Consumer panel bars loan recovery from widow, penalises firm for insurance lapse
TIRUNELVELI: Tirunelveli District Consumer Disputes Redressal Commission on Thursday ordered a finance company not to collect a loan of Rs 15 lakh borrowed by the complainant's deceased husband and cancelled the memorandum of deposit of title deed (MOD).
The commission imposed a penalty of Rs 1 lakh on the company -- Cholamandalam Investment and Finance Company Limited -- for erroneously obtaining a loan protection life insurance in the name of the spouse and insisting that she repay the loan.
The complainant, J Prema (55), was the co-borrower of the loan, obtained by her husband, Jayaraman of Puthukudiyiruppu, from the Valliyoor branch of the finance company on June 30, 2024. Jayaraman had pledged his plot with a building and the company received Rs 5,607 from Jayaraman to insure the mortgaged property through the Chola Griha Raksha Policy and Rs 1,06,935 for a life insurance policy from ICICI Prudential Life Insurance Company Limited.
However, on November 10, 2024, Jayaraman died and Prema informed the branch manager about her husband's demise. Though initially the manager agreed to settle the loan through the insurance claim, he later informed her that the policy had been mistakenly taken in her name and insisted that she repay the loan. Neither the branch manager nor the company's senior manager responded to the notice issued by Prema's advocate, J Jebasingh, who later brought the case before the commission.
Cancelling the MOD, the commission ruled, "Prema or any legal heir of the deceased borrower is not liable to pay anything to the opposite parties for the loan obtained by Jayaraman." It added, "The company is liable to pay Rs 1 lakh as compensation for mental strain, mental agony, deficiency in service and unfair trade practice, and Rs 10,000 as cost to the complainant. If the compensation is not paid within a month, the company shall pay 9% interest per annum."
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