Master Adriel Bryan Cherian vs Authorized Officer

N. Nagaresh, J.

The petitioner, who is an orphan minor and who is represented by his maternal aunt / legal guardian, has filed this OP(DRT) invoking Article 227 of the Constitution of India seeking to call for the records leading to Ext.P19 notice and to quash the same. The petitioner seeks to declare that all measures initiated by the 1st respondent-Authorised Officer of the State Bank of India under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are illegal.

The petitioner states that his deceased father availed a Home Loan for an amount of ₹25,92,580/- for purchasing an Apartment unit in the PVS Apartment Complex, Kozhikode. A one time advance premium of ₹92,580/- was also sanctioned towards Life Insurance Policy in the name of the borrower. The petitioner would submit that the one-time advance premium for the Life Insurance Police was directly transferred to the 2nd respondent to be forwarded to the 4th respondent-Insurance Company.

The EMI towards loan were paid promptly till the death of the borrower on 31.12.2018. On 05.03.2019, the 3rd respondent issued a Section 13(2) notice to the petitioner demanding that the loan account may be regularised. The petitioner made request to the Bank to process the Life Insurance Policy in the name of the deceased. The petitioner also issued Ext.P6 legal notice dated 03.06.2019 to the 2nd respondent. Ext.P6 notice was replied with Exts.P7 and P8 wherein the Bank stated that the Life Insurance Policy was rejected by the 4th respondent-Insurance Company. It was further stated that upon rejection of the Life Insurance Policy, the insurance premium instalment of ₹18,660/- was credited by the 3rd respondent into the NRI account maintained by the borrower.

The 2nd respondent filed OA No.501/2019 in the Debts Recovery Tribunal, Ernakulam claiming ₹24,33,578.79 as outstanding payment as on 17.09.2019. The petitioner filed written statement denying the allegations contained in the OA. The petitioner states that at no point of time, the petitioner was put on notice regarding the alleged rejection of insurance coverage.

The 1st respondent again issued Ext.P14 notice under Section 13(2) revising the outstanding amount to ₹34,06,414/-. The Bank took symbolic possession of the property on 27.09.2023. The petitioner filed SA No.750/2023 seeking to declare that the measures initiated by the Bank under Section 13(4) is invalid. In the meanwhile, the Bank filed CMP No.2603/2023 in the Chief Judicial Magistrate's Court, Kozhikode and the Chief Judicial Magistrate's Court appointed Advocate Commissioner for taking over possession of the secured asset. The Advocate Commissioner has issued a second notice dated 13.05.2024 (Ext.P19) threatening to take possession of the secured asset.

The petitioner states that the borrower was made to believe that he has a Home Loan Insurance Policy and that the processing, documentation and payment of the one time insurance premium will be undertaken by the 2nd respondent-Branch Manager and that the Home Loan Insurance Policy will be retained by the 2nd respondent as security for the Home Loan.

The borrower had been duly remitting EMI towards Home Loan as well as one-time insurance premium. Though the 2nd respondent was notified regarding the death of the borrower, the 2nd respondent failed and neglected to take any action to settle the insurance policy. The 2nd and 4th respondents failed to act and also failed and neglected to notify the borrower regarding the alleged rejection of the insurance cover policy. Ext.P19 notice is therefore liable to be quashed.

Standing Counsel entered appearance on behalf of respondents 1 to 3. On behalf of the respondents, it is submitted that when the EMIs were defaulted by the borrower, the insurer returned the premium and the balance premium out of the sanctioned insurance loan was remitted back into the account of the borrower. Such remittance was made in the year 2018 itself. Therefore, the petitioner cannot raise any grievance in that regard. The OP(DRT) is liable to be dismissed.

I have heard the learned counsel for the petitioner and the learned Standing Counsel representing respondents 1 to 3.

A Housing Loan was sanctioned to the petitioner's deceased father, of an amount of ₹25 lakhs. An insurance premium loan of ₹92,850/- was also sanctioned. The borrower passed away on 31.12.2018.

The submission of respondents 1 to 3 is that the insurance application was rejected by the Insurer due to non-compliance of the procedure, terms and conditions as directed by the Insurance Company. The Insurer had returned the premium which was about ₹18,000/-, and the amount credited to the SB account of the borrower during his life time. If that be so, the petitioner cannot raise any legal grievance against respondents 1 to 3. The prayer of the petitioner to declare that all measures initiated by the 1st respondent under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as illegal, is therefore not liable to be granted on the said ground urged by the petitioner.

In the facts and circumstances of the case, the OP(DRT) is disposed of directing the Debts Recovery Tribunal-I, Ernakulam to dispose of SA No.750/2023 as expeditiously as possible and at any rate, within a period of three months.