Life Insurance Corporation of India vs Tanvir Ahmad Bhat and Another

Syed Bashir-ud-Din, J.—One Mohmmad Yousuf Bhat was insured for a sum of Rs. 15,000/- w.e.f. 22-5-1980 under policy No.

22940987 effected by appellant, Life Insurance Corporation of India (LICI). The insured died within three years of the policy. The CLICI treated

it as a case of early death claim and put it on Investigation. Relying on the report of Investigating agency that the insured has concealed the material

facts in respect of health while making declaration in the proposal, repudiated the claim and Informed to petitioner by letter dated 12-3-1987. The

minor sons of petitioner through their uncle Gh. Mohmmad Bhat filed a consumer complaint No. 310/95 before J. & K. State Consumers

Protection Commission, Srlnagar (hereafter for short Commission). The Commission, after taking written statement of the opposite party on record

pursuant to the notice and on evidence and material admitted during inquiry, upheld the claim of the minors and directed the opposite party LICI to

pay them a sum of Rs. 15,000/-with Interest @ 18% w.e.f. 14-9-1982 till payment.

Appeal is preferred by LICI challenging the award of insured sum with interest on grounds stated thereto.

Mr. H.S. Oberoi, Advocate for appellant, submits that so far as grounds put forth to question award of insured sum of Rs. I5,000/- to the two

minor sons of deceased (insured Mohmmad Yousuf Bhat) are concerned, same are not pressed in the face of facts and circumstances of the case.

Counsel further submits that the appeal is confined to quantum of interest and the date from which it is awarded on the sum assured. We record

this statement of counsel.

The learned counsel canvasses that the award of 18% interest on sum assured is on higher side, and this Court, following Apex Court's decision,

has awarded reasonable rate of interest in the facts and circumstances of each case. The counsel further submits that the award of interest from 14-

9-1982 when the Insured is alleged to have died, is quite unreasonable, in so far as the case could not be finally settled/repudiated till 12-3-87, for

the reason that the documents and information required and summoned from petitioners was not forthcoming. It was as per appellants' own

showing that the required form was sent by them to LICI on 19-11-85. The latter acknowledged pendency of the case under process by letter

dated 22-5-86, followed by another letter of February 17, 1987 addressed to minor claimants' mother, seeking further information regarding

admission of the deceased in hospital with required particulars. It is stated that all this goes to show that the matter in any case was not finalised for

non-supply of information and documents and that LICI pursued and processed the matter till the claim was repudiated on 12-3-1987. Despite

initial opposition to award of reasonable interest and the date from which it should be payable, the counsel for respondents concedes that the

matter was in process and pending for want of information, material and documents summoned by Insurance company from the respondents. As to

the quantum of Interest, the counsel submits that he leaves it to the Court to determine the reasonable rate of interest on the awarded sum.

The submissions of the counsel for appellant find support from record. The material and evidence on record of Commission file fairly shown that

the matter was in process and under consideration till March 1987. The information and documents were sought and summoned from petitioner till

February 1987. It was only on March 12, 1987 that the claim was repudiated and petitioner informed.

in the overall facts and circumstances of the case it will be just and proper to allow the rate of interest from this date i.e. 12-3-87. The award of

18% Interest in the fact situation of this case cannot be said to be reasonable rate of interest. It is excessive and on higher side. In 1987 the rate of

interest was low and not as high as it is these days. Having regard to the rate of interest at the relevant time and the decisions on the subject, we

consider, in the facts and circumstances of this case, award of 10% as reasonable interest. Accordingly, we award interest at the rate of 10% from

1-3-87 as fair, equitable and reasonable Interest.

Except above modification as to the rate of interest and the date from which it is payable the appeal is dismissed.