The State Bank of India (SBI) has approached the National Consumer Disputes Redressal Commission (NCDRC) to transfer a home loan repayment dispute case filed against it by Madras High Court judge, Justice J Nisha Banu, outside Tamil Nadu. The bank is apprehensive that it may not receive an impartial hearing from the District Consumer Disputes Redressal Commission (DCDRC) in Madurai, as the case falls under the jurisdiction of the Madras High Court, reported The Indian Express.
The dispute revolves around a home loan Justice Banu took from SBI for a property in Madurai that was partially constructed and later demolished due to alleged poor construction. According to SBI, despite reminders, the judge has not fully repaid the outstanding loan amount. Justice Banu, on the other hand, claims the issue is linked to a rejected insurance claim from The New India Assurance Company, alleging collusion between bank officials and the insurance company to deny her rightful compensation.
The NCDRC, led by its president, Justice AP Sahi, and Member Inder Jit Singh, issued a notice to SBI regarding the transfer request on August 2. The next hearing is scheduled for September 23.
SBI’s counsel, Advocate Jitendra Kumar, sought an interim stay on proceedings in Madurai, arguing that the bank’s concerns warranted a transfer. However, the Commission remarked that SBI’s apprehension could not be lightly accepted because a sitting High Court judge is involved, asking for more substantial reasons.
SBI contends that the judge’s equated monthly instalments (EMIs) were not honoured due to insufficient funds on several occasions in 2018 and 2019. According to records, the judge had requested a rescheduling of her EMIs at one point, but payments through the Electronic Clearing Service (ECS) failed due to insufficient funds.
When contacted by the news daily, Justice Banu’s counsel refused to comment, citing the ongoing national commission case.
In her June 2024 consumer complaint, Justice Banu demanded that the insurance company pay her Rs 46 lakh with interest and that SBI and the insurer compensate her Rs 1 crore for mental anguish. She also sought the return of all EMIs paid with interest, Rs 17,125 deducted for the insurance policy, and Rs 50,000 towards litigation costs. Justice Banu claimed the “Standard Fire and Special Peril Policy” was purchased by SBI without her knowledge and that the bank had assured her the outstanding loan would be adjusted against the insurance payout.
SBI maintains that the insurance policy was purchased with the judge’s knowledge and that she failed to clear the remaining loan balance despite receiving Rs 38 lakh as compensation from the builder for the substandard construction. SBI further pointed out that the insurance claim was rejected in September 2018 because demolition was not covered under the policy. The bank also argued that the relationship between an insurer and insured is independent of the debtor-creditor relationship.
The case dates back to 2010, when Justice Banu, then a practising lawyer, took out a home loan of Rs 29.20 lakh from SBI with a 20-year repayment period. Loan disbursement was stopped in 2013 at her request, after Rs 20.17 lakh had been disbursed, due to issues with the construction. The loan was classified as a non-performing asset (NPA) in November 2021, according to the Reserve Bank of India (RBI) guidelines.
Justice Banu also pursued a case against the contractor with the Tamil Nadu State Consumer Disputes Redressal Commission, where she was awarded Rs 13 lakh in compensation. On appeal, the NCDRC increased the award to Rs 25 lakh in 2019 and granted her permission to demolish the property in 2016.
Justice Banu’s complaint states that she only became aware of the Rs 17,125 deduction for the insurance policy after being granted permission to demolish the property, following which she sought a copy of the policy through legal notice.
First Published: Sep 13 2024 | 3:44 PM IST
