If you are stuck in such a situation, here is what to do.

Mr. Rajesh Kumar, a resident of a tier-2 city in Uttar Pradesh, recently applied for a home loan from Apex Universal Bank. During the application process, the bank’s representative, Mr. Sameer Verma, handled all the paperwork. A few months after the loan was disbursed, Mr. Kumar’s son, Aman, while reviewing the bank statements, noticed a significant deduction for a loan insurance policy that his father had no recollection of agreeing to. It appeared that Mr. Verma had deceptively obtained Mr. Kumar’s signature on the insurance forms along with the main loan documents, without properly explaining the product or its costs. The family now seeks to understand their legal rights to cancel the policy, get a refund, and hold the bank and its agent accountable for this fraudulent act.

Advice in such cases

Navigating such a situation requires a systematic approach to build a strong case and seek redressal. The primary goal is to prove that the insurance policy was sold without informed consent, amounting to an unfair and deceptive trade practice.

• Review all the documents provided by the bank at the time of the loan sanction. Scrutinize the loan agreement, sanction letter, and the specific insurance policy document for any clauses you may have overlooked.
• Immediately send a formal, written complaint to the bank’s designated Grievance Redressal Officer. Clearly state the facts, mention that the consent was obtained fraudulently, and demand the immediate cancellation of the policy and a full refund of the premium deducted.
• If the bank fails to provide a satisfactory resolution within 30 days, you can escalate the matter to the Banking Ombudsman, a quasi-judicial authority that resolves disputes between banks and customers.
• Simultaneously, you can file a complaint before the appropriate Consumer Disputes Redressal Commission for “deficiency in service” and “unfair trade practice.”
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A Good lawyer can get the issues resolve in 7-10 days.

Applicable Sections of Law

Such cases of mis-selling and fraud involve provisions from various Indian statutes, including the new criminal laws.

• Section 318 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section deals with cheating. If the bank agent dishonestly induced your father to sign the document by deceiving him, it constitutes the offence of cheating.
• Section 316 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section pertains to Criminal Breach of Trust. The agent, being entrusted with the responsibility of processing a loan, dishonestly used that position to misappropriate funds for an insurance policy against the customer’s interests.
• Consumer Protection Act, 2019: This is a powerful tool. The act of selling an insurance policy without consent is a clear case of “unfair trade practice” and “deficiency in service” by the bank and the insurance provider.
• Indian Contract Act, 1872: Under Section 17, “fraud” includes the suggestion of a fact which is not true by one who does not believe it to be true, and any other act fitted to deceive. A contract where consent is obtained by fraud is voidable at the option of the party whose consent was so caused.

If you are the complainant

As the person pursuing the case on behalf of your father, you must be methodical.

• Gather and organize all documentary evidence. This includes the loan application, sanction letter, bank statements showing the premium deduction, and a copy of the unwanted insurance policy.
• Draft a detailed timeline of events, from the first interaction with the agent to the discovery of the fraud.
• Be the primary point of contact for all communications. Keep meticulous records of emails, letters sent via registered post, and names of officials you speak with.
• File the initial complaint with the bank yourself, and if necessary, escalate it to the Banking Ombudsman online. The process is designed to be user-friendly.
• If you decide to approach the consumer court or file a criminal complaint, it is highly advisable to engage a lawyer to draft the legal notices and petitions correctly.

If you are the victim

As the direct victim (the father in this scenario), your role is crucial, even if your child is handling the correspondence.

• Your clear and consistent testimony is the most important piece of evidence. You must be prepared to state, in a written affidavit and if required, in person, that you were not informed about the insurance policy and did not consent to it.
• Do not be intimidated by the bank’s officials. Stick to your version of the facts.
• If you have difficulty with the proceedings, you can provide a Letter of Authority to your son, allowing him to represent you in front of various forums.
• Cooperate fully with your lawyer and provide all information truthfully.

How the police behave in such cases

Approaching the police for financial fraud can sometimes be challenging, as they may perceive it as a civil dispute.

• Often, the police at the station level may be reluctant to file a First Information Report (FIR), suggesting that you approach the bank’s internal mechanism or a consumer court instead.
• They may classify the case as a contractual dispute rather than a criminal offence like cheating.
• If the local police station refuses to register an FIR, you have the right to send a written complaint to the Superintendent of Police (SP) or a higher-ranking officer.
• Another effective remedy is to file a private complaint directly before the Magistrate under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), who can then order the police to investigate. A lawyer’s assistance is essential for this step.

FAQs people normally have

What legal steps can I take against the bank and the agent?
You can take a three-pronged approach: 1) Complain to the bank and then the Banking Ombudsman for an administrative resolution. 2) File a case in the Consumer Court for compensation and refund. 3) File a criminal complaint (FIR or private complaint) against the agent for cheating and criminal breach of trust, and against the bank for vicarious liability.

What should I do to get my money back?
The quickest path to getting a refund is often through the bank’s grievance cell or the Banking Ombudsman. The Consumer Court can also order a full refund along with compensation for mental agony and litigation costs.

Can the bank be held liable for its agent’s fraudulent actions?
Yes. The bank is vicariously liable for the actions of its employees and agents performed during the course of their employment. You should always name both the agent and the bank as opposite parties in your complaints.

What evidence is required?

Strong evidence is key to winning your case. You should collect:

• The complete home loan agreement and all associated papers.
• The specific insurance policy document that was fraudulently issued.
• Bank account statements clearly showing the deduction of the insurance premium.
• Copies of all written communication (letters, emails) sent to the bank and their responses.
• An affidavit from the victim (your father) detailing the misrepresentation by the agent.
• Any call recordings, if made with proper disclosure, or names of witnesses if someone else was present during the agent’s visit.

How long will the investigation take?

The timeline can vary depending on the forum you choose:

• Bank’s Grievance Cell: Typically required to resolve the issue within 30 days.
• Banking Ombudsman: The process can take anywhere from 45 days to 3 months.
• Consumer Court: Depending on the commission’s workload, it can take from 6 months to over a year.
• Criminal Investigation: If an FIR is filed, the investigation timeline under the new BNSS has been streamlined, but complex financial cases can still take several months to conclude.

Advocate Sudhir Rao, Supreme Court of India