S Gopal Puri
Dharamshala:
The District Consumer Disputes Redressal Commission at Dharamshala in Himachal Pradesh’s Kangra has ruled in favour of Ravinder Kumar, a resident of Bandla village in Palampur, who suffered heavy losses when his under-construction house collapsed in a landslide on July 22, 2023.
The consumer commission found the State Bank of India’s (SBI) ADB Branch at Palampur guilty of misrepresenting the insurance policy terms and directed it to pay Rs 13.36 lakh, along with interest, compensation and litigation costs. The commission also ordered the bank to waive off the entire loan amount and associated interest, citing gross deficiency in service.
Loan-linked insurance turns controversial
Ravinder Kumar had availed a home loan of Rs 24 lakh from the SBI, of which Rs 12 lakh had been disbursed in two installments by early January 2023. The bank, acting as an intermediary, insured the property under the SBI Bharat Griha Raksha Policy by deducting Rs 15,099 as premium from Kumar’s account. The policy, however, was meant for a completed residential building, while Kumar’s structure was still under construction.
When a devastating landslide damaged the under-construction home in July 2023, Kumar filed a claim. The insurance company, SBI General Insurance Co. Ltd., rejected it, citing Clause C(2), which excludes under-construction buildings from coverage under the issued policy.
The commission, presided over by president Hemanshu Mishra and members Arti Sood and Narayan Thakur, concluded that the SBI’s Palampur branch falsely represented the nature of the building in the proposal form. It also observed forged or mismatched signatures on official insurance documents, which were inconsistent with the complainant’s verified signatures on loan and legal papers.
Moreover, the commission noted that the insurance premium for under-construction buildings is typically lower, but due to the SBI’s actions, the complainant paid more and was deprived of proper coverage.
Partial relief granted, bank held accountable
Though the insurance firm was cleared of direct liability due to the policy type, the bank was held solely responsible for misleading both the insurer and the complainant. As per the final order, the commission asked the SBI to pay Rs 13,36,840 as compensation for the assessed damage; 9% annual interest from the date of complaint (March 2, 2024) until full payment; Rs 50,000 for mental harassment and Rs 15,000 as litigation cost. The bank was also asked to waive the entire outstanding loan and any interest charged.
