DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, PALAKKAD

Dated this the 30 ^th day of May 2011

Present : Smt. Preetha.G. Nair, Member

: Smt.Bhanumathi.A.K. Member Date of filing: 1/2/2010

(C.C.No.12/2010)

Rathinam

W/o.Late Guruswamy,

Bandhiboyan Thottam,

Walayar, Palakkad. - Complainant

(By Adv.Sreevalsan.R)

V/s

The Manager,

Indian Overseas Bank

Kanjikode, Palakkad.

(By Adv.C.Mohanram) - Opposite party

O R D E R

By Smt.PREETHA G NAIR, MEMBER

The complainant’s husband had taken an agriculture loan of Two lakhs from the opposite party bank during the year 2005. The complainant’s husband taken insurance for the loan. One time premium was taken by the opposite party from the loan amount of Shri.Guruswamy, the husband of the complainant. He died on 31/3/08. The complainant was not having the knowledge about the insurance till some months back. The opposite party concealed the fact of insurance and the complainant was asked to pay the balance loan amount. The complainant was forced to pay Rs.94,812/- towards the balance loan amount when the complainant knew the fact of insurance immediately, she approached the bank and requested to disburse the insurance amount. According to the Manager the insurance premium could not be paid to the insurance agency and the complainant could not receiving the benefit of insurance. The complainant sent advocate notice to the opposite party and it was replied by the opposite party in false stories. The opposite party having a bounden duty to insure the loan as they had taken the insurance premium from his account and handling charges was also taken from the account of Shri.Guruswamy. Hence the complainant prays for an order directing the opposite party to

1. pay Rs.1,00,000/- as compensation

2. Refund of Rs.91,812/- as the excess amount collected from the complainant and cost of the proceedings to the complainant.

Opposite party filed version stating the following contentions. The opposite party admitted that the complainant’s husband has borrowed an agricultural loan of Rs.2,00,000/- The opposite party denied that at the time of the loan was borrowed they compelled late Guruswamy to take liability insurance for the loan and a sum of Rs.11,726/- was deducted from the loan amount sanctioned. The further allegation that the opposite party has informed the complainant that the Bank was not able to pay the Insurance Premium to the agent, so the complainant is not entitled to any benefit is also not correct and denied.

It is true that after availing the agricultural loan late Guruswamy by mistake remitted a sum of Rs.11,726/- towards insurance premium for liability insurance. The insurance is applicable only to the borrowers under Retail Loans and does not cover Agricultural loans. The opposite party stated that the insurance premium collected was returned by the Life Insurance Company and the amount was credited in the loan account. Late Guruswamy has remitted the premium by mistake and there is no policy offered by the Life Insurance Corporation of India covering the agricultural loan liability in case of the death of the borrower. Hence the opposite party prayed that dismiss the complaint with cost.

Complainant filed chief affidavit and Ext.A1 to A6. Opposite party filed chief affidavit and Ext.B1 to B7. Opposite party was cross examined.

Now the issues that arise for consideration are

1. Whether there is any deficiency in service on the part of opposite party ?

2. If so, what is the relief and cost entitled to the complainant ?

Issue I & II

We perused relevant documents on record. In Ext.A1 the opposite party debited an amount of Rs.11,726/- in the head of Life Insurance. But the opposite party stated that agricultural loans are not covered by Liability Insurance and the amount mistakenly collected from the borrower has been credited in the loan account of Guruswamy. Normally the opposite party bank had availed all loan as per the terms and conditions of the Banker’s Law. In the present case the opposite party had availed agricultural loan in the name of complainant’s husband. The opposite party had debited an amount of Rs.11,726/- for Insurance premium and forwarded to the Regional Office. The Regional Office has returned the amount on the ground that insurance was not applicable to Agricultural loans and the amount was credited to the borrower’s account. In Ext.B2 shows that the insurance premium was refunded and credited to the account of Guruswamy on 16/01/2005. Guruswamy died on 31/3/2008. No evidence was produced by the opposite party to prove notice was issued to the complainant’s husband that insurance premium was mistakenly collected and credited to the loan account. In Ext.B1 on 13/10/2005 the opposite party had collected Rs.11,781/- from loan amount of complainant’s husband. In Ext.B2 on 16/1/05 the opposite party had credited an amount of Rs.11,726 in the loan account of complainant’s husband. In version also opposite party had stated that the amount of Rs.11,726/- was credited on 16/1/2005 towards the loan dues. In the argument notes of opposite party stated that in the version the date of refund of insurance was mistakenly shown as 16/1/2005, where as the correct date is 16/11/2005. No documentary evidence was produced by the opposite party to prove that the insurance premium was credited on 16/11/2005. In Ext.A1 the loan was granted by the opposite party bank to shri.Guruswamy from 13/10/2005. In Ext.A1 the 1^st part shows correction of dates written on the subsequent dates.

In the cross examination of opposite party admits that if she was in the place of their Manager she would not have collected the insurance premium. The opposite party stated in the version that availing the agricultural loan late Guruswamy, by mistake remitted a sum of Rs.11,726/- towards insurance premium and the insurance does not cover agricultural loans. So the insurance premium collected was returned by the Life Insurance Corporation and the amount was credited in the loan account on 16/1/2005. In the deposition of opposite party “we have not sent any letters to LIC and the LIC does not sent any letters to us”. There is a contradiction in the statement of opposite party. The opposite party has not produced the original loan ledgers. Admittedly the premium amount and handling charges was taken from the account of Guruswamy by the opposite party by way of internal transaction. According to the opposite party the handling charges is not returned to Guruswamy. At the time of loan transaction Manager was not examined. From the available evidence and records it can be seen that Life Insurance Premium was collected by the opposite party and it was not sent to the LIC. In Ext.A6, the documents are the Jewel Cards issued by the opposite party for pledging the ornaments. These documents show that the Jewel loan was taken by the complainant and the amount was remitted towards the loan account.

In Ext.B4 liability insurance is only for retail loans. The opposite party must given proper guidelines to the applicant. In the present case the opposite party has not given proper guidelines and the husband of the complainant could not get insurance. The complainant has not produce any evidence to prove liability insurance cover the agricultural loans.

In the above discussions we are of the view that there is deficiency in service on the part of opposite party. Hence, the complaint partly allowed. We direct the opposite party to pay Rs.25,000/- (Rupees Twenty five thousand only) as compensation for mental agony and Rs.1,000/- (Rupees One thousand only) as cost of the proceedings to the complainant within one month from the date of receipt of order, failing which the complainant is entitled for 9% interest per annum for the whole amount from the date of order till realisation.

Pronounced in the open court on this the 30^th day of May 2011.

                                                                                                                                        Sd/-

Preetha G Nair

Member

      Sd/-

Bhanumathi.A.K.

Member

APPENDIX

Exhibits marked on the side of the complainant

Ext.A1 – Pass Book of Guruswamy issued by Opposite party

Ext.A2 – Photocopy of death certificate of Guruswamy

Ext.A3 series- Copy of Advocate letter dt.1/10/09 issued to opposite party

by the complainant with postal acknowledgement cards and receipt.

Ext.A4 - Reply to Advocate letter by opposite party dated 19/10/09

Ext.A5 – Receipt dt.29/6/09 issued by opposite party for the cash deposit

Ext.A6 – Copy of Jewel Loan Card (3 nos)

Exhibits marked on the side of the opposite party

Ext.B1 – Photocopy of Account Statement of Guruswamy

Ext.B2 – Photocopy of Agricultural loan statement of Guruswamy

Ext.B3 – Loan Account Statement of Guruswamy with the order sanctioning the

same and the documents executed by Guruswamy in connection with

the loan transaction.

Ext.B4 – Copy of Circular issued by the Central Office of the opposite party

Ext.B5 – Covering letter issued from IOB, Kanjikode to the Regional Office, IOB,

Calicut (office copy) dtd.15/10/05

Ext.B6 – Debit Voucher No.22 for liability insurance

Ext.B7 – Credit voucher No.66 for liability insurance

Witness examined on the side of opposite party

DW1 – N.A.Geetha