Sunder Singh vs LIFE INSURANCE CORPORATION (HOUSING FINANCE LTD.

THIS order shall dispose of two appeals No. 112 of 1996 filed by Sunder Singh Shilwant and No. 126 of 1996 filed by the Life Insurance Corporation (Housing Finance, Ltd.), Karnal, as both these appeals are against one and the same order dated 19.1.1996 passed by the District Consumer Forum, Karnal, whereby the complaint of Sunder Singh Shilwant alleging deficiency in service against the Life Insurance Corporation in the matter of advancing loan for the purpose of construction of a house has been partly allowed.

THE complainant, who is a Lecturer in the Faculty of Laws, M.D. University, Rohtak, approached the District Consumer Forum, Karnal with the grievance that as he had obtained an insurance policy of rupees one lac in February, 1992, he applied on 27.1.1993 to the opposite party for grant of loan amounting to Rs. 90,000/-. Though a sum of Rs. 40,000/- had been disbursed to him on 10.6.1993 the balance amount was not released. Alleging deficiency in service on the part of the LIC the complainant claimed compensation of Rs. 2 lacs alongwith interest at the rate of 18% p.a. against the opposite party. In their reply, the LIC pleaded that simply because the complainant had taken out a LIC policy, it did not confer upon him an automatic right to obtain the house building loan. Since there were a number of other formalities and requirement to be completed by the complainant, second instalment was not released due to the non-co- operation of the complainant himself. THE District Consumer Forum, after going through the detailed documentary evidence came to the conclusion that though there was no cogent evidence in support of the allegations levelled by the complainant, yet he was not treated with proper respect and dignity with which a person should have been treated by the LIC. Thus, the complaint was partly allowed by passing the following directions: "THE complainant has led no direct evidence on the quantum of compensation. It has only been argued that the complainant is an educated person and he had to get a loan at a higher rate from other sources. Adequate compensation has been claimed but the definite proof for definite amount is missing so that we would make a guess to award a compensation of Rs. 5,000/- to the complainant on account of deficiency in service by opp. party. We also direct opp. party to pay a sum of Rs. 500/- as cost of litigation to the complainant".

In Appeal No. 112 of 1996, the learned Counsel for the appellant has reiterated the submissions as were raised before the learned District Forum to contend, that the second and third instalments of the loan had not been released by the LIC. In reply thereto, the learned Counsel for the LIC advancing the arguments in support of the cross appeal No. 126 of 1996 pleaded that the second and third instalments were not released because the complainant had failed to produce the valuation report regarding the construction of the house.

After hearing the learned Counsel for the parties and having gone through the record, we are of the considered view that there is a clear deficiency in service on the part of the LIC in not releasing the 2nd and 3rd instalments of the loan already sanctioned in favour of the complainant. It is correct that simply because a person has got himself insured by taking out an insurance policy does not make him automatically entitled to the advancement of loan for construction of a house etc. and that a number of other formalities, procedural or otherwise, are also required to be completed for that purpose, but in the present case the position is quite different. The LIC had already taken a decision to advance the necessary loan which presupposes the completion of all the formalities, including the bona fide need for the grant of loan and the capacity of the insured borrower to repay the same etc. Therefore, to release the first instalment and to withhold the subsequent ones would certainly amount to deficiency in service on the part of the LIC. Under the circumstances, we have no hesitation in allowing Appeal No. 112 of 1996 filed by the complainant-appellant by issuing direction to the LIC to release the subsequent 2nd and 3rd instalments of loan to the complainant within a period of one month from the date of receipt of this order, if not already released. The complainant is also directed to complete the procedural requirements, if any, still to be undergone by him by furnishing necessary information and documents within the period as stipulated above, for the release of the remaining two instalments of loan. However, in the facts and circumstances of the case, we are satisfied that the ends of justice stand adequately met with the relief already granted by the District Consumer Forum and no additional compensation is necessary to be granted to the complainant. So far as the Cross Appeal No. 126 of 1996 is concerned/it automatically stands dismissed with no order as to costs. Appeal No. 112/96 allowed. Appeal No. 126/96 dismissed.