Life Insurance Corporation of India vs C.V.KRISHNAMOORTHY, IAS.

THIS appeal has been brought by the Life Insurance Corporation of India from an order of the District Forum, Thiruvananthapuram (wrongly described as the District Forum, Kollam in the preamble to the order) in a complaint brought by the respondent. The respondent took a Life Insurance Policy worth Rs. 10,000/- commencing from 9-11-76 with an annual premium of Rs. 775/-. The class of Assurance was 15 years (ordinary type) anticipated endowment assurance with profits. Under the terms of the policy 20% of the sum assured was payable on 9-11-81 and an other 20% was payable on 9-11 -86. The appellant did not pay the instalments on the due dates but paid the respondent Rs. 4000/- on 18-9-1989 with simple interest at 9% per annum. In 1990 the respondent brought the complaint alleging that had the appellant paid him the amount in proper time he could have deposited it in an investment fetching interest of 15% and asking for compensation for the delayed payment and the poor rate of interest paid.

THE appellant resisted the complaint on the following material contentions. THE matter arises under the Life Insurance Corporation Act and therefore it is outside the Consumer Protection Act (C.P. Act) and the jurisdiction of the District Forum. THE respondent is not a consumer and there is no consumer dispute. THE records of the policy were transferred to Thiruvananthapuram from Delhi on 4-3-1980. "Due to an inadvertant error in building up the machine master of the policy to get the details of the policy whenever required, at the time of transfer of records to Thiruvananthapuram." THErefore the discharge vouchers for the payment survival benefits due on 9-11-1981 and 9-11-1986 could not be sent to the respondent at the proper time. THE omission was due to the inadvertent and innocent mistake. THE respondent who obviously was aware of these dates did not care to give timely intimation to the appellant or to make any claim. THE appellant nevertheless paid the respondent interest at the rate of 9% per annum. That is the rate which the appellant charges from policy holders who fail to pay premium on policies in time. THE respondent had executed a discharge voucher on 18-9-81 in full satisfaction of the demands when he was paid Rs. 4000/- with interest at 9%. THE interest itself was paid exgratia. THE respondent is not entitled to re-open the matter. THE complaint is vexatious. The District Forum held that the respondent whose status as a policy holder was admitted, fell within the definition of "consumer" in the Consumer Protection Act and the status is not taken away by the L.I.C. Actand that the Forum has jurisdiction to settle the dispute. On the dispute about compensation, the Forum found that while under the terms of the policy Rs. 2000/- being 20% of the policy amount (assured sum) was payable on 9-11-1981 and the next instalment of Rs. 2000/- (also 20%) was payable on 9-11-86, the appellant sent the respondent a cheque for Rs. 4000/- on 18-9-1989 to cover these amounts and that in addition they paid him Rs. 1929.60 being penal interest at 9% per annum for the delayed payment. The District Forum accepted the respondent''s contention that 9% is poor compensation for the delayed payment and that had the payments been made in 1981 and 1986 he could have deposited the amounts in good investment fetching interest upto 15%, that the L.I.C. should not punish a policy holder for its inefficiency and that he (the respondent) is entitled to get interest at an enhanced rate and that in the light of the decision AIR 1990 S.C. 185 he is entitled to interest at 15% for the delayed payment as a result of the negligence of the appellant.

The Forum also made consequent directions and allowed the respondent Rs. 1000/- as damages from the appellant since it had raised untenable contentions despite its negligence.

ALTHOUGH the memorandum of appeal contains as many as 40 grounds, Counsel for the appellant submitted that he was pressing only four grounds (1) that the relationship between the appellant and the respondent does not spell a consumer dispute, (2) that their dispute between them does not fall within the scope of the Consumer Protection Act, (3) that there is no complaint as defined in the Act and (4) that the award of interest at 15 % as compensation or as a measure of equity is without jurisdiction. Point (1) to (3) are inter-connected and can be considered together. The expression "service" in Section 2(1)(o) includes " the provision of facilities in connection with; inter alia, "insurance". The respondent has hired the services of the appellant for consideration and is without doubt a "consumer" within Section 2(1)(d)(ii). If the respondent''s allegation is true - which depends on the merits - it clearly amounts to "deficiency" with Section 2(1)(g). The respondent had set out in his complaint, albeit briefly, his grievance: - how and in what manner the service suffered from deficiency. The scheme of the Act does not prescribe or even contemplate a detailed or full pleading as in a Civil Suit or Writ petition and the respondent''s communication to the Forum, on which the proceedings were initiated, is definitely a complaint. Counsel for the appellant urged that till the date of the complaint there was no deficiency and the finding which discovered a deficiency is insufficient to attract a "deficiency" for the purpose of the Act. The argument, to put it mildly, is strange for in that event the defaulting opposite party can defeat any complaint by denying the allegation of deficiency. What the Forum does is not to create a deficiency but uncover one. Here as in a plaint before a Court, we have to go by the allegations in the complaint and not by the version of the opposite party; if the allegtations in the complaint fail the complaint fails; the complaint fails not solely because the version has rebutted the complaint. As for the existence of "consumer disputes" the denial of the respondent''s claim by the appellant does constitute a consumer dispute. It is therefore pointless to contend that there is no consumer dispute. We have no hesitation in rejecting these contentions.

IN challenging the jurisdiction of the Forum Counsel urged, that the matter is governed by the Life INsurance Corporation Act and that the respondent should have taken recourse to its provisions and not to those of the C.P. Act. Counsel draw our attention to no provision of the Life INsurance Corporation Act which excludes the provision of the C.P. Act and the jurisdiction or the Consumer Redressal Agencies. The argument also overlooks the provisions of Section 3 of the C.P. Act. We cannot help observing that we have been hearing contentions of this nature from objecting opposite parties who dislike or are irritated by the "speedy and simple redressal" provided by the C.P. Act to consumers. The District Forum had jurisdiction to entertain the respondent''s complaint and adjudicate upon it uneffected by the Life INsurance Corporation Act. The appellant''s argument to the contrary is rejected. We now pass to the last contention, on which counsel laid particular emphasis, that the District Forum had no power to award interest and that in any event it erred in awarding interest at 15%. Counsel also pointed out that the appellant had paid the respondent exgratia interest at 9% amounting to Rs. 1929.60 in addition to Rs. 4000/- that he had accepted it in full discharge of the dues and that he cannot re-open the dispute and advance further claims. The payment of Rs. 4000/- (in two instalments of Rs. 2000/-) represents the amounts that had fallen due and were payable to the respondent on 9-11-81 and on 9-11- 86 respectively. The two receipts evidence the payment of the amounts but they make no reference to the interest or to Rs. 1929.60 nor do they indicate that it was in full discharge of the liability. The argument that the payment of interest at 9% per annum was in full and final discharge and that its acceptance estops the respondent as it were from claiming anything more on account of interest has no merit. It was next argued that the insurance policy contains no provision for interest and that the respondent''s claim is supported neither by contract nor by law. Counsel pointed out that the 9% paid by the appellant was exgratia and spells no obligation to pay interest even at that rate and that the 15% claimed and allowed by the District Forum was without any basis. It was contended on the strength of 1958 KLT 961, AIR 1966 S.C. 396 and AIR 1978 Col 449 that interest cannot be allowed as damages or compensation. Now in Life Insurance Corporation of India v. Gangadhar Viswanath Ranade, AIR 1990 S.C. 185 the Supreme Court confirmed the decision of the Bombay High Court (Nagpur Bench) awarding interest at 15% as reasonable on the insurance amount payable to the assignee of an Insurance policy. The Supreme Court observed. (Page 193). "The High Court has relied on the fact that interest at 15 % per annum is reasonable in the present case, particularly in view of the fact that the L.I.C. itself charges interest at that rate. It is sufficient for us to state that there is no material produced, in the present case, to suggest that the award of the interest at 15% per annum is excessive to permit interference with the rate in this appeal particularly when the High Court has come to the conclusion that this is the reasonable rate. The argument also is, therefore, rejected."

IN view of this pronouncement neither the award of interest nor the rate of 15% awarded can be upset. Further Section 14(1)(d) of the C.P. Act empowers the District Forum to direct the opposite party "to pay such amount as may be awarded by it as compensation to the Consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party."

THE non-payment of the insurance money in time was due to the negligence of the appellant and we cannot accept the defect in the machine as a valid defence or excuse for the negligence. THE respondent who appeared in person, read out before us, the correspondence between him and the L.I.C., and they show that it was his letter of September, 1989 that awaked the L.I.C., to his policy and their default. In a letter written to the respondent in November, 1989 the Executive Director (Marketing) apologetically told him that the L.I.C., was offering him 9% interest to mitigate his hardships to some extent. At one stage the respondent even threatened the L.I.C, with a complaint before the National Redressal Commission. It is axiomatic that had the amounts reached the respondent in time he could have made a good and profitable investment. THE consequent loss was due to the appellant''s negligence. THE appellant is therefore bound to compensate the respondent and the award of interest at 15% per annum is not only legal but proper. In view of the observation of the Supreme Court and the provision of Section 14(1)(d) of the C.P. Act, it is needless to examine the basis of the decisions cited by Counsel for the appellant nor the passage which is in the same lines from Pollock and Mulla Indian Contract and Specific Relief Acts 10th Edition Page 632 under the heading ''Delay in payment of money''.

We find no merit in the appellant''s contention that if the respondent had suffered any injury or loss owing to the appellant''s failure to pay the amounts in time, he should have mitigated the damage.

THERE is no ground to interfere with the order of the District Forum. It is accordingly confirmed and the appeal is dismissed with costs of Rs. 1000/-. Appeal dismissed.