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Judgment
The consumer complaint filed by two retired senior citizens, Paulose John and his wife, was allowed by the Consumer Disputes Redressal Forum Unit-1, Kolkata. Appeal of HDFC Bank against the same has also been dismissed by the West Bengal State Consumer Disputes Redressal Commission. However, while doing so, the State Commission has reduced the amount of compensation from Rs.5,00,000/- to Rs.75,000/-. Now, this Revision Petition is filed by the Complainants against such reduction of the compensation amount.
The cause of action arose out of a loan taken by the Complainants from the OPs/Bank on 23.4.2007. As security for this loan, the Complainants pledged their joint life insurance policy. The policy had commenced on 11.2.1993, was in currency and was to mature on 11.2.2013. Thus, Rs.146280/- had already been paid towards premia for 15 years, when the policy was offered as security.
As per the complaint before the District Forum, the total outstanding loan amount, including interest and excluding payments made by the complainants in between, the total amount came to Rs.80108.89 paisa as on 1.5.2008. On 27.5.2008 OP/ Bank surrendered the policy to the LIC and received its surrender value of Rs.1,11,172/-. It applied the same to the outstanding loan amount, interest, service tax etc. and credited the remaining balance Rs.30144.56 to the account of the complainants. Allegedly, this was done without any intimation or notice to the complainants. Therefore, a consumer complaint was filed seeking compensation of Rs.7,50,000/- for subjecting the complainants to monetary loss and mental agony.
In the present proceedings, the Petitioner/Complainant has been represented by Mr. Dileep Poolakkot, Advocate and Respondents/Bank by Mr. Rishab Raj Jain, Advocate. The two counsel have been heard at length and the records have been carefully perused. It is learnt from the Registry of this Commission that HDFC Bank has not challenged the impugned order.
The District Forum observed that within a few days of receiving Rs.5,500/- from the complainants towards the outstanding loan amount, the bank had surrendered the policy to the LIC, in the same month i.e. May, 2008. The surrender itself was done without any notice or intimation to the complainants, which was a violation of the principle of natural justice. Even thereafter the loan account was not closed until 20.3.2009. This amounted to unfair trade practice as well as negligence in discharge of duties on the part of the bank. Had the policy been allowed to complete its tenure, it would have given the complainants the protection that they had sought for their old age by subscribing to the policy. The maturity amount was Rs.5 lakhs. The District Forum therefore awarded full maturity value of Rs.5 lakhs as compensation together with cost of Rs.5000/-.
The State Commission while dismissing the appeal of the Respondent/Bank and reducing the amount of compensation has made the following observations:- " From the materials on record it becomes clear that the overdraft facility exceeded its limit at the instance of the Complainants - Respondents. It further appears that the bank surrendered the LIC policy at premature stage towards the satisfaction of the outstanding dues and, as a result, less amount was obtained as compared to the matured amount of the said policy. It is also on record that the Bank after satisfaction of the outstanding dues credited the excess amount of Rs.31,001.31 to the loan account of the Complainants-Respondents. Evidently, the Bank had the right to surrender the policy which was pledged as security, but after the liquidation of the outstanding dues the Bank went on deducting certain amount on the ground that the Complainants did not inform the Bank in writing to close the said account. We are unable to accept such contention of the Bank. We are of the considered view that when the outstanding dues stands liquated, the Bank on its own motion ought to have closed the account. The Bank having not done so was deficient in service and as a result, it is liable to pay compensation to the Complainants. Having regard to the facts and circumstances, we are of the view that the sum of Rs.75,000/- would be just and proper towards compensation in favour of the Complainants- Respondents.
On behalf of the Respondents, it has been argued that the policy having been assigned as security in favour of Opposite Party No.1, the Complainants had ceased to be the beneficiary under it. In our view, this is strange logic and runs counter to the very concept of ''security''. It is nothing more than an attempt to justify the unilateral surrender of the policy by the bank. We therefore, reject this argument. Further, our attention has been drawn to copy of a communication sent to the borrowers in September, 2007. They were informed, inter alia, that penal interest of 18% per year, on the amount in excess of the limit, will be chargeable. The communication also contained the following recital:- "Important Note:
Monthly interest charge has to be serviced in full by way of credit to the LAS Account in the immediately following month, failing which the Accounts are liable to be classified as NPA. In such cases, Bank will exercise its right to sell/redeem the securities in the market after providing reasonable notice to Clients." (emphasis supplied) It is clear from the records that no such notice was issued to the complainants. There was no intimation that the loan was being declared a Non Performing Asset. There was no intimation that the security was going to be invoked by premature surrender of the life insurance policy.
Learned counsel for the Respondent/Bank conceded that no notice had been given to the Petitioners/Complainants before resorting to the above action. He however, pointed out that the District Forum had gone overboard in allowing the entire maturity value of the policy i.e. Rs.5 lakhs as compensation. Also, there was be no justification for award of the amount of which the benefit had already been given by the Bank to the Complainants i.e. Rs.1,11,172. We find substance in the argument. However, there is no explanation why the loan account was not simultaneously closed.
We, therefore find ourselves unable to condone the double lapse on the part of the Respondent/Bank. On the one hand, action taken to surrender the insurance policy, without any notice to the complainants, was in violation of its own declared instructions. On the other, it amounted to denial of an opportunity to the complainants which clearly constituted deficiency of service on the part of the Bank. Further, the failure to simultaneously close the loan account needs to be considered a case of unprofessional conduct and therefore, a serious deficiency of service.
In the above view of the matter, we deem it imperative to enhance the quantum of relief. Accordingly, the compensation amount of Rs.75,000/-is increased to Rs.1,50,000. The same shall be paid, within three months and with interest at 9% p.a. from the date of filing of the Complaint before the District Forum. Revision Petition No.1144 of 2013 is disposed of in these terms.