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Branch Manager, L.I.C. of India - Appellant
Versus
Consumer Education Centre - Respondent
Decided On : 03/25/1994
C.D.A. No. 715 of 1993
Advocates Appeared :
M. V.S. Sureshkumar,V. Gourishankar
Headnote:Consumer Protection Act, 1986 - Sections 2 & 14 - Deficiency-in-service - Insurance Policy - Complainant subscribed to two Jeevan Dhara Insurance Policies - He paid two premiums on first policy and one premium on second policy - Government of India withdrew income tax exemption on premiums paid towards policies Complainant requested Insurance Company to settle his accounts - Company formulated liberal surrender procedure and paid to complainant surrender value - Complaint against Claim of refund of actual amount deposited with interest - Whether can be allowed - (No, there being no deficiency in service on part of L.I.C. of India).
Held: It therefore, cannot be said that the Corporation represented that the income tax exemption mentioned in the brochure is co-extensive with that of the life of the policy. It is common knowledge that the amendments are likely to occur in the Finance Act of every year and that the Life Insurance Corporation, has no say in the matter of amendment of income tax. An exemption may be granted in a particular financial year and may be withdrawn by the Central Government in the next financial year. It, therefore, cannot be said that the second complainant who is very highly placed senior I.A.S. Officer is led to believe by the brochure issued by the Corporation that it can grant such an exemption during the entire life span of the policy as the exemption from income tax can only be granted by the Central Government, which may be changed from year to year by amendment. We are therefore, not inclined to accept that there is anything in the brochure indicating that the Corporation represented that the exemption is co-extensive with that of the life span of the policy or that the second complainant was led to believe that the tax exemption is co-extensive with that of the life span of the policy and so believing he paid the premiums for Jeevandhara policies. If there is no matter in the brochure misleading the complainant No. 2 and since what is stated in the brochure is merely gist of the amendment to Income tax Act we are of the view that there is no deficiency in service rendered by the Life Insurance Corporation of India. We are also not inclined to accept that there is any misrepresentation made by the Life Insurance Corporation. (para 10)
Further held: Since we found that there is no deficiency of service on the part of the L.I. C. of India, the Corporation is not liable to refund all the amounts paid under premiums with interest.
(para 11)
Result: Appeal allowed.
A. Venkatarami Reddy, President - This is an appeal preferred by Life Insurance Corporation of India, the opposite party in C.D. No. 1310/92 against the order of the District Forum, Hyderabad directing payment of(i) interest at 12% per annum on the first premium of Rs. 26,065.00 of the first policy from the date of its payment till 22.9.1992)i) interest at 12% per annum on Rs. 18,246.00 from the date of payment of the second premium of the first policy till 22.9.1992, iii) interest at 12% p.a. on Rs. 11501/- from the date of payment of the premium of the second policy till 22.9.1992; iv) Rs. 7819/- with interest at 12% p.a. thereon from the date of payment of the second premium of the first policy till the date of realisation, v) Rs. 2875/- with interest at 12% p.a. thereon from the date of payment of the premium of the second policy till the date of realization and vi) cost of Rs. 1000/- to the second complainant.
2: First complainant is Consumer Education Centre which espoused the cause of the complaint
3. The Life Insurance Corporation of India, Hyderabad division issued a brochure which reads as follows:-
“Jeevan Dhara,
Now
LIC's Jeevan-Dhara
gets 80 CCA Benefit
Premiums paid
Upto Rs. 20,000 in 1987-88
&
Upto Rs. 30,000 from 1988-89
Onwards Are Eligible 100% Deduction in Taxable Income.
Government Notification to Follow.
Buy a Jeevan Dhara immediately.”
The brochure further reads that “it offers to(i) A regular post retirement pension.
(ii) 100% Tax relief under Section 80CCA(iii) Attractive guaranteed returns.
(iv) Absolute security(v) Gross Insurance Value Element(GIVE)(vi) Final bonus addition to the GIVE amount.”
According to the second complainant in view of what was offered in the brochure he subscribed on 28.3.1991 to two Jeevan Dhara Insurance Policies.-The first one bears distinctive No. 641295038 for a period of 11 years with annual premium of Rs. 26,065.00 and the second policy bearing No. 640795485 for a period of 8 years' with annual premium of Rs. 14,376.00. The second complainant paid two premiums on the first policy and one premium on the second policy. The Government of India withdrew with effect\from 1.4.1992 by Finance Act, 1992 the Income. Tax Exemption on the premiums paid towards Jeevan Dhara policies. In view of the withdrawal of the exemption from Income tax the second complainant wrote a letter on 7.5.1992 to the opposite party to settle his accounts. The opposite party sent a letter on 19.5.1992 informing the second complainant that the Corporation had been formulating liberal surrender procedure and requested him to wait till then. On 22.9.1992 the opposite party paid to the second complainant an amount of Rs. 44311/- being the surrender value of the first policy ill respect of which the second complainant paid Rs. 52130/- towards two premiums. . Similarly, the opposite party paid on the same day asum of Rs. 11,501.00 being the surrender value in respect of the second policy with regard tone premium of Rs. 14,376.00 paid. The complainant No.2 contends that the payment of surrender value was unreasonable as the policy holders were compelled to surrender their policies because of withdrawal of Income tax benefits. The complainants claimed that the opposite party should have refunded the actual amount deposited Le. Rs. 52,130/- and Rs. 14,376/- towards two L.I.C. policies with interest at 24% p.a. Therefore, the second complainant claimed an amount of Rs. 10,694.00 being the difference of the premier paid by him and the amount received towards the surrender value with 24%p.a. and compensation of Rs. 5,000/-
4. The version of the Life Insurance Corporation, in their written statement is that it is the Government of India by virtue of Section 8QCCA of the Income tax Act that gave benefit of 1.00% tax relief upto an extent of Rs. 40,000/- investment made in Jeevan Dhara Policies upto 1.4.1992. But subsequently by the Finance Act, 1993 with effect from 1.4.1992 the exemption of investment in Jeevan Dhara polic
