This revision is directed against the order of the Andhra Pradesh State Consumer Disputes Redressal Commission, Hyderabad (in short, “the State Commission”) dated 1.4.2013 whereby the State Commission accepted the first appeal No.837/2012 filed against the order of the District Forum-II, Hyderabad, set aside the order and dismissed the complaint.

Briefly put, facts relevant for the disposal of the revision petition are that the father of the respondent/complainant during his lifetime availed three different loans of Rs.5,00,000/-, Rs.1,00,000/- and Rs.4,25,000/- from the respondent/opposite party against the mortgage of the property. One of the conditions of the loan was that the borrower shall assign life insurance policies issued under the acceptable plan to the Company, having an insurance cover equal to the amount of loan sanctioned, as collateral security for the loan before the loan or its first installment could be disbursed. Another clause of the loan agreement provided that the sum payable under any of the policies offered as collateral security shall be appropriated towards payment of the principal as well as the interest due on the loan. It is the case of the complainant that the respondent released the loan without complying with the above-noted condition. Claiming this to be deficiency in service, the complainant filed the consumer complaint under Section 12 of the Consumer Protection Act, 1986 alleging that after the death of his father on 10.4.2011 the respondent cannot recover the balance loan amount and sought following prayers: -

“(i)      to direct the Opposite Party to waive off the balance loan amount of Rs.5,26,310/- (Rupees Five Lakhs Twenty Six Thousand Three Hundred and Ten only) upto May, 2011 pertaining to Loan Account Nos.64038900,64040597 and 64049977;

(ii)       to direct the Opposite Party to pay Rs.1,00,000/- towards damages for mental agony and waste of valuable time of the Complainant and his family members, with interest @ 24% per annum

(iii)     to pass such other orders as this Hon’ble District Consumer Redressal Forum may deem fit and proper in the circumstances of the case.”

The respondent resisted the complaint and filed the written statement claiming that failure of the respondent to insist on the insurance policy before releasing the loan amount cannot be termed as deficiency in service because furnishing of insurance policy as a collateral security was the obligation of the complainant under the loan agreement.

The District Forum on consideration of the pleadings of the parties and the evidence, allowed the complaint in part and directed the respondent/opposite party to waive off the balance loan amount of Rs.5,26,310/- pertaining to the above-noted three loan accounts. Besides a sum of Rs.1,00,000/- was awarded as compensation to the complainant.

Feeling aggrieved of the order of the District Forum, the petitioner preferred an appeal before the State Commission. The State Commission on consideration of record accepted the appeal, set aside the order of the District Forum and dismissed the complaint.

Learned Shri G.S. Mani, Advocate for the petitioner has contended that the impugned order of the State Commission is not sustainable because it is based upon incorrect appreciation of the terms and conditions No.6 (a) to 6 (d) of the loan agreement. It is contended that the State Commission has failed to appreciate that as per condition No.6 (a) a duty was cast upon the respondent to insist on life insurance policy as a collateral security and since the respondent did not insist on the insurance policy as collateral security it has committed deficiency in service and now it cannot seek recovery of balance amount from the petitioner who is son of the loanee and co-applicant in respect of third loan of Rs.4,25,000/-.

No one has appeared on behalf of the respondent despite call. Therefore, we are constrained to proceed ex-parte against the respondent.

We have considered the submissions made on behalf of the petitioner and perused the record, particularly the relevant terms and conditions of the loan reproduced as under: -

“6.(a) You will have to assign Life Insurance Policy/ies issued under the accept able plan to the Company having insurance cover equal to the amount of loan sanctioned as collateral security for the loan before the loan or the first installment thereof is disbursed as mentioned in Clause NBo.9 of the Schedule of Loan Offer Letter.

6(b)     Premiums due under the policy/ies assigned to the Company must be paid in the manner prescribed in the said policy/ies direct to the concerned office of Life Insurance Corporation of India issuing the policy and proof of payment submitted to the Company from time to time. The said Policy/ies assigned to the Company must be kept in force to the extent of full sum assured failing which, without prejudice to the Company’s right to be kept in force to the extent of full sum assured failing which, without prejudice to the company’s right to recall the entire loan or the outstanding balance thereof along with the interest, additional interest and other dues if any, ou will be liable to pay interest at a higher rate form the month of discontinuance of Life Insurance Policy as is applicable to Company’/s Housing Loan Scheme without Life Insurance Policy i.e., griha Lakshmi Scheme.

6(c)     The sum payable under any of the policies offered as collateral security for the loan shall be appropriated towards repayment of the principal and interest due under the loan.

6(d)     In the event of the entire loan becoming immediately payable under the provisions contained herein (whether or not the due date has elapsed) or in the event of your failure to pay any interest/EMI/premia form the due date or in the event of your failure to maintain the said policy/ies in full force and effect or in the event of any breach of any of the conditions contained herein, then the Company, without prejudice to its rights to immediate payment of the principal money or part thereof shall be entitled to surrender such policy/ies without giving any notice to you of its intention to do so and to receive the amount of such surrender value and apply the same in such manner as the Company thinks fit either towards the principal amount or the interest or any other amount due or payable hereunder, before filing of Suit for recovery of dues.”

On reading of clause 6 (a) and terms and conditions of the loan, we find that this clause casts an obligation on the loanee to furnish life insurance policy/ies  issued under the acceptable plan to the company as collateral security for the loan. Admittedly, the loanee has not furnished the collateral security. That being the case, the loanee or his successor in interest cannot escape the liability of repayment of loan. We are conscious of the fact that clause 6 (a) provides that before the receipt of the insurance policy as collateral security the lender Company was not expected to disburse the loan or any part thereof. The condition 6 (a) is meant to cover the risk of the respondent but by no means can be used by the loanee’s successor to avoid payment of the loan with interest. Admittedly, the loan was advanced against the mortgage. Therefore, if the respondent has not insisted on collateral security in the form of insurance policy the petitioner cannot take advantage of the same, particularly when the father of the petitioner who could have insured himself and given the policies as collateral security failed to do so. Under these circumstances, we find no merit in the plea of the petitioner who wants to take advantage of his own failure. We have perused the order of the State Commission which is well reasoned. Counsel for the petitioner has failed to show any jurisdictional error or any perversity in the order which may call for the interference in exercise of revisional jurisdiction.

Revision petition is, therefore, dismissed with no order as to costs.