DARIYAVESINGH B. KARNAWAT vs Life Insurance Corporation of India

BOTH these appeals arise from order dated 8.1.2003 rendered by the learned Consumer Disputes Redressal Forum, Surat in Consumer Case No. 367 of 1998 directing the opponent Life Insurance Corporation of India (LIC for short) to pay to the complainant Rs. 27,386/- with interest @ 12% from 4.1.1994 till payment and cost quantified at Rs. 1,000/-. Appeal 141 of 2003 has been filed by the original complainant and Appeal No. 557 of 2004 has been filed by the opponent LIC of India. The complainant''s grievance in the appeal is with regard to working of the annuity amount made by the opponent LIC of India, obviously at the say of the employer of the complainant and for payment of cumulative interest in lieu of compensation for actual loss suffered with regard to refund of Rs. 27,386/- originally wrongfully deducted by way of income tax by the opponent LIC of India. The opponent LIC of India has made grievance with regard to the impugned order on the ground that the complaint was barred by limitation, that there was no deficiency in service on the part of opponent LIC of India as it acted as per the communication received from the employer of the complainant and the complainant accepted the amount after deduction of income tax along with the TDS challan.

WE have heard the learned Advocate for the original opponent LIC of India and the learned representative for the original complainant. WE have gone through the impugned order and the material placed on record of the complaint and on the record of both these appeals. At the outset we may say that the main grievance of the complainant is with regard to wrongful deduction of income tax by the opponent LIC of India. The reliefs prayed for in the complaint indicate that the complainant prayed for refund of tax deducted by opponent LIC of India in the sum of Rs. 27,386/-, loss of interest @ 12% (cumulative) on the amount of Rs. 27,386/- and reimbursement of expenses and compensation in the sum of Rs. 45,000/-. In that view of the matter it is abundantly clear that the complainant did not approach the learned Forum for any other relief except relief of refund of tax deducted by the opponent LIC of India. With this basic nature of the complaint, we proceed to consider the submissions made on behalf of the rival parties. The learned Forum has proceeded to hold that the complainant was not barred by limitation while answering the third point for determination. What the learned Forum has said in respect of the defence of limitation is that the cause of action of the complainant would be continuing cause of action. In our considered opinion, this finding cannot apparently be accepted as the occasion of deduction of tax was the one and the complainant alleged that it was wrongfully deducted. The cause of action started running from the date the complainant made grievance with regard to alleged wrongful deduction of tax. It is not in dispute that the grievance was made with regard to deduction of tax somewhere in the year 1994 in the first instance. Following brief facts will throw further light on the question.

The complainant left the service of his employer M/s. West Coast Paper Mills Limited on or around 4.12.1993. Pursuant to the communication received from the said employer, opponent LIC of India tendered the amount under the Group Superannuation Fund Scheme as per the working of the amount set out by the employer. The employer also had shown deduction of income tax of Rs. 27,386/-. The opponent LIC of India without wasting time communicated to the complainant on 4.1.1994 tendering the amount while also sending the tax deduction challan. It is a different matter that the complainant had first disowned the payment and made grievance with regard to deduction of income tax and returned the cheque. However, it is not in dispute that ultimately he had an occasion to accept the amount after deduction of tax. That happened in the year 1995 as submitted on behalf of the complainant. Even if that date is taken into consideration, the complaint stated to have been filed on 11.11.1998 is clearly barred by limitation. In the first place the cause of action cannot be said to be continuing cause of action since the grievance with regard to deduction of income tax was made by the complainant way back in the year 1994. His grievance might be continuing but the cause of action started running when he first made grievance. Simply because the opponent LIC of India at a later point of time communicated to the complainant with regard to tax deduction certificate and co-operated in the matter of complainant getting refund from the Income Tax Department, it cannot be said that the cause of action continued against the opponent LIC of India. In our considered opinion the complaint should have been dismissed as barred by limitation.

FROM the aforesaid brief facts it would clearly appear that the opponent LIC of India was acting as per the instructions received from the employer. Although it is not in dispute that the employer instructed the opponent LIC of India for effecting payment under the scheme in a particular manner, reference may be made to the communication in that respect issued by the employer acting as Trustee under the scheme of opponent LIC of India. It appears at Annexure A in the appeal filed by opponent LIC of India. As against the name of the complainant due date of payment under the scheme is shown to be 4.1.1994. Commuted amount stated is Rs. 59,931/- plus Rs. 1,199/-, in all Rs. 61,130/-. In the column of income tax deducted, if any, 40% in the sum of Rs. 24,452/- and 12% surcharge in the sum of Rs. 2,934/- totalling to Rs. 27,380/- are stated. In the column of net amount payable Rs. 33,744/- is stated. Thus, the opponent LIC of India was to act as per the particulars supplied by the employer. It is not in dispute that the opponent LIC of India tendered the amount as per these instructions after deducting the income tax and tendered the tax amount so deducted to the income tax department as per the challan which was annexed with the letter addressed to the complainant. This happened way back on or around 4.1.1994. Yet, the question with regard to tax deduction certificate was raised by the complainant and the opponent LIC of India appears to have tried to assist the complainant. This can be visualised from the communication dated 18.8.1994 (Annexure-B) and another TDS certificate (Annexure E) dated 2.12.1995. It would clearly appear that no deficiency in service could ever have been imputed against the opponent LIC of India under such circumstances. If there was any grievance the complainant could have made the same against the employer. It has been submitted on behalf of the complainant that he in fact superannuated upon attaining the age of 58 years and did not have any occasion to resign. Once again, this grievance is referable to the action of the employer who had in no uncertain terms communicated to the opponent LIC of India the fact that the complainant resigned and did not have any occasion of being superannuated. We do not have any particulars about the actual age of superannuation whether it was 58 years or it was 60 years. We do not propose to enter into the question with regard to the age of superannuation, though on a reference to the averments made in the complaint, it becomes abundantly clear that the complainant left the service and had not retired from the service. What is important is that even if the complainant was in fact superannuated upon reaching the date of retirement, the mistake, if any, could be attributed to the employer. The complainant could have made grievance against the employer with regard to the factum of the retirement of factum or his resignation. No defect or imperfection in rendition of service could be attributed in that regard against the opponent LIC of India. The matter does not end here. The complainant had an occasion to accept the net amount after deduction of tax somewhere in the year 1995. It has been submitted that he accepted such amount subject to his contentions or without prejudice. If that was so, there was no reason for him not to pursue the matter forthwith. It appears that he unnecessarily waited for more than three years even thereafter. That apart, the opponent LIC of India went on assisting the complainant in the matter of getting refund from the Income Tax Department. That the complainant did not receive the refund from the Income Tax Department is merely the say of the complainant unsupported by any documentary evidence with regard to any order passed by the Income Tax Department on his tax return for refund. There is nothing worth the name from the Income Tax Department which would have lent support to the complainant''s case that he did not receive refund of tax and that was solely the result of deficiency in service alleged against the opponent LIC of India. Taking the matter from any angle, the complainant cannot succeed in the matter of claiming refund of the tax deduction made by the opponent LIC. Reference has been made on behalf of the complainant to Clause 4 of the scheme, copy where of has been filed with the complainant''s appeal. Said Clause 4 would read as under: "4. Communication of annuity benefits- In 1968, Rule 90 of Income-tax Rules, 1962 was modified to include a provision for commutation of annuities at the rate one-third of the annuity corpus for employees not entitled for gratuity and one-fourth for others. These commutations are tax-free and these worked as inducements in increasing demand for superannuation schemes. From November, 1984, Rule 90 of the Income-tax Rules, 1962 stands further modified whereby a higher proportion of annuity corpus is commutable. Accordingly, one-third of annuity corpus is commutable if the employee is entitled to gratuity and half the annuity corpus is commutable otherwise".

On a plain reading of the aforesaid clause, it would clearly appear that communications are to be tax free in case of superannuation of the employee. There is no reference with regard to status of the employee who has resigned from service. Even if there was any modification in the provisions of the Income-tax Act/Rules exempting the employees who would resign from their service, tax deducted would become refundable from the Income-tax Department, that process clearly appears to have been undertaken by the complainant and the result of that process is not made available in the complaint proceedings or even at this stage. Be that it may, it is not understandable how the complainant could claim refund of income-tax already deducted from the amount payable under the scheme when such income tax was remitted to the Income Tax Department by the opponent LIC of India. In our considered opinion, opponent LIC of India could hardly be saddled with the liability to refund the tax amount already deducted and remitted to the Income- Tax Department.

IT has been submitted on behalf of the opponent LIC of India that employer would be a necessary party in respect of the grievance made by the complainant. In our considered opinion, cause of action, if any, was in fact against the employer and not against the opponent LIC of India in any manner. There is no question of joining the employer as party to the complaint filed against the opponent LIC of India. In fact the complainant ought to have filed the complaint against the employer and not against the LIC of India, if, in fact, it was appropriately contended that no tax was required to be deducted under the provisions of the scheme. In any view of the matter, since we find that the complaint was not entertainable against the opponent LIC of India, we pass following order. ORDER Impugned order dated 8.1.2003 rendered by the learned Consumer Disputes Redressal Forum, Surat in Consumer Case No. 367 of 1998 is hereby set aside. Complaint bearing No. 367 of 1998 will stand dismissed. Appeal No. 557 of 2004 filed by the Life Insurance Corporation of India shall stand allowed. Appeal No. 141 of 2003 filed by the original complainant shall stand dismissed. There shall be no order as to costs all throughout. Ordered accordingly.