MADHAV HARI JOSHI versus DIVISIONAL MANAGER, LIFE INSURANCE CORPORATION OF INDIA & ANR.

Citation: [2019] 1 S.C.R. 208 · Decided: 04-01-2019 · Supreme Court of India · Bench: D.Y. CHANDRACHUD, HEMANT GUPTA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 1 S.C.R.
MADHAV HARI JOSHI
v.
DIVISIONAL MANAGER,
LIFE INSURANCE CORPORATION OF INDIA & ANR.
(Civil Appeal Nos. 49-50 of 2019)
JANUARY 04, 2019
[DR. D. Y. CHANDRACHUD AND HEMANT GUPTA, JJ.]
Consumer Protection:
Deficiency of service – Appellant-consumer submitted a
proposal to Life Insurance Corporation (LIC) under one of its plans
– Alongwith proposal, paid Rs.1,75,000/-  –The policy not issued
nor money refunded – Complaint seeking refund of money with
interest and also compensation of Rs.5,00,000/-  – District Forum
directed refund of the amount and in addition compensation of
Rs.4,25,000/-  – State Commission confirmed the order – National
Commission maintained the order of refund alongwith 12% interest,
but refused the compensation – Review petition dismissed – On
appeal, held: In the facts of case, deficiency of service was clearly
establlished  – LIC held the money of the consumer wrongfully for
five years – Its omission to refund has deprieved the consumer of
the use of his money – Hence, mere direction of interest will not
provide sufficient redress – To meet the ends of justice, in addition
to the amount directed to be paid by National Commission, payment
of further amount of Rs.2,00,000/- is directed towards all the claims.
Disposing of the appeals, the Court
HELD: 1. It appears from the letter of the Branch Manager
of LIC (dated 15th April, 2009) that he had already received a
decision to complete the proposal with extra premium.  Admittedly,
even the extra premium of Rs.10,000/- was paid by the appellant
as part of his payment of Rs.1,75,000/-.  The remaining formalities
that were required to be observed were to be fulfilled by the
Development Officer and not by the appellant.  LIC retained the
moneys of the appellant for a period of nearly five years.  No
effort was made to refund the moneys. In this view of the matter,
a deficiency of service was clearly established. [Paras 18, 19][213-
D-E]
[2019] 1 S.C.R. 208
208
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2. The plan in question was not exclusively an insurance
based product.  By being linked to the equity market, it had an
investment element.  LIC held on to the moneys of the appellant
wrongfully for five years.  Its omission to refund has deprived
the appellant of the use of his moneys.  Hence, a mere direction
for the payment of interest on the principal sum will not provide
sufficient redress. The ends of justice would be met, if the
direction, which has been issued by the National Commission, is
modified and an additional amount of Rs.2,00,000/- is directed to
be paid towards all the claims, demands and  outstandings,
including litigation expenses, in addition to what has been ordered
by National Commission. [Paras 20, 21][213-G-H; 214-A-B, D]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 49-50
of 2019.
From the Judgment and Order dated  26.02.2015 of the National
Consumer Disputes Redressal Commission, New Delhi in Revision
Petition No. 4493 of 2014 and order dated 29.04.2015 in Review Petition
No. 80 of 2015 in Revision Petition No. 4493 of 2014.
Subodh S. Patil, Adv. for the Appellant.
R. Chandrachud, Karan Sharma, Advs. for the Respondents.
The following Judgment of the Court was delivered:
J U D G M E N T
1. Delay condoned.
2. Leave granted.
3. The present appeals arise from the decisions of the National
Consumer Disputes Redressal Commission (“the National Commission”)
dated 26 February, 20151 and 29 April, 20152.
4. The appellant submitted a proposal to the Life Insurance
Corporation (LIC) under its Jeevan Aastha Plan on 31 January, 2009.
On 15 April, 2009, the Branch Officer of LIC responded to the proposal
in the following terms:
“We are in receipt of your proposal for plan Jeevan Astha on
31.1.2009.
 1 Revision Petition No.4493 of 2014
 2 Review Petition No.80 of 2015
MADHAV HARI JOSHI v. DIVISIONAL MANAGER, LIFE
INSURANCE CORPORATION OF INDIA
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SUPREME COURT REPORTS
[2019] 1 S.C.R.
Alongwith special reports the case was referred to our divisional
office for decision.  We have received the decision to complete
the proposal with class V health extra.
Shree Jeevan Astha Plan was a close ended paln up to 21.2.2009.
We can offer you another plan.  Kindly inform us the plan and
accordingly so that we can proceed further in completion of your
proposal.”
5. It is not in dispute that together with the proposal, the appellant
had paid an amount of Rs.1,75,000/- (Rupees one lakh seventy five
thousand
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