SBI Dabeerpura asked to pay Rs.1.10L compensation to customer for causing mental agony

Complainant Junnu Sujatha, a resident of Rajendra Nagar, said in August 2011, her husband had borrowed Rs.8,38,000 housing loan from the State Bank of India, Dabeerpura Branch along with the loan risk insurance coverage offered by the SBI Life Insurance for the requisite premium.

Apparently, the complainant's husband was paying the EMIs regularly until he passed away in September 2018 due to multiple organ failure. In response to the intimation from the Recovery Officer of the State Bank of India, the complainant approached the bank with the death certificate of her husband and sought risk insurance coverage.

The complainant requested the bank to waive the outstanding balance of the housing loan claiming insurance coverage.

Subsequently, the complaint filed an RTI application with the bank seeking information and details interalia, the complete statement of Housing Loan account, SBI Life Insurance Bond, Annual premiums paid, correspondence between SBI Life and the Bank, letters intimating the account holder about the Insurance, Medical checkup report of the account holder prior to taking the Insurance policy, any other information pertaining to all insurance policies of the Loan Account holder and their status.

In response to the RTI application, the bank furnished the loan account statement of both the housing loan and the SBI Insurance account but failed to provide information pertaining to the SBI Insurance Bond. The bank informed that SBI Life Insurance has canceled the Insurance Policy.

"The bank or the life insurance company did not intimate about the cancellation of the Insurance Policy and an amount of Rs.8,958 was deducted towards the SBI Suraksha Insurance in 2011. I received a Demand Notice in June 2017 from SBI demanding repayment of Housing Loan dues and dues of SBI Suraksha loan, showing that the Suraksha Loan was in force," said the complainant.

The complainant further alleged that the representatives of the SBI have been regularly harassing her and her children. She said the officials are threatening to take possession of the housing property, declaring their housing loan account as Non-Performing Asset despite the fact that it is covered under SBI Life Suraksha Risk Insurance Policy.

The complainant and her children were subjected to mental agony and suffering and was compelled to pay Rs.10,000 to the loan account.

While responding to the allegation, the State Bank of India, Dabeerpura Branch said it was contended that the SBI Life Suraksha Risk Insurance Policy proposal of the complainant's husband was apparently declined by the SBI Life Insurance and the premium amount of Rs.8,958 was refunded which was credited by the Insurance Company to his Housing loan account but not to the Insurance Account.

It is further contended by the bank that the complainant's husband-borrower was a willful defaulter and a demand notice of the SARFAESI Act was issued when he was alive and subsequently, the complainant paid Rs.10,000 only to stop further proceedings under the Act.

SBI said the complainant's husband-borrower was aware of the refund of Insurance premium implying knowledge of the denial of his insurance policy proposal.

The SBI Life Insurance contended that there is no contract of Insurance between the complainant husband-borrower and the SBI Life Insurance as there was no confirmation/clarification regarding the interest rate from the proposer Bank. It noted that the premium amount of Rs.8,958 was refunded to the proposer Bank, SBI, and the complaint is hopelessly barred by limitation as it is filed after 7 years when the complainant husband-borrower died in 2018 whereas his Policy was declined in 2011 and refunded the premium amount SBI.

After going through the evidence and hearing the arguments from the complainant, the forum said: "The Opposite Parties not only denied the Insurance claim but also approbating and reprobating having accepted the premium and unilaterally canceling the Insurance on the ground of non-confirmation /clarification of the loan interest rate by the bank and demanding outstanding dues against the Suraksha Loan clearly gives rise to a very clear presumption of acceptance of the policy by the insurer in this case."

The forum asked the bank to release the Original Title Deed Documents of the property of the complainant after appropriating the outstanding loan amount of Housing loan to the Suraksha Insurance.

The forum also asked to pay an amount of Rs.1,00,000 towards compensation for mental agony and inconvenience caused to the bereaved complainant's family, to refund of Rs.10,000 paid towards the loan account by the complainant and to pay Rs.10,000 towards costs of litigation.