Per K.V.Krishna Murthy:   

The complainant had taken a policy on 14-8-1995 for assured sum of Rs.3,50,000/-, maturity date of which was on 14.8.2012.  The complainant has paid all the half-yearly installments due.  The last premium installment was due in February – 2012.  The complainant has paid the last premium on 24.5.2012.  The LIC paid a sum of Rs.6,90,550/- to the Bank account of the complainant on 17-6-2013.  Thus, there is a delay of 10 months and 2 days in crediting the amount from the date of maturity.  The complainant therefore is claiming compensation of Rs.1,50,000/- for the delay of 10 months in making the payment of the sum.

            2.  Apart from this, the complainant also alleged that she has paid extra two premium of Rs.20,936/- to the LIC without mentioning the dates of such payments.  The complainant also not furnished the receipts for having paid the extra amount of Rs.20,936/-.  But she claims refund of Rs.20,936/-.

            3.  The complainant was filed on 02.1.2014.  The opposite party was served with notice of the proceedings on 10.1.2014.   Written version has not been filed so far although an advocate filed vakalat for OP on 15.2.2014.

            4.  During the course of proceedings, the LIC has deposited Rs.54,560/- by way of Cheque No.095374 dated: 14.3.2014 in this District Forum.  The intimation of this deposit has been given to the advocate for the complainant on 17.3.2014.  The cheque has been encashed by this Forum on 18.3.2014.  The amount has not been taken by the complainant so far.

            5.  Along with the cheque, working sheet for payment of interest on Delayed Settlement of Claim dated: 14.3.2014 issued by Divisional Office Raichur has also been furnished, which discloses that interest on Rs.6,90,549/- for 302 days at 10.50% p.a. has been calculated, amounted to Rs.60,825/- is payable. 

            6.  On 31-10-2014, LIC has furnished a copy of the e-mail received from Gangavathi branch office, which discloses that Rs.6,265/- has been deducted towards Income Tax deducted at source and the figure Rs.54,560/- has been arrived.  The rate of tax deducted was 10.3%.  There is no agreement for payment of interest between LIC and the complainant in terms of the policy for delayed payment.  As such there is no obligation for LIC to pay the interest.  The complainant is not interested in getting income by way of interest.  The liability of the Insurance Company is to pay the damages.  So what was the amount payable according to the LIC for the delayed payment is nothing but damages although described as interest.  The amount agreed to be paid by LIC in this case is a Non-Taxable capital income.  In other words, the amount agreed to be paid by LIC is not in the nature of interest within the meaning of Section 2 (28A) of the Income Tax Act.  See the decision of the National Commission in G.D.A. V/s Dr.N.K.Gupta in Revision Petition No.2244 of 1999 disposal date 18-09-2002.  Therefore, the deduction of tax at source has been wrongly done.  LIC has to pay to the complainant Rs.6,265/-, which has been wrongly deducted out of the amount of damages, which according to the LIC was payable to the complainant.

            7.  The complainant has not proved that she has paid Rs.20,936/- over the premium payable.  Therefore not entitle for the refund of the said sum, which she claims.

            8.  As already noticed, the LIC paid the maturity amount of Rs.6,90,550/- ten (10) months after the maturity date.  Even according to the LIC Rs.60,825/- was payable as per regulations of the LIC for delayed payment of the maturity amount.  Therefore, LIC ought to have paid Rs.60,825/- on 17-06-2013, which has not been done.  Therefore, deficiency in service is evident.  The complainant has received Rs.54,560/- on
18-03-2014.  Still the LIC has to pay balance of Rs.6,265/-.  On consideration of this fact, a sum of Rs.5,000/- is awarded as compensation for deficiency in service for not paying this amount on 17-06-2013.  A sum of Rs.3,000/- is awarded towards litigation expenses.

            9.  For the reasons setout above, the complaint is partly allowed in the following heads;

            (a) Balance of interest by way of damages      -           Rs. 6,265/-

            (b) Compensation for deficiency in service     -           Rs.  5,000/-

            (c)  Cost of litigation                                              -           Rs.  3,000/-

                                                            TOTAL                     -           Rs. 14,265/-

            (Rupees fourteen thousand two hundred and sixty-five only)

            LIC is directed to report the compliance of payment within three months.

                                                                                  // ANNEXURE //

List of Documents Exhibited for the Complainant.

Witnesses examined for the Complainant / Respondent.