The State Bank of India (SBI) has engaged a judge of the Madras High Court, Justice J Nisha Banu, in a fray relating to the non-repayment of a home loan availed of and an insurance claim about that loan. SBI has approached the National Consumer Disputes Redressal Commission (NCDRC), seeking transfer of a consumer complaint pending against it to be heard outside Tamil Nadu. The plea by the bank is essentially on grounds that it will not get a fair deal in the District Consumer Disputes Redressal Commission, Madurai, which comes under the geographical jurisdiction of the Madras High Court.

Apprehension Of Justice In Madurai
SBI is troubled since DCDRC, Madurai, falls under the jurisdiction of the Madras High Court and the bank is afraid of some kind of bias. Justice Banu had filed a complaint to the forum for deficiency in service relating to repayment of home loan and insurance policies linked to the loan. The Indian Express says that SBI fears the one-man local commission would not be fair as Justice Banu is a judge in that state itself.

Partially Constructed Home And Demolition Issues
The root of the dispute lies in the partial construction of Justice Banu’s house in Madurai, which was later demolished on account of poor construction. The dispute acquired critical dimensions when Justice Banu tagged her home loan repayment with a claim against New India Assurance Company that was rejected. SBI has alleged non-repayment of the loan amount in full despite repeated notices. Judge Banu accused some bank officials and the insurance company of collusion and denying her the rightful benefits of the policy.

SBI Seeks Transfer Of Case
The NCDRC headed by the president, Justice AP Sahi, and member Inder Jeet Singh, while issuing a notice for the SBI petition on August 2, 2024, ordered it to be listed for the next hearing on September 23, 2024. The counsel for SBI, Advocate Jitendra Kumar pressed for an interim stay on the proceedings at DCDRC Madurai, saying SBI may not get a fair trial. The NCDRC, however, maintained that more concrete evidence was required to justify such a claim.

Judge’s Loan Repayment Dispute
SBI said Justice Banu was regularly servicing her EMIs till sometime in 2018-2019. The bank said ECS attempts made in February 2018, December 2018, January 2019 and February 2019 to debit the EMI were returned unpaid due to insufficient funds. SBI also pointed out that though she had obtained compensation for defective construction from the builder himself, she has not paid the pending amount of the loan.

Justice Banu’s Claims
The justice had, in June 2024 filed a consumer complaint before the district consumer disputes redressal forum, stating that both bank and insurance company officials were in conspiracy to block her insurance claim. She also alleged that SBI bought a “Standard Fire and Special Peril Policy” on her behalf without her consent and debited Rs 17,125 from her account towards payment of subscription for that policy. In her complaint, Justice Banu had asked the Madurai consumer forum to direct the New India Assurance Company to pay her Rs 46 lakh as the insured amount along with interest. She had sought Rs 1 crore as compensation for the mental distress and had demanded the refund of all EMIs paid along with interest.

SBI’s Defence
SBI, while defending itself, contended that Justice Banu had full knowledge of the policy purchase and pointed out that though he had received Rs 38 lakh as compensation from the builder for substandard construction, the judge did not clear the balance loan. The bank also pointed out that the insurance company itself rejected Justice Banu’s claim in 2018 by holding that demolition of the partially constructed house was not covered under the policy.

Loan History And Dispute
The dispute dates back to October 2010 when Justice Banu, an advocate then, took a home loan of Rs 29.20 lakh from SBI for a repayment period of 20 years. The bank disbursed Rs 20.17 lakh till 2013 and thereafter stopped disbursal on Justice Banu’s request due to some problems in construction. According to the records of SBI, the loan was classified as NPA in November 2021 as per RBI guidelines.

The son of Justice Banu, who is her power of attorney, stated in the consumer complaint that due to defective construction, the house had started collapsing and in 2011, Justice Banu stopped further disbursements of the loan amount. Justice Banu had also filed a complaint for defective service against the contractor before the Tamil Nadu State Consumer Disputes Redressal Commission, which too had awarded compensation of Rs 13 lakh to her. While disposing of the appeal, the national commission enhanced the compensation to Rs 25 lakh in 2019.

Going the Legal Way: Continuing Case
Meanwhile, Justice Banu asked the Madurai Commission to direct SBI and New India Assurance to bear the liability on the disputed loan and insurance policy. The next hearing of the case by NCDRC on September 23 may decide on the future of the case, including whether SBI’s plea for the case to be transferred out of Tamil Nadu will be allowed or dismissed.