The State Consumer Disputes Redressal Commission, Puducherry, has directed the Life Insurance Corporation (LIC) of India and Employees’ Provident Fund Organisation (EPFO) to pay a compensation of ₹2.5 lakh to an insurance policy holder for deficiency of service, in addition to accrued interest for the delayed settlement of maturity benefits.
A bench of the Commission, comprising S. Sundaravadivelu, presiding member, and S. Oumasanguery, member, directed the two agencies to pay the amount within two months from receiving the order, failing which the amount shall be paid with 9% interest till the date of payment.
The order was issued by the bench after weighing past judgements of the Supreme Court and the National Commission, the fact that the case has seen trial in five consumer fora, since 2012, as well as the fact that the complainant was now 75 years old and had to undergo mental distress to get the survival benefits due in 2000, 2005 and the maturity benefit in 2010.
The case pertained to one L. Sundararajan who had taken a 15-year money back policy with LIC, where premiums were to be transferred annually from his EPF account. The policy, taken in 1995, had a sum assured of ₹50,000. It also included survival benefits at the five-year and 10-year marks and a maturity benefit at the end of the 15-year term.
The complainant contended that LIC failed to notify him about the maturity and the maturity benefits were not paid to him. As letters and personal visits did not yield any results, he filed a complaint with the District Consumer Disputes Redressal Commission in Puducherry. The LIC countered that they had not received the premiums continuously, leading to the policy lapsing while the EPFO stated that they had paid the premiums and were not liable.
In 2015, the District Commission passed an order awarding ₹20,000 as compensation and also awarded a litigation cost of ₹5,000 to the complainant. Both parties appealed the order before the State Commission, which upheld the district forum order and enhanced the compensation. This led to an LIC appeal before the National Commission, which referred the dispute back to the district forum.
After re-hearing both sides, the District Commission passed orders holding the LIC and the EPFO liable for their deficiencies in service. The LIC was directed to pay ₹1,45,446 with 9% interest and LIC and EPFO were jointly directed to pay ₹2 lakh as compensation, and ₹20,000 as costs.
The LIC appealed against the order before the State Commission arguing that the District Commission’s order was arbitrary because the premiums were not paid continuously and that they had already settled the maturity amount. The LIC also stated that they were not contractually obligated to send notices, and that if there was any deficiency, they should only pay interest for the delayed payment. The complainant had sought ₹13,49,491 by calculating a 20% interest for the delay, citing the EPF scheme.
In its latest order, the State Commission upheld the District Commission’s finding that the LIC was deficient in service for not taking any action after receipt of premium amounts even though sent belatedly, not acting as per policy conditions, not settling survival benefits and not intimating the consequences of not paying premiums. The EPFO was also deficient for sending premiums late and in lump sums, the Commission stated.
Emphasising the need for service providers to be proactive in meeting the needs of the customers, the State Commission directed the LIC to pay ₹1,50,000 as compensation plus 9% interest for the delayed payment and the EPFO to pay ₹1,00,000 as compensation.
Published – February 05, 2025 08:30 pm IST