IMPORTANT POINT
Banking Insurance cannot disown its liability to repay loan amount as per scheme.

Mrs. Rekha Gupta, Member—Revision Petition no. 3057 of 2013 has been filed under section 21 (B) of the Consumer Protection Act, 1986 against the order dated 25.02.2013 passed by the Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram (‘the State Commission’) in appeal no. 558 of 2012.

2. The facts of the case as per the petitioner/ opposite parties are that the respondent/complainant and her husband had jointly availed a housing loan from the petitioner. The loan number was 67015249089. The second opposite party (OP) before the District Forum had asked the respondent and her husband to take a SBI Life Insurance Policy so as to indemnify the repayment of loan amount in the event of the death of the respondent or her husband. Accordingly, Rs.33,300/- was retained towards insurance premium and only disbursed Rs.4,50,000/- out of the sanctioned loan amount of Rs.4,83,300/- (Rupees four lakh eighty three thousand three hundred only). On enquiry, it was learnt that it was a usual practice to give insurance coverage to all housing loans.

3. The respondent and her husband had paid the EMI Rs.5,010/- promptly till April 2008. The husband of the respondent met with an accident on 23.04.2008 and was in the ICU for two months and he died on 30.06.2008. Hence there occurred a break in repayment of three months. The EMI for three months was paid in September 2008.

4. Though, as per the insurance policy conditions, the respondent need not pay the future EMI’s of the loan, the second OP before the District Forum coerced the respondent for the remittance of EMI’s and accordingly the respondent paid Rs.79,000/- till March 2010.

5. The respondent approached the second OP for getting the insurance policy benefits. But OP rejected the request stating that they had omitted to transfer the insurance premium amount to the insurance company. Thereafter, the matter was brought to the notice of the petitioner – Bank. But no reply was given to the respondent till date.

6. Petitioners were duty bound to transfer the insurance premium amount of Rs.33,300/- to the insurance company before the disbursal of the first instalment of the loan. The omission on their part to transfer the amount retained towards insurance premium to the insurance company amounts to deficiency of service.

7. Petitioners were duty bound to waive the future EMI’s from 6/2008 onwards, i.e., after the death of respondent’s husband. Respondent was entitled for the refund of Rs.79,000/- collected from here after the death of her husband.

8. The respondent was entitled for a direction to the petitioner to waive of future EMI’s from 6/2008 onwards and also for the refund of Rs.79,000/- along with interest at the rate of 13% per annum from today.

9. The written reply was filed by opposite party no. 2 before the District Forum. It was admitted that the second opposite party before the District Forum had sanctioned a housing loan to the respondent and her husband on 22.07.2006. They, however, denied the further averments that at the time of availing the loan facility, the 2nd OP before the District Forum asked the respondent and her husband to take an insurance policy so as to indemnify the repayment of loan amount, in the event of death of the respondent’s husband and that the amount of Rs.33,300/- was retained by the 2nd OP before District Forum towards the insurance premium and that only an amount of Rs.4,50,000/- out of the sanctioned loan amount of Rs.4,83,000/- alone was disbursed.

10. They further stated that OP no. 2 before District Forum, as part of the procedure adopted by the Bank had informed the respondent and her husband about the facility of taking a life insurance policy also at the time of availing the loan facility. It was also informed by the OP no. 2 before the District Forum that taking insurance policy was only optional. The respondent or her husband did not exercise any option in this regard. They also did not authorise OP no. 2 before District Forum to t