Life Insurance Corporation of India v. Sunita Devi & Anr

1. This intra court appeal impugns the order dated 28th April, 2010 of the learned Single Judge, allowing W.P.(C) No.3774/2008 filed by the respondent No.1 inter alia by directing the appellant to release to the respondent No.1 / writ petitioner the amount of Rs.2,27,800/- together with simple interest @ 6% per annum from 24th November, 2004 within four weeks of the order and with a further direction that if the payment is not made within the said time, the appellant will pay penal simple interest @ 12% per annum for the period of delay. 2014:DHC:5413-DB

2. Notice of the appeal was issued and the appeal ordered to be heard along with LPA No.544/2010. The appellant applied for early hearing stating that LPA No.544/2010 with which this appeal was ordered to be heard stands dismissed vide order dated 12th March, 2012. We have heard the counsels for the parties.

3. The writ petition from which this appeal arises was filed, pleading: (i) that the husband of the respondent No.1 / writ petitioner was an employee of Indian Airlines and a member of the Pension Scheme introduced in the year 1994 by Indian Airlines; (ii) that under the said Scheme known as Indian Airlines Employees; Self – Contributory Superannuation Pension Scheme, a Trust (whose trustees are the respondent No.2 to the appeal), was formed and a percentage from the salary payable to each employee every month was deducted to be credited to the fund under the said Scheme and to be invested with the appellant and the retiring employees were to get pension equivalent to 40% of the last drawn salary; (iii) that under the said Scheme, on demise of an employee, the payment of annuity amount was to be paid to his nominee / legal representative; (iv) that the husband of the respondent No.1 / writ petitioner appointed the respondent No.1 / writ petitioner as his nominee under the said Scheme; (v) that the husband of the respondent No.1 / writ petitioner upon retirement from Indian Airlines started drawing pension of Rs.2,278/- per month under the said Scheme; (vi) that the husband of the respondent No.1 / writ petitioner died on 21st October, 2004;

(vii) that the respondent No.1 / writ petitioner vide letter dated 24th November, 2004 intimated the appellant of the death of her husband and requested the appellant for payment of the annuity to her as the nominee under the aforesaid Scheme of her husband; (viii) however, no payment was made; (ix) that after much cajoling, the appellant vide letter dated 17th January, 2008 to the respondent No.1 / writ petitioner informed that the appellant could settle the payment only when the trustees provided the Claim Form duly attested by them and signed by the nominee and which the trustees had not done; and, ultimately, the writ petition from which this appeal arises was filed seeking a direction for release of the amount of Rs.2,27,800/- stated to be due under the said Scheme together with interest @ 18% per annum from 24th November, 2004, when the respondent No.1 / writ petitioner had first sought release of the amount and till the payment thereof.

4. The appellant contested the writ petition inter alia pleading that it maintained the fund on behalf of the Trust and could release the payment only after the proper discharge was made by the Trust and which had not been done qua the respondent No.1 / writ petitioner. Though the respondent No.2 trustees also contested the writ petition, inter alia on the ground of the respondent No.1 / writ petitioner being not allowed to the amount claimed owing to amendment to the Scheme, but the respondent No.2 trustees having not supported this appeal and their own LPA being LPA No.544/2010 having been dismissed, need is not felt to elaborate their pleadings.

5. The learned Single Judge vide the impugned judgment allowed the writ petition, holding: (a) that no real justification had been shown for denying the payment of the balance corpus amount of Rs.2,27,800/- to the respondent No.1 / writ petitioner; (b) that any amendment made to the Scheme could only have prospective effect and could not deprive the vested rights of the retired employees, as held in Air India Employees Self-Contributory Superannuation Pension Scheme Vs. Kuriakose Vs. Cherian (2005) 8 SCC 404;

(c) that after payment of commutation amount of Rs.1,13,900/- to the husband of the respondent No.1 / writ petitioner, the respondent No.1 / writ petitioner was entitled to receive the balance of the total corpus of Rs.2,27,800/- and which corpus had been arrived at on the basis of annuities purchased and had got crystallized and the appellant could not back track on the basis of subsequent amendment to the Scheme;

(d) that the Trust had no objection to any orders being passed in the writ petition allowing the prayer of the respondent No.1 / writ petitioner and its role was limited to forwarding the claim of the respondent No.1 / writ petitioner to the appellant and which it was prepared to do. Accordingly, the writ petition was allowed and the respondent No.2 trustees were directed to within a period of two weeks send the duly attested Claim Form of the respondent No.1 / writ petitioner to the appellant and the appellant was directed to, within a further period of two weeks thereafter, release the amount of Rs.2,27,800/- with interest as aforesaid to the respondent No.1 / writ petitioner. Costs of Rs.5,000/- were also imposed on the appellant.

6. LPA No.544/2010 supra was preferred by the respondent No.2 trustees of the Scheme against the aforesaid judgment and which as aforesaid was dismissed in the light of the judgment aforesaid of the Supreme Court.

7. We are told that the appellant has already paid the sum of Rs.2,27,800/- with interest to the respondent No.1 / writ petitioner. The counsel for the respondent No.1 / writ petitioner however states that the entire amount due towards interest as directed has not been paid, particularly the penal interest and a sum of approximately Rs.60,000/- is still outstanding in terms of the judgment of the learned Single Judge.

8. Though the counsel for the respondent No.2 trustees sought to urge that the payment having been made, this appeal has become infructuous but we do not agree. If the appeal were to be allowed and no money were to be found to be due to the respondent No.1 / writ petitioner or if the liability were found to be that of the respondent No.2 trust, restitution can always be ordered.

9. The counsel for the appellant however in his arguments did not contest the entitlement of the respondent No.1 / writ petitioner to the sum of Rs.2,27,800/-; the only challenge is on the ground of the impugned judgment foisting the liability for interest on the appellant. It is argued that the appellant could have made the payment to the respondent No.1 / writ petitioner only upon the claim of the respondent No.1 / writ petitioner being cleared / approved by the respondent No.2 trustees and which the respondent No.2 trustees had failed to do; thus the appellant could not be burdened with interest. It is further argued that in fact the counsel for the appellant had stated before the learned Single Judge that the appellant had no objection to any orders being passed but the said statement, in the impugned judgment, has been attributed to the respondent No.2 trust, which in fact was contesting the petition.

10. We had during the hearing of the appeal on 14th October, 2014 enquired from the counsel for the appellant, as to whether the appellant was controverting that the amount due to the respondent No.1 / writ petitioner at the time of the first claim by her in the year 2004 was Rs.2,27,800/- and if so, the said money admittedly having remained in the coffers of the appellant and the appellant having continued to enjoy the benefits thereof, even if the fault in not issuing approval was of the respondent No.2 trustees, what was wrong with the appellant being made liable for payment of interest. On request of the counsel for the appellant to take definite instructions in this regard, the hearing was adjourned to today. We further asked the counsel for the appellant to take instructions on as to interest at what rate was payable under the Scheme.

11. Today, the counsel for the appellant confirms that under the said Scheme, on the demise of the husband of the respondent No.1 / writ petitioner and upon claim being made by the respondent No.1 / writ petitioner in the year 2004, the sum of Rs.2,27,800/- was payable. He further states that interest @ 7% per annum was payable under the Scheme and clarifies that no such interest on the sum of Rs.2,27,800/- has been computed or paid.

12. The position which thus emerges is that the interest @ 6% per annum which the learned Single Judge has directed to be paid for the delay in payment is less than the interest rate payable under the Scheme. We fail to see as to what possibly can be the justification for the appellant to appeal against the direction for payment of interest at a rate less than what it was contractually liable to pay on the monies invested with it.