Consumer Forum directs LIC to refund amount with interest

District Consumer Forum has directed an insurance company to refund Rs 9477 along with 18 percent annual interest to a Pulwama man who suffered bone fracture in 2000.     

Disposing of a 17 year old compliant by Nazir Ahmad of Pulwama district’s  Moren village, a bench of DCFS headed by its president (District & Sessions Judge) Muhammad Ashraf Malik directed Life Insurance Corporation of India to refund Rs 9477 to Ahmad along with 18 percent  annual interest.   

The bench also comprising Advocate Farah Deeba and Tariq Hussain Qadri as members held that the Company shall pay enhanced interest rate of 18 percent from the date of the default till realization of the amount if its order was not implemented.        

The bench, however, said the company is at liberty to take appropriate proceedings for the recovery of the amount from the official who recommended the claim of complainant for disability benefit.

The LIC had resisted the complaint on the ground that the disability suffered by Ahmad is not total and permanent and the complainant is not entitled to the disability benefit as per the policy.  

“Though the disability suffered by the complainant is not held to be permanent and total under clause 10 of the policy, an important aspect of the case which led to the institution of this complaint was necessarily to be looked for,” the Forum said.

Pointing out the complainant had approached the LIC Company at Pulwama claiming the disability benefit, the bench said: “There is material to suggest that the opposition party even conveyed to the complainant that the requisite settlement as recommended would be accomplished by the regional office at Srinagar and complainant will be informed about the development”.  

The Forum held that the official of the company at Pulwama created not only an impression with the complainant that his claim was genuine but also a legitimate expectation for his benefit under the Policy.  

“No measures appear to have been taken by the said functionary at any point of time to explain the complainant that the policy at the hand would lapse and the deposited premium would get forfeited”.    

If the official company, the Forum said, would not be able to comprehend the expression “permanent and total” as mentioned in the policy, how come the complainant could be reasonably expected to know this all. 

Underscoring that the official functionary of the Company was deficient in providing service and indulged in an unfair trade practice, the bench ruled that the complainant is entitled to receive back the deposited premium.  

“ Law is well settled that object of the consumer protection act 1987 is to provide the better protection of the interests of the consumer and as such to settle the consumer disputes quickly in a summary proceeding to ward of the perplexities  of an aggrieved consumer,” the bench observed.

The complainant had taken a Life Insurance policy for a sum of Rs one lakh under 20 years money back policy with profits and accident benefit. Under the policy, the sum accrued together with accrued bonus was payable on death before the stipulated date of maturity.

Besides the life assured was entitled to accidental benefits and in case of survival 20 percent of sum assured was payable after 5 years, another 20 percent of the sum after 10 years and further 20 percent after 15 years from the date of commencement. For remaining 40 percent of the sum assured with accrued bonus he was entitled on the stipulated date of maturity.  

Besides the assured was entitled to accidental and disability benefits vide clause 10 of the policy.  On 14 August in 2000 after he suffered fracture in his neck of the femur bone, the complainant approached LIC claiming for the assured sum as disability benefit.

Despite repeated requests to address the grievance, the company was headless leaving the complainant with no option but to lay this compliant before the forum on December 26, 2001.

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