National Consumer Disputes Redressal Commission Presiding Member K.S. Chaudhari and Member B.C. Gupta said Rae Bareli resident Manavinder Kaur should get annual interest of 12 percent on Rs.1 lakh paid to her in accidental benefits after her son's death.
The interest ordered would add up to over Rs.2.15 lakh.
The matter reached the apex consumer commission through an appeal filed by the Life Insurance Corporation of India (LIC) against the March 4, 2008, decision of the Uttar Pradesh Consumer Disputes Redressal Commission, which had awarded Manavinder Kaur annual interest of 18 interest on Rs.1 lakh from Sep 22, 1994, till payment.
The rate of interest has now been reduced to 12 percent per annum by the national commission.
"As LIC has already paid the original sum assured and amount of accidental benefits, as awarded by the district forum, we need not to go into the merits of the case. Now the question remains only regarding rate of interest," the national commission said in a recent order.
Offering some relief to the insurance company, the national commission said the "revision petition filed by LIC is partly allowed and the impugned order dated March 4, 2008, passed by the state commission... is modified and grant of interest at the rate of 18 percent per annum is reduced to 12 per annum".
Manavinder Kaur's son Kulbir Singh Sidhu, 17, died in an accident June 11, 1991. She claimed LIC had paid only the basic assured amount without accidental benefits and this amounted to deficiency in service.
The insurance company contested this and submitted that accidental benefits were not payable as a minor was not covered for this and urged that the plea be dismissed.
The district forum, however, allowed the complaint and directed LIC to pay Rs.1 lakh as accidental benefits along with 18 percent per annum interest from Sept 22, 1994, till payment.
LIC submitted that, though a policy for accidental benefits could not have been issued in the name of a minor, it still paid accidental benefits to Manavinder Kaur, but the rate of interest awarded by district forum was on the higher side.
Manavinder Kaur's authorised representative told the national commission that she had been contesting the matter for the past 18 years, the rate of interest awarded by the district forum was not on the higher side and hence the LIC's revision petition be dismissed.
Chaudhari said in the judgment: "The district forum has awarded 18 percent per annum interest from Sep 22, 1994, and the state commission has dismissed the appeal of LIC."
"It is doubtful whether 'Bima Sandesh Policy' with accidental cover could have been issued by the petitioner in the name of minor. Apparently, 18 percent per annum interest is on the higher side and 12 percent per annum interest would meet the ends of justice. In such circumstances, it would be appropriate to reduce rate of interest from 18 percent per annum to 12 percent per annum," Chaudhari added.
The insurance company has the option of challenging the national consumer commission's decision in the Supreme Court.
(Rahul Chhabra can be contacted at email@example.com)
--IANS (Posted on 27-08-2013)