STATE BANK OF INDIA vs Narinder Kaur And Ors.

THE impugned order was passed by the West Bengal State Consumer Disputes Redressal Commission in FA/453/2009. Three different Revision Petitions have been filed against this order, two by OP -2/SBI Life Insurance Co. Ltd. and one by OP -1/State Bank Of India. For this reason, all three were listed for consideration together.

WHEN the matter came up for consideration on 6.5.2015, this Commission disposed of two Revision Petitions, both filed by OP -2/SBI Life Insurance Company Ltd., with the following order: - "Learned Counsel appearing for the Petitioner, namely, SBI Life Insurance Co. Ltd., states that having regard to the peculiar facts and circumstances of the case, the Insurance Company has decided not to press both the Revision Petitions and they will comply with the directions issued by the State Commission.

Accordingly, both the Revision Petitions are dismissed as not pressed. No costs.

Vide order dated 07.09.2010 in Revision Petition No. 2794 of 2010, the operation of the impugned order was stayed, subject to deposit of 50% of the awarded amount along with accrued interest thereon by the Insurance Company before the District Forum within four weeks thereof. Subsequently, vide order dated 10.02.2014 the Complainant was permitted to withdraw the said amount on her furnishing a solvent surety to the satisfaction of the President of the District Forum. It is stated that the said amount has since been released to the Complainant. Since the Revision Petitions have been dismissed as not pressed, the surety furnished by the Complainant in terms of the said order shall stand discharged.

Learned Counsel appearing for the Insurance Company very fairly states that the balance amount in terms of the impugned order shall be paid to the Complainant within two weeks from today by means of a banker''s cheque/demand draft. It is ordered accordingly."

IN the absence of a similar concession from OP -1/State Bank of India, its Petition RP/2794/2010 has been heard separately and is taken up for consideration and decision in this order. Mr. Jitendra Kumar, Advocate has been heard on behalf of the State Bank of India and Mr. Asok Chattopadhya, Advocate on behalf of the Complainant/Ms. Narinder Kaur. We have also carefully considered the records filed by the two sides. The matter arose from a housing loan of Rs. 11.8 lakhs sanctioned by the OP -1/State Bank of India on 21.9.2004. It is specifically alleged in paras 4 and 5 of the Complaint Petition, filed before the Consumer Disputes Redressal Forum Burdwan District, that the Complainant had deposited four life insurance policies with total endowment sum of Rs. 8 lakhs. Yet, they were allegedly, ''compelled'' by the Bank to take another life insurance policy for Rs. 11.8 lakhs, from OP -2/SBI Life Insurance Company Ltd. Accordingly, simultaneously with sanction of the housing loan, OP -1/SBI deducted a sum of Rs. 49980/ - on 21.9.2004 itself, towards one time premium for insurance cover from OP -2.

THE District Forum dismissed the complaint qua OP -2/SBI Life Insurance Company and allowed the same against OP -1/SBI. Significantly, it has observed that it had asked the counsel for State Bank of India whether the requirements of supply of medical questionnaire as sought by SBI Life in its letter of 25.1.2005 had been intimated to Gurjeet Singh by the SBI. Counsel accepted before the District Forum that there was no document to show that Gurjeet Singh was so intimated by the OP -1/SBI. It was only stated that he was verbally intimated about it.

THE State Commission has held both OPs responsible observing that there was adequate material on record to determine their liability. It, therefore, disagreed with the District Forum to the extent of exoneration of OP -2/SBI Life. It held OP -1 and OP -2 both equally liable and awarded compensation of Rs. 5.00 Lakhs to be paid by each.

AS noted earlier in this order, OP -2/SBI Life has already accepted its liability in the matter. We therefore, find no need to delve further into the same. Coming to the case of OP -1/SBI, as made out in this Revision Petition, we find that most of the grounds raised therein are in the nature of justification for proceedings for recovery of this housing loan. The main issue of first imposing a life insurance policy as a requirement of the loan and then failing to bring it to a conclusion, even 15 months after deducting the one time premium, has been completely side -stepped.

THE only contention raised on the question of insurance is that the failure was on the part of the late husband of the complainant in appearing for the medical check -up as advised by SBI Life. This is a contention which is contrary to the evidence on the record of the Fora below. There was nothing to show that OP -1 had communicated these requirements to the borrower. Even before us, learned Counsel for the Petitioner/SBI could not respond to a specific query from the Bench as to the manner in which steps required for commencement of life insurance cover to an individual borrower under the Master Policy obtained from OP -2, were communicated to late Gurjeet Singh or his wife. On the contrary, the plea of the complainant was that they were only asked to fill up the proposal form and informed about deduction of premium from the loan. Again, learned Counsel was asked to show what evidence was led before the Fora below to bring out the steps taken by SBI to ensure compliance with the requirements of the letter 25.01.2005 from SBI Life. Learned Counsel admitted that no documents were produced before the Fora below. Once again, even on the question as to how the fact of refund of premium by SBI Life and closure of the insurance proposal by it, was actually communicated by SBI to the borrower or anyone on his behalf, learned Counsel stated that it was orally communicated.

THE manner in which the entire proposal for insurance cover from SBI Life has been handled by OP -1/SBI can be best appreciated if we take a look at the relevant dates and events. As seen from the record - "i. Premium deducted for insurance to cover the housing loan sanctioned to Gurjeet Singh and his wife. - - 21.9.2004.

ii. Premium amount and insurance proposal for the life of Gurjeet Singh sent by SBI to SBI Life on - - date not mentioned

iii. As per pleadings of SBI Life before District Forum, the requirement of three medical Questionnaires was called for, from the Master Policy holder i.e. OP -1/SBI. The letter of SBI Life to SBI acknowledging receipt of medical reports of Gurjeet Singh and seeking return of the enclosed questionnaire(s) duly completed and signed. - - 25.1.2005

iv. SBI Life returned the premium amount to SBI enclosing a demand draft for the premium on the ground that insurance cover could not be provided on account of pending medical requirements. The latter also clarified that if the borrower continues to be interested in insurance cover, fresh proposal with medical report and premium amount may be submitted. - - 19.12.2005

v. SBI credited the refunded premium amount to the loan account of Gurjeet Singh. - - 28.3.2006

vi. Notice under the SARFAESI Act issued by SBI - - 08.06.2007.

FROM the above, it is clear that between 21.09.2004 and 25.01.2005 the insurance proposal along with premium was sent by OP -1 to OP -2. It is also clear that the need for medical examination was conveyed to OP -1 and the report was sought on 25.1.2005. It is clear that OP -2 has waited for over ten months for the questionnaires duly filled in on diabetes, BP and other health concerns. Having failed to receive the same from OP -1, the decision to close the proposal and return the premium was taken by OP -2. The same was communicated to OP -1 on 19.12.2005 together with a demand draft of 30.11.2005, refunding the premium. These dates clearly bring out that despite correspondence of over one year with OP -1/SBI, the insurer/SBI Life was not able to take a decision on the insurance proposal. There is no evidence on record to show that after receiving the letter of 19.12.2005, OP -1/SBI took any steps to complete the necessary steps for activating the insurance coverage. All it did was to re -credit the refunded premium to the loan account. This conduct stands out as a clear case of deficiency of service.

THE State Commission has observed that on examination of relevant record and evidence it is established that neither Gurjeet Singh nor the Complainant received any communication from OP -1/SBI or directly from OP -2/SBI Life, seeking any medical record or test report from them. It has also observed that there is no evidence that the letter of 25.01.2005 from OP -2 was either received by or communicated to Gurjeet Singh or his wife. The Commission has, therefore, observed that there is no evidence or explanation why after taking the proposal and premium on 21.09.2004 the OPs could not take a final view on it till 25.01.2005. It is in this background that the subsequent conduct of OP -1/SBI needs to be viewed. The State Commission has observed that: "Referring to encashment of three numbers of Life Insurance Policy in the name of Late Gurjeet Singh Wasu and keeping of another policy in the name of the complainant, subsequent to death of the complainant''s husband, we find that OP No. 1 instead of doing its part of the responsibility in regard to the irregular, unreasonable and delayed cancellation of the policy by OP No. 2, jumped upon the helpless widow being the complainant, who was not only bereaved by sudden and premature death of her husband but was also called upon to look after her two children who were otherwise challenged. We are simply appalled at the heartless conduct and deficiency of service on part of the OP No. 1 namely State Bank of India, Kulti Branch, who holding the master policy did not even care to do justice to the complainant but also, being more resourceful flexed its muscles to ensure further damage and loss to the complainant."

IT is possible to argue on behalf of OP -1 that part of its responsibility would lie at the door of OP -2 as SBI Life, having received the proposal, could have directly communicated with Gurjeet Singh instead of waiting for one year to reach him through SBI. The fact would still remain that: "a. Life insurance from OP -2/SBI Life was a requirement of OP -1 and not of the borrower. It was only in the nature of an additional security in the hands of the lender.

b. From the record, it is clear that this insurance was actually a condition for sanction of the housing loan and the one time premium was deducted directly from the loan amount by OP -1.

c. Having deducted the full premium, OP -1/SBI was under an obligation to expeditiously meet all requirements for commencement of the insurance cover. On the contrary, evidence on record shows that its response was at best tardy and indifferent.

d. The only logical explanation for this conduct of OP -1 lies in the four life insurance policies which it had already obtained from the hapless borrower.

e. Despite four policies in hand, OP -1/SBI still chose to commence proceedings under the SURFAESI Act, in display of extreme professional irresponsibility."

IN the above background, the attempt at justification of recovery proceedings in the revision petition amounts to ignoring the main findings of the Fora below. The question is whether the recovery proceedings justified or otherwise, would have been occasioned at all, had OP -1/SBI ensured the steps for getting the insurance policy promptly in position. At the risk of repetition, it must be said that the entire risk of OP -1 would have been covered, had the policy incepted before the matter was closed by OP -2/SBI Life. Even at that point, a window was left open for the same by SBI Life but there is nothing to show if anything was done, even at this late stage, to ensure that the policy incepted. Responsibility for the outcome must therefore lie squarely at the door of OP -1/SBI.

THE facts of this case are very similar to those in State Bank of India v. Joice Johny (RP No. 216 of 2012, decided on 27.07.2012). It related to a housing loan sanctioned on 06.10.2005 jointly to the complainant and her husband. The sanctioned amount included one -time premium towards coverage of the loan under a Master Policy from SBI Life. Husband of the complainant died on 06.11.2007. Thereafter all her pleas for coverage of the outstanding loan amount under the insurance policy, for which premium had been deducted at the time of sanction of the loan, went unheeded. The District Forum held that the petitioner was liable to the extent of the 50% of the outstanding loan amount. The State Commission agreed and held that while sanctioning the loan the lender had made provision for payment of premium to SBI Life to get the loan secured. If it had failed to secure necessary documents in this regard before disbursing the loan, it would be a deficiency of service on its part and the plea that the complainant did not come forward to execute the necessary documents would not be available to it.

THE National Commission upheld the view taken by the State Commission observing that the loan was clearly required to be covered by SBI Life Suraksha Group Insurance Scheme. Under the letter of sanction, the necessary documents for this were to be executed before the disbursal of the loan and premium was to be credited to the insurer. On both counts the Bank had failed to discharge its obligation. The National Commission not only concurred with the State Commission but also enhanced the compensation amount from Rs. 10,000/ - to Rs. 40,000/ -. Special Leave Petition to Appeal against this order was dismissed by Hon''ble Supreme Court of India on 05.04.2013.

IN the case before us, we find ourselves in full agreement with the sentiment expressed by the State Commission against the conduct of OP -1/SBI as cited above. For details considered earlier in this order, we hold that the revision petition is devoid of any merit. It is therefore, dismissed as such. Further, considering the facts and circumstances of the case as well as the conduct of OP -1/SBI, we also deem it appropriate to impose punitive cost of Rs. 2 lakhs. This shall be in addition to the award of the State Commission and shall be paid to the Complainant within a period of three months. SBI may adjust payments already made to the Complainant, if any. Delay, if any, shall carry interest on this amount at 10 % per annum.

THE Revision Petition is disposed of in the aforesaid terms.