KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

C.C.No.71/2016

JUDGEMENT DATED: 15.11.2023

PRESENT:

COMPLAINANTS:

(by Advs. S. Reghukumar & P. Babu)

Vs.

OPPOSITE PARTIES:

(by Adv. B. Madhukumar)

(by Adv. Bhoj Raj S.J.)

JUDGEMENT

SRI. AJITH KUMAR   D.  :  JUDICIAL MEMBER

          This is a complaint filed by the legal representatives of the deceased P. Ashokkumar against the Indian Overseas Bank, Sreekanteswaram Branch represented by its Regional Manager and LIC, South Zonal Office alleging deficiency in service.  The averments contained in the complaint in short are stated hereunder:

          2.       The 3^rd opposite party had entered into an agreement with opposite parties 1 and 2 for a Group Liability Insurance of Housing Loan/Other Retail Loan Borrowers.  The Master Policy Holders are opposite parties 1 and 2.  As per the terms and conditions of the policy, the policy was to be retained by the 2^nd opposite party.

          3.       The deceased P. Ashokkumar along with the 1^st complainant had applied for a term loan of Rs.10,00,000/-(Rupees Ten Lakhs) for the construction of a house under Subhagruha Scheme in survey no.1059/1-1 of Pettah Village.  A bipartite agreement for the loan was executed between P. Ashokkumar along with the 1^st complainant and the 1^st opposite party on 30.07.2012.

          4.       The 1^st opposite party had persuaded late Ashokkumar and the 1^st complainant to insure themselves in the Group Liability Insurance of the housing loan and they were informed that a full single one term premium fixed for the insurance coverage will be debited in the loan amount at the inception which shall be paid to the 3^rd opposite party by the 1^st opposite party and the borrower will have to repay the same along with the loan instalment.  It was also specified that in the event of the demise of the borrower during the pendency of the loan, the 3^rd opposite party shall settle the claim and the benefits will be utilized towards the liquidation of the loan amount and any other dues in utilising the loan provided by the bank.  In the event of any surplus arising out of the benefits settled by the 3^rd opposite party after liquidating the outstanding amount, the nominee will be entitled to receive such surplus amount.  The insurance came into effect from the date of sanctioning loan.  On 30.07.2012 Sri. P. Ashokkumar had submitted an application for membership of Indian Overseas Bank Liability Insurance Scheme and given consent to become a member of LIC Group Mortgage Redemption Assurance Scheme/Group Liability Insurance for retail loan borrowers.  

5.       Sri. P. Ashokkumar was in sound health and he was not suffering from any illness and hence a declaration to that effect was submitted. 
Sri. Ashokkumar and the 1^st complainant had authorized the 1^st opposite party to debit the full single one time premium of Rs.64,640/-(Rupees Sixty Four Thousand Six Hundred and Forty only) as part of the housing loan.  The 1^st opposite party had sanctioned an amount of Rs.10,64,640/-(Rupees Ten Lakhs Sixty Four Thousand Six Hundred and Forty) as housing loan which was inclusive of the one time premium for availing the insurance coverage. The 1^st opposite party had fixed the equated monthly instalments as Rs.13,500/-(Rupees Thirteen Thousand Five Hundred only) which was worked out by adding the insurance premium with the loan amount.

          6.       The 1^st and 2^nd opposite parties and the 3^rd opposite party had entered into an agreement for the purpose of canvassing/processing insurance contract for and behalf of the 3^rd opposite party.  All steps for materializing the insurance contract were taken by the 1^st opposite party on behalf of the 3^rd opposite party.  The 1^st opposite party had acted as the counter part of the 3^rd opposite party in the matter of insurance contract.  The 1^st opposite party was bound to remit the full one time premium with the 3^rd opposite party on 30.07.2012 itself.  On 30.07.2012 Rs.3,00,000/-(Rupees Three Lakhs) was disbursed as the 1^st phase of the loan.

          7.       Sri. P. Ashokkumar later developed general weakness and fever and he was taken to KIMS Hospital, Thiruvananthapuram.   Later he was referred to Amritha Institute of Science and Research Centre.  He was subjected to Gastro-Intestinal surgery on 16.03.2013 and was discharged on 10.04.2013.  On 19.12.2013 he passed away. 

          8.       On knowing about the death of Sri. P. Ashokkumar, the 1^st opposite party had visited the house of the complainants and advised to submit a copy of his death certificate so as to take up the matter with the 3^rd opposite party for settling the claim.  The death certificate was received on 02.01.2014, a copy of which was submitted before the 1^st opposite party who informed the complainants that outstanding loan amount/dues will be liquidated from the proceeds received from the LIC and hence the complainant need not make any further remittance.

          9.       On 04.02.2014 it was seen that the 1^st opposite party had transferred Rs.1,17,619/-(Rupees One Lakh Seventeen Thousand Six Hundred and Nineteen only) from the savings bank account of the complainant illegally without the consent of the complainant.

10.     Thereafter the first complainant had visited the 1^st opposite party and enquired as to whether the insurance amount had been credited to the loan account.  On 02.06.2015 the complainant had also sent a letter to the 2^nd opposite party requesting to make arrangements for crediting the insurance amount to the loan account for which the 2^nd opposite party had sent a reply that the Bank had taken up the matter with the 3^rd opposite party for settlement of liability of the insurance claim and the 3^rd opposite party had repudiated all liabilities as the deceased had not provided correct information regarding his health condition at the time of effecting the policy.  The 3^rd opposite party had advised them that P. Ashokkumar had taken the insurance claim on 25.07.2013 and at that point of time he had failed to mention that he had undergone liver transplantation on 16.03.2013 and was diagnosed with Hemato Carcinoma for the past six months.  He was admitted in the Amrita Institute of Medical Science and Research on 22.02.2013 for Gastro Intestinal surgery and was discharged on 10.04.2013.  These facts were not disclosed in the declaration submitted by the applicant at the time of entering into the insurance scheme.

11.     So the 3^rd opposite party had repudiated the claim and refused to pay the insurance.  The proposal, the consent cum authorisation form and simple declaration of good health were dated 30.07.2012 which facts are suppressed by the 3^rd opposite party.  This suppression constitutes unfair trade practice.  The statement in the intimation issued by the 3^rd opposite party to the effect that Hemato Carcinoma was detected to Asok Kumar in August 2012 is false. 
Sri. Ashokkumar had given a consent cum authorisation form on 30.07.2012 itself on the date of availing loan and at that point of time he was in sound health and was not suffering from any illness.  The Bank had taken a stand that  the 3^rd opposite party, who is the competent authority had taken a decision to repudiate all the liability under the claim for the reason that the deceased had withheld the correct information regarding his health at the time of effecting the insurance with them.  Sri. Ashokkumar was admitted for Gastro Intestinal surgery on 22.02.2013 i.e. six months and twenty two days after availing the insurance scheme on 30.07.2012.

12.     Subsequent to the repudiation of the claim, the 1^st opposite party had illegally appropriated an amount of Rs.1,17,619/-(Rupees One Lakh Seventeen Thousand Six Hundred and Nineteen only) from the joint savings bank account of the deceased Sri. Ashokkumar and the 1^st complainant. 

          13.     The 1^st opposite party had also issued a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) to the complainants to discharge the liabilities by paying a total sum of Rs.11,75,003/-(Rupees Eleven Lakhs Seventy Five Thousand and Three only) with interest @ 11.70% per annum within sixty days from the date of notice. The first complainant had sent a reply to the opposite party to stop the recovery proceedings, to write off the loan amounts and to release the documents in respect of the property mortgaged.

14.     The 1^st and 2^nd opposite parties had issued another legal notice that they were going to institute a suit recover dues to which the complainant had sent a reply.

          15.     Repudiation by the 3^rd opposite party is illegal as the terms and conditions of the insurance policy was not issued to insurer/borrower and the execution clause in the policy is not binding to the insurer. So the 3^rd opposite party cannot invoke the alleged clause which was not disclosed to the insured for the purpose of repudiating the claim.  The complainant is legally entitled to get the entire loan amount liquidated.  All these occurred due to negligence, deficiency in service and unfair trade practice on the part of the opposite party.

          16.     The complainants suffered mental agony and trauma of grave nature and monitory loss due to repudiation of the legitimate and legal claim of insurance coverage.  So the opposite parties are jointly and severally liable to compensate the complainants.

          17.     The complainants would seek for a direction to the opposite party to waive/liquidate the entire loan accrued with interest and to issue a certificate of discharge.  The complainant would also seek for a direction to the 1^st opposite party to refund an amount of Rs.1,17,619/-(Rupees One Lakh Seventeen Thousand Six Hundred and Nineteen only) with interest @18% from 19.12.2013 till realisation as the said amount was illegally appropriated from their savings bank account after the death of the 1^st borrower.  Further claim of the complainants is to direct the opposite parties to pay Rs.20,00,000/-(Rupees Twenty Lakhs only) as compensation towards deficiency in service, unfair trade practice, mental agony and hardships caused to the complainants.  A sum of Rs.10,000/-(Rupees Ten Thousand only) is sought as cost of the proceedings.

          18.     The 1^st and 2^nd opposite parties had filed a joint version with following contentions:

          The complaint is not maintainable either in law or on facts. The matter in dispute is in respect of repudiation of insurance claim in which these opposite parties were unnecessarily attributed and hence the complaint is bad for misjoinder of parties.  The opposite parties would admit that the deceased Ashokkumar had availed a housing loan of Rs.10,00,000/-(Rupees Ten Lakhs) on 30.07.2012.The borrower was aware of the Group Liability Insurance Scheme of housing loan provided by the 3^rd opposite party who had also given an application for the same on his own account.  Being the facilitator the 1^st opposite party had forwarded the application to the 3^rd opposite party to induct the borrower to the scheme and the 3^rd opposite party, after scrutiny had accepted the application and inducted the borrowers into the scheme on receipt of the entire premium.  There was no persuasion from the side of these opposite parties.

          19.     The sanctioning of loan amount and repayment are reflected in the security documents executed by the borrowers.  So the allegations contrary to the terms and conditions of the documents are denied by the opposite parties.  The processing and sanctioning of the insurance policy was done by the 3^rd opposite party and the 1^st opposite party has no role in it except the receipt of an application.

          20.     The borrowers had given consent authorizing the 1^st opposite party to remit the entire premium at once and the 1^st opposite party had remitted the same accordingly the borrowers were inducted into the scheme by the 3^rd opposite party.  So the allegation that the 1^st opposite party was bound to remit the premium on 30.07.2012 is incorrect.  The statement of account shows that the premium amount was debited to the loan account only on 25.07.2013 which is after the disbursement of the entire loan amount of Rs.10,00,000/-(Rupees Ten Lakhs only).  The 3^rd opposite party had intimated the fact of repudiation of the claim on 04.09.2015 and the same was intimated by the 2^nd opposite party to the 1^st complainant vide letter dated 07.09.2015 with a request that in case of any dissatisfaction, they can send representation within three months for reconsideration to the concerned authority of the 3^rd opposite party.

21.     But the complainants never informed about any steps taken in this regard.  There was no deficiency in service or unfair trade practice on the part of the opposite parties.  The borrowers were not regular in repayments which resulted in overdue loan account.  So the 1^st opposite party had exercised their legal as well as contractual right of recovery of loan amount by resorting to the provisions contained in the SURFAESI Act.  Since the borrowers, after availing the loan facility failed to repay the amount the Bank is bound to initiate actions for recovery of the loan amount.  There is no cause of action against the opposite parties.  The averments regarding the mental agony and trauma and the monetary loss as stated in the complaint is a concocted story made for escaping from the liability towards these opposite parties.  They would seek for dismissal of the complaint.

          22.     The 3^rd opposite party had filed a separate version with the following contentions:

          They would admit that on 27.12.2015 a contract was entered into between the 1^st and 2^nd opposite parties with LIC for taking a Group Mortgage Redemption Assurance Scheme and thereby a master policy was issued to the Bank.  As per the said policy the Bank is defined as the nodal agency.  The deceased Ashokkumar was a borrower who is also defined as a member to the scheme.  The Clause contained in the scheme defines the effective date as 01.07.2005.  But the new members who join the scheme thereafter would be construed as members on the respective date of remittance of the premium.  Here the deceased became a member of the scheme from the date of remittance of the premium.  The premium was remitted only on 25.07.2013 though his consent for remitting the full premium was issued on 30.07.2012.  As per the scheme, the insurance coverage starts only from the date of payment of the premium and not from 30.07.2012.

          23.     Even before the receipt of the premium there happened a change in the state in the health of the deceased and he had undergone a liver transplantation and was detected to have Hepato Carcinoma six months prior to the surgery as seen from the discharge summary issued by the Amrita Institute of Medical Science and Research Centre.  This fact was wilfully suppressed by the deceased from the LIC.  The insurance coverage started only on 25.07.2013 and the deceased had availed treatment from 22.02.2013 to 10.04.2013 which is prior to the remittance of the premium.

24.     Contract of insurance is of utmost good faith a class of contract in which the party has a preliminary duty to disclose material facts relevant to the subject matter to the other party.  Non-disclosure makes the contract voidable.  In a contract of insurance the knowledge of many material facts which are confined to the party seeking insurance shall be disclosed in its full particulars well in advance.  Here there was suppression on the part of the insured.  The nodal agency, as per the scheme has to act on behalf of the members in all matters relating to the scheme and every act done as per the agreement made and notice given to the Corporation by the nodal agency shall be binding on the members.  Here the nodal agency had remitted the premium only on 25.07.2013 and there is considerable delay.  However, on account of the delay in remitting the premium by the Bank  the coverage did not start from 30.07.2012. No deficiency can be attributed against the LIC.  The date of remittance of premium was only on 25.07.2013 though consent for debiting the full premium was issued on 30.07.2012.  The 3^rd opposite party would also seek for dismissal of the complaint.

17.     Heard the counsels for the complainant as well as the opposite parties.  Written notes of arguments were filed by the lawyers.

18.     Now the points that arise for determination are:

Point Nos. 1 & 2

1. Is there any deficiency in service or unfair trade practice on the part of opposite parties?
2. Reliefs and costs?

Point No. 1

          19.     The 1^st complainant had sworn before this Commission as PW1 in support of the averments contained in the complaint.  Exhibit A1 is the application for term loan for construction/acquisition of house/flat under "Subhagruha Scheme".  It is dated 30.07.2012.  On the date of application, the deceased P. Ashokkumar had also filed a consent cum authorisation form and simple declaration of good health for getting himself enrolled a member of Group Liability Insurance of Housing Loan with the 3^rd opposite party.  It bears the signature of the deceased Ashokkumar as well as the 1^st complainant.  After availing the loan deceased Ashokkumar had undergone Gastro Intestinal surgery from Amrita Institute of Medical Science and Research on 22.02.2013.  The case of the 3^rd opposite party is that the premium for insurance was remitted by the Bank only on 25.07.2013 and before that the deceased had undergone treatment for Gastro disorders and he had undergone liver transplantation as he was detected to have Hepato Carcinoma for six months.  The insurance company had repudiated the claim for the reason that the deceased had suppressed his illness. Exhibit A3 is a letter issued by the Zonal Manager of LIC to the Senior Manager of the Bank regarding the repudiation of the policy.  Subsequently, on 07.09.2015 the Bank had issued Exhibit A4 to the 1^st complainant to take up the matter with LIC if the complainant was not satisfied with the stand taken by the insurance company.  Exhibit A5 is the loan account statement availed by the deceased and the 1^st complainant.  On 12.11.2015 the bank had issued a demand notice under 13(2) of SURFAESI Act to the complainants with respect to the intention of the bank to resort to the provisions of the said Act.  Exhibit A7 is the copy of the letter issued by the 1^st complainant to the bank in response to Exhibit A6.  In Exhibit A7, the letter issued by the complainants the deficiency of service attributed against the Bank in not remitting the premium amount to the policy on the date of availing the loan i.e. 30.07.2012 was raised.  According to the complainants, as on date of filing the application form i.e. on 30.07.2012 the deceased Ashokkumar was not having any ailments.  Exhibit A8 is a lawyer’s notice issued on behalf of the complainants to the authorised officers of the Bank with respect to the intention of the complainants to take legal action against the Bank for the failure to remit the premium to the insurance company though the premium was also debited in the loan account and EMI was fixed on its basis. Exhibit A9 is the reply notice sent by the lawyer of the 1^st and 2^nd opposite parties. Exhibit A10 is another lawyer’s notice issued by the counsel for the complainant to the Bank. 

20.     The Chief Manager of the 1^st opposite party had sworn before this Commission as DW1.  Exhibit B1 is the master policy retained by the 1^st opposite party in respect of the policy to be taken by the members of the housing loan.  Exhibit B2 is the Rule of Group Mortgage Redemption Assurance Scheme pertaining to Exhibit B1.  The effective date is stipulated as 01.07.2005 i.e. the date on which the scheme had commenced.  The entry date has to be taken as the effective date in relation to the members joining the scheme subsequent to 01.07.2005 which is the date of remittance of premium.  According to the 3^rd opposite party, as the premium was remitted on 25.07.2013 the effective date of the policy could be construed as 25.07.2013 only.  Exhibit B3 is the medical record pertaining to the treatment availed by P. Ashokkumar from Amrita Institute of Medical Science and Research.  Exhibit B4 is the declaration to be submitted in respect of the members of the scheme.  Exhibit B5 is the letter dated 13.05.2014 regarding the validity period of full medical report as three months.  Exhibit B6 is the claim form submitted by the bank.  The third opposite party had repudiated the claim for the reason that the deceased had suppressed his illness at the time of joining the scheme i.e. when he remitted the single premium.  According to the opposite parties 1 and 2, the Bank had no role in deciding the claim to be put up by the complainants.  The case set up by the Bank is that the premium amount was debited to the loan account only on 25.07.2013 which is after the disbursal of the entire loan.  According to them there was no illegality or arbitrariness on the part of the Bank in remitting the premium amount
on 25.07.2013.  Further case set up by the Bank is that they had already exercised their legal right for recovery of the loan by resorting to SURFAESI Act.  According to the Bank no unfair trade practice or deficiency in service could be attributed against them as the claim was repudiated by the 3^rd opposite party and it was up to the complainant to take up the matter with the 3^rd opposite party for getting the claim amount.

 21.    In answer to this contention, the learned counsel for the complainant had drawn our attention to the initial steps taken by the Bank.  Exhibit A1 and A2 are dated 30.07.2012.  There is no direct contact between the complainant and the 3^rd opposite party.  The application for membership to the scheme was received by the Bank on 30.07.2012 and the Bank is expected to act in accordance with the master policy maintained with the Bank.  Exhibit B2 is the policy rules of the Group Mortgage Redemption Scheme.  It is also pertinent to state that the EMI was fixed by adding the amount to be remitted before the Insurance Company.

22.     Actually, the complainants had availed a loan of Rs.10,00,000/-(Rupees Ten Lakhs only) but the EMI was fixed by adding the premium amount to the Group Insurance policy. As per the second Clause in Exhibit A2, the loanee had authorised the Bank to pay the single premium as a part of the housing loan and fixed up the EMI accordingly.  The fourth Clause contained in Exhibit A2 shows the readiness of the loanee to pay the full premium at the inception though the full loan amount would be disbursed by the Bank in phases.  In view of these two stipulations contained in Exhibit A2, the Bank was bound to pay the total one time premium of Rs.64,640/-(Rupees Sixty Four Thousand Six Hundred and Forty) on the date of sanctioning the loan.  The loan amount was disbursed in five phases.  The EMI was fixed as Rs.13,500/-(Rupees Thirteen Thousand Five Hundred only) in 180 instalments which was worked out by adding the single time premium along with the amount advanced as loan.  There is grave omission on the part of the Bank in remitting the single premium on 25.07.2013 which is eleven months and twenty four days after the sanctioning and submission of the loan and consent letter given by the loanee to subscribe him as a member. As on the date of the sanctioning the loan a declaration of good health was also submitted by Sri. Ashokkumar which cannot be stated as faulty for the reason that on 30.07.2012 he was not having any ailments.  He was admitted in the Amrita Institute of Medical Science and Research only on 22.02.2013.  The materials on record would go to show that his ailments started six months and twenty two days after the sanctioning of the loan and the filing of the consent letter. 

23.     The reason for repudiation of the claim is the alleged suppression on the part of Ashokkumar in not disclosing the treatment availed by him on 25.07.2013.  But the Insurance Company did not mention about the date of declaration of good health submitted by Ashokkumar. The said declaration is seen filed on 30.07.2012.  If the argument advanced by the Insurance company is accepted the reason for silence about the declaration by the insurance company is unknown.  If the Insurance company was not satisfied with such a declaration, it was obligatory on their part to seek for a fresh declaration on the date of remitting the premium by the Banker.  Admittedly, the premium amount was paid on 25.07.2013 and the death of the deceased occurred on 19.12.2013.  The insurance company had accepted the good health declaration put in by the deceased Sri. Ashokkumar on 30.07.2012 and hence, they cannot raise a contention that Sri. Ashokkumar had suppressed anything.

24.     Admittedly, the Bank was in possession of the master policy and the rules submitted under Exhibit B2 and the evidence elicited through the examination of DW1 would reveal that by taking into account all the stipulations contained in Exhibit A2, the total EMI was fixed on 30.07.2012.  There is no direct transaction between the loanee and the Insurance company.  The 1^st and 2^nd opposite parties being the nodal agency it is up to them to remit the premium and to transmit the requisite consent letter to the Insurance company.  The facts elicited through the cross examination of the official examined on the side of the 3^rd opposite party as DW2 would show that the policy was processed after getting convinced that the simple declaration of good health was dated 30.07.2012.No documentary evidence has been produced by the opposite parties to prove that the deceased Ashokkumar had any physical ailments prior to 30.07.2012.So it cannot be contended that Sri. Ashokkumar had suppressed anything when he had filed the simple declaration of good health as contemplated in Exhibit A2.  In this connection a decision of the National Commission reported in Chhattisgarh Rajya Grameen Bank Vs. Mahendra Kumar Sinha & Anr. III (2017) CPJ 664 (NC) is beneficial.

25.     It was a case where the Bank had debited the amount towards the premium but failed to deposit the same to the insurance company.  So the Insurance company had repudiated the claim.  The National Commission had reached a conclusion that the failure of the Bank in remitting the amount towards the premium could be construed as deficiency in service.  An identical case was dealt with by the National Commission in Bank of Baroda Vs. Minaben R. Bane 2015(3) CPR 741 (NC).  It was a case where proceedings under SURFAESI Act was also pending.  The National Commission took a view that pendency of a case under SURFAESI Act has nothing to do with the facts involved in the dispute. 

26.     On consideration of the materials on record it could be seen that the bank had failed in remitting the premium amount which was agreed to be paid by the loanee on 30.07.2012 though the Bank was fully aware that it was necessary for the loanee to get himself enrolled in the scheme for which the premium ought to have been remitted.  Though the Bank had fixed the EMI by adding one time premium amount, it did not remit the same and failed in transmitting the consent letter along with the requisite declaration to the 3^rd opposite party.  So it is definite that there is deficiency in service on the part of the 1^st and 2^nd opposite parties.

27.     The conduct of the 3^rd opposite party is also significant here. Repudiation of claim is on the reason that the deceased Ashokkumar did not disclose his illness in the declaration. But the records received by the 3^rd opposite party contains a declaration put in by the loanee dated 30.07.2012 and on its basis the Insurance company had accepted and issued the policy. If the Insurance company had any objection in this connection, they could have returned the declaration and sought for a fresh declaration.  Without resorting to such a procedure, the Insurance company had waived their right.  So they cannot repudiate a claim on its basis.

28.     In this connection a ruling of the Apex Court reported in Galada Power & Telecommunication Limited Vs. United India Insurance Company Limited & Anr. (2016) 14 SCC 161 is significant.  The Apex Court had dealt with Estoppel and waiver which are questions of conduct and must necessarily be determined on the facts of each case.  If the 3^rd opposite party was not satisfied with the declaration put in by Sri. Ashokkumar they ought not have accepted it and processed the policy.  When they accepted the policy on the basis of a declaration dated 30.07.2012, they cannot turn around and say that the deceased Ashokkumar had supressed material facts regarding his health condition which occurred after 30.07.2012.  Since the illness brought out through Exhibit B3 was subsequent to 30.07.2012 no one can say that Ashokkumar had suppressed any material facts in the declaration regarding his health condition.  Having accepted the declaration and the consent form dated 30.07.2012 the 3^rd opposite party is estopped from raising a contention that the deceased Ashokkumar had suppressed material facts in the declaration.

29.     On evaluating the entire evidence on record, it could be convincingly established that there was deficiency in service on the part of the 1^st and 2^nd opposite parties in not remitting the one term insurance premium and there is deficiency in service on the part of the 3^rd opposite party that after having accepted the declaration and the consent letter submitted by Sri. Ashokkumar and enrolling him as a member of the scheme later raised a contention that Sri. Ashokkumar failed to disclose his illness which occurred subsequent to the date of declaration.

30.     Therefore, the opposite parties 1 to 3 are found jointly and severally liable to liquidate the loan availed by Sri. Ashokkumar on 30.07.2012.

31.     After the demise of Sri. P. Ashokkumar on 04.02.2014, an amount of Rs.1,17,619/-(Rupees One Lakh Seventeen Thousand Six Hundred and Nineteen only) was debited from the joint account of the complainants since the opposite parties are bound to liquidate the entire loan dues in view of the joint insurance scheme.  The opposite parties 1 and 2 had no right to appropriate Rs.1,17,619/-(Rupees One Lakh Seventeen Thousand Six Hundred and Nineteen only) after the demise of Ashokkumar. So the complainants are entitled to get back the said amount.

32.     The agony suffered by the complainants has to be considered while deciding the relief to be granted. The deceased had availed a loan of
Rs.10,00,000/-(Rupees ten lakhs only) and when he applied for the loan the Bank had directed him to avail a group insurance scheme by fastening an additional liability of Rs.64,640/-(Rupees sixty four thousand six hundred and forty). The EMI towards the loan was fixed adding the group insurance premium with the loan amount. As far as the loanee is concerned he has no role in respect of the transmission of his consent letter, declaration form etc to the Insurance Company and remittance of the premium to the Insurance company by the Bank. The loanee was diagnosed with serious health issues long after filing his health declaration and consent letter. The insurance scheme was introduced for the welfare of the loanee and not for enrichment of the bank or the Insurance company. Once the poor loanee is succumbed to death survived by his wife, mother and minor children the Bank and the Insurance company are trying to escape from their liability by accusing each other. They have even initiated coercive measures for recovery of the loan and the insurance premium by resorting to the provisions of SARFAESI Act.  The sufferings of the widow, mother and minor children of the deceased have to be taken in to account. Having due regard the inconvenience and hardships caused to the complainants the opposite parties are found jointly and severally liable to pay Rupees One Lakh as compensation.  Point is found accordingly.

In the result, the complaint is allowed as follows:

1. Opposite parties 1 to 3 are directed to liquidate the entire loan dues accrued with interest and to issue a certificate of discharge in favour of the complainants in respect of the loan availed by the deceased
   P. Ashokkumar on 30.07.2012 from the 1^st opposite party.
2. The opposite parties 1 and 2 are directed to refund the amount of Rs.1,17,619/-(Rupees One Lakh Seventeen Thousand Six Hundred and Nineteen) to the complainants .
3. Opposite parties 1to 3 together are directed to pay the complainants a sum of Rupees One lakh as compensation.
4. Complaints are allowed to get Rs.10,000/-(Rupees Ten Thousand) as costs of the proceedings.
5. The opposite parties shall pay the amount within 30 days from the date of receipt of the copy of this order failing which they shall pay interest for the whole amount @ 8% per annum till the date of payment.

Dictated to my Confidential Assistant, transcribed by her, corrected by me and pronounced in the Open Court, this the 15^th day of November, 2023.

SL

C.C.No.71/2016

APPENDIX

1. COMPLAINANT’S WITNESS

2. COMPLAINANT’S DOCUMENTS

3. OPPOSITE PARTY’S WITNESS

4. OPPOSITE PARTY’S DOCUMENTS

5. COURT EXHIBITS

JUDICIAL MEMEBER