CONSUMER DISPUTES REDRESSAL COMMISSION – X
GOVERNMENT OF N.C.T. OF DELHI
Udyog Sadan, C – 22 & 23, Institutional Area
(Behind Qutub Hotel)
New Delhi – 110016
Case No.636/2013
UMESH KUMAR SHARMA
“KRISHNA KUTIR”
301, IMPERIAL SUPERTECH ESTATES
SECTOR 9, VAISHALI
GHAZIABAD (U.P.) …..COMPLAINANT
-
LIFE INSURANCE CORPORATION OF INDIA
BRANCH UNIT 312
31, COMMUNITY CENTRE
NEW FRIENDS COLONY
NEW DELHI …..RESPONDENTS
Date of Institution-11.12.2013
Date of Order-24.05.2024
O R D E R
MONIKA SRIVASTAVA– President
Complainant has filed the present complaint seeking reversal of interest on loan repayment from the OP.
- It is stated that complainant had taken a loan of Rs.21,000/- against his LIC policy number 110442045 in February 1998. Copy of the sanction letter is enclosed as Annexure 2. The loan was repaid by the complainant in August 2013 after making the entire payment of Rs.
91,609/-. Copy of the receipt of loan repayment is enclosed as Annexure 3.
- It is the case of the complainant that he had to pay a huge amount of Rs.70,609/- as interest on the loan and that there has been no communication information about the interest/mounting interest amount/amount payable by the complainant against his loan account as OP imposed compounding interest on interest which resulted in huge interest accumulation of Rs.70,609/- up till 31.08.2013.
- It is the grievance of the complainant that there was number single intimation or communication made by the OP to him about any such accumulation of interest ever since he took the loan. It is stated that even the sanction letter dated 26.02.1998 does not mention anything about interest compounding/accumulation. It is stated by the complainant that he is entitled to have the reversal of amount of interest paid by him to OP.
- Complainant has placed on record his policy document which clearly depicts the amount of loan as Rs.21,000/- and the interest paid as Rs.70,609/- amounting to total Rs.91,609/-. Clause 8 of the said policy discusses Loans as under:
Loans:-Provided the policy has acquired a paid up value loans are granted subject to the following terms and conditions within the surrender value of the policy for such amounts and on such further terms and conditions as the Corporation may fix from time to time and subject to the production of satisfactory title:
- The policy shall be assigned absolutely to and held by the Corporation as a security for the repayment of advance(s) and of the interest thereon;
- interest on the advance(s) shall be paid compounding half yearly to the Corporation at the rate to be specified by the corporation when the relative advance is made, the first payment of interest to be made on the next policy anniversary or on the date six months before the next policy anniversary whichever immediately follows the date on which the relative advance is made and every half year thereafter. Interest is charged for a minimum period of 6 months:
- OP, in its reply states that insurance is a contract and the parties are governed by the contract of insurance i.e to the terms and conditions given in the policy which are comprehensive enough to determine the rights and liability of the parties. It is stated that as per clause 8 of the said policy OP has deducted half yearly compounding interest on the loan taken in the year 1998 by the complainant.
- It is also stated that complainant while taking loan had agreed to repay the loan with half yearly compounding interest. Copy of the blank loan application is annexed as Annexure B. In this regard, OP has placed reliance on the judgment passed by the Hon’ble Supreme Court in General Assurance Society Ltd vs Chandumall Jain AIR 1966 SC 1644.
- This Commission has gone through the entire material on record. It is not the case of the complainant that he did not have the policy or that he was unaware of the terms of the policy or did not agree to the terms when the loan was taken. The complainant has raised the issue of compounding interest after having repaid the loan amount when he was fully aware of the terms of the policy.
In the light of the law clearly laid down by the Hon’ble Supreme Court passed in General Assurance Society Ltd vs Chandumall Jain AIR 1966 SC 1644, the averments of the complainant cannot be sustained and therefore the complaint is dismissed.
Copy of the order be provided to the parties as per rules. File be consigned to record room. Order be uploaded on the website.
