SURESH CHANDRA, MEMBER
Respondent Paras Ram Sethi is the original complainant. He took a life insurance policy from the petitioners on yearly premium of Rs.1342.50. The policy was effective from 01.07.1980. During the currency of the policy, the respondent took a loan of Rs.4150/- on 06.02.1986 against the security of this policy. In spite of having received the letter from the petitioners for payment of premium prior to the due date and also demand of loan amount or the interest due thereon, the respondent did not make the payments. In view of this, when the insurance policy was matured and became due for payment on 01.07.2002, the petitioners deducted the principal amount of Rs.4150/- along with the interest amount of Rs.13,439/- from the maturity amount of Rs.61,300/- under the policy. The respondent filed the present complaint before the District Forum for the refund of excess amount of interest, which was not permissible under the law. According to the respondent, under the provisions of Punjab Relief of Indebtedness Act, 1934, it has been made applicable to the Union Territory of Delhi, vide Notification No. 189/38 dated 30.05.1939 and rule of DAMDUPAT as contained in section 30 of the aforesaid Act is applicable in respect of the debts which prohibits the courts to pass or execute or give effect to an award in respect of a debt covered by the Act for a larger sum than twice the sum advanced. According to the respondent, since this Act is applicable to the Union Territory of Delhi as well, the loan taken by him from the Life Insurance Corporation of India is governed by the provision of this Act and hence, the petitioners are liable to refund the excess amount from due of the maturity amount of the policy.
2. On being noticed, the petitioners resisted the complaint and submitted in their reply that the respondent was under contractual obligation to pay 9% interest on the principal amount of loan received by him with the agreed interest of 9% p.a. with half yearly rests. On appraisal of the pleadings and the evidence brought on record by the parties, the District Forum returned its finding vide its order dated 01.12.2005 in favour of the respondent-complainant relying on the single Bench judgment of Honble High Court of Delhi in the case of Life Insurance Corporation of India Vs. Shyam Surat Singh (AIR 1981 Delhi 291). Aggrieved by this order of the District Forum, the petitioners challenged the same before the State Consumer Disputes Redressal Commission, Delhi (State Commission, for short), which also confirmed the order of the District Forum and dismissed the appeal. It is in these circumstances that the petitioners have now filed the present revision petition against the impugned order of the State Commission passed on 28.05.2007.
3. We have heard Mr. Mohinder Singh, learned counsel for the petitioners and the respondent in person.
4. The short point which has arisen in this case for our consideration is as to whether the loan taken by the respondent from the LIC is covered by the 1934 Act (Supra) thereby subjecting it to the limits laid down in section 30 of the Act, popularly known as DAMDUPAT rule. At the outset, learned counsel for the petitioners has drawn our attention to the fact that after the order of the Honble Single Judge of the Delhi High Court (Supra), the petitioners had carried the matter before the Division Bench of Delhi High Court which has vide its order dated 29.11.1985 held that the rule of Damdupat as reflected in section 30 of the Act, 1934 is not applicable to the loan advanced by the LIC of India. He therefore submitted that the order of the Delhi High Court based on which the Fora below had returned their findings in favour of the respondent and allowed the complaint is no longer available and hence the impugned order cannot be sustained in the eye of law.
5. We have perused the judgment passed by Division Bench of the Honble Delhi High Court. In its order, the High Court has made the following observations in para 9:-
œHowever, we have come to the conclusion that there has been an alteration in the legal position, if at all it was doubtful, by the Notification of the Delhi Administration published in the Delhi Gazette of September 12, 1974. That Notification is as follows:-
œLITIGATION DEPARTMENT NOTIFICATION
Delhi, the 3rd September, 1974.
No. F. 13(2)/74-Judl.- In exercise of the (powers) conferred by sub-section (3) of section 1 of the Usurious Loans Act, 1918, the Lt. Governor of Delhi is pleased to direct that the provisions of that Act as amended by the Punjab Relief of Indebtedness Act, 1934, Punjab Act, XII of 1940 and Punjab Act VI of 1942, as extended to the Union Territory of Delhi, shall not apply to the transactions of loan advanced by the Life Insurance Corporation of India any person or body of persons, whether incorporated or not, residing or situated in the Union Territory of Delhi.
By Order,
Mrs. S. Duggal, Deputy Secy.?
This means that the provisions of the Usurious Loan Act, 1918, as amended by the Punjab Relief of Indebtedness Act, 1934, or the Punjab Act XII of 1942, shall not apply to transactions of loan advanced by the Life Insurance Corporation of India. The provision regarding Damdupat was applied in Delhi by amendment of the Punjab Relief of Indebtedness Act in 1940. That amendment was contained in the Punjab Act XII of 1940. The Notification is quite clear that the provisions of that Act are not to apply to loans advanced by the Life Insurance Corporation of India.?
6. It would be clear from the above that the rule of Damdupat relied by the respondent is not applicable to the loan in question taken from the LIC of India. In view of this, LIC of India is entitled to deduct the amount of loan along with interest due thereon in accordance with the terms of the loan from the maturity amount of the policy in question. The impugned order is accordingly set aside and appeal stands allowed but with no order as to costs.