Narednra Kawde, Member:
1. Present appeal is filed challenging the order in Consumer Complaint No.157/2004, (Anandrao Ramchandra Salunkhe V/s. Life Insurance Corporation of India and Anr.), passed by the District Consumer Disputes Redressal Forum, Sangli (âthe District Forum in short) on 10.03.2005. The District Forum appreciating the contentions of the Respondent/Complainant partly allowed the consumer complaint holding deficiency in service against the Appellant/Opponent and directed the Appellant/Opponent Insurance Company to pay an amount of Rs.29,888/- together with interest @9% per annum effective from 21.07.2004 and costs of litigation of Rs.1,000/- to the Respondent/Complainant.
2. Heard both parties. Perused the record.
3. Undisputed facts are that the Respondent/Complainant obtained Policy bearing No.945237308 with sum insured of Rs.75,000/- for the period of 25 years on 11/11/1993. The policy stood lapsed as the premiums from August 2002 onwards were not paid and the said policy accrued paid-up value. Complainant applied for releasing of surrender value as he could not pay further premiums to revive the policy. The loan of Rs.15,000/- was availed against the said policy by the Complainant. The Appellant/Opponent Insurance Company offered to pay an amount of Rs.2,268/- after deducting the loan availed by the Complainant. Complainant refused to accept the said amount as he was aggrieved with the settlement. Therefore, he filed the consumer complaint claiming receivable amount together with bonus and interest @18% per annum thereon, additionally, the Complainant claimed Rs.5,000/- for mental agony and Rs.2,000/- towards costs of litigation.
4. The District Forum after adjudication of the consumer complaint passed the impugned order which is under challenge in this appeal before us.
5. It is the contention of the Appellant that under the Insurance Policy the request of the Complainant for release of surrender value was considered in terms of conditions stipulated under the Policy and more particularly, the Condition No.4 â Non-forfeiture regulation and Condition No.7 Guaranteed Surrender Value. Further, it was submitted by the Ld.Advocate of the Appellant/Opponent that since the status of the subject policy was in lapsed condition as on date of the request of the Complainant, the paid-up value as per the standard formula (number of premium paid + sum assured ÷ policy term), paid-up value under the policy as on that date worked out to Rs.23,250/- and the bonus declared from year to year was accumulated to Rs.42,187/-. As per the standard formula to arrive at surrender value the total amount of paid-up value plus bonus i.e. Rs.65,437/- (i.e. Rs.23,250/- + Rs.42,187) was taken into consideration and as guaranteed under the terms and conditions of the policy minimum 32.92% of total of Rs.65,437/- was worked out. Thus, the surrender amount came to Rs.21,542/-. Since there was outstanding loan of Rs.15,090/- and the payment of repayment of loan was defaulted interest thereon was calculated to Rs.4,184/-. Thus, amount of Rs.19,274/- was deducted from the payable surrender value and the net amount of Rs.2,268/- was payable and accordingly offered to the Complainant which was denied by him.
6. During the course of hearing, the Appellant/Opponent Insurance Company was directed to produce on record approved guidelines to decide the paid-up value/surrender value. Adequate time was granted. The case was adjourned from time to time for compliance. Ld.Advocate of the Appellant/Opponent Insurance Company produced on record Life Insurance Regulations 1959 as Amended till 01.01.2006. Regulation 18(ii) provides for terms of surrender value with approval of Executive Committee of the L.I.C. Brief note submitted for approval of the Executive Committee prepared by the Executive Director, L.I.C. is also produced on record. Said note was submitted for approval of the Executive Committee of the L.I.C. but, the Ld.Advocate failed to produce actual approval thereof by the Executive committee under Regulation 18(ii) of Regulations 1959. Though the L.I.C. is empowered to make rules and regulation under the Provisions of Life Insurance Act, 1956, yet the note circulated by the Executive Director on the subject matter was not finally approved by the competent authority i.e. Executive Committee of the L.I.C. Further, the Appellant L.I.C. could not produce any documentary evidence to show that the surrender value formula has been approved by the competent authority and notified in the official gazette as required under provisions of section 113(1) of the Insurance Act, 1938, though, sufficient time was granted to place on record such approval including subsisting reversionary bonus as attached to the policy. In absence of any documentary evidence approving the surrender value formula by the competent authority notified under section 113 of the Insurance Act, 1938, we are unable to understand and accept surrender value and reversionary bonus formula which is not backed by the approval of the competent authority.
7. However, the facts narrated hereinabove remained as it is, this appeal has been preferred by the original Opponent â L.I.C., challenging the impugned order passed by the District Forum. There is no cross appeal of the Complainant for enhancement of the award passed by the District Forum, which means the Complainant/Respondent is acquiesced with the impugned order. However, Opponent L.I.C. has been proving the case as against Complainant in whose favour consumer complaint is decided. As a word of caution the Appellant/Opponent L.I.C. is advised to seek approval of competent authority for surrender value formula as provided under section 113(1) of the Insurance Act, 1938 to deal with such cases in future. The District Forum while upholding the contentions of the Complainant about the deficiency in service against the Opponent awarded an amount of Rs.29,888/- along with interest @ 9% per annum from the date of filing of the complaint i.e. from 21/07/2004, on account of surrender value in its own wisdom. In the absence of any approved formula for calculating surrender value on record, we need not interfere at this stage in the impugned order and judgement passed by the District Forum. In view of the aforesaid observations appeal preferred by the L.I.C. does not survive for consideration. Hence, the order:
O R D E R
(i) Appeal stands dismissed.
(ii) Appellant L.I.C. to bear its own costs and pay Rs.15,000/- (Rupees Fifteen Thousand only) as costs to the Respondent/Complainant.
(iii) Inform the parties accordingly.