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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
J.M. Malik, P.M and Dr. S.M. Kantikar, Member
INDIABULLS HOUSING FINANCE LIMITED - Appellant
Versus
RITESH NIRANJANBHAI SONI AND OTHERS - Respondents
Revision Petition No. 1312 of 2014 (Against the Order dated 29/11/2013 in Appeal No. 1327/2010 of the State Commission Gujarat).
Decided on : 10-07-2015
Kanika Agnihotri With Juhi Chawla, Advocate, for the Appellant; Piyush Jadugar, Advocate and Deepak Bansal, Advocate, for the Respondent
The main legal point established in the judgment is the liability of the finance company to pay the outstanding loan amount and compensate for its negligence in not sending the proposal form and premium amount to the insurance company.
Headnote:
Insurance - Loan Agreement - Negotiable Instruments Act - [Max New York Life Insurance Co. Ltd., Indiabulls Finance Services, Negotiable Instruments Act] - The court discussed the loan agreement, the deductions made by the finance company, and the insurance proposal. The key legal provisions discussed include the liability of the finance company to pay the outstanding loan amount, the negligence in not sending the proposal form and premium amount to the insurance company, and the interpretation of the proposal form and its implications on the borrower's understanding of the agreement.
Fact of the Case:
The deceased borrower took a loan from Indiabulls Finance Services, and the finance company deducted amounts for processing charges, service tax, and insurance. After the borrower's death, the finance company presented a cheque which was returned due to the closed account. The finance company filed a complaint under the Negotiable Instruments Act, which was dismissed, leading to the current complaint seeking repayment of the loan amount, interest, and compensation.
Finding of the Court:
The court found that the finance company was liable to pay the outstanding loan amount and compensate for its negligence in not sending the proposal form and premium amount to the insurance company. The court also held that the borrower's heirs should be given a No Due Certificate if the loan amount is considered as paid to the deceased.
Issues: The issues revolved around the liability of the finance company to pay the outstanding loan amount, the negligence in not sending the proposal form and premium amount to the insurance company, and the interpretation of the proposal form and its implications on the borrower's understanding of the agreement.
Ratio Decidendi: The court held that the finance company was liable to pay the outstanding loan amount and compensate for its negligence. It also emphasized that the borrower's heirs should be given a No Due Certificate if the loan amount is considered as paid to the deceased.
Final Decision: The court ordered the finance company to pay the premium already recovered from the insured, compensate for the negligence, and pay the outstanding loan amount along with up-to-date interest.
ORDER
J.M. Malik, (P.M) - Niranjanbhai Dhulabhai Soni, Proprietor of M/s. Dhulalal Nanalal Choksi, since deceased, now represented by his LR, Ritesh Niranjanbhai Soni, son and Smt. Hansaben Niranjanbhai Soni, wife of deceased, took a personal loan in the sum of Rs. 7,65,000/- from Indiabulls Finance Services, OP1, on 27.07.2001. Out of the said loan amount, the OP1 charged a sum of Rs. 15,000/- as processing charges, Rs. 1,854/- as service tax and Rs. 15,000/- as amount against company (MNYL) and sent a cheque in the sum of Rs. 7,33,146/- as loan amount. The Borrower was required to repay the loan amount in monthly instalments @ Rs. 27,657/- per EMI.
2. The OP1, while granting loan, took signatures of the Borrower and took the insurance amount in the sum of Rs. 14,662/- which was deducted from the complainant's account. Unfortunately, Niranjanbhai Dhulabhai Soni passed away, on 02.11.2007. The information was given to OP1 on 28.11.2007 and it was explained that on the basis of insurance, the loan file should be closed. In response, OP1 wrote a letter without date to the effect that the OP2, due to technical and underwriting ground, had not accepted the insurance proposal and the premium amount was sent back by OP1 to the complainant on 06.11.2007 through cheque drawn on Ahmedabad Peoples Co-operative Bank Ltd., in the sum of Rs. 14,662/-. The said cheque was not got encashed. As Niranjanbhai Dhulabhai Soni, expired on 02.11.2007, the account of Dhulalal Nanal Choksi in Ahmedabad Peoples Co-operative Bank Ltd., was closed on 30.11.2007.
3. The repayment of the loan amount was started since 03.09.2007 and total three instalments (on 03.09.2007, 03.10.2007 and 03.11.2007) @ Rs. 27,657/- each, were given and accepted. OP1, while knowing that the Borrower had since expired, yet, presented the cheque which was returned with the endorsement "account closed". Even then, the OP sent legal notice and filed a complaint under Section 138 of the Negotiable Instruments Act, before the Hon'ble Delhi Metropolitan Magistrate, which was dismissed, subject to deposit of Rs. 5,000/- with the Delhi Legal Service Authority and Rs. 5,000/- to the son of the Borrower, i.e., complainant No.1. Thereafter, the instant complaint was filed before the District Forum with the prayer that the complainant be granted a sum of Rs. 9,12,681/- against both the OPs, jointly and severally, with interest @ 15% p.a., and compensation in the sum of Rs. 10,00,000/- and complaint expenses in the sum of Rs. 10,000/-.
4. The District Forum passed the following order :-
"That the opponent No.1 had deducted the premium amount from the loan amount then also proposal form is not sent with premium and due to that reason the complainant due to remaining away from the benefits of policy had given mental harassment for which he will pay Rs. 15,000/-.
That the opponent No.1 will pay Rs. 2,000/- for the expense of complaint of complainant.
Complaint is cancelled against opponent No.2 but no any order is passed for costs".
5. Aggrieved by that order, an appeal was filed by the complainants/LRs, before the State Commission. The State Commission passed the following order :-
"1. That the application is partly granted.
2. Interruption is done in order of Ld. Forum and it is ordered to opponent No.1 that they have to pay all the loan amount to complainant of the loan account of deceased Niranjanbhai Dhulabhai Soni and or by depositing the loan amount in the above loan of deceased their heirs should be given no due certificate within one month from the date of this order. Moreover, the order which is passed for paying Rs. 15,000/- for the mental harassment and Rs. 2,000/- complaint expense that is kept, continues.
3. No order is passed for application expense".
6. We have heard the counsel for the parties. It is true that Late Sh. Niranjanbhai Dhulabhai Soni had taken personal loan from OP1 for the Institute, owned by him. OP1 had offered the loan on the condition that if the complainant would
