SBI High Court Judge Home Loan Controversy, Court denies more time to SBI, Check latest update
On Monday, the National Consumer Disputes Redressal Commission (NCDRC) rejected the State Bank of India’s (SBI) request for additional time to respond to a consumer complaint filed by Madras High Court judge Justice J. Nisha Banu regarding a home loan repayment issue.
Commission head Justice A.P. Sahi, who was accompanied by Member Inder Jit Singh, indicated that a detailed order would be forthcoming. During the proceedings, Justice Sahi advised Justice Banu’s counsel, who suggested imposing significant costs on SBI, to reconsider, stating, “you better leave that… You have to be careful. But we will do everything that is possible”.
As the case was discussed, SBI’s counsel requested an adjournment, citing the illness of Advocate Jitendra Kumar, who was supposed to represent the bank. However, the Commission noted that two other advocates had signed the vakalatnama but were also absent without any indication of their health status. The NCDRC dismissed the request for adjournment, stating, “this is a mere excuse undertaken to seek adjournment” and emphasized the seriousness of the matter, especially given that it involves a sitting High Court judge.
Background of Case
The State Bank of India (SBI) has approached the National Consumer Disputes Redressal Commission (NCDRC) to request the transfer of a consumer complaint filed by Justice J. Nisha Banu, a judge of the Madras High Court. The complaint concerns a dispute over home loan repayments and is currently being heard in Tamil Nadu. SBI seeks to relocate the case outside of Tamil Nadu to ensure a fair hearing.
Background of the Dispute
Justice Nisha Banu took out a home loan from SBI and has been making repayments. However, a disagreement arose regarding the outstanding amount. SBI alleges that the judge has not fully repaid the loan despite numerous reminders. In contrast, Justice Banu asserts that the dispute involves a home insurance policy with The New India Assurance Company, which denied her claim. She accuses both the bank and the insurance company of colluding to deny her insurance benefits.
SBI contends that Justice Banu was aware of the insurance policy and that the remaining loan amount is still due. The bank also pointed out that Justice Banu received Rs 38 lakh in compensation from the builder for poor construction, which resulted in the building’s demolition.
Legal Proceedings and Hearing Dates
On August 2, 2024, the NCDRC issued a notice regarding SBI’s request for transfer. The next hearing is set for September 23, 2024. During the proceedings, SBI’s lawyer, Advocate Jitendra Kumar, sought an interim stay on the ongoing proceedings in the District Consumer Disputes Redressal Commission (DCDRC) in Madurai. However, the NCDRC expressed caution in granting such a stay, emphasizing the need for substantial justification, particularly due to the involvement of a sitting High Court judge.
Home Loan and Insurance Policy Dispute
SBI acknowledged that Justice Banu had been paying her Equated Monthly Installments (EMIs) but noted instances of returned payments due to insufficient funds in 2018 and 2019. In her complaint filed in June 2024, Justice Banu claims that SBI officials and the insurance company conspired to deny her benefits from a “Standard Fire and Special Peril Policy.” She asserts that the policy was purchased by SBI without her knowledge, with Rs 17,125 deducted from her loan for this policy.
Justice Banu’s legal team is seeking Rs 46 lakh in compensation, which is the insured amount, along with interest. Additionally, they are requesting Rs 1 crore for mental anguish, reimbursement of all paid EMIs with interest, a refund of the policy cost, and litigation costs amounting to Rs 50,000. Furthermore, they are asking SBI to close her loan account.
SBI’s Defense
SBI maintains that Justice Banu was aware of the insurance policy and is still obligated to repay the remaining loan balance. The bank highlighted that the insurance company rejected her claim in 2018, stating that the demolition of the building was not covered under the policy. SBI argues that the relationship between the bank and the insurance company is separate from the debtor-creditor relationship and should not influence the loan repayment.
Timeline of Events
The home loan dispute originated in October 2010 when Justice Banu, then a lawyer, took out a loan of Rs 29.20 lakh from SBI, to be repaid over 20 years. In 2013, after receiving Rs 20,17,500, she requested to halt further disbursal due to construction issues. By November 2021, the loan was classified as a Non-Performing Asset (NPA) under RBI guidelines.
Justice Banu’s complaint states that she received Rs 38 lakh in compensation from the builder for substandard construction, and in 2016, the national consumer forum granted her permission to demolish the partially constructed building. She claims she only became aware of the insurance policy after the demolition and received the policy document only after sending a legal notice.
