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UYes I have ots sanction letter it states the loan would be closed if one time settlement is done within 30 days from the issued date that is 18.02.2025. we paid full amount on 18.02.2025, except a signature we paid the amount on the same letter by bank manager with date, we didn’t receive any acknowledgement, closure of loan and mortgage attached to it. After the request, he said it is in process. What further steps can I do to immediately receive my mortgage?ULoan agreement clause 3 mandates life insurance for education loan & clause 3 mandates loan to be marked as completed in these circumstancesUBut OTS was done after one month of complaint in the district forum. It was only after we approached the district consumer court that the bank issued a physical possession notice giving us 5 days to act, making an re appeal in the same case how can bank not release mortgage or loan closure certificate even after 20 days of OTS.UI am from tamil nadu and district complaint filed in salem, which state commission I should approach?UThis state commission case judgement done by tn state commission, if I have to do reappeal then I have to approach tamil nadustate commisonUMan, 1st whole set is my case related insurance clause and explanation ends right before before judgement point and it is totally related to my case ( last two lines stated another judgement on similar ground)UCarefully read it I have cited one more state commision case on similar grounds attached the particular judgement at last
1)Deficiency in Service by Breaching Loan Agreement
To understand this, let us first look at Clause 6 of the Loan Agreement, which states:
“The Borrower will take out a life insurance policy in his/her name for an amount at least
equal to the total amount of the loan granted or agreed to be granted to him/her and will
keep the said policy alive at all times during his/her indebtedness to the Bank, by regular
payment of premia thereon. He/she will assign the said policy in favour of the Bank. In
case the Borrower commits default in payment of any premium due on his/her said life
policy, the Bank shall be at liberty to (but not bound to do so) pay the same and debit
the amount so paid to his/her loan account. The amount so debited will form part of the
loan and will carry interest at the rate payable in respect of the loan as specified in parThe first two lines talk about who must take life insurance, the amount, in whose favour,
and the timeframe. Let us dissect one by one:
• Who: The borrower must take life insurance.
• Amount: It must be equal to the loan amount granted.
• Favour: It must be assigned in favour of the bank.
• Timeframe: The policy must be always kept alive during the borrower’s
indebtedness to the bank. Since the borrower’s debt starts right after loan
disbursement, the policy should be in place on or before loan disbursement.
So, it clearly states that:
“On or before loan disbursement, a mandatory life insurance policy in favour of the
bank, equal to the loan amount granted, must be taken by the borrower.”
Now, let us discuss what happened with the loan:
• The loan defaulted as the borrower had passed away.
• The recovery mechanism for the bank in this situation was to invoke the
insurance policy. However, the bank found that no insurance was attached to the
loan.
But as per the loan agreement, the loan should only be disbursed after ensuring that
insurance with sanctioned amount is attached to the loan.Another state commision case judgement where home loan borrower died:
“If the opposite party failed to secure necessary documents in this regard(insurance) before the disbursing
the loan amount certainly it would be the deficiency of service on their part.”URead the article idiot similar case ditto
Consumer ruled in favour of guarantorUSir, but I have the particular education loan agreement that clearly mandates all claims and prove every breach of bank happenedUAdding whole loan history
Whole Loan timeline Summary:
2010: Loan Origination
Borrower and guarantor approached the bank for an education loan .
The bank required a mortgage as collateral and disbursed the loan.
Bank’s Breach : The bank failed to comply with mandatory clauses in the loan agreement, specifically the requirement to purchase insurance policy (a critical safeguard in case of borrower death) as they only need mortgage which can cover any case.2011: Borrower’s Death
The borrower passed away after two disbursements.
The guarantor informed the bank about the borrower’s death and requested the closure of the loan .
Bank’s Breach : Instead of recalling the loan as per the agreement, the bank kept the loan open and took no action.2011–2016: Bank’s Inaction
For five years , the bank did nothing to address the loan or its status.
Bank’s Breach : The bank failed to recall the loan or take any steps to resolve the matter, despite the borrower’s death and the terms of the agreement.2017: Legal Proceedings Begin
The bank approached the sub-judice court , claiming the moratorium period was over and that the guarantor was now liable for the loan.
Guarantor appeared for 70+ hearings , citing the insurance clause and arguing that the bank had breached the agreement.
Bank’s Breach : The bank only appeared for 5 hearings , showing minimal effort in pursuing the case.2020–2025: SARFAESI Proceedings and NPA Declaration
In 2020 , the bank initiated SARFAESI proceedings , declaring the loan a Non-Performing Asset (NPA) —9 years after the borrower’s death .
Guarantor believed the ongoing sub-judice court case would resolve the matter and waited for the judgment.In January 2025 , the guarantor learned about the possibility of filing a complaint in the consumer court as a in party person and made some mistakes while filing and arguing.
In February 2025 , the bank issued a physical possession notice , giving the guarantor just 5 days to act. Under pressure, the guarantor opted for a settlement (OTS ).
The consumer court dismissed the complaint, citing improper filing and arguing procedures by the complainant.Key Points of Contention
**Insurance Clause Violation** : The bank failed to ensure the mandatory insurance policy was in place, leaving the loan unprotected in the event of the borrower’s death.
**Failure to Recall Loan (2011) **: After the borrower’s death, the bank did not recall the loan as per the agreement.
**Delayed Action (2011–2016)** : The bank sat idle for five years, allowing interest and penalties to accumulate unnecessarily.
**Selective Participation in Court Hearings** : The bank appeared for only 5 out of 70+ hearings, showing negligence in pursuing the case.
**Unjustified NPA Declaration (2020) **: Declaring the loan an NPA nine years after the borrower’s death is questionable, especially when the case was already in court.See how a 10k cr worth bank indulged in fraudulent activities to recover 3 lakh worth loan and hide its own mistake.
Give us one reason why we should be liable for loan.
Related to loan,We had no choice but to pay ₹7.25 lakhs on 18.02.2025, as per a one-time settlement letter issued for a loan default of ₹9.75 lakhs. We paid the loan on said day.The bank claimed this payment would release the loan from NPA status and resolve the mortgage. Meanwhile, a case was ongoing at the District Consumer Forum regarding this loan. The bank manager pressured my mother (the loan owner) not to pursue legal action further, insisting we wouldn’t win at the district level or state commission. He assured her he’d ensure the mortgage was released smoothly if we complied.
However, the district forum dismissed our case for flawed reasons, despite it being strong. We’re considering escalating to the State Commission due to clear service deficiencies. But here’s the issue: the bank hasn’t provided any acknowledgment, loan closure letter, or mortgage release yet (as of 02.03.2025). My mom fears that if we approach the State Commission, the manager might demand an additional ₹3 lakhs to “release everything,” as he allegedly threatened us before.
Should she file a consumer case within the next 20 days against the dismissed district court decision? Any advice on how to proceed without falling prey to further exploitation would be greatly appreciated.
UMan you don’t know the whole case still blabbering, let me details it how bank scammed us then you decide who is the defaulter:Whole Loan timeline Summary:
2010: Loan Origination
Borrower and guarantor approached the bank for an education loan .
The bank required a mortgage as collateral and disbursed the loan.
Bank’s Breach : The bank failed to comply with mandatory clauses in the loan agreement, specifically the requirement to purchase insurance policy (a critical safeguard in case of borrower death) as they only need mortgage which can cover any case.2011: Borrower’s Death
The borrower passed away after two disbursements.
The guarantor informed the bank about the borrower’s death and requested the closure of the loan .
Bank’s Breach : Instead of recalling the loan as per the agreement, the bank kept the loan open and took no action.2011–2016: Bank’s Inaction
For five years , the bank did nothing to address the loan or its status.
Bank’s Breach : The bank failed to recall the loan or take any steps to resolve the matter, despite the borrower’s death and the terms of the agreement.2017: Legal Proceedings Begin
The bank approached the sub-judice court , claiming the moratorium period was over and that the guarantor was now liable for the loan.
Guarantor appeared for 70+ hearings , citing the insurance clause and arguing that the bank had breached the agreement.
Bank’s Breach : The bank only appeared for 5 hearings , showing minimal effort in pursuing the case.2020–2025: SARFAESI Proceedings and NPA Declaration
In 2020 , the bank initiated SARFAESI proceedings , declaring the loan a Non-Performing Asset (NPA) —9 years after the borrower’s death .
Guarantor believed the ongoing sub-judice court case would resolve the matter and waited for the judgment.In January 2025 , the guarantor learned about the possibility of filing a complaint in the consumer court as a in party person and made some mistakes while filing and arguing.
In February 2025 , the bank issued a physical possession notice , giving the guarantor just 5 days to act. Under pressure, the guarantor opted for a settlement (OTS ).
The consumer court dismissed the complaint, citing improper filing and arguing procedures by the complainant.Key Points of Contention
Insurance Clause Violation : The bank failed to ensure the mandatory insurance policy was in place, leaving the loan unprotected in the event of the borrower’s death.
Failure to Recall Loan (2011) : After the borrower’s death, the bank did not recall the loan as per the agreement.
Delayed Action (2011–2016) : The bank sat idle for five years, allowing interest and penalties to accumulate unnecessarily.
Selective Participation in Court Hearings : The bank appeared for only 5 out of 70+ hearings, showing negligence in pursuing the case.
Unjustified NPA Declaration (2020) : Declaring the loan an NPA nine years after the borrower’s death is questionable, especially when the case was already in court.See how a 10k cr worth bank indulged in fraudulent activities to recover 3 lakh worth loan and hide its own mistake.
Give us one reason why we should be liable for loan.
