MADHAV HARI JOSHI versus DIVISIONAL MANAGER, LIFE INSURANCE CORPORATION OF INDIA & ANR. on 4 January 2019

J U D G M E N T

1. Delay condoned.

2. Leave granted.

3. The present appeals arise from the decisions of the NationalConsumer Disputes Redressal Commission (“the National Commission”)dated 26 February, 2015[1] and 29 April, 2015[2].

4. The appellant submitted a proposal to the Life InsuranceCorporation (LIC) under its Jeevan Aastha Plan on 31 January, 2009.On 15 April, 2009, the Branch Officer of LIC responded to the proposalin the following terms:

“We are in receipt of your proposal for plan Jeevan Astha on31.1.2009.

1 Revision Petition No.4493 of 2014

2 Review Petition No.80 of 2015

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AAlongwith special reports the case was referred to our divisionaloffice for decision. We have received the decision to completethe proposal with class V health extra.

Shree Jeevan Astha Plan was a close ended paln up to 21.2.2009.We can offer you another plan. Kindly inform us the plan andBaccordingly so that we can proceed further in completion of yourproposal.”

5. It is not in dispute that together with the proposal, the appellanthad paid an amount of Rs.1,75,000/- (Rupees one lakh seventy fivethousand only) inclusive of an amount of Rs.10,000/- towards additionalCrisk premium.

6. The Jeevan Aastha Plan was open for subscription for 45 daysbetween 8 December, 2008 and 22 January, 2009.

7. Upon receipt of the above letter dated 15 April, 2009, theappellant addressed a communication to the Chairman of LIC recordingDhis grievance that he had already complied with all formalities, includingthe payment of additional premium and had undergone a medical test.

8. In response to his representation, the appellant was issued acommunication dated 23 July, 2009 by the Manager (Admn.), LIC. Theletter reads thus:E

“We are in receipt of your letter dt.27.06.2009 originally addressedto our Chairman. In this regard we would like to inform you thatthe proposal was accepted by our higher office on 02.03.2009subject to the following requirements:

1) Consent for Cl. V extraF

2) Reason for nomination if favour of Sister-in-law

3) Moral Hazard Report by Development Officer The above decision was informed to the agent (Sri S.S. Joshi)who has introduced the proposal’s to convey the same to you inGtime. It is learnt from the agent that you have not given yourconsent for extra premium.”

9. Eventually, as it transpires, neither was a policy issued to theappellant nor were his moneys refunded. That led him to institute acomplaint before the District Consumer Disputes Redressal Forum,H

Thane (“the District Forum”) in 2012. By his complaint, as amended,the appellant sought a refund of his investment of Rs.1,75,000/- togetherwith interest and compensation in the amount of Rs.5,00,000/-.

10. The District Forum allowed the complaint by directing LIC torefund the amount of Rs.1,75,000/-. In addition, compensation in theamount of Rs.4,25,000/- was granted on the ground that the appellanthad been deprived of his moneys for a period of five years.

11. The State Consumer Disputes Redressal Commission, Mumbai(“the State Commission”) confirmed the order of the District Forum.

12. LIC instituted revisional proceedings before the NationalCommission. The direction for the payment of Rs.1,75,000/- has beenmaintained by the National Commission. The appellant was also grantedinterest at the rate of 12% per annum from the date on which the principalamount was paid to LIC till the date on which it was deposited with theDistrict Forum. However, the direction for the payment of compensationhas been deleted.

13. A review petition instituted against the order in revision wasdismissed.

14. Learned counsel appearing on behalf the appellant submitsthat by the order of the National Commission, all findings of fact recordedin favour of the appellant were confirmed. However, the direction forthe payment of compensation has been deleted without any reason orjustification.

15. Learned counsel further submitted that both in the letter dated15 April, 2009 as well as in the subsequent letter dated 23 July, 2009, theappellant was called upon to pay an extra premium which as a matter offact, had already been paid. The remaining two conditions in regard tothe nomination which was made in favour of a relative and for a ‘moralhazard report’ by the Development Officer were required to be fulfilledby LIC. Hence, the appellant completed all necessary formalities. Oncethe proposal was accepted, it has been submitted that there was nojustification to deny the issuance of a policy. Moreover, it was submittedthat the policy was an equity-based plan. As a result of the retention ofthe moneys by LIC for nearly five years, the appellant lost the benefit ofan enhancement in the value of his investment in a booming equity marketand should be suitably compensated. Hence, it has been urged that therefund ordered with 12% interest would not be a sufficient recompense.

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16. On the other hand, learned counsel appearing on behalf ofLIC submitted that LIC had, by its letters, informed the appellant thatthe plan stood closed on 21 February, 2009 and he could apply for analternative plan. The appellant having failed to do so, it has been urgedthat there is no warrant for the grant of compensation and the order ofthe National Commission does not call for interference.

17. From a reading of the impugned judgment of the NationalCommission, it emerges that all findings of fact have, in fact, beenrecorded in favour of the appellant. For convenience of reference, weextract paragraphs 6, 7 and 8 from the impugned order hereafter:

“6. On a perusal of the letters dated 15-04-2009 and 23-07-2009issued by LIC we find that the proposal submitted by thecomplainant was kept pending till he submitted (i) consent forClause V Express, (ii) the reasons for nomination in favour ofsister in law and (iii) moral hazard report from the developmentofficer was received. Thus, the petitioner found the complainanteligible for the Jeevan Asthan policy on his completing the aforesaidrequirements.

7. As regards extra premium amounting to Rs.10,000/-, it is anadmitted case that the complainant had paid Rs.1,75,000/- as againstthe regular premium of Rs.1,65,000/-. In view of the aforesaidpayment, the requirement to submit the consent to pay an additionalpremium became redundant. As regards reasons for nominatingsister in law, a perusal of the relevant policy would show that ifthe person nominated was a distant relative or not related to thelife to be assured, such cases were not to be considered andnomination in favour of a close relative was to be insisted upon.If the proposer insisted for nomination in favour of a person notrelated (included a distant relative) to him/her then a letter was tobe sent at his/her address to obtain consent for the desirednomination and a special MHR is to be obtained at least from aDevelopment Officer regarding the genuineness of the nominationto ensure that no moral hazard was involved. In the case beforeus it is obvious that the complainant was insisting upon nominationin favour of his sister in law. The LIC, therefore, should havesent a letter to her seeking consent for the said nomination.However, no such letter was addressed by the petitioner to thesister in law of the complainant. As far as special MHR is

concerned, it was to be obtained by LIC and not by the proposerso as to verify the genuineness of the nomination and to ensurethat no moral hazard is involved. That also was not done in thiscase and the matter was simply kept pending till the last date forissuing the said policy expired on 21.02.2009.

8. That is petitioner’s own case that Jeevan Astha policy was toclose on 21.02.2009. Therefore, if any consent was to be obtainedfrom the nominee or any verification was to be done, that ought tohave been done well before the date on which the scheme was toclose. The proposer cannot be made to suffer on account of thedelay and the negligence on the part of the petitioner LIC in notprocessing the proposal expeditiously and well before the Schemewas to close on 21.02.2009.”

These findings are borne out from the record.

18. It appears from his letter dated 15 April, 2009 that the BranchManager of LIC had already received a decision to complete the proposalwith extra premium. Admittedly, even the extra premium of Rs.10,000/- was paid by the appellant as part of his payment of Rs.1,75,000/-. Theremaining formalities that were required to be observed were to be fulfilledby the Development Officer and not by the appellant. LIC retained themoneys of the appellant for a period of nearly five years. No effort wasmade to refund the moneys.

19. In this view of the matter, a deficiency of service was clearlyestablished. The National Commission has awarded interest at 12% perannum on the principal sum of Rs.1,75,000/-. The District Forum hadquantified the compensation payable to the appellant at Rs.4,25,000/-.The District Forum did not indicate the basis on which the abovecomputation was made.

20. Learned counsel appearing on behalf of the appellant submittedthat the plan for which he had applied was an equity based market planand, hence, he has lost the benefit of an escalation in his investmentvalue. There is merit in this submission. The plan in question was notexclusively an insurance based product. By being linked to the equitymarket, it had an investment element. LIC held on to the moneys of theappellant wrongfully for five years. Its omission to refund has deprivedthe appellant of the use of his moneys. Hence, a mere direction for thepayment of interest on the principal sum will not provide sufficient redress.

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21. In our view, the ends of justice would be met, if the direction,which has been issued by the National Commission, is modified and anadditional amount of Rs.2,00,000/- is directed to be paid towards all theclaims, demands and outstandings, including litigation expenses.

22. The addition which has been directed to be made by this CourtBshall be paid over to the appellant within a period of one month fromtoday.

23. Learned counsel appearing on behalf of LIC states that theamount which has been ordered to be paid by the National Commissionhas already been deposited in the District Forum. The additional amountCwhich has been directed by this Court shall also be deposited before theDistrict Forum within the period stipulated. The amount shall be releasedto the appellant by the District Forum on proper identification.

24. We clarify that the above amount of Rs.2,00,000/- shall be inaddition to what has been ordered by the National Commission.

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25. The appeals are accordingly disposed of. There shall be noorder as to costs.

Kalpana K. Tripathy

Appeals disposed of.

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[2019] 1 S.C.R. 215

HANSRAJ

v.

MEWALAL AND ORS.

(Civil Appeal Nos. 87-88 of 2019)

JANUARY 09, 2019

[ASHOK BHUSHAN AND K. M. JOSEPH, JJ]

U.P. Consolidation of Holdings Act, 1953 – ConsolidationScheme – Proposal of chaks – Assistant Consolidation Officerproposing chaks to the appellant-original tenure holder andrespondents-co tenure holder on the plot opening towards pitchroad in the north of the plot – Objections to the proposed chaks bythe respondents that their possession is towards north of the plotwhereas appellant is in possession towards south of the plot, assuch proposed chaks should be in accordance with their possession – Objections allowed – Challenge to, by the appellant – SettlementOfficer holding that the appellant was original tenure holder ofplot, gave appellant chak on pitch road including area where hisboring and pumping set was situated and joint holder was givenchak on the north east side where he started construction – Upheldby the Deputy Director Consolidation – Writ petition thereagainst,allowed by the High Court – Sustainability of – Held: Notsustainable – All the co-sharers had right in the plot and holdingswere not partitioned as per law – Appellant was fully justified inclaiming right of allotment on a portion of plot on the pitch road –There was no justifiable reason for setting aside the order of theSettlement Officer, Consolidation and Deputy Director,Consolidation – Equity was adjusted by the order of SettlementOfficer in making the chak in the manner that chak of every co-sharer was on the pitch road which needed no interference by theHigh Court – Thus, the order of the High Court set aside – U.P.Zamindari Abolition & Land Reforms Act, 1950 – s. 176.

Allowing the appeals, the Court

HELD: 1.1 When in the northern side of the plot a pitchroad was constructed which was prior to consolidation operation,the co-sharers of plot were entitled to get the benefit of road and

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Awhen the Settlement Officer of Consolidation had carved the chaksin the manner that all the co-sharers including the appellant andrespondents were given the chaks on the pitch road which orderwas confirmed by the Deputy Director of Consolidation, there isno valid reason for the High Court to reverse the orders passedby the Deputy Director of Consolidation and the SettlementBOfficer Consolidation. The reasons as given by the High Courtindicate that the High Court had noticed that as house of one ofthe petitioners (writ petitioners) is situated in the north easternside and boring and pumping set of the appellant is situated inthe southern side, the High Court justified the order of theCConsolidation Officer. The High Court lost sight of the fact thatby amendment made by the Settlement Officer Consolidation,one of the writ petitioners, R was allotted chak at the north eastcorner on the Plot where his house was in existence and theappellant was given the chak also on pitch road including his boringand pumping set. [Para 10][220-D-H]D

1.2 Even though parties were in possession of some portionsof the plot by mutual arrangement, there was no partition ofholding. The agricultural holding can be partitioned by institutingthe proceedings u/s. 176 of the U.P. Zamindari Abolition & LandReforms Act, 1950. Till holding is divided in accordance withEsection 176 every co-sharer of plot has right on the holding. It isnot the case of any of the parties that holding was partitioned byan order obtained under Section 176. All the co-sharers had rightin the plot in question and holdings were not partitioned as perlaw. The appellant was fully justified in claiming right of allotment

Fon a portion of plot on the pitch road. The Assistant ConsolidationOfficer has proposed the chaks to the parties in a manner so thatevery one gets chak on the pitch road. The Consolidation Officerhas reversed the allotment of chaks by putting the appellant onthe southern side away from the road and allocating the chaks on the pitch road in favour of the respondents which order was rightlyGreversed by the Settlement Officer of the Consolidation whichwas an equitable order by which R who was given chak includingthe area where he was constructing the house on the northeasternportion of the plot. The appellant was allotted an area comprisinghis pumping set and also by allocating chak part of which was onHpitch road, other respondents were allotted the chak in such a manner that everyone got their chak on the pitch road. Therewas no justifiable reason for setting aside the order of theSettlement Officer Consolidation and Deputy Director,Consolidation. It is to be noticed that Settlement OfficerConsolidation and Deputy Director while passing their ordershave also inspected the spot and the orders passed by them wereon the basis of spot inspection. The High Court in exercise of itsjurisdiction under Act 226 committed error in allowing the writpetition by restoring the order of the Consolidation Officer whichwas an inequitable order. In the facts and circumstances of theinstant case, equity was adjusted by the order of Settlement Officerof Consolidation in making the chak in the manner that chak ofevery co-sharer was on the pitch road which order needed nointerference by the High Court. The appellant filed a review whichwas too dismissed by the High Court. The orders of the HighCourt are unsustainable and are set aside [Paras 11-13][221-A-B, D-H; 222-A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 87-88of 2019.

From the Judgment and Order dated 25.07.2013 of the HighCourt of Judicature at Allahabad in Writ B No. 55952 of 2012 and orderdated 20.01.2014 in Civil Misc. Review Application No. 250902 of 2013.

Ashok Kumar Singh, Shantwanu Singh, Advs. for the appellant.

The Judgment of the Court was delivered by ASHOK BHUSHAN, J. 1. The appellant aggrieved by thejudgment of the High Court of Allahabad in Writ-B No.55952 of 2012has come up in these appeals. The High Court by the impugned judgmentdated 25.07.2013 has allowed the writ petition filed by the privaterespondents by setting aside the order dated 28.04.2012 of the SettlementOfficer Consolidation and order dated 19.07.2012 of Deputy Director ofConsolidation.

2. The brief facts necessary to be noticed for deciding theseappeals are:

The appellant along with his brother Bansraj were Bhumidharof Plot No.677 of Village Bahria, District Basti. Bansraj, brother of theappellant by sale deed dated 12.10.1989 sold his 1/2 share in favour of A

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Arespondents. The Village in question was brought under Consolidationoperation after issuance of notification under the U.P. Consolidation ofHoldings Act, 1953 (hereinafter referred to as ‘the Act’). The AssistantConsolidation Officer prepared a provisional Consolidation Schemeproposing chaks to the appellant as well as respondents on Plot No.677of which appellant was original tenure holder and the respondents wereBco-tenure holders by virtue of sale deed from Bansraj. In the northernside of Plot No.677 a pitch road was constructed six years before startof Consolidation operation. The Assistant Consolidation Officer proposedchaks to the appellant and the respondents opening towards pitch roadin the north of Plot No.677. The respondents filed belated objection underCSection 21 of the Act objecting to the chaks as proposed by the AssistantConsolidation Officer. The case of the objectors was that they should beproposed chaks on Plot No.677 in accordance with their possession.They stated that Their possession is towards north of the plot whereasthe appellant is in possession towards South of the Plot No.677. TheConsolidation Officer allowed the objection filed by the respondents.DThe respondents were allotted chaks on the pitch road towards north,the chak of appellant was carved on the south of the plot away from thepitch road.

3. The appeal was filed by the appellant before the SettlementOfficer Consolidation under Section 21(2) of the Act. The SettlementEOfficer Consolidation noted that appellant was original tenure holder ofPlot No.677 and Ram Milan etc. have also become joint holders on thebasis of the sale deed. Ram Milan was constructing a house on the northeast side of the plot after obtaining permission of Settlement OfficerConsolidation which construction was stopped on the objection of theFappellant. The Settlement Officer Consolidation concluded that it wouldbe legal and appropriate to give chak to all the joint holders adjacent topitch road. The appeal was allowed. Ram Milan was given chak on thenorth east side where he started construction. The appellant was givenchak on the pitch road including area where his boring and pumping setwas situated.G

4. Against the order of the Settlement Officer Consolidationrevision was filed by the respondents under Section 48 of the Act. TheDeputy Director, Consolidation affirmed the order of the SettlementOfficer Consolidation. The Deputy Director, Consolidation has alsoinspected the spot and found that all the co-tenure holders have beenH

allotted chak adjacent to the pitch road and if the claim of the revisionistis allowed the appellant shall not get chak adjacent to pitch road whichwould be illegal.

5. Aggrieved by the order of the Deputy Director, Consolidation awrit petition was filed by the respondents. Learned Single Judge whileallowing the writ petition has given the following reasons:

“I have considered the arguments of the learned counsel for theparties and examined the material available on record. From theperusal of the order of Consolidation Officer, it is proved that thehouse of one of the petitioners is situated in the northern side andboring and pumping set of respondent no.3 are situated in thesouthern side as such severance of the possession on the spot isfully proved. In the circumstances of the case, the ConsolidationOfficer has rightly allotted the chak to the petitioners in the northernside and no interference was required in it. The orders of SettlementOfficer Consolidation as well as Deputy Director of Consolidationare illegal and are liable to be set aside.”

6. Learned counsel for the appellant submits that appellant beingoriginal tenure holder of Plot No.677 he was co-sharer on the entire plotand was rightly proposed chak by the Assistant Consolidation Officer ona part of the pitch road. The area on the pitch road became valuableafter construction of the road and the appellant could not have beendenied his chak on the part of pitch road. The Consolidation Officercommitted error in setting aside chak proposed by the AssistantConsolidation Officer, which was rightly reversed by the SettlementConsolidation Officer and Deputy Director, Consolidation. He submittedthat there was no partition of the agricultural land in accordance withlaw nor there was any right in the respondents to claim chak comprisingthe entire area of the plot on the pitch road.

7. No one appeared for the respondents.

8. As noted above, the Assistant Consolidation Officer hasproposed chaks to the parties which were all on the pitch road. TheConsolidation Officer allowed the objection filed by the respondents underSection 21(1) by allocating chaks to the respondents on the northernside of the plot on the pitch road by carving the chak of the appellant onthe southern side away from the pitch road. The Consolidation Officerallowed the objection of the respondents by noticing following reasons:

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A“(i) The objectors are cultivating as per the sketch maps producedby them.

(ii) The House of Ram Milan is situated on the northern easterncorner.

(iii) The Assistant Consolidation Officer has not shown the chakBof Ram Milan in his proposal.”

9. The Settlement Officer Consolidation set aside the order ofConsolidation Officer in the appeal filed by the appellant. The SettlementConsolidation Officer has allotted the chak to Ram Milan on the northeast corner. The Settlement Officer Consolidation allocated the chaksCof the parties in the manner that every one was allotted the chak on thepitch road. The reason for altering the chaks by the Consolidation Officerwith regard to Ram Milan was fully satisfied by the Settlement Officerof Consolidation since he was allotted the chak where he was constructingthe house. In the chak of the appellant, the trees and boring and pumpingDset were also included to maintain the possession of the parties on theplot.

10. The appellant was original holder of the Plot No.677/1. Whenin the northern side of the plot a pitch road was constructed which wasprior to consolidation operation, the co-sharers of Plot No.677 were entitledEto get the benefit of road and when the Settlement Officer of Consolidationhad carved the chaks in the manner that all the co-sharers including theappellant and respondents were given the chaks on the pitch road whichorder was confirmed by the Deputy Director of Consolidation, we seeno valid reason for the High Court to reverse the orders passed by theDeputy Director of Consolidation and the Settlement OfficerFConsolidation. The reasons as given by the High Court, as noticed above,indicate that the High Court had noticed that as house of one of thepetitioners (writ petitioners) is situated in the north-eastern side and boringand pumping set of the appellant is situated in the southern side, the HighCourt has justified the order of the Consolidation Officer. The High CourtGhas lost sight of the fact that by amendment made by the SettlementOfficer Consolidation, one of the writ petitioners, Ram Milan was allottedchak at the north east corner on the Plot No.677 where his house was inexistence and the appellant was given the chak also on pitch road includinghis boring and pumping set.

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11. There is one more reason due to which no interference wasrequired in the order of the Settlement Officer Consolidation and theDeputy Director, Consolidation, i.e., the appellant and the respondentswere all co-sharers of Plot No.677. Even though parties were inpossession of some portions of the plot by mutual arrangement, therewas no partition of holding. It is relevant to note that agricultural holdingcan be partitioned by instituting the proceedings under Section 176 ofU.P. Zamindari Abolition & Land Reforms Act, 1950 which is as follows:

“176. Holding of a bhumidhar or sirdar divisible. - (1) Abhumidhar may sue for [division] of his holding.

(2) To every such suit the Gaon Sabha concerned shall be madea party.”

Till holding is divided in accordance with Section 176 every co-sharer of plot has right on the holding.

12. It is not the case of any of the parties that holding waspartitioned by an order obtained under Section 176. All the co-sharershad right in the plot in question and holdings were not partitioned as perlaw. The appellant was fully justified in claiming right of allotment on aportion of plot on the pitch road. The Assistant Consolidation Officerhas proposed the chaks to the parties in a manner so that every one getschak on the pitch road. The Consolidation Officer has reversed theallotment of chaks by putting the appellant on the southern side awayfrom the road and allocating the chaks on the pitch road in favour of therespondents which order was rightly reversed by the Settlement Officerof the Consolidation which was an equitable order by which Ram Milanwho was given chak including the area where he was constructing thehouse on the north-eastern portion of the plot. The appellant was allottedan area comprising his pumping set and also by allocating chak part ofwhich was on pitch road, other respondents were allotted the chak insuch a manner that everyone got their chak on the pitch road. Therewas no justifiable reason for setting aside the order of the SettlementOfficer Consolidation and Deputy Director, Consolidation. It is to benoticed that Settlement Officer Consolidation and Deputy Director whilepassing their orders have also inspected the spot and the orders passedby them were on the basis of spot inspection. The High Court in exerciseof its jurisdiction under Act 226 committed error in allowing the writpetition by restoring the order of the Consolidation Officer which was A

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Aan inequitable order. In the facts and circumstances of the present case,equity was adjusted by the order of Settlement Officer of Consolidationin making the chak in the manner that chak of every co-sharer was onthe pitch road which order needed no interference by the High Court.The appellant filed a review which was too dismissed by the High Courton 20.01.2014.B

13. In view of the foregoing discussion, we are of the view thatorders of the High Court are unsustainable and are hereby set aside.The appeals are allowed, judgment dated 25.07.2013 as well as orderdated 20.01.2014 are set aside. The writ petition filed by the respondentsstand dismissed. No costs.

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