CHENNAI: The Chennai North District Consumer Disputes Redressal Commission has directed a private bank and an insurance company to pay Rs 30,000 to the father of a deceased loan borrower for deficiency in service. The bank has also been ordered to close the outstanding loan of Rs 34 lakh taken by the borrower.
According to the complaint filed by PM Ramadass, his late son Mahesh Kumar had availed a business loan of Rs 34 lakh from DCB Bank.
The bank had purchased a group Secure Mind Policy from ICICI Lombard General Insurance Company to cover the loan amount. After Mahesh’s death, the complainant submitted a claim to the insurer. However, the claim was rejected on the grounds that the policy had expired.
Ramadass contended that the premium was deducted along with the monthly EMI, and that the bank had failed to remind the borrower to renew the policy. He alleged that the negligence and deficiency in service by both the bank and insurance company had caused financial loss and mental agony to the family.
During the hearing, the bank failed to appear and was set ex parte. ICICI Lombard argued that there was no direct contractual relationship between the complainant and insurer, stating that the bank had independently taken insurance cover to safeguard its own interests.
The commission, comprising president D Gopinath and members Kavitha Kannan and V Ramamurthy, held both opposite parties jointly and severally liable for deficiency in service. It ruled that the bank had not complied with the terms of service and had acted negligently in handling the insurance component of the loan.
The commission directed DCB Bank to close Mahesh’s loan account, including interest accrued to date, and issue a ‘No Objection’ certificate to the complainant. It also ordered both the bank and the insurance company to pay Rs 20,000 as compensation for monetary loss, mental agony and suffering, and Rs 10,000 towards litigation costs.
The amount must be paid within two months from the date of receipt of the order.