Madras High Court
Uma Maheshwari vs The Authorized Officer on 8 April, 2024
Bench: D.Krishnakumar, R.Vijayakumar
W.P(MD).No.7858 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 10.01.2024
PRONOUNCED ON : 08.04.2024
CORAM:
THE HONOURABLE MR.JUSTICE D.KRISHNAKUMAR
and
THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR
W.P(MD).No.7858 of 2023
and WMP(MD).Nos.7281 & 11682 of 2023
Uma Maheshwari ...Petitioner
Vs
1.The Authorized Officer
M/s.Cholamandalam Investment & Finance Company Ltd.,
Dare House First Floor
No.2, NSC Bose Road, Parrys
Chennai 600 001
2.The Branch Manager
M/s.Cholamandalam Investment & Finance Company Ltd.,
Tiruchendur Road
Palayamkottai
Tirunelveli District
3.The Branch Manager
ICICI Prudential Life Insurance Company Ltd.,
No.25, Sundari Complex, First Floor
Office No.101, Nanguneri Branch, Near New Bus Stand
Tirunelveli, Tamil Nadu 627 007
https://www.mhc.tn.gov.in/judis
1/13
W.P(MD).No.7858 of 2023
4.The Registered Office
ICICI Prudential Life Insurance Company Ltd.,
ICICI Prulife Towers, Appasaheb Marathe Marg
Prabhadevi, Mumbai 400 025 ...Respondents
( R3 & R4 are suo moto impleaded vide Court order dated 24.04.2023)
Prayer : Writ Petition has been filed under Article 226 of Constitution of
India to issue a writ of Certiorari, to call for the records pertaining to the
alleged impugned order of Demand Notice under Section 13(2) dated
28.12.2022 and the Possession Notice dated 08.03.2023 under Section 8(1)
SARFEASI Act, 2002, under SARFAESI Act issued by the first respondent
under SARFAESI Act issued by the respondent and quash the same as illegal.
For Petitioner : Mr.S.Mani
For R1 & R2 : Mr.P.Pethu Rajesh
For R3 & R4 : Mr.Sachin Daga
:Mr.S.Srinivasa Raghavan
Amicus Curiae
ORDER
(Made by R.VIJAYAKUMAR,J.)
The present writ petition has been filed challenging the demand notice
issued under Section 13(2) and the possession notice under Section 13(4) of
SARFAESI Act on 28.12.2022 and 08.03.2023 respectively and to quash the
same.
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(A)Facts leading to the filing of the present writ petition are as
follows:
2.The petitioner's husband had applied for a Housing Loan of
Rs.1,70,00,000/- with the respondent Housing Finance Company. The said
amount was sanctioned on 22.12.2021. At the time of sanctioning of the
amount, they have deducted a sum of Rs.3,35,825/- towards life insurance
premium amount along with other deduction. After deducting, the balance
amount was released through cheque. The petitioner's husband passed away
in a road accident on 01.05.2022. The petitioner was under the impression
that the life insurance premium amount would be adjusted towards the
housing loan. Since there was no response, the petitioner had addressed a
legal notice to the Housing Finance Company on 25.05.2022 requesting them
to send a copy of the life insurance policy and the copy of the statement
accounts for the period from 25.10.2021. The Housing Finance Company had
sent a reply on 10.06.2022 informing that they had processed the life
insurance policy through ICICI Insurance Company. However, the policy
could not be issued in view of the fact that they have not received the
document for proceeding the policy. With the said information, the premium
amount that was deducted was re-credited back to the statement of accounts.
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3.The petitioner again sent another two legal notices on 07.07.2022 and
28.07.2022 to indemnify the loan amount by the Insurance Company and to
liberate the petitioner from the clutches of the loan amount. Since there was
no proper response, the petitioner had filed the consumer complaint before
the Consumer State Commission Redressal Forum in C.C.No.383 of 2022 as
against the Housing Finance Company. The prayer in the said complaint was
to direct the Housing Finance Company to pay a sum of Rs.1,80,00,000/-to
the complainant for the negligent act of the opposite parties for not taking the
insurance policy in proper time. The petitioner had further prayed for
payment of a sum of Rs.20,00,000/- by way of damages. The Housing
Finance Company has filed their written version and the Consumer
Complaint is still pending.
4.The Housing Finance Company has chosen to issue a demand notice
under Section 13(2) of SARFAESI Act on 28.12.2022. By way of a reply, an
Advocate notice has been sent to the Housing Finance Company on
30.01.2023. On 13.02.2023, a detailed reply notice was sent on behalf of the
Housing Finance Company to the counsel for the petitioner. Thereafter, the
Housing Finance Company has chosen to issue a possession notice under
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Section 13(4) of SARFAESI Act on 08.03.2023. Challenging the demand
notice and the possession notice, the present writ petition has been filed.
(B)Contentions of the learned counsel appearing for the petitioner
are as follows:
5.When the premium amount has been deducted even before the
disbursal of the loan amount from the account of the borrower, the Housing
Finance Company is duty bound to transfer the said amount to ICICI
Insurance Company for issuance of the policy document. Though the
premium amount was deducted on 31.12.2021, the Housing Finance
Company had never transferred the said amount to ICICI Insurance Company
till the petitioner had sent a legal notice on 25.05.2022. After receipt of the
legal notice, the Insurance Company has re-credited the premium amount to
the credit of the housing loan account by way of letter dated 10.06.2022.
Therefore, it is clear that when the borrower was alive till 01.05.2022, the
premium was retained by the Housing Finance Company. Therefore, it is a
clear case of fraud on the part of the Housing Finance Company. In case, if
any further documents are required, they should have called upon the
borrower for submission of those documents. However, nothing is placed on
record to show that there was any negligence or dereliction on the part of the
borrower in submitting the documents for the purpose of getting the
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Insurance policy. After the death of the borrower came to the knowledge of
the Housing Finance Company, they have taken a 'U' turn and contended that
no policy at all been issued and hence, the Housing Finance is not covered by
the Life Insurance Policy. Had there been a Life Insurance Policy covering
the Housing Loan, the petitioner would not have suffered to such an extent.
Therefore, when the fault is on the part of the Housing Finance Company,
they cannot issue demand notice and the possession notice, demanding the
balance housing loan amount from the borrower or his legal heirs. Hence, he
prayed for quashing these two notices.
(C) Contentions of the learned counsel appearing for the
respondents 1 and 2 /Housing Finance Company are as follows:
6.The petitioner is not merely a legal heir of the borrower, but she is
also a co-applicant for the credit facility availed by her husband. The
petitioner's husband has opted for life insurance with the respondents 3 and 4
Insurance Company on his own accord and a sum of Rs.3,35,825/- was
debited from sanctioned loan amount for the premium. The subject matter of
life insurance is a contract between the petitioner's husband and the
respondents 3 and 4 Insurance Company.
7.The respondents 1 and 2 Housing Finance Company are no way
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responsible or connected with the said transaction. Since the petitioner's
husband has not co-operated for the medical examination, the insurance
premium amount was returned by the Insurance Company to the Housing
Finance Company and the same was credited to the loan account of the
petitioner and her husband on 07.04.2022. The premium amount was re-
credited to the loan account much prior to the death of the borrower.
8.The learned counsel for the respondents 1 and 2 had further
contended that as far as the Life Insurance Policy is concerned, there is
privity of contract only between the borrower and the respondents 3 and 4.
Except routing the premium amount by deducting the same from the loan
amount, there is no connection whatsoever with regard to the insurance
policy. It is for the borrower to co-operate with the Insurance Company and to
submit the relevant documents that are sought for by the Insurance Company.
Having failed to do so, they cannot blame the Housing Finance Company.
9.Taking insurance policy is the option of the borrower and therefore,
the contention that the premium was compulsorily deducted from the loan
amount without their consent is not factually correct. After deducting the said
amount, the premium was immediately paid to the ICICI Insurance Company.
When they made several attempts to call the borrower for submission of
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certain documents and medical records, the borrower had not responded.
Therefore, the Insurance Company had re-credited the amount to the Housing
Finance Company and in turn the Housing Finance Company had re-credited
the amount to the account of the borrower even before his death. Merely
because the premium has been deducted, that would not amount to issuance
of policy unless a policy document is issued by the Insurance Company. The
allegation of Implied Agency will not be applicable to the Housing Finance
Corporation.
10.The learned counsel for the respondents 1 and 2 had further
contended that alleging deficiency of service, the petitioner had already filed
a consumer complaint before the State Consumer Redressal Forum in
November 2022. Thereafter, the present writ petition has been filed in March
2023 challenging the proceedings initiated under SARFAESI Act. If at all the
petitioner has got any remedy, the same has to be worked out before the
Consumer Redressal Forum. Since due amount has not been paid, the
Housing Finance is legally entitled to invoke the provisions of the
SARFAESI Act. Hence, he prayed for dismissal of the writ petition.
(D)Contentions of the learned counsel appearing for the
respondents 3 and 4 are as follows:
11.The learned counsel for the respondents 3 and 4 had raised a
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preliminary objection with regard to the maintainability of the writ petition as
against the private Insurance Company. They had further contended that the
Life Insurance Company has received a duly filled proposal and an
application form through respondents 1 and 2 requesting for issuance of Life
Insurance Policy along with one time premium deposit of Rs.3,35,825/-.
Thereafter, several communications were addressed to the borrower to appear
for a medical test which is precondition for issuance of Life Insurance Policy.
Since there was no response from the borrower, it was kept in the proposal
stage and the contract of insurance never got concluded. No policy document
was ever issued covering the life of deceased borrower.
12.The respondents 3 and 4 had further contended that the premium
amount was refunded vide RTGS to HDFC Bank Account on 04.04.2022 and
it was credited on 06.04.2022 that is even prior to the death of the proposer.
In fact, on 04.07.2023, the Insurance Company had received an e-mail from
Housing Finance Company confirming the fact that the proposal was declined
on medical ground and the premium amount was duly settled. Therefore, the
Insurance Company has fully discharged of its liability. There is no complaint
of deficiency in service or unfair trade practice, especially when there is no
contract of service between the parties. Since the borrower has not accepted
the offer and has not appeared for medical test, the contract of Insurance has
not been concluded. Therefore, the prayer as against the Insurance Company
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is not sustainable and the same is liable to be dismissed.
13.We have carefully considered the submissions and perused the
material records.
(E) Discussion:
14.The petitioner's husband had applied for housing loan for a sum of
Rs.1,70,00,000/- from the respondents 1 and 2 Housing Finance Company.
The said loan was sanctioned on 22.12.2021. At the time of sanctioning the
loan amount, several charges were deducted before disbursement of the loan
amount. A deduction of a sum of Rs.3,35,825/- towards life insurance
premium amount is one of the deduction. The borrower's husband had passed
away on 01.05.2022. Thereafter, when the wife of the borrower/writ
petitioner attempted to make a claim over the Life Insurance Policy, she came
to know that the premium amount has been re-credited to the bank account
alleging that the borrower had not co-operated for the medical test.
Thereafter, the demand notice and possession notice have been issued by the
Housing Finance seeking to recover the loan amount. These facts are not in
dispute.
15.According to the Housing Finance Company, they have deducted
the premium amount and they have paid the same to the Insurance Company
along with proposal form. Thereafter, they have no further role for issuance
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of the Insurance Policy. According to the Insurance Company, though they
have received the premium amount, since the borrower had not appeared for
the medical test, the contract of insurance had not concluded and therefore,
no policy document was issued.
16.It is the specific case of the Insurance Company that after waiting
for a few months, they have refunded the premium amount vide RTGS in
HDFC bank account bearing No.00040310005866 on 04.04.2022 and the
amount was credited on 06.04.2022 to the account of the Housing Finance
Company namely respondents 1 and 2. Therefore, it is clear that the
respondents 1 and 2 have refunded the premium amount even while the
borrower was alive. Since the Insurance Company had not issued any policy
document covering the life of the deceased borrower and they have refunded
the premium amount to the Housing Finance Company even before the death
of the borrower, they cannot be found fault with.
17.As far as the case of the Housing Finance Company namely
respondents 1 and 2 are concerned, there is no record to show on what date
the premium amount was credited to the borrower's account or whether the
borrower was put on notice about the fact that the proposal has been declined
by the Insurance Company. These issues have to be adjudicated before the
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consumer complaint pending before the State Consumer Redressal Forum in
C.C.No.383 of 2022. Unless it is decided by the competent forum relating to
deficiency of service, the rights of the Housing Finance Company to proceed
under SARFAESI Act cannot be curtailed. When the non payment of loan
amount is an admitted fact, the alleged deficiency of service in processing the
insurance policy cannot be a legal impediment for proceeding under
SARFAESI Act. In case, if the petitioner ultimately succeeds before the
Consumer Redressal Forum, they will be entitled to get refund of the amount
paid by them along with reasonable interest.
18.We place on record our appreciation for the assistance rendered by
Mr.S.Srinivasa Raghavan, Advocate as Amicus Curiae by placing the factual
and legal aspects before this Court including the judgments of the Hon'ble
Supreme Court. Those judgments arise out of the Consumer Protection Act
and hence, we are not considering those judgments for the purpose of
deciding the validity of proceedings under SARFAESI Act.
19.With the above said observations, the writ petition stands dismissed.
No costs. Consequently, connected miscellaneous petitions are closed.
(D.K.K.J.,) (R.V.J.,)
08.04.2024
Index :yes
Internet :yes
https://www.mhc.tn.gov.in/judis
NCC : yes/no
msa
D.KRISHNAKUMAR, J.
AND
R.VIJAYAKUMAR,J.
msa
Pre-delivery Order made in
and WMP(MD).Nos.7281 & 11682 of 2023
08.04.2024
https://www.mhc.tn.gov.in/judis
