only compensates the individual, satisfies him personally but helps in curing social evil. It may result in improving the work culture and help in changing the outlook. Wade in his book Administrative Law has observed that it is to the credit of public authorities that there are simply few reported English decisions on this form of malpractice, namely, misfeasance in public offices which includes malicious use of power, deliberate maladministration and perhaps also other unlawful acts causing injury. One of the reasons for this appears to be development of law which, apart, from other factors succeeded in keeping a salutary check on the functioning in the government or semi-government offices by holding the officers personally responsible for their capricious or even ultra vires action resulting in injury or loss to a citizen by awarding damages against them"."

THE Court also observed that it is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result. The culture of window clearance appears to be totally dead. And, finally observed that, it is therefore necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries. For the aforesaid reasons, this Revision Petition is partly allowed. The order passed by the District Forum and State Commission are set aside. It is held that: (a) there was unjustifiable delay in reviving the policy; (b) the act of demanding encashment certificate of the cheque from the complainant was nothing but an act of harassment to the complainant as it was the duty of the officers of the LIC to verify their own bank''s statement for finding out whether the cheque issued by the complainant was encashed or dishonoured; (c) there was no reason not to follow Rule (3)(h) of Policy Servicing Department, Manual No.3 for reviving of the lapsed policy.

FOR these deficiencies in service, LIC shall pay Rs.25,000/- as costs to the complainant. It would be open to the LIC to recover the same from the concerned officers who made such lapses. In the result, the revision petition is allowed accordingly. The amount of Rs.25,000/- shall be paid to the Complainant within a period of four weeks from today.