Santosh Kumar Kejriwal vs Life Insurance Corporation Of India & Anr

This appeal has been filed by the appellant Santosh Kumar Kejriwal challenging the order dated 16.02.2016 passed by the State Consumer Disputes Redressal Commission, West Bengal, (in short 'the State Commission') in Consumer Complaint No.204 of 2014.

Brief facts of the case are that the appellant/complainant is a senior citizen and being attracted with 'Jeevan Suraksha Plan-I' policy of the respondent opposite party he purchased the plan by investing Rs.20,50,390/-. It is alleged that he was assured that 95% of the fund value can be encashed even after date of vesting and that 'the option for the annuity type is to be exercised at least 6 months before the date of vesting. It has been alleged that opposite parties committed deficiency in service by not providing the option form in time & also by ill-advising him to submit the Maturity Discharge Voucher on 13.06.2013. As no option was given, the complainant was only entitled to the annuity payment and not for any lump sum payment. Aggrieved, the appellant/complainant filed a consumer complaint before the State Commission for payment of Rs.22,45,135/- along with interest, compensation & litigation cost. The complaint was resisted by the respondent opposite party on the ground that the complainant had not given any option before six months of maturity and therefore, he was not entitled to the fund value under the policy. The State Commission, however, allowed the complaint as under:-

"It is found that instead of option form, he was given Surrender Discharge Voucher by the OP No.2 on 13.06.2013, which he submitted properly, but the same was not given effect to by the OP No.2. Viewing from all aspects, the Complainant is found to be entitled to the assured sum of Rs.22,45,135/-, as assured to him, instead of Rs.21,65,636/- is offered to him. Thus, the complaint succeeds. OP is directed to pay a sum of Rs.22,45,135/- (Rupees Twenty-two lakh forty-five thousand one hundred thirty-five) only within one month from the date of this order, in default to pay an interest @18% per annum from this date till payment. He is also entitled to get a litigation cost of Rs.5,000/- from the OPs."

Hence the present appeal.

Heard the learned counsel for both the parties and perused the record. The learned counsel for the appellant stated that though the State Commission has awarded the required amount as per the demand of the complainant, however, the State Commission has not awarded any interest or compensation for mental agony and harassment. It was stated that the money was due in the year 2013 which will be paid only after the order of the State Commission. The complainant is entitled to due interest on this amount. It was requested that 12% interest may be granted on the amount of Rs.22,45,135/- from the date of filing of the complaint till actual date of realisation. In support of this assertion the learned counsel referred to the following cases:-

(1). Tahazhathe Purayil Sarabi and Ors. Vs. Union of India (UOI) and Anr., AIR 2009 SC 3098. It has been held that:-

"17. The Courts are consistent in their view that normally when a money decree is passed, it is most essential that interest be granted for the period during which the money was due, but could not be utilized by the person in whose favour an order of recovery of money was passed. As has been frequently explained by this Court and various High Courts, interest is essentially a compensation payable on account of denial of the right to utilise the money due, which has been, in fact, utilized by the person withholding the same. Accordingly, payment of interest follows as a matter of course when a money decree is passed. The only question to be decided is since when is such interest payable on such a decree. Though, there are two divergent views, one indicating that interest is payable from the date when claim for the principal sum is made, namely, the date of institution of the proceedings till the recovery of the amount, the other view is that such interest is payable only when a determination is made and order is passed for recovery of the dues. However, the more consistent view has been the former and in rare cases interest has been awarded for periods even prior to the institution of proceedings for recovery of the dues, where the same is provided for by the terms of the agreement entered into between the parties or where the same is permissible by statute."

(2) Rubi (Chandra) Dutta Vs. United India Insurance Company Limited, (2011) 11 SCC 269. It has been held that:-

"26. It is correct that the Act does not contain any provision for grant of interest, but on account of catena of cases of this Court that interest can still be awarded, taking recourse to Section 34 of the Code of Civil Procedure, to do complete justice between the parties. We accordingly do so. This principle is based upon justice, equity and good conscience, which would certainly authorize us to grant interest, otherwise, the very purpose of awarding compensation to the appellant would be defeated. We accordingly deem it fit to award interest at the rate of 9% per annum on the aforesaid amount from the date of filing the complaint till it is actually paid."

On the other hand, the counsel for the respondents stated that the appellant/complainant had not given any option whether he wanted lump sum payment on the maturity of the scheme or he wanted annuity to be fixed. Option was to be given prior to 6 months of the maturity of the scheme. As per the scheme, if the option was not given the annuity option will prevail. However, when the complaint was filed the Insurance Company offered Rs.21,65,636/- to the complainant. The State Commission has ordered 95% of the fund value on maturity which comes to Rs.22,45,135/-. Although the Insurance Company does not agree with the order of the State Commission, however it has not preferred an appeal because the difference of two amounts is not significant. The demand of the complainant for interest on the payment on this amount has no basis because there is no such clause in the policy document that interest will be provided on the maturity amount. The State Commission has already awarded amount which is more than the due amount to the complainant. Thus, there is no justification for awarding any interest to the complainant on the amount ordered by the State Commission. As there is no provision in the policy for such interest the deciding forum has to apply its discretion to award or not to award any interest in the facts and circumstances of the case. The State Commission has decided not to award any interest. Though interest @18% per annum has been granted, if the amount is not paid within 30 days from the date of order of the State Commission. In support of his arguments the learned counsel referred to the judgment of Hon'ble Supreme Court in the matter of LIC of India and Another Vs. S. Sindhu, (2006) 5 SCC 258, wherein it has been observed:-

"12. Where a statute provides for payment of interest, such interest will have to be paid in accordance with the provisions of such statute. Admittedly there is no enactment, or rules made under any enactment, either relating to contracts in general or insurance in particular, which provides for payment of interest in regard to amount payable under such a policy."

I have carefully considered the arguments advanced by both the parties and have examined the record. As the Insurance Company has not preferred any appeal against the order dated 16.02.2016 passed by the State Commission, the order has become final qua the Insurance Company. Thus, the Insurance Company has agreed to pay Rs.22,45,135/- to the complainant. The only question raised in the present appeal is whether the complainant is entitled to get interest on this amount. In the light of the judgment of Hon'ble Supreme Court in Tahazhathe Purayil Sarabi and Ors. Vs. Union of India (UOI) and Anr. (supra) relied upon by the learned counsel for the complainant interest seems to be payable on this amount. Moreover, Hon'ble Supreme Court in Alok Shanker Pandey Vs. Union of India &Ors., II (2007) CPJ 3 (SC) has held that:-

"9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B."

From the above, it is clear that the complainant is entitled to get interest on the amount of Rs.22,45,135/- awarded by the State Commission. The learned counsel for the appellant complainant has further relied upon the judgment of the Hon'ble Supreme Court in Rubi (Chandra) Dutta Vs. United India Insurance Company Limited (supra), wherein it has been observed that the interest may be paid from the date of complaint. Therefore, the complainant would be entitled to get interest from the date of filing of the complaint i.e. 20th June 2014.

Now coming to the question of rate of interest the appellant has sought interest @ 12% per annum on this amount. Looking at the current scenario of the interest rates in the banks and the declining trend of interest rates, I deem it appropriate to allow interest @6% per annum on the amount awarded by the State Commission from the date of filing of the complaint i.e. 20th June, 2014.

Based on the above discussion, the First Appeal No.248 of 2016 is partly allowed and it is ordered that Insurance Company shall pay interest @6% per annum on the amount of Rs.22,45,135/- to the complainant from 20th June, 2014 till the payment of Rs.22,45,135/-.