(Passed on 03/05/2023)

Per Mr. Atul D. Alsi, Hon’ble President

1. The complainant filed a complaint case under Section 12 of Consumer Protection Act, 1986 for arbitrarily surrender of insurance policy of complainant by OP Nos. 1 and 2 towards arrears of loan amount and thereby seeking the sum assured amount of LIC policy and  compensation of Rs. 1,00,000/- along with cost of Rs. 10,000/-. The complainant is LIC  insurance agent of OP No. 2.
2. The complainant has saving account bearing No. 04640100005063 with OP No. 1/bank. In the year 2012, the complainant was in need of financial help. Therefore, the complainant obtained personal loan from OP No. 1 under Baroda Advantage SB_GEN of Rs. 60,000/- and kept lien  of insurance policy of complainant towards satisfaction of loan amount. The complainant has kept the lien of policy bearing No. 973350229 of Rs. 50,000/- and after maturity the amount of Rs. 1,50,000/- will be payable.
3. On 23/03/2015, the OP No. 2/bank had surrendered the lien insurance policy of complainant and Rs. 9,301/- had been transferred to loan account of complainant. After receipt of pre-mature surrender of policy amounted to Rs. 31,332/- which was deposited in saving account of complainant by insurance company. The OP No. 2 without due process of law and without intimation to complainant, surrendered the complainant’s insurance policy on 23/03/2015. The complainant had balance amount of Rs. 18,956/- in his saving account on 23/03/2015. The OP No. 2 instead of crediting the loan amount from the balance amount from saving bank, arbitrarily surrendered the complainant’s lien insurance policy without intimation and notice and part of balance amount had been credited to the loan account of complainant. Therefore, the complainant is seeking refund of sum assured amount of insurance policy payable on maturity along with compensation and cost.
4. The OP No. 1 filed reply and denied allegations and submitted that the OP No. 1 had sanctioned personal loan of Rs. 60,000/- against monthly re-payment of Rs. Rs. 2,147/- for 36 months with one guarantor  and by assigning one insurance policy bearing No. 973350229  of complainant  as lien towards satisfaction  of loan amount. The complainant was irregular in re-payment of loan amount. Therefore, the complainant’s account become NPA account. On dated 21/01/2015, the OP No. 1 had issued notice in respect of NPA account to the complainant with submission that in case of non- payment of arrears of loan amount, the insurance policy will be surrendered. The complainant failed to deposit the arrears of loan amount. Therefore, the assigned insurance policy had been surrendered and the amount received from the pre-mature surrender of policy amounted to Rs. 31,332/-. The arrears of loan amount had been credited in loan account from complainant’s saving account. Therefore, there is no negligency on the part of OP No.1. Therefore, the case is deserves to be dismissed with cost.
5. The OP No. 2 filed reply and denied allegations and submitted that the cause of action arose  on 23/3/2015 when the loan account had been closed by surrendering policy and the present complaint has been filed on 09/01/2019 beyond the period of limitation of 2 years without any application for condonation of delay. The OP No. 1 /bank issued a letter on 10/03/2015 to surrender the complainant’s policy for non-payment of arrears of loan amount  in favor of OP No. 2.  Therefore, the OP No. 2 as per rule, the complainant’s policy which was surrendered in favor of OP No. 1/bank as per stamp of surrender of policy affixed thereon had been surrendered and the amount of Rs. 31,332/- had been credited in the saving bank account of complainant for the policy bearing No. 973350229 issued by OP No. 2 in favor of complainant for the sum assured of Rs. 50,000/-on 23/03/2015. Therefore, there is no negligency on the part of OP No. 2 as well there is no nexus of relation of consumer. Hence the complaint is liable to be dismissed against OP No. 2 with cost.
6. The counsel  for complainant argued that when there was sufficient balance of Rs. 18,956/- in the saving bank account of complainant but in spite of crediting the balance amount of loan account, the OP No. 1/bank has arbitrarily surrendered the insurance policy of complainant without intimation. Therefore, it amounts to deficiency in service on the part of OP/bank.
7. The counsel for OP No. 1/bank argued that on 21/01/2015, the OP No. 1/bank had issued a letter to the complainant to settle the loan  account within 7 days, otherwise the LIC policy will be surrendered. Therefore, the surrender of policy towards arrears of loan amount does not amounts to deficiency in service.
8. The counsel for OP No. 2/LIC argued that as per letter issued from OP No. 1/bank dated 10/03/2015 along with original surrender policy and along with letter of surrender of policy by complainant in favor of OP No. 1/ bank  as per documents filed on record by OP  No. 2 as per list of documents dated 29/08/2019 and therefore, disbursement of amount towards surrender insurance policy of complainant does not amounts to deficiency in service and therefore, petition is liable to be dismissed with cost.

REASONING

9.  The complainant is having saving bank account bearing No. 04640100005063 with OP No. 1/bank. The OP No. 1/bank had sanctioned personal loan in favor of complainant amounted to Rs. 60,000/- in the year 2012 as per loan application moved by complainant with one guarantor in favor of OP No. 1. The complainant has also assigned one insurance policy bearing No. 973350229 of Rs. 50,000/- for the sum assured of Rs. 50,000/- by paying monthly premium  of Rs. 417/- issued by OP No. 2 on 30/08/2004 to be matured on 28/11/2019. The OP No. 1 had surrendered the complainant’s insurance policy towards arrears of loan account which was NPA account on 30/12/2014. The OP No. 2/insurance company had paid Rs. 31,332/- on 23/03/2015 as per letter of surrender of policy had been issued by OP No. 1/bank in favor of OP No. 2/LIC. The OP No. 1/bank had credited Rs. 9,301/- in loan account of complainant from surrender amount of Rs. 31332/- closed the loan account.
10. The OP No. 1/bank has claimed the issuance of letter dated 21/01/2015 in favor of complainant to pay the  balance amount of loan account, otherwise policy will be surrendered after 7 days period. The OP No. 1 has failed to file the proof of receipt of letter by complainant with any postal acknowledgment or endorsement from postal authority for the receipt or service of letter dated 21/01/2015. As per statement of account filed on record by the complainant, as per list of documents dated 31/01/2019,the complainant’s saving bank account has balanced amount of Rs. 18,956/- on 23/03/2015 on same date the surrender amount had been received from OP No. 2/LIC amounted to Rs. 31,332/-. The OP No. 1 without intimation or proof of service of notice, assigned the insurance policy of complainant hence it amounts to deficiency in service. The OP/bank has right to assignment of policy as per terms of contract  for arrears of  loan amount subject to intimation or service of written notice for surrender of policy to the complainant. Here  there is no evidence of intimation or service of notice for surrender of policy, Hence the OP No. 1/bank is liable to pay compensation amount of Rs. 50,000/-to the complainant along with cost of litigation of Rs. 10,000/- The OP No. 2  had issued insurance policy to the complainant but the OP No. 2 has  no role towards settlement of loan account of complainant. Therefore, there is no negligency on the part of OP No. 2. Hence no order has been passed against OP No. 2. Hence, the complaint is partly allowed as per following order.

ORDER

1. The complaint is partly allowed.
2. The OP No. 1 is liable to pay compensation of Rs. 40,000/- for arbitrarily surrender of insurance policy bearing No. 973350229 of complainant along with cost of litigation of Rs. 10,000/- to the complainant.
3. No order is passed against OP No. 2.
4. Copy of order be furnished to both parties, free of cost.