My father took a Loan Against Property against our house in 2016 for a term of 10 years from HDB financial services (NBFC from HDFC group) There was a life insurance policy that was issued at the time of loan sanction from HDFC life insurance company at a one time premium of Rs 70000 (current outstanding loan amount is around Rs 35 lakhs). My father expired in July 2019 and we filed for death claim through HDB. However, we were told by HDB that HDFC life has rejected the claim because the policy has expired on Aug 2018 post which we asked for the copy of original policy bonds as proof of tenure but they refused to provide the papers. On repeated follow-up and complaint of HDFC life on IRDA's greivance redressal portal, HDFC life responded that the policy was never in effect as it was subjected to a health checkup which my father didn't appear for and as a result the policy was cancelled and refund adjusted in loan amount in Jan 2017. I verified the same by asking for the statement of loan account from the bank. So, now I want to sue the bank(and or HDFC life) for not informing us that the policy was cancelled and not in effect because we continued to believe that my father is insured. Now, we think that this is negligence on part of bank to not inform us about the policy cancellation so that we could take another policy to secure the loan. Please advise if it is a valid argument to file a case against the bank ? or do you think that this will not stand in the court of law. If yes, then where should we file the case, in court (for civil matters) or on consumer forum. Also, even if the court consider it as negligence on bank's part and ask them to bear the loan partially, it would be a good relief. Bank is threatening us that if we do not continue to pay the EMIs, then they can start the process of selling the house to recover the amount. Thanks
Negligence is on part of bank. Send legal notice to release benefits of policy. Failure to which file consumer complaint.
Policy was hire on demand of bank, conditional to grant loan, so it was on bank to raise demand if any check up was required.
Bank refusal is an excuse to avoid payment. Usual practise to refuse to claim.
File consumer complaint.
You should not stop paying EMI as bank would auction property on repayment of loan
2) you can file complaint against HDB financial services as they have collected insurance premium but not issued any notice for cancellation of policy
3) seek orders to direct company to pay insurance amount on demise of father
4) seek litigation costs and compensation for mental torture undergone by you
Thanks for the answers. I also want to know if I should first send a legal notice or can directly approach consumer forum against the bank. Also, Does the tenure of the proposed insurance matter ? The bank initially said that the insurance was for 2 years only and thus would have expired in Aug 2018. The tenure of the original loan is not clear yet (as we did not see the policy papers since the insurance was cancelled). I doubt that the insurance was for three years (till Aug 2019) which would have covered my father's demise which happened in July 2019.
Do not stop payment of EMIs, in default of payment of EMIs the bank can proceed against the house and recover their money.
Issue notice to HDB FS from whom your father obtained loan and paid for insurance.
Failing which you can initiate proceedings against them for deficiency of service.
You should issue legal notice to bank and seek copy of policy taken in name of your deceased father
need to peruse terms and conditions of policy
This is also one kid of cheating and unfair trade practice adopted by such NBFCs and the lender banks to defraud their customers.
Since you have the details for the amount deducted towards the insurance of the borrower for this loan, you may drag them to court of law or even consumer court and seek compensation for the deficiency in service besides insurance claim amount for the loan as per the insurance policy.
If your father had paid one time premium amount towards the insurance policy then in my opinion it should be a term insurance policy to cover the entire term of the loan tenure.
You may verify the details and then proceed, however there is no necessity for you to go into the technical details so soon, let them put their defence after you having filed a case against them, you can fight the case on merits and on the supporting documentary evidences in your side.
You can better issue a legal demand notice first and then file the consumer case.
Legal notice is not mandatory. Can directly appraoch CF within 2 years. Demand policy document from them or request court to direct bank to provide you policy.
serve a personal or legal notice to the opposite party before filing the complaint. According to the Consumer Protection Act, 1986,
1. Yes it is a valid ground to file a case against bank and life insurance company.
2. You should file the claim case consumer court as it will less time consuming.
3. Bank can initiate proceedings against your property but for that you can file a petition before DRT against loan company on from of concealment of facts and pray for stay on loan till disposal of suit.
Dear Sir,
Before formally filing a Consumer Complaint, it is desired that the Consumer gives notice to the opposite party of the fact of any deficiency in service or of unfair trade practice etc to see if the trader is willing to make good the loss suffered by either replacing the commodity or returning the value of the purchase. If yes, the issue resolves then and there. But if the trader refuses or neglects here that the consumers needs to approach the Consumer Court.
STEP 1: At first identify the Jurisdiction of the Forum where the complaint is to be filed. This issue needs to be identified from two angles of jurisdiction i.e. Territorial and Pecuniary.
The Consumer has to take into consideration both the territorial and pecuniary jurisdiction of the tribunal in mind before filing his complaint and has to choose the correct forum.
Territorial Jurisdiction of the Consumer Forums :-
A complaint shall be instituted in a District Forum or State Commission or National within the local limits of whose jurisdiction,—
a) the opposite party resides or caries on business or has a branch office or personally works for gain, or
b) If there are more than one opposite party, then any one of the opposite parties resides, or carries on business or has a branch office, or personally works for gain,
Provided that in such case the permission of either District Forum, State Commission or National Commission as the case may be, or the opposite parties who do not reside in such place or carry on business or have a branch office or personally works for gain as the case may be, must be obtained , or
c) the cause of action arose.
