In Brief
The appellant applied for an equity-linked life insurance policy with LIC in January 2009, paying Rs. 1,75,000/- including extra premium. LIC kept the proposal pending, citing conditions including nomination approval and a moral hazard report—items LIC itself was obliged to complete. The scheme closed before these steps were taken, no policy was issued, and the money was never refunded. The District Forum awarded refund plus Rs. 4,25,000/- compensation, but the National Commission deleted the compensation. The Supreme Court held LIC had committed deficiency of service by wrongfully retaining funds for five years. The Court upheld the refund with 12% interest but added Rs. 2,00,000/- additional compensation to redress the loss of investment appreciation in the equity-based plan.
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