Sundaram Bnp Paribas Home Finance Limited, Rep by Its Power of Attorney Holder and Another Vs. Consumer Guidance Society Representing: Smt. Sujatha Yanam and Another - Court Judgment

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consumer protection act, 1986 - sections 2(1)(g), 14(1)(d), 21(b); comparative citation: 2013 (1) cpj 115vinay kumar, member the revision petitioner sundaram bnp paribas home finance ltd. has challenged the decision of the ap state consumer disputes redressal commission in fa no.1216 of 2010. the matter arose out of a home loan taken by the late husband of the complainant from the petitioner on 31.8.2008. at the time of disbursal of the loan, the deceased nagaraju yanam and his co-borrower/complainant, agreed to subscribe to sbi life insurance policy. it was allegedly on the representation that the group housing loan protection policy would be immensely beneficial in the event of the death of the borrower as the entire outstanding balance of the loan would be written off. as per the consumer complaint, subsequently filed before the district forum krishna district, being deeply swayed away by these representations, the complainants deceased husband gave his assent for the subscription of the above described policy and even authorized the opposite party nos.1 and 2 to disburse one time lump sum premium amount of rs.36,464/- (rupees thirty six thousand four hundred and sixty four only) to sbi life insurance company limited, hyderabad i.e. opposite party no.3. 2. the complaint petition also states that this amount was subsequently sent by ops-1 and 2 to op-3, through a cheque of 31.8.2008. the borrowers also gave authorisation, empowering op-1 and op-2 to adjust the claim amount to be received from op-3 against the entire out outstanding housing loan. the complainants husband was informed by op-1 that the insurance proposal had been accepted by op-3. but, the policy certificate was never delivered. 3. consequent upon death of the borrower/complainants husband on 3.12.2008 the ops were informed. the complainant, as advised by op-1, made a claim under the insurance policy, through op-1, but heard nothing. subsequently, a notice was received under the securitization and reconstruction of financial assets and enforcement of security interest (sarfaesi) act, 2002, calling upon the complainant to pay an amount of rs.14,86,667/- towards the outstanding balance of the housing loan and an interest. allegedly the notice was sent in the name of the deceased husband, though the ops had been informed about his death. a legal notice was issued on behalf of the complainant on 9.7.2009, asking op-1 and op-2 to indemnify the complainant for the loss caused due to their negligence and inaction in not getting the insurance cover for the complainant. 4. a reply was reportedly received from them on 21.7.2009 informing the complainant that her claim had been repudiated by the op-3 on the ground that the deceased was suffering from hiv+ condition. despite a specific request from the complainant, op-1 and 2 did not even send a copy of the alleged repudiation letter. therefore, the following prayer was made in the consumer complaint filed before the district forum:- œi) to write off the entire outstanding loan in the account of the complainants deceased husband on the date of his death amounting to rs.14,86,667/- caused due to sheer negligence of the opposite party nos.1 and 2 with the connivance of the opposite party no.3, despite disbursement of premium amount and release all the original documents delivered to the opposite party no.1 to the complainant. ii) to refund the amount of rs.38,000/-, illegally collected from the complainant after the death of her husband. iii) award compensation for mental agony, trials and serious discomfort caused to the complainant at rs.1,00,000/- and costs and such other reliefs which in the opinion of the honble forum may think fit and proper.? 5. the district forum allowed the complaint and held that the complainant need not pay the balance loan amount to op-1 and 2. the appeal of the revision petitioner against the decision of the district forum has been dismissed by the state commission observing that:- œin fact in page 2 of the affidavit filed on behalf of opposite parties 1 and 2, the opposite parties admitted that on 19.9.2008, a bunch of cheques were sent through pavan air couriers which was lost during transit. this concludes that opposite parties 1 and 2 never sent the premium amount to opposite party no.3 and therefore no policy was issued, for which act the complainant cannot be made to suffer. the complainant also filed the guidelines on fair practices code for hfcs which she procured under right to information act, 2006 and keeping in view this code, it was the duty of opposite parties 1 and 2 to have informed the complainant about the issuance/non issuance of the policy...................................................... ...........................therefore, we are of the considered view that in the absence of any concluded contract by opposite party no.3, only because of the latches of opposite parties 1 and 2 in not transmitting the premium amount to opposite party no.3, opposite parties 1 and 2 are liable to settle the claim amount and we see no reasons to interfere with the well considered order of the district forum.? 6. it is seen from the orders of the fora below that in their joint version, op-1 and op-2 admitted the sanction of loan and receipt of insurance premium. the written version categorically accepts:- œit is respectfully submitted that the subscription to sbi group housing loan protection insurance policy would be beneficial to the co-borrower if borrower ends up with natural death. it is not necessary to these opposite parties to allure its customers and to behave as hand in glove with the opposite party no.3. had the customer got the insurance claim, it is the opposite party no.1 and 2 and its customer who are the beneficiaries.? this amounts to a clear admission that op-1 and op-2 had promoted the insurance as a measure which was required to protect repayment of their loan and which protected the borrower as well. 7. on the other hand, op-3 denied receiving any claim form on behalf of the complainant. in fact, receipt of premium and issue of policy in the name of the late husband of the complainant were denied by op-3. on this issue, the state commission has referred to the admission of op-1 and op-2 that the cheque was sent but was lost during transit. in this behalf, the written response of op-1 and op-2 admits that:- œit is unfortunate that the ten cheques including the cheque of the complainants husband bearing no 101196 of icici bank along with the respective insurance proposal forms were sent by the second opposite party through pavan air ways courier on 19-9-2008 but unfortunately the bunch of cheques 10 in nos sent to the sbi life insurance was lost during transit. the fact of loosing the said cheques were noticed by the opposite parties no1 and 2 a little late immediately it prepared the second cheque bearing no 022547 dated 18-12-2008 and requested the complainant to send the opposite party no 1 duly filled in proposal form with the signature of the husband of the complainant on that the complainant for the first time disclosed that her husband died on 3-12-2008.? 8. from the above averment in the written response of op-1 and op-2 two things become very clear:- a) that the premium for insurance coverage payable to the sbi life, was recovered from the borrower; but b) it was never received by op-3, as the cheque sent by op-1 and op-2 was lost in transit. there was further delay of nearly three months in informing the complainant that proposal form also was required to be sent for the insurance. 9. we find no explanation why the proposal form was not obtained simultaneously with deduction of the premium amount. also, there is no explanation why, in the first instance, the premium cheque was sent to op-3 without the proposal form. 10. we have heard mrs. prabha swami on behalf of the revision petitioner and carefully considered the records. learned counsel argued that consumer protection ac, 1986 empowers the consumer fora to award compensation in suitable cases. however, the act does not empower them to direct that the loan should be return off, as was done by the district forum and confirmed by the state commission. in our view, the import of the decision of the fora below becomes clear from the observation of the state commission cited above in this order. the non-conclusion of a contract of insurance between the borrower and op-3 was the direct consequence of latches on the part of op-1 and op-2. but for this, the borrower would have been fully eligible to be considered to receive benefits from op-3 equal to the unpaid balance of principal and interest in the loan account. it is for this reason, that the state commission has held that op-1 and op-2 are liable to settle the claim amount. in other words, liability of op-1 and op-2 is for deficiency of service and its quantum is equal to the balance of loan amount with interest. we therefore, find no substance in the contention of the learned counsel. 11. the other contention of the revision petitioner is that the deceased was in any case not entitled to claim any benefit under the insurance policy as he had suppressed information relating to pre-existing hiv+ conditions. the contention needs to be thrown out at the threshold itself. by their own admission in the joint written response before the district forum, ops 1 and 2 accept that they had failed to obtain the proposal form from the borrower before his death. without the proposal form, there would be no occasion for the insurer to either investigate the claim or repudiate it. 12. in the result, we find no merit in this revision petition. it is consequently dismissed with no order as to costs.