Chandigarh

DF-I

CC/785/2014

Suresh Kumar Saddi - Complainant(s)

Versus

ICICI Prudential Life Insurance Co. Limited. - Opp.Party(s)

Anil Malhotra

03 Jun 2016

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I,

U.T. CHANDIGARH

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Consumer Complaint No.	:	CC/785/2014
Date of Institution	:	28/11/2014
Date of Decision	:	03/06/2016

 

Suresh Kumar Saddi s/o Sh. Amar Nath Saddi, Resident of H.No.58, Parshant Vihar, N.A.C. Zirakpur, Tehsil Dera Bassi, District Mohali.

…..Complainant

V E R S U S

1.     ICICI Prudential Life Insurance Co. Limited, ICICI Prulife Towers, 1089, Appasaheb Marathe Marg, Mumbai, through its Office in charge.

2.     ICICI Prudential Life Insurance Co. Limited, S.C.O No.9-10-11 (First Floor), Sector 9-D, Chandigarh through its officer in charge.

3.     Bank of India, SCF No.9, Sector 20-C, Chandigarh through its Chief Manager.

……Opposite Parties

 

QUORUM:	DR. MANJIT SINGH	PRESIDENT
	MRS.SURJEET KAUR	MEMBER
	SURESH KUMAR SARDANA	MEMBER

                                       

                                                                       

ARGUED BY	:	Sh. Rakesh Kaundal, Counsel for complainant
	:	Sh. Gaurav Bhardwaj, Counsel for OPs 1 & 2
	:	Sh. Ranjeet Singh Khural, Counsel for OP-3

PER DR. MANJIT SINGH, PRESIDENT

1.         Aggrieved by the attitude of OPs 1 & 2, M/s ICICI Prudential Life Insurance Co. Limited, the complainant has brought this consumer complaint under Section 12 of the Consumer Protection Act, 1986, for a direction to the OPs to make the entire balance payment of loan amount to the tune of Rs.2,21,782/- alongwith interest @ 12% per annum and also sought compensation to the tune of Rs.50,000/- on account of mental agony and harassment besides litigation expenses to the tune of Rs.11,000/-.

                The son of the complainant, late Mr. Sidharth Saddi, in order to do his Master of Accounting from Macquarie University, Sydney, obtained a loan from OP-3/Bank of India. The complainant was the co-borrower with his son.  OP-3 has liaison with OPs 1 & 2 to cover the education loan of the borrowers. The said loan was sanctioned on 2.11.2006 and OPs 1 & 2 provided the insurance cover for the recovery of the said loan advanced to Mr. Sidharth Saddi for education.  The loan was insured vide Star Education Credit Assure Policy No.09838613. Unfortunately, Mr. Sidharth Saddi died on 30.6.2012 and at that time the outstanding loan amount was Rs.12,96,405/-.  As per the insurance policy, OPs 1 & 2 were liable to pay the aforesaid amount, including the interest accrued.  OPs 1 & 2 paid a sum of Rs.11,50,000/- directly to OP-3 against the terms and conditions of the insurance policy without taking the consent of the complainant. The said amount was credited in the loan account on 1.12.2012.  On that day, the total outstanding amount was Rs.13,71,782/- and after adjustment of Rs.11,50,000/-, there was debit balance of Rs.2,21,782. As per the terms and conditions of the insurance policy, OPs 1 & 2 were to pay a total sum of Rs.13,71,782/- which was outstanding at that time, but they have failed to make the payment of Rs.2,21,782/- which was allegedly the interest amount. Hence the complainant has brought this complaint. 

2.         OPs 1 & 2 resisted the claim of the complainant alleging that the complainant has raised very serious allegations against the OPs without substantiating them with any documentary proof; the entire complaint is based on surmises and conjectures and deserve outright dismissal; jurisdiction of the Forum is also denied.  It is alleged that the complainant has failed to demonstrate any deficiency in service on the part of the OPs.  It is further alleged that the OPs strictly acted as per the terms and conditions of the policy contract.  It is pleaded that the Forum cannot pass an order in contravention of the terms and conditions of the policy contract.  Reference has been made to the judgment of the Hon’ble Supreme Court in Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Insurance Co. Ltd., 2010 (10) SCC 567.  It is alleged that the definition of life cover means the benefit payable due to the death of the member as per the scheme. Life cover can be opted as life cover or as reducing cover depending on the nature of the loan. It is alleged that the benefit on death of the member provided the death has occurred after the loan is disbursed.  In case of level cover, the company shall pay the life cover and in case of reducing cover the company shall pay the reduced life cover, as specified in the Credit Assure statement to the beneficiary as on the date of death of the member.  OPs admitted that the loan advanced to Mr. Sidharth Saddi had insurance cover. The OPs alleged that a sum of Rs.11,50,000/- was paid vide cheque dated 9.11.2012 which was has been encashed by the complainant.  The company was obliged to pay the life cover as such there is no further liability of OPs 1 & 2.
3.         OP-3 filed its written statement alleging that the deficiency in service, if any, is on the part of OPs 1 & 2.  OP-3 admitted all the contentions of the complainant about the disbursement of the loan amount and receiving a sum of Rs.11,50,000/- in settlement of insurance claim of the complainant and alleged that an amount of Rs.2,21,782/- was still outstanding at that time.
4.         The parties led evidence in support of their contentions. 
5.         We have gone through the record and heard the arguments addressed by the learned Counsel for the parties.
6.         The learned counsel for the complainant argued that as per the terms and conditions of the policy, the whole loan amount, including interest, was covered under the insurance policy and on the death of Mr. Sidharth Saddi, son of the complainant, the whole outstanding amount was to be paid by OPs 1 & 2 to OP-3, which they have partly paid and interest amount has not been paid. So, there is deficiency in service on the part of OPs 1 & 2.  As such, the complainant is entitled to get the reliefs as claimed by him.
7.         The learned counsel for OPs 1 & 2 argued that as per the terms and conditions of the policy, a sum of Rs.11,50,000/- has been paid by OPs 1 & 2, which has been adjusted in the loan account of the complainant.  OPs 1 & 2, as per the terms and conditions of the insurance policy, were only to provide the cover for the sum assured and were not liable to pay the whole of the outstanding amount, particularly the interest. As such, there is no deficiency in service on the part of OPs 1 & 2.
8.         There is no dispute that the education loan amount obtained by the son of the complainant for his education was provided the insurance cover by OPs 1 & 2.  It is also not disputed that on the death of Mr. Sidharth Saddi, son of the complainant, out of the total outstanding amount of Rs.13,71,782/-, OPs 1 & 2 paid a sum of Rs.11,50,000/- to OP-3, which has been adjusted in the loan account of the complainant and his deceased son.  The only dispute is with regard to the balance amount of Rs.2,21,782/-, which is the interest amount.  As per OPs 1 & 2, they are not liable to pay this interest amount and they were only to pay the principal amount outstanding. 
9.         The argument of the learned counsel for OPs 1 & 2 is that OPs 1 & 2 are not liable to pay interest amount as they were only to pay the sum assured i.e. the life cover. Reference has been made to the policy document Ex.R-3 which gives the definition of life cover. As per this definition, life cover (also referred as sum assured) means the benefit payable due to death of the Member as per the Scheme. The Life Cover can be opted as “level Cover” or as “Reducing Cover” depending on the nature of the loan. This clause of the policy document is not applicable in the present case because the OPs have failed to produce any document that the complainant and his son had agreed to the policy conditions as mentioned in Ex.R-3. The OPs have failed to produce the agreement of policy entered between the complainant and his son on one side and the Insurance Company on the other side. 
10.         Annexure C-1 is a circular dated 23.7.2007 by the Bank of India Head Office to all the branches/offices with regard to the Star Education Loan Scheme Life Insurance Cover for Borrowers (Optional) Star Education Credit Assure. Annexure to Cir.letter No.2007-08/54 dated 23.7.2007 defines the sum assured. As per this policy, sum assured is equal to the loan amount sanctioned + accrued interest, subject to the following limits:-

Min SA = Rs.1 lac

Max. SA = Rs.20 lacs

In case the loan is less than 1 lac, borrower will have to opt for a Sum Assured of Min.Rs.1 lac.”

In the present case, the loan advanced was more than Rs.1.00 lakh. So, as per this circular, which is binding on OPs 1 & 2, the sum assured shall have to be treated as the sanctioned loan + accrued interest. As such, even as per the terms and conditions of the insurance policy, the life cover i.e. the sum assured shall be treated as the sanctioned loan amount + accrued interest. Accordingly, as per the terms and conditions of the policy, OPs 1 & 2 are liable to pay the outstanding interest on the loan amount which was borrowed by the complainant and his son. Hence, we are of the view that OPs 1 & 2 have unreasonably declined to pay the balance amount of the complainant and his son, particularly the interest amount, which has been withheld.

11.         Taking into consideration all the facts and circumstances narrated above, we have no hesitation to hold that there is deficiency in service on the part of the OPs.  Hence, the present complaint deserves to succeed. The same is accordingly partly allowed. The OPs are directed as under:-

(i)     OPs 1 & 2 shall pay the balance loan amount to the tune of Rs.2,21,782/- alongwith further interest, if any, accrued on the said amount to OP-3 for adjustment of the said amount. OP-3 after adjustment of the said amount, if paid by OPs 1 & 2, shall issue the No Due Certificate to the complainant. 

(ii)    Since the complainant has been unnecessarily harassed, therefore, OPs 1 & 2 shall pay a sum of Rs.10,000/- as compensation for mental agony and harassment caused to the complainant;

(iii)   OPs 1 & 2 shall also pay Rs.5,000/- as costs of litigation to the complainant. 

12.         This order be complied with by OPs 1 & 2 within one month from the date of receipt of its certified copy, failing which they shall make the payment of the amounts mentioned at Sr.No.(i) & (ii) above, with interest @ 12% per annum from the date of filing of the present complaint till realization, apart from compliance of direction at Sr.No.(iii) above.
13.         The certified copies of this order be sent to the parties free of charge. The file be consigned.

	Sd/-	Sd/-	Sd/-
03/06/2016	[Suresh Kumar Sardana]	[Surjeet Kaur]	[Dr. Manjit Singh]
hg	Member	Member	President