Coming down heavily on ICICI Prudential Life Insurance Co Ltd and ICICI Bank Ltd for denying an insurance policy on a home loan and charging excess interest from the borrower, respectively, the National Consumer Disputes Redressal Commission (NCDRC) upheld decisions of the district and state consumer commission. The NCDRC directed ICICI Bank to recalculate the equated monthly instalments (EMIs) by taking the rate of interest as 9.85% per annum (pa) on Rs1.50 crore (loan disbursed) instead of Rs1.63 crore (loan sanctioned) and charge the future EMI at that rate and credit the excess amount already recovered, while ICICI Prudential was asked to issue an insurance policy to secure the loan after receiving premium as offered.
In an order issued last week, justice Sudip Ahluwalia, presiding member of NCDRC, says, "Consequently, the refusal on part of the petitioner/insurance company to provide insurance coverage to the complainant was clearly cryptic and insufficient, especially in a situation when it had already accepted the premium in advance for the first two years of the insurance coverage before calling the complainant for medical examination, in which even otherwise nothing adverse emerged against him."
The case is related to Delhi-based Prem Kumar Aggarwal, who obtained a loan of Rs1.63 crore from ICICI Bank. The loan amount includes a premium of Rs13 lakh for an insurance policy from ICICI Prudential.
On 18 March 2015, ICICI Bank informed Mr Aggarwal that on 17 March 2015, it had disbursed Rs1.52 crore against a sanctioned loan of Rs1.63 crore. On 6 April 2015, the lender collected Rs21,513 from Mr Aggarwal as a pre-equated monthly instalment (pre-EMI). Later, on 21 April 2015, ICICI Bank handed over a cheque of Rs1.50 crore to the seller.
On enquiring about the difference in amount, ICICI Bank informed Mr Aggarwal that Rs2.60 lakh had been paid to ICICI Prudential as an insurance premium for two years. After 15 days of disbursement of the loan of Rs1.52 crore, the lender deducted Rs2.17 lakh as EMI for the loan amount of Rs1.63 crore from the savings account of Mr Aggarwal.
In its offer letter on 15 January 2015, ICICI Prudential never stated that the insurance would be subject to any condition, and no such condition was mentioned in the letter. Citing findings of the trade-mill test (TMT) and past medical history without any basis and no critical medical condition, the insurer refused to provide insurance cover for Mr Aggarwal's home loan.
He then filed a complaint with the district consumer commission, seeking a refund of Rs21,513 and re-calculation of EMI on actual loan disbursal of Rs1.52 crore instead of the sanctioned loan of Rs1.63 crore from 5 June 2015 and refund of EMI charged on 5 May 2015. Mr Aggarwal also requested the commission to direct ICICI Prudential to provide insurance cover and refund the premium of Rs1.30 lakh for one year from the premium it collected from the lender.
In its judgement, the district commission observed that the sanctioned loan was for Rs1.63 crore for a tenure of 120 months and an EMI of Rs2,16,763 and the date of commencement was 5 April 2015. It also noted that Rs1.50 crore was paid to the seller on 31 March 2015, which also means that till that date, the amount was with the Bank and the date of commencement of the EMI was 5 April 2015.
"The EMI could only be started from the date of disbursement and payment by the Bank. At best, EMI could only be charged by the Bank from 31 March 2015 to 5 April 2015, while they had calculated pre-EMI from 17 March 2015 when this amount was not available to the complainant (Mr Aggarwal). As such, the charging of Rs21,513 was illegal, and the same deserved to be reverted by ICICI Bank into the complainant's account," the district commission stated.
Mentioning that ICICI Bank has violated the principles of financial discipline, the district commission further observed that charging of EMI on Rs1.63 crore, which was Rs2,16,762, was illegal as the disbursed amount was Rs1.52 crore.
Commenting on ICICI Prudential, the district commission noted that the insurer did not issue an insurance policy on the ground of health risk and refunded the premium to ICICI Bank. "ICICI Prudential had not filed any evidence to disentitle the complainant for the availing facility on insurance on the health grounds. The only fact mentioned in ICICI Prudential's affidavit was that the kidney of the complainant was removed in 2010. In the last five years, there was no evidence to show that the complainant was suffering from any other ailment. The ground taken by ICICI Prudential that the complainant's health was at risk was therefore as arbitrary, as there was no proof on record that the complainant was having 'TMT findings and past medical history'. Hence, denial on the part of ICICI Prudential and reversal of the amount was held to be illegal," the district commission says in its order on 14 December 2015.
ICICI Bank then filed an appeal before the state commission in Delhi. In its order on 7 January 2020, the state commission ruled that ICICI Bank could not charge pre-EMI from 17 March 2015 and charging Rs21,513 as pre-EMI is illegal. It also observed that the EMI of Rs216,762 was for a loan of Rs1.63 crore when the actual disbursal was Rs1.52 crore; therefore the same EMI cannot be charged and must be reduced proportionately.
The state commission allowed ICICI Prudential to submit the proposal form to show whether Mr Aggarwal had concealed that his kidney was removed in 2010. However, the insurer failed to file the proposal form. Hence, an adverse inference was drawn against the insurer to that effect, and the findings of the district commission directing ICICI Prudential to provide insurance cover were upheld by the state commission.
During the hearing, NCDRC came across a limited point about whether ICICI Prudential could have been compelled to accept the insurance proposal on behalf of Mr Aggarwal merely because the premium of the first two years’ instalment was into its account even before the requisite medical examination of the proposal could be done.
The bench noted that Mr Aggarwal did undergo the medical examination as required by ICICI Prudential. However, his proposal was declined. ICICI Prudential told him, "We have evaluated your application and regret to inform you that we are unable to provide you with insurance cover as your medical reports indicate the following medical conditions: TMT findings and past medical history."
NCDRC then perused documents related to Mr Aggarwal's medical examination, including his TMT report and the medical examination report about his examination conducted by Dr Chandra's Path Lab, an authorised medical officer or establishment on behalf of the insurer.
The TMT report of Mr Aggarwal concludes, "Negative for provocable reversible ischaemia' which would mean that during the TMT exercise undergone by the complainant, there was no danger of short supply of blood relating to any heart problem like Angina or feelings in nature of a heart attack. In a nutshell, the TMT report squarely went in favour of Mr Aggarwal," the bench noted.
"Consequently, even the medical examination report, including the complainant's medical history, found nothing adverse against him except for the effect that he had got removed one kidney five years ago prior to the medical examination and which was also disclosed in his own proposal form. Till now, nearly 13 years have passed since his kidney was removed, and Mr Aggarwal claims of not having faced any kidney-related problems ever since. Medical jurisprudence also holds that persons with single kidney are medically fit to live a regular life," NCDRC noted.
It says, "...this commission finds no tangible grounds to interfere with the concurrent decisions of both the fora below. The revisions are dismissed with consolidated costs of Rs20,000 in favour of respondent/complainant Prem Kumar Aggarwal."
(Revision Petition Nos732/735 of 2020 Date: 3 January 2023)