LIC can`t make consumer pay for its mistake: NCDRC

NCDRC asked the PSU to pay Rs 11,000 compensation to a customer for demanding additional premium from him 12 years after he had bought the policy.

Updated: Jul 08, 2012, 10:27 AM IST

New Delhi: The Life Insurance Corporation (LIC) cannot make a customer pay for its employees` mistakes, the apex consumer commission has said and asked the PSU to pay Rs 11,000 compensation to a customer for demanding additional premium from him 12 years after he had bought the policy.

The LIC had raised the demand on Sunil Kumar Paliwal, a resident of district Narsinghpur in Madhya Pradesh, when it realised that due to a typographical mistake in two policies issued to him, it was collecting premium from him annually instead of half-yearly.

"Even if there was a typographical mistake the same was committed by the employees of the petitioner (LIC) and cannot be used to the disadvantage of the complainant (Paliwal) by unilaterally changing the terms of the contract after a gap of 12 years," the National Consumer Disputes Redressal Commission (NCDRC) said.

The apex consumer commission made the observation while dismissing the LIC`s plea which had challenged the concurrent verdicts of the Madhya Pradesh State Consumer Commission and a district forum against the PSU.

The district forum, on Paliwal`s complaint, had asked the LIC not to modify the premium of the policies issued to him without his consent nor pressurize him to make the payment. It had also directed LIC to pay him Rs 11,000 as compensation.

In his complaint, Paliwal had said he had purchased two policies in favour of his children from LIC in 1994 and was annually paying the premium for both.

He had said that in 2006 the LIC demanded from him payment of Rs 14,796 and Rs 33,732 as the 12 year difference in the premium payable for both policies.

Paliwal had said that the demand raised by the LIC was in breach of contract and that the PSU cannot modify the terms of the contract 12 years after issuance of the policies.

In its defence, the LIC had contended that the mistake was inadvertent and demand was in accordance with its rules for payment of premium on such policies.

PTI