With Madras HC judge in home loan dispute, SBI wants hearing outside TN

The bank has alleged that the judge was yet to fully repay the outstanding amount despite reminders and was linking it to a policy claim on her home that was rejected by The New India Assurance Company. Justice Banu has accused bank officials and the insurance company of collusion to deny her the policy benefits.

A bench of NCDRC president Justice A P Sahi and Member Inder Jit Singh issued notice on SBI’s transfer petition on August 2, and fixed it for hearing again on September 23.

The SBI counsel, Advocate Jitendra Kumar, pressed for an interim stay of proceedings before the DCDRC in Madurai. But the Commission said, “You might have a reasonable apprehension but not so lightly when it comes to a sitting High Court judge… You have to state many things (like) why do you expect this to be happening in your case? There should be something more serious than a light assertion…”

According to SBI, Justice Banu was paying the EMIs, which were rescheduled at one stage on her request. However, the bank said “in February 2018, December 2018, January 2019 and February 2019 ECS (Electronic Clearing Service) initiated for debiting the EMI was returned unpaid on account of insufficiency of funds”.

When contacted by The Indian Express, the counsel representing Justice Banu before the Madurai commission said, “It is not proper on our part to discuss when the national commission is also seized of it.”

Justice Banu has urged the Madurai commission to direct The New India Assurance Co. Ltd to pay her Rs 46 lakh, which is the insured amount along with interest; direct the insurance firm and SBI to pay Rs 1 crore as compensation for mental agony; direct return of all EMIs paid with interest; return the Rs 17,125 deducted for purchasing the policy; pay Rs 50,000 towards litigation cost; and direct SBI to close the loan account.

In her consumer complaint lodged in June 2024, Justice Banu alleged that bank and insurance officials “colluded” to deny her claim on a “Standard Fire and Special Peril Policy” – which she claimed was “purchased” by SBI “without” her “knowledge”. She also said the bank debited Rs 17,125 for the policy and promised her that the outstanding loan would be adjusted against the payout.

The SBI, meanwhile, contended that the policy purchase was known to the judge. It also argued that the judge hasn’t paid the outstanding amount despite obtaining Rs 38 lakh from the builder as compensation for alleged poor construction that led her to get the partially constructed building demolished.

The SBI pointed out that the insurance company had rejected the judge’s claim in September 2018 saying demolition was “not covered” under the policy. It argued that the relation between the insurer and insured is independent and separate from the debtor-creditor relationship.

Case records trace the root of the dispute to October 2010 when Justice Banu, then still a lawyer, availed an SBI home loan of Rs 29.20 lakh with a 20-year repayment period. According to SBI, the disbursal was stopped in 2013 on the judge’s request, after Rs 20,17,500 had already been released, following issues in construction quality. Records show the loan was classified as NPA as per RBI Guidelines in November 2021.

Justice Banu’s complaint filed with the Madurai consumer forum – through her son, who is the power of attorney holder – in June 2024 pegged the amount disbursed until the end of 2011 at Rs 19,65,368. It said that in 2011-end, the “structure started withering and falling down due to the substandard construction”. Following this, she “immediately” alerted the bank not to disburse any more of the loan as construction had stopped.

Justice Banu also moved the TN State Consumer Disputes Redressal Commission against the contractor and was awarded Rs 13 lakh as compensation. On appeal, the national forum NCDRC awarded Rs 25 lakh more on July 10, 2019. On July 8, 2016, it gave her permission to demolish the structure.

Justice Banu’s complaint said she informed the bank about permission to demolish the structure “immediately” and it was only then that she was told that Rs 17,125 was deducted from the sanctioned loan for the policy. She said she was not provided with the policy document till she gave notice to issue a copy.