The Kolkata District Consumer Commission has directed HDFC Life to settle a Rs 27.3 lakh mortgage loan availed by a borrower who had since died, and pay his legal heirs Rs 50,000 for mental agony and Rs 10,000 for litigation costs, while noting that the insurer had denied a death claim under a life insurance policy linked to the mortgage. The commission also found PNB Housing Finance deficient in service for failing to safeguard the borrowers’ interests.

While dealing with a plea of the legal heirs of the deceased man, a bench of president Kallol Chattopadhyay and member Udayan Roy noted that as the lending bank and the entity that facilitated the insurance arrangement, PNB Housing Finance had a duty of care towards the complainants to ensure that the policy was actually issued in their favour and, upon repudiation by HDFC Life, to take timely steps to protect the interests of the borrowers.

“The mere crediting of the refunded premium to the loan account without notifying the complainants and without making any representation on their behalf falls short of the standard of service reasonably expected of a bank in such an arrangement. PNB Housing Finance are accordingly also found to be deficient in service, though to a lesser degree,” the court said on June 12.

The complainants alleged that the opposite party credited the premium back to the suit loan account, and it only came to their knowledge for the first time when they obtained the statement of their loan account in June 2021.

It is further stated that between March 2021 and September 2021, the complainants approached HDFC Life on numerous occasions, which initially held out assurances of redressal but ultimately did nothing.

PNB Housing Finance denied the allegations of deficiency in service and admitted the sanction and disbursement of the loan of Rs 27.30 lakh in July 2020 and the payment of Rs 1.30 as insurance premium to HDFC Life.

It was contended that there was no occasion for the complainants to suffer any psychological harm attributable, and the complaint against them was liable to be dismissed with costs.

HDFC Life contended that owing to the non-cooperation of Ashok Sharma during his lifetime in not undergoing the requisite medical examination, the necessary formalities for issuance of the insurance policy could not be completed, and consequently, the contract of insurance remained unconcluded.

It was accordingly submitted that the complainants cannot derive any benefit from an unconcluded contract.