2019 (4) TMI 984 - SC - Indian Laws

Recovery of loan amount form appellant from the spouse of deceased - whether the loan was duly insured - after the loan was sanctioned on 27.02.2015, the amount was credited to the loan account after deducting the insurance premium - deficiency of service on the part of the Respondent Finance Company - HELD THAT - The National Commission, in exercise of its revisional jurisdiction, has set aside the concurrent findings of the District Forum and State Commission, by the impugned Order dated 30.11.2018 - The revisional jurisdiction of the National Commission is a limited jurisdiction, to be exercised in case the State Commission lacked jurisdiction, or acted with illegality or material irregularity. The National Commission has allowed the Revision Petition of the Respondent Finance Company on two grounds; first, that the Appellant had failed to produce any evidence to prove that the insurance premium was paid to the Respondent Finance Company; second, that there was no evidence to prove that the Respondent Finance Company deducted the insurance premium from the loan account - A perusal of the pleadings and record, would show that both these findings are factually incorrect. It is the admitted position that the deceased husband of the Appellant had paid the insurance premium by a Demand Draft in favour of the Insurance Company. This has been acknowledged in paragraph 4(c) of the Revision Petition filed by the Respondent Finance Company - As a consequence, the risk would be covered from the date of payment of the insurance premium. The loan was secured from the date on which the insurance premium was paid. The premium having been paid by the Appellant s husband during his lifetime, the loan was to be adjusted from the insurance policy. The National Commission has erroneously set aside the Order passed by the State Commission on factually incorrect grounds - The Appellant has made out a clear case of deficiency of service on the part of the Respondent Finance Company - the Order dated 30.11.2018 passed by the National Commission is set aside - appeal allowed.

Summary

Issues involved:
Challenge to order by National Consumer Disputes Redressal Commission regarding recovery of loan amount after death of borrower, interpretation of insurance policy coverage, deficiency of service by Finance Company, jurisdiction of National Commission in revisional jurisdiction.

Analysis:

Issue 1: Challenge to order by National Consumer Disputes Redressal Commission
The Civil Appeal was filed to challenge the Order dated 30.11.2018 passed by the National Consumer Disputes Redressal Commission. The Appellant argued that the Respondent - Finance Company should not recover the loan amount from her due to the delay in obtaining the insurance policy, which led to deficiency of service. The District Forum and State Commission had ruled in favor of the Appellant, but the National Commission set aside the order based on contradictory statements in the Legal Notice regarding insurance premium payment.

Issue 2: Interpretation of insurance policy coverage
The deceased borrower had paid the insurance premium, and the insurance policy was issued after his death. The National Commission held that there was no evidence of premium payment or deduction from the loan account. However, the Respondent - Finance Company admitted receiving the Demand Draft for premium payment. The loan was secured by the insurance policy, and the risk was covered from the date of premium payment as per Section 64VB(2) of the Insurance Act, 1938. The delay in obtaining the policy indicated deficiency of service by the Finance Company.

Issue 3: Deficiency of service by Finance Company
The Respondent - Finance Company delayed in forwarding the premium amount to obtain the insurance policy, which was issued after the borrower's death. The Appellant's husband had fulfilled his part of the transaction by paying the premium and processing charges. The delay in obtaining the policy led to unnecessary legal proceedings for the Appellant, indicating deficiency of service by the Finance Company.

Issue 4: Jurisdiction of National Commission in revisional jurisdiction
The National Commission's revisional jurisdiction is limited to cases where the State Commission lacked jurisdiction, acted illegally, or with material irregularity. The National Commission erroneously set aside the State Commission's order based on incorrect grounds. The Appellant successfully proved deficiency of service by the Finance Company, leading to the setting aside of the National Commission's order in favor of the Appellant.

This comprehensive analysis covers the key issues involved in the legal judgment, providing a detailed understanding of the case and the reasoning behind the decisions made at each stage of the dispute resolution process.