Branch Manager State Bank Of Travancore vs Shaila Jain

REVISION Petition no. 3057 of 2013 has been filed under section 21 (B) of the Consumer Protection Act, 1986 against the order dated 25.02.2013 passed by the Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram ( ''the State Commission '') in appeal no. 558 of 2012.

THE facts of the case as per the petitioner/ opposite parties are that the respondent/complainant and her husband had jointly availed a housing loan from the petitioner. The loan number was 67015249089. The second opposite party (OP) before the District Forum had asked the respondent and her husband to take a SBI Life Insurance Policy so as to indemnify the repayment of loan amount in the event of the death of the respondent or her husband. Accordingly, Rs.33,300/ - was retained towards insurance premium and only disbursed Rs.4,50,000/ - out of the sanctioned loan amount of Rs.4,83,300/ - (Rupees four lakh eighty three thousand three hundred only). On enquiry, it was learnt that it was a usual practice to give insurance coverage to all housing loans. The respondent and her husband had paid the EMI Rs.5,010/ - promptly till April 2008. The husband of the respondent met with an accident on 23.04.2008 and was in the ICU for two months and he died on 30.06.2008. Hence there occurred a break in repayment of three months. The EMI for three months was paid in September 2008.

THOUGH , as per the insurance policy conditions, the respondent need not pay the future EMI ''s of the loan, the second OP before the District Forum coerced the respondent for the remittance of EMI ''s and accordingly the respondent paid Rs.79,000/ - till March 2010.

THE respondent approached the second OP for getting the insurance policy benefits. But OP rejected the request stating that they had omitted to transfer the insurance premium amount to the insurance company. Thereafter, the matter was brought to the notice of the petitioner - Bank. But no reply was given to the respondent till date. Petitioners were duty bound to transfer the insurance premium amount of Rs.33,300/ - to the insurance company before the disbursal of the first instalment of the loan. The omission on their part to transfer the amount retained towards insurance premium to the insurance company amounts to deficiency of service.

PETITIONERS were duty bound to waive the future EMI ''s from 6/2008 onwards, i.e., after the death of respondent ''s husband. Respondent was entitled for the refund of Rs.79,000/ - collected from here after the death of her husband.

THE respondent was entitled for a direction to the petitioner to waive of future EMI ''s from 6/2008 onwards and also for the refund of Rs.79,000/ - along with interest at the rate of 13% per annum from today. The written reply was filed by opposite party no. 2 before the District Forum. It was admitted that the second opposite party before the District Forum had sanctioned a housing loan to the respondent and her husband on 22.07.2006. They, however, denied the further averments that at the time of availing the loan facility, the 2nd OP before the District Forum asked the respondent and her husband to take an insurance policy so as to indemnify the repayment of loan amount, in the event of death of the respondent ''s husband and that the amount of Rs.33,300/ - was retained by the 2nd OP before District Forum towards the insurance premium and that only an amount of Rs.4,50,000/ - out of the sanctioned loan amount of Rs.4,83,000/ - alone was disbursed.

THEY further stated that OP no. 2 before District Forum, as part of the procedure adopted by the Bank had informed the respondent and her husband about the facility of taking a life insurance policy also at the time of availing the loan facility. It was also informed by the OP no. 2 before the District Forum that taking insurance policy was only optional. The respondent or her husband did not exercise any option in this regard. They also did not authorise OP no. 2 before District Forum to take any insurance premium. None of the records available discloses the fact that the parties applied for the insurance policy and that policy was issued by an insurance company to the respondent and her husband. The party did not opt for the policy and hence, there was no occasion for the 2nd OP before the District Forum to retain the amount of Rs.33,300/ - as insurance premium. While availing the housing loan of Rs.4,83,300/ - by the respondent and her husband, necessary documents including Medium Term Loan agreement were executed by them. All the documents executed by the respondent and her husband show that the Medium Term Loan (housing loan) was availed on condition that the loan amount will be repaid in 180 installments with EMI of Rs.5010/ -. They were paying the amount promptly till April 2008 but there was break of repayment due to the demise of respondent ''s husband. The payment of EMI for three months in September 2008 was also not disputed. Since no insurance policy was found to be taken by the respondent and her husband from any insurance, the OP before the District Forum did not transfer the insurance premium amount of Rs.33,300/ - to any insurance company and hence, it cannot amount to deficiency in service on the part of the OP before the District Forum. The respondent is one of the co -borrowers in the housing loan and she is duty bound to remit the EMI in terms of the agreement and the OP before the District Forum is entitled to receive the instalments as paid by the respondent in repayment of the loan.

VIDE order dated 31.12.2011 District Consumer Disputes Redressal Forum at Ernakulam ( ''the District Forum '') had allowed the complaint and has observed as under: ''''Ext. A1 are the copy of savings pass book of the complainant and the specifications of the insurance. On perusal of Ext. A1 specifications it is specifically mentioned that ''''AVAILABLE SBI LIFE INSURANCE '''' the benefits of policy and attractions of the same. According to the complainant the 2nd opposite party sanctioned loan amount of Rs. 4,83,300/ -. however disbursed only Rs. 4,50,000/ -. The remaining amount of Rs. 33,300/ - was retained by the 2nd opposite party towards insurance premium. In Ext. A1 pass book goes to show that the loan amount was disbursed by three instalments. The instalment amounts are Rs. 1,35,000/ -, Rs. 1,80,000/ - and 1,35,000/ - and totaling Rs. 4,50,000/ - Ext. B1 sanction letter would show that the 2nd opposite party has sanctioned Rs. 4,83,300/ - as loan amount. The 2nd opposite party vehemently denied that they haven ''t retained Rs. 33,300/ - for the purpose of insurance premium. But they did not adduce any evidence in this Forum to substantiate that they had disbursed the entire sanctioned amount to the complainant. The opposite parties at least ought to have produced A/C statement pertaining to the loan account of the complainant. No evidence is before us to show that the opposite parties duly informed the complainant and her husband that taking insurance policy is optional. The learned counsel for the complainant relied in a decision rendered by Hon ''ble National Commission in SBI Life Insurance Co. Ltd. Vs. Asha Dixit and ANR. 1 (2011) CPJ 81 (NC) The Hon ''ble National Commission found that is responsible for, not completing documentation with regard to the insurance premium and the bank is liable to indemnify the loss. In the instant case though the 2nd opposite party collected the insurance premium from the complainant they failed to avail insurance policy in spite of receipt of the premium. The above conduct of the 2nd opposite party amounts to deficiency in their service. In view of the above we are of the opinion that the opposite parties are liable to refund the amount of Rs. 79,000/ - received as EMI after the death of the complainant ''s husband to the complainant with interest. We are not ordering any costs since we have already ordered refund of the amount with interest. Accordingly, we partly allow the complaint and direct that the opposite parties shall jointly and severally refund Rs. 79,000/ - to the complainant with 12% interest p.a. from the date of complaint till realization.

Aggrieved by the order of the District Forum, the petitioner filed an appeal before the State Commission. The State Commission vide their order dated 25.02.2013 dismissed the appeal and confirmed the order of the District Forum. The State Commission while dismissing the appeal observed that: ''''This Commission heard in detail both sides and perused the evidence, fact and circumstances of the case. It is seeing that the forum below passed the order on the basis of strict provisions of law and evidence. It is legally sustainable. The appellant/ opposite party bank kept the premium which collected from the complainant and they did not remit the insurance company. This is the consequence, for non -issue of a policy by the insurance company to the complainant. The appellant/ opposite party is totally deficiency on their part in non -transfer the collected premium amount to the insurance company on behalf of the complainant. There is no apparent error in the order passed by the forum below. It is legally sustainable. This Commission uphold the decision of the forum below. In the result, this appeal is dismissed and confirmed the order passed by the forum below ''''.

HENCE , the present revision petition.

THE main grounds for the revision petition are that: The State Commission has also failed to appreciate that having earlier opted for availing the benefits of Life Insurance Cover by joining the Group Insurance Scheme of the SBI life Insurance Co. Ltd., and further having also got sanctioned from the petitioner Bank, the additional loan amount of Rs.33,300/ - to cover the insurance premium, the respondent and her husband failed and neglected to complete the requisite formalities of submitting the consent -cum -authority letter as well as Declaration of Good Health in the prescribed format to the Petitioner Bank for its onward submission to the insurance company along with the premium. The State Commission has also failed to appreciate that due to their own fault and negligence, the loan account of the respondent was not covered under the benefits of insurance due to non -submission of the requisite and mandatory consent -cum -authority letter as well as a Declaration of Good Health in the prescribed format. The State Commission has grossly erred in concurring with the findings of the District Forum regarding payment of insurance premium, ignoring the fact that the respondent had never paid insurance premium to the petitioner and in fact the amount of Rs.33,300/ - was additionally sanctioned in favour of the respondent, in addition to the actual loan amount of Rs.4,50,000/ - to enable them to pay the insurance premium which amount remained unutilised due to non -completion of the requisite formalities by the respondent and her husband. The State Commission as erred in holding that the petitioner had disbursed only Rs.4,50,000/ - to the respondent as was evident from the entries made in the pass book, whereas, the actual fact was that the total loan amount was Rs.4,50,000/ - and the amount of Rs.33,300/ - was additionally sanctioned by the petitioner Bank to enable the respondent and her husband to pay the insurance premium was left unutilised on account of the lapses and omission on the part of the respondent and her husband to complete the requisite formalities of submitting the consent -cum -authority letter as well as a declaration of good health in the prescribed format to the petitioner bank for its onward submission to the insurance company along with the premium of Rs.33,300/ -. The State Commission has failed to appreciate that the statement of account of the loan account of the respondent clearly defects the amount of Rs.4,50,000/ - as housing loan, while the amount of Rs.33,300/ - was additionally sanctioned to pay insurance premium by the respondent. We have heard the learned counsel for petitioner and have also carefully gone through the records of the case.

IT is an undisputed fact that the petitioner - Bank had sanctioned loan of Rs.4,83,300/ - to Shri N P Jain and Smt Shaila Jain vide sanction letter dated 22.07.2006. It is also clear from the proposal form on record that as per column no. 21, the loan required from the bank was only Rs.4,50,000/ -. In the declaration however they have said they are applying for housing loan of Rs.4,50,000/ - plus Rs.33,300/ -. The agreement letter mentions the document to be executed before availing the loan as follows: (i) A - 5 (ii) Memorandum of term loan agreement for housing loan granted to purchaser (iii) Sanction letter

HEREIN , document to be filed for availing the insurance which was offered by the bank has not been mentioned. As per the details of the scheme of Life insurance Cover to Housing Loan Borrowers of State Bank Group the objective of the scheme is to provide life insurance cover to housing loan borrowers of the Bank as protection against risk of death due to any reasons during the tenure of the loan. As per the scheme, in the event of death of the borrower at any time during the tenure of the loan, the SBI Life will assume the liability towards the repayment of the outstanding loan amount including interest as per the original EMI schedule. SBI Life would pay the outstanding loan amount to the branch upon receipt of documents evidencing the death of the borrower (in case of loans granted on floating rate of interest basis, the amount payable and the term of insurance would not exceed the outstanding amount and term calculated on the basis of a fixed interest rate of 11% per annum). The Life insurance cover on the above lines was an optional facility that would be available at the branches of State Bank Group. It was on this basis that in addition to the loan amount required by the respondent, the petitioner had added Rs.33,300/ - as additional amount equivalent to the insurance premium amount for the duration of the housing loan as additional loan to the borrower. Clause 15 also states that there would not be any detailed insurance proposal form required from the housing loan borrowers. The cover would be available based on a consent letter from the borrower addressed to the branch where he/ she avails the housing loan expressing his/ her consent to join the group insurance scheme and acceptable proof of age. We cannot believe that without obtaining a consent letter from the borrower, the bank on its own sanctioned Rs.33,300/ - the additional loan towards the premium of the insurance policy. Hence, it was incumbent on the petitioner to inform the respondent of any other required document or any procedure to be followed for obtaining insurance cover which as per the scheme should have been effective from the date of giving the loan, as it was to cover against risk of death due to any reason during the tenure of the loan. Clause 9 of the said scheme clearly states as follows: 9. Facility of additional loan from the branches for the insurance premium amount: If required by the housing loan borrower, concerned branches may grant an additional amount equivalent to the insurance premium amount for the duration of the housing loan, as an additional loan to the borrower. This amount will be on top of the housing loan amount, and the branch will remit the premium amount direct to SBI Life as a loan disbursement. For loan amount or outstanding loan amount more than Rs.7.5 lakh, please report to the contents of [Annexure A 1(a)]. In the case of existing housing loans, the borrowers are eligible to seek from the branch an additional loan amount corresponding to the life insurance premium amount for the remaining tenure of the housing loan. Such loan amount will be repayable in equal instalment along with the EMI for the housing loan ''''.

HENCE , the defence of the counsel for the petitioner stands vitiated by this clause which clearly states that the branch has to remit the premium amount directly to SBI Life as loan disbursement.

THUS , in view of the facts stated above no jurisdictional or legal error has been shown to us to call for interference in the exercise of powers under Section 21 (b) of Act. Since, two Fora below have given a detailed and well -reasoned orders which do not call for any interference nor they suffer from any infirmity or erroneous exercise of jurisdiction or material irregularity. Thus, present revision petition is hereby, dismissed with cost of Rs.20,000/ - (Rupees twenty Thousand only). Petitioner is directed to pay Rs.10,000/ - directly to the respondent by way of demand draft within four weeks and the balance amount of Rs.10,000/ - be deposited by way of demand draft in the name of ''Consumer Legal Aid Account '' of this Commission, within four weeks from today. In case, the petitioner fails to pay and deposit the said cost within the prescribed period, then it shall also be liable to pay interest @ 9% per annum till realization.

LIST on 4th April 2014 for compliance.