While upholding an order passed by the Punjab state consumer disputes redressal commission, the national consumer disputes redressal commission (NCDRC) directed the Life Insurance Corporation of India (LIC) to pay the balance of Rs99,136 with a 9% interest out of the surrender value of Rs5,78,948 conveyed to the policyholder. LIC had refused to pay the balance, saying the policy had a fixed guaranteed amount of Rs4.85 lakh with an endowment plan.
In an order last month, the NCDRC bench of Dr Inder Jit Singh (presiding member) says, "The insurance company itself has conveyed the surrender value as Rs5,78,948, which they now claim as having been done by mistake due to corrupted computer data but never issued any subsequent correspondence to the respondent about such mistake. At this stage, the policyholder cannot be made to bear the consequence of the mistake on the part of the LIC, hence, in the peculiar facts and circumstances of the case, we find no reason to interfere with the order of the state commission, the same is upheld."
In 2000, Mansa district, Punjab-based Asha Kiran bought an insurance policy from LIC spanning the period till March 2019. She paid all the premiums during this period. On 4 February 2019, when she asked for the policy status, LIC issued a printout showing the surrender value of Rs5,78,942.
When the policy matured, Ms Kiran submitted all pertinent documents and original receipts to LIC. However, LIC transferred Rs4,79,806 to her. On 13 March 2019, she submitted an application to LIC urging it to release the balance amount of Rs99,138. However, she did not receive the balance amount from LIC.
After her complaint was dismissed by the Mansa district consumer disputes redressal commission, she approached the state commission. In an order on 1 July 2021, the state commission allowed her appeal and directed LIC to pay Rs99,136 at an interest of 9%pa (per annum) from 11 March 2019 till its realisation.
LIC challenged the state commission order before NCDRC. It argued that the state commission failed to recognise that the policy in question had a fixed guaranteed amount with an endowment plan 122-E. "The complainant's entitlement was fixed at Rs4,85,000. The state commission committed material illegality by converting it into a policy with life cover, which is impermissible under the law."
The counsel for Ms Kiran contended that LIC has asserted that the policy master was compromised, resulting in the erroneous reflection of her policy with life cover and entitlement of Rs5,78,942. Despite documentary evidence confirming Ms Kiran's entitlement to Rs5,78,942, the counsel contended that the policy master, without her knowledge, altered the policy purchased as 'Y' (denotation) with life cover. "LIC has failed in disclosing information about the policy change over the period of 19 years during which consistent premium of payments were made."
After going through the order of the state commission, other relevant records and rival contentions of the parties, NCDRC observed that, in the 8 February 2019 status report, LIC conveyed the surrender value as Rs5,78,942 but, on maturity, it paid only Rs4,79,806 to Ms Kiran.
LIC contended that the said status report was sent by mistake due to a computer-generated error, Ms Kiran was entitled to a fixed sum of Rs4,85,000 only and it was a bonafide mistake from the insurance company due to a corrupted computer record and such a mistake should not entitle the policyholder to the benefit of the policy which she never purchased.
"However, it is to be noted that even after the issuance of that status report dated 8 February 2019, at no stage the insurance company has conveyed to the complainant about such a mistake," NCDRC observed.
Quoting from the state commission order, the bench of Dr Singh says, "...This is also a deficiency in service on the part of LIC for keeping the customer in the dark about the change of her entitlement of the amount. In these circumstances, we are of the view that this is a clear-cut case of negligence and deficiency in service on the part of LIC, which failed to perform its duty to inform the customer about the above-mentioned change and about the change of surrender value amount due to above said corrupted master policy."
While dismissing the revision petition, NCDRC directed LIC to pay the remaining amount of surrender value i.e. Rs99,136 with interest to Ms Kiran.
(Revision Petition No702 of 2021 Date: 22 January 2024)